HeartCore Enterprises, Inc.
For the period ended Jun 30, 2025. Filed Aug 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 13, 2025
HTCR$1.51-11.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001213900-25-043737
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-13.
0001213900-25-075680
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 77 previous paragraphs and 157 current paragraphs.
40 unchanged; 25 reworded; 81 added; 12 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 8 previous and 33 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (81)
Current report
On May 24, 2025, we received written notice (the “Stockholders’ Equity Notice”) from the Nasdaq Staff indicating that we are not in compliance with the $2,500,000 minimum stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b) (the “Minimum Stockholders’ Equity Requirement”) for continued listing on the Nasdaq Capital Market. Additionally, the Nasdaq Staff noted that we do not meet the alternatives of market value of listed securities or net income from continuing operations as of May 23, 2025.
Current report
Under Nasdaq rules, we had 45 calendar days (or until July 8, 2025) to submit a plan to regain compliance, which we did. On July 11, 2025, the Nasdaq Staff notified us that they had granted us an extension until September 30, 2025, to regain compliance with the Minimum Stockholders’ Equity Requirement. Pursuant to the terms of the extension, on or before September 30, 2025, we must complete the transactions pursuant to the Equity Purchase Agreement and Securities Purchase Agreement (both as defined below) and evidence compliance with the Minimum Stockholders’ Equity Requirement as indicated in the Nasdaq Staff’s notification.
Current report
The notification of noncompliance had no immediate effect on the listing or trading of our common stock on the Nasdaq Capital Market under the symbol “HTCR.” There can be no assurance that we will be able to regain compliance with the Minimum Stockholders’ Equity Requirement, even if we maintain compliance with the other listing requirements.
Current report
Consulting and Services Agreement with tmsuk Co. Ltd.
Current report
On May 30, 2025 (the “tmsuk Effective Date”), we entered into a Consulting and Services Agreement (the “tmsuk Consulting Agreement”) with tmsuk Co., Ltd., a Japanese corporation (“tmsuk”). Pursuant to the terms of the tmsuk Consulting Agreement, we agreed to provide tmsuk certain services, including the following (collectively, the “tmsuk Services”):
Current report
In providing the tmsuk Services, we agreed to not render legal advice or perform accounting services, nor act as an investment advisor or broker/dealer. Pursuant to the terms of the tmsuk Consulting Agreement, the parties agreed that we will not provide the following services, among others: negotiation for the sale of tmsuk’s securities; participation in discussions between tmsuk and potential investors; assisting in structuring any transactions involving the sale of tmsuk’s securities; pre-screening of potential investors; due diligence activities; nor providing advice relating to valuation of or financial advisability of any investments in tmsuk; or handling any funds or securities on behalf of tmsuk.
Current report
Pursuant to the terms of the tmsuk Consulting Agreement, tmsuk agreed to compensate us as follows in return for the provision of the tmsuk Services during the nine-month term:
Current report
Issuance by tmsuk of the tmsuk Warrant may be subject to the approval of tmsuk’s stockholders, and in such case, the tmsuk Warrant will not be issued unless and until stockholder approval is obtained. In the event that tmsuk stockholder approval is not obtained, and the tmsuk Warrant is not issued, on or before the 90 th day following the tmsuk Effective Date, the parties agreed to reasonably cooperate to come to mutual agreement on an alternate method to provide to us the same value and rights as would have been provided pursuant to the tmsuk Warrant.
Current report
In the event that the term of the tmsuk Consulting Agreement is extended beyond the initial nine-month term, tmsuk agreed to compensate us for tmsuk Services provided at the rate of $150 per hour, based on the hours spent by our personnel providing the tmsuk Services.
Current report
The tmsuk Consulting Agreement may be terminated at any time by either party upon notice to the other party.
Current report
OEM Sales Agreement
Current report
On June 23, 2025, HeartCore Japan entered into an OEM Sales Agreement (the “Silver Egg Agreement”) by and between HeartCore Japan and Silver Egg Technology CO. Ltd. (“Silver Egg”). Pursuant to the terms of the Silver Egg Agreement, Silver Egg agreed to provide to HeartCore Japan its AI recommendation service, “Aigent Recommender,” developed by Silver Egg (the “Services”). The specific terms and conditions for the provision of the Services will be determined in individual agreements. The Silver Egg Agreement will serve as the basic agreement and will apply to all individual agreements between HeartCore Japan and Silver Egg during the term of the Silver Egg Agreement, and such individual agreements will constitute a part of the Silver Egg Agreement.
Current report
The term of the Silver Egg Agreement is two years. Unless either party notifies the other in writing at least six months prior to the expiration of the term, the Silver Egg Agreement will automatically renew for additional two year periods. Notwithstanding the foregoing, if either party wishes to terminate the Silver Egg Agreement during the term, both parties must agree in writing. The term of each individual contract pursuant to the Silver Egg Agreement will commence on the date of the individual contract and will continue until the last day of the month in which 12 months have elapsed from the start date of the use of the Services. However, unless HeartCore Japan or Silver Egg gives written notice to the other party at least 30 days prior to the expiration of the term, the individual contract will be automatically renewed for an additional 12-month periods.
Current report
Pursuant to the terms of the individual agreement for the first year (through June 30, 2026) and for the second year (from July 1, 2026 to June 30, 2027), when HeartCore Japan achieves the target number of contracts (20), the monthly service fees to be paid by HeartCore Japan to Silver Egg will be as follows:
Current report
If HeartCore Japan does not achieve the target number of contracts by June 30, 2026, the monthly service fees to be paid by HeartCore Japan to Silver Egg for the second year (from July 1, 2026 to June 30, 2027) will increase as follows:
Current report
Consulting and Services Agreement with Cipher Core Co., Ltd.
Current report
On June 30, 2025, the Company entered into a Consulting and Services Agreement (the “Consulting Agreement”) with Cipher Core Co., Ltd. (“Cipher Core”). As compensation for its services under the Consulting Agreement, Cipher Core will pay the Company an aggregate of $500,000 in fees, and issue to the Company a warrant to acquire 3% of Cipher Core’s capital stock, on a fully diluted basis. The number of warrant shares, which is fully earned, vested, and non-returnable, may be subject to adjustments.
Current report
As part of the Consulting Agreement, the Company agreed to assist Cipher Core in its efforts to go public and list on the Nasdaq Stock Market (“Nasdaq”). Under the Consulting Agreement, the Company will assist Cipher Core with:
Current report
In providing the services under the Consulting Agreement, the Company will not render legal advice or perform accounting services, and will not act as an investment advisor or broker/dealer. Pursuant to the terms of the Consulting Agreement, the parties agreed that the Company will not provide the following services, among others: negotiation for the sale of Cipher Core’s securities; participation in discussions between Cipher Core and potential investors; assisting in structuring any transactions involving the sale of Cipher Core’s securities; pre-screening of potential investors; due diligence activities; nor providing advice relating to valuation of or financial advisability of any investments in Cipher Core; or handling any funds or securities on behalf of Cipher Core.
Current report
Equity Purchase Agreement
Current report
On June 30, 2025, we and Crom Structured Opportunities Fund I, LP (“Crom” or the “Investor”), an accredited investor, entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”), pursuant to which the we have the right, but not the obligation, to direct the Investor, at any time and from time to time during the Commitment Period (as hereinafter defined) as provided in the Equity Purchase Agreement, to purchase up to $25,000,000 (the “Maximum Commitment Amount”) in aggregate gross purchase price of newly issued fully paid shares of our common stock, par value $0.0001 (the “Advance Shares”). The “Commitment Period” means, subject to the terms and conditions of the Equity Purchase Agreement, the period commencing on June 30, 2025 and ending on the earlier of (i) the date on which the Investor shall have purchased Advance Shares equal to the Maximum Commitment Amount, (ii) June 30, 2027, (iii) written notice of termination by us to the Investor, (iv) the Equity Line of Credit (“ELOC”) Registration Statement (as hereinafter defined) is no longer effective after the initial effective date of the ELOC Registration Statement, (v) the date that we commence a voluntary bankruptcy case, a bankruptcy proceeding is commenced against us, a custodian is appointed for us or for all or substantially all of its property, or we make a general assignment for the benefit of its creditors, or (vi) the date on which the Equity Purchase Agreement is terminated by mutual written consent of the parties.
Current report
Under the terms and subject to the conditions of the Equity Purchase Agreement, we have the right, but not the obligation, to direct the Investor, by our delivery to the Investorof a notice (the “Advance Notice”) from time to time, to purchase Advance Shares (i) in a minimum amount not less than $25,000, calculated based on 96% of the volume-weighted average price (“VWAP”) of our common stock on the trading day immediately preceding the date during the Commitment Period that an Advance Notice is deemed delivered (the “Advance Date”), and (ii) in a maximum amount up to the lesser of (a) $500,000, or (b) 50% of the average daily trading value of the common stock during the seven trading days immediately preceding the respective Advance Date (excluding the single highest volume trading day and the single lowest volume trading day from such calculation) multiplied by the lowest VWAP of the common stock during the seven trading days immediately preceding the respective Advance Date (each, an “Advance”). Each Advance is subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as provided in the Equity Purchase Agreement.
Current report
The number of Advance Shares then to be purchased by the Investormay not exceed the number of such shares that, when aggregated with all other shares of common stock then owned by the Investor beneficially or deemed beneficially owned by the Investor, would result in the Investor owning more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable pursuant to an Advance Notice.
Current report
The Equity Purchase Agreement further provides that we may not issue or sell to the Investorany Advance Shares under the Equity Purchase Agreement in excess of 19.99% of our issued and outstanding common stock on June 30, 2025, until stockholder approval satisfying the requirements of Nasdaq Rule 5635(d) has been obtained and is in effect. We obtained this stockholder approval on June 30, 2025.
Current report
We also agreed to pay the Investora commitment fee equal to $250,000 worth of shares of common stock (“ELOC Commitment Shares”), with the number of ELOC Commitment Shares issued being based on the Nasdaq official closing price of the common stock on June 27, 2025, the trading day immediately prior to the effective date of the Equity Purchase Agreement, in consideration for the Investor’s entry into the Equity Purchase Agreement.
Current report
Pursuant to the terms of the Equity Purchase Agreement, we agreed that we will not without the prior written consent of the Investor, enter into an “Equity Line of Credit” or a “Variable Rate Transaction,” as such terms are defined in the Equity Purchase Agreement. The Investor agreed not to engage in any short sale or hedging transactions with respect to the common stock during the term of the Equity Purchase Agreement. We may terminate the Equity Purchase Agreement at any time by written notice to the Investor at least five trading days in advance; provided that there are no outstanding Advance Notices. We and the Investormay also terminate the Equity Purchase Agreement at any time by mutual written consent. In addition, the Equity Purchase Agreement will automatically terminate at the end of the Commitment Period.
Current report
Pursuant to the terms of the Equity Purchase Agreement, we agreed that it would also comply with the ELOC Registration Rights Agreement (as hereinafter defined) with respect to the filing and effectiveness deadlines of the ELOC Registration Statement in accordance with the terms of the ELOC Registration Rights Agreement.
Current report
We will not issue or sell any shares of common stock to the Investor pursuant to the Equity Purchase Agreement, except for the ELOC Commitment Shares, until and unless the ELOC Registration Statement has been declared effective by the SEC.
Current report
The Equity Purchase Agreement also contains customary representations, warranties, indemnification provisions and closing conditions. The representations, warranties and covenants contained in the Equity Purchase Agreement were made only for purposes of the Equity Purchase Agreement and as of specific dates, were solely for the benefit of the parties to such agreement and are subject to certain important limitations.
Current report
ELOC Registration Rights Agreement
Current report
In connection with the execution of the Equity Purchase Agreement, we and the Investor entered into a Registration Rights Agreement dated June 30, 2025 (the “ELOC Registration Rights Agreement”), pursuant to which we agreed to use our commercially reasonable efforts to prepare and file within 30 calendar days from the date of the Equity Purchase Agreement, an initial registration statement covering the resale of all of the shares of common stock which the Investormay acquire (including the Advance Shares and the Commitment Shares) pursuant to the Equity Purchase Agreement (the “ELOC Registration Statement”). We have also agreed to have the ELOC Registration Statement declared effective by the SEC within 90 days from June 30, 2025.
Current report
We filed such Registration Statement on Form S-1 (File No: 333-288937) with the SEC on July 25, 2025.
Current report
Securities Purchase Agreement
Current report
On June 30, 2025, we and the Investor executed a Securities Purchase Agreement (the “Securities Purchase Agreement”). According to the terms of the Securities Purchase Agreement, we agreed to issue to the Investor, and the Investor agreed to purchase from us, 2,000 shares of our Series A Convertible Preferred Stock at a purchase price equal to $1,000 per share ($2,000,000 in the aggregate), with each such share of Series A Convertible Preferred Stock having a stated value of $1,100. The sale of the shares of Series A Convertible Preferred Stock closed on June 30, 2025 (the “Closing”).
Current report
In connection with executing the Securities Purchase Agreement, for no additional consideration, at Closing, we issued to the Investor 750,000 shares of common stock (the “SPA Commitment Shares”).
Current report
The Investor has the right at any time (subject to certain ownership limitations) to convert all or any portion of the then Series A Convertible Preferred Stock into shares of common stock (the “Conversion Shares”). For additional information regarding the conversion terms of the Series A Convertible Preferred Stock, please see “Series A Convertible Preferred Stock” below.
Current report
Pursuant to the Securities Purchase Agreement, we will, at all times, reserve from its authorized and unissued shares of common stock, two times such number of shares of common stock as shall from time to time be sufficient to effectuate the conversion of all outstanding shares of Series A Convertible Preferred Stock.
Current report
The Securities Purchase Agreement also contains customary representations, warranties, indemnification provisions and closing conditions. The representations, warranties and covenants contained in the Securities Purchase Agreement were made only for purposes of the Securities Purchase Agreement and as of specific dates, were solely for the benefit of the parties to such agreement and are subject to certain important limitations.
Current report
SPA Registration Rights Agreement
Current report
In connection with the execution of the Securities Purchase Agreement, we and the Investor entered into a registration rights agreement (the “SPA Registration Rights Agreement”), pursuant to which we agreed to file, within 30 calendar days from the date of the Securities Purchase Agreement, an initial registration statement covering the resale of all of the Conversion Shares and SPA Commitment Shares. We have also agreed to have such registration statement declared effective by the SEC within 90 days from June 30, 2025.
Showing the first 40 of 81 passages. Open the source sections for the rest.
Removed paragraphs (12)
Previous report
Change in Controlled Company Status and Board Committee Formation
Previous report
In the first quarter of 2025, the Company announced that its Board of Directors (the “Board”) had formed a Compensation Committee and a Nominating and Corporate Governance Committee. The Compensation Committee is comprised of three independent directors: Ferdinand Groenewald, Heather Neville (Chair) and Koji Sato. The Nominating and Corporate Governance Committee is comprised of three independent directors: Ferdinand Groenewald, Heather Neville and Koji Sato (Chair).
Previous report
In exchange for their service on the Compensation Committee, the Chair of the Compensation Committee will receive an additional $7,000 annually, and the other Compensation Committee members will receive an additional $4,000 annually.
Previous report
In exchange for their service on the Nominating and Corporate Governance Committee, the Chair of the Nominating and Corporate Governance Committee will receive an additional $6,000 annually, and the other Nominating and Corporate Governance Committee members will receive an additional $3,000 annually.
Previous report
Upon initially listing with the Nasdaq Capital Market, the Company qualified as a “controlled company” because more than 50% of the voting power for the election of directors was held by Mr. Yamamoto. As a result of certain sales under the Company’s previously announced at-the-market offering, Mr. Yamamoto no longer holds more than 50% of the voting power for the election of directors and therefore, the Company no longer qualifies as a controlled company. As a result, the Company is required, subject to phase-in rules, to comply with Nasdaq requirements that:
Previous report
The Company previously availed itself of certain of the controlled company exemptions. More specifically, the Company did not have a compensation committee or a nominating and corporate governance committee.
Previous report
We no longer qualify as a controlled company and accordingly, we have formed a Compensation Committee and a Nominating and Corporate Governance Committee; however, we currently utilize and presently intend to continue to utilize, the exemption relating to a majority independent Board. Pursuant to Nasdaq’s phase-in rules, we have a period of one year from the date on which we ceased to be a controlled company to comply with the majority independent Board requirement.
Previous report
Three of six members of the Company’s Board are independent directors within the meaning of Nasdaq Capital Market rules: Ferdinand Groenewald, Heather Neville, and Koji Sato.
Previous report
Our total cost of revenues decreased by $527,801, or 17.5%, to $2,486,742 for the three months ended March 31, 2025 from $3,014,543 for the three months ended March 31, 2024, mainly attributable to the decrease of $374,939 and $226,468 in the cost of customized software development and services and GO IPO consulting services, respectively, in light of the decreases in sales.
Previous report
As a result of the foregoing, we reported a net loss of $3,137,381 for the three months ended March 31, 2025, representing a $1,659,379 or 112.3% increase from a net loss of $1,478,002 for the three months ended March 31, 2024.
Previous report
As a result of the foregoing, we reported a net loss attributable to HeartCore Enterprises, Inc. of $3,086,992 for the three months ended March 31, 2025, representing a $1,753,642 or 131.5% increase from a net loss attributable to HeartCore Enterprises, Inc. of $1,333,350 for the three months ended March 31, 2024.
Previous report
Net cash flows provided by financing activities amounted to $142,940 for the three months ended March 31, 2025, primarily consisting of (i) proceeds of $134,689 from short-term debt borrowing; (ii) proceeds of $117,000 from exercise of stock options; (iii) collection of subscription receivable of $103,942; and offset by (iv) repayment of $165,165 for long-term debts.
Reworded paragraphs (25)
Previous wording
During 2022, we started the GO IPO business, which supports Japanese companies listing on Nasdaq and NYSE in the United States. As of March 31, 2025, we have entered into consulting agreements with 14 companies to assist them in their IPO process, whereby we are entitled to receive from each company a consulting fee that ranges from $380,000 to $900,000 and warrants or stock acquisition rights to purchase 1% to 4% of the fully-diluted share capital of such companies that is exercisable on certain dates at an exercise price of $0.01 or JPY1 per share.
Current wording
During 2022, we started the GO IPO business, which supports Japanese companies listing on The Nasdaq Stock Market (“Nasdaq”) and NYSE in the United States. As of June 30, 2025, we have entered into consulting agreements with 16 companies to assist them in their IPO process, whereby we are entitled to receive from each company a consulting fee that ranges from $380,000 to $900,000 and warrants or stock acquisition rights to purchase 1% to 4% of the fully-diluted share capital of such companies that is exercisable on certain dates at an exercise price of $0.01 or JPY1 per share.
Previous wording
We were incorporated in the State of Delaware on May 18, 2021. We conduct business activities principally through our wholly owned subsidiary, HeartCore Co. Ltd. (“HeartCore Japan”), which was established in Japan by Sumitaka Yamamoto, our Chairman of Board, Chief Executive Officer and President and a significant stockholder of the Company, in 2009.
Current wording
We were incorporated in the State of Delaware on May 18, 2021. We conduct business activities principally through our wholly owned subsidiary, HeartCore Co. Ltd. (“HeartCore Japan”), which was established in Japan in 2009 by Sumitaka Yamamoto, our Chairman of Board, Chief Executive Officer and President and a significant stockholder of the Company.
Previous wording
On September 6, 2022, the Company entered into a share exchange and purchase agreement to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California, and its wholly owned subsidiaries. Sigmaways and its wholly owned subsidiaries are engaged in the business of developing and sales of software in the United States. The acquisition closed on February 1, 2023.
Current wording
On September 6, 2022, we entered into a share exchange and purchase agreement to acquire 51% of the outstanding shares of Sigmaways, Inc. (“Sigmaways”), a company incorporated under the laws of the State of California, and its wholly owned subsidiaries. Sigmaways and its wholly owned subsidiaries are engaged in the business of developing and sales of software in the United States. The acquisition closed on February 1, 2023.
Previous wording
On May 6, 2025, the Company received written notice (the “Bid Price Notice”) from the Nasdaq Listing Qualification Department (the “Nasdaq Staff”) indicating that the Company is not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”) for continued listing on the Nasdaq Capital Market. The notification of noncompliance has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market under the symbol “HTCR,” and the Company is currently monitoring the closing bid price of its common stock and evaluating its alternatives, if appropriate, to resolve the deficiency and regain compliance with this rule.
Current wording
On May 6, 2025, we received written notice (the “Bid Price Notice”) from the Nasdaq Listing Qualification Department (the “Nasdaq Staff”) indicating that we were not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”) for continued listing on the Nasdaq Capital Market. The notification of noncompliance has no immediate effect on the listing or trading of our common stock on the Nasdaq Capital Market under the symbol “HTCR,” and we are currently monitoring the closing bid price of our common stock and evaluating our alternatives, if appropriate, to resolve the deficiency and regain compliance with this rule.
Previous wording
The Nasdaq Listing Rules require listed securities to maintain a minimum bid price of $1.00 per share and, based upon the closing bid price for the last 30 consecutive business days, the Company no longer meets this requirement. The Bid Price Notice indicated that the Company will be provided 180 calendar days, or until November 3, 2025, in which to regain compliance. If at any time during this period the closing bid price of the Company’s common stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Nasdaq Staff will provide the Company with written confirmation of compliance and the matter will be closed.
Current wording
The Nasdaq Listing Rules require listed securities to maintain a minimum bid price of $1.00 per share and, based upon the closing bid price for the last 30 consecutive business days, we no longer meet this requirement. The Bid Price Notice indicated that we will be provided 180 calendar days, or until November 3, 2025, in which to regain compliance. If at any time during this period the closing bid price of our common stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Nasdaq Staff will provide us with written confirmation of compliance and the matter will be closed.
Previous wording
Alternatively, if the Company fails to regain compliance with Rule 5550(a)(2) prior to the expiration of the 180 calendar day period, but meets the continued listing requirement for market value of publicly held shares and all of the other applicable standards for initial listing on the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provides written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary, then the Company may be granted an additional 180 calendar days to regain compliance with Rule 5550(a)(2).
Current wording
Alternatively, if we fail to regain compliance with Rule 5550(a)(2) prior to the expiration of the 180 calendar day period, but meet the continued listing requirement for market value of publicly held shares and all of the other applicable standards for initial listing on the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provide written notice of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary, then we may be granted an additional 180 calendar days to regain compliance with Rule 5550(a)(2).
Previous wording
There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement, even if it maintains compliance with the other listing requirements. The Company is considering actions that it may take in response to the Bid Price Notice in order to regain compliance with the continued listing requirements, but no decisions regarding a response have been made at this time.
Current wording
There can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement, even if we maintain compliance with the other listing requirements. We are considering actions that we may take in response to the Bid Price Notice in order to regain compliance with the continued listing requirements, but no decisions regarding a response have been made at this time.
Previous wording
For the three months ended March 31, 2025 and 2024, we generated revenues of $3,587,026 and $5,046,732, respectively, and reported net loss of $3,137,381 and $1,478,002, respectively, and cash flows used in operating activities of $2,000,791 and $898,619, respectively. As noted in our unaudited consolidated financial statements, as of March 31, 2025, we had an accumulated deficit of $19,331,835.
Current wording
For the six months ended June 30, 2025 and 2024, we generated revenues of $8,331,272 and $9,113,120, respectively, reported a net loss of $2,075,875 and $3,689,120, respectively, and had cash flows used in operating activities of $2,674,892 and $1,735,744, respectively. As noted in our unaudited consolidated financial statements, as of June 30, 2025, we had an accumulated deficit of $18,231,933.
Previous wording
Our total revenues decreased by $1,459,706, or 28.9%, to $3,587,026 for the three months ended March 31, 2025 from $5,046,732 for the three months ended March 31, 2024, primarily attributable to (i) a decreased revenue of $743,854 from sale on-premise software, mainly because the Company obtained several large orders of CMS license during the first quarter of 2024, while only one such comparable large order was obtained in the current period; (ii) a decreased revenue of $336,812 from customized software development and services in connection with the intense competition of the software market in the U.S.; and (iii) a decreased revenue of $329,938 from GO IPO consulting services, as no new IPO consulting orders were entered this quarter mainly as heightened uncertainty in the U.S. stock market caused by rising tariffs.
Current wording
Our total revenues increased by $677,858, or 16.7%, to $4,744,246 for the three months ended June 30, 2025, from $4,066,388 for the three months ended June 30, 2024, primarily attributable to (i) an increased revenue of $1,155,548 from the sale of on-premise software, primarily attributable the Company obtained multiple large orders of CMS license in the current period, while no such comparable large order was obtained in second quarter 2024; (ii) an increased revenue of $134,571 from software as a service (“SaaS”), mainly because the Company put more efforts to expand and promote its traditional SaaS business in Japan during current quarter and obtained more orders, partially offset by (iii) a decreased revenue of $340,279 from customized software development and services in connection with the intense competition of the software market in the U.S.; and (iv) a decreased revenue of $319,396 from software development and other services, mainly as the Company shifted its business strategies to focus more on development and expansion its on-premise software revenue and SaaS revenue in the second quarter 2025, resulting in less resources and efforts were put on software development and other services.
Previous wording
Our total gross profit decreased by $931,905, or 45.9%, to $1,100,284 for the three months ended March 31, 2025 from $2,032,189 for the three months ended March 31, 2024, mainly attributable to (i) a decrease of $751,215 in gross profit from sale of on-premises software, as the sale decreased dramatically while there was not much change in the corresponding costs as the product was developed independently and fixed, which were not proportional to sales, and (ii) a decrease of $103,470 in gross profit from GO IPO consulting services, in light of the decrease in sale.
Current wording
Our total gross profit increased by $1,411,714, or 175.2%, to $2,217,595 for the three months ended June 30, 2025, from $805,881 for the three months ended June 30, 2024, mainly attributable to (i) an increase of $1,086,885 in gross profit from sale of on-premises software, as the sale increased dramatically while there was not much change in the corresponding costs as the product was developed independently and fixed, which were not proportional to sales; (ii) an increase of $239,409 in gross profit from customized software development and services, as Sigmaways reduced outsourcing costs by ending cooperation with costly vendors in the second quarter 2025, resulting in costs decreased more than revenue did; and (iii) an increase of $147,654 in gross profit from IPO consulting service, as the Company implement its operational efficiency for consulting revenue with the accumulation of IPO consulting projects experience in the current quarter.
Previous wording
For the reasons discussed above, our overall gross profit margin decreased by 9.6% to 30.7% for the three months ended March 31, 2025 from 40.3% for the three months ended March 31, 2024.
Current wording
For the reasons discussed above, our overall gross profit margin increased by 26.9%, to 46.7%, for the three months ended June 30, 2025 from 19.8% for the three months ended June 30, 2024.
Previous wording
Our selling expenses increased by $71,453, or 32.5%, to $291,160 for the three months ended March 31, 2025 from $219,707 in the three months ended March 31, 2024, primarily attributable to an increase of $97,622 in sales salaries, commissions and welfare, resulting from the employee restructuring in late 2024 by transferring certain administrative and management department employees to sales department to promote selling activities for software business in Japan.
Current wording
Our selling expenses increased by $206,214, or 114.9%, to $385,622 for the three months ended June 30, 2025 from $179,408 in the three months ended June 30, 2024, primarily attributable to an increase of $224,138 in sales salaries, commissions and welfare, resulting from the employee restructuring in late 2024 by transferring certain administrative and management department employees to sales department to promote selling activities for software business in Japan.
Previous wording
As a percentage of revenues, general and administrative expenses were 53.8% and 47.6% of our revenues for the three months ended March 31, 2025 and 2024, respectively.
Current wording
As a percentage of revenues, general and administrative expenses were 32.9% and 49.7% of our revenues for the three months ended June 30, 2025 and 2024, respectively.
Previous wording
Our research and development expenses increased by $34,759 or 39.0%, to $123,893 in the three months ended March 31, 2025 from $89,134 in the three months ended March 31, 2024, primarily attributable to an increase of $79,348 in salaries and welfare expenses for the employees assigned to the development of a new product, Global CMS, which started in late 2024; offset by a decrease of $44,250 in outsourcing costs due to the expiration of certain outsourcing contracts in the current period.
Current wording
Our research and development expenses increased by $50,213, or 45.1%, to $161,481 in the three months ended June 30, 2025, from $111,268 in the three months ended June 30, 2024, primarily attributable to an increase of $82,419 in salaries and welfare expenses for the employees assigned to the development of a new product, Global CMS, which started in late 2024, offset by a decrease of $32,016 in outsourcing costs due to the expiration of certain outsourcing contracts in the current period.
Previous wording
As a percentage of revenues, research and development expenses were 3.5% and 1.8% of our revenues for the three months ended March 31, 2025 and 2024, respectively.
Current wording
As a percentage of revenues, research and development expenses were 3.4% and 2.7% of our revenues for the three months ended June 30, 2025 and 2024, respectively.
Previous wording
We owned 51% equity interest of Sigmaways and its subsidiaries and 51% equity interest of HeartCore Luvina. Accordingly, we recorded net loss attributable to the non-controlling interests of $50,389 and $144,652 in the three months ended March 31, 2025 and 2024, respectively.
Current wording
During the three months ended June 30, 2025 and 2024, we owned a 51% equity interest of Sigmaways and its subsidiaries and 51% equity interest of HeartCore Luvina. Accordingly, we recorded net loss attributable to the non-controlling interests of $38,396 and $260,018 in the three months ended June 30, 2025 and 2024, respectively.
Previous wording
Our general and administrative expenses decreased by $476,915 or 19.8%, to $1,929,388 for the three months ended March 31, 2025 from $2,406,303 in the three months ended March 31, 2024, primarily attributable to (i) a decrease of $153,770 in salaries and welfare expenses, mainly resulting from the employee restructuring in late 2024 as mentioned above; (ii) a decrease of $159,874 in depreciation and amortization expenses, primarily because we fully impaired intangible asset arose from acquisition of Sigmaways at the end of last fiscal year, resulting in no amortization expenses were recorded in current quarter; and (iii) a decrease of $113,477 in office, utility and other expenses, reflecting from our continued efforts to save operating expenses.
Current wording
Our general and administrative expenses decreased by $936,297, or 21.1%, to $3,492,415 for the six months ended June 30, 2025, from $4,428,712 in the six months ended June 30, 2024, primarily attributable to (i) a decrease of $274,084 in salaries and welfare expenses, mainly resulting from the employee restructuring in late 2024 as mentioned above; (ii) a decrease of $329,377 in depreciation and amortization expenses, primarily because we fully impaired intangible asset arose from the acquisition of Sigmaways at the end of the 2024 fiscal year, resulting in no amortization expenses recorded in current period; and (iii) a decrease of $292,771 in consultant and professional service fees, mainly because we incurred broker fees in connection with termination of the IPO consulting services in the six months ended June 30, 2024, while no such expenses incurred in the current period.
Previous wording
Our other income (expenses) primarily includes changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income generated from bank deposits, interest expenses for bank loans, other income, and other expenses. Total other expenses, net, of $875,214 for the three months ended March 31, 2024 increased by $961,374 or 109.8% to total other expenses, net, of $1,836,588 for the three months ended March 31, 2025, primarily attributable to an increase of $1,547,582 in loss on fair value changes in investments in marketable securities due to decreased stock price of investees, partially offset by a decrease of $627,266 in loss on fair value changes in investment in warrants.
Current wording
Our other income (expenses) primarily includes changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income generated from bank deposits, interest expenses for bank loans, other income and other expenses. Total other expenses, net, of $1,651,291 for the six months ended June 30, 2024 decreased by $765,182, or 46.3%, to total other expenses, net, of $886,109 for the six months ended June 30, 2025, primarily attributable to (i) a decrease of $1,310,367 in changes in fair value of investment in warrants due to fair value measurement, partially offset by (ii) an increase of $498,624 in changes in fair value of investments in marketable securities due to fluctuations in stock price of investees.
Previous wording
Income tax expense was $56,636 for the three months ended March 31, 2025, representing a decrease of $136,803, or 170.6% from income tax benefit of $80,167 in the three months ended March 31, 2024, mainly because we recognized deferred income tax benefit in connection with amortization expense for intangible asset raised from acquisition of Sigmaways in the three months ended March 31, 2024, whereas, the intangible asset was fully impaired in the fourth quarter of 2024, and thus no such deferred income tax benefit recorded in current quarter. Meanwhile, the income tax expenses incurred in the current quarter mainly attributable to the decrease of deferred tax assets due to various revenue and expenses adjustments.
Current wording
Income tax expense was $53,074 for the six months ended June 30, 2025, representing an increase of $205,404, or 134.8%, from income tax benefit of $152,330 for the six months ended June 30, 2024, mainly because we recognized deferred income tax benefit in connection with amortization expense for intangible asset raised from the acquisition of Sigmaways in the six months ended June 30, 2024, whereas the intangible asset was fully impaired in the fourth quarter of 2024, and thus no such deferred income tax benefit recorded in current period. Meanwhile, the income tax expenses incurred in the six months ended June 30, 2025 was mainly attributable to the decrease of deferred tax assets due to various revenue and expenses adjustments.
Previous wording
As of March 31, 2025, we had $738,984 in cash and cash equivalents as compared to $2,121,089 as of December 31, 2024. We also had $2,114,655 in accounts receivable as of March 31, 2025. Our accounts receivable primarily include balance due from customers for our on-premise software sold and services provided and accepted by customers, as well as amounts billable to the customers for customized software development and services.
Current wording
As of June 30, 2025, we had $2,347,622 in cash and cash equivalents, as compared to $2,121,089 as of December 31, 2024. We also had $3,000,337 in accounts receivable as of June 30, 2025. Our accounts receivable primarily include the balance due from customers for our on-premise software sold and services provided and accepted by customers, as well as amounts billable to the customers for customized software development and services.
Previous wording
Net cash flows used in operating activities was $2,000,791 for the three months ended March 31, 2025, primarily consisting of the following:
Current wording
Net cash flows used in operating activities was $2,674,892 for the six months ended June 30, 2025, primarily consisting of the following:
Previous wording
Net cash flows provided by investing activities amounted to $473,061 for the three months ended March 31, 2025, primarily attributable to the proceeds of $462,763 from sale of marketable securities.
Current wording
Net cash flows provided by investing activities amounted to $1,091,636 for the six months ended June 30, 2025, primarily attributable to the proceeds of $1,071,732 received from sale of marketable securities.
Previous wording
The Company has entered into operating leases for office space with terms ranging from two to fifteen years, and a finance lease for vehicle with the term of five years.
Current wording
We entered into operating leases for office space with terms ranging from two to fifteen years, and a finance lease for vehicle with the term of five years.
Previous wording
The Company’s debts included short-term debt and long-term debts borrowed from banks and financial institutions.
Current wording
The Company’sdebts included long-term debts borrowed from banks and financial institutions.
Previous wording
Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements. These financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the date of the unaudited consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. We continue to evaluate the estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. We believe there are no critical accounting policies and estimates for the three months ended March 31, 2025.
Current wording
Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements. These financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the date of the unaudited consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. We continue to evaluate the estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. We believe there are no critical accounting policies and estimates for the six months ended June 30, 2025.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
Nasdaq Notice Regarding Minimum Stockholders’ Equity Requirement
Current report — wording carried from elsewhere
Our general and administrative expenses decreased by $459,382, or 22.7%, to $1,563,027 for the three months ended June 30, 2025 from $2,022,409 in the three months ended June 30, 2024, primarily attributable to (i) a decrease of $169,503 in depreciation and amortization expenses, primarily because we fully impaired intangible asset arose from acquisition of Sigmaways at the end of last fiscal year, resulting in no amortization expenses were recorded in current quarter; and (ii) a decrease of $284,619 in consultant and professional service fees, mainly because we incurred broker fees in connection with termination of the IPO consulting services in the second quarter 2024, while no such expenses incurred in the current quarter.
Current report — wording carried from elsewhere
Our other income (expenses) primarily includes changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income generated from bank deposits, interest expenses for bank loans, other income and other expenses. Total other expenses, net, of $776,077 for the three months ended June 30, 2024 increased by $1,726,556, or 222.5%, to total other income, net, of $950,479 for the three months ended June 30, 2025, primarily attributable to (i) an increase of $1,048,958 in changes in fair value of investments in marketable securities due to fluctuations in stock price of investees; and (ii) an increase of $683,101 in changes in fair value of investment in warrants due to fair value measurement.
Current report — wording carried from elsewhere
Income tax benefit was $3,562 for the three months ended June 30, 2025, representing a decrease of $68,601, or 95.1%, from income tax benefit of $72,163 in the three months ended June 30, 2024, mainly because we recognized deferred income tax benefit in connection with amortization expense for intangible asset raised from acquisition of Sigmaways in the three months ended June 30, 2024, whereas, the intangible asset was fully impaired in the fourth quarter of 2024, and thus no such deferred income tax benefit recorded in current quarter.
Current report — wording carried from elsewhere
Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
The following table summarizes our operating results as reflected in our unaudited statements of operations for the six months ended June 30, 2025 and 2024, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.
Current report — wording carried from elsewhere
Our selling expenses increased by $277,667, or 69.6%, to $676,782 for the six months ended June 30, 2025, from $399,115 in the six months ended June 30, 2024, primarily attributable to an increase of $321,760 in sales salaries, commissions and welfare, resulting from the employee restructuring in late 2024 by transferring certain administrative and management department employees to sales department to promote selling activities for software business in Japan.
Current report — wording carried from elsewhere
As a percentage of revenues, our selling expenses accounted for 8.1% and 4.4% of our total revenues for the six months ended June 30, 2025 and 2024, respectively.
Current report — wording carried from elsewhere
Our research and development expenses increased by $84,972, or 42.4%, to $285,374 in the six months ended June 30, 2025, from $200,402 in the six months ended June 30, 2024, primarily attributable to an increase of $161,767 in salaries and welfare expenses for the employees assigned to the development of a new product, Global CMS, which started in late 2024, partially offset by a decrease of $76,266 in outsourcing costs due to the expiration of certain outsourcing contracts in the current period.
Current report — wording carried from elsewhere
Net Loss Attributable to Non-controlling Interests
Current report — wording carried from elsewhere
During the six months ended June 30, 2025 and 2024, we owned a 51% equity interest of Sigmaways and its subsidiaries and 51% equity interest of HeartCore Luvina. Accordingly, we recorded net loss attributable to the non-controlling interests of $88,785 and $404,670 in the six months ended June 30, 2025 and 2024, respectively.