HeartCore Enterprises Inc

Previous wording

We are a leading software development company based in Tokyo, Japan. We provide software through two business units. The first business unit, our CX division, includes a customer experience management business (the “CXM Platform”) that has been in existence for 14 years. Our CXM Platform includes marketing, sales, service and content management systems, as well as other tools and integrations, that enable companies to attract and engage customers throughout the customer experience. We also provide education, services and support to help customers be successful with our CXM Platform.

Current wording

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

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 August 14, 2024, we have entered into consulting agreements with 14 companies to assist them in their IPO process, pursuant to which 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 and the New York Stock Exchange in the United States. As of November 14, 2024, we have entered into consulting agreements with 14 companies to assist them in their IPO process, pursuant to which 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

On February 29, 2024, the Company entered into a warrants transfer agreement with a non-related company to sell partial of the warrants it received from a customer (“Consulting Customer”) as noncash consideration from consulting services for $9,000,000 in cash. The Company received $9,000,000 during the six months ended June 30, 2024 and recorded it in other current liabilities as the warrants to be transferred are exercisable upon its Consulting Customer’s consummation of the Merger with a special purpose acquisition company or the occurrence of other fundamental events defined in the warrant agreement it had with the Consulting Customer.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

On October 26, 2023, the Company received written notice (the “Bid Price Notice”) from the Nasdaq Listing Qualification Department (the “Nasdaq Staff”) indicating that the Company was 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 had no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market under the symbol “HTCR.”

Current wording

On October 26, 2023, the Company received written notice (the “Bid Price Notice”) from the Nasdaq Listing Qualifications Department (the “Nasdaq Staff”) indicating that the Company was 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 had 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 continued to monitor the closing bid price of its common stock and evaluate its 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 then-last 30 consecutive business days, the Company did not meet this requirement. The Bid Price Notice indicated that the Company would be provided 180 calendar days, or until April 23, 2024, in which to regain compliance. If at any time during this period the closing bid price of the Company’s common stock was at least $1.00 per share for a minimum of 10 consecutive business days, the Nasdaq Staff would 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, as of October 26, 2023, based upon the closing bid price for the then-last 30 consecutive business days, the Company no longer met this requirement. The Bid Price Notice indicated that the Company would be provided 180 calendar days, or until April 23, 2024, 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 would provide the Company with written confirmation of compliance and the matter will be closed.

Previous wording

On April 24, 2024, the Company received written notice from the Nasdaq Staff indicating that although the Company was not in compliance with the Minimum Bid Price Requirement, the Nasdaq Staff determined that the Company is eligible for an additional 180 calendar day period, or until October 21, 2024, to regain compliance. The Nasdaq Staff indicated that its determination was based on the Company meeting the continued listing requirement for market value of publicly held shares and all of the other applicable requirements for initial listing on the Nasdaq Capital Market, with the exception of the Minimum Bid Requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. Accordingly, there is no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market under the symbol “HTCR.”

Current wording

On April 24, 2024, the Company received written notice (the “April 2024 Nasdaq Letter”) from the Nasdaq Staff indicating that although the Company was not in compliance with the Minimum Bid Price Requirement, the Nasdaq Staff determined that the Company was eligible for an additional 180 calendar day period, or until October 21, 2024, to regain compliance. The Nasdaq Staff indicated that its determination was based on the Company meeting the continued listing requirement for market value of publicly held shares and all of the other applicable requirements for initial listing on the Nasdaq Capital Market, with the exception of the Minimum Bid Requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effectuating a reverse stock split, if necessary. Accordingly, there was no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market under the symbol “HTCR.”

Previous wording

If at any time during this additional time 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

If at any time between April 24, 2024 and October 21, 2024, the closing bid price of the Company’s common stock was at least $1.00 per share for a minimum of 10 consecutive business days, the Nasdaq Staff would provide the Company with written confirmation of compliance and the matter would be closed.

Previous wording

For the three months ended June 30, 2024 and 2023, we generated revenues of $4,066,388 and $5,095,373, respectively, reported a net loss of $2,211,118 and $1,022,846, respectively.

Current wording

For the three months ended September 30, 2024 and 2023, we generated revenues of $17,850,411 and $4,688,908, respectively, reported a net income of $10,816,930 and a net loss of $2,541,133, respectively.

Previous wording

For the six months ended June 30, 2024 and 2023, we generated revenues of $9,113,120 and $13,829,523, respectively, reported a net loss of $3,689,120 and net income of $785,191, respectively, and had cash flows used in operating activities of $1,460,744 and 1,368,562, respectively. As noted in our unaudited consolidated financial statements, as of June 30, 2024, we had an accumulated deficit of $18,047,919.

Current wording

For the nine months ended September 30, 2024 and 2023, we generated revenues of $26,963,531 and $18,518,431, respectively, reported a net income of $7,127,810 and a net loss of $1,755,942, respectively, and had cash flows used in operating activities of $3,499,514 and $2,457,661, respectively. As noted in our unaudited consolidated financial statements, as of September 30, 2024, we had an accumulated deficit of $6,990,113.

Previous wording

For the reasons discussed above, our overall gross profit margin decreased by 9.8% to 19.8% for the three months ended June 30, 2024 from 29.6% in the three months ended June 30, 2023.

Current wording

For the reason discussed above, our overall gross profit margin increased by 63.1% to 80.8% for the three months ended September 30, 2024 from 17.7% for the three months ended September 30, 2023.

Previous wording

As a percentage of revenues, our selling expenses accounted for 4.4% and 9.6% of our total revenues for the three months ended June 30, 2024 and 2023, respectively.

Current wording

As a percentage of revenues, our selling expenses accounted for 1.4% and 5.9% of our total revenues for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Our general and administrative expenses decreased by $425,478, or 17.4%, to $2,022,409 for the three months ended June 30, 2024 from $2,447,887 in the three months ended June 30, 2023, primarily attributable to (i) a decrease of $230,118 in salaries and welfare due to the retirement of certain senior employees; and (ii) a decrease of $243,627 in office, utility, and other expenses due to our effort to reduce operating costs.

Current wording

Our general and administrative expenses decreased by $205,581, or 9.5%, to $1,966,717 for the three months ended September 30, 2024 from $2,172,298 in the three months ended September 30, 2023, primarily attributable to a decrease of $230,045 in salaries and welfare due to the retirement of certain employees.

Previous wording

As a percentage of revenues, our general and administrative expenses were 49.7% and 48.0% of our total revenues for the three months ended June 30, 2024 and 2023, respectively.

Current wording

As a percentage of revenues, our general and administrative expenses were 11.0% and 46.3% of our total revenues for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Our research and development expenses slightly increased by $71,660, or 180.9%, to $111,268 in the three months ended June 30, 2024 from $39,608 in the three months ended June 30, 2023, primarily attributable to an increase of $72,559 in outsourcing expenses relating to the development of new CMS management screen features in the current period.

Current wording

Our research and development expenses decreased by $62,542, or 36.8%, to $107,529 in the three months ended September 30, 2024 from $170,071 in the three months ended September 30, 2023, primarily attributable to a decrease of $61,986 in outsourcing expenses relating to the development of new CMS management screen features which will be completed soon.

Previous wording

As a percentage of revenues, our research and development expenses were 2.7% and 0.8% of our total revenues for the three months ended June 30, 2024 and 2023, respectively.

Current wording

As a percentage of revenues, our research and development expenses were 0.6% and 3.6% of our total revenues for the three months ended September 30, 2024 and 2023, respectively.

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 expense for bank loans and bond, other income, and other expenses. Other expenses, net, of $177,726 for the three months ended June 30, 2023 increased by $598,351, or 336.7%, to other expenses, net, of $776,077 for the three months ended June 30, 2024, primarily attributable to an increase of $531,562 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, loss on sale of warrants, interest income generated from bank deposits, interest expense for bank loans and bond, other income, and other expenses. Other expenses, net, of $733,975 for the three months ended September 30, 2023 increased by $323,851, or 44.1%, to other expenses, net, of $1,057,826 for the three months ended September 30, 2024, primarily attributable to (i) a loss of $3,970,628 on sale of warrants, offset (ii) by an increase of $3,330,079 in changes in fair value of investment in warrants and (iii) an increase of $394,012 in changes in fair value of investments in marketable securities.

Previous wording

Income tax benefit was $152,330 for the six months ended June 30, 2024, a decrease of $191,776, or 486.2%, from income tax expense of $39,446 in the six months ended June 30, 2023, primarily due to a net loss before income tax provision in the current period, while we recorded a net income before income tax provision in the six months ended June 30, 2023.

Current wording

Income tax expense was $225,275 in the three months ended September 30, 2024, an increase of $205,862, or 1,060.4%, from income tax expense of $19,413 in the three months ended September 30, 2023, primarily due to a net income before income tax provision in the current period, while we recorded a net loss before income tax provision in the three months ended September 30, 2023.

Previous wording

We owned 51% equity interest in Sigmaways and its subsidiaries and 51% equity interest in HeartCore Luvina. Accordingly, we recorded net loss attributable to non-controlling interests of $260,018 and $111,046 for the three months ended June 30, 2024 and 2023, respectively.

Current wording

We owned 51% equity interest in Sigmaways and its subsidiaries and 51% equity interest in HeartCore Luvina. Accordingly, we recorded net loss attributable to non-controlling interests of $240,876 and $233,913 for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

As a result of the foregoing, we reported a net loss attributable to HeartCore Enterprises, Inc. of $3,284,450 for the six months ended June 30, 2024, representing a $4,254,939, or 438.4%, decrease from a net income attributable to HeartCore Enterprises, Inc. of $970,489 for the six months ended June 30, 2023.

Current wording

As a result of the foregoing, we reported a net income attributable to HeartCore Enterprises, Inc. of $11,057,806 for the three months ended September 30, 2024, representing a $13,365,026, or 579.3%, increase from a net loss attributable to HeartCore Enterprises, Inc. of $2,307,220 for the three months ended September 30, 2023.

Previous wording

Comparison of Results of Operations for the Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of Results of Operations for the Nine Months Ended September 30, 2024 and 2023

Previous wording

The following table summarizes our operating results as reflected in our unaudited statements of operations during the six months ended June 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

Current wording

The following table summarizes our operating results as reflected in our unaudited statements of operations during the nine months ended September 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.

Previous wording

For the reasons discussed above, our overall gross profit margin decreased by 20.5% to 31.1% for the six months ended June 30, 2024 from 51.6% in the six months ended June 30, 2023.

Current wording

For the reason discussed above, our overall gross profit margin increased by 21.0% to 64.0% for the nine months ended September 30, 2024 from 43.0% in the nine months ended September 30, 2023.

Previous wording

Our selling expenses decreased by $657,589, or 62.2%, to $399,115 for the six months ended June 30, 2024 from $1,056,704 in the six months ended June 30, 2023, primarily attributable to a decrease of $338,863 in stock-based compensation, as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event in the current period; and (ii) a decrease of $322,142 in advertising expense due to less advertising activities in the current period.

Current wording

Our selling expenses decreased by $688,522, or 51.7%, to $642,225 for the nine months ended September 30, 2024 from $1,330,747 in the nine months ended September 30, 2023, primarily attributable to (i) a decrease of $380,087 in stock-based compensation, as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event in the current period; and (ii) a decrease of $337,882 in advertising expense due to less advertising activities in the current period.

Previous wording

As a percentage of revenues, our selling expenses accounted for 4.4% and 7.6% of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

Current wording

As a percentage of revenues, our selling expenses accounted for 2.4% and 7.2% of our total revenues for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

As a percentage of revenues, our general and administrative expenses were 48.6% and 37.1% of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

Current wording

As a percentage of revenues, our general and administrative expenses were 23.8% and 39.4% of our total revenues for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Our research and development expenses slightly increased by $81,170, or 68.1%, to $200,402 in the six months ended June 30, 2024 from $119,232 in the six months ended June 30, 2023, primarily attributable to an increase of $137,967 in outsourcing expenses relating to the development of new CMS management screen features in the current period; offset by (ii) a decrease of $56,797 in stock-based compensation, as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event in the current period.

Current wording

Our research and development expenses slightly increased by $18,628, or 6.4%, to $307,931 in the nine months ended September 30, 2024 from $289,303 in the nine months ended September 30, 2023, primarily attributable to (i) an increase of $75,981 in outsourcing expenses relating to the development of new CMS management screen features in the current period; offset by (ii) a decrease of $57,353 in stock-based compensation, as the Company granted shares of common stock to employees and service providers of Sigmaways in 2023, and there was no such event in the current period.

Previous wording

As a percentage of revenues, our research and development expenses were 2.2% and 0.9% of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

Current wording

As a percentage of revenues, our research and development expenses were 1.1% and 1.6% of our total revenues for the nine months ended September 30, 2024 and 2023, respectively.

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 expense for bank loans and bond, other income, and other expenses. Other expenses, net, of $7,852 for the six months ended June 30, 2023 increased by $1,643,439, or 20,930.2%, to other expenses, net, of $1,651,291 for the six months ended June 30, 2024, primarily attributable to an increase of $201,309 in loss on fair value changes in investments in marketable securities and an increase of $1,403,814 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, loss on sale of warrants, interest income generated from bank deposits, interest expense for bank loans and bond, other income, and other expenses. Other expenses, net, of $741,827 for the nine months ended September 30, 2023 increased by $1,967,290, or 265.2%, to other expenses, net, of $2,709,117 for the nine months ended September 30, 2024, primarily attributable to a loss of $3,970,628 on sale of warrants, offset by an increase of $192,703 in changes in fair value of investments in marketable securities and an increase of $1,926,265 in changes in fair value of investment in warrants.

Previous wording

We owned 51% equity interest in Sigmaways and its subsidiaries and 51% equity interest of HeartCore Luvina. Accordingly, we recorded net loss attributable to non-controlling interests of $404,670 and $185,298 for the six months ended June 30, 2024 and 2023, respectively.

Current wording

We owned 51% equity interest in Sigmaways and its subsidiaries and 51% equity interest of HeartCore Luvina. Accordingly, we recorded net loss attributable to non-controlling interests of $645,546 and $419,211 for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

As of June 30, 2024, we had $3,806,349 in cash and cash equivalents, as compared to $1,012,479 as of December 31, 2023. We also had $2,440,872 in accounts receivable, current as of June 30, 2024. Our accounts receivable primarily include balance due from customers for our on-premise software sold and services provided and accepted by customers, as well as amounts billable to the customers for customized software development and services.

Current wording

As of September 30, 2024, we had $1,232,117 in cash and cash equivalents, as compared to $1,012,479 as of December 31, 2023. We also had $2,578,855 in accounts receivable, current as of September 30, 2024. Our accounts receivable primarily include balance due from customers for our on-premise software sold and services provided and accepted by customers, as well as amounts billable to the customers for customized software development and services.

Previous wording

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

Current wording

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

Previous wording

Net cash flows used in operating activities was $1,460,744 for the six months ended June 30, 2024, primarily consisting of the following:

Current wording

Net cash flows used in operating activities was $3,499,514 for the nine months ended September 30, 2024, primarily consisting of the following:

Previous wording

Net cash flows provided by investing activities amounted to $5,271,823 for the six months ended June 30, 2024, primarily attributable to net proceeds from sale of unearned warrants of $5,640,000, offset by payment of $350,000 to purchase long-term investment in SAFE and prepayment of $35,209 for property and equipment.

Current wording

Net cash flows provided by investing activities amounted to $5,317,323 for the nine months ended September 30, 2024, primarily attributable to net proceeds from sale of warrants of $5,640,000, offset by payment of $350,000 to purchase long-term investment in SAFE.

Previous wording

Net cash flows used in financing activities amounted to $874,136 for the six months ended June 30, 2024, primarily consisting of repayment of $281,451 for short-term and long-term debts, and net repayment of $242,008 for factoring arrangement, and dividend distribution of $417,283.

Current wording

Net cash flows used in financing activities amounted to $1,529,441 for the nine months ended September 30, 2024, primarily consisting of repayment of $453,048 for short-term and long-term debts, net repayment of $257,295 for factoring arrangement, and dividend distribution of $834,566.

Previous wording

The Company has entered into six leases for its office space, one of which was terminated in February 2024, and these leases were classified as operating leases. It has also entered into a lease for office equipment, and two leases for vehicles, one of which was terminated in September 2023, and these leases were classified as finance leases.

Current wording

The Company has entered into six leases for its office space, one of which was terminated in February 2024, and these leases were classified as operating leases. It has also entered into a lease for office equipment and it was terminated in March 2024, and two leases for vehicles, one of which was terminated in September 2023, and these leases were classified as finance leases.

Previous wording

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

Current wording

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

Previous wording

The Company records reduction to revenues for estimated customer returns and allowances. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues in the period in which it makes such a determination. Reserves for customer refunds are included within other current liabilities or other non-current liabilities on the consolidated balance sheets. At a minimum, the Company reviews and refines these estimates on a quarterly basis.

Current wording

The Company records reduction to revenues for estimated customer returns and allowances. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to revenues in the period in which it makes such a determination. Reserves for customer refunds are included within other current liabilities on the consolidated balance sheets. At a minimum, the Company reviews and refines these estimates on a quarterly basis.

Previous wording

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, current and non-current, in the consolidated balance sheets, when revenues are recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the six months ended June 30, 2024 and 2023 that were included in the opening deferred revenue balance was approximately $1.5 million and $1.3 million, respectively.

Current wording

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, current and non-current, in the consolidated balance sheets, when revenues are recognized prior to invoicing. The Company factors certain accounts receivable upon or after the performance obligation is being met. The Company records deferred revenue in the consolidated balance sheets when revenues are recognized subsequent to cash collection for an invoice. Deferred revenue is reported net of related uncollected deferred revenue in the consolidated balance sheets. The amount of revenues recognized during the nine months ended September 30, 2024 and 2023 that were included in the opening deferred revenue balance was approximately $1.8 million and $1.5 million, respectively.