HeartCore Enterprises, Inc.

Following the strategic disposition of Sigmaways and its subsidiaries, our revenue has become concentrated among a smaller number of key customers. The loss of, or a material reduction in business from, any of these customers, or a failure to collect outstanding receivables, could have a material adverse effect on our business, financial condition, and results of operations.

On June 22, 2026, we completed the sale of our entire 51% majority interest in Sigmaways and its subsidiaries. Following this transaction, we no longer consolidate or derive revenue from Sigmaways and its subsidiaries’ operational activities.

Prior to the disposition, a significant portion of our consolidated revenue was derived through Sigmaways and its subsidiaries. Following the sale of Sigmaways and its subsidiaries, our revenue from continuing operations is now significantly more concentrated among a smaller group of customers. For the three and six months ended June 30, 2026, a limited number of customers accounted for a substantial majority of our revenues and outstanding accounts receivable. If we fail to retain these key clients or if they reduce their commitments, our consolidated revenue will decline disproportionately. Our revenues and cash flows may experience heightened volatility, making financial performance less predictable from period to period

Our accounts receivable is concentrated among a small number of customers. Any deterioration in the financial condition or liquidity of these key customers, or general macroeconomic weakness in our primary geographic markets, could increase our credit risk and result in significant delay, default, or non-payment of outstanding accounts receivable.

Furthermore, the consideration of the disposition of Sigmaways and its subsidiaries consists of $1,000 upfront cash consideration and an earn-out consideration of up to $649,000 contingent on post-closing gross revenue thresholds over 12 months. We cannot provide assurance that any earn-out consideration will be realized.