HeartCore Enterprises, Inc 10-K for FY2025

HeartCore Enterprises, Inc. (HTCR)

10-K 2026-03-31 For: 2025-12-31

Added on April 07, 2026

About this 10-K

HeartCore Enterprises, Inc filed this 10-K on March 31, 2026, covering the fiscal year ended December 31, 2025 (FY2025).

Headline figures

Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $8.97M; down 60.5% from $22.69M a year earlier
Net income: $5.79M; compared with a net loss of $1.48M a year earlier
Diluted EPS: $0.22; compared with -$0.07 a year earlier

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Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		HTCR		The Nasdaq Capital Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

		Page
Part I

Item 1.	Business	4
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	23
Item 1C	Cybersecurity	23
Item 2.	Properties	24
Item 3.	Legal Proceedings	25
Item 4.	Mine Safety Disclosures	25

Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
Item 6.	Reserved	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 8.	Financial Statements and Supplementary Data	38
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	38
Item 9A.	Controls and Procedures	39
Item 9B.	Other Information	39
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	39

Part III

Item 10.	Directors, Executive Officers and Corporate Governance	40
Item 11.	Executive Compensation	47
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	65
Item 13.	Certain Relationships and Related Transactions, and Director Independence	66
Item 14.	Principal Accountant Fees and Services	68

Part IV

Item 15.	Exhibit and Financial Statement Schedules	69
Item 16.	Form 10-K Summary	69

	●	the level of demand for our services;

	●	competition in our markets;

	●	our ability to grow and manage growth profitably;

	●	our ability to access additional capital;

	●	changes in applicable laws or regulations;

	●	our ability to attract and retain qualified personnel;

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

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

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

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

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

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

	●	Translation of requested documents into English;

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

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

	●	Conversion of accounting data from Japanese standards to accounting principles generally accepted in the U.S. (“U.S. GAAP”);

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

	●	Creation of English web page; and

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

	(a)	A cash fee payable in installment payments; and

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

	●	Global Consulting and Accounting Firms: Large multinational firms provide comprehensive IPO readiness, internal control conversion, and U.S. GAAP reconciliation services (from generally accepted accounting principles in Japan (“Japanese GAAP”). These firms possess significant brand recognition, vast global resources, and long-standing relationships with Japanese conglomerates.
	●	Specialized Financial Advisory and IR Firms: Various boutique firms in both Japan and the U.S. specialize in investor relations, “equity story” development, and English-language financial communications.
	●	Investment Banks and Underwriters: While we do not act as an underwriter or broker-dealer, the advisory arms of major investment banks often provide preliminary structuring and “readiness” advice to their clients as part of the underwriting relationship.

	●	Niche Specialization: Unlike broad-based consultancies, our Go IPO suite is specifically engineered for the unique regulatory and cultural hurdles Japanese issuers face when entering the U.S. markets (e.g., Japanese GAAP to U.S. GAAP conversion and SEC-compliant internal control documentation).
	●	Integrated Execution: By combining technical accounting support, process mining technology, English-language translation, and investor deck preparation into a single service suite, we offer a “one-stop” solution that reduces the administrative burden on the issuer’s management.
	●	Aligned Compensation Model: Our willingness to accept a portion of our compensation in the form of warrants aligns our long-term interests with the successful public debut and post-listing performance of our clients.
	●	Independence: Because we do not act as auditors, underwriters or legal counsel, we occupy an independent advisory role that allows us to assist clients with introductions to these third-party professionals without the conflicts of interest inherent in integrated financial institutions. We do not take part in the selection of, or negotiation of terms with, law firms, underwriters or audit firms. Such selection and negotiation is the sole responsibility of the client.

	(a)	An amount of ¥1,013,340,000 less the amount of HeartCore Japan’s debts as set forth in the HeartCore Japan Agreement (the “Estimated Debt”) will be paid by the Smith Japan to the Company on the closing date (such final amount, the “Closing Payment”).
	(b)	An amount of ¥126,133,200 (the “Holdback Amount”) will be retained by the Smith Japan from the Closing Payment, and, subject to the provisions of the HeartCore Japan Agreement, will be paid by Smith Japan to the Company on the first business day occurring the later of: (a) 180 days after the closing date, or (b) if applicable, the date the Net Tangible Assets (as defined in the HeartCore Japan Agreement) is finally determined pursuant to the terms of the HeartCore Japan Agreement (the “Holdback Release Date”).
	(c)	An amount of ¥273,866,800 (the “Long Term Holdback Amount”) in respect of the agreements (“Multi-year Licensing Agreements”) concerning the licensing of HeartCore Japan’s “HeartCore CMS” product to a specified customer for a period of more than one year will be retained by Smith Japan from the Closing Payment and will be paid by Smith Japan as set forth in the HeartCore Japan Agreement.

	(d)	Subject to the provisions of the HeartCore Japan Agreement, an amount of ¥387,078,650 (the “Deferred Consideration”), which shall consist of a principal amount of ¥322,700,000 with an uncompounded rate of interest of 6.65% per annum, will be retained by Smith Japan from the Closing Payment and will be paid by Smith Japan on October 31, 2028, the third annual anniversary of the closing date.
	(e)	Within five business days following the final determination of the actual amount of HeartCore Japan’s debts as of the closing (the “Final Debt Amount”), Smith Japan shall pay to the Company an amount equal to (i) the Estimated Debt minus (ii) the Final Debt Amount. For the avoidance of doubt, if the Final Debt Amount is greater than the Estimated Debt, no payment shall be owed by Smith Japan.

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

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

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

	●	Timing and Concentration of Agreements: Our revenue is driven by a limited number of high-value consulting agreements. The failure to enter into anticipated agreements in a particular quarter, or a delay in a client’s IPO timeline, can cause significant revenue shortfalls.
	●	Volatility of Equity-Based Compensation: A substantial portion of our compensation consists of warrants or stock acquisition rights. The fair value of these instruments is subject to significant quarterly adjustments based on the valuation of the underlying private Japanese companies and market conditions, which may result in non-cash fluctuations in our reported earnings.
	●	Pipeline Delays: The U.S. IPO process for Japanese issuers is subject to regulatory hurdles, audit delays, and market windows that are outside of our control. Any delay in a client’s filing of a Form S-1 or F-1 can defer the payment of cash installments.

	●	Niche Market Focus: Our current business relates exclusively to Go IPO services for Japanese companies. Changes in Japanese economic policy, U.S.-Japan trade relations, or a cooling of the U.S. IPO market specifically for foreign issuers would disproportionately affect our results.
	●	Resource Allocation: The amount and timing of operating expenses, particularly the costs associated with bilingual professional staff, process mining licenses, and specialized translation services required to onboard new clients.
	●	Dependence on Third Parties: Our ability to fulfill our service obligations often depends on the schedule and performance of third-party law firms, underwriters, and auditors selected by our clients.
	●	Foreign Currency Exchange Rates: As we serve Japanese issuers, fluctuations in the JPY/USD exchange rate can affect the value of our consulting fees and the exercise prices of the stock acquisition rights we hold.

	●	If a client company changes management or strategies;

	●	If a client company is engaged in material litigation;

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

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

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

	●	If the client company cannot secure market makers;

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

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

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

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

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

	●	announcements by us of new consulting agreements or capital commitments;

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

	●	rumors and market speculation involving us;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	●	a vendor management policy for service providers.

	For the Years Ended December 31,
	2025						2024						Variance
				% of						% of
	Amount			Revenues			Amount			Revenues			Amount			%

Revenues	$	8,968,732			100.0	%	$	22,685,544			100.0	%	$	(13,716,812	)		-60.5	%
Cost of revenues		5,817,279			64.9	%		7,969,898			35.1	%		(2,152,619	)		-27.0	%
Gross profit		3,151,453			35.1	%		14,715,646			64.9	%		(11,564,193	)		-78.6	%

Operating expenses:
Selling expenses		233,744			2.6	%		621,070			2.7	%		(387,326	)		-62.4	%
General and administrative expenses		6,039,026			67.3	%		6,921,959			30.5	%		(882,933	)		-12.8	%
Research and development expenses		-			-			179,762			0.8	%		(179,762	)		-100.0	%
Impairment of intangible asset		-			-			3,878,125			17.1	%		(3,878,125	)		-100.0	%
Impairment of goodwill		-			-			3,276,441			14.5	%		(3,276,441	)		-100.0	%
Total operating expenses		6,272,770			69.9	%		14,877,357			65.6	%		(8,604,587	)		-57.8	%

Loss from continuing operations		(3,121,317	)		-34.8	%		(161,711	)		-0.7	%		2,959,606			1830.2	%

Other expenses		(1,017,788	)		-11.3	%		(5,350,096	)		-23.6	%		(4,332,308	)		-81.0	%

Loss from continuing operations before income tax expense (benefit)		(4,139,105	)		-46.1	%		(5,511,807	)		-24.3	%		(1,372,702	)		-24.9	%

Income taxes expense (benefit)		44,900			0.5	%		(363,156	)		-1.6	%		(408,056	)		-112.4	%

Net loss from continuing operations		(4,184,005	)		-46.6	%		(5,148,651	)		-22.7	%		(964,646	)		-18.7	%

Income (loss) from discontinued operations, net of income tax		9,677,293			107.9	%		(64,249	)		-0.3	%		9,741,542			15162.2	%

Net income (loss)		5,493,288			61.3	%		(5,212,900	)		-23.0	%		10,706,188			205.4	%

Less: net loss attributable to non-controlling interests		(300,596	)		-3.4	%		(3,731,526	)		-16.4	%		(3,430,930	)		-91.9	%

Net income (loss) attributable to HeartCore Enterprises, Inc.		5,793,884			64.7	%		(1,481,374	)		-6.6	%		7,275,258			491.1	%

Dividends accrued on Series A convertible preferred shares		(94,357	)		-1.1	%		-			-			94,357			100.0	%

Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders	$	5,699,527			63.6	%	$	(1,481,374	)		-6.6	%	$	7,180,901			484.7	%

	For the Years Ended December 31,
	2025				2024					Variance
	Amount		%		Amount		%			Amount			%

Research and development expenses
Outsourcing expenses	$	-		-	$	177,389		98.7	%	$	(177,389	)		-100.0	%
Stock-based compensation		-		-		2,373		1.3	%		(2,373	)		-100.0	%
Total research and development expenses	$	-		-	$	179,762		100.0	%	$	(179,762	)		-100.0	%

	For the Years Ended December 31,
	2025			2024
Net cash flows used in operating activities of continuing operations	$	(3,117,101	)	$	(3,890,317	)
Net cash flows provided by investing activities of continuing operations		5,590,600			6,314,546
Net cash flows provided by (used in) financing activities of continuing operations		(1,493,076	)		134,098
Net cash flows used in discontinued operations		(1,034,279	)		(1,302,740	)
Effect of exchange rate changes		(81,271	)		(146,977	)
Net change in cash and cash equivalents		(135,127	)		1,108,610
Cash and cash equivalents, beginning of the year		2,121,089			1,012,479
Cash and cash equivalents, end of the year	$	1,985,962		$	2,121,089

	●	Net loss from continuing operations of $4,184,005 for the fiscal year.

	●	Warrants received as noncash consideration in total of $837,913 as our GO IPO consulting customers completed the IPO during the period.

	●	A gain of $625,675 on fair value changes in investment in warrants due to fair value measurement.

	●	Offset by loss of $1,494,234 on fair value changes in investments in marketable securities due to fair value measurement.

	●	Offset by an increase of $1,036,456 in income tax payables in connection with the gain recognized from the sale of discontinued operations.

	●	Net loss from continuing operations of $5,148,651 for the fiscal year.

	●	Marketable securities and warrants received as non-cash consideration of $13,541,693 as our IPO consulting customers completed the IPO during the period.

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

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

	●	Offset by a loss of $2,412,385 on fair value changes in investments in marketable securities due to fair value measurement.

	●	Offset by a decrease of $1,050,522 in accounts receivable.

	Principal
Year Ended December 31,	Payment
2026	$	50,598
2027		55,325
2028		60,471
2029		27,857
2030		9,973
Thereafter		294,750
Total	$	498,974

Name	Age	Positions
Sumitaka Yamamoto	60	Chairman of Board, Chief Executive Officer and President
Kimio Hosaka	57	Chief Operating Officer and Director
Qizhi Gao	44	Chief Financial Officer
Ferdinand Groenewald	41	Director
Yoonji Lee	30	Director
Koji Sato	56	Director

	●	a majority of the Board consist of “independent directors” as defined by Nasdaq’s applicable rules and regulations;

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

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

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

	●	review the proposed scope and results of the audit;

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

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

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

	●	recognize and prevent prohibited non-audit services;

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

	●	oversee internal audit functions, if any.

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

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

	●	To review our incentive compensation arrangements.

	●	To review and recommend to the Board for approval the frequency with which we will conduct say-on-pay votes.

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

	●	To meet at least two times a year.

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

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

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

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

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

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

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

	●	To meet at least two times a year.

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

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

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

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