v3.26.1
DISCONTINUED OPERATIONS
 6 Months Ended
Jun. 30, 2026
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS

NOTE 12 – DISCONTINUED OPERATIONS

 

HeartCore Japan

 

On July 24, 2025, in light of the intense competition of the software market in Japan, the Board of Directors of the Company approved to enter into a non-binding letter of intent to sell 100% of the outstanding shares of HeartCore Japan. The Company does not expect to have any continuing involvement in HeartCore Japan subsequent to the closing. The Company determines the sale of HeartCore Japan met the criteria for classification as held for sale. Additionally, the Company determines the sale of HeartCore Japan represents a strategic shift that has a major impact on its operations and financial results. Accordingly, all results of operations of HeartCore Japan have been removed from continuing operations and presented as discontinued operations in the unaudited consolidated statements of operations and comprehensive income (loss) for all periods presented. On October 31, 2025, the sale transaction was closed. The Company entered into a purchase agreement to sell 100% of the outstanding shares of HeartCore Japan to Smith Japan Holdings KK for a cash consideration of approximately $12 million, subject to price adjustment. For the six months ended June 30, 2026, the Company received proceeds from sale of discontinued operations for HeartCore Japan of $871,549.

 

The following table summarizes the results of operations from discontinued operations, net of income tax for HeartCore Japan in the unaudited consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2025:

 

   For the Three Months Ended   For the Six Months Ended 
   June 30, 2025   June 30, 2025 
Revenues  $2,775,189   $4,268,802 
Cost of revenues   969,835    1,906,938 
Gross profit   1,805,354    2,361,864 
Operating expenses:          
Selling expenses   294,647    432,885 
General and administrative expenses   409,219    757,402 
Research and development expenses   161,481    285,374 
Total operating expenses   865,347    1,475,661 
Income from discontinued operations   940,007    886,203 
Other expenses   (13,300)   (9,818)
Income from discontinued operations before income tax expense (benefit)   926,707    876,385 
Income tax expense (benefit)   (15,467)   1,561 
Income from discontinued operations, net of income tax  $942,174   $874,824 

 

 

Sigmaways and Its Wholly-owned Subsidiaries

 

On March 5, 2026, in light of the intense competition of the software market in the United States, the Board of Directors of the Company approved to sell 51% of the outstanding shares of Sigmaways and its wholly-owned subsidiaries. The Company does not expect to have any continuing involvement in Sigmaways and its wholly-owned subsidiaries subsequent to the closing. The Company determines the assets of Sigmaways and its wholly-owned subsidiaries met the criteria for classification as held for sale. Additionally, the Company determines the sale of Sigmaways and its wholly-owned subsidiaries represents a strategic shift that has a major impact on its operations and financial results. Accordingly, all results of operations of Sigmaways and its wholly-owned subsidiaries have been removed from continuing operations and presented as discontinued operations in the unaudited consolidated statements of operations and comprehensive income (loss) for all periods presented. All assets and liabilities of Sigmaways and its wholly-owned subsidiaries have been presented separately as assets and liabilities of discontinued operations in the consolidated balance sheets as of December 31, 2025. On June 22, 2026, the sale transaction was closed. The Company entered into a purchase agreement to sell 51% of the outstanding shares of Sigmaways and its wholly-owned subsidiaries to Semaphore Technologies, Inc. for a cash consideration of up to $650,000, consisting of (i) closing cash consideration of $1,000, and (ii) additional cash consideration of up to $649,000, upon achievement of certain financial performance milestones. The Company assesses the collection risk from time to time and determines the collection of additional cash consideration is not probable based on the current financial performance of Sigmaways and its wholly-owned subsidiaries. For the six months ended June 30, 2026, the Company received gross proceeds from sale of discontinued operations for Sigmaways and its wholly-owned subsidiaries of $1,000, net of cash divested of $28,351.

 

The following table summarizes the results of operations from discontinued operations, net of income tax for Sigmaways and its wholly-owned subsidiaries in the unaudited consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2026 and 2025:

 

   2026   2025   2026   2025 
   For the Three Months
Ended June 30,		   For the Six Months
Ended June 30,		 
   2026   2025   2026   2025 
Revenues  $523,773   $1,781,780   $1,537,119   $3,622,561 
Cost of revenues   422,623    1,346,574    1,254,009    2,741,313 
Gross profit   101,150    435,206    283,110    881,248 
Operating expenses:                    
Selling expenses   7,050    13,969    15,526    29,301 
General and administrative expenses   148,734    486,301    550,513    1,026,107 
Total operating expenses   155,784    500,270    566,039    1,055,408 
Loss from discontinued operations   (54,634)   (65,064)   (282,929)   (174,160)
Other expenses   (10,995)   (23,708)   (26,193)   (39,648)
Loss on sale of discontinued operations   (423,496)   -    (423,496)   - 
Loss from discontinued operations before income tax expense   (489,125)   (88,772)   (732,618)   (213,808)
Income tax expense   105    5,932    105    5,932 
Loss from discontinued operations, net of income tax   (489,230)   (94,704)   (732,723)   (219,740)
Less: loss from discontinued operations attributable to non-controlling interests   (32,209)   (46,405)   (151,521)   (107,673)
Loss from discontinued operations attributable to HeartCore Enterprises, Inc.  $(457,021)  $(48,299)  $(581,202)  $(112,067)

 

 

The following table summarizes the assets and liabilities of discontinued operations and non-controlling interests for Sigmaways and its wholly-owned subsidiaries in the consolidated balance sheets as of December 31, 2025:

 

    December 31, 
    2025 
Assets of discontinued operations      
Cash and cash equivalents   $81,136 
Accounts receivable    685,035 
Prepaid expenses    54,512 
Current portion of long-term note receivable    100,000 
Property and equipment, net    16,124 
Operating lease right-of-use assets    11,668 
Security deposits    1,645 
Total assets of discontinued operations   $950,120 
       
Liabilities of discontinued operations      
Accounts payable and accrued expenses   $847,459 
Accrued payroll and other employee costs    445,344 
Short-term debt – related party    75,000 
Current portion of long-term debts    50,598 
Factoring liability    135,982 
Operating lease liabilities, current    15,012 
Other current liabilities    59,191 
Long-term debts    448,376 
Total liabilities of discontinued operations   $2,076,962 
       
Non-controlling interests   $(1,633,871)

 

Assets and liabilities classified as held for sale are reported at the lower of carrying amount or fair value less cost to sell. There was no valuation allowance against the assets classified as held for sale. As of the closing date of the sale of Sigmaways and its wholly-owned subsidiaries, the assets and liabilities classified as held for sale and non-controlling interests were derecognized and loss on sale of discontinued operations was recorded.