HeartCore Enterprises, Inc. Leases Disclosure

NOTE 10 – LEASES

 

The Company has entered into operating leases for office space with terms ranging from two to fifteen years, and finance leases for office equipment and vehicle with terms of five years. The estimated effect of lease renewal and termination options, as applicable, that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right-of-use assets and lease liabilities is included in the consolidated financial statements. Right-of-use assets of finance leases of $60,440 and $85,613 are included in property and equipment, net as of December 31, 2024 and 2023, respectively.

  

Operating lease costs for lease payments are recognized on a straight-line basis over the lease term. Finance lease costs include amortization, which are recognized on a straight-line basis over the expected life of the leased assets, and interest expenses, which are recognized following an effective interest rate method. Leases with initial term of twelve months or less are not recorded in the consolidated balance sheets.

The components of lease costs are as follows:

 

		For the Years Ended December 31,
		2024				2023
Finance lease costs
Amortization of right-of-use assets		$	17,139			$	19,699
Interest on lease liabilities			937				388
Total finance lease costs			18,076				20,087
Operating lease costs			400,840				388,633
Short-term lease costs			-				51,582
Total lease costs		$	418,916			$	460,302

 

The following table presents supplemental information related to the Company’s leases:

 

		For the Years Ended December 31,
		2024				2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	937			$	388
Operating cash flows from operating leases			408,962				361,929
Financing cash flows from finance leases			16,766				22,422
Finance lease right-of-use assets obtained in exchange for finance lease liabilities			-				93,217
Operating lease right-of-use assets obtained in exchange for operating lease liabilities			125,735				317,040
Remeasurement of operating lease liabilities and right-of-use assets due to lease modification			23,956				30,186
Weighted average remaining lease term (years)
Finance leases			3.8				4.7
Operating leases			6.8				7.5
Weighted-average discount rate (per annum)
Finance leases			1.32	%			1.32	%
Operating leases			1.37	%			1.34	%

 

As of December 31, 2024, the future maturity of lease liabilities is as follows:

 

Year Ended December 31,		Finance Lease				Operating Leases
2025		$	16,640			$	394,538
2026			16,640				301,182
2027			16,640				259,508
2028			11,093				259,508
2029			-				259,508
Thereafter			-				603,091
Total lease payments			61,013				2,077,335
Less: imputed interest			(1,464	)			(90,388	)
Total lease liabilities			59,549				1,986,947
Less: current portion			(15,956	)			(371,951	)
Non-current lease liabilities		$	43,593			$	1,614,996

 

Pursuant to the operating lease agreements, the Company made security deposits to the lessors. The security deposits amounted to $307,996 and $348,428 as of December 31, 2024 and 2023, respectively.