UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 2, 2023
HEARTCORE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-41272 | 87-0913420 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
1-2-33, Higashigotanda, Shinagawa-ku, Tokyo, Japan
(Address of principal executive offices)
+81-3-6409-6966
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions.
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock | HTCR | Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
GATES GROUP Inc. Service Agreement
On October 2, 2023 (the “GATES Effective Date”), HeartCore Enterprises, Inc. (the “Company”) entered into a Service Agreement (the “GATES Agreement”) by and between the Company and GATES GROUP Inc., a Japanese corporation (“GATES”). Pursuant to the terms of the GATES Agreement, GATES engaged the Company, on an exclusive basis, to render the following services for GATES (collectively, the “GATES Services”):
| (i) | Phase 1: |
| ● | Suggesting to hire human resources, if the Company deems necessary; | |
| ● | Suggesting to convert financial statements from Japanese tax law basis to Japanese generally accepted accounting principles, if the Company deems necessary; | |
| ● | Suggesting to remove problematic accounting account, if the Company deems necessary; | |
| ● | Suggesting to translate accounting documents (i.e., financial statement, general ledger, journal entry), if the Company deems necessary; | |
| ● | Suggesting to develop growth strategy after public listing; | |
| ● | Suggesting to consider the listing structure, if the Company deems necessary. |
| (ii) | Phase 2: |
| ● | Suggesting for the selection and negotiation of terms for a law firm, underwriter and auditing firm for GATES, if the Company deems necessary; | |
| ● | Suggesting for the preparation of documentation for internal controls required for an initial public offering or de-SPAC transaction by GATES; | |
| ● | Suggesting for converting GATES’ financial statement based on United States generally accounting principles (US GAAP), if the Company deems necessary; | |
| ● | Translation of documents into English which the Company agrees to translate; | |
| ● | Attending and, if requested by GATES and the Company deems necessary, leading, GATES’ meetings regarding the initial public offering; | |
| ● | Suggesting GATES with support services related to GATES’ Nasdaq listing; | |
| ● | Suggesting the preparation of Form S-1 or Form F-1, Form S-4 or Form F-4 filings, if the Company deems necessary; | |
| ● | Support for investor relations activities, if the Company deems necessary; | |
| ● | Suggesting for preparing of investor presentation/deck and executive summary of GATES’ operation, if the Company deems necessary; and |
| (iii) | Phase 3: |
| ● | Support for investor relations activities, if the Company deems necessary. |
In providing the GATES Services, the Company will not render legal advice or perform accounting services, and will not act as an investment advisor or broker/dealer. Pursuant to the terms of the GATES Agreement, the parties agreed that the Company will not provide the following services, among others: negotiation of the sale of GATES’ securities; participation in discussions between GATES and potential investors; assisting in structuring any transactions involving the sale of GATES’ securities; pre-screening of potential investors; due diligence activities; nor providing advice relating to valuation of or financial advisability of any investments in GATES.
In exchange for providing the GATES Services for Phase 1 and Phase 2, GATES will pay to the Company $600,000 (the “Services Fee”) as follows:
| ● | 10% of the Services Fee on the GATES Effective Date; | |
| ● | 50% of the Services Fee four months after the GATES Effective Date; | |
| ● | 20% of the Services Fee six months after the GATES Effective Date; and | |
| ● | 20% of the Services Fee eight months after the GATES Effective Date. |
For Phase 3, in return for GATES’ Nasdaq listing, GATES will issue and the Company will be entitled to receive, a warrant to acquire a number of shares of capital stock of the entity designated by the Company from GATES and its affiliated company becoming a publicly traded company. The total amount of such shares will be an amount equal to 3% of the fully diluted share capital of GATES as of the GATES Effective Date (subject to adjustment as set forth in the GATES Agreement).
The term of the GATES Agreement will continue until the earlier of (i) three years from the GATES Effective Date; and (ii) two years later from the date on which the stock of GATES or any successor or resulting entity in the contemplated initial public offering of GATES’ stock in the U.S. or a merger or other similar transaction with a special purpose acquisition company, or other transaction pursuant to which GATES or its affiliated company becomes a public traded company in the U.S. The term of the GATES Agreement may be renewed upon the mutual written agreement of the parties to the GATES Agreement.
The GATES Agreement may be terminated by either party upon one month’s written notice to the other party, with the payment set forth in the GATES Agreement. However, if either party engages in anti-social force activities, the other party will terminate the GATES Agreement without written notice immediately, and the other party will pay the compensation as set forth in the GATES Agreement.
The foregoing description of the GATES Agreement is qualified in its entirety by reference to the GATES Agreement, a copy of which is filed as Exhibit 10.1 hereto and which is incorporated herein by reference.
GATES Warrant
On October 2, 2023, GATES issued to the Company a common stock purchase warrant (the “GATES Warrant”) to purchase 16 shares of GATES capital stock, subject to adjustment as set forth in the GATES Warrant. Pursuant to the terms of the GATES Warrant, the Company may, at any time (i) on or after the earlier of the date that either (a) GATES completes its first listing on any tier of the Nasdaq Stock Market, the new York Stock Exchange or the NYSE American; (b) GATES consummates a merger or other transaction with a special purpose acquisition company (“SPAC”) wherein GATES becomes a subsidiary of the SPAC; or (c) GATES consummates any other GATES Fundamental Transaction (as defined in the GATES Warrant) (the “GATES Trigger Date”); and (ii) on or prior to the close of business on the tenth anniversary of the GATES Trigger Date, exercise the GATES Warrant to purchase 16 shares of GATES’ capital stock (subject to adjustment as provided in the GATES Warrant), which represents 3% of Gates’ issued and outstanding common stock as of the issuance date of the GATES Warrant, for an exercise price per share of $0.01, subject to adjustment as provided in the GATES Warrant. The number of shares for which the GATES Warrant will be exercisable will be automatically adjusted on the GATES Trigger Date to be 3% of the fully diluted number and class of shares of capital stock of GATES as of the GATES Trigger Date, following completion of the transactions which caused the GATES Trigger Date to be achieved. The GATES Warrant contains a 9.99% equity blocker.
The foregoing description of the GATES Warrant is qualified in its entirety by reference to the GATES Warrant, a copy of which is filed as Exhibit 10.2 hereto and which is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On October 3, 2023, the Company issued a press release regarding the GATES Consulting Agreement and the GATES Warrant. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information included in this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth under this Item 7.01 shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Service Agreement, dated as of October 2, 2023, by and between the registrant and GATES GROUP Inc. | |
| 10.2 | Common Stock Purchase Warrant, dated October 2, 2023, issued by GATES GROUP Inc. to the registrant. | |
| 99.1 | Press release of the registrant issued on October 3, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HEARTCORE ENTERPRISES, INC. | ||
| Dated: October 3, 2023 | By: | /s/ Sumitaka Yamamoto |
| Name: | Sumitaka Yamamoto | |
| Title: | Chief Executive Officer | |