Amended Current Report Filing (8-k/a)
April 14 2023 - 4:06PM
Edgar (US Regulatory)
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2023-02-01
2023-02-01
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K/A
(Amendment
No. 2)
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): February 1, 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.
Explanatory
Note
On
February 6, 2023, HeartCore Enterprises, Inc. (the “Company”) filed a Current Report on Form 8-K (the “February
8-K”) to disclose, among other things, the closing of the acquisition (the “Acquisition”) of 51% of the outstanding
shares of Sigmaways, Inc. (“Sigmaways”) by the Company, pursuant to the terms of the Share Exchange and Purchase Agreement
(the “Sigmaways Agreement”), dated as of September 6, 2022, as thereafter amended, by and among the Company, Sigmaways and
Prakash Sadasivam.
On
February 10, 2023, the Company filed an amendment to the February 8-K (the “8-K/A No. 1”) to update the February 8-K as explained in the 8-K/A No. 1.
As
previously disclosed in the Current Report on Form 8-K filed on March 28, 2023 (the “March 8-K”) by the Company, on March
22, 2023, the Company entered into a Warrant Exchange and Termination Agreement pursuant to which Mr. Sadasivam agreed to transfer the
Amended and Restated Warrant (as hereinafter defined) to the Company in exchange for the issuance by the Company to Mr. Sadasivam of
500,000 shares of the Company’s common stock. On March 22, 2023, the Company issued 500,000 shares of the Company’s common
stock to Mr. Sadasivam. As a result, the Amended and Restated Warrant was terminated, null and void, and of no further force or effect.
The
Company is filing this Amendment No. 2 (the “8-K/A No. 2”) to the February 8-K in order to (i) correct statements
made in Item 9.01 of the February 8-K, as amended; and (ii) update the disclosure in the February 8-K, as amended, to reflect
entry into the Warrant Exchange and Termination Agreement as disclosed in the March 8-K.
After
further analysis of the Acquisition and the requirements of Item 2.01, Item 9.01(a) and Item 9.01(b) of Form 8-K, the Company’s
management has determined (i) that the closing of the Acquisition did not trigger disclosure under Item 2.01 of Form 8-K, and (ii) financial
statements and pro forma financial information are not required to be provided pursuant to Item 9.01 and Item 9.01(b), respectively,
of Form 8-K. Therefore, the disclosure found under Item 2.01, Item 9.01(a) and Item 9.01(b) of the February 8-K, as amended, is
deleted in its entirety, and the February 8-K is amended and restated, in its entirety, as set forth herein. Except for the
changes noted in this Explanatory Note and certain conforming edits, no other changes have been made to the disclosure provided in the
8-K/A No. 1.
Item
1.01. Entry into a Material Definitive Agreement.
As
previously disclosed, on September 6, 2022, HeartCore Enterprises, Inc. (the “Company”) entered into that certain Share Exchange
and Purchase Agreement (the “Sigmaways Agreement”), dated as of September 6, 2022, as thereafter amended, by and among the
Company, Sigmaways, Inc. (“Sigmaways”) and Prakash Sadasivam. On February 1, 2023, the Company, Sigmaways and Mr. Sadasivam
entered into Amendment No. 2 (“Amendment No. 2”) to the Sigmaways Agreement. Pursuant to the terms of Amendment No. 2, among
other things, the Company agreed, in exchange for the Sigmaways shares, to (i) issue to Mr. Sadasivam 2,000,000 shares of the Company’s
common stock, (ii) pay to Mr. Sadasivam $1,000,000 (the “Cash Purchase Price”); and (iii) issue to Mr. Sadasivam a common
stock purchase warrant to acquire 1,900,000 shares of the Company’s common stock (the “Warrant”). In addition, the
Company agreed that following closing, it would deposit $2,000,000 into a dedicated account, which amount will be used to expand Sigmaways’
business.
On
February 1, 2023, the acquisition of 51% of Sigmaways’ outstanding shares by the Company (the “Acquisition”) closed.
At the closing, Mr. Sadasivam was appointed to serve as the Company’s Chief Strategy Officer. In addition, on February 1, 2023,
the Board expanded the size of the Board from seven persons to eight persons, and named Mr. Sadasivam to serve as a member of the Board,
to fill the vacancy created by the increase in the size of the Board. See Item 5.02 hereof, which information is incorporated herein
by reference. Also at the closing, two persons designated by the Company were named to Sigmaways’ Board of Directors. The sole
other member of the Sigmaways Board of Directors is Mr. Sadasivam.
The
Warrant issued pursuant to the Sigmaways Agreement was exercisable until February 12, 2025, at an exercise price of $1.17 per share,
subject to adjustment as set forth in the Warrant. The Warrant contained a 9.99% equity blocker.
On
February 6, 2023, subsequent to the closing of the Acquisition, the parties to the Sigmaways Agreement determined that there was an error
in the Sigmaways Agreement and in the warrant issued pursuant to the terms of the Sigmaways Agreement. As executed, among other things,
the Sigmaways Agreement incorrectly provided that the Company would issue to Mr. Sadasivam a warrant to acquire 1,900,000 shares of the
Company’s common stock. The parties had agreed, however, that the Company would issue to Mr. Sadasivam a warrant to acquire 737,500
shares of the Company’s common stock.
Accordingly,
in order to correct the error, on February 6, 2023, the Company issued to Mr. Sadasivam an amended and restated warrant (the “Amended
and Restated Warrant”) that reflected the correct number of shares (737,500) underlying the warrant, and Mr. Sadasivam agreed and
accepted the Amended and Restated Warrant. The Amended and Restated Warrant is exercisable until February 12, 2025, at an exercise price
of $1.17 per share, subject to adjustment as set forth in the Amended and Restated Warrant. The Amended and Restated Warrant contains
a 9.99% equity blocker.
On
February 8, 2023, the parties to the Sigmaways Agreement entered into an addendum to the Sigmaways Agreement pursuant to which the parties
acknowledged and agreed that (i) the references in the Sigmaways Agreement to a warrant to acquire 1,900,000 shares of common stock was
in error, and (ii) the warrant was intended to be for 737,500 shares of common stock. Except as set forth in the Addendum, the terms
of the Sigmaways Agreement remain in full force and effect.
On March 22, 2023, the
Company entered into a Warrant Exchange and Termination Agreement pursuant to which Mr. Sadasivam agreed to transfer the Amended and
Restated Warrant to the Company in exchange for the issuance by the Company to Mr. Sadasivam of 500,000 shares of the Company’s
common stock. On March 22, 2023, the Company issued 500,000 shares of the Company’s common stock to Mr. Sadasivam. As a result,
the Amended and Restated Warrant was terminated, null and void, and of no further force or effect.
The
foregoing description of Amendment No. 2, the Warrant, the Amended and Restated Warrant, the Addendum, and the Warrant Exchange and
Termination Agreement is qualified in its entirety by reference to Amendment No. 2, the Warrant, the Amended and Restated Warrant,
the Addendum, and the Warrant Exchange and Termination Agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.4,
10.5 and 10.6, respectively, and which are incorporated herein by reference.
Item
3.02. Unregistered Sales of Equity Securities.
As
disclosed in Items 1.01 hereof, which disclosure is incorporated herein by reference, in exchange for the 229,500 shares of Sigmaways
stock acquired by the Company from Mr. Sadasivam, the Company (i) issued to Mr. Sadasivam 2,000,000 shares of the Company’s common
stock; (ii) paid to Mr. Sadasivam cash consideration of $1,000,000; and (iii) issued the Amended and Restated Warrant to Mr. Sadasivam.
See also the disclosure regarding the Warrant Exchange and Termination Agreement set forth in Item 1.01 above.
Following
the closing, there were 19,649,886 shares of the Company’s common stock outstanding.
The
Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”),
for the private placement of the equity securities pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated
thereunder because, among other things, the transaction did not involve a public offering, the recipient is an accredited investor, the
recipient acquired the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of
the securities.
Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On
February 1, 2023, Mr. Sadasivam was appointed to serve as the Company’s Chief Strategy Officer. In addition, on February 1, 2023,
the Board expanded the size of the Board from seven persons to eight persons, and named Mr. Sadasivam to serve as a member of the Board,
to fill the vacancy created by the increase in the size of the Board.
Mr.
Sadasivam, age 49, has served as the CEO of Sigmaways since 2006. Since 2020, Mr. Sadasivam has served as an official member of the Forbes
Technology Council. He holds degrees from Vallore Institute of Technology in Vellore, India, and from UCLA’s Anderson School of
Management.
On
February 1, 2023, the Company and Mr. Sadasivam entered into an Employment Agreement (the “Employment Agreement”). The Employment
Agreement provides that he will serve as the Company’s Chief Strategy Officer, and that he will be paid an annual salary of $96,000.
In addition, on each annual anniversary of the effective date of the Employment Agreement during the term, the Company will issue to
Mr. Sadasivam a number of shares of common stock equal to (i) 30% of the base salary as of such date, divided by (ii) the volume weighted
average closing of the Company’s common stock for the five trading days immediately preceding such date. Mr. Sadasivam is also
eligible to receive discretionary bonuses as determined by the Board.
The
Employment Agreement has an initial term of 1 year, provided that the term of each agreement will automatically be extended for one or
more additional terms of one year each unless either the Company or Mr. Sadasivam provides notice to the other of their desire to not
so renew the initial term or renewal term (as applicable) at least 30 days prior to the expiration of then-current initial term or renewal
term (as applicable). The Employment Agreement provides that the employment with the Company shall be “at will,” meaning
that either Mr. Sadasivam or the Company may terminate employment at any time and for any reason, subject to the other provisions of
the Employment Agreement.
The
Employment Agreement may be terminated by the Company, either with or without “Cause” (as defined in the Employment Agreement),
or by Mr. Sadasivam, either with or without “Good Reason” (as defined in the Employment Agreement).
In
the event that the Company terminates the term of the Employment Agreement or employment with Cause, or if Mr. Sadasivam terminates his
Employment Agreement without Good Reason, then, subject to any other relevant agreements:
|
○ |
the
Company will pay to Mr. Sadasivam any unpaid base salary and benefits then owed or accrued, and any unreimbursed expenses; |
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○ |
any
unvested portion of any equity granted to Mr. Sadasivam under the Employment Agreement or any other agreements with the Company will
immediately be forfeited; and |
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○ |
all
of the parties’ rights and obligations under the Employment Agreement will cease, other than those rights or obligations which
arose prior to the termination date or in connection with such termination, and subject to the survival provisions of the Employment
Agreement. |
In
the event that the Company terminates the term of the Employment Agreement or employment without Cause, or if Mr. Sadasivam terminates
the Employment Agreement with Good Reason, then, subject to any other relevant agreements:
|
○ |
the
Company will pay to Mr. Sadasivam any base salary, bonuses, and benefits then owed or accrued, and any unreimbursed expenses; |
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○ |
the
Company will pay to Mr. Sadasivam, in one lump sum, an amount equal to the base salary that would have been paid to Mr. Sadasivam
for the remainder of the initial term of the Employment Agreement (if the termination occurs during the initial term of the Employment
Agreement) or renewal term of the Employment Agreement (if the termination occurs during a renewal term of the Employment Agreement); |
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○ |
any
unvested portion of any equity granted to Mr. Sadasivam under the Employment Agreement or any other agreements with the Company will,
to the extent not already vested, be deemed automatically vested; and |
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○ |
all
of the parties’ rights and obligations under the Employment Agreement will cease, other than those rights or obligations which
arose prior to the termination date or in connection with such termination, and subject to the survival provisions of the Employment
Agreement. |
In
the event of Mr. Sadasivam’s death or total disability during the term of the Employment Agreement, the term of the applicable
agreement and the applicable executive’s employment shall terminate on the date of death or total disability. In the event of such
termination, the Company’s sole obligations hereunder to Mr. Sadasivam shall be for unpaid base salary, accrued but unpaid bonus
and benefits (then owed or accrued and owed in the future), a pro-rata bonus for the year of termination based on the target bonus for
such year and the portion of such year in which Mr. Sadasivam was employed, and reimbursement of expenses pursuant to the terms hereon
through the effective date of termination, and any unvested portion of any equity grant will immediately be forfeited as of the termination
date.
In
the event that the term of the Employment Agreement is not renewed by either party, any unvested portion of any equity granted will immediately
be forfeited as of the expiration of the term of the Employment Agreement without any further action of the parties.
The
Employment Agreement contains customary representations and warranties.
The
foregoing description of the Employment Agreement is qualified in its entirety by reference to the Employment Agreement, a copy of which
is filed as Exhibit 10.3 hereto and incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
No. |
|
Description |
10.1 |
|
Amendment No. 2 to Share Exchange and Purchase Agreement, dated as of February 1, 2023, by and among the registrant, Sigmaways, Inc. and Prakash Sadasivam (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2023). |
10.2 |
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Common Stock Purchase Warrant, dated February 1, 2023 (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2023). |
10.3 |
|
Employment Agreement, dated February 1, 2023, by and between the registrant and Prakash Sadasivam (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2023). |
10.4 |
|
Amended and Restated Common Stock Purchase Warrant, dated February 6, 2023 (incorporated by reference to Exhibit 10.4 to Amendment No. 1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 10, 2023). |
10.5 |
|
Addendum to Share Exchange and Purchase Agreement, dated as of February 8, 2023, by and among the registrant, Sigmaways, Inc. and Prakash Sadasivam (incorporated by reference to Exhibit 10.5 to Amendment No. 1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 10, 2023). |
10.6 |
|
Warrant Exchange and Termination Agreement, dated as of March 22, 2023, by and between the registrant and Prakash Sadasivam (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 28, 2023). |
104 |
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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. |
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Dated:
April 14, 2023 |
By: |
/s/
Sumitaka Yamamoto |
|
Name: |
Sumitaka
Yamamoto |
|
Title: |
Chief
Executive Officer |
HeartCore Enterprises (NASDAQ:HTCR)
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