HTCR HeartCore Enterprises Inc

 

 

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): February 23, 2024

 

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.

 

Jyo Co., Ltd. Service Agreement

 

On February 23, 2024 (the “Jyo Effective Date”), HeartCore Enterprises, Inc. (the “Company”) entered into a Service Agreement (the “Jyo Agreement”) by and between the Company and Jyo Co., Ltd., a Japanese corporation (“Jyo”). Pursuant to the terms of the Jyo Agreement, Jyo engaged the Company, on an exclusive basis, to render the following services for Jyo (collectively, the “Jyo 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.
	●	Suggesting for the selection and negotiation of terms for a law firm, underwriter and auditing firm for Jyo, 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 Jyo;
	●	Suggesting for converting Jyo’s financial statement based on United States generally accounting principles, if the Company deems necessary;
	●	Translation of documents into English which the Company agrees to translate;
	●	Attending and, if requested by Jyo and the Company deems necessary, leading, Jyo’s meetings regarding the initial public offering;
	●	Suggesting Jyo with support services related to Jyo’s 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 Jyo’s operation, if the Company deems necessary; and

 

(ii)

Phase 2:

 

●

Support for investor relations activities, if the Company deems necessary.

 

In providing the Jyo 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 Jyo Agreement, the parties agreed that the Company will not provide the following services, among others: negotiation of the sale of Jyo’s securities; participation in discussions between Jyo and potential investors; assisting in structuring any transactions involving the sale of Jyo’s securities; pre-screening of potential investors; due diligence activities; nor providing advice relating to valuation of or financial advisability of any investments in Jyo.

 

In exchange for providing the Jyo Services for Phase 1, Jyo will pay to the Company $750,000 (the “Services Fee”) as follows:

 

	●	$250,000 of the Services Fee on the Jyo Effective Date;
	●	$150,000 of the Services Fee within 45 days after the Jyo Effective Date;
	●	$200,000 of the Services Fee three months after the Jyo Effective Date; and
	●	$150,000 of the Services Fee six months after the Jyo Effective Date.

 

 

For Phase 2, in return for Jyo’s Nasdaq listing, Jyo 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 Jyo and its affiliated company becoming a publicly traded company. The total amount of such shares will be an amount equal to 2% of the fully diluted share capital of Jyo as of the Jyo Effective Date (subject to adjustment as set forth in the Jyo Agreement).

 

The term of the Jyo Agreement will continue until the earlier of (i) three years from the Jyo Effective Date; and (ii) two years later from the date on which the stock of Jyo or any successor or resulting entity in the contemplated initial public offering of Jyo’s stock in the U.S. or a merger or other similar transaction with a special purpose acquisition company, or other transaction pursuant to which Jyo or its affiliated company becomes a public traded company in the U.S. The term of the Jyo Agreement may be renewed upon the mutual written agreement of the parties to the Jyo Agreement.

 

The Jyo Agreement may be terminated by either party upon one month’s written notice to the other party, with the payment set forth in the Jyo Agreement. However, if either party engages in anti-social force activities, the other party will terminate the Jyo Agreement without written notice immediately, and the other party will pay the compensation as set forth in the Jyo Agreement.

 

The foregoing description of the Jyo Agreement is qualified in its entirety by reference to the Jyo Agreement, a copy of which is filed as Exhibit 10.1 hereto and which is incorporated herein by reference.

 

Jyo Warrant

 

On February 23, 2024, Jyo issued to the Company a common stock purchase warrant (the “Jyo Warrant”) to purchase 80 shares of Jyo capital stock, subject to adjustment as set forth in the Jyo Warrant. Pursuant to the terms of the Jyo Warrant, the Company may, at any time (i) on or after the earlier of the date that either (a) Jyo completes its first listing on any tier of the Nasdaq Stock Market, the New York Stock Exchange or the NYSE American; (b) Jyo consummates a merger or other transaction with a special purpose acquisition company (“SPAC”) wherein Jyo becomes a subsidiary of the SPAC; or (c) Jyo consummates any other Jyo Fundamental Transaction (as defined in the Jyo Warrant) (the “Jyo Trigger Date”); and (ii) on or prior to the close of business on the tenth anniversary of the Jyo Trigger Date, exercise the Jyo Warrant to purchase 80 shares of Jyo’s capital stock (subject to adjustment as provided in the Jyo Warrant), which represents 2% of Jyo’s issued and outstanding common stock as of the issuance date of the Jyo Warrant, for an exercise price per share of $0.01, subject to adjustment as provided in the Jyo Warrant. The number of shares for which the Jyo Warrant will be exercisable will be automatically adjusted on the Jyo Trigger Date to be 2% of the fully diluted number and class of shares of capital stock of Jyo as of the Jyo Trigger Date, following completion of the transactions which caused the Jyo Trigger Date to be achieved. The Jyo Warrant contains a 9.99% equity blocker.

 

The foregoing description of the Jyo Warrant is qualified in its entirety by reference to the Jyo 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 February 29, 2024, the Company issued a press release regarding the Jyo Consulting Agreement and the Jyo 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 February 23, 2024, by and between the registrant and Jyo Co., Ltd.
10.2		Common Stock Purchase Warrant, dated February 23, 2024, issued by Jyo Co., Ltd. to the registrant.
99.1		Press release of the registrant issued on February 29, 2024.
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: February 29, 2024	By:	/s/ Sumitaka Yamamoto
	Name:	Sumitaka Yamamoto
	Title:	Chief Executive Officer

 

 

 

 

Exhibit 10.1

 

SERVICE AGREEMENT

 

Dated as of February 23, 2024

 

This Service Agreement (“Agreement”) is made and entered into as of the date first set forth above (the “Effective Date”), by and between Jyo Co., Ltd., a Japanese Corporation (the “Company”) and HeartCore Enterprises, Inc., a Delaware corporation (“PMO”). Each of the Company and PMO may be referred to herein individually as a “Party” and collectively as the “Parties.”

 

WHEREAS, PMO desires to provide certain project management office services to the Company in accordance with the terms and conditions contained hereinafter; and

 

WHEREAS, the Company deems it to be in its best interest to retain PMO to render to the Company such services as may be needed in connection with a contemplated initial public offering of its stock in the United States or a merger or other similar transaction with a special purpose acquisition company (including, without limitation, a case where the Company becomes a subsidiary of such entity) or other transaction pursuant to which the Company or its affiliated company becomes a publicly traded company in the United States (each, the “Transaction”); and

 

WHEREAS, the Parties agree, after having a complete understanding of the services desired and the services to be provided, that the Company desires to retain PMO to provide such assistance through its services for the Company, and PMO is willing to provide such services to the Company;

 

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

Section 1.

Engagement.

 

In exchange for the compensation as set forth herein and subject to the other terms and conditions hereinafter set forth, the Company hereby engages PMO during the Term (as defined below), on an exclusive basis (i.e, no other service providers of the same type shall be appointed by the Company), to render the Services set forth in Section 2 as an independent contractor of the Company, and PMO hereby accepts such engagement.

 

Section 2.

Obligation of the Parties

 

(a)

Subject to the terms and conditions herein and for the Term, the Parties shall perform the obligations defined in Appendix 1 (Obligation of the Parties), including, without limitation, the provision of the services to the Company by PMO (the “Services”). The Appendices referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

 

(b)

Notwithstanding the definition of the “Services” as set forth above, it is acknowledged and agreed by the Company that PMO carries no professional licenses, and is not rendering legal advice or performing accounting services, nor acting as an investment advisor or broker/dealer within the meaning of the applicable state and federal securities laws. It is also acknowledged and agreed by the Company that it is the Company’s responsibility to obtain necessary professional advice, including but not limited to legal, accounting and tax from respective professional for any document or paperwork created, filed, signed and/or submitted in connection with the Company’s initial public offering, as well as any actions to be taken by the Company in connection with the Company’s initial public offering; and there is no guarantee that the results desired by the Company will be achieved.

 

 

(c)

The Company acknowledges that the Services of PMO shall not be dedicated or full-time staff nor shall PMO be required to render any specific number of hours or assign specific personnel to the Company or its projects.

 

(d)

Notwithstanding the definition of the “Services” as set forth above, the Company acknowledges and agree that the PMO will specifically not provide any of the following services to the Company: (i) negotiation for the sale of any the Company’s securities or participation in discussions between the Company and the potential investors; (ii) assisting in structuring any transactions involving the sale of the Company’s securities; (iii) engagement in any pre-screening of potential investors to determine their eligibility to purchase any securities or engaging in any pre-selling efforts for the Company’s securities; (iv) discussing details of the nature of the securities sold or whether recommendations were made concerning the sale of the securities; (v) engagement in due diligence activities; (vi) providing advice relating to the valuation of or the financial advisability of any investments in the Company; (vii) handling any funds or securities on behalf of the Company; (viii) assisting in organizational restructuring of the Company; or (ix) other operations that require special licenses, permits or approvals from government authorities.

 

(e)

Even if PMO will use its reasonable efforts to provide the Services using the its professional skills and in a manner consistent with generally accepted standards for the performance of such work, PMO does not guarantee correctness of its advice, accuracy of its work, and any results desired by the company to be achieved. It is acknowledged and agreed by the Company that accuracy of the document, figures or explanation shall be responsible by the Company and any decision shall be made in the Company’s own responsibility.

 

(f)

The Company acknowledges that PMO is engaged in other business activities, and that it will continue such activities during the term of this Agreement. PMO shall not be restricted from engaging in other business activities during the term of this Agreement.

 

(g)

Ownership of deliverables provided by PMO shall belong to the Company save for the deliverables that PMO claims ownership. The Company may not use any deliverable, or any material provided by PMO for the purpose other than initial public offering unless prior consent with PMO.

 

Section 3.

Force Majeure

 

(a)

Neither party is liable for delay or failure to perform any of its obligations due to the case defined in Section 3(b)(ⅰ) and/or (ⅱ).

 

(b)

The case of force majeure:

 

(i)

war, invasion, act of foreign enemies, act of public enemies, rebellion, insurrection, military or usurped power, civil war, riot, mobilization, act of God, fire, lightning, storm, tempest, flood, bursting or overflowing of water, earthquake, natural disaster, epidemic, explosion, shortage of transport, general shortage of material, strike, industrial action, arrest or restraint or princes, rulers or people, seizure under legal process, embargo, requisition, hostilities, quarantine restrictions, restriction in the use of power, perils of the seas, pirates, assailing thieves, currency restrictions; and

 

 

(ii)

legal amendment in both Japan and/or the US, revision of OECD BEPS policy, tax rate change in both Japan and/or the US, revision of SEC regulations, revision of general accounting principles in both Japan and/or US, internal rules’ revisions of any related party, including, but not limited to, PMO, the Company, stock exchange, underwriter, auditor, law firm, bank, and any other cause of any kind whatsoever beyond the control of PMO.

 

Section 4.

Term; Termination.

 

(a)

The term of this Agreement shall commence on the Effective Date and shall continue until the earlier of (i) three (3) years from the Effective Date and (ii) two (2) years later from the date on which the stock of the Company or any successor or resulting entity in the Transaction such as beginning of trading in the United States (as applicable, the “Term”), unless sooner terminated in accordance with the terms herein. The Term may be renewed upon the mutual written agreement of the Parties via an amendment of this Agreement.

 

(i)

The Term will be split into the following two phases as defined as follows:

(1)

Preparation for NASDAQ listing (“Phase 1”)”

	a.	This term shall be six months from the Effective date.
	b.	Actual duration might be extended subject to the progress for the preparation of NASDAQ listing.
	c.	Once the Phase 1 were extended to more than 8 months, the provisions of Section 4 and Section 5 might be amended by mutual written consent by the Parties if necessary.
	d.	Once either Party requests the other Party to suspend this Agreement, he provisions of Section 4 and Section 5 might be amended by mutual written consent by the Parties if necessary.

(2)

After NASDAQ listing (“Phase 2”)

a.

This term shall be the remaining durations of the Term other than Phase 1.

 

(b)

Procedures

 

	(i)	This Agreement and the Term may be terminated by either Party upon one-month written notice to the other Party, with payment defined in Appendix 2 if necessary.
	(ii)	However, if either Party engages anti-social force activities, the other Party shall terminate this Agreement without written notice immediately. If so, the other Party shall pay the compensation defined in Appendix 2 if necessary.

 

(c)

Upon the termination or expiration of the Term, the Parties shall have no further obligations other than the duty of confidentiality hereunder, obligations for compensation under Section 5 that have not yet been fulfilled, and those which arose prior to such termination or which are explicitly set forth herein as surviving any such termination or expiration.

 

 

Section 5.

Compensation and Expenses.

 

(a)

As full and complete compensation for PMO’s agreement with respect to the Services, the Company shall compensate PMO as follows:

 

(i)

For Phase 1, the Company shall pay to the PMO the sum of US$750,000 (the “Services Fee”). The billing schedule of the Services Fee shall be defined in Appendix 2.

 

(ii)

For Phase 2, in return for the Company’s NADAQ listing, the Company shall issue, and PMO shall be entitled to receive, a warrant to acquire a number of shares of capital stock of the entity designated by PMO from among the Company and its affiliated company becoming a publicly traded company, by executing a warrant substantially in the form as attached hereto as Appendix 3 (the “Warrant”), which may be revised by mutual agreement between the Parties to change the issuing entity from Company to another entity. The total amount of such shares shall be an amount equal to 2% of the fully diluted share capital of the Company as of Effective Date; provided, however, that the number of such shares may be adjusted subject to the Warrant. The right to receive Warrant shall be deemed fully earned and vested as of the Effective Date and shall be non-returnable to the Company for any reason. The Warrant shall be issued after establishment of legal entity of the US of the Company or mandatory legal procedures subject to the regulations of Companies Act of Japan are completed Japan. Specific terms and conditions and other details of the Warrant’s issuance shall be set forth in Appendix 3.

 

	(b)	In the event that the Term ends pursuant to clause (ii) of Section 4(a) prior to the payment of all portions of the Services Fee as set forth in Section 5(a)(i), then any portions of the Services Fee not then paid shall be paid as of such time.
	(c)	In the event of termination of this Agreement and the Term, the Company shall pay the amount that shall be calculated on a pro rata basis for the number of months remaining in each period as defined in Appendix 2 PMO shall not be subject to repayment of the compensation, including the Services Fee, to the Company in any event of termination or expiration of the Term and/or this Agreement.

 

(i)

If this Agreement is suspended, the provisions above should be applied.

 

	(d)	During the Term of the Agreement the Company will reimburse the PMO’s travel and other reasonable expenses related to PMO’s performance under this Agreement, on a monthly basis, within 30 days of PMO’s submission to Company of invoices and receipts related to said expenses in form as reasonably acceptable to the Company.
	(e)	PMO shall be responsible for any and all taxes incurred by or payable by PMO with respect to all compensation or reimbursement of expenses or any other payments made to PMO hereunder. In furtherance thereof, PMO shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld by the Company with respect to such amount.

 

 

Section 6.

No Employee Status.

 

The Parties also acknowledge and agree that PMO is an independent contractor and is not an employee or agent of Company in its position as a consultant and advisor. As such, Company shall not be liable for any employment tax, withholding tax, social security tax, worker’s compensation or any other tax, insurance, expense or liability with respect to any or all compensation, reimbursements and remuneration PMO may receive hereunder, all of which shall be the sole responsibility of PMO. PMO is solely responsible for the reporting and payment of, all pertinent federal, state, or local self-employment or income taxes, licensing fees, or any other taxes or assessments levied by governmental authorities, as well as for all other liabilities or payments related to those services. The Parties also acknowledge and agree that PMO is not a licensed securities broker or salesperson, and that PMO will not be participating in, nor compensated for, any unlicensed securities sales activities other than those permitted under any of the exemptions set forth in applicable securities laws.

 

Section 7.

Relationship of the Parties.

 

(a)

PMO is retained by the Company only for the purposes of and to the extent set forth in this Agreement, and PMO’ relation to the Company during the period of its engagement hereunder shall be that of an independent contractor. PMO shall not, nor, as applicable, shall any of its agents, have employee status with the Company or be entitled to participate in any plans, arrangements or distributions by the Company pertaining to or in connection with any pension, stock, bonus, profit-sharing or similar benefits as may be available to the Company’s employees. PMO shall be responsible for the reporting and payment of all income and self-employment taxes for all compensation paid to PMO hereunder.

 

(b)

This Agreement does not create a relationship of principal and agent, joint venture, partnership or employment between the Company and PMO. PMO’ engagement hereunder is not a franchise or business opportunity. Neither Party shall be liable for any obligations incurred by the other except as expressly provided herein.

 

(c)

PMO shall not have authority to enter into contracts binding the Company or to create any obligations or incur liabilities on behalf of the Company. PMO shall not act or represent himself, directly or by implication, as an agent of the Company with any authority other than as set forth expressly in this Agreement.

 

(d)

Any person hired by PMO shall be the employee of PMO and not of the Company, and all compensation, payroll taxes, facilities and related expenses for any such employee shall be the sole responsibility of PMO.

 

(e)

PMO acknowledges that it is not an officer, director or agent of Company, it is not, and will not, be responsible for any management decisions on behalf of Company, and may not commit Company to any action. Company represents that PMO does not have, through stock ownership or otherwise, the power neither to control Company, nor to exercise any dominating influences over its management.

 

 

Section 8.

Representations and Warranties.

 

(a)

Representations and Warranties of the Company. Company represents and warrants hereunder that this Agreement and the transactions contemplated hereunder have been duly and validly authorized by all requisite corporate action; that Company has the full right, power and capacity to execute, deliver and perform its obligations hereunder; and that this Agreement, upon execution and delivery of the same by Company, will represent the valid and binding obligation of Company enforceable in accordance with its terms, subject to the application of bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and general principles of equity, regardless of whether enforceability is considered in a proceeding at law or in equity (the “Enforceability Exceptions”). The representations and warranties set forth herein shall survive the termination or expiration of this Agreement.

 

(b)

Representations and Warranties of PMO. PMO represents and warrants hereunder that this Agreement and the transactions contemplated hereunder have been duly and validly authorized by all requisite action; that PMO has the full right, power and capacity to execute, deliver and perform its obligations hereunder; and that this Agreement, upon execution and delivery of the same by PMO, will represent the valid and binding obligation of PMO enforceable in accordance with its terms, subject to the Enforceability Exceptions. PMO represents and warrants that all personnel or agents of PMO who perform any activities on behalf of the Company hereunder or otherwise are legally authorized and permitted to work in the United States and for the benefit of the Company hereunder. The representations and warranties set forth herein shall survive the termination or expiration of this Agreement The representations and warranties set forth herein shall survive the termination or expiration of this Agreement.

 

Section 9.

Indemnification.

 

(a)

In the event PMO is subject to any action, claim or proceeding resulting from the Company’s business, contemplated initial public offering, or subsequent operations, the Company agrees to indemnify and hold harmless PMO from any such action, claim or proceeding. Indemnification shall include all fees, costs and reasonable attorneys’ fees that PMO may incur. In claiming indemnification hereunder, PMO shall promptly provide the Company written notice of any claim that PMO reasonably believes falls within the scope of this Agreement. PMO may, at its expense, assist in the defense if it so chooses, provided that the Company shall control such defense, and all negotiations relative to the settlement of any such claim. Any settlement intended to bind PMO shall not be final without PMO’s written consent.

 

(b)

Any liability of PMO and its officers, directors, controlling persons, employees or agents shall not exceed the 1/2 of the amount of the Services Fee actually paid to PMO by the Company pursuant this Agreement.

 

 

Section 10.

Confidentiality

 

(a)

Confidential Information

 

For purposes of this Agreement, and except as provided below, “Confidential Information” of the Company shall mean any confidential, proprietary or trade secret information, data or know-how which relates to the business, research, services, products, customers, suppliers, employees, or financial information of the Company, including, but not limited to, product or service specifications, designs, drawings, protypes, computer programs, models, business plans, marketing plans, financial data, financial statements, financial forecasts and statistical information, in each that is marked as confidential, proprietary or secret, or with an alternate legend or making indicating the confidentiality thereof or which, from the nature thereof should reasonably be expected to be confidential or proprietary, and any other Material Non-Public Information (as defined below), in each case which is disclosed by the Company or on its behalf, before or after the date hereof, to the Recipient either in writing, orally, by inspection or in any other form or medium. Any technical or business information of a third person furnished or disclosed shall be deemed “Confidential information” of the Company unless otherwise specifically indicated in writing to the contrary.

 

(b)

Material Non-Public Information

 

For purposes of this Agreement, and except as provided below, “Material Non-Public Information” shall mean any information obtained by the Recipient hereunder, whether otherwise constituting Confidential Information or not, with respect to which there is substantial likelihood that a reasonable investor would consider such information important or valuable in making any of his, her or its investment decisions or recommendations to others with respect to the Company or any of its equity securities or debt, or any derivatives thereof, or information that is reasonably certain to have a substantial effect on the price of the Company’s securities or debt, or any derivatives thereof, whether positive or negative.

 

Section 11.

Miscellaneous.

 

(a)

Notices. All notices under this Agreement shall be in writing. Notices may be served by certified or registered mail, postage paid with return receipt requested; by private courier, prepaid; by other reliable form of electronic communication; or personally. Mailed notices shall be deemed delivered five (5) days after mailing, properly addressed. Couriered notices shall be deemed delivered on the date that the courier warrants that delivery will occur. Electronic communication notices shall be deemed delivered when receipt is either confirmed by confirming transmission equipment or acknowledged by the addressee or its office. Personal delivery shall be effective when accomplished. Any Party may change its address by giving notice, in writing, stating its new address, to the other Party. Subject to the forgoing, notices shall be sent as follows:

 

If to the PMO:

 

HeartCore Enterprises, Inc.

Attn: Sumitaka Yamamoto

19303 Chablis Court

Saratoga CA 95070

Email: kanno@heartcore.co.jp

 

With a copy, which shall not constitute notice, to:

 

Anthony L.G., PLLC

Attn: John Cacomanolis

625 N. Flagler Drive, Suite 600

West Palm Beach, FL 33401

Email: JCacomanolis@anthonypllc.com

 

 

If to the Company, to:

 

Jyo Co., Ltd..

Attn: Kento Fukuoka

2-31-10, Funakoshi, Yahatanishiku,

Kita-kyushu, Fukuoka, 807-1111

Email: fukuoka@jyo-inc.jp

 

(b)

Accuracy of Statements. Each Party represents and warrants that no representation or warranty contained in this Agreement, and no statement delivered or information supplied to the other Party pursuant hereto, contains an untrue statement of material fact or omits to state a material fact necessary in order to make the statements or information contained herein or therein not misleading. The representations and warranties made in this Agreement will be continued and will remain true and complete in all material respects and will survive the execution of the transactions contemplated hereby.

 

(c)

Entire Agreement. This Agreement sets forth all the promises, covenants, agreements, conditions and understandings between the Parties, and supersedes all prior and contemporaneous agreements, understandings, inducements or conditions, expressed or implied, oral or written, except as herein or therein contained.

 

(d)

Survival. The provisions of Section 9 and Section 10 of this Agreement, and any additional provisions as required to effect any of such Sections, shall survive any termination or expiration hereof, and provided that no expiration or termination of this Agreement shall excuse a Party for any liability for obligations arising prior to such expiration or termination.

 

(e)

Binding Effect; Assignment. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. No Party shall have any power or any right to assign or transfer, in whole or in part, this Agreement, or any of its rights or any of its obligations hereunder, including, without limitation, any right to pursue any claim for damages pursuant to this Agreement or the transactions contemplated herein, or to pursue any claim for any breach or default of this Agreement, or any right arising from the purported assignor’s due performance of its obligations hereunder, without the prior written consent of the other Party and any such purported assignment in contravention of the provisions herein shall be null and void and of no force or effect.

 

(f)

Amendment. The Parties hereby irrevocably agree that no attempted amendment, modification, termination, discharge or change (collectively, “Amendment”) of this Agreement shall be valid and effective, unless the Parties shall unanimously agree in writing to such Amendment.

 

(g)

No Waiver. No waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the Party against whom it is asserted, and any such written waiver shall only be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver. No failure to exercise and no delay in exercising on the part of either of the Parties any right, power or privilege under this Agreement shall operate as a waiver of it, nor shall any single or partial exercise of any other right, power or privilege preclude any other or further exercise of its exercise of any other right, power or privilege.

 

 

(h)

Gender and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Party or Parties, or their personal representatives, successors and assigns may require.

 

(i)

Headings. The article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement.

 

(j)

Governing Law; Etc.

 

	(i)	This Agreement, and all matters based upon, arising out of or relating in any way to the Transaction, including all disputes, claims or causes of action arising out of or relating to the Transaction as well as the interpretation, construction, performance and enforcement of the Transaction, shall be governed by the laws of Japan, without regard to any jurisdiction’s conflict-of-laws principles.
	(ii)	ANY CONTROVERSIES, DISPUTES, LEGAL SUIT, ACTION OR PROCEEDING, BETWEEN THE PARTIES INCLUDING THEIR RESPECTIVE AFFILIATES, OWNERS, OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES, ARISING OUT OF, BASED UPON, OR RELATING TO THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) SHALL BE INSTITUTED AND ADJUDICATED SOLELY IN TOKYO DISTRICT COURT.
	(iii)	Each of the Parties acknowledge that each has been represented in connection with the signing of this waiver by independent legal counsel selected by the respective Party and that such Party has discussed the legal consequences and import of this waiver with legal counsel. Each of the Parties further acknowledge that each has read and understands the meaning of this waiver and grants this waiver knowingly, voluntarily, without duress and only after consideration of the consequences of this waiver with legal counsel.

 

(k)

Severability; Expenses; Further Assurances. If any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible. Except as otherwise specifically provided in this Agreement, each Party shall be responsible for the expenses it may incur in connection with the negotiation, preparation, execution, delivery, performance and enforcement of this Agreement. The Parties shall from time to time do and perform any additional acts and execute and deliver any additional documents and instruments that may be required by Law or reasonably requested by any Party to establish, maintain or protect its rights and remedies under, or to effect the intents and purposes of, this Agreement.

 

 

(l)

Specific Performance. Each Party agrees that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that each Party shall be entitled to seek specific performance of the terms hereof in addition to any other remedy at law or in equity.

 

(m)

Attorneys’ Fees. If any Party hereto is required to engage in litigation against any other Party, either as plaintiff or as defendant, in order to enforce or defend any rights under this Agreement, and such litigation results in a final judgment in favor of such Party (“Prevailing Party”), then the party or parties against whom said final judgment is obtained shall reimburse the Prevailing Party for all direct, indirect or incidental expenses incurred, including, but not limited to, all attorneys’ fees, court costs and other expenses incurred throughout all negotiations, trials or appeals undertaken in order to enforce the Prevailing Party’s rights hereunder.

 

(n)

Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party, and nothing in this Agreement, express or implied, is intended to confer upon any other person or entity any rights or remedies of any nature whatsoever under or by reason of this Agreement other than as specifically set forth herein.

 

(o)

Execution in Counterparts, Electronic Transmission. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

[Signatures appear on following page]

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.

 

	HeartCore Enterprises, Inc.
	By:	/s/ Sumitaka Yamamoto
	Name:	Sumitaka Yamamoto
	Title:	Chief Executive Officer
	Jyo Co., Ltd.
	By:	/s/ Kento Fukuoka
	Name:	Kento Fukuoka
	Title:	Chief Executive Officer

 

 

Appendix 1

Obligations of the Parties

 

(1)	Obligations of the Company:

 

The Company shall perform the following obligations to aim and execute NASDAQ public listing.

 

(a)

Phase 1

 

	●	Hiring necessary human resource and workforce;
	●	Converting the own financial statements from Japanese Tax Law basis to Japanese Generally Accepted Accounting Principles;
	●	Removing problematic accounting account;
	●	Translating accounting documents;
	●	Translating investor presentation/deck, executive summary of the Company’s operation, and other necessary materials;
	●	Consideration of listing structure.
	●	Attending a meeting with a law firm, underwriter, auditing firm and other advisors;
	●	Responding inquires from a law firm, underwriter, auditing firm and other advisors;
	●	Creating Web Page and other necessary tools in English for investor relations;
	●	Converting the own financial statement based on and into the United States Generally Accounting Principles (US GAAP).

 

(2)	Obligations of PMO:

 

PMO shall provide the following services to the Company to let the Company go to NASDAQ, and additional services as agreed by the Company and PMO.

 

(a)

Phase 1

 

	●	Suggesting to hire human resource of the Company, if PMO deems necessary;
	●	Suggesting to convert financial statements from Japanese Tax Law basis to Japanese Generally Accepted Accounting Principles, if PMO deems necessary;
	●	Suggesting to remove problematic accounting account, if PMO deems necessary;
	●	Suggesting to translate accounting documents (i.e., financial statement, general ledger, journal entry), if PMO deems necessary;
	●	Suggesting to develop growth strategy after public listing;
	●	Suggesting to consider the listing structure, if PMO deems necessary.
	●	Suggesting for the selection and negotiation of terms for a law firm, underwriter and auditing firm for the Company, if PMO deems necessary;
	●	Suggesting for the preparation of documentation for internal controls required for an initial public offering or de-SPAC transaction by the Company;
	●	Suggesting for converting the Company’s financial statement based on the United States Generally Accounting Principles (US GAAP), if PMO deems necessary;
	●	Translation of documents into English which PMO agrees to translate;
	●	Attending and, if requested by the Company and PMO deems necessary, leading, the Company’s meetings regarding the initial public offering;
	●	Suggesting the Company with support services related to the Company’s NASDAQ listing;
	●	Suggesting the preparation of Form S-1 or Form F-1, Form S-4 or Form F-4 filings, if PMO deems necessary;
	●	Support for investor relations activities, if PMO deems necessary;
	●	Suggesting for preparing of investor presentation/deck and executive summary of the Company’s operation, if PMO deems necessary;

 

(b)

Phase 2

 

●

Support for investor relations activities, if PMO deems necessary;

 

 

Appendix 2

Billing Schedule

 

Schedule

 

The billing schedule and payment due of the Services Fee shall be as follows. For the avoidance of doubt, PMO shall not be subject to repayment of the billing amount to the Company (i.e., the Services Fee) in any event of termination or expiration of the Term or this Agreement.

 

		Period		Amount		Date (D)
Phase 1		1		US$250,000 (1)		Effective Date
		2		US$150,000 (2)		Within 45 days after Effective Date
		3		US$200,000 (3)		The 3 month after Effective Date
		4		US$150,000 (4)		The 6 month after Effective Date

 

 

Appendix.3

Warrant Agreement

(Attached)

 

 

Exhibit 10.2

 

EITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

Jyo Co., Ltd.

 

Warrant Shares: 80 (2%), subject to adjustment as set forth herein.

Issuance Date: February 23, 2024

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, HeartCore Enterprises, Inc., a Delaware corporation, or its registered assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Trigger Date (as defined below) and on or prior to the close of business on the tenth anniversary of the Trigger Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Jyo Co., Ltd., a Japanese corporation (the “Company”), the number of shares of capital stock (the “Common Stock”) of the Company (as subject to adjustment hereunder, the “Warrant Shares”) as set forth above. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2.

 

Section 1. Definitions; Warrant Shares. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Service Agreement dated as of the issuance date as set forth above (the “Issuance Date”) between the Company and the Holder (the “Service Agreement”). The Company and the Holder acknowledge and agree that the number of Warrant Shares as set forth above represent 2% of the issued and outstanding Common Stock as of the Issuance Date, and that such number of Warrant Shares shall be subject to adjustment as set forth herein. In addition, for purposes herein, the following terms shall have the following meanings:

 

(a)

“Fundamental Transaction” means (i) the Company, directly or indirectly, in one or more related transactions effecting any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effecting any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding shares of Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effecting any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummating a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), in each of clauses (i) through (v), inclusive, which is not a Restructuring.

 

 

	(b)	“IPO” means any event wherein any class of the Company’s stock becomes listed for trading on any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE American.
	(c)	“SPAC” means a special purpose acquisition company whose stock is listed for trading on any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE American.
	(d)	“Trigger Date” means the earlier of the date that either (i) the Company completes its first IPO, (ii) the Company consummates a merger or other transaction with a SPAC wherein the Company becomes a subsidiary of the SPAC; or (iii) the Company consummates any other Fundamental Transaction.

 

Section 2.

Exercise.

 

(a)

Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after Trigger Date and before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form attached hereto. Within two (2) Trading Days (as defined below) following the date of aforesaid exercise, the Holder shall deliver the aggregate Exercise Price (if the exercise is pursuant to Section 2(b)) for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company), the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within two (2) Trading Days of delivery of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof. For purposes herein, the term “Trading Day” means any day that shares of Common Stock are listed for trading or quotation on any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE American.

 

 

	(b)	Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $0.01, subject to adjustment as described herein (as applicable, the “Exercise Price”).
	(c)	Cashless Exercise. In the event that there is no effective registration statement registering the Warrant Shares, or no current prospectus available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at the Holder’s election, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) * (X)] by (A), where:

 

(A) = the Market Price (as defined below) on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise, where the “Market Price” equals the highest traded price of the Common Stock during the one hundred fifty (150) Trading Days prior to the date of the respective Exercise Notice;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

Notwithstanding anything herein to the contrary, on the Termination Date, unless the Holder notifies the Company otherwise, if there is no effective registration statement registering the Warrant Shares, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c); provided however, that if the automatic exercise contemplated under this Section shall result in a conflict with the beneficial ownership limitations of Section 2(f), the Termination Date shall be extended so long as necessary to provide for full exercise of the Warrant under this Section 2(c).

 

 

(d)

Anti-Dilution Adjustments to Exercise Price. If the Company or any Subsidiary (as defined below) thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or securities entitling any person or entity (for purposes of clarification, including but not limited to the Holder pursuant to (i) any other security of the Company issued to Holder on or after the Issuance Date or (ii) any other agreement entered into between the Company and Holder) to acquire shares of Common Stock (upon conversion, exercise or otherwise), at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents (as defined below) so issued shall at any time, whether by operation of purchase price adjustments, elimination of an applicable floor price for any reason in the future (including but not limited to the passage of time or satisfaction of certain condition(s)), reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled or potentially entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price at any time while such Common Stock or Common Stock Equivalents are in existence, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance (regardless of whether the Common Stock or Common Stock Equivalents are (i) subsequently redeemed or retired by the Company after the date of the Dilutive Issuance or (ii) actually converted or exercised at such Base Share Price), then the Exercise Price shall be reduced at the option of the Holder and only reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued, regardless of whether the Common Stock or Common Stock Equivalents are (i) subsequently redeemed or retired by the Company after the date of the Dilutive Issuance or (ii) actually converted or exercised at such Base Share Price by the holder thereof (for the avoidance of doubt, the Holder may utilize the Base Share Price even if the Company did not actually issue shares of its common stock at the Base Share Price under the respective Common stock Equivalents). The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 2(d), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 2(d), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. For purposes herein, “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

 

 

(e)

Mechanics of Exercise.

 

(i)

Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Company’s then-engaged transfer agent (the “Transfer Agent”) to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and there is an effective registration statement permitting the issuance of the Warrant Shares to, or resale of the Warrant Shares, by the Holder and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, prior to the issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the amount of $1,000.00 per Trading Day. The Company shall pay any payments incurred under this Section 2(e) in immediately available funds, or shares of Common Stock of the Company, in the Holder’s discretion, upon demand. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

 

(ii)

Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

(iii)

Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares by the Warrant Share Delivery Date, then the Holder will have the right, at any time prior to issuance of such Warrant Shares, to rescind such exercise.

 

 

(iv)

Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000.00 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000.00, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000.00. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

(v)

No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

(vi)

Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

 

 

(vii)

Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

(f)

Holder’s Exercise Limitations. From and after the date that the Warrant Shares are of a class of equity of the borrower registered under Section 12(g) of the Exchange Act or the Company is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, the Company shall not effect any exercise of this Warrant, and Holder shall not have the right to exercise any portion of this Warrant, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(f) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(f), in determining the number of outstanding shares of Common Stock, Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder may decrease the Beneficial Ownership Limitation at any time and the Holder, upon not less than sixty-one (61) days’ prior notice to the Company, may increase or waive the Beneficial Ownership Limitation provisions of this Section 2(f), provided that any such increase or waiver will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(f) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

Section 3.

Certain Adjustments and Revisions to Warrant.

 

(a)

Fundamental Transaction.

 

(i)

Transaction. If, at any time while this Warrant is outstanding, the Company consummates any Fundamental Transaction, then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares of common stock of the successor or acquiring corporation (the “Successor Entity”), of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction, and any references herein to the “Company”, whether standing alone or as a part of any other defined term, shall be deemed a reference to the successor or acquiring corporation in the Fundamental Transaction, or the Company if it is the surviving corporation, and this Warrant shall be so exercisable with respect to the Successor Entity or the Company, as applicable. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. If so requested by the Company, the Successor Entity or the Holder, each of the Company, the Successor Entity and the Holder shall reasonably cooperate to execute and deliver such agreements and documents as required to effect the intent of the provisions of this Section 3(a) and the other provisions herein.

 

(ii)

Holder Election. In the event that a Fundamental Transaction occurs prior to the full exercise of this Warrant, the Holder, in its sole discretion and as evidenced by written notice to the Company and the Successor Entity, if applicable, at any time shall have the right to elect to cause the Company and the Successor Entity, if applicable, to issue to Holder a new warrant of the Company or the Successor Entity (the “Fundamental Transaction Replacement Warrant”), which Fundamental Transaction Replacement Warrant shall be issued within three business days of such election by Holder, and shall reflect the terms and conditions herein following the effects of this Section 3(a), and the other provisions herein.

 

(iii)

Terms of Replacement Warrant. The Fundamental Transaction Replacement Warrant shall be substantially in the form of this Warrant (other than the last sentence of Section 5(e) shall be omitted, and such additional changes as reasonably required to reflect any Successor Entity as the issuer shall be made), and shall provide for the acquisition of the stock of the Company and the Successor Entity, as applicable, and will be for a number of shares of the Company and the Successor Entity comprising the number of shares of the Company and the Successor Entity into which 2% of the shares of the Company as of the Issuance Date as set forth above were converted or exchanged in the Fundamental Transaction, less any proportion of this Warrant which has been exercised as of the time of the issuance of the Fundamental Transaction Replacement Warrant. By way of example and not limitation, in the event that this Warrant was initially exercisable for 1,000 shares of the Company and the Company had 100,000 shares outstanding, and assuming no portion of this Warrant had been exercised, if all 100,000 shares of the Company were converted or exchanged in a Fundamental Transaction for 1,000,000 shares of the Successor Entity, the Fundamental Transaction Replacement Warrant would be exercisable for 10,000 shares of the Successor Entity. The Fundamental Transaction Replacement Warrant shall be governed by the laws of the jurisdiction of organization of the Company or the Successor Entity, as applicable. Upon any issuance of the Fundamental Transaction Replacement Warrant, this Warrant shall thereafter be null and void.

 

 

(b)

Restructuring.

 

(i)

New Entity. In addition to the other provisions herein, the Company and the Holder acknowledge and agree that, in connection with preparations for a Trigger Event, it is expected that the Company may create a new corporation (“Newco”), to undertake the Trigger Event, and in which event the Company is expected to be acquired by, or merge with, Newco or a subsidiary of Newco, such that Newco will be the entity that completes the Trigger Event (the “Restructuring”).

 

(ii)

Holder Election. In the event that the Restructuring is completed prior to the full exercise of this Warrant, the Holder, in its sole discretion and as evidenced by written notice to the Company at any time prior to or following the completion of the Restructuring, shall have the right to elect to cause the Company and Newco to issue to Holder a new warrant of Newco to replace this Warrant (the “Restructuring Replacement Warrant”), which Restructuring Replacement Warrant shall be issued within three business days of such election by Holder, and shall reflect the terms and conditions herein following the effects of this Section 3(b), and the other provisions herein.

 

(iii)

Terms of Restructuring Replacement Warrant. The Restructuring Replacement Warrant shall be substantially in the form of this Warrant (other than the last sentence of Section 5(e) shall be omitted, and such additional changes as reasonably required to reflect the Newco as the issuer shall be made), and shall provide for the acquisition of the stock of Newco, and will be for a number of shares of Newco comprising the number of shares of Newco into which 2% of the shares of the Company as of the Issuance Date as set forth above were converted or exchanged in the Restructuring, less any proportion of this Warrant which has been exercised as of the time of the issuance of the Restructuring Replacement Warrant. By way of example and not limitation, in the event that this Warrant was initially exercisable for 1,000 shares of the Company and the Company had 100,000 shares outstanding, and assuming no portion of this Warrant had been exercised, if all 100,000 shares of the Company were converted or exchanged in an Restructuring for 1,000,000 shares of Newco, the Restructuring Replacement Warrant would be exercisable for 10,000 shares of Newco. The Restructuring Replacement Warrant shall be governed by the laws of the jurisdiction of organization of Newco. Upon any issuance of the Restructuring Replacement Warrant, this Warrant shall thereafter be null and void.

 

(c)

Adjustment of Warrant Shares. The number of Warrant Shares for which this Warrant shall be exercisable shall be automatically adjusted on the Trigger Date to be 2% of the fully diluted number and class of shares of capital stock of the Company or any Successor Entity, as applicable, as of the Trigger Date, following completion of the transactions which caused the Trigger Date to be achieved.

 

 

(d)

Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(e)

Non-Circumvention. The intent of the provisions of this Section 3 is that the Holder will be entitled to acquire shares of stock in the entity in which or through which the Company consummates any Trigger Event, whether following a Restructuring or not, and whether being the Company, Newco or any Successor Entity, and the Company shall not undertake any actions or fail to take any actions which would reasonably be expected to frustrate such intent, and shall take such actions as reasonably required to effect such intent.

 

(f)

Voluntary Reduction. The Company may unilaterally reduce the Exercise Price at any time.

 

(g)

Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. For the avoidance of doubt, the adjustments to the number of Warrant Shares and to the Exercise Price as set forth in each of Section 2(d), Section 3(a), Section 3(b), Section 3(c) and Section 3(d), and any other adjustment or modification provisions herein, shall each operate independently of each other, and cumulatively.

 

(h)

Notice to Holder.

 

(i)

Adjustments. Whenever the Exercise Price or the number of Warrant Shares is adjusted pursuant to any provision in this Warrant, or in the event of any Fundamental Transaction or Restructuring, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price and the number of Warrant Shares after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

 

(ii)

Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on, or a redemption of, the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities; or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, to the extent that such information constitutes material non-public information (as determined in good faith by the Company) the Company shall follow the procedure described the Consulting Agreement and shall deliver to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 4.

Transfer of Warrant.

 

(a)

Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

 

(b)

New Warrants. Subject to compliance with all applicable securities laws, this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

(c)

Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 5.

Miscellaneous.

 

(a)

No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth herein.

 

(b)

Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

(c)

Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

 

(d)

Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant, which number shall be at least 300% of the number of Warrant Shares to be issued upon exercise of this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the trading market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value; (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant; and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant. Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. Failure to maintain sufficient shares for exercise of the Warrant, shall constitute an Event of Default under the Consulting Agreement and Holder shall be able to rely on any applicable default remedies thereunder.

 

(e)

Governing Law and Jurisdiction. This Warrant, and any and all claims, proceedings or causes of action relating to this Warrant or arising from this Warrant or the transactions contemplated herein, including, without limitation, tort claims, statutory claims and contract claims, shall be interpreted, construed, governed and enforced under and solely in accordance with the substantive and procedural laws of the State of Delaware, in each case as in effect from time to time and as the same may be amended from time to time, and as applied to agreements performed wholly within the State of Delaware. All questions concerning jurisdiction, venue and the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Consulting Agreement. Notwithstanding the foregoing, to the extent that the laws of Japan are required to apply hereto in order to give effect hereto, the laws of Japan shall so apply.

 

(f)

Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

 

(g)

Non-waiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Consulting Agreement, if the Company fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

(h)

Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Consulting Agreement.

 

(i)

Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(j)

Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

(k)

Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

(l)

Amendment. Other than as specifically set forth herein, this Warrant may be modified or amended or the provisions hereof waived only with the written consent of the Company and the Holder.

 

(m)

Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(n)

Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

(o)

Execution in Counterparts, Electronic Transmission. This Warrant may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

[Signatures appear on following page]

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of Issuance Date.

 

	Jyo Co., Ltd.
	By:	/s/ Kento Fukuoka
	Name:	Kento Fukuoka
	Title:	Chief Executive Officer

 

Agreed and accepted:
HeartCore Enterprises, Inc.
By:	/s/ Sumitaka Yamamoto
Name:	Sumitaka Yamamoto
Title:	Chief Executive Officer

 

 

NOTICE OF EXERCISE

 

TO: Jyo Co., Ltd.

 

(1) The undersigned hereby elects to purchase                    Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of lawful money of the United States;

 

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

(4) After giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

 

Name of Investing Entity:

 

 

Signature of Authorized Signatory of Investing Entity:

 

Name:
Title:
Date:

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.)

 

Jyo Co., Ltd.

 

FOR VALUE RECEIVED, [               ] all of or [              ] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to ____________________________________________________whose address is ___________________________________________________________________.

 

Dated: _______________________________________________,__________

 

Holder’s Signature:
Holder’s Address:

 

Signed in the presence of:

 

 

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

Exhibit 99.1

 

 

HeartCore Signs 12^th Go IPO Contract

 

NEW YORK and TOKYO, February 29, 2024 (GLOBE NEWSWIRE) — HeartCore Enterprises, Inc. (Nasdaq: HTCR) (“HeartCore” or the “Company”), a leading enterprise software and consulting services company based in Tokyo, announced that it has signed an agreement (“Consulting Agreement”) with Jyo Co., Ltd. (“Jyo”) for its 12^th Go IPO consulting service win.

 

“I am pleased to announce our 12^th Go IPO contract win and our first one for 2024,” said HeartCore CEO Sumitaka Kanno Yamamoto. “Demand remains robust as the HeartCore Go IPO brand continues to grow in the Japanese markets and attracts interest from companies seeking to list on a major U.S. exchange. Despite facing headwinds in a volatile IPO market, we continue to shepherd our clients through a typically grueling process with our white glove approach to ensure they’re successfully listed. The opportunities our consulting business brings to HeartCore’s overall financial potential and performance continue to remain a pillar in our long-term success. With notable progress and developments being made in our software business and global expansion initiatives, we remain focused on executing our two-pronged business and growth strategy.”

 

As part of the Consulting Agreement, HeartCore will assist Jyo in its efforts to go public and list on the Nasdaq Stock Market (“Nasdaq”) or the New York Stock Exchange (“NYSE”). Through Go IPO, the Company services clients by assisting throughout the audit and legal firm hiring process, translating requested documents into English, assisting in the preparation of documentation for internal controls required for an initial public offering or de-SPAC, providing general support services, assisting in the preparation of the S-1 or F-1 filing, and more. As compensation for its services, HeartCore expects to generate from Jyo an aggregate of $700,000 in initial fees. In addition, HeartCore has received a warrant to acquire 2% of Jyo’s common stock, on a fully diluted basis.

 

About HeartCore Enterprises, Inc.

 

Headquartered in Tokyo, Japan, HeartCore Enterprises is a leading enterprise software and consulting services company. HeartCore offers Software as a Service (SaaS) solutions to enterprise customers in Japan and worldwide. The Company also provides data analytics services that allow enterprise businesses to create tailored web experiences for their clients through best-in-class design. HeartCore’s customer experience management platform (CXM Platform) includes marketing, sales, service and content management systems, as well as other tools and integrations, which enable companies to enhance the customer experience and drive engagement. HeartCore also operates a digital transformation business that provides customers with robotics process automation, process mining and task mining to accelerate the digital transformation of enterprises. HeartCore’s GO IPO^SM consulting services helps Japanese-based companies go public in the U.S. Additional information about the Company’s products and services is available at https://heartcore-enterprises.com/.

 

Forward-Looking Statements

 

All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as “believed,” “intend,” “expect,” “anticipate,” “plan,” “potential,” “continue,” or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks, and uncertainties are discussed in HeartCore’s filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond HeartCore’s control which could, and likely will materially affect actual results, and levels of activity, performance, or achievements. Any forward-looking statement reflects HeartCore’s current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to operations, results of operations, growth strategy, and liquidity. HeartCore assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The contents of any website referenced in this press release are not incorporated by reference herein.

 

HeartCore Investor Relations Contact:

 

Gateway Group, Inc.

Matt Glover and John Yi

HTCR@gateway-grp.com

(949) 574-3860

 

 

v3.24.0.1

Cover	Feb. 23, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 23, 2024
Entity File Number	001-41272
Entity Registrant Name	HEARTCORE ENTERPRISES, INC.
Entity Central Index Key	0001892322
Entity Tax Identification Number	87-0913420
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1-2-33
Entity Address, Address Line Two	Higashigotanda
Entity Address, Address Line Three	Shinagawa-ku
Entity Address, City or Town	Tokyo
Entity Address, Country	JP
City Area Code	+81-3
Local Phone Number	6409-6966
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	HTCR
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

---