# EDGAR Filing Document

**Accession Number:** 0001892322
**File Stem:** 0001213900-25-075659
**Filing Date:** 2025-8
**Character Count:** 28234
**Document Hash:** e388d905549175454f9d43b31d237c58
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-075659.hdr.sgml**: 20250813

**ACCESSION NUMBER**: 0001213900-25-075659

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20250813

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20250813

**DATE AS OF CHANGE**: 20250813

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** HeartCore Enterprises, Inc.
- **CENTRAL INDEX KEY:** 0001892322
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 870913420
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41272
- **FILM NUMBER:** 251211519

**BUSINESS ADDRESS:**
- **STREET 1:** 1-2-33, HIGASHIGOTANDA,
- **STREET 2:** SHINAGAWA-KU
- **CITY:** TOKYO
- **STATE:** M0
- **ZIP:** 1410022
- **BUSINESS PHONE:** 650-695-2583

**MAIL ADDRESS:**
- **STREET 1:** 848 JORDAN AVE. APT G
- **CITY:** LOS ALTOS
- **STATE:** CA
- **ZIP:** 94022

?xml version='1.0' encoding='ASCII'?

**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) **<u>August 13, 2025</u>**

**<u>HEARTCORE ENTERPRISES, INC.</u>**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Delaware** | **001-41272** | **87-0913420** |
| (State or other jurisdiction<br> of incorporation) | (Commission File Number) | (IRS Employer<br> Identiﬁcation No.) |

---

---

| | |
|:---|:---|
| **1-2-33, Higashigotanda, <br> Shinagawa, Tokyo, Japan** | **141-0022** |
| (Address of principal executive offices) | (Zip Code) |

---

Registrant's telephone number, including area code **<u>+81-3-6409-6966</u>**

**<u>N/A</u>**

(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 obligation of the registrant under any of the following provisions (<u>see</u> General Instruction A.2. below):

☐ 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 2.02. Results of Operations and Financial Condition.**

On August 13, 2025, HeartCore Enterprises, Inc. (the "Company") issued a press release announcing financial results for the three and six months ended June 30, 2025. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in any website is not a part of this Current Report on Form 8-K.

The information included in this Item 2.02, 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 (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

**Item 9.01. Financial Statements and Exhibits.**

(d) Exhibits.

---

| | |
|:---|:---|
| **Exhibit No**. | **Description** |
| 99.1 | [Press release of the registrant dated August 13, 2025.](ea025303701ex99-1_heartcore.htm) |
| 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 thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: August 13, 2025 | **HEARTCORE ENTERPRISES, INC.** | **HEARTCORE ENTERPRISES, INC.** |
|  | By: | */s/ Sumitaka Yamamoto* |
|  |  | Sumitaka Yamamoto |
|  |  | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**HeartCore Reports Financial Results for Second Quarter and Six Months Ended June 30, 2025**

**NEW YORK and TOKYO, August 13, 2025 (GLOBE NEWSWIRE) – HeartCore Enterprises, Inc. (Nasdaq: HTCR) ("HeartCore" or the "Company"),** a leading enterprise software and consulting services company based in Tokyo, reported financial results for the second quarter and six months ended June 30, 2025.

**Second Quarter 2025 and Recent Operational & Financial Highlights**

● As of June 30, 2025, HeartCore's total shareholders' equity totaled $3.5 million. The Company believes that it is now in compliance with the $2.5 million minimum stockholders' equity requirement set forth in Nasdaq Listing Rule 5550(b) for continued listing on the Nasdaq Capital Market.

● Partnered with Silver Egg Technology CO., Ltd. to integrate new recommendation engine into its CMS platform.

● Signed 15<sup>th</sup> and 16<sup>th</sup> Go IPO Contract.

● Announced strategic partnership with NEC Solutions Innovators, Ltd. to enhance CMS implementation process.

**Management Commentary**

"I am pleased to report a strong second quarter, marked by our return to profitability," said HeartCore CEO Sumitaka Kanno. "These results reflect the resilience of our software business, which was bolstered by a significant deal with a major infrastructure company that was closed during the quarter. Our second quarter results were particularly encouraging, especially during a period without any Go IPO client listings. We signed our 15<sup>th</sup> and 16<sup>th</sup> Go IPO contract wins late in the second quarter and early in the third quarter, but more notably, we expect one of our existing Go IPO clients to successfully list on the Nasdaq Stock Market in the near-term. This is expected to further strengthen our results in the third quarter. In the broader IPO market, there were several other APAC-based companies outside of our pipeline that successfully listed in 2025, which we view as a positive indicator for our Go IPO business. Looking ahead, we are excited to host our Go IPO Korea event next month, which we hope will mark the beginning of a stronger presence in the Korean market. With encouraging signs from the general IPO landscape, we remain focused on expanding our reach to APAC companies seeking to list on U.S. exchanges, while continuing to guide our existing clients throughout the listing process and ultimately, across the finish line as a publicly traded company."

**Second Quarter 2025 Financial Results**

Revenues increased by 16.7% to $4.7 million, compared to $4.1 million in the same period last year. The increase was primarily due to (i) the increased sale of on-premise software mainly from multiple large orders of CMS licenses in the second quarter of 2025, compared to the same period last year, (ii) increased software-as-a-service ("SaaS") revenue due to the Company putting more efforts into expanding and promoting its traditional SaaS business in Japan, and (iii) obtaining more orders, partially offset by (iv) a decrease in customized software development and services revenue in connection with the intense competition of the software market in the U.S., and a decrease in software development and other services, mainly as the Company shifted its business strategies to focus more on development and expansion its on-premise software revenue and SaaS revenue.

![](ex99-1_001.jpg)

Gross profit increased 175.2% to $2.2 million, compared to $0.8 million in the same period last year. The increase was primarily due to (i) an increase in gross profit from sales of on-premise software as the sale increased dramatically while there was not much change in the corresponding costs as the product was developed independently and fixed costs which were not proportional to sales, (ii) an increase in gross profit from customized software development and services as Sigmaways reduced outsourcing costs by ending cooperation with costly vendors, resulting in costs that decreased more dramatically than revenue did, and (iii) an increase in gross profit from the Company's IPO consulting services.

Operating expenses decreased to $2.1 million, compared to $2.3 million in the same period last year. The decrease was primarily due to a decrease in general and administrative expenses.

Net income was $1.1 million, compared to a net loss of $2.2 million in the same period last year, as a result of the aforementioned increases in revenue and gross profit.

Adjusted EBITDA was $0.1 million for the second quarter of 2025, compared to $(1.2) million in the same period last year.

As of June 30, 2025, the Company had cash and cash equivalents of $2.3 million, compared to $2.1 million on December 31, 2024.

**Six Months Ended June 30, 2025 Financial Results**

Revenues were $8.3 million, compared to $9.1 million in the same period last year. The decrease was primarily due to (i) a decrease in customized software development and services revenue in connection with a slowdown in Sigmaways revenue, driven by intensified competition in the U.S. software market, (ii) decreased Go IPO consulting services revenue mainly due to fewer ongoing IPO consulting projects, (iii) decreased software development and other services revenue mainly as the Company shifted its business strategies to focus more on development and expansion of its on-premise software and SaaS revenue in the second quarter of 2025, resulting in fewer resources and efforts dedicated to software development and other services, partially offset by (iv) an increase in on-premise software revenue due to the Company obtaining several large CMS license orders in the current period.

Gross profit increased 16.9% to $3.3 million, compared to $2.8 million in the same period last year. The increase was primarily due to (i) an increase in gross profit from the sale of on-premise software, as sales rose significantly while related costs remained largely unchanged since the product was independently developed with fixed costs not proportional to sales, and (ii) increased gross profit from customized software development and services, as Sigmaways reduced outsourcing costs by ending cooperation with costly vendors in the current period.

Operating expenses decreased to $4.4 million, compared to $5.0 million in the same period last year. The improvement was primarily due to a decrease in general and administrative expenses.

Net loss improved to $2.1 million, compared to a loss of $3.7 million in the same period last year, as a result of the aforementioned increase in gross profit during the period and increase in revenue in the second quarter.

Adjusted EBITDA was $(1.1) million for the six months ended June 30, 2025, compared to $(1.6) million in the same period last year.

**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<sup>SM</sup> consulting services helps Japanese-based companies go public in the U.S. Additional information about the Company's products and services is available at and https://heartcore-enterprises.com/.

**Non-GAAP Financial Measures Disclaimer**

This document includes references to adjusted EBITDA, which is a non-GAAP financial measure. For the purposes of this presentation, adjusted EBITDA is calculated by adjusting net loss to exclude depreciation and amortization, changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income, and interest expenses.

This measure is presented as supplemental information and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the U.S. ("GAAP").

Management believes that adjusted EBITDA provides useful information to investors by highlighting the Company's core operational performance, excluding non-cash and non-recurring items. However, non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

---

| | | |
|:---|:---|:---|
| | **For the three months ended <br> June 30,** | **For the three months ended <br> June 30,** |
| <br>**Item** | **2025** | **2024** |
| Net loss | $1.1 million | $-2.2 million |
| (+) Depreciation and amortization expense | $0.0 million | $0.2 million |
| (+) Changes in fair value of investments in marketable securities | $-0.9 million | $0.2 million |
| (+) Changes in fair value of investment in warrants | $-0.1 million | $0.6 million |
| (-) Interest income | $0.0 million | $0.0 million |
| (+) Interest expenses | $0.0 million | $0.0 million |
| Adjusted EBITDA | $0.1 million | $-1.2 million |

---

![](ex99-1_001.jpg)

---

| | | |
|:---|:---|:---|
| | **For the six months ended <br> June 30,** | **For the six months ended <br> June 30,** |
| <br>**Item** | **2025** | **2024** |
| Net loss | $-2.1 million | $-3.7 million |
| (+) Depreciation and amortization expense | $0.0 million | $0.4 million |
| (+) Changes in fair value of investments in marketable securities | $0.9 million | $0.4 million |
| (+) Changes in fair value of investment in warrants | $-0.1 million | $1.2 million |
| (-) Interest income | $0.0 million | $0.0 million |
| (+) Interest expenses | $0.1 million | $0.1 million |
| Adjusted EBITDA | $-1.1 million | $-1.6 million |

---

**Forward-Looking Statements**

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, or the Private Securities Litigation Reform Act of 1995. 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

![](ex99-1_001.jpg)

**HEARTCORE ENTERPRISES, INC.**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br>**2025** | **December 31,**<br>**2024** |
|  | **(Unaudited)** | |
| **ASSETS** | **ASSETS** | **ASSETS** |
| **Current assets:** |  |  |
| Cash and cash equivalents | $2347622 | $2121089 |
| Accounts receivable | 3000337 | 1950050 |
| Investments in marketable securities | 2495016 | 4495703 |
| Prepaid expenses | 503171 | 458839 |
| Current portion of long-term note receivable | 100000 | 100000 |
| Due from related party | 44148 | 40139 |
| Deferred offering costs | 250000 |  |
| Other current assets | 186944 | 251545 |
| **Total current assets** | **8927238** | **9417365** |
| **Non-current assets:** |  |  |
| Accounts receivable, non-current | 1058539 | 752930 |
| Property and equipment, net | 442475 | 584854 |
| Operating lease right-of-use assets | 1853466 | 1936097 |
| Long-term investment in warrants | 650446 | 577786 |
| Long-term note receivable | 100000 | 100000 |
| Deferred tax assets | 138263 | 152300 |
| Security deposits | 225649 | 307996 |
| Long-term loan receivable from related party | 114230 | 123928 |
| Other non-current assets | 15014 | 11778 |
| **Total non-current assets** | **4598082** | **4547669** |
| **Total assets** | $**13525320** | $**13965034** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** | **LIABILITIES AND SHAREHOLDERS' EQUITY** | **LIABILITIES AND SHAREHOLDERS' EQUITY** |
| **Current liabilities:** |  |  |
| Accounts payable and accrued expenses | $1758084 | $2039323 |
| Accounts payable and accrued expenses - related party | 22924 | 47199 |
| Accrued payroll and other employee costs | 752787 | 675502 |
| Due to related parties | 590 | 932 |
| Short-term debt - related party | 75000 | 75000 |
| Current portion of long-term debts | 382494 | 401255 |
| Insurance premium financing | 90869 | 16626 |
| Factoring liability | 226212 | 172394 |
| Operating lease liabilities, current | 290886 | 371951 |
| Finance lease liabilities, current | 17666 | 15956 |
| Income tax payables | 716263 | 822014 |
| Deferred revenue | 1702068 | 1876490 |
| Derivative liability | 236141 |  |
| Other current liabilities | 821858 | 907080 |
| **Total current liabilities** | **7093842** | **7421722** |
| **Non-current liabilities:** |  |  |
| Long-term debts | 1097263 | 1238813 |
| Operating lease liabilities, non-current | 1613378 | 1614996 |
| Finance lease liabilities, non-current | 39085 | 43593 |
| Asset retirement obligations | 122735 | 183895 |
| **Total non-current liabilities** | **2872461** | **3081297** |
| **Total liabilities** | **9966303** | **10503019** |
| **Shareholders' equity:** |  |  |
| Preferred shares, $0.0001 par value, 20,000,000 shares authorized; Series A convertible preferred shares, 2,000 and no shares designated, issued and outstanding as of June 30, 2025 and December 31, 2024, respectively; aggregate liquidation preference of $2,200,611 and nil as of June 30, 2025 and December 31, 2024, respectively |  |  |
| Common shares, $0.0001 par value, 200,000,000 shares authorized, 23,310,770 and 21,937,987 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | 2331 | 2193 |
| Subscription receivable |  | (103942) |
| Additional paid-in capital | 22676912 | 20656153 |
| Accumulated deficit | (18231933) | (16244843) |
| Accumulated other comprehensive income | 393124 | 343936 |
| **Total HeartCore Enterprises, Inc. shareholders' equity** | **4840434** | **4653497** |
| Non-controlling interests | (1281417) | (1191482) |
| **Total shareholders' equity** | **3559017** | **3462015** |
| **Total liabilities and shareholders' equity** | $**13525320** | $**13965034** |

---

**HEARTCORE ENTERPRISES, INC.**

**Unaudited Consolidated Statements of Operations and Comprehensive Loss**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2025** | **2024** |
| Revenues | $8331272 | $9113120 |
| Cost of revenues | 5013393 | 6275050 |
| **Gross profit** | 3317879 | 2838070 |
| **Operating expenses:** |  |  |
| &nbsp;&nbsp;&nbsp;Selling expenses | 676782 | 399115 |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 3492415 | 4428712 |
| &nbsp;&nbsp;&nbsp;Research and development expenses | 285374 | 200402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total operating expenses** | 4454571 | 5028229 |
| **Income (loss) from operations** | (1136692) | (2190159) |
| **Other income (expenses):** |  |  |
| &nbsp;&nbsp;&nbsp;Changes in fair value of investments in marketable securities | (928955) | (430331) |
| &nbsp;&nbsp;&nbsp;Changes in fair value of investment in warrants | 72660 | (1237707) |
| &nbsp;&nbsp;&nbsp;Interest income | 4861 | 4624 |
| &nbsp;&nbsp;&nbsp;Interest expenses | (61798) | (73701) |
| &nbsp;&nbsp;&nbsp;Other income | 56920 | 134874 |
| &nbsp;&nbsp;&nbsp;Other expenses | (29797) | (49050) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total other income (expenses)** | (886109) | (1651291) |
| **Income (loss) before income tax expense (benefit)** | (2022801) | (3841450) |
| Income tax expense (benefit) | 53074 | (152330) |
| **Net income (loss)** | (2075875) | (3689120) |
| Less: net loss attributable to non-controlling interests | (88785) | (404670) |
| **Net income (loss) attributable to HeartCore Enterprises, Inc.** | (1987090) | (3284450) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends accrued on Series A convertible preferred shares | (611) | - |
| **Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders** | $(1987701) | $(3284450) |
| **Other comprehensive income (loss):** |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | 48038 | (13825) |
| **Total comprehensive income (loss)** | (2027837) | (3702945) |
| Less: comprehensive loss attributable to non-controlling interests | (89935) | (412471) |
| **Comprehensive income (loss) attributable to HeartCore Enterprises, Inc.** | $(1937902) | $(3290474) |
| **Net income (loss) per common share attributable to HeartCore Enterprises, Inc.** |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $(0.09) | $(0.16) |
| &nbsp;&nbsp;&nbsp;Diluted | $(0.09) | $(0.16) |
| **Weighted average common shares outstanding** |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 22072324 | 20859429 |
| &nbsp;&nbsp;&nbsp;Diluted | 22072324 | 20859429 |

---

![](ex99-1_001.jpg)

**HEARTCORE ENTERPRISES, INC.**

**Unaudited Consolidated Statements of Cash Flows**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br> June 30,** | **For the six months ended<br> June 30,** |
|  | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| Net loss | $(2075875) | $(3689120) |
| **Adjustments to reconcile net loss to net cash flows used in operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization expenses | 42437 | 374946 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property and equipment | 117305 | 1894 |
| &nbsp;&nbsp;&nbsp;Amortization of debt issuance costs | 2194 | 2296 |
| &nbsp;&nbsp;&nbsp;Non-cash lease expense | 163354 | 182546 |
| &nbsp;&nbsp;&nbsp;Gain on termination of lease | (9059) | (469) |
| &nbsp;&nbsp;&nbsp;Deferred income taxes | 28008 | (153531) |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 60204 | 147754 |
| &nbsp;&nbsp;&nbsp;Changes in fair value of investments in marketable securities | 928955 | 430331 |
| &nbsp;&nbsp;&nbsp;Changes in fair value of investment in warrants | (72660) | 1237707 |
| &nbsp;&nbsp;&nbsp;Gain on settlement of asset retirement obligations | (45873) |  |
| **Changes in assets and liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | (1145166) | (823402) |
| &nbsp;&nbsp;&nbsp;Prepaid expenses | 126001 | 158110 |
| &nbsp;&nbsp;&nbsp;Other assets | 182063 | (7526) |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | (320566) | 272375 |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses - related party | (23386) | 21956 |
| &nbsp;&nbsp;&nbsp;Accrued payroll and other employee costs | 31589 | (278361) |
| &nbsp;&nbsp;&nbsp;Due to related parties | (370) | (1246) |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | (159030) | (183047) |
| &nbsp;&nbsp;&nbsp;Income tax payables | (108943) | (152697) |
| &nbsp;&nbsp;&nbsp;Deferred revenue | (282704) | 165073 |
| &nbsp;&nbsp;&nbsp;Other liabilities | (113370) | 558667 |
| **Net cash flows used in operating activities** | **(2674892)** | **(1735744)** |
| **Cash flows from investing activities:** |  |  |
| Purchases of property and equipment | (1235) | (4134) |
| Prepayment for property and equipment |  | (35209) |
| Purchase of investment in SAFE |  | (75000) |
| Net proceeds from sale of warrants |  | 5640000 |
| Proceeds from sale of marketable securities | 1071732 |  |
| Repayment of loan provided to related party | 21139 | 21166 |
| **Net cash flows provided by investing activities** | **1091636** | **5546823** |
| **Cash flows from financing activities:** |  |  |
| Payments for finance leases | (8375) | (8526) |
| Proceeds from short-term debt | 134689 | 68138 |
| Repayment of short-term and long-term debts | (395495) | (281451) |
| Repayment of insurance premium financing | (65257) | (60201) |
| Net proceeds from factoring arrangement | 53818 |  |
| Net repayment of factoring arrangement |  | (242008) |
| Capital contribution from non-controlling shareholder |  | 67195 |
| Distribution of dividends |  | (417283) |
| Proceeds from issuance of common shares | 30445 |  |
| Proceeds from collection of subscription receivable | 103942 |  |
| Proceeds from exercise of stock options | 117000 |  |
| Proceeds from issuance of Series A convertible preferred shares and common shares related to securities purchase agreement, net of share issuance costs | 1800000 | - |
| **Net cash flows provided by (used in) financing activities** | **1770767** | **(874136)** |
| Effect of exchange rate changes | 39022 | (143073) |
| Net change in cash and cash equivalents | 226533 | 2793870 |
| Cash and cash equivalents - beginning of the period | 2121089 | 1012479 |
| **Cash and cash equivalents - end of the period** | $**2347622** | $**3806349** |
| **Supplemental cash flow disclosures:** |  |  |
| Interest paid | $63320 | $74063 |
| Income taxes paid | $131118 | $117524 |
| **Non-cash investing and financing transactions:** |  |  |
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $23495 | $125735 |
| Insurance premium financing | $139500 | $172689 |
| Warrants converted to marketable securities | $- | $223481 |
| Issuance of common shares related to equity purchase agreement | $250000 | $- |
| Dividends accrued on Series A convertible preferred shares | $611 | $- |

---