8-K
HeartCore Enterprises, Inc. (HTCR)
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):March 31, 2025
HEARTCORE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-41272 | 87-0913420 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>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 2.02. Resultsof Operations and Financial Condition.
On March 31, 2025, HeartCore Enterprises, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal year ended December 31, 2024. 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. FinancialStatements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release of the registrant issued on March 31, 2025. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
1
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: March 31, 2025 | By: | /s/ Sumitaka Yamamoto |
| Name: | Sumitaka Yamamoto | |
| Title: | Chief Executive Officer |
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Exhibit 99.1
HeartCore Reports 2024 Financial Results
NEW YORK and TOKYO, March 31, 2025 (GLOBE NEWSWIRE) – HeartCoreEnterprises, Inc. (Nasdaq: HTCR) (“HeartCore” or the “Company”), a leading enterprise software and consulting services company based in Tokyo, reported financial results for the year ended December 31, 2024.
Recent Operational & Financial Highlights
| ● | 2024 revenue increased 39% to $30.4 million year-over-year |
|---|---|
| ● | HeartCore recorded $7.2 million in impairment of goodwill and intangible<br>asset related to acquisition of its subsidiary Sigmaways. The losses are considered as a one-time occurrence that will not affect the<br>Company’s business and financial performance in the future quarters. |
| --- | --- |
| ● | Established<br> new business development team aimed at strengthening customer success across HeartCore’s<br> CMS business |
| --- | --- |
| ● | Announced<br> plans to expand the Go IPO consulting business into South Korea. The Company adjusted its<br> scheduled South Korea IPO seminar event to September 2025 |
| --- | --- |
| ● | Announced<br> new digital customer experience initiatives and cross-selling efforts |
| --- | --- |
| ● | Regained<br> compliance with Nasdaq’s continued listing requirements |
| --- | --- |
| ● | Expanded<br> CMS platform offering into a SaaS delivery model |
| --- | --- |
| ● | Entered<br> into a sales collaboration with Tosho Computer Systems Co., Ltd. |
| --- | --- |
| ● | Announced<br> transition from annual contracts to multi-year agreements for core software business contracts |
| --- | --- |
| ● | Partnered<br> with NTT Data Business Brains Corporation to enhance website development service capabilities |
| --- | --- |
| ● | Achieved<br> top market share in Japan for nine consecutive years |
| --- | --- |
| ● | Awarded<br> new contract from Fourmix Co., Ltd. to implement CMS platform |
| --- | --- |
Management Commentary
HeartCore CEO Sumitaka Kanno commented: “Over the past year, we made several strategic advancements in our software business model, all aimed at driving sustainable and predictable revenue growth, improving margins, and enhancing our ability to effectively cross-sell and upsell to our 1,000+ enterprise customers. While we are confident that the initiatives we have implemented will yield meaningful returns, we have also recognized that strategic acquisitions will be critical to maintaining our market leadership in Japan and sustaining our strong customer retention rate. With a well-established customer base built over the years, our acquisition strategy will primarily focus on deepening wallet share with each client we are engaged with, while seamlessly complementing and enhancing our existing suite of software solutions. This will include acquiring companies with synergistic technologies that align with our core offerings and leveraging effective use of AI to strengthen our value proposition and competitive edge. Outside of acquisitions, another key focus for HeartCore will be to accelerate the development of new products geared for global expansion in 2025, with the target launch aimed for the first half of 2026. Currently, only a small portion of our customer base consists of enterprises outside of Japan. By focusing on creating globally scalable solutions and enhancing our offerings with synergistic technologies through strategic acquisitions, we aim to expand our presence across international markets and drive additional growth in our software business.”
“Looking at our financial performance, we recorded approximately $7.2 million in impairment of goodwill and intangible asset, primarily related to our subsidiary, Sigmaways. While these losses impacted our full-year results, they are classified as one-time occurrences and are not expected to affect our financial performance in future quarters. To address this, we have already implemented several corrective measures, including separating Sigmaways’ liabilities and suspending all transactions with small venture companies to minimize any non-essential costs. While net loss for the year was $5.2 million, we believe a more relevant measure of our performance is adjusted EBITDA, which totaled $7.3 million for 2024, as it excludes the losses related to Sigmaways. Nevertheless, our subsidiaries continue to deliver synergistic technologies that enable us to effectively upsell and cross-sell to our shared clients. We believe that over the long term, as we continue to develop and innovate our solutions, acquire new technologies through M&A, and tap into mutual client portfolios across our partners and subsidiaries, we will drive positive outcomes for our financial performance.”
“Outside of exploring synergistic M&A opportunities within our software business to fuel growth, we are also focused on expanding our Go IPO business. We recently announced our plans to extend our service into South Korea and have formed a strategic partnership with a venture fund in the region. To kick off this initiative, we will be hosting a seminar in September of this year. South Korea will be the first of several markets we aim to expand into across the APAC region, as IPO interests from foreign issuers have steadily increased over the years. Expanding beyond Japan’s borders marks a significant milestone for our Go IPO business, opening up new opportunities for us to leverage. To ensure successful market entry, we are actively seeking strategic partnerships, such as in South Korea, to gain access to their clientele portfolio that are interested in our services. We remain dedicated to executing both lines of business and look forward to our growth prospects throughout 2025.”
2024 Financial Results
Revenues increased 39% to $30.4 million, compared to $21.8 million in the same period last year. The increase was primarily due to revenue from warrants and ordinary shares associated with the successful listing of two Go IPO consulting service clients.
Gross profit increased 121% to $17.8 million, compared to $8.1 million in the same period last year. The increase was primarily due to the aforementioned reason.
Operating expenses increased 46% to $17.8 million, compared to $12.2 million in the same period last year. The increase was primarily due to impairment of goodwill and intangible asset totaling approximately $7.2 million primarily related to our subsidiary, Sigmaways. The Company anticipates these impairment losses to be a one-time occurrence and does not foresee any material impact on its financial performance in future quarters.
Net loss for 2024 was $5.2 million. Net loss attributable to HeartCore improved to $1.5 million, compared to a loss of $4.2 million in the same period last year.
Adjusted EBITDA for the year totaled $7.3 million compared to $(3.6) million in the same period last year.
As of December 31, 2024, the Company had cash and cash equivalents of $2.1 million, compared to $1.0 million on December 31, 2023.
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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 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, impairment of intangible asset, and impairment of goodwill.
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 U.S. GAAP.
Management believes that this 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.
| Item | FY24 | FY23 | ||
|---|---|---|---|---|
| Net Loss | -$ | 5.2<br> million | -$ | 4.9<br> million |
| (+) Depreciation | $ | 0.1<br> million | $ | 0.1<br> million |
| (+) Impairment loss on goodwill | $ | 3.3<br> million | $ | 0.0<br> million |
| (+) Impairment loss on intangible<br> assets | $ | 3.9<br> million | $ | 0.0<br> million |
| (+) Changes in fair value<br> of investments in marketable securities | $ | 2.4<br> million | $ | 0.6<br> million |
| (+) Changes in fair value<br> of investment in warrants | -$ | 1.7<br> million | $ | 0.5<br> million |
| (+) Loss on sale of warrants | $ | 4.0<br> million | $ | 0.0<br> million |
| (+) Impairment of investment<br> in equity securities | $ | 0.3<br> million | $ | 0.0<br> million |
| (+) Loss on forgiveness of<br> note receivable | $ | 0.1<br> million | $ | 0.0<br> million |
| (+) Interest income | $ | 0.0<br> million | -$ | 0.1<br> million |
| (+) Interest expenses | $ | 0.1<br> million | $ | 0.2<br> million |
| (+) Government grants | $ | 0.0<br> million | -$ | 0.1<br> million |
| Adjusted EBITDA | $ | 7.3<br> million | -$ | 3.6<br> 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
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HEARTCORE ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, | |||||
|---|---|---|---|---|---|
| 2023 | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 2,121,089 | $ | 1,012,479 | ||
| Accounts receivable | 1,950,050 | 2,623,682 | |||
| Investments in marketable securities | 4,495,703 | 642,348 | |||
| Investment in equity securities | - | 300,000 | |||
| Prepaid expenses | 458,839 | 536,865 | |||
| Current portion of long-term note receivable | 100,000 | 100,000 | |||
| Due from related party | 40,139 | 44,758 | |||
| Other current assets | 251,545 | 234,761 | |||
| Total current assets | 9,417,365 | 5,494,893 | |||
| Non-current assets: | |||||
| Accounts receivable, non-current | 752,930 | - | |||
| Property and equipment, net | 584,854 | 763,730 | |||
| Operating lease right-of-use assets | 1,936,097 | 2,467,889 | |||
| Intangible asset, net | - | 4,515,625 | |||
| Goodwill | - | 3,276,441 | |||
| Long-term investment in warrants | 577,786 | 2,004,308 | |||
| Long-term note receivable | 100,000 | 200,000 | |||
| Deferred tax assets | 152,300 | 369,436 | |||
| Security deposits | 307,996 | 348,428 | |||
| Long-term loan receivable from related party | 123,928 | 182,946 | |||
| Other non-current assets | 11,778 | 71 | |||
| Total non-current assets | 4,547,669 | 14,128,874 | |||
| Total assets | 13,965,034 | $ | 19,623,767 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable and accrued expenses | 2,039,323 | $ | 1,757,038 | ||
| Accounts payable and accrued expenses - related party | 47,199 | - | |||
| Accrued payroll and other employee costs | 675,502 | 723,305 | |||
| Due to related parties | 932 | 1,476 | |||
| Short-term debt | - | 135,937 | |||
| Short-term debt - related party | 75,000 | - | |||
| Current portion of long-term debts | 401,255 | 371,783 | |||
| Insurance premium financing | 16,626 | - | |||
| Factoring liability | 172,394 | 562,767 | |||
| Operating lease liabilities, current | 371,951 | 396,535 | |||
| Finance lease liabilities, current | 15,956 | 17,445 | |||
| Income tax payables | 822,014 | 162,689 | |||
| Deferred revenue | 1,876,490 | 2,166,175 | |||
| Other current liabilities | 907,080 | 216,405 | |||
| Total current liabilities | 7,421,722 | 6,511,555 | |||
| Non-current liabilities: | |||||
| Long-term debts | 1,238,813 | 1,770,352 | |||
| Operating lease liabilities, non-current | 1,614,996 | 2,135,160 | |||
| Finance lease liabilities, non-current | 43,593 | 66,779 | |||
| Deferred tax liabilities | - | 1,264,375 | |||
| Other non-current liabilities | 183,895 | 208,732 | |||
| Total non-current liabilities | 3,081,297 | 5,445,398 | |||
| Total liabilities | 10,503,019 | 11,956,953 | |||
| Shareholders' equity: | |||||
| Preferred shares (0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of December 31, 2024 and 2023) | - | - | |||
| Common shares (0.0001 par value, 200,000,000 shares authorized; 21,937,987 and 20,842,690 shares issued and outstanding as of December 31, 2024 and 2023, respectively) | 2,193 | 2,083 | |||
| Subscription receivable | (103,942 | ) | - | ||
| Additional paid-in capital | 20,656,153 | 19,594,801 | |||
| Accumulated deficit | (16,244,843 | ) | (14,763,469 | ) | |
| Accumulated other comprehensive income | 343,936 | 331,881 | |||
| Total HeartCore Enterprises, Inc. shareholders' equity | 4,653,497 | 5,165,296 | |||
| Non-controlling interests | (1,191,482 | ) | 2,501,518 | ||
| Total shareholders' equity | 3,462,015 | 7,666,814 | |||
| Total liabilities and shareholders' equity | 13,965,034 | $ | 19,623,767 |
All values are in US Dollars.
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HEARTCORE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVELOSS
| For the year ended<br><br> December 31, | For the year ended<br><br> December 31, | |||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Revenues | $ | 30,407,229 | $ | 21,845,830 | ||
| Cost of revenues | 12,579,359 | 13,778,416 | ||||
| Gross profit | 17,827,870 | 8,067,414 | ||||
| Operating expenses: | ||||||
| Selling expenses | 1,255,368 | 1,516,247 | ||||
| General and administrative expenses | 8,623,587 | 9,651,381 | ||||
| Research and development expenses | 729,584 | 1,019,141 | ||||
| Impairment of intangible asset | 3,878,125 | - | ||||
| Impairment of goodwill | 3,276,441 | - | ||||
| Total operating expenses | 17,763,105 | 12,186,769 | ||||
| Income (loss) from operations | 64,765 | (4,119,355 | ) | |||
| Other income (expenses): | ||||||
| Changes in fair value of investments in marketable securities | (2,412,385 | ) | (615,520 | ) | ||
| Changes in fair value of investment in warrants | 1,657,699 | (501,445 | ) | |||
| Loss on sale of warrants | (3,970,628 | ) | - | |||
| Impairment of investment in equity securities | (300,000 | ) | - | |||
| Loss on forgiveness of note receivable | (100,000 | ) | - | |||
| Interest income | 18,835 | 70,624 | ||||
| Interest expenses | (144,033 | ) | (162,968 | ) | ||
| Government grants | - | 76,612 | ||||
| Other income | 260,918 | 366,283 | ||||
| Other expenses | (424,893 | ) | (124,595 | ) | ||
| Total other expenses | (5,414,487 | ) | (891,009 | ) | ||
| Loss before income tax benefit | (5,349,722 | ) | (5,010,364 | ) | ||
| Income tax benefit | (136,822 | ) | (133,664 | ) | ||
| Net loss | (5,212,900 | ) | (4,876,700 | ) | ||
| Less: net loss attributable to non-controlling interests | (3,731,526 | ) | (686,810 | ) | ||
| Net loss attributable to HeartCore Enterprises, Inc. | $ | (1,481,374 | ) | $ | (4,189,890 | ) |
| Other comprehensive loss: | ||||||
| Foreign currency translation adjustment | (16,614 | ) | (34,628 | ) | ||
| Total comprehensive loss | (5,229,514 | ) | (4,911,328 | ) | ||
| Less: comprehensive loss attributable to non-controlling interests | (3,760,195 | ) | (688,482 | ) | ||
| Comprehensive loss attributable to HeartCore Enterprises, Inc. | $ | (1,469,319 | ) | $ | (4,222,846 | ) |
| Net loss per common share attributable to HeartCore Enterprises, Inc. | ||||||
| Basic | $ | (0.07 | ) | $ | (0.21 | ) |
| Diluted | $ | (0.07 | ) | $ | (0.21 | ) |
| Weighted average common shares outstanding | ||||||
| Basic | 20,940,956 | 20,404,642 | ||||
| Diluted | 20,940,956 | 20,404,642 |
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HEARTCORE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the year ended<br><br> December 31, | For the year ended<br><br> December 31, | |||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (5,212,900 | ) | $ | (4,876,700 | ) |
| Adjustments to reconcile net loss to net cash flows | ||||||
| used in operating activities: | ||||||
| Depreciation and amortization expenses | 749,639 | 683,019 | ||||
| Loss (gain) on disposal of property and equipment | 1,894 | (4,514 | ) | |||
| Amortization of debt issuance costs | 4,567 | 3,733 | ||||
| Non-cash lease expense | 365,531 | 346,070 | ||||
| Loss (gain) on termination of lease | (469 | ) | 76 | |||
| Impairment of intangible asset | 3,878,125 | - | ||||
| Impairment of goodwill | 3,276,441 | - | ||||
| Deferred income taxes | (1,076,600 | ) | (291,596 | ) | ||
| Stock-based compensation | 368,744 | 1,430,513 | ||||
| Marketable securities received as noncash consideration | (572,010 | ) | - | |||
| Warrants received as noncash consideration | (12,969,683 | ) | (3,763,621 | ) | ||
| Changes in fair value of investments in marketable securities | 2,412,385 | 615,520 | ||||
| Changes in fair value of investment in warrants | (1,657,699 | ) | 501,445 | |||
| Loss on sale of warrants | 3,970,628 | - | ||||
| Impairment of investment in equity securities | 300,000 | - | ||||
| Impairment of investment in SAFE | 75,000 | - | ||||
| Loss on forgiveness of note receivable | 100,000 | - | ||||
| Changes in assets and liabilities: | ||||||
| Accounts receivable | (193,369 | ) | (338,312 | ) | ||
| Prepaid expenses | 210,477 | 359,310 | ||||
| Other assets | (38,336 | ) | (133,550 | ) | ||
| Accounts payable and accrued expenses | 331,685 | 532,790 | ||||
| Accounts payable and accrued expenses - related party | 47,955 | - | ||||
| Accrued payroll and other employee costs | 3,623 | 152,101 | ||||
| Due to related parties | (1,338 | ) | 1,123 | |||
| Operating lease liabilities | (371,877 | ) | (327,877 | ) | ||
| Income tax payables | 669,142 | 162,045 | ||||
| Deferred revenue | (156,527 | ) | 553,130 | |||
| Other liabilities | 710,001 | 64,086 | ||||
| Net cash flows used in operating activities | (4,774,971 | ) | (4,331,209 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (7,446 | ) | (526,260 | ) | ||
| Proceeds from disposal of property and equipment | - | 24,814 | ||||
| Advance on note receivable | - | (600,000 | ) | |||
| Purchase of investment in SAFE | (75,000 | ) | - | |||
| Net proceeds from sale of warrants | 5,640,000 | - | ||||
| Proceeds from sale of marketable securities | 749,546 | - | ||||
| Repayment of loan provided to related party | 42,104 | 45,404 | ||||
| Payment for acquisition of subsidiary, net of cash acquired | - | (724,910 | ) | |||
| Net cash flows provided by (used in) investing activities | 6,349,204 | (1,780,952 | ) | |||
| Cash flows from financing activities: | ||||||
| Payments for finance leases | (16,766 | ) | (22,422 | ) | ||
| Proceeds from short-term and long-term debts | 68,138 | 710,107 | ||||
| Proceeds from related party debt | 75,000 | - | ||||
| Repayment of short-term and long-term debts | (554,553 | ) | (711,395 | ) | ||
| Repayment of insurance premium financing | (156,063 | ) | (389,035 | ) | ||
| Net proceeds from factoring arrangement | - | 562,767 | ||||
| Net repayment of factoring arrangement | (390,373 | ) | - | |||
| Payments for debt issuance costs | - | (13,828 | ) | |||
| Distribution of dividends | (834,566 | ) | - | |||
| Capital contribution from non-controlling shareholder | 67,195 | - | ||||
| Proceeds from issuance of common shares | 1,423,342 | - | ||||
| Net cash flows provide by (used in) financing activities | (318,646 | ) | 136,194 | |||
| Effect of exchange rate changes | (146,977 | ) | (188,880 | ) | ||
| Net change in cash and cash equivalents | 1,108,610 | (6,164,847 | ) | |||
| Cash and cash equivalents - beginning of the year | 1,012,479 | 7,177,326 | ||||
| Cash and cash equivalents - end of the year | $ | 2,121,089 | $ | 1,012,479 | ||
| Supplemental cash flow disclosures: | ||||||
| Interest paid | $ | 143,101 | $ | 85,634 | ||
| Income taxes paid | $ | 298,466 | $ | 91,707 | ||
| Non-cash investing and financing transactions | ||||||
| Finance lease right-of-use assets obtained in exchange for finance lease liabilities | $ | - | $ | 93,217 | ||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | 125,735 | $ | 317,040 | ||
| Remeasurement of operating lease liabilities and right-of-use assets due to lease modification | $ | 23,956 | $ | 30,186 | ||
| Insurance premium financing | $ | 172,689 | $ | 389,035 | ||
| Common shares issued for acquisition of subsidiary | $ | - | $ | 3,150,000 | ||
| Warrants converted to marketable securities | $ | 6,443,276 | $ | 1,257,868 | ||
| Note receivable converted to investment in equity securities | $ | - | $ | 300,000 |
6