Business Context and Reporting Period
Company: Perpetuals.com Ltd (formerly Earlyworks Co., Ltd.)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended April 30, 2026
Jurisdiction: Japan (Incorporated), listed on Nasdaq (Ticker: PDC)
Key Event: On January 20, 2026, the Company completed the acquisition of Perpetual Markets Ltd. (PML), rebranding from a legacy Japanese blockchain firm to an AI-powered financial services company. The consolidated results for FY2026 predominantly reflect the legacy business, with PML results included only from the acquisition date.
Key Financial Metrics
| Metric | FY 2026 (JPY) | FY 2026 (USD) | FY 2025 (JPY) | FY 2025 (USD) |
|---|---|---|---|---|
| Total Revenue | 256,301,192 | 1,636,035 | 440,361,163 | 2,810,865 |
| Gross Profit | 152,378,935 | 972,673 | 227,102,500 | 1,450,000 |
| Net Loss | (2,754,451,171) | (17,582,352) | (256,696,946) | (1,638,561) |
| Cash & Equivalents (End of Period) | 132,810,235 | 847,761 | 104,379,373 | 666,286 |
| Working Capital Deficit | (1,839,835,167) | (11,744,129) | N/A | N/A |
| Net Cash Used in Operating Activities | (2,650,419,716) | (16,918,293) | (191,733,955) | (1,223,865) |
Note: USD figures are convenience translations at the rate of JPY 156.66 = $1.00.
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased by approximately 41.8% (JPY 184 million) compared to FY2025. This was driven by a 57.7% drop in software and system development services revenue from the legacy business, partially offset by JPY 15.8 million in revenue from the newly acquired PML subgroup.
- Significant Increase in Expenses: General and administrative expenses surged by 139.6% (JPY 495.8 million) to JPY 2.81 billion. This increase was primarily due to JPY 1.96 billion in acquisition-related expenses (including professional fees and equity issuance costs) and the consolidation of PML's operations.
- Net Loss Expansion: Net loss widened significantly to JPY 2.75 billion (US$17.6 million) from JPY 256.7 million in the prior year, largely attributable to the one-time acquisition costs and the integration of the new business model.
- Balance Sheet Impact: The acquisition resulted in the recognition of JPY 9.77 billion (US$62.4 million) in goodwill. The Company also recorded a working capital deficit of JPY 1.84 billion.
Guidance, Outlook, Risks, and Contingencies
Going Concern Warning
Management and the independent registered public accounting firm have expressed substantial doubt about the Company's ability to continue as a going concern. This is due to a history of operating losses, a significant working capital deficit, and net cash outflows from operating activities. The Company's ability to continue depends on securing additional financing (equity or debt) and generating new revenue.
Business Outlook
The Company is transitioning to a fintech model focused on:
- UpsideOnly.com: A retail-facing trading prediction platform using proprietary "BayesShield AI" to generate signals without users risking capital.
- Kronos X: Regulated multi-asset exchange infrastructure software.
- Barriers.com: Planned launch of barrier options with guaranteed stop-loss features.
Key Risks
- Regulatory Uncertainty: The Company faces potential regulatory challenges regarding the classification of UpsideOnly (gambling vs. data analytics) and its proprietary trading activities.
- Technology Performance: Revenue generation depends heavily on the performance of the BayesShield AI model and the quality of user-generated data.
- Capital Requirements: The Company requires significant additional capital to fund proprietary trading activities and operations, with no assurance that financing will be available.
- Internal Controls: The Company disclosed a material weakness in internal control over financial reporting related to insufficient personnel to formalize controls for U.S. GAAP and SEC reporting.
Legal Contingencies
- Shareholder Litigation (Resolved): A lawsuit filed by shareholders in Tokyo District Court regarding share sale procedures was settled in July 2026 with a payment of JPY 20 million.
- Placement Agent Dispute: Alexander Capital, L.P. filed a breach of contract lawsuit in the U.S. District Court (Southern District of New York) regarding a 2025 PIPE transaction. The Company is currently negotiating a settlement.
- Employment Lawsuits: The U.S. subsidiary, Kephas Corporation, is involved in two pending employment lawsuits alleging unpaid wages and wrongful termination.
Investor Verification Checklist
- Going Concern Status: Verify the Company's progress in securing the additional debt or equity financing required to sustain operations beyond the current cash runway.
- Acquisition Integration: Assess the actual revenue contribution of the Perpetual Markets Ltd. (PML) acquisition versus the legacy business in upcoming quarterly reports.
- Regulatory Compliance: Monitor any regulatory actions or clarifications regarding the classification of the UpsideOnly platform and the Company's proprietary trading activities.
- Internal Controls Remediation: Review future filings for updates on the remediation of the material weakness in internal controls over financial reporting.
- Legal Settlements: Track the resolution of the Alexander Capital lawsuit and the pending employment disputes to quantify potential liabilities.