Business Context and Reporting Period
This Form 6-K filing by Earlyworks Co., Ltd. (the "Company") covers the month of December 2025, with a report date of December 30, 2025. The filing discloses the entry into a material definitive agreement: a Share Exchange Agreement dated December 28, 2025, with Perpetual Markets Ltd. ("Perpetual") and its shareholders. Upon closing, Perpetual is expected to become a wholly-owned subsidiary of Earlyworks.
Key Financial Metrics and Transaction Consideration
The filing details the consideration for the acquisition of Perpetual but does not provide standalone financial statements (revenue, profit, cash flow) for the reporting period. The transaction consideration includes:
- Equity Consideration: Issuance of American Depositary Shares (ADSs) representing 19.99% of the Company's issued and outstanding ADSs at closing, plus 53,051,000 Series P Preferred Shares (convertible to 10,610,200 ADSs).
- Cash Consideration: Total of US$15.0 million, structured as:
- US$3.5 million payable upfront at closing.
- US$11.5 million deferred, sourced from warrant exercise proceeds (capped at US$7.5 million) and a future capital raise.
- Warrant Grant: Issuance of warrants to Sigma9 Capital Ltd. to purchase 2,500,000 ADSs at an exercise price of US$5.00 per ADS.
Material Changes and Governance Arrangements
The primary material change is the proposed acquisition of Perpetual. Key governance and structural changes include:
- Leadership: The current CEO of Perpetual is expected to be appointed as Co-CEO of Earlyworks and a Board member, contingent on shareholder approval and ownership thresholds.
- Board Composition: Former Perpetual shareholders will have the right to designate a Board member, expected to chair the Compensation Committee.
- Incentive Pool: Establishment of a profit-based incentive pool equal to 10% of the Company's consolidated net profits post-closing.
- MTF Options: Reciprocal put and call options regarding the future acquisition of a MiFID II-licensed Multilateral Trading Facility (MTF) entity, exercisable for a nominal price of US$1,000.
Guidance, Risks, and Contingencies
The transaction is subject to customary closing conditions, including shareholder approval and regulatory clearances. The filing includes standard forward-looking statements regarding expectations of closing and future performance, noting that actual results may differ materially due to risks identified in the Company's Form 20-F. Specific contingencies include:
- The deferred cash consideration depends on the success of a future capital raise and warrant exercises.
- The MTF Option exercise is contingent on obtaining all required governmental and regulatory approvals.
- The Shareholders Agreement remains effective for up to five years or until specific ownership thresholds are no longer met.
Investor Verification Checklist
- Verify the final approval status of the Share Exchange by Earlyworks shareholders.
- Confirm the valuation and financial health of Perpetual Markets Ltd. prior to closing.
- Monitor the Company's ability to secure the future capital raise required to satisfy the US$11.5 million deferred cash consideration.
- Review the specific terms of the MTF Put and Call options and the regulatory landscape for acquiring a MiFID II-licensed entity.
- Assess the dilution impact of the 19.99% ADS issuance and the 53,051,000 Series P Preferred Shares on existing shareholders.