EX-99.1 2 ea023254801ex99-1_earlyworks.htm PRESS RELEASE TITLED "EARLYWORKS CO., LTD. REPORTS FINANCIAL AND OPERATIONAL PERFORMANCE FOR THE SIX MONTHS ENDED OCTOBER 31, 2024"

Exhibit 99.1

 

Earlyworks Co., Ltd. Reports Financial and Operational Performance for the Six Months Ended October 31, 2024

 

TOKYO, March 3, 2025. Earlyworks Co., Ltd. (NASDAQ: ELWS) (the “Company”), a Japanese provider of blockchain technology solutions, today announced its financial results for the six months ended October 31, 2024.

 

For the six months ended October 31, 2024, the Company’s revenue increased by approximately JPY 170,039 thousand, gross profit increased by approximately JPY 81,193 thousand and net loss decreased by approximately JPY 74,789 thousand, as compared to the same period in 2023.

 

Management Commentary

 

In July 2023, the Company was successfully listed on Nasdaq. After years of research and development aimed at improving the applicability for blockchain technology, we completed the development of our proprietary blockchain platform, the “Grid Ledger System (GLS),” in December 2023. The GLS has been acknowledged for its high processing speed by multiple corporate clients.

 

With our listing and the development of GLS as key milestones, we have gained the opportunity to provide services, including system planning, development, consultation, and maintenance, to clients in a variety of industries, such as telecommunications, transportation infrastructure, food and beverage, real estate, entertainment, and IT services. Centered on GLS, we believe our solutions have the potential to go beyond the traditional contract-based development models, and can serve as the foundation for a business model that closely supports corporate clients and their operations. Currently, we are preparing for a full-scale expansion in this area.

 

Additionally, to accelerate the growth of Web3-related businesses in Japan, we are actively promoting business alliances and collaborations in new ventures to expand the adoption of GLS. Through these initiatives, we aim to enhance GLS’s reliability and market competitiveness, and deliver greater value to a broader range of customers.

 

Following our listing, we have also focused on strengthening our organizational structure. In November 2024, we appointed a Chief Operating Officer (COO), responsible for driving our business operations. This appointment improves our ability in sales activities and the creation of new business opportunities leveraging GLS to further expand our business. Simultaneously, we established a Chief Design Officer (CDO) role to enhance our creative and design capabilities. The CDO oversees unified UX and UI design, aiming to elevate the user experience of GLS and other technologies.

 

Moving forward, we believe the collaboration between the COO and CDO will enable us to execute business strategies and deliver customer value in tandem. Our efforts will extend beyond conventional business models to develop innovative business frameworks powered by GLS. Our ultimate goal is not only to provide cutting-edge technology but also to contribute to the overall development of the Web3 industry and the realization of a sustainable society in collaboration with our corporate clients.

 

As we strive to drive technological innovation centered on GLS, we aim to strengthen our presence in the Web3 industry and advance as a trusted partner committed to enhancing the value of our corporate clients.

 

 

 

EARLYWORKS CO., LTD.

UNAUDITED INTERIM CONDENSED STATEMENTS OF OPERATIONS

 

   For the six months ended
October 31,
2023		   For the six months ended October 31,
2024		   For the six months ended October 31,
2024		 
   JPY   JPY   USD 
OPERATING REVENUES            
Software and system development services   4,812,000    217,699,635    1,428,944 
Consulting and solution services   1,267,620    7,284,000    47,811 
Sale of NFTs   48,864,935    -    - 
TOTAL OPERATING REVENUES   54,944,555    224,983,635    1,476,755 
COST OF REVENUES   (3,336,792)   (92,182,568)   (605,071)
GROSS PROFIT   51,607,763    132,801,067    871,684 
OPERATING EXPENSES:               
Selling and marketing expenses   (27,077,415)   (37,830,288)   (248,312)
General and administrative expenses   (200,231,599)   (176,938,483)   (1,161,395)
Share-based compensation expenses   (1,616,463)   -    - 
Research and development expenses   (44,821,606)   (21,583,147)   (141,668)
TOTAL OPERATING EXPENSES   (273,747,083)   (236,351,918)   (1,551,375)
LOSS FROM OPERATIONS   (222,139,320)   (103,550,851)   (679,691)
Gain (loss) on digital assets, net   (167,879)   81,900    538 
Interest expenses, net   (1,789,278)   (1,184,561)   (7,775)
Foreign exchange gain (loss), net   38,823,264    (6,768,200)   (44,425)
Government grants   -    1,255,000    8,238 
Other income, net   129,617    1,100    7 
LOSS BEFORE INCOME TAXES   (185,143,596)   (110,165,612)   (723,108)
Provision for income taxes               
Current   -    -    - 
Deferred   188,496    -    - 
Total provision for income taxes   188,496    -    - 
NET LOSS   (184,955,100)   (110,165,612)   (723,108)
                
LOSS PER SHARE               
Basic   (12.77)   (7.31)   (0.05)
Diluted   (12.77)   (7.31)   (0.05)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING*               
Basic   14,478,530    15,076,900    15,076,900 
Diluted   14,478,530    15,076,900    15,076,900 

 

The accompanying notes are an integral part of these unaudited interim condensed financial statements.

 

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EARLYWORKS CO., LTD.

UNAUDITED INTERIM CONDENSED BALANCE SHEETS

 

   As of
April 30,
2024		   As of
October 31,
2024		   As of
October 31,
2024		 
   JPY   JPY   USD 
       (Unaudited)   (Unaudited) 
ASSETS            
CURRENT ASSETS:            
Cash   337,911,102    212,493,024    1,394,769 
Time deposit   100,000,000    -    - 
Digital assets   44,662    116,854    767 
Accounts receivable, net   40,711,929    28,309,600    185,819 
Contract assets   40,359,303    37,233,604    244,395 
Prepayments   8,227,532    58,066,704    381,140 
Short-term deposits   3,096,509    3,096,509    20,325 
Income tax receivable   325    -    - 
Other current assets, net   39,600    3    - 
TOTAL CURRENT ASSETS   530,390,962    339,316,298    2,227,215 
Property and equipment, net   1,319,884    1,085,713    7,126 
Operating lease right-of-use assets   11,711,000    7,607,963    49,937 
Long-term deposits   657,740    657,740    4,317 
Restricted cash   31,486,253    31,486,253    206,671 
TOTAL ASSETS   575,565,839    380,153,967    2,495,266 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES:               
Bank loans – current portion, net   119,189,500    15,807,000    103,755 
Other payables and accrued liabilities   65,573,842    73,011,094    479,230 
Operating lease liabilities, current   8,239,009    6,911,713    45,367 
Contract liabilities   -    2,404,025    15,780 
Deferred income   -    20,000,000    131,277 
TOTAL CURRENT LIABILITIES   193,002,351    118,133,832    775,409 
Bank loans – non-current, net   49,063,000    41,461,000    272,143 
Operating lease liabilities, non-current   2,775,741    -    - 
TOTAL LIABILITIES   244,841,092    159,594,832    1,047,552 
                
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY:               
Ordinary shares, 55,300,000 shares authorized; 13,839,400 and 15,076,900 shares issued and outstanding as of April 30, 2023 and 2024   50,000,000    50,000,000    328,192 
Additional paid-in capital   2,210,480,581    2,210,480,581    14,509,226 
Accumulated deficit   (1,929,755,834)   (2,039,921,446)   (13,389,704)
TOTAL SHAREHOLDERS’ EQUITY   330,724,747    220,559,135    1,447,714 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   575,565,839    380,153,967    2,495,266 

 

The accompanying notes are an integral part of these unaudited interim condensed financial statements.

 

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Total revenue for the six months ended on October 31, 2024, increased by approximately JPY 170,039 thousand from approximately JPY 54,945 thousand in the same period in 2023 to approximately JPY 224,984 thousand.

 

Revenue from software and system development services increased by approximately JPY 212,888 thousand mainly due to the launch of the System Development Kit package for GLS, and revenue from consulting and solution services also increased by approximately JPY 6,016 thousand mainly due to collaborations with large Japanese corporations and increase in the associated consulting and solution services. On the other hand, revenue from sales of NFTs decreased by approximately JPY 48,865 thousand as there was a decrease in demand in the NFT market in the six-months ended October 31, 2024.

 

Cost of revenue increased by approximately JPY 88,846 thousand from approximately JPY 3,337 thousand in the same period in 2023 to approximately JPY 92,183 thousand, primarily due to the significant increase in revenue of JPY 170,039 thousand as described above.  

 

Total operating expenses decreased by approximately JPY 37,395 thousand from approximately JPY 273,747 thousand in the same period in 2023 to approximately 236,352 thousand. The main reasons contributing to the decrease were the decrease in general and administrative expenses of approximately JPY 23,293 thousand and in research and development expenses of approximately JPY 23,239 thousand, partially offset by the increase in selling and marketing expenses of approximately JPY 10,753 thousand. The decrease in general and administrative expenses was primarily due to decreased recruiting and training expenses, outsourcing fees, and taxes and public dues (taxes and public charges). The decrease in research and development expenses was primarily because the Company was dedicated to the research and development of GLS in the six-months ended October 31, 2023, which was a strategic decision made by the Company’s management to contribute to its future business. On the other hand, the increase in selling and marketing expenses was primarily due to increased advertising and promotion expenses.

 

As of October 31, 2024, the Company had approximately JPY 243,979 thousand in cash and restricted cash and the total shareholder’s equity decreased by approximately JPY 110,166 thousand due to net loss for the six months ended October, 31, 2024 from approximately JPY 330,725 thousand as of April 30, 2024 to approximately JPY 220,559 thousand as of October 31, 2024.

 

About Earlyworks Co., Ltd.

 

Earlyworks Co., Ltd. is a Japanese company operating its proprietary private blockchain technology, GLS, to leverage blockchain technology in various applications in a wide range of industries. GLS is a hybrid blockchain that combines the technical advantages of blockchain and database technology. GLS features high-speed processing, which can reach 0.016 seconds per transaction, tamper-resistance, security, zero server downtime, and versatile applications. The applicability of GLS is verified in multiple domains, including real estate, advertisement, telecommunications, metaverse, and financial services. The Company’s mission is to keep updating GLS and make it an infrastructure in the coming Web3/metaverse-like data society.

 

Company　Name: Earlyworks Co., Ltd.
Location: 3F MR Building, 5-7-11 Ueno, Taito-ku, Tokyo
Representative: Seiya Kobayashi, CEO
Business Description: Development and provision of next-generation blockchain systems, including the proprietary GLS (Grid Ledger System), and blockchain-based system solutions
Establishment: May 2018
Website: https://e-arly.works/
For Media Inquiries:
Earlyworks Co., Ltd.
E-Mail: ew-ir@e-arly.works

 

Forward-Looking Statements

 

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may,” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S. Securities and Exchange Commission.

 

 

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