F-1: Earlyworks Registers 6.9M ADSs for Resale by Investors

Earlyworks Co., Ltd. filed an F-1 registration statement to allow selling shareholders to resell up to 6,943,848 American Depositary Shares, following recent private placement offerings.

Summary

• The company filed an F-1 registration statement for the resale of up to 6,943,848 American Depositary Shares (ADSs), representing 34,719,240 Ordinary Shares, by selling shareholders.
• These ADSs are issuable upon the exercise of various prefunded, ordinary, and placement agent warrants from two private placement offerings that closed in October and November 2025.
• The company will not receive any proceeds directly from the sale of these Offered Securities by the Selling Shareholders.
• However, the company may receive approximately $9,543,366.08 if all exercisable warrants are exercised for cash.
• Proceeds from warrant exercises are intended for the acquisition of a target company, working capital, and other general corporate purposes.
• Earlyworks Co., Ltd. is a blockchain-based technology company incorporated in Japan, providing services and solutions leveraging its proprietary GLS technology.
• Total revenue for the fiscal year ended April 30, 2025, was approximately JPY 440.4 million (US$3.1 million), up from JPY 179.4 million in 2024 and JPY 46.6 million in 2023.
• The company reported a net loss of approximately JPY 256.7 million (US$1.8 million) for the fiscal year ended April 30, 2025, compared to JPY 336.2 million in 2024 and JPY 382.3 million in 2023.
• The ADSs are listed on the Nasdaq Capital Market under the symbol ELWS, with a last reported sale price of $5.98 per ADS on November 21, 2025.
• The company has regained compliance with Nasdaq's continued listing standards, specifically the minimum market value of listed securities and the Equity Rule, as of October 21, 2025.

Sentiment

Score: 7

Explanation: The company has demonstrated strong revenue growth and successfully addressed Nasdaq listing compliance issues, while also securing significant capital through private placements for future strategic initiatives, including an acquisition. However, it continues to operate at a net loss, faces substantial risks inherent in the nascent blockchain industry, and the current filing is primarily for resale by existing shareholders, not a direct capital raise for the company from this specific registration.

Positives

• Successfully completed two private placement offerings in October and November 2025, securing potential capital of approximately $9.54 million upon full cash exercise of warrants.
• Regained compliance with Nasdaq's minimum market value of listed securities and equity rules, resolving a significant listing risk.
• Demonstrated substantial revenue growth, increasing from JPY 46.6 million in FY2023 to JPY 440.4 million (US$3.1 million) in FY2025.
• Focus on blockchain-based technology, positioning the company in a high-growth, innovative sector with diverse applications.

Negatives

• The company continues to operate at a net loss, reporting approximately JPY 256.7 million (US$1.8 million) for the fiscal year ended April 30, 2025.
• The current F-1 filing is for the resale of securities by existing shareholders, meaning the company will not receive direct capital from these specific sales.
• The trading price of the ADSs has been and is likely to continue to be highly volatile, posing a risk to investors.
• Share ownership is concentrated in the hands of management, potentially limiting the influence of public shareholders.
• The company does not intend to pay dividends for the foreseeable future, retaining funds for business operations and growth.

Risks

• Blockchain is a nascent and rapidly changing technology, and slowing development or acceptance could adversely affect the business.
• Inability to effectively apply technology to drive customer value through blockchain-based solutions.
• Potential inability to adequately evaluate the risks associated with NFT platforms developed by the company.
• NFT platforms may expose the company to legal and regulatory risks.
• Technology is dependent on telecommunications infrastructure and the performance of devices equipped with blockchain.
• Cybersecurity incidents may materially and adversely affect the business.
• Operational system failures or interruptions could materially harm the ability to conduct operations.
• Inability to successfully compete could materially harm the business.
• Competitors will likely attempt to imitate services and technology; inability to protect proprietary rights.
• Negative publicity could damage the business.
• Infringement on intellectual property rights of others if competitors obtain patents covering critical technology.
• Inability to successfully identify, hire, and retain skilled individuals.
• Loss of key personnel could have a material adverse effect.
• Risk of employee misconduct.
• Adverse effects if vendors and third-party service providers experience difficulties.
• Revenue dependence on a limited number of major customers.
• Difficulty executing growth strategy and maintaining growth effectively.
• Acquisitions, other investments, and strategic alliances may not be successful or produce anticipated results.
• Inability to seek additional financing on commercially acceptable terms could adversely affect liquidity and financial condition.
• Operational risk may materially and adversely affect performance.
• Insufficient insurance to cover potential losses and claims.
• Involvement in legal and other proceedings may result in significant liabilities or losses.
• General economic, political, and market conditions may have an adverse impact on operating performance.
• Business may be adversely affected by coronavirus, other epidemics or pandemics, acts of God, wars, insurrections, riots, infrastructure failures, and other force majeure events.
• Uncertain regulatory regimes governing blockchain technologies; new regulations or policies may materially adversely affect development.
• Compliance and risk management programs might not be effective.
• Limited experience operating as a public company.
• Requirements of being a public company may strain resources and divert management's attention.
• The sale of a substantial amount of ADSs by Selling Shareholders could adversely affect the market price.
• The trading price of the ADSs has been and is likely to continue to be highly volatile.
• Management will have considerable discretion in deciding how to apply proceeds from warrant exercises, which may not align with investor preferences.
• Failure to implement and maintain an effective system of internal control.
• As a foreign private issuer, following home country practice (even as a controlled company) could adversely affect public shareholders.
• Rights of shareholders under Japanese law may differ from rights in other jurisdictions.
• ADS holders may have fewer rights than holders of Ordinary Shares and must act through the depositary.
• Direct acquisition of Ordinary Shares is subject to prior filing requirements under Japanese Foreign Exchange and Foreign Trade Act.
• ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement.
• ADS holders may not receive distributions on Ordinary Shares if it is illegal or impractical to make them available.
• Limitations on transfer of ADSs.
• The deposit agreement may be amended without consent from holders of ADSs.
• Difficulty enforcing judgments obtained in courts outside Japan.
• Dividend payments and sale amounts will be affected by fluctuations in the exchange rate between the U.S. dollar and the Japanese yen.
• Ceasing to qualify as a foreign private issuer would incur significant additional legal, accounting, and other expenses.
• As an emerging growth company, taking advantage of certain exemptions makes performance comparison with other public companies more difficult.
• Classification as a passive foreign investment company could have adverse United States federal income tax consequences.
• Inability to maintain compliance with Nasdaq's listing standards would result in delisting, negatively impacting market price and liquidity.

Future Outlook

The company intends to use any proceeds received from the cash exercise of warrants for the acquisition of a target company, working capital, and other general corporate purposes. It believes in a data-centric future where blockchain technology will be indispensable and widely used due to its efficiency, security, and reliability. The company does not expect to pay any dividends in the foreseeable future, intending to retain available funds and future earnings to fund business operations, development, and growth.

Management Comments

• "Our mission is to optimize business operations with our creative ideas and the use of blockchain technology."
• "We believe in a data centric future where blockchain technology will be indispensable and widely used, due to its efficiency, security, and reliability."

Industry Context

The company operates in the nascent and rapidly changing blockchain technology sector, providing solutions for diverse industries including information technology, metaverse, advertisement, real estate, telecommunication, and entertainment. Its revenue growth suggests increasing adoption of blockchain-based services, aligning with broader trends towards digital transformation and decentralized technologies. The focus on NFTs also places it within the evolving digital asset market.

Management Changes

Corporate Governance

Related Party Transactions

• Satoshi Kobayashi, the company's Chief Executive Officer, Interim Chief Financial Officer, and Representative Director, owns 100% of Themis Capital GK, which holds 4,000,000 Ordinary Shares.
• Alexander Capital L.P. (Placement Agent) and certain of its employees received First Closing Placement Agent Warrants and Second Closing Placement Agent Warrants as compensation for their services in the 2025 Private Placements.

Stakeholder Impact

• **Shareholders**: Potential for significant dilution if all warrants are exercised, which could impact per-share value. Increased liquidity for selling shareholders. Continued stock price volatility is expected. ADS holders have fewer rights than direct Ordinary Share holders and must act through the depositary. No dividends are expected in the foreseeable future.
• **Private Placement Investors**: Gained significant warrant positions and participation rights in future financings. Have designated director nominees, increasing their influence on corporate governance and strategic direction.
• **Employees**: Potential for growth and new opportunities stemming from the planned acquisition and expansion of business operations.
• **Customers**: Continued development and delivery of blockchain-based solutions and services across various industries.

Next Steps

• Hold a shareholders meeting by November 14, 2025, to approve the election of two investor-designated director nominees and the acquisition of a target company.
• Complete the acquisition of a target company using proceeds from warrant exercises.
• Continue to develop and leverage proprietary GLS blockchain technology for various business settings.
• Maintain compliance with Nasdaq's continued listing standards.

Key Dates

Recommendation

The company has demonstrated strong revenue growth and successfully addressed Nasdaq listing compliance issues, while also securing significant capital through private placements for future strategic initiatives, including an acquisition. However, it continues to operate at a net loss, faces substantial risks inherent in the nascent blockchain industry, and the current filing is for resale by existing shareholders, not a direct capital raise for the company from this specific registration. The potential for significant dilution from warrant exercises and expected stock price volatility warrant a cautious 'hold' stance, awaiting further operational improvements and sustained profitability.

Keywords

Blockchain, ADS, Warrants, Private Placement, Nasdaq, Emerging Growth Company, Foreign Private Issuer, Japan, Fintech, NFT