20-F/A: Perpetuals.com Ltd. Amends 2026 Annual Report

Perpetuals.com Ltd. filed an amendment to its 2026 annual report to correct minor typographic errors in financial statements and disclosures.

Summary

• Perpetuals.com Ltd. (formerly Earlyworks Co., Ltd.) filed Amendment No. 1 to its Form 20-F for the fiscal year ended April 30, 2026.
• The amendment primarily corrects minor typographic errors in the audited consolidated financial statements, including balance sheets, statements of operations, and cash flows.
• Key corrections involve the total shareholders' equity value, general and administrative expenses, total operating expenses, and net loss figures for the year ended April 30, 2026.
• Typographical errors in risk factors and other sections like Item 4 (Information on the Company) and Item 5 (Operating and Financial Review and Prospects) were also addressed.
• A subsequent events disclosure regarding related party loans was added, and disclosures regarding net proceeds from warrant issuances were updated.
• The company reported a net loss of JPY 2,742.2 million (US$17.5 million) for the fiscal year ended April 30, 2026.
• As of April 30, 2026, the company had JPY 132.8 million (US$0.8 million) in cash and a working capital deficit of JPY 1,827.2 million (US$11.7 million), raising substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the significant net loss, ongoing going concern doubts, and substantial acquisition-related expenses, despite strategic advancements.

Positives

• The company completed the acquisition of Perpetual Markets Ltd. (PML) on January 20, 2026, rebranding to Perpetuals.com Ltd. and changing its Nasdaq ticker to PDC.
• The UpsideOnly platform has acquired over 500,000 users across approximately 170 countries with a reported low acquisition cost of $0.65 per user.
• A strategic licensing agreement was executed in April 2026 with German UDS for the integration of BayesShield AI into its research and learning infrastructure.
• The PM MTF secured its MiFID II MTF license in March 2026 and received approval from CySEC to offer crypto-asset services under MiCA in August 2026.
• The company has a robust intellectual property portfolio with two provisional patent applications for its BayesShield AI technology and numerous registered trademarks.
• The company has a diversified revenue stream from software and system development services (62.0% of FY2026 revenue) and consulting and solution services (38.0% of FY2026 revenue).

Negatives

• The company reported a net loss of JPY 2,742.2 million (US$17.5 million) for the fiscal year ended April 30, 2026.
• Substantial doubt exists about the company's ability to continue as a going concern due to operating losses, negative cash flow from operations, and a working capital deficit.
• General and administrative expenses increased significantly by 691.1% to JPY 2,810.7 million (US$17.9 million) for FY2026, largely due to acquisition-related costs.
• The company incurred acquisition-related costs of JPY 2,006.3 million (US$12.8 million) during FY2026.
• Two employment-related lawsuits are pending against its U.S. subsidiary, Kephas Corporation, alleging unpaid wages and wrongful termination.
• Alexander Capital, L.P. filed a lawsuit for breach of contract related to its engagement as a placement agent for a PIPE transaction.

Risks

• The company has a history of operating losses and expects substantial future expenses and operating losses, raising substantial doubt about its ability to continue as a going concern.
• The transition to a new, U.S.-based management team with limited experience managing a publicly traded company may adversely affect operations and compliance.
• The success of the UpsideOnly platform is dependent on its proprietary BayesShield AI technology, user acquisition, data quality, and profitable trading activities.
• The Kronos X business is substantially dependent on the Perpetual Markets Multilateral Trading Facility (PM MTF), creating a risk if the PM MTF encounters operational issues.
• The company's tokenization business faces significant regulatory, technological, operational, and market risks, with evolving legal and commercial requirements.
• Additional financing will be required to fund operations and growth, and such financing may not be available on commercially acceptable terms or at all.
• The loss of key personnel, particularly management and officers with extensive market knowledge, could have a material adverse effect on the company.
• The company's characterization of the UpsideOnly platform as a gamified data analytics platform, rather than a regulated financial service, may be challenged by regulators or courts.

Future Outlook

The company's future outlook is heavily dependent on its ability to secure additional financing, successfully integrate the acquired PML business, scale its UpsideOnly platform and BayesShield AI technology, and navigate a complex and evolving regulatory landscape. The company acknowledges substantial doubt about its ability to continue as a going concern.

Management Comments

• Management has commenced a strategy to raise debt and equity and may seek to refinance existing debt obligations.
• Management is strengthening formal review-and-approval controls for future SEC submissions, together with recruiting additional qualified personnel with relevant U.S. GAAP and SEC reporting experience.
• Management believes that separating a users participation from the direct funding and execution of trades, including leveraged trades, may address certain structural disadvantages of conventional retail trading.

Industry Context

StockSavvy.ai notes that Perpetuals.com Ltd. is operating in the rapidly evolving fintech and AI sectors, with a focus on AI-powered financial services and market infrastructure. The company's strategic shift post-acquisition into these areas, while leveraging its legacy blockchain expertise, places it in a competitive landscape with both established players and emerging technology firms. The ongoing development of regulated trading platforms (Kronos X, PM MTF) and innovative retail-facing products (UpsideOnly) reflects broader industry trends towards AI integration and risk-mitigated trading solutions.

Comparison to Industry Standards

• The company's reported user acquisition cost for UpsideOnly of approximately $0.65 per user is significantly lower than the reported acquisition costs for CFD providers (approximately $500) and brokers (approximately $200), suggesting a potentially more efficient customer acquisition model for its specific offering.
• The financial performance of the legacy blockchain business, which generated the majority of consolidated revenue in FY2026, is declining, while the post-acquisition business is still in its early stages of development and revenue generation.
• The company's net loss of JPY 2,742.2 million (US$17.5 million) for FY2026 is substantial, and the company's ability to continue as a going concern is in doubt, a situation not uncommon for early-stage technology companies undergoing significant transformation and acquisition, but still a critical concern for investors.
• The company's strategy to improve BayesShield AI models by expanding the user base of platforms like UpsideOnly creates a feedback loop that is a common growth strategy in AI-driven businesses, aiming for continuous improvement through data accumulation.

Legal Proceedings

• A lawsuit filed by certain shareholders in the Tokyo District Court against the Company and Mr. Satoshi Kobayashi was settled on July 17, 2026, with a payment of JPY20 million.
• Alexander Capital, L.P. filed a lawsuit against the Company in the U.S. District Court for the Southern District of New York alleging breach of contract.
• Kephas Corporation is involved in two pending employment-related lawsuits alleging unpaid wages and wrongful termination.
• James Warren filed an action against Kephas Corporation and Patrick Gruhn alleging trespass, invasion of privacy, security, nuisance, and whistleblower retaliation.
• Rachel Ann Thompson filed an action against Patrick Gruhn, Daniel Bentley, and Kephas Corporation alleging wrongful termination, which was refiled in May 2026.
• Modulus Global, Inc. filed a lawsuit against Patrick Gruhn, Brandon Williams, Kephas Corporation, and others alleging trade-secret misappropriation and fraud; claims against Brandon Williams, Kephas Corporation, and WIB Technologies Inc. were dismissed for lack of personal jurisdiction.

Related Party Transactions

• Satoshi Kobayashi, Co-CEO and Interim CFO, is a guarantor on the company's office lease and has provided loans to the company.
• Patrick Gruhn, Co-CEO, transferred office property to Kephas Corporation and has provided funding advances to the company.
• Amounts owing to Patrick Gruhn of JPY 216,004,619 (USD 1,378,811) are included in loans to related parties, noncurrent.
• The company has an unsecured loan facility with Lorem Ipsum RM UG GmbH.
• Amounts payable to directors Patrick Gruhn and Panagiota Ziourti for acquisition of Kephas Corporation and office supplies, respectively.

Stakeholder Impact

• Shareholders may experience dilution due to potential future equity issuances for capital raises.
• The going concern uncertainty poses a significant risk to all stakeholders, potentially impacting the value of investments and the company's ability to meet its obligations.
• The ongoing legal proceedings could result in substantial costs and diversion of resources, potentially affecting financial performance and operational focus.
• The company's reliance on key personnel means their departure could negatively impact operations and growth prospects for employees and shareholders.

Next Steps

• Continue to expand the user base of the UpsideOnly platform.
• Improve and expand BayesShield AI models through data and potential licensing.
• Explore partnerships with CFD providers and potential acquisitions of distressed CFD providers.
• Launch Barriers.com in partnership with PM MTF Ltd. and migrate product offerings to the MTF.
• Offer full platform services for brokers.
• Continue to manage and remediate material weaknesses in internal controls over financial reporting.
• Seek additional debt and equity financing.

Key Dates

Recommendation

The company is undergoing a significant transformation with promising new ventures like UpsideOnly and Kronos X, but faces considerable headwinds. The substantial net loss, going concern doubts, and ongoing legal challenges warrant caution. While the acquisition and strategic partnerships show potential, the path to profitability and sustainable operations remains uncertain. A 'hold' recommendation reflects a balanced view of the potential upside from strategic initiatives against the significant risks and financial challenges.

Keywords

Perpetuals.com Ltd, Form 20-F/A, Amendment, Financial Statements, Going Concern, Acquisition, BayesShield AI, UpsideOnly