Earlyworks Co., Ltd. Reports Financial and Operational Performance for the Six Months Ended October 31, 2023
TOKYO, May 01, 2024 (GLOBE NEWSWIRE) -- Earlyworks Co., Ltd. $(ELWS)$ (the "Company"), a Japanese provider of blockchain technology solutions, yesterday announced its financial results for the six months ended October 31, 2023.
For the six months ended October 31, 2023, the Company's revenue increased by approximately JPY 22,738 thousand, gross profit increased by approximately JPY 39,631 thousand and net loss decreased by approximately JPY 28,393 thousand, as compared to the same period in 2022.
Management Commentary
The six-month period ended October 31, 2023 marks several milestones for the Company.
First, the Company achieved its initial public offering and listing on the NASDAQ in the six months ended October 31, 2023.
Second, the Company has been able to leverage its research and development achievements for business opportunities. In the 2023 fiscal year, the Company was dedicated to the research and development of its proprietary blockchain system (Grid Ledger System, hereinafter "GLS"). This was a strategic decision made by Company's management to contribute to its future business. During the six months ended October 31, 2023, the Company made significant efforts to promote GLS. As announced in the Company's previous press releases, the Company's research and development efforts resulted in the launch of Phase 1 of the System Development Kit package for GLS, and collaborations with large Japanese corporations, including NTT DOCOMO, INC., one of Japan's largest cell phone operators, have been implemented. The Company is hopeful that these collaborations will contribute to future business growth.
Third, the Company has updated its revenue generation model. The Company's previous model centered on securing system development contracts using blockchain technology. With the development of GLS, the Company has been able to provide decentralized blockchain solutions based on GLS. Large and venture companies in Japan are currently seeking collaborations to launch new businesses, termed "co-creation new business development." The Company has sought to take full advantage of opportunities created by the "co-creation new business development" model and establish collaborations as a business partner, rather than a contracting system developer, by leveraging GLS. For example, as announced in the Company's previous press release, the Company has been selected as a co-creation business partner for MetaMe$(R)$, a meta-communication service utilizing technology from NTT DOCOMO, INC. The Company believes this initiative of updating its revenue generation model has redefined the Company's position and presented new opportunities for recurring income and revenue.
Comparison Between the Six Months Ended October 31, 2023 and 2022
EARLYWORKS CO., LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF OPERATIONS
For the For the For the
six months six months six months
ended ended ended
October 31, October 31, October
2022 2023 31, 2023
------------- ------------ ----------
JPY JPY USD
OPERATING REVENUES
Software and
system
development
services 11,358,517 4,812,000 31,771
Consulting and
solution
services 20,847,940 1,267,620 8,369
Sale of NFTs -- 48,864,935 322,626
------------ ------------ ----------
TOTAL OPERATING
REVENUES 32,206,457 54,944,555 362,766
------------ ------------ ----------
COST OF REVENUES (20,229,847) (3,336,792) (22,031)
------------ ------------ ----------
GROSS PROFIT 11,976,610 51,607,763 340,735
OPERATING
EXPENSES:
Selling and
marketing
expenses (11,366,838) (27,077,415) (178,776)
General and
administrative
expenses (162,606,424) (200,231,599) (1,322,010)
Share-based
compensation
expenses -- (1,616,463) (10,673)
Research and
development
expenses (50,234,955) (44,821,606) (295,930)
------------ ------------ ----------
TOTAL OPERATING
EXPENSES (224,208,217) (273,747,083) (1,807,389)
------------ ------------ ----------
LOSS FROM OPERATIONS (212,231,607) (222,139,320) (1,466,654)
Loss on digital
assets -- (167,879) (1,108)
Interest expenses,
net (700,617) (1,789,278) (11,814)
Foreign exchange
gain, net -- 38,823,264 256,327
Other (expense)
income, net (213,799) 129,617 856
------------ ------------ ----------
LOSS BEFORE INCOME
TAXES (213,146,023) (185,143,596) (1,222,393)
Provision for
income (tax)
benefit
Current (145,000) -- --
Deferred (56,966) 188,496 1,245
------------ ------------ ----------
Total provision
for income
(tax) benefit (201,966) 188,496 1,245
------------ ------------ ----------
NET LOSS (213,347,989) (184,955,100) (1,221,148)
------------ ------------ ----------
LOSS PER SHARE
Basic (15.42) (12.77) (0.08)
Diluted (15.42) (12.77) (0.08)
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING*
Basic 13,839,400 14,478,530 14,478,530
Diluted 13,839,400 14,478,530 14,478,530
The accompanying notes are an integral part of these unaudited interim condensed financial statements.
EARLYWORKS CO., LTD.
UNAUDITED INTERIM CONDENSED BALANCE SHEETS
As of As of As of
April 30, October 31, October 31,
2023 2023 2023
--------------- -------------- -----------
JPY JPY USD
-------------- -----------
(Unaudited) (Unaudited)
ASSETS
CURRENT ASSETS
Cash 177,886,393 701,384,530 4,630,824
Digital assets 750,307 465,464 3,073
Accounts
receivable,
net 30,934,916 10,986,371 72,536
Prepayments 2,591,297 24,329,264 160,632
Short-term
deposits 3,096,509 3,096,509 20,444
Income tax
receivable 19,147,994 9,635,241 63,616
Other current
assets, net 275,577 2,226,920 14,703
-------------- -------------- -----------
TOTAL CURRENT
ASSETS 234,682,993 752,124,299 4,965,828
-------------- -------------- -----------
Property and
equipment,
net 2,067,013 1,752,601 11,571
Operating lease
right-of-use
assets 3,467,368 15,781,366 104,195
Deferred
initial
public
offering
("IPO")
costs 212,160,121 -- --
Long-term
deposits 657,740 657,740 4,343
-------------- -------------- -----------
TOTAL ASSETS 453,035,235 770,316,006 5,085,937
============== ============== ===========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
CURRENT
LIABILITIES:
Bank loans --
current
portion, net 123,819,000 121,969,000 805,289
Other payables
and accrued
liabilities 47,250,464 95,948,571 633,491
Operating lease
liabilities,
current 3,467,368 8,173,403 53,964
Income taxes
payable 145,000 -- --
Contract
liabilities 1,397,470 -- --
-------------- -------------- -----------
TOTAL CURRENT
LIABILITIES 176,079,302 226,090,974 1,492,744
-------------- -------------- -----------
Bank loans --
non-current,
net 68,252,500 57,268,000 378,106
Operating lease
liabilities,
non-current -- 6,911,713 45,634
Deferred tax
liabilities
--
non-current 188,496 -- --
-------------- -------------- -----------
TOTAL LIABILITIES 244,520,298 290,270,687 1,916,484
============== ============== ===========
COMMITMENTS AND
CONTINGENCIES
SHAREHOLDERS'
EQUITY:
Ordinary
shares,
55,300,000
shares
authorized;
13,839,400 and
15,039,400
shares issued
and
outstanding as
of April 30,
2023 and
October 31,
2023,
respectively 100,000,000 881,200,000 5,818,038
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