Filing 20-F

20-F 1 ea0305348-20f_perpetuals.htm ANNUAL REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2026

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number: 001-41752

Perpetuals.com Ltd

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

5-7-11, Ueno, Taito-ku

Tokyo, Japan 110-0005

(Address of principal executive offices)

Satoshi Kobayashi, Co-Chief Executive Officer, Interim Chief Financial Officer, and Representative Director

Telephone: +81 03-5614-0978

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

At the address of the Company set forth above

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class Trading Symbol(s) Name of each exchange on which registered
American depositary shares, each
representing five ordinary shares PDC The Nasdaq Stock Market LLC
Ordinary shares* The Nasdaq Stock Market LLC

* Not for trading, but only in connection with the registration of the American depositary shares on the NASDAQ Stock Market LLC. Each American depositary share represents five ordinary shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report : 33,872,687 ordinary shares and 53,051,000 Series P shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

TABLE OF CONTENTS

INTRODUCTION iii

FORWARD-LOOKING INFORMATION iv

PART I 1

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 1

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 1

ITEM 3. KEY INFORMATION 1

ITEM 4. INFORMATION ON THE COMPANY 25

ITEM 4A. UNRESOLVED STAFF COMMENTS 52

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 52

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 60

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 66

ITEM 8. FINANCIAL INFORMATION 67

ITEM 9. THE OFFER AND LISTING 68

ITEM 10. ADDITIONAL INFORMATION 68

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 77

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 78

PART II 80

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 80

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 80

ITEM 15. CONTROLS AND PROCEDURES 80

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ITEM 16. [RESERVED] 81

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT 81

ITEM 16B. CODE OF ETHICS 81

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES 81

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 81

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 82

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT 82

ITEM 16G. CORPORATE GOVERNANCE 82

ITEM 16H. MINE SAFETY DISCLOSURE 83

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 83

ITEM 16J. INSIDER TRADING POLICIES 83

ITEM 16K. CYBERSECURITY 83

PART III 84

ITEM 17. FINANCIAL STATEMENTS 84

ITEM 18. FINANCIAL STATEMENTS 84

ITEM 19. EXHIBITS 84

ii

INTRODUCTION

In this Annual Report, unless the context otherwise requires, references to:

● “ADRs” are to the American Depositary Receipts that may evidence the ADSs (defined below);

● “ADSs” are to the American Depositary Shares of Perpetuals.com Ltd (formerly known as Earlyworks Co., Ltd.), each of which represents five Ordinary Shares (defined below);

● “Exchange Act” are to the Securities Exchange Act of 1934, as amended;

● “Japanese yen” or “JPY” are to the legal currency of Japan;

● “Nasdaq” are to the Nasdaq Stock Market LLC;

● “Ordinary Shares” are to the ordinary shares of Perpetuals.com Ltd (formerly known as Earlyworks Co., Ltd.);

● “SEC” are to the United States Securities and Exchange Commission;

● “Securities Act” are to the Securities Act of 1933, as amended;

● “U.S.”, “US” or “United States” are to United States of America, its territories, its possessions and all areas subject to its jurisdiction;

● “US$,” “$,” “USD” or “U.S. dollars” are to the legal currency of the United States; and

● “we,” “us,” “our,” “our Company,” or the “Company” are to Perpetuals.com Ltd (formerly known as Earlyworks Co., Ltd.).

This Annual Report includes our audited financial statements for the fiscal years ended April 30, 2026, 2025, and 2024. Our functional currency and reporting currency is the Japanese yen. Convenience translations included in this Annual Report of Japanese yen into U.S. dollars have been made at the exchange rate of JPY 156.66 = $1.00, which was the foreign exchange rate on April 30, 2026 as reported by the Board of Governors of the Federal Reserve System (the “U.S. Federal Reserve”) in its weekly release on April 30, 2026. Historical and current exchange rate information may be found at https://www.federalreserve.gov/releases/h10/hist/dat00_ja.htm.

We have made rounding adjustments to some of the figures included in this Annual Report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.

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FORWARD-LOOKING INFORMATION

This Annual Report contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You 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 in this Annual Report. These statements are likely to address our growth strategy, financial results, and future development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

● assumptions about our future financial and operating results, including revenue, income, expenditures, cash balances, and other financial items;

● our ability to execute our growth and expansion plan, including our ability to meet our goals;

● current and future economic and political conditions;

● our ability to compete in our industry;

● our capital requirements and our ability to raise any additional financing which we may require;

● our ability to attract customers and further enhance our brand awareness;

● our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business;

● trends in our industry; and

● other assumptions described in this Annual Report underlying or relating to any forward-looking statements.

We describe certain material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied, or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this Annual Report, whether as a result of new information, future events, changes in assumptions, or otherwise.

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Part I

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

Item 3. KEY INFORMATION

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Our legacy company, Earlyworks, Co., Ltd., was dedicated to optimizing business operations with the use of blockchain technology. On January 20, 2026, our company completed the acquisition of Perpetual Markets Ltd., resulting in the rebranding of our company as Perpetuals.com Ltd and our Nasdaq ticker symbol changing to PDC (the “Acquisition”). Following the Acquisition, we are positioned as an AI-powered financial services company focused on providing infrastructure, services, and financial products designed to enable responsible financial market participation from global clients.

Risks Related to Our Post-Acquisition Business

We have a history of operating losses and will likely incur substantial additional expenses and operating losses in the future. Management has concluded that there is, and the report of our independent registered public accounting firm contains an explanatory paragraph that expresses, substantial doubt about our ability to continue as a “going concern.”

As of April 30, 2026, we had cash of approximately JPY113.0 million (US$0.7 million), a working capital deficit of approximately JPY91.9 million (US$0.6 million), and net cash used in operating activities of approximately JPY748.9 million (US$4.8 million) for the fiscal year ended April 30, 2026. These conditions raise substantial doubt about our ability to continue as a going concern.

We may consider obtaining additional financing in the future through equity or debt financings, or other means. However, we are dependent upon our ability to obtain new revenue generating customer contracts, secure equity and/or debt financing and there are no assurances that we will be successful. As a result of the above, there is material uncertainty related to events or conditions that may cast significant doubt (or raise substantial doubt as contemplated by PCAOB standards) on our ability to continue as a going concern, and therefore, we may be unable to realize our assets and discharge our liabilities in the normal course of business. If we were to be unable to continue as a going concern, or if there were to be continued doubt about our ability to do so, the value of your investment would be materially and adversely affected.

We have recently transformed our business, and our transformed business has a limited operating history, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful in executing our business strategy.

We are transitioning from a relatively small legacy Japanese blockchain business to a much more ambitious U.S.-centered financial technology and trading-related business.

Currently, our revenue-generating operations are focused on the following offerings:

● UpsideOnly.com: Launched in May 2026, UpsideOnly.com is our flagship retail-facing trading and market prediction platform that uses our proprietary BayesShield AI combined with crowd intelligence without risking their capital, and are rewarded for their skills.

● Kronos X®: Our multi-asset exchange infrastructure software solution providing fully regulated trading technology compliant with applicable EU regulations, available as a turnkey white-label solution for banks, brokers, and fintechs. Kronos X® enables clients to offer innovative services and products and is notably used by the EU-licensed Perpetual Markets Multilateral Trading Facility (the “PM MTF”) .

Our business and operations following the Acquisition differ materially from those of the prior periods reflected in our historical financial statements, although our consolidated results for the fiscal year ended April 30, 2026 still predominantly reflect the legacy business, because the results of the acquired PML subgroup were consolidated only from the Acquisition Date. Revised in response to the HTFL comment on Items 3 and 4, to reconcile this statement with the fact that our FY2026 consolidated results still predominantly reflect the legacy business. We have only a limited operating history with respect to our current products, services, business models, and sources of revenue.

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Accordingly, our historical financial results and operating experience may not be indicative of our future performance, and investors may have limited information on which to evaluate our prospects, including our ability to attract and retain users, develop and commercialize new products, generate sustainable revenue, manage the risks associated with our new business activities, and achieve or maintain profitability. Our ability to successfully execute our current business strategy is subject to numerous uncertainties, including our ability to scale our operations, develop and maintain our technology and infrastructure, respond to changing market conditions and regulatory requirements, forecast demand for product offerings, and compete effectively with established and emerging competitors.

We may encounter unforeseen expenses, difficulties, delays, and other challenges as we continue to develop and expand our transformed business. If we are unable to successfully execute this transformation or establish and grow our new business operations, our financial condition, results of operations, and prospects could be materially and adversely affected.

Our transition to a new, U.S.-based management team with limited experience managing a publicly traded company may adversely affect our operations and our ability to meet our obligations as a public company.

We have recently undergone a significant transition in our management and leadership structure. Our new management team is based principally in the United States and has limited experience collectively managing a publicly traded company, while our prior management and operating structure was based principally in Japan and included individuals with greater experience overseeing the operations and requirements of a public company. The transition to our new management team, together with the broader transformation of our business, may place significant demands on our management and other personnel.

Managing a publicly traded company requires substantial attention to corporate governance, financial reporting, disclosure controls and procedures, investor relations, regulatory compliance, and other obligations that may differ from those applicable to our historical operations. Our new management team may require time to develop the processes, systems, risk mitigation strategies, and institutional knowledge necessary to effectively manage these responsibilities. Any failure to establish and maintain appropriate systems, controls, and procedures, or to otherwise effectively manage the transition, could result in operational difficulties, delays, or errors, including with respect to our public reporting and regulatory obligations, and could adversely affect our business and financial condition. These challenges may be particularly significant because our management team is simultaneously responsible for implementing our new business strategy, developing new products and operations, and establishing the infrastructure necessary to satisfy the governance, reporting, disclosure, and compliance requirements applicable to a Nasdaq-listed public company.

In addition, the transition from a Japan-based management and operating structure to a predominantly U.S.-based management team involves changes in corporate culture, management practices, communication styles, decision-making processes, and approaches to corporate governance. Differences in business practices and cultural expectations between our historical and current management structures may create challenges in communication, coordination, and integration and could result in misunderstandings, inefficiencies, or delays in decision-making. We may also experience difficulty retaining institutional knowledge or effectively transferring responsibilities during the transition. If we are unable to successfully manage these changes, our business, results of operations, and financial condition could be materially and adversely affected.

2

We may not be successful in operating, commercializing and scaling our UpsideOnly platform, and our ability to generate revenue from the platform depends on the continued performance of our proprietary technology, our ability to attract and retain users and our ability to successfully execute our business model.

Our UpsideOnly platform is a relatively new business, and we have limited experience operating, commercializing, and scaling the platform. We developed the platform substantially from scratch and, as with any newly developed technology platform, we may experience software bugs, errors, defects, outages, security vulnerabilities, and other technical or operational problems that require significant time and resources to identify and correct. Our ability to respond promptly and effectively to customer inquiries, complaints, and other support requests may also be constrained by our relatively limited customer service resources, particularly as our user base grows. If we are unable to maintain the functionality, reliability, and performance of the platform or provide an appropriate level of customer support, we may experience user dissatisfaction, reputational harm, loss of users, and difficulty attracting new users.

The successful operation of UpsideOnly also depends on our relationships with third-party service providers. We rely on third parties for certain critical functions, including the provision of market data, payment processing, and services associated with investing and trading our capital. Our ability to operate the platform depends on our ability to identify providers willing to work with a novel, unfamiliar financial services offering on acceptable terms or at all. Once retained, our providers may experience service interruptions, technical failures, capacity constraints, financial difficulties, regulatory restrictions, or other problems, or may terminate or materially modify their services or relationships with us. We may not be able to replace these providers quickly or on commercially reasonable terms, and the loss of or disruption to any critical third-party service could impair or prevent the operation of UpsideOnly.

Our ability to commercialize and scale UpsideOnly will also depend on our ability to continue to attract and retain users at attractive acquisition costs. To date, our user acquisition efforts have relied substantially on online advertising, and we intend to pursue additional strategies, including referral programs. There can be no assurance that these or other marketing initiatives will continue to generate users at commercially attractive acquisition costs, particularly as we expand the scale of our marketing efforts or seek to reach new user populations. If our user acquisition costs increase or our ability to attract and retain users declines, we may be unable to achieve the scale necessary to make our business model commercially viable.

The quality and composition of the data generated by our users are also important to the performance of the platform. Our proprietary BayesShield AI tool relies in part on signal data generated through user trading predictions on the platform (“Signal Data”). We believe that Signal Data generated by skilled and engaged traders may be more useful to our models than data generated by less skilled users, automated activity, bots, or other activity that does not reflect meaningful trading decisions. Accordingly, our ability to attract users whose activity generates useful Signal Data, while identifying and filtering out bots and other activity that may adversely affect the quality of our data, is important to the performance of our models. If we are unable to attract an appropriate user base or maintain the quality and integrity of our Signal Data, the effectiveness of BayesShield AI may suffer.

3

The economic model underlying UpsideOnly depends substantially on the ability of BayesShield AI to continue to identify a sufficiently high percentage of profitable trading opportunities. If BayesShield AI does not perform as expected, including as a result of changes in market conditions, insufficient or lower-quality Signal Data, model errors, technical problems, or other factors, our trading activities may generate lower returns or losses. Lower trading performance could reduce our revenue, limit our ability to share profits with users, impair our ability to attract and retain users, and make it more difficult to achieve the scale necessary to operate the platform profitably.

Moreover, as we seek to increase the scale of our trading activities, we expect to require additional capital to fund our proprietary trading activities. We may be unable to obtain sufficient capital on acceptable terms or at all, which could limit our ability to scale the platform and execute our business plan.

Our business model is therefore subject to a number of interrelated dependencies. Our ability to generate meaningful and sustainable revenue from UpsideOnly will depend on our ability to successfully operate the platform, attract and retain an appropriate user base at attractive acquisition costs, generate high-quality Signal Data, maintain the performance of BayesShield AI, execute profitable trading activities, obtain sufficient capital to support those activities, and effectively manage the platform as it scales. If we are unable to successfully execute on one or more of these elements, we may not be able to commercialize or scale UpsideOnly, and our business, financial condition, results of operations, and prospects could be materially and adversely affected.

Our business model depends substantially on the ability of our proprietary BayesShield AI technology to identify profitable trading opportunities, and if BayesShield does not perform as expected, our ability to generate revenue and scale UpsideOnly could be materially adversely affected.

The economic model underlying our UpsideOnly platform depends substantially on the ability of our proprietary BayesShield AI technology to analyze Signal Data and identify trading opportunities that ultimately prove profitable. There can be no assurance that BayesShield will continue to perform as expected or that its historical or current performance will be indicative of its future performance. The effectiveness of BayesShield AI may decline as market conditions change, trading patterns evolve, historical relationships cease to apply, or other factors affect the predictive value of the data on which the model relies. Even if BayesShield AI accurately identifies the direction or general outcome of a market movement, our trading activities may not be profitable after taking into account execution prices, spreads, slippage, liquidity, financing costs, fees, and other transaction costs.

BayesShield AI is also subject to inherent model risk. The model may generate inaccurate, incomplete, or misleading predictions, including as a result of errors in its design, implementation or training, limitations in the underlying data, changes in market conditions, or other factors that we may not anticipate or be able to identify. The model may also perform differently as we increase the volume or scale of our trading activities. We may be unable to identify or correct model deficiencies before they adversely affect our trading results, and efforts to improve or retrain the model may be costly, time-consuming, or unsuccessful.

4

The quality, quantity and composition of the Signal Data used by BayesShield AI are important to the performance of the model. We believe that Signal Data generated by skilled and engaged traders may provide more useful information than data generated by less experienced users, automated activity, bots, or other activity that does not reflect meaningful trading decisions. Our ability to attract and retain an appropriate user base, encourage meaningful user participation, and identify and filter bots or other activity that could adversely affect the quality of our Signal Data is therefore important to the effectiveness of BayesShield AI. If the quality or predictive value of our Signal Data deteriorates, or if we are unable to obtain sufficient Signal Data as our platform scales, BayesShield AI may become less effective.

In addition, BayesShield AI may be susceptible to changes in user behavior resulting from the operation of the UpsideOnly platform itself. As users gain a better understanding of how the platform evaluates predictions or as the composition of our user base changes, users may alter their behavior in ways that affect the nature or quality of the Signal Data available to us. We may also encounter difficulties in distinguishing genuine trading decisions from automated, coordinated, or otherwise anomalous activity. These factors could reduce the predictive value of our data and adversely affect the performance of BayesShield AI.

The use of AI and machine learning technologies also presents technological, operational, legal, regulatory, and reputational risks. AI and machine learning technologies are inherently complex, and our models may produce unexpected or erroneous results. We may also face difficulties explaining or validating the basis for particular model outputs, monitoring model performance, detecting model degradation, or implementing appropriate controls over the development and deployment of our models. Regulatory requirements relating to the use of AI and algorithmic decision-making are evolving rapidly and may require us to modify our models, data practices, disclosures, oversight procedures, or other aspects of our platform, which could increase our costs or limit our ability to use BayesShield as currently contemplated.

Finally, the performance of BayesShield AI is only one component of our overall trading process. Our ability to convert accurate predictions into profitable trading activity will depend on our ability to execute trades effectively, manage our trading capital, maintain access to appropriate market data and liquidity, and operate within applicable risk and regulatory parameters. As we seek to increase the amount of capital deployed through our trading activities, we may encounter liquidity constraints, execution challenges or other factors that cause actual trading results to differ from the results suggested by the model.

If BayesShield AI fails to identify profitable trading opportunities at a sufficient rate, if the quality or predictive value of our Signal Data deteriorates, if market conditions cause the model’s effectiveness to decline, or if we are otherwise unable to translate the model’s predictions into profitable trading activity, our trading results, revenue, ability to reward users, and ability to scale UpsideOnly could be materially and adversely affected.

Our proprietary trading activities expose us to significant market and investment losses.

As part of our business, we use our own capital to enter into positions in financial instruments based, in part, on signals and other information generated by our UpsideOnly platform, including Signal Data evaluated using artificial intelligence and machine learning models. Unlike our users, who do not bear the risk of loss from these investments, we bear the full risk of loss associated with our proprietary trading activities. Accordingly, our trading activities could result in significant losses and adversely affect our financial condition and results of operations.

Our trading results may be adversely affected by a variety of factors, many of which are beyond our control, including:

● market volatility and adverse price movements, which could cause the value of our positions to decline rapidly or unexpectedly;

● inaccurate or incomplete signals or other information, including signals generated from user data or other sources, which could cause us to enter into positions that are unprofitable;

● errors, limitations, or failures in our artificial intelligence and other models, including model inaccuracies, flawed assumptions, inadequate training data, unexpected model behavior, or failures to appropriately account for changing market conditions;

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● trading and execution errors, including errors in order generation, transmission, pricing, position sizing, or other aspects of trade execution;

● insufficient liquidity, which may prevent us from establishing or closing positions at desired prices or volumes or may require us to transact at substantially less favorable prices or volumes;

● slippage and transaction costs, which may cause the actual prices at which we execute trades to differ materially from the prices reflected in our models or otherwise anticipated by us;

● concentration of our positions, including concentration in particular assets, markets, counterparties, or trading strategies, which could magnify losses resulting from adverse developments affecting those positions;

● the use of leverage, to the extent applicable, which could magnify both gains and losses and could result in losses exceeding the amount of capital initially committed to a position;

● counterparty defaults or failures, which could prevent us from receiving amounts owed to us or otherwise result in losses or delays in closing or settling positions;

● failures or disruptions in our trading systems, technology, data feeds, connectivity, or other infrastructure, which could result in erroneous trades, missed trading opportunities, inability to manage positions, or unexpected losses;

● our inability to exit positions, including because of market closures, trading halts, liquidity constraints, technical failures, or other circumstances, potentially resulting in additional losses;

● unexpected market events, including sudden market dislocations, geopolitical events, regulatory actions, natural disasters, cyberattacks, or other events that cause prices or market conditions to change rapidly or behave in ways that our models or risk-management procedures do not anticipate.

Although we may employ risk-management procedures and position limits designed to mitigate these risks, such measures may not be effective in all circumstances, particularly during periods of extreme market volatility or market disruption. In addition, historical market data and prior trading results may not be indicative of future market conditions or trading performance. As a result, losses from our proprietary trading activities could be substantial and could materially adversely affect our business, financial condition, results of operations, and cash flows.

The markets in which we operate have relatively low barriers to entry, and we may face increasing competition from existing and new competitors.

The software, artificial intelligence, and financial technology markets in which we operate are characterized by relatively low barriers to entry and rapid technological development. Competitors may be able to develop and introduce products and platforms that are similar to, or compete directly with, our products and platforms without requiring significant capital investment or other substantial resources. In addition, advances in artificial intelligence, software development tools, cloud computing, data analytics, quantum computing, and other technologies may further reduce the time and cost required to develop competing products and services and could result in technologically superior products.

We expect competition in our markets to increase as existing companies expand their product offerings and as new companies enter these markets. Competitors may include established financial services, technology, cryptocurrency, and financial technology companies, as well as newly formed companies that may introduce innovative products or business models. We also may face competition from products or platforms that do not currently exist or that are based on technologies, business models, or applications that we cannot currently anticipate. New or improved products and platforms could provide functionality, pricing, user experiences, or other features that are more attractive to users than those offered by us.

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Our ability to compete successfully will depend on our ability to anticipate technological and market developments and to develop, introduce, and enhance our products and platforms in a timely and cost-effective manner. We may be required to devote substantial financial and other resources to research and development, technology, marketing, user acquisition, and other competitive initiatives. We may not be able to develop new products or features as quickly as our competitors, and products or technologies developed by others may render our products or platforms less attractive, obsolete, or otherwise uncompetitive.

In addition, some of our current or prospective competitors may have greater financial, technological, marketing, or other resources than we do, greater access to data, larger user bases, stronger brand recognition, or established relationships with financial institutions, technology providers, or other industry participants. Competitors may also be able to devote greater resources to developing and deploying artificial intelligence and other emerging technologies or may benefit from network effects or other competitive advantages that are not available to us.

Increased competition could result in reduced user acquisition or retention, loss of market share, pressure to reduce fees or other pricing, increased costs, reduced margins, or the need to make additional investments in our products and technology. We cannot assure you that we will be able to compete effectively or maintain or increase our market position, and any failure to do so could materially and adversely affect our business, financial condition, results of operations, and prospects.

Historical, back-tested, or simulated performance of our trading strategies and technologies may not be indicative of actual future results.

From time to time, we may evaluate, develop, or present trading strategies, models, algorithms, or other technologies based on historical or simulated performance, including through back-testing. Back-tested results are hypothetical and are derived by applying a trading strategy, model, algorithm, or methodology to historical data rather than by conducting actual trading during the relevant historical period. Accordingly, back-tested results do not represent the results of actual trading or live operation and are subject to significant limitations.

Back-tested results depend on the historical data, assumptions, parameters, models, and methodologies used in the analysis. The selection or design of a strategy or model may be influenced by knowledge of historical market conditions, which may result in hindsight bias or overfitting and may cause the strategy or model to appear more effective in historical testing than it would have been if developed or implemented without the benefit of such knowledge. In addition, back-tested results may not reflect the effects of actual trading conditions, including transaction costs, commissions, fees, bid-ask spreads, market impact, slippage, liquidity constraints, position limits, execution delays, trading halts, financing costs, or other factors that could materially affect actual performance.

Historical data and relationships reflected in back-tested results may also cease to be representative of future market conditions. Market conditions, volatility, correlations, liquidity, trading behavior, and other factors may change in ways that our models or strategies do not anticipate. In particular, strategies or models that perform well during a particular historical period may perform poorly, or may cease to perform as intended, under different market conditions.

To the extent we use artificial intelligence or machine learning models in developing or evaluating trading strategies, the results may also be affected by limitations in training data, model assumptions, model design, data quality, model drift, or other factors that may cause actual results to differ materially from historical or simulated results. There can be no assurance that the performance reflected in any back-tested or simulated results will be achieved in actual operation or that our trading strategies, models, or technologies will generate profitable results in the future. Any reliance on historical, back-tested, or simulated performance could therefore result in expectations regarding future performance that are not realized, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

Our Kronos X® business is substantially dependent on the Perpetual Markets Multilateral Trading Facility.

The Kronos X® product is substantially dependent on the continued operation and commercial viability of the Perpetual Markets Multilateral Trading Facility (the “PM MTF”). Kronos X® is the infrastructure that supports PM MTF, and our ability to operate and generate revenue from Kronos X® would be adversely affected if the PM MTF were unable to operate successfully or if its operations were materially impaired or discontinued. Our dependence on a single trading venue also limits our ability to mitigate an interruption or deterioration in the PM MTF’s operations by relying on alternative venues.

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The continued viability of the PM MTF depends on a variety of factors, including its ability to maintain the regulatory authorizations necessary to operate, attract and retain sufficient trading participants, establish adequate liquidity and trading volume, maintain reliable technology and infrastructure, and protect its systems and data from cybersecurity incidents and other disruptions. The PM MTF may also be subject to regulatory inquiries, examinations, investigations, enforcement actions, changes in applicable laws or regulations, or other regulatory developments that could adversely affect its operations. In addition, obtaining and maintaining the regulatory authorizations necessary to operate the PM MTF does not guarantee that the PM MTF will attract sufficient participants, liquidity, or trading volume to become or remain commercially viable.

The PM MTF could also experience operational failures, technology or infrastructure disruptions, cybersecurity incidents, liquidity constraints, or other events that impair its ability to provide a functioning trading venue.

We do not have the ability to control the PM MTF’s operations or ensure that it continues to operate in a manner that supports our business. Our interests may also differ from those of the PM MTF or its other stakeholders, and we cannot assure you that the PM MTF will continue to prioritize initiatives or make investments that are necessary or beneficial to Kronos X®.

Any material impairment of the PM MTF’s operations or commercial viability could materially and adversely affect our ability to operate and grow Kronos X® and could materially and adversely affect our business, financial condition, results of operations, and prospects.

Our tokenization business is subject to significant regulatory, technological, operational and market risks, and changes in applicable laws or the failure of tokenized asset markets to develop could adversely affect our business, financial condition, and results of operations.

We are developing and providing infrastructure and services relating to the tokenization of real-world assets, including services relating to asset issuance, market making, and trading through regulated order book infrastructure. Our tokenization activities involve emerging technologies and business models that are subject to evolving legal, regulatory, and commercial requirements. Tokenized securities generally remain subject to applicable securities laws and regulations, and the application of those requirements may vary depending on the structure of a particular tokenized asset, the rights associated with the token, the jurisdictions involved and the activities performed by us, and our counterparties. Regulators may determine that certain aspects of our tokenization activities require additional licenses, registrations, approvals, or compliance measures, or may impose restrictions on our ability to offer, facilitate, or expand these services. Any such requirements, restrictions, or regulatory changes could increase our costs, limit our operations, or require us to modify or discontinue portions of our tokenization business.

Our tokenization activities also depend on blockchain networks, smart contracts, trading and settlement infrastructure, custodians, and other third-party technology and service providers. These systems and providers may be subject to operational failures, cybersecurity incidents, fraud, programming errors, network disruptions, changes in technology, or other vulnerabilities. Any such failure could result in transaction errors, loss or impairment of assets or records, delays in settlement, disputes with customers or counterparties, regulatory scrutiny, or reputational harm.

In addition, the commercial success of tokenized real-world assets depends on the development of sufficient market participation, liquidity, and acceptance by issuers, investors, financial institutions, and other market participants. Tokenized markets may not develop as rapidly as expected, and secondary-market liquidity and price transparency may remain limited. A lack of market adoption or liquidity could reduce demand for our tokenization services, impair the economics of our tokenization business, and limit our ability to scale this business.

The legal and economic rights associated with a tokenized asset may also differ from those associated with the underlying asset, depending on the structure of the applicable tokenization arrangement. Uncertainty regarding ownership, custody, transferability, settlement, redemption, or other rights could result in disputes, regulatory intervention or additional liabilities. Any of these risks could materially and adversely affect our business, financial condition, and results of operations.

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We will need to obtain additional financing to fund our operations and growth, including our proprietary trading activities, and such financing may not be available on commercially acceptable terms or at all.

The viability of our business is dependent on the availability of adequate capital to develop and maintain our business. We will need to continue to invest in our operations for the foreseeable future to carry out our business plan, including investments in the development and maintenance of our software and infrastructure and capital to support the growth of our UpsideOnly platform and our proprietary trading activities conducted in connection with that platform. Accordingly, we will need to seek additional financing.

Our ability to obtain additional financing may be affected by financial lending institutions’ ability or willingness to lend to us on commercially acceptable terms, as well as conditions in the capital markets and our operating and financial performance. If we are unable to obtain sufficient financing when needed, our liquidity and financial condition could be adversely affected. In addition, limited access to capital or credit could adversely affect our ability to meet our capital requirements, invest in our software and infrastructure, engage in strategic initiatives, make acquisitions or strategic investments in other companies, react to changing economic and business conditions, or repay any outstanding debt.

Any additional financing may involve the issuance of equity or equity-linked securities, which could dilute the ownership interests of our existing shareholders, or the incurrence of additional indebtedness, which could increase our interest expense and impose additional financial and operational restrictions. There can be no assurance that we will be able to obtain additional financing on terms favorable to us, or at all. Any failure to obtain adequate financing when required could materially and adversely affect our business, financial condition, liquidity, and operating results.

The loss of key personnel could have a material adverse effect on us.

Our success depends solely on the continued services of key personnel, particularly our management and officers, who have extensive market knowledge and industry experience. Our management team collectively has extensive knowledge and experience regarding cryptocurrency, derivatives, financial markets, software development, and AI. Our innovative product offerings are the result of a significant investment of time and effort by our management to build novel and innovative products in a highly specialized industry. The loss of services of our Co-Chief Executive Officers, our Chief Strategy Officer, or other members of management could diminish our business and growth opportunities.

If we are unable to successfully identify, hire, and retain skilled individuals, our business will be adversely affected.

Our growth is based, in part, on our ability to attract and retain highly skilled professionals and software engineers. We aim to motivate and retain qualified employees. However, we may face difficulties in recruiting and retaining employees of a caliber consistent with our business strategy because of competition from other companies. If our employees are unsatisfied with what we offer, such as remuneration packages or working environment, we may not be able to retain qualified employees or replace them with personnel of appropriate skill sets and personal attributes at comparable costs. In such an event, we may need to expend additional resources to retain or replace suitable employees.

We may be subject to various employment-related claims from time to time, such as individual actions or government enforcement actions relating to wage-hour, labor standards, or healthcare and benefit issues. Such actions, if brought against us and successful in whole or in part, may materially and adversely affect our business or results of operations. For example, as of the date of this Annual Report, our U.S. subsidiary Kephas Corporation is involved in two pending employment related lawsuits, one filed by a former employee in April 2026 alleging unpaid wages, and a second filed by a former employee in May 2026 alleging wrongful termination.

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Negative publicity could damage our business.

Developing and maintaining our reputation is critical to attracting users, customers, and investors. Negative publicity regarding our Company, our technology, our key personnel, or cryptocurrency or derivatives markets generally, whether based upon fact, allegation or perception and whether justified or not, could give rise to reputational risk which could significantly harm our business prospects.

We could be the victim of employee misconduct.

There is a risk that our employees or contractors could engage in fraud, conflicts of interest, unauthorized disclosure of confidential information, or other misconduct that adversely affects our business. Furthermore, our employees could make errors in recording or executing transactions for customers which would cause us to enter into transactions that customers may disavow and refuse to settle. It is not always possible to deter misconduct by our employees, and the precautions we take to prevent and detect misconduct may not be effective in all cases. Our ability to detect and prevent errors or misconduct by entities with which we do business may be even more limited. Such misconduct could subject us to financial losses and materially harm our reputation, financial condition, and operating results.

If our vendors and third-party service providers experience difficulties, our business could be adversely affected.

We outsource some operational activities and depend on relationships with vendors and third-party service providers. For example, we employ external engineers for certain outsourced systems development and maintenance projects. Our operations could be interrupted or disrupted if our vendors and third-party service providers, or even the vendors of such vendors and third-party service providers, experience operational or other systems difficulties, terminate their service, fail to comply with regulations, raise their prices, or dispute key intellectual property rights sold or licensed to or developed for our Company. If any of these events happen, and we are unable to replace vendors and service providers, on a timely basis or at all, our operations could be interrupted. If an interruption were to continue for a significant period, our business, financial condition and results of operations could be adversely affected. Even if we can replace vendors and third-party providers, it may be at a higher cost, which could also adversely affect our business, financial condition, and results of operations.

We may explore acquisitions, other investments, and strategic alliances. We may not be successful in identifying opportunities or in integrating the acquired businesses. Any such transaction may not produce the results we anticipate, which could adversely affect our business.

We may explore and pursue acquisitions, strategic partnerships, joint ventures, and other alliances to strengthen our business and grow our company in the future. The market for acquisitions and strategic opportunities is highly competitive. In addition, these transactions entail numerous operational and financial risks, including but not limited to difficulties in valuing acquired businesses, combining personnel and firm cultures, integrating acquired products, services, and operations, achieving anticipated synergies that were inherent in our valuation assumptions, exposure to unknown material liabilities, the potential loss of key vendors, clients, or employees of acquired companies, incurrence of substantial debt or dilutive issuance of equity securities to pay for acquisitions, higher-than expected acquisition or integration costs, write-downs of assets, or impairment charges, increased amortization expenses, and decreased earnings, revenue or cash flow from dispositions.

General economic, political and market conditions may have an adverse impact on our operating performance, results of operations, and cash flow.

Our business is influenced by a range of factors that are beyond our control including general economic and business conditions and legal, regulatory, and political developments. Challenging economic conditions worldwide have from time to time contributed, and may continue to contribute, to slowdowns in the information financial technology industry at large. Weakness in the economy could have a negative effect on our business, operations, and financial condition, including decreases in revenue and operating cash flow, and inability to attract future equity and debt financing on commercially reasonable terms. Additionally, in a down-cycle economic environment, we may experience the negative effects of demand for our offerings. The impact of global events, including the ongoing conflicts between Russia and Ukraine, the United States and the Islamic Republic of Iran, and Israel and Hamas-led Palestinian militant groups, may also negatively affect our company.

Our business may be adversely affected by the impact of coronavirus, other epidemics or pandemics, acts of God, wars, insurrections, riots, infrastructure failures, and other force majeure events.

Public health epidemics or outbreaks could adversely affect our business. In addition, acts of terrorism, labor activism, or unrest, and other geo-political unrest could cause disruptions in the business, the businesses of partners, or the economy as a whole. In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue operations and may endure system interruptions, reputational harm, delays in development of our systems, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on future operating results.

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Risks Specific to our Pre-Acquisition Business

Blockchain is a nascent and rapidly changing technology and the use of blockchain technology in the commercial marketplace remains relatively small. The slowing or stopping of the development or acceptance of blockchain technology may adversely affect our business.

Blockchain is an emerging technology that offers new capabilities. The development of blockchain technology is a new and rapidly evolving industry that is subject to a high degree of uncertainty. The capabilities of blockchain technology have not been fully confirmed. The utilization of blockchain technology may face opposition by certain participants in the market, who may criticize blockchain technology for its slow processing speed, poor real-time data processing capacity, and burdensome learning costs, among other things. In addition, blockchain technology is subject to technical risks such as forking. Most blockchain networks operate based on some form of open-source software. An open-source project is not represented, maintained, or monitored by an official organization or authority. Because of the nature of open-source software projects, it may be easier for third parties not affiliated with the issuer to introduce weaknesses or bugs into the core infrastructure elements of the blockchain network. This could result in the corruption of the open-source code which may result in the loss or theft of blockchain assets.

Factors affecting the further development of blockchain industry include, without limitation:

● continued worldwide growth in the adoption and use of blockchain technology;

● the maintenance and development of the open-source software protocol of blockchain networks;

● changes in consumer demographics;

● changes in public tastes and preferences;

● the popularity or acceptance of blockchain networks and assets; and

● government and quasi-government regulation of blockchain networks and assets, including any restrictions on access, operation, and use of blockchain networks and assets.

Our blockchain business model is dependent on continued investment in and development of the blockchain industry and related technologies. If investments in the blockchain industry become less attractive to investors, innovators, and developers, or if blockchain networks and assets do not gain public acceptance or are not adopted and used by a substantial number of individuals, companies and other entities, it could have a material adverse impact on our blockchain operations.

If we are unable to apply technology effectively in driving value for our customers through blockchain-based solutions, our blockchain business could be adversely affected.

Our success depends on our ability to apply our proprietary blockchain technology, Grid Ledger System (“GLS”), develop new services, and improve the performance and cost-effectiveness of the existing services, in each case in ways that address current and anticipated customer requirements, industry needs, and future trends. Such success is dependent upon several factors, including technology effectiveness, functionality, competitive pricing, licensing, and integration with existing and emerging technologies. The blockchain industry is characterized by rapid technological changes. If we fail to develop and implement technology solutions and technical expertise that keep pace with changes in technology, industry standards, and customer preferences, our value proposition could be adversely affected. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis and our ideas may not be accepted in the marketplace. The effort to gain technological expertise and develop new technologies in our business may require us to incur significant expenses. In addition, GLS may not gain acceptance or recognition in the market, which is dominated by more established and conventional technologies, even though we believe GLS is superior to the conventional blockchains. Our unique advantage created by GLS may be threatened by intensified competition in the market if our competitors invent similar technologies in the future. Any of these events could result in a material adverse effect on our operating results, customer relationships, and business.

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Our blockchain technology is dependent on telecommunications infrastructure and the performance of devices equipped with blockchain.

The success of our blockchain-based services will depend on the continued development of a stable telecommunications infrastructure with the necessary speed, data capacity, and security, complementary products such as high-speed networking equipment for providing reliable internet access and services, and other devices that are equipped with blockchain. There is no assurance that the relevant infrastructure and devices will continue to be able to support the demands placed on it by the growth of blockchain technology. There is also no assurance that the infrastructure or complementary products or services necessary to support the blockchain technology will be developed in a timely manner, or that such development will not incur substantial costs to adapt to changing technologies. The failure of these platforms and devices or their development could materially and adversely affect our business, financial condition, and results of operation.

Cybersecurity incidents involving our blockchain business may materially and adversely affect our business.

Security breaches, computer malware, and computer hacking attacks have been a prevalent concern since the launch of blockchain technology. To reduce security concerns, GLS employs intermediate processing nodes, which are independent of the nodes that make up the blockchain network and process the actual transactions. Even if the intermediate processing nodes are stopped, the transactions cannot be tampered with. To reduce the impact of attacks on intermediate processing nodes and any unauthorized access, GLS allows the use of firewalls and other means to prevent cyberattacks, thereby providing security. However, our security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of ours, or otherwise. Techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be designed to remain dormant until a predetermined event. Outside parties may also attempt to fraudulently induce employees of ours to disclose sensitive information in order to gain access to our infrastructure. Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the services we provide, which in turn could have an adverse effect on our business.

If we are not able to successfully compete in the blockchain market, our blockchain business will be materially harmed.

We design, upgrade, and maintain technology systems for our customers. We expect to encounter competition in our business, including from entities having substantially greater capital and resources and offering a wider range of products and services. Many of our competitors may have greater financial, marketing, technological, and personnel resources than we do, and may offer a wider range of bundled services, have broader name recognition, and have larger customer bases than we do.

Our ability to develop competitive advantages is dependent on continued improvement in GLS, enhancements to our services, investment in the development of our services, and additional marketing activities. Failure to implement timely changes into our technology, limited access to resources to make sufficient investments in the development of our blockchain services, or competitors devoting significantly more resources to competing services could adversely affect our market share, which would adversely affect our business and results of operations.

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Risks Related to Intellectual Property, Cybersecurity, and Technology

Our ability to protect our intellectual property, including our BayesShield AI technology, may be limited, which could impair our ability to maintain our competitive advantage.

Competitors may attempt to imitate our products or attempt to replicate their functionality. Our intellectual property, including our proprietary software, artificial intelligence and machine learning technologies, algorithms, models, data, methodologies, trade secrets, know-how, and other proprietary information, is an important component of our business and may provide us with a competitive advantage. We have submitted two patent applications relating to our BayesShield AI technology. However, there can be no assurance that any of our pending or future patent applications will result in issued patents, that any patents that are issued will provide meaningful protection, or that the scope of any patent protection will be sufficient to prevent competitors from developing or commercializing technologies that are similar to, or perform functions similar to, our technologies.

The patent application process is costly, time-consuming, and subject to substantial uncertainty. Patent applications may be challenged or rejected by patent offices, and the scope of any patent claims ultimately allowed may be narrower than the claims initially sought. Even if patents are issued, they may subsequently be challenged, narrowed, invalidated, circumvented, or rendered unenforceable. In addition, patent protection is territorial and may not be available, or may be more difficult or costly to obtain or enforce, in all jurisdictions in which we may operate or compete. We may also decide not to pursue or maintain patent protection in particular jurisdictions due to the costs and uncertainties involved.

We also rely on a combination of trade secret protections, confidentiality obligations, contractual restrictions, copyright, trademarks, and other legal protections to protect our intellectual property. These measures may not adequately protect our intellectual property, particularly where employees, contractors, service providers, business partners, or other persons have access to our proprietary technology or information. Unauthorized disclosure, misappropriation, reverse engineering, or other unauthorized use of our intellectual property could enable third parties to reproduce or develop competing technologies more quickly or at lower cost. In addition, competitors may independently develop technologies that are substantially similar to ours without infringing our intellectual property rights.

The rapid development of artificial intelligence and related technologies may make it increasingly difficult to protect certain aspects of our intellectual property. Technologies, algorithms, and techniques may be developed or reproduced more rapidly than we are able to obtain or enforce intellectual property protection. In addition, the use of publicly available information, third-party technologies, open-source software, and other resources in the development of AI systems may create additional challenges in identifying, protecting, or enforcing our proprietary rights.

We may also need to enforce our intellectual property rights against infringement, misappropriation, or other unauthorized use. Any such enforcement actions could be expensive, time-consuming, and uncertain, and we may not prevail. Conversely, third parties may assert that our products or technologies infringe, misappropriate, or otherwise violate their intellectual property rights. Any such claims, regardless of their merit, could result in significant costs, require us to modify or discontinue aspects of our products, or divert management and technical resources.

If we are unable to obtain, maintain, or adequately protect our intellectual property, or if third parties are able to develop, obtain, or use technologies that compete with our proprietary technologies, we may be unable to maintain our technological or competitive advantages. Any such loss of intellectual property protection or competitive advantage could materially and adversely affect our business, financial condition, results of operations, and prospects.

If one or more competitors obtain patents covering technology critical to the operation of our business, we may infringe on the intellectual property rights of others.

If one or more other persons, companies, or organizations has or obtains a valid patent covering technology critical to the operation of our business, there can be no assurance that such entity would be willing to license such technology at acceptable prices or at all, which could have a material adverse effect on our business, financial condition, and results of operations.

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We may not always be able to determine that we are using or accessing protected information or software. In addition, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may currently be pending applications of which we are unaware that may later result in issued patents that our products or services infringe.

We could expend significant resources defending against patent infringement and other intellectual property right claims, which could require us to divert resources away from our operations. Any damages we are required to pay or injunctions against our continued use of such intellectual property in resolution of such claims may cause a material adverse effect to our business, financial condition, and results of operations.

Cybersecurity incidents may materially and adversely affect our business.

We rely on information technology systems, networks, software, cloud services, data centers, and other infrastructure to operate our business, develop and maintain our platforms, process transactions, communicate with users and business partners, store and process data, and conduct our proprietary trading activities. These systems, and the systems of our third-party service providers, may be vulnerable to cybersecurity incidents, including cyberattacks, hacking, phishing, ransomware, malware, denial-of-service attacks, credential theft, exploitation of software vulnerabilities, and other forms of unauthorized access or disruption. Cybersecurity incidents may also result from inadvertent or intentional actions by our employees, contractors, or other persons who have authorized access to our systems or information, including the unauthorized disclosure, theft, misuse, or loss of confidential, proprietary, or personal information.

An unauthorized intrusion into, or other compromise of, our systems could result in the theft, destruction, alteration, or unauthorized disclosure of sensitive information, including user information, personal data, proprietary information, trading strategies, models, source code, and other confidential business information. A cybersecurity incident could also disrupt the availability or functionality of our platforms, interfere with our ability to process transactions or execute or manage proprietary trading positions, impair our operations, or cause us to incur significant costs to investigate, contain, remediate, and prevent further incidents. We may also be subject to claims, litigation, regulatory investigations, enforcement actions, fines, penalties, and other liabilities arising from cybersecurity incidents or our failure to comply with applicable cybersecurity or data privacy requirements. In addition, an actual or perceived cybersecurity incident could damage our reputation, reduce user confidence in our platforms, result in the loss of users or business partners, and adversely affect our business and results of operations.

Our collection, storage, use, and other processing of personal data also subjects us to a variety of data privacy and data protection laws and regulations, including the European Union’s General Data Protection Regulation (GDPR), the United Kingdom’s data protection laws, and applicable U.S. state privacy laws. These laws and regulations impose requirements relating to, among other things, the collection and use of personal data, data minimization, security measures, data subject rights, cross-border data transfers, data retention, and the notification of certain data breaches. The regulatory framework governing data privacy and protection continues to develop and may become more complex or restrictive. Any failure or perceived failure by us to comply with applicable requirements, including as a result of a cybersecurity incident, could result in significant regulatory scrutiny, enforcement proceedings, monetary penalties, restrictions on our ability to process personal data, or other adverse consequences.

The cybersecurity threat landscape is also continually evolving. Advances in artificial intelligence may enable malicious actors to conduct more sophisticated, automated, targeted, or convincing attacks, including attacks that may be more difficult for traditional security measures to detect. In addition, developments in quantum computing could eventually undermine certain cryptographic algorithms and other security technologies currently relied upon to protect information and communications. We may be required to make significant investments in cybersecurity technologies, personnel, controls, and procedures to address these and other emerging threats, and there can be no assurance that our security measures will prevent or adequately mitigate every cybersecurity incident.

Despite our cybersecurity measures, policies, procedures, and controls, we cannot guarantee that our systems or those of our service providers will not be compromised, that unauthorized access will not occur, or that a cybersecurity incident will not materially affect our business. Moreover, cybersecurity incidents may not be detected promptly, and the techniques used to circumvent security measures are continually evolving. As a result, any such incident could materially and adversely affect our business, financial condition, results of operations, reputation, and prospects.

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Operational risk may materially and adversely affect our performance.

Operational risk is the risk of an adverse outcome resulting from inadequate or failed internal processes, people, systems, or external events. Our exposure to operational risk arises from routine processing errors, as well as extraordinary incidents, such as major system failures or legal and regulatory matters. Because our business lines are reliant on both technology and human expertise and execution, we are exposed to material operational risks arising from a number of factors, including, but not limited to, human error, processing, and communication errors, errors of third-party service providers, counterparties, or other third parties, failed or inadequate processes, design flaws, and technology, or system failures and malfunctions. Operational errors or significant operational delays could have a materially negative impact on our ability to conduct our business, which could adversely affect our results of operations.

Risks Related to Legal and Regulatory Matters

Our characterization of the UpsideOnly platform and its activities may be challenged by regulators or courts, and changes in laws and regulations could subject our business to additional regulatory requirements.

We believe the UpsideOnly platform is best characterized as a gamified data analytics platform rather than as a provider of regulated financial services, an investment fund, a gambling operator, a payment service provider, or a platform for the offer, sale, or trading of securities, derivatives, or other regulated financial instruments. Based on the manner in which the platform currently operates, we do not believe that its activities are subject to many of the regulatory regimes that commonly apply to financial services, trading, investment, gambling, or payment businesses. However, the application of laws and regulations to novel technologies and business models is often uncertain, and regulatory authorities or courts may disagree with our characterization of the platform or its activities.

For example, we do not believe that the activities conducted through the UpsideOnly platform constitute the provision of regulated financial services or the operation of an investment fund. Users do not purchase or sell securities, derivatives, or other financial instruments through the platform, do not entrust us with funds for investment on their behalf, and do not participate in a pool of capital that we manage for their benefit. The positions displayed through the platform are simulated positions used for prediction and analytics purposes, and the virtual units used within the platform have no monetary value, are not transferable, do not represent or provide rights to any underlying asset, and can be reset by the user’s own volition. Our subsequent use of our own capital in connection with our proprietary trading activities is conducted for our own account and does not involve investing or managing users’ capital.

We also do not believe that the activities conducted through the platform constitute unlawful Internet gambling or otherwise constitute a regulated wagering activity under applicable U.S. federal or state law. Nevertheless, gambling and wagering laws vary substantially among jurisdictions, and the characterization of a particular activity may depend on factors such as consideration, chance, skill, prizes, and the nature of the underlying activity. Regulatory authorities or courts could determine that some or all aspects of our platform constitute gambling or wagering notwithstanding our characterization of the platform.

Similarly, we do not believe that our receipt and handling of user deposits in connection with the platform constitutes money transmission or the provision of regulated payment services under applicable U.S. federal or state laws. We do not believe that the deposits constitute funds that users entrust to us for transmission to third parties, and our handling of such deposits is intended to be incidental to the operation of the platform. However, the application of money transmission and payment services laws can depend on the specific structure and flow of funds, and applicable regulators could reach a different conclusion.

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We also do not believe that the platform involves the offer or sale of securities subject to U.S. federal securities laws or the offer, sale, or dealing in securities, derivatives, or other financial instruments under applicable U.S., European Union, United Kingdom, or Marshall Islands laws. In particular, we do not believe that the platform provides investment services or activities regulated under MiFID II, such as reception and transmission or execution of orders, dealing on own account on behalf of users, portfolio management, investment advice, or operation of a multilateral or organized trading facility. We similarly do not believe that the platform constitutes a regulated collective investment scheme under applicable U.K. law because users do not contribute capital that is pooled for investment purposes and do not participate in an investment arrangement managed for their benefit.

In addition, we do not believe that the simulated positions and other prediction features offered through the platform constitute futures, options, swaps, or other commodity interests subject to regulation by the U.S. Commodity Futures Trading Commission. The simulated positions do not create rights or obligations to purchase, sell, deliver, or receive an underlying commodity or financial instrument and are not transactions in actual futures or other derivatives. Nevertheless, the CFTC has broad authority over certain commodity and retail commodity transactions, and the application of that authority may depend on the substance and economic characteristics of an activity rather than how it is described.

We also do not believe that the virtual units used within the platform constitute crypto-assets or other regulated digital assets. The virtual units are internal game or platform units with no independent monetary value, no transferability to other users, no redemption rights, and no representation on a blockchain or other distributed ledger. Accordingly, we do not believe that the platform involves the issuance, offer, sale, or provision of services relating to crypto-assets subject to applicable European Union crypto-asset regulation.

Our conclusions regarding the applicability of these and other regulatory regimes are based on our current understanding of applicable laws, regulations, regulatory guidance, and the manner in which the UpsideOnly platform currently operates. These conclusions have not necessarily been tested by regulators or courts, and there can be no assurance that a regulatory authority will agree with our interpretation. If a regulator or court determines that the platform or any aspect of our activities constitutes a regulated financial service, investment product, gambling or wagering activity, money transmission or payment service, commodity interest, crypto-asset service, collective investment scheme, or other regulated activity, we could become subject to licensing, registration, reporting, capital, consumer protection, disclosure, operational, recordkeeping, or other regulatory requirements. Compliance with such requirements could require us to modify or discontinue certain aspects of the platform, incur substantial additional costs, or delay or restrict our ability to offer the platform in certain jurisdictions. We could also be subject to investigations, enforcement proceedings, fines, penalties, private claims, or other liabilities for activities conducted before any such determination.

Moreover, the regulatory environment applicable to financial technology, artificial intelligence, digital assets, online gaming and prediction products, payments, and other technology-enabled businesses is evolving rapidly. Legislatures, regulators, and courts may adopt new laws, regulations, or interpretations, or apply existing laws in new ways, that could increase the regulatory burden applicable to our business or cause activities that we currently believe are outside the scope of regulation to become regulated. Such developments could materially increase our compliance costs, limit the markets in which we may offer the platform, require changes to our business model or technology, or otherwise materially and adversely affect our business, financial condition, results of operations, and prospects.

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We may not have sufficient insurance to cover potential losses and claims.

We currently maintain insurance coverage against the risk of property damage caused by fires, lightning strikes, explosions, riots, vehicle collisions, thefts, and flooding. We also maintain earthquake insurance coverage. While we believe that there have not been instances when we had to incur losses, damages, and liabilities because of the lack of insurance coverage, there may be such instances in the future, which may in turn adversely affect our financial condition and results of operations.

We may become involved in legal and other proceedings from time to time and may suffer significant liabilities or other losses as a result

Certain shareholders of our company filed a lawsuit in the Tokyo District Court against our company and Mr. Satoshi Kobayashi, the Company’s Co-Chief Executive Officer, Interim Chief Financial Officer, and Representative Director. The complaint, which is dated December 18, 2023, was served on our company and Mr. Kobayashi on January 12, 2024. The plaintiffs alleged that Mr. Kobayashi violated Article 709 of the Japanese Civil Code by intentionally delaying or misrepresenting the procedures necessary for the sale of shares, thereby unfairly depriving the plaintiffs of the opportunity to sell their shares on the Nasdaq market at a higher price following our company’s initial public offering, and that our company shall be liable for damages caused by Mr. Kobayashi in the discharge of his duties as our company’s Representative Director under Article 350 of the Japanese Companies Act. The plaintiffs sought monetary damages in the total amount of $2,925,747, plus interest and costs. On July 17, 2026, a judicial settlement was reached before the Tokyo District Court resolving all claims between the plaintiffs and the defendants. The settlement payment of JPY20 million was completed on July 27, 2026, the parties confirmed that no further obligations or claims exist between them, and the provisional attachment orders have been withdrawn.

In addition, Alexander Capital, L.P. filed a lawsuit against our company in the United States District Court in the Southern District of New York. The complaint, which is dated April 21, 2026, alleges breach of contract claims against our company related to Alexander Capital’s engagement as our company’s placement agent in connection with a private investment in public equity (PIPE) transaction that occurred in two tranches in October and November of 2025, respectively. We are currently involved in negotiations to settle the lawsuit.

Our U.S. subsidiary Kephas Corporation is involved in two pending employment related lawsuits, one filed by a former employee in April 2026 alleging unpaid wages, and a second filed by a former employee in May 2026 alleging wrongful termination.

From time to time, we may become involved in other disputes with the provision of our services or other aspects of our business and operations, including labor disputes with employees and contract disputes with our customers. These disputes may lead to legal or other proceedings and may result in substantial costs and diversion of resources and management’s attention. Disputes and legal and other proceedings may require substantial time and expense to resolve, which could divert valuable resources, such as management time and working capital, delay our planned projects, and increase our costs. Third parties that are found liable to us may not have the resources to compensate us for our incurred costs and damages. We could also be required to pay significant costs and damages if we do not prevail in any such disputes or proceedings.

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Risks Related to Our Ordinary Shares and the Trading Market

Share ownership is concentrated in the hands of our management, who are able to exercise significant influence on us.

As of the date of this Annual Report, our directors and executive officers together beneficially own 23.21% of our outstanding Ordinary Shares. These shareholders, acting together, have significant influence over all matters that require approval by our shareholders, including the election of directors and approval of significant corporate transactions. Corporate action might be taken even if other shareholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of our company that other shareholders may view as beneficial.

The sale or availability for sale of substantial amounts of the ADSs could adversely affect their market price.

Sales of a substantial amount of the ADSs in the public market, or the perception that these sales could occur, could adversely affect the market price of the ADSs and could materially impair our ability to raise capital through equity offerings in the future. As of the date of this Annual Report, 40,570,692 Ordinary Shares are issued and outstanding, and 5,855,129 ADSs (representing 29,275,645 Ordinary Shares) are issued, outstanding and freely tradeable. In addition, 5,001,120 ADSs (representing 25,005,600 Ordinary Shares) and 204,000 ADSs (representing 1,020,000 Ordinary Shares) are issuable upon the exercise of warrants and stock options, respectively, that are issued and outstanding as of the date of this Annual Report. In addition, we have issued 53,051,000 Series P preferred shares, which, if and as converted into Ordinary Shares on a one-for-one basis, would be equivalent to 10,610,200 ADSs, subject to receipt of the required shareholder approval to provide such conversion and voting rights. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs.

If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding the ADSs, the price of the ADSs, and trading volume could decline.

Any trading market for the ADSs may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of the ADSs would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of the ADSs and the trading volume to decline.

The market price of the ADSs may be volatile or may decline regardless of our operating performance.

The market price of the ADSs may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

● actual or anticipated fluctuations in our revenue and other operating results;

● the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;

● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

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● announcements by us or our competitors of significant products, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

● the trading volume of the ADSs on Nasdaq;

● sales of the ADSs or Ordinary Shares by us, our executive officers and directors, or our shareholders or the anticipation that such sales may occur in the future;

● lawsuits threatened or filed against us; and

● other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

If we fail to implement and maintain an effective system of internal control, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of the ADSs may be materially and adversely affected.

As a public company in the United States, we are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) requires that we include a report of management on our internal control over financial reporting in our Annual Report. In addition, once we cease to be an “emerging growth company,” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to complete our evaluation testing and any required remediation in a timely manner.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented, or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of the ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from Nasdaq, regulatory investigations, and civil or criminal sanctions. We may also be required to restate our financial statements for prior periods. See “Item 15. Controls And Procedures” for more information.

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We do not intend to pay dividends for the foreseeable future.

We currently intend to retain most, if not all, of our available funds and any future earnings to fund the operation, development, and growth of our business and, as a result, we do not expect to declare or pay any dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source for any future dividend income. Accordingly, the return on your investment in the ADSs likely depends entirely upon any future price appreciation of the ADSs. There is no assurance that the ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in the ADSs and you may even lose your entire investment in the ADSs.

Rights of shareholders under Japanese law may be different from rights of shareholders in other jurisdictions.

Our amended articles of incorporation and the Companies Act of Japan (Act No. 86 of 2005, as amended), or the Companies Act, govern our corporate affairs. Legal principles relating to matters such as the validity of corporate procedures, directors’ and executive officers’ fiduciary duties, and obligations and shareholders’ rights under Japanese law may be different from, or less clearly defined than, those that would apply to a company incorporated in any other jurisdiction. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the law of other countries. For example, under the Companies Act, only holders of 3% or more of our total voting rights or our outstanding shares are entitled to examine our accounting books and records. Furthermore, there is a degree of uncertainty as to what duties the directors of a Japanese joint-stock corporation may have in response to an unsolicited takeover bid, and such uncertainty may be more pronounced than that in other jurisdictions.

As holders of ADSs, you may have fewer rights than holders of our Ordinary Shares and must act through the depositary to exercise those rights.

The rights of shareholders under Japanese law to take actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining our accounting books and records, and exercising appraisal rights, are available only to shareholders of record. ADS holders are not shareholders of record. The depositary, through its custodian agents, is the record holder of our Ordinary Shares underlying the ADSs. ADS holders are not able to bring a derivative action, examine our accounting books and records, or exercise appraisal rights through the depositary.

Holders of ADSs may exercise their voting rights only in accordance with the provisions of the deposit agreement. If we instruct the depositary to ask for your voting instructions, upon receipt of voting instructions from the ADS holders in the manner set forth in the deposit agreement, the depositary will make efforts to vote the Ordinary Shares underlying the ADSs in accordance with the instructions of the ADS holders. The depositary and its agents may not be able to send voting instructions to ADS holders or carry out their voting instructions in a timely manner. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast, or for the effect of any such vote. As a result, holders of ADSs may not be able to exercise their right to vote.

Direct acquisition of our Ordinary Shares, in lieu of ADSs, is subject to a prior filing requirement under the amendments in 2019 to the Japanese Foreign Exchange and Foreign Trade Act of Japan and related regulations.

Under the amendments in 2019 to the Foreign Exchange and Foreign Trade Act of Japan (Act No. 228 of 1949, as amended) (“FEFTA”) and related regulations, direct acquisition of our Ordinary Shares, in lieu of ADSs, by a Foreign Investor (as defined herein under “Item 10. Additional Information—D. Exchange Controls”) could be subject to the prior filing requirement under FEFTA, regardless of the number of shares to be acquired. A Foreign Investor wishing to acquire direct ownership of our Ordinary Shares, rather than ADSs, will be required to make a prior filing with the relevant governmental authorities through the Bank of Japan and wait until clearance for the acquisition is granted by the applicable governmental authorities, which approval may take up to 30 days and could be subject to further extension. Without such clearance, the Foreign Investor will not be permitted to acquire our Ordinary Shares directly.

A prior filing requirement as set forth above is not triggered for acquiring or trading the ADSs since the depositary received clearance for the acquisition of our Ordinary Shares underlying the ADS in June 2023. In addition, any Foreign Investor expecting to receive delivery of our Ordinary Shares upon surrender of ADSs must also obtain pre-clearance from the applicable Japanese governmental authority prior to accepting delivery, which approval may take up to 30 days and could be subject to further extension. Although such prior filing requirement is not triggered for trading the ADSs once the depositary receives clearance for the deposit of the underlying Ordinary Shares, we cannot assure you that there will not be delays for additional Foreign Investors who wish to acquire our Ordinary Shares or for holders of the ADSs who are Foreign Investors and who wish to surrender their ADSs and acquire the underlying Ordinary Shares. In addition, we cannot assure you that the applicable Japanese governmental authorities will grant such clearance in a timely manner or at all.

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The discussion above is not exhaustive of all possible foreign exchange controls requirements that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of our Ordinary Shares or the ADSs by consulting their own advisors. For a more detailed discussion on the requirements and procedures regarding the prior notifications under the Foreign Exchange Regulations, see “Item 10. Additional Information—D. Exchange Controls.”

ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.

The deposit agreement governing the ADSs representing our Ordinary Shares provides that, to the fullest extent permitted by applicable law, owners and holders of ADSs irrevocably waive the right to a jury trial for any claim that they may have against us or the depositary arising from or relating to our Ordinary Shares, the ADSs, or the deposit agreement, including any claim under the U.S. federal securities laws.

However, ADS holders will not be deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. In fact, ADS holders cannot waive our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. If we or the depositary opposed a demand for jury trial relying on jury trial waiver mentioned above, it is up to the court to determine whether such waiver was enforceable considering the facts and circumstances of that case in accordance with the applicable state and federal law.

If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. To our knowledge, the enforceability of a jury trial waiver under the federal securities laws has not been finally adjudicated by a federal court or by the United States Supreme Court. Nonetheless, we believe that a jury trial waiver provision is generally enforceable under the laws of the State of New York, which govern the deposit agreement, or by a federal or state court in the City of New York. In determining whether to enforce a jury trial waiver provision, New York courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has knowingly waived any right to trial by jury. We believe that this is the case with respect to the deposit agreement and the ADSs. In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaim sounding in fraud or one which is based upon a creditor’s negligence in failing to liquidate collateral upon a guarantor’s demand, or in the case of an intentional tort claim, none of which we believe are applicable in the case of the deposit agreement or the ADSs. If you or any other owners or holders of ADSs bring a claim against us or the depositary relating to the matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other owner or holder may not have the right to a jury trial regarding such claims, which may limit and discourage lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may have different outcomes compared to that of a jury trial, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if the jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any owner or holder of ADSs or by us or the depositary of compliance with any substantive provision of U.S. federal securities laws and the rules and regulations promulgated thereunder.

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Holders of ADSs may not receive distributions on our Ordinary Shares or any value for them if it is illegal or impractical to make them available to such holders.

Subject to the terms of the deposit agreement, the depositary has agreed to pay holders of ADSs the cash dividends or other distributions it or the custodian for the ADSs receives on the Ordinary Shares or other deposited securities after deducting its fees and expenses and any taxes or other government charges. Holders of ADSs will receive these distributions in proportion to the number of our Ordinary Shares that such ADSs represent. However, the depositary is not responsible for making such payments or distributions if it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act, but that are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after reasonable efforts made by the depositary. We have no obligation to take any other action to permit distributions on our Ordinary Shares to holders of ADSs. This means that holders of ADSs may not receive the distributions we make on our Ordinary Shares if it is illegal or impractical to make them available to such holders. These restrictions may materially reduce the value of the ADSs.

Holders of ADSs may be subject to limitations on transfer of their ADSs.

ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer, or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

We may amend the deposit agreement without consent from holders of ADSs and, if such holders disagree with our amendments, their choices will be limited to selling the ADSs or cancelling and withdrawing the underlying Ordinary Shares.

We may agree with the depositary to amend the deposit agreement without consent from holders of ADSs. If an amendment increases fees to be charged to ADS holders or prejudices a substantial existing right of ADS holders, it will not become effective until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, ADS holders are considered, by continuing to hold their ADSs, to have agreed to the amendment and to be bound by the amended deposit agreement. If holders of ADSs do not agree with an amendment to the deposit agreement, their choices will be limited to selling the ADSs or cancelling and withdrawing the underlying Ordinary Shares. No assurance can be given that a sale of ADSs could be made at a price satisfactory to the holder in such circumstances.

We are incorporated in Japan, and it may be more difficult to enforce judgments obtained in courts outside Japan.

We are incorporated in Japan as a joint-stock corporation with limited liability. Some of our directors are non-U.S. residents, and a substantial portion of our assets and the personal assets of some of our directors and executive officers are located outside the United States. As a result, when compared to a U.S. company, it may be more difficult for investors to effect service of process in the United States upon us or to enforce against us, our directors or executive officers, judgments obtained in U.S. courts predicated upon civil liability provisions of the federal or state securities laws of the U.S. or similar judgments obtained in other courts outside Japan. There is doubt as to the enforceability in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the federal and state securities laws of the United States.

Dividend payments and the amount you may realize upon a sale of our Ordinary Shares or the ADSs that you hold will be affected by fluctuations in the exchange rate between the U.S. dollar and the Japanese yen.

Cash dividends, if any, in respect of our Ordinary Shares represented by the ADSs will be paid to the depositary in Japanese yen and then converted by the depositary or its agents into U.S. dollars, subject to certain conditions and the terms of the deposit agreement. Accordingly, fluctuations in the exchange rate between the Japanese yen and the U.S. dollar will affect, among other things, the amounts a holder of ADSs will receive from the depositary in respect of dividends, the U.S. dollar value of the proceeds that a holder of ADSs would receive upon sale in Japan of our Ordinary Shares obtained upon cancellation and surrender of ADSs and the secondary market price of ADSs. Such fluctuations will also affect the U.S. dollar value of dividends and sales proceeds received by holders of our Ordinary Shares.

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If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting, and other expenses that we would not incur as a foreign private issuer.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our executive officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16(b) and Section 16(c) of the Exchange Act. However, effective March 18, 2026, our directors and officers are subject to the reporting requirements of Section 16(a) of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we are not required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. We may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

Because we are a foreign private issuer and have taken advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you have less protection than you would have if we were a domestic issuer.

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we have followed home country practice in lieu of the above requirements. The corporate governance practice in our home country, Japan, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our company may decrease as a result. In addition, Nasdaq listing rules also require U.S. domestic issuers to have an audit committee and a compensation committee and a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. Consistent with corporate governance practices in Japan, we do not have a standalone compensation committee or nomination and corporate governance committee of our board. As a result of these exemptions, investors would have less protection than they would have if we were a domestic issuer.

If we cannot satisfy the continued listing requirements and other rules of Nasdaq, the ADSs may be delisted, which could negatively affect the price of the ADSs and your ability to sell them.

In order to maintain our listing on Nasdaq, we are required to comply with the continued listing requirements and other rules of Nasdaq. If we are unable to satisfy Nasdaq criteria for maintaining our listing, the ADSs could be subject to delisting. If Nasdaq subsequently delists the ADSs from trading, we could face significant consequences, including:

● a limited availability for market quotations for the ADSs;

● reduced liquidity with respect to the ADSs;

● a determination that the ADS is a “penny stock,” which will require brokers trading in the ADSs to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the ADSs;

● limited amount of news and analyst coverage; and

● a decreased ability to issue additional securities or obtain additional financing in the future.

We are an “emerging growth company” within the meaning of the Securities Act, and we have taken advantage of certain exemptions from disclosure requirements available to emerging growth companies, which will make it more difficult to compare our performance with other public companies.

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such an extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This will make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

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Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and the ADSs.

For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we have elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of other public companies. If some investors find the ADSs less attractive as a result, there may be a less active trading market for the ADSs and the ADS price may be more volatile.

If we are classified as a passive foreign investment company, United States taxpayers who own the ADSs or our Ordinary Shares may have adverse United States federal income tax consequences.

A non-U.S. corporation such as us will be classified as a passive foreign investment company (“PFIC”) for any taxable year if, for such year, either:

● at least 75% of our gross income for the year is passive income; or

● the average percentage of our assets (determined at the end of each quarter) during the taxable year which produce passive income or which are held for the production of passive income is at least 50%.

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business), and gains from the disposition of passive assets.

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds the ADSs or our Ordinary Shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

Based on our operations and the composition of our assets, we do not believe we were a PFIC for our 2026 taxable year. However, it is possible that, for our 2027 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders. We will make this determination following the end of any particular tax year.

The classification of certain of our income as active or passive, and certain of our assets as producing active or passive income, and hence whether we are or will become a PFIC, depends on the interpretation of certain United States Treasury Regulations as well as certain IRS guidance relating to the classification of assets as producing active or passive income. Such regulations and guidance are potentially subject to different interpretations. If due to different interpretations of such regulations and guidance the percentage of our passive income or the percentage of our assets treated as producing passive income increases, we may be a PFIC in one or more taxable years. For further discussion, please refer to the PFIC Consequences in the United State Federal Income Taxation section.

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U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS ABOUT THE PFIC RULES, THE POTENTIAL APPLICABILITY OF THESE RULES TO THE COMPANY CURRENTLY AND IN THE FUTURE, AND THEIR FILING OBLIGATIONS IF THE COMPANY IS A PFIC.

If we are unable to maintain compliance with Nasdaq’s listing standards, our securities will be delisted, which would negatively affect our securities’ market price and liquidity and reduce our ability to raise capital.

We have previously received deficiency notices from Nasdaq regarding our compliance with listing standards and have subsequently regained our compliance status. There can be no assurance that we will maintain compliance with Nasdaq’s continued listing requirements. If we fail to maintain compliance, our securities could be delisted from Nasdaq. We and holders of our securities could be materially adversely affected if our securities are delisted from Nasdaq. In particular:

● we may be unable to raise equity capital on acceptable terms or at all;

● we may lose the confidence of our business partners, which would jeopardize our ability to continue our business as currently conducted;

● the price of our securities will likely decrease as a result of the loss of market efficiencies associated with Nasdaq;

● holders may be unable to sell or purchase our securities when they wish to do so;

● we may become subject to stockholder litigation;

● we may lose media and analyst coverage;

● our securities could be considered a “penny stock,” which would likely limit the level of trading activity in the secondary market for our securities; and

● we would likely lose any active trading market for our securities, as they may only be traded on one of the over-the-counter markets, if at all.

Item 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Corporate History and Structure

We were incorporated in Japan on May 1, 2018 as a joint-stock corporation with limited liability pursuant to the laws of Japan. The Company was formerly known as Earlyworks Co., Ltd. and changed its name to Perpetuals.com Ltd in connection with the rebranding in January 2026. On January 20, 2026, the Company acquired 100% of the outstanding shares of Perpetual Markets Ltd., making it a wholly owned subsidiary of the Company (the “Acquisition”).

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Our post-Acquisition business operates through a number of direct and indirect wholly owned operating subsidiaries, with its primary business activities operated within the U.S. Kephas Corporation, a Delaware corporation, is our U.S. operating subsidiary. Its subsidiaries, USO Labs Ltd., a Marshall Islands corporation, and USO Deposit Trust LLC, a Delaware limited liability company, jointly operate our UpsideOnly business.

Corporate Information

Our principal executive office is located at 5-7-11, Ueno, Taito-ku, Tokyo, Japan 110-0005, and our telephone number is +81 03-5614-0978. Our websites are https://perpetuals.com/ and https://e-arly.works/. The information contained in, or accessible from, our website or any other website does not constitute a part of this Annual Report. Our agent for service of process in the United States is Cogency Global Inc., at 122 East 42nd Street, 18th Floor, New York, NY 10168.

The SEC maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.

For information regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.”

B. Business Overview

For the fiscal years ended April 30, 2026, 2025, and 2024, we had total revenue of JPY 256.3 million (US$1.6 million), JPY440.4 million (US$3.1 million), and JPY179.4 million, respectively. For the same fiscal years, we had net loss of approximately JPY 733.3 million (US$4.7 million), JPY256.7 million net loss (US$1.8 million), and JPY336.2 million net loss, respectively.

The Acquisition

Our legacy company, Earlyworks, Co., Ltd., was dedicated to optimizing business operations with the use of blockchain technology. On January 20, 2026, our company completed the Acquisition, resulting in the rebranding of our company as Perpetuals.com Ltd and our Nasdaq ticker symbol changing to PDC.

This following Business Overview is divided into two portions, one describing the post-Acquisition business, and the other describing the pre-Acquisition business.

During the fiscal year ended April 30, 2026, the legacy blockchain business generated the majority of our consolidated revenue, because the results of the acquired PML subgroup were consolidated only from the Acquisition Date. Following the Acquisition, however, our operational focus is centered on the post-Acquisition business, and we do not expect the legacy blockchain pre-Acquisition operations to be a meaningful part of our growth strategy for the future.

Post-Acquisition Overview

Introduction

Post-Acquisition, we are a fintech company that pairs proprietary AI with regulated market infrastructure to open global financial markets to more participants, from financial platforms to individual users. By building on fully compliant infrastructure, we keep the interests of platforms and users aligned, while making markets more transparent and accessible and minimizing incumbent structural risks to traders.

Our proprietary technology enables not only the operation of regulated financial and cryptocurrency services, it also leverages our patent-pending specialized machine learning system, BayesShield AI – trained on billions of retail trading data points – to help fintech companies create and offer innovative products and services.

Beginning with our inception in May 2018 and prior to the completion of the Acquisition, we were predominantly focused on blockchain technology, and this legacy business is discussed in detail separately below.

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Our Purpose

We believe characteristics of the conventional retail trading environment create an opportunity for alternative approaches that seek to provide individuals with access to investment opportunities without subjecting them to assume the same level of trading risk.

We believe that separating a user’s participation from the direct funding and execution of leveraged trades may address certain structural disadvantages of conventional retail trading, including the risk of substantial losses of user trading capital, the effects of leverage and margin requirements, and certain conflicts that can arise when a trading provider’s revenues are directly or indirectly linked to customer trading activity or customer losses.

Existing State of the Retail Trading Market

The Retail Trading Environment

Retail traders seeking to participate in financial markets have historically relied primarily on traditional brokerage firms, online trading platforms and, more recently, proprietary trading or “funded trader” firms. Although these businesses differ substantially in their structures, products, and regulatory status, many conventional retail trading models require the trader to commit capital and assume direct exposure to market losses. In addition, the economics of some of these models can create incentives or conflicts of interest that may not be fully aligned with the interests of retail traders.

Traditional Brokerage and Trading Platforms

A traditional brokerage firm generally provides a platform through which customers can buy and sell securities, derivatives, foreign exchange, or other financial instruments. Depending on its business model and the products offered, a broker may generate revenue from commissions, transaction fees, bid-ask spreads, margin or financing charges, payment for order flow, interest earned on customer cash, and other sources.

A broker acting solely as an agent generally does not profit directly from a customer’s trading loss. Nevertheless, a broker may have an economic incentive to increase customer trading activity or to offer or recommend products, services, or account features that generate greater revenue for the broker. The U.S. Securities and Exchange Commission (“SEC”) has recognized that broker-dealers and investment professionals can have economic incentives relating to fees, commissions, markups, payment for order flow, cash-sweep programs, proprietary products, and other sources of compensation, and that such incentives can create conflicts between a firm’s interests and those of its retail customers.

The economic relationship can be different where a trading provider acts as principal or otherwise serves as the counterparty to a customer’s transaction. For example, in certain over-the-counter (“OTC”) foreign exchange markets, the customer does not trade against an open exchange but instead trades directly against the dealer. In such circumstances, the dealer may be the seller when the customer buys and the buyer when the customer sells. The Commodity Futures Trading Commission (“CFTC”) has specifically noted that an OTC foreign exchange dealer can make money when customers trade more frequently, lose money, or pay fees, spreads, or commissions.

Accordingly, while it would be inaccurate to characterize all traditional brokerage firms as benefiting from customer losses, the economics of certain retail trading models can create conflicts of interest or incentives that may be adverse to retail customers. The nature and magnitude of those conflicts depend on the provider’s business model, the products offered, and the manner in which customer transactions are executed.

Proprietary and “Funded Trader” Firms

Retail traders also increasingly have access to businesses commonly described as proprietary trading (often referred to as “prop trading” firms) or “funded trader” firms. A traditional prop trading firm generally trades the firm’s own capital and does not operate primarily as a retail brokerage. Retail-oriented “funded trader” businesses, however, may use different models. In some cases, an individual pays an evaluation fee or subscription, trades in a simulated environment or subject to specified trading parameters, and may become eligible to receive a portion of purported trading profits if specified conditions are satisfied. Other firms may use different arrangements, including arrangements involving actual trading or deployment of firm capital.

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The economic terms of these programs can vary significantly, including with respect to evaluation fees, subscription fees, trading restrictions, profit-sharing arrangements, maximum permitted losses, payout conditions, and the circumstances under which an account may be terminated. As a result, retail traders may bear economic costs or face contractual restrictions even where they are not directly investing their own capital in the market.

Furthermore, retail-oriented proprietary trading firms commonly generate revenue by charging prospective traders fees to participate in trading evaluations or “challenges.” The trader generally pays the fee regardless of whether the trader successfully completes the evaluation. Industry data published by Finance Magnates and based on data from FPFX Tech covering more than 300,000 accounts and approximately 100,000 traders across ten proprietary trading firms found that approximately only 14% of traders passed the evaluation stage and obtained a funded account, while approximately just 7% of traders ultimately received a payout. The same data indicated that a trader spent approximately $800 on challenge purchases over the course of the trader’s activity with a prop trading firm, typically through approximately three challenge attempts.

These characteristics can create an economic model in which evaluation and related fees constitute an important source of revenue and in which the provider’s economics may depend significantly on the continued participation of prospective traders. The precise revenue mix varies among providers, however, and public information is insufficient to establish an industry-wide percentage of revenue or profit attributable to evaluation fees. Some firms may also generate revenue through profit-sharing arrangements, subscriptions, trading-related fees, data or platform charges, or other sources.

From the perspective of a retail trader, the distinction can be significant. A trader who fails an evaluation or “challenge” generally loses the evaluation fee without receiving a payout, while a relatively small proportion of participants ultimately receive payouts. This creates a potential structural tension in models in which the provider receives revenue when traders enter or repeat an evaluation regardless of whether those traders ultimately succeed.

The CFTC has specifically cautioned retail customers about offers involving proprietary trading firms’ money and profit-sharing arrangements and has noted that claims associated with such opportunities should be evaluated carefully.

Leverage and the Potential for Rapid Losses

One of the most significant risks associated with many forms of retail trading is leverage. Leverage allows a trader to obtain market exposure that is greater than the amount of capital the trader deposits or commits to a position. For example, with 10-to-1 leverage, a trader who commits $1,000 may obtain exposure to a position with a notional value of $10,000. A 10% increase in the value of the position would therefore produce a $1,000 gain before costs, while a 10% decrease would produce a $1,000 loss. Smaller changes in the underlying market can therefore result in proportionately larger gains or losses relative to the trader’s capital.

Leverage can be particularly consequential in volatile markets because losses can accumulate rapidly and may trigger margin requirements, forced liquidation, or other mechanisms that require a trader to close positions. Depending on the product and applicable protections, a trader may also incur financing charges, spreads, commissions, and other costs that further reduce returns.

Regulators have identified excessive leverage as an important source of risk to retail traders. For example, the European Securities and Markets Authority (“ESMA”) previously concluded that contracts for difference (“CFDs”) presented significant investor-protection concerns relating to, among other things, complexity, lack of transparency, excessive leverage, the disparity between potential returns and the risk of loss, and marketing and distribution practices. ESMA’s analysis across European jurisdictions found that 74% to 89% of retail CFD accounts typically lost money. ESMA responded with measures including leverage limits, margin close-out requirements, negative-balance protection, and restrictions on incentives to trade CFDs.

The prevalence of retail trading losses is also significant in other leveraged markets. The CFTC currently states that approximately two out of three retail foreign exchange traders lose money each quarter. These statistics do not mean that every retail trader will lose money or that all trading providers operate in the same manner. They nevertheless illustrate the difficulty retail traders face in generating consistent returns through conventional short-term and leveraged trading strategies.

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Challenges Inherent in Conventional Retail Trading

In addition to the potential conflicts described above, conventional retail trading generally requires individuals to make repeated decisions concerning the timing, size, and direction of trades while bearing the resulting market risk. Retail traders may therefore be exposed to a combination of market volatility, leverage, transaction costs, financing costs, liquidity constraints, margin requirements, and behavioral biases. Even where a trading strategy has generated favorable results historically, there can be no assurance that the strategy will continue to perform under future market conditions.

These characteristics can create a challenging environment for retail traders. The trader is generally required to supply the capital, assume the market risk, and bear the costs associated with trading, while the trading provider may generate revenue from the trader’s activity through fees, spreads, financing charges, order-flow arrangements, or other sources. In certain principal or counterparty models, the provider may also have an economic interest that is directly related to the customer’s trading outcome. The resulting economics can differ materially from an arrangement in which the provider and the user participate in the economic benefits of successful investment activity on more closely aligned terms.

Our Offerings

UpsideOnly.com

UpsideOnly.com, our flagship consumer facing product launched in May of 2026, changes the game. In contrast to the existing retail trading environment, UpsideOnly enables retail traders to forgo the monetary risks associated with trading with their own capital. Instead, users are rewarded when their strategic trading insights, gathered through predictions on financial market outcomes using virtual capital, prove valuable in the market. Traders face no personal monetary loss when their insights are incorrect.

Foundational to the success of UpsideOnly is our belief that the sum of human and artificial intelligence is greater than its individual components. UpsideOnly coordinates and capitalizes on the unification of mass human intelligence (from the global user base) and artificial intelligence (from our specialized machine learning system, BayesShield AI) within financial markets. By combining these inputs, we hope to build the most successful prop trading platform on the market.

The platform allows users to make simulated predictions about financial markets – including stocks, futures, foreign exchange, and cryptocurrencies – using virtual capital, without requiring users to execute conventional leveraged trades or place trading capital at risk in connection with those predictions. Rather than requiring users to generate returns principally through the successful execution of trades using their own capital, our business model is designed to use user-generated market signals or predictions as an input into our own AI-powered investment and trading activities.

When BayesShield AI determines that user-generated information may have investment value, it informs our prop trading desk, and we then use our own capital to pursue corresponding investment opportunities. When our investment activity is profitable, users may participate in the economic benefits generated from successful investment activity. Users suffer no losses if our investment activity is not profitable. In this way, users never risk personal capital and yet can participate in profits when their insights prove valuable.

We believe this approach can provide an alternative to certain aspects of the conventional retail trading experience by separating a user’s participation in potential investment opportunities from the direct market risk associated with conventional trading. Users do not directly execute trades through our platform or use their own trading capital to fund our investment activities. Instead, we assume the investment and trading risk associated with decisions to deploy our own capital, while users may receive economic benefits when their market signals or predictions contribute to successful investment activity.

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Unlike most predictive trading platforms, our interests are aligned with the interests of our user base. We and our platform users seek to win together.

Our approach does not eliminate investment risk, and there can be no assurance that our models, signals, or investment activities will be successful. In addition, users may be subject to other risks and limitations associated with our offerings, including the terms and conditions applicable to particular products. Nevertheless, we believe that separating a user’s participation from the direct funding and execution of trades, including leveraged trades, may address certain structural disadvantages of conventional retail trading, including the risk of substantial losses of user trading capital, the effects of leverage and margin requirements, and certain conflicts that can arise when a trading provider’s revenues are directly or indirectly linked to customer trading activity or customer losses.

Kronos X®

Our Kronos X® Multi-Asset Exchange provides fully regulated trading technology compliant with applicable EU regulations described in greater detail below. Kronos X® is available as a turnkey white-label solution for banks, brokers, and fintechs. Our proprietary data centers in Germany and the U.S. West Coast deliver low-latency execution with colocation options for institutional participants. Kronos X® is enabling our clients to offer innovative services and products, including barrier products, discussed in greater detail below.

Our Kronos X® technology is used by the EU-licensed Perpetual Markets Multilateral Trading Facility operated by PM MTF Ltd (the “PM MTF”). PM MTF Ltd acts as the licensed venue operator that runs entirely on our financial technology stack.

PM MTF Ltd is a Cypriot Investment Firm (CIF) that maintains legal permission to operate the PM MTF in Cyprus, with extended permission to deal on behalf of clients (act as a broker) and to self-clear (act as their own clearing house). PM MTF operates under full compliance with the following EU regulations:

● MiFID II: The Markets in European Union Financial Instruments Directive II.

● MiCA: The Markets in Crypto-Assets Regulation.

● DORA: The Digital Operational Resilience Act.

● EMIR: The European Market Infrastructure Regulation.

In March of 2026, the PM MTF secured its MiFID II MTF license through the Cyprus Securities and Exchange Commission (“CySEC”). The MiFID II license provides for the following:

● Single Entity Structure: Combines a regulated MTF with direct client execution, removing the need for external brokers.

● Investor Protections: Provides clients with segregated asset accounts, best execution rules, and coverage under the Cyprus Investor Compensation Fund.

● Passporting: Operates across more than 30 countries in the European Economic Area (EEA).

Additionally, in August of 2026, the PM MTF received approval from CySEC to offer crypto-asset services under MiCA. The authorization enables the operation of a trading platform for crypto-assets that can provide clients with crypto-asset custody and administration, order execution, order reception and transmission, and crypto-asset transfer services.

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It builds on the existing MiFID II-regulated PM MTF platform, allowing the PM MTF to broaden the range of asset classes available through its regulated European venue into digital assets, while providing a route to offer these services to clients across the EU through MiCA’s cross-border notification framework.

We believe the MiFID II license and the MiCA approval – in combination with our innovative Kronos X® technology – provide the PM MTF with a compelling competitive advantage.

We generate revenue from Kronos X® through license fees based on trading volume on the PM MTF.

Perpetuals Tokenization

We offer end-to-end infrastructure and services for the tokenization of real-world assets, including asset issuance, market making, and trading through regulated order book infrastructure. Our team has experience supporting the development and implementation of tokenized securities in regulated markets.

Business Model

Post-Acquisition, we expect to generate revenue primarily through the following means.

Profitable Prop Trading Activity Informed by Crowdsourced Trading Predictions and BayesShield AI

Our UpsideOnly users make simulated trading predictions. When BayesShield AI determines that user-generated information may have investment value, it informs our prop trading desk, and we then use our own capital to pursue corresponding investment opportunities. When our investment activity is profitable, we share the profits on a 50/50 basis with users whose predictions helped to inform the profitable trading activity.

Volume-Based Fees Through Kronos X

Kronos X generates revenue through a volume-based fee structure from the PM MTF and other brokers. The more users/higher transaction volume of the customer, the higher the fees we collect.

Our Strategy

Our current strategy relies on five programs, which operate synergistically by coordinating clients, data, or products across programs.

Program 1. Growth of the UpsideOnly Platform

We have been pleased with the rate of market adoption of UpsideOnly to-date and we are focused on continuing to expand our user base. Thus far, we have utilized a multichannel marketing approach for customer acquisition. Due to the digital nature of UpsideOnly, much of our marketing and advertising efforts have been online. This has included acquisition through paid promotion (e.g., Google Ads, Bitmedia, and Stocktwits) and organic efforts (e.g., social media, Discord, and video).

As of the date of this Annual Report, our marketing and advertising efforts have resulted in the acquisition of over 500,000 UpsideOnly users across approximately 170 countries. Our acquisition costs of approximately $0.65 per user are extremely low in comparison to the acquisition cost per client for CFD providers and brokers of approximately $500 and $200, respectively. In 2026, we also plan to launch a user referral program as a means of attracting users to the platform.

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Program 2. Improvement and Expansion of BayesShield AI Models

BayesShield AI is our proprietary, patent-pending AI system. It identifies the most skillful asset traders by using billions of retail trading data points to generate trading signals from that data. A greater number of users of our offerings such as UpsideOnly provides for more trading data points, thereby improving the performance of the system in identifying profitable trading strategies. In turn, better models attract more users. This feedback loop continuously strengthens our market position. We believe that competitors with fewer data points cannot make similar models of the same quality.

Our strategy involves improving the effectiveness of BayesShield AI by expanding the user base of our platforms such as UpsideOnly. In addition, we will continue to explore other opportunities to license BayesShield AI to, and otherwise collaborate with, third parties to improve the BayesShield AI model.

In April of 2026, we executed a strategic licensing agreement with the German University of Digital Science (German UDS) for the integration of BayesShield AI for deployment across its research centers and digital learning infrastructure, including its Research Center for Artificial Intelligence, Research Center for Cybersecurity, and Research Center for Digital Transformations. Under the license agreement, German UDS agreed to integrate BayesShield AI into its curriculum as a live case study and applied research platform across multiple graduate programs. Students and faculty can leverage BayesShield AI’s probabilistic AI models to analyze real-world trading patterns, conduct research on retail investor behavior, and develop next-generation risk management frameworks.

In addition, we believe that the coordination and capitalization of collective human intelligence combined with BayesShield AI has applications extending beyond financial markets, and our strategy involves exploration of potential new markets.

For example, in April of 2026, we announced the extension of the BayesShield AI technology into the healthcare space in the form of BayesShield Clinical. BayesShield Clinical applies the same patent-pending methodology we developed to predict trading outcomes to a new domain: identifying which physicians in hospitals and clinics are the most accurate at diagnosing specific types of cases to ensure patients get the best health outcomes.

To pilot the program, we have partnered with the European Institute of Management (EIM), a higher education institution offering doctoral programs, including a PhD in Healthcare Studies, to support the clinical implementation of BayesShield Clinical. Under the arrangement, we provide the software platform while EIM works directly with partner hospitals and clinics to manage pilot deployment, trial design, and academic oversight. EIM’s PhD in Healthcare Studies program will serve as the academic collaboration for the clinical pilots, with doctoral candidates contributing to the study design and analysis of outcomes. Additional hospital, health system, and research partnerships are in development.

Financial markets and clinical medicine share a common analytical problem: decisions made under uncertainty, where skill is obscured by noise, variable conditions, and behavioral bias. We believe the same approach that identifies performance patterns in financial markets can reveal them in clinical decision-making.

BayesShield Clinical is designed for hospitals, clinics, and health systems. It does not diagnose patients or replace physician judgment. Instead, it strips away behavioral biases, applying statistical methods to identify patterns of diagnostic strength across specific case types. Hospitals and other health care providers can use these insights for optimized case routing, second-opinion protocols, and training program design.

Continued: -

https://www.sec.gov/Archives/edgar/data/1944399/000121390026100218/ea0305348-20f_perpetuals.htm