HODL1,lnc.

Business Details

The company's only reportable segment. Following the outflow of subsidiaries and assets by former management, the company resumed its "blockchain development and consulting business" in June 2025. It now operates around three pillars: the "BUIDL business," which supports Web3-related projects, system development, and technical consulting; the "HODL business" (currently in trial operation), which involves long-term holding and management of Ethereum; and the "AI management agent business," launched in May 2026. In substance, operations are run on the business base of the parent company alone.

Recent Overview

Revenue rose 234% year-on-year to ¥47 million, and while losses narrowed significantly, material uncertainty regarding the going concern assumption continues

Revenue for the second quarter (interim period) of the fiscal year ending October 2026 rose sharply to ¥47 million (up 234.3% year-on-year). Due to reductions in SG&A expenses (from ¥319 million to ¥228 million year-on-year), the operating loss narrowed to -¥202 million (from -¥308 million in the same period of the prior year). Because the extraordinary loss of ¥716 million (related to former management) recorded in the prior-year period did not recur, the interim net loss also improved significantly to -¥244 million (from -¥1,007 million in the prior-year period). Meanwhile, the company sold all of its investment securities (proceeds of ¥111 million), resulting in a large decrease in fixed assets. Pursuant to a board resolution dated April 30, 2026, the company issued the 16th and 17th stock acquisition rights (maximum proceeds of ¥6,426 million), allotted on May 19, 2026. The AI management agent business was newly launched starting in May 2026.

Key Products

Growth Drivers

• Following the resumption of the blockchain development and consulting business (June 2025), revenue increased 234% year-on-year, reflecting progress in customer acquisition
• Creation of a new revenue source through the AI management agent business launched in May 2026
• Strengthening of the Ethereum treasury operation framework through collaboration with Gauntlet
• Strengthening of the financial and business base through issuance of the 16th and 17th stock acquisition rights (maximum proceeds of ¥6,426 million)
• Deepening collaboration with the Ethereum ecosystem (advancing partnerships with domestic and international communities, industry associations, and related companies)
• Progress in domestic Web3 promotion policy and tax system development (organization of valuation methods for corporate-held cryptocurrency, consideration of separate taxation, etc.)

Risks

• Material uncertainty exists regarding the going concern assumption (impairment of the business and financial base resulting from the outflow of subsidiaries and assets by former management continues)
• Cash and deposits balance is limited at ¥156 million (end of Q2), and operating cash flow was an outflow of -¥178 million, making securing liquidity an urgent priority
• Fundraising through stock acquisition rights (up to ¥6,426 million) carries uncertainty regarding exercise status, with a risk that proceeds fall short of plan
• The outcome of litigation against former management and related parties is uncertain, and additional litigation-related expenditures are anticipated
• Full-year earnings guidance is undisclosed because the business is in a launch/growth stage, making reasonable forecasting difficult
• Risk from fluctuations in cryptocurrency (ETH) prices, and the risk management framework for treasury operations remains under development
• Rebuilding of the customer base and relationships is still in progress, and the continuity and stability of revenue have not yet been established
• Equity ratio declined from 78.7% at the end of the prior fiscal year to 52.8%, and accumulated deficit has widened (-¥5,596 million) due to cumulative net losses

Business Details

The systems engineering business was a segment centered on IT contract development and engineering services handled by consolidated subsidiaries such as Kusim Soft Corporation. Its principal customer was CAICA Technologies Co., Ltd. (revenue of ¥81 million in the prior consolidated fiscal year). Following the transfer of subsidiaries by former management as payment in kind (dated February 3, 2025), the company lost substantive control under the effective control criteria, and the subsidiaries were excluded from the scope of consolidation from the beginning of the fiscal year ending October 2025 (30th fiscal year). Revenue for the current consolidated fiscal year (FY2025, ending October 2025) was zero, and the segment was formally removed from reportable segments.

Recent Overview

Excluded from reportable segments as of the current period due to improper transfer by former management

Due to the transfer of ZED Holdings (and its subsidiaries, including Kusim Soft Corporation) by former management to CAICA Financial Holdings as payment in kind, dated February 3, 2025, the company effectively lost management control. The subsidiaries were excluded from the scope of consolidation from the beginning of the fiscal year ending October 2025 (30th fiscal year), and the "Systems Engineering Business" segment was discontinued. Sales results for the current consolidated fiscal year were zero (down 100.0% year-on-year). Revenue for the prior consolidated fiscal year (FY2024, ended October 2024) was ¥492 million, with an operating loss of ¥41 million. The company has filed litigation seeking to recover management control over the subsidiaries.

Key Products

Growth Drivers

Risks

• Due to the payment-in-kind transfer by former management (dated February 3, 2025), operating subsidiaries such as Kusim Soft Corporation were excluded from the scope of consolidation, causing the segment to disappear
• The company has filed litigation seeking to recover management control over the subsidiaries, but the likelihood of recovery is uncertain, and an allowance for doubtful accounts has been recorded for the full amount of the ¥2,060 million long-term loan
• The company's financial base has been impaired by improper asset outflows caused by former management (litigation seeking approximately ¥3.3 billion in total has been filed), and the outlook for business reconstruction remains unclear
• Material doubt exists regarding the going concern assumption, and the prospects for restoring the business base that would be a precondition for reviving the segment remain unclear

Business Details

The incubation business was a segment principally involving the holding and valuation of cryptocurrencies for which no active market exists. In the prior consolidated fiscal year (November 2023 to October 2024), it recorded revenue of ¥432 million (including ¥41 million in intersegment internal sales), but following the February 2025 outflow of subsidiaries and assets caused by former management, it was excluded from the scope of consolidation from the beginning of the current consolidated fiscal year (November 2024 to October 2025) and discontinued as a reportable segment. Sales results for the current consolidated fiscal year were zero (down 100.0% year-on-year).

Recent Overview

Excluded from reportable segments from the beginning of the current consolidated fiscal year due to asset outflow caused by former management

As a result of the transfer of subsidiaries (including ZEDHD) by former management as payment in kind, dated February 3, 2025, the group of consolidated subsidiaries that had operated the incubation business was excluded from the scope of consolidation under the effective control criteria. As a result, the "Incubation Business" was discontinued as a reportable segment from the beginning of the current consolidated fiscal year (fiscal year ending November 2024), and sales results for the current consolidated fiscal year were ¥0 million (down 100.0% year-on-year). Note that cost of sales in the prior consolidated fiscal year included a valuation loss of ¥1 million on cryptocurrencies for which no active market exists within the incubation business. The company has currently filed damages litigation totaling approximately ¥3.3 billion against former management and related parties, and is proceeding with efforts to recover assets.

Key Products

Growth Drivers

Risks

• Loss of business base due to improper transfer of subsidiaries and assets by former management resulted in discontinuation as a reportable segment from the current consolidated fiscal year
• Since the segment's principal assets were cryptocurrencies for which no active market exists, valuation loss risk was inherent
• The outcome of litigation seeking to recover management control of consolidated subsidiaries such as ZEDHD is uncertain, and there is no clear prospect for asset recovery
• The recoverability of the ¥2,060 million long-term loan extended by former management (for which an allowance for doubtful accounts has been fully recorded) remains unclear