Earlyworks Announces Plan to Implement ADS Ratio Change
Earlyworks Co., (Nasdaq: ELWS) has announced a change in the ratio of its American Depository Shares (ADS) to ordinary shares, effective May 16, 2024. The ratio will shift from one ADS representing one ordinary share to one ADS representing five ordinary shares, effectively acting as a one-for-five reverse ADS split. This change aims to support liquidity and help the company regain compliance with Nasdaq's minimum bid price requirement. ADS holders will undergo automatic exchanges or will be required to surrender their certificated ADSs for new ones. The company expects the ADS trading price to increase proportionally but cannot guarantee it. Earlyworks has also appealed a Nasdaq delisting determination, with a hearing set for June 18, 2024.
- Change in ADS ratio from 1:1 to 1:5 aims to support liquidity.
- Reverse ADS split to help regain compliance with Nasdaq's $1.00 minimum bid price requirement.
- Automatic exchange process for uncertificated ADS holders ensures convenience.
- Hearing scheduled for June 18, 2024, to appeal Nasdaq delisting, temporarily staying suspension.
- Company received a delisting determination from Nasdaq due to failure to meet minimum bid price requirement.
- No assurance that the new ADS trading price will be proportionally equal to or greater than the previous price.
- Fractional ADS entitlements will be aggregated and sold, which may lead to minor financial losses for shareholders.
Insights
Earlyworks' decision to change the ADS ratio to regain compliance with Nasdaq's minimum bid price requirement shows a proactive approach to maintain their listing. By consolidating shares, the price per ADS is expected to rise, potentially enhancing market perception and liquidity. However, such adjustments often signal underlying challenges and there's no guarantee the price will stabilize above the
The planned ADS ratio change indicates Earlyworks' strategic effort to improve stock liquidity and meet Nasdaq's compliance standards. While the change can make the stock appear more attractive, it does not alter the fundamental business operations or financial health. Investors should be aware that reverse splits can sometimes lead to volatility and the market's reaction to the news will be crucial. The company's continued struggles to maintain a high share price might reflect broader challenges in its market position or business model.
Earlyworks' appeal against Nasdaq's delisting determination follows regulatory procedures to avoid immediate delisting. The change in the ADS ratio is a common tactic to achieve compliance but requires careful execution to ensure it meets regulatory standards without adversely affecting investors. The outcome of the hearing on June 18, 2024, will be significant, as a negative decision could lead to delisting and impact investor confidence. Investors should follow the legal proceedings closely and consider the potential risks associated with non-compliance.
TOKYO, May 13, 2024 (GLOBE NEWSWIRE) -- Earlyworks Co., Ltd. (Nasdaq: ELWS) (the “Company” or “Earlyworks”), a Japanese company operating its proprietary private blockchain technology, Grid Ledger System (“GLS”), announced plans to change the ratio of its American Depository Shares (“ADSs”) to its ordinary shares from one (1) ADS, representing one (1) ordinary share, to one (1) ADS representing five (5) ordinary shares (the “ADS Ratio”). The change in the ADS Ratio is expected to become effective on or about May 16, 2024 (the “Effective Date”).
For the Company’s ADS holders, the change in the ADS Ratio has the same effect as a one-for-five reverse ADS split and will have no impact on an ADS holder’s proportional equity interest in the Company. The change in the ADS Ratio is intended to further support the liquidity in the Company’s ADSs and to enable the Company to regain compliance with the Nasdaq minimum bid price requirement.
On the Effective Date, registered holders of the Company’s ADSs held in certificated form will be required on a mandatory basis to surrender their certificated ADSs to Bank of New York Mellon, the depositary bank (the “Depositary”), for cancellation and will receive one (1) new ADS in exchange for every five (5) existing ADSs surrendered. Holders of uncertificated ADSs in the Direct Registration System (DRS) and The Depository Trust Company (DTC) will have their ADSs automatically exchanged and need not take any action.
The exchange of every five (5) then-held (existing) ADSs for one (1) new ADS will occur automatically at the Effective Date, with the then-held ADSs being cancelled and new ADSs being issued by the Depositary. The Company’s ADSs will continue to be traded on The Nasdaq Capital Market under the ticker symbol “ELWS.”
No fractional new ADSs will be issued in connection with the change in the ADS Ratio. Instead, fractional entitlements to new ADSs will be aggregated and sold, and the net cash proceeds from the sale of the fractional ADS entitlements (after deduction of fees, taxes, and expenses) will be distributed to the applicable ADS holders by the Depositary.
As a result of the change in the ADS Ratio, the ADS trading price is expected to increase proportionally, although the Company can give no assurance that the ADS trading price after the change in the ADS Ratio will be proportionally equal to or greater than the previous ADS trading price prior to the change or that the change in the ADS Ratio will have any effect on the liquidity in the Company’s ADSs.
Earlyworks appealed the Nasdaq Delisting Determination
As previously disclosed in the Company’s press release dated May 6, 2024, the Company received a staff determination letter, on May 1, 2024, from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, due to the Company’s failure to regain compliance with a minimum bid price of
About Earlyworks Co., Ltd.
Earlyworks Co., Ltd. is a Japanese company operating its proprietary private blockchain technology, GLS, to leverage blockchain technology in various applications in a wide range of industries. GLS is a hybrid blockchain that combines the technical advantages of blockchain and database technology. GLS features high-speed processing, which can reach 0.016 seconds per transaction, tamper-resistance, security, zero server downtime, and versatile applications. The applicability of GLS is verified in multiple domains, including real estate, advertisement, telecommunications, metaverse, and financial services. The Company’s mission is to keep updating GLS and make it an infrastructure in the coming Web3/metaverse-like data society.
For more information, please visit the Company’s website: https://ir.e-arly.works/.
For inquiries about this release, please contact:
Earlyworks Co., Ltd.
Contact E-MAIL: ew-ir@e-arly.works
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors 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. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S. Securities and Exchange Commission.
FAQ
What is the new ADS ratio for Earlyworks (ELWS)?
Why is Earlyworks changing its ADS ratio?
When will the new ADS ratio for ELWS take effect?
What actions do certificated ADS holders need to take?
Will there be any fractional ADSs issued due to the ratio change?
How does the ADS ratio change affect the trading price of ELWS?
What is the purpose of Earlyworks' Nasdaq delisting appeal?
When is the Nasdaq delisting appeal hearing for Earlyworks scheduled?
