Earlyworks Co., Ltd. Announces Receipt of Nasdaq Delisting Determination and Plan to Request a Hearing before the Nasdaq Hearings Panel

Rhea-AI Summary

Earlyworks Co., (Nasdaq: ELWS) received a delisting determination from Nasdaq due to failure to meet the minimum bid price requirement. The company plans to request a hearing before the Nasdaq Hearings Panel to appeal the decision.

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• Earlyworks Co., faces the risk of delisting from Nasdaq due to non-compliance with the minimum bid price requirement, potentially impacting investor confidence and liquidity of the stock.

Insights

Financial Analyst

The announcement by Earlyworks Co., Ltd. regarding the Nasdaq delisting determination poses a significant risk to its shareholders and could have material implications for the stock’s liquidity and the company’s capital raising abilities. A delisting often leads to a decrease in investor confidence, causing a potential decline in share price and trading volume as the stock may become less accessible and attractive to investors. The company's consideration of a reverse stock split indicates a strategic move to boost the share price to meet the Nasdaq's Minimum Bid Requirement. However, this could be seen unfavorably by investors as it artificially inflates the stock price without improving underlying fundamentals. The outcome of the appeal could provide a short-term reprieve, but the underlying issues, such as compliance with initial listing requirements, must be addressed for long-term stability. The appeal process and subsequent actions by Earlyworks will be closely monitored by investors, as they will determine the company's ability to stay on a major exchange and meet investor expectations.

Legal Expert

From a legal standpoint, Earlyworks Co., Ltd.'s receipt of the Nasdaq delisting determination triggers several regulatory considerations. The company's ability to request an appeal before the Nasdaq Hearings Panel is part of the due process afforded to companies facing delisting and it illustrates the regulatory mechanisms in place to ensure fair treatment of publicly-traded entities. However, in cases of delisting, companies must also contend with the legal and regulatory implications of trading on over-the-counter (OTC) markets, if they cannot sustain listing on a major exchange. This can lead to increased compliance costs and reduced oversight, potentially affecting the perception of the company by investors who often associate OTC markets with higher risk profiles. The planned appeal by Earlyworks will have to convincingly address their non-compliance issues, aiming not only to satisfy Nasdaq's requirements but also to maintain its standing and credibility with shareholders and potential investors.

TOKYO, May 06, 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”), today announced that the Company received a staff determination letter (the “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 $1.00 per share requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”), Nasdaq has determined (the “Determination”) that Company’s securities will be scheduled for delisting from Nasdaq unless the Company requests an appeal of the Determination to a Hearings Panel (the “Panel”). 

On October 30, 2023, the Company received a letter from Nasdaq (the “Notice”), notifying the Company that based upon the closing bid price of its securities for the last 30 consecutive business days preceding the Notice, the Company was not in compliance with the Minimum Bid Requirement. 

In accordance with Listing Rule 5810(c)(3)(A), the Notice provided the Company a period of 180 calendar days from the date of the Notice, or until April 29, 2024, to regain compliance with the Minimum Bid Requirement. According to the Letter, the Company had not regained compliance with the Minimum Bid Requirement as of April 29, 2024, and is not eligible for a second 180-day period. 

Specifically, the Company does not comply with the initial listing requirement of $5,000,000 minimum stockholders’ equity for The Nasdaq Capital Market, as contemplated for a second 180-day period.

Unless the Company requests an appeal of the Determination by May 8, 2024, the Company’s securities will be suspended at the opening of business on May 10, 2024, and a Form 25-NSE will be filed with the U.S. Securities and Exchange Commission, which will remove the Company’s securities from listing and registration on Nasdaq. 

The Company plans to appeal the Determination to the Panel in due course. A hearing request will stay the suspension of the Company’s securities and the filing of Form 25-NSE pending the Panel’s decision. The Company is considering all options available to it, including a reverse stock split, and will provide its shareholders with material updates when they are available. 

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, advertising, 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 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 SEC.

FAQ

What is the symbol for Earlyworks Co., on Nasdaq?

The symbol for Earlyworks Co., on Nasdaq is ELWS.

Why is Earlyworks Co., facing delisting from Nasdaq?

Earlyworks Co., is facing delisting from Nasdaq due to non-compliance with the minimum bid price requirement.

What options is Earlyworks Co., considering to address the delisting determination?

Earlyworks Co., is considering all options available, including a reverse stock split, to address the delisting determination.