Lead Real Estate Co., Ltd Receives Notification Regarding Non-Compliance of Nasdaq Global Market Minimum Market Value of Publicly Held Shares Requirement

Rhea-AI Summary

Lead Real Estate Co., (Nasdaq: LRE), a Japanese luxury property developer, has received a notification from Nasdaq on August 12, 2024, regarding non-compliance with the minimum market value of publicly held shares (MVPHS) requirement. LRE's MVPHS has fallen below the required $5,000,000 for 33 consecutive business days. The company has been given until February 10, 2025, to regain compliance by maintaining an MVPHS of $5,000,000 or more for at least 10 consecutive business days. Failure to comply may result in delisting from the Nasdaq Global Market. LRE is considering options to regain compliance and may appeal any delisting determination or apply for transfer to the Nasdaq Capital Market.

Positive

• Company still listed on Nasdaq Global Market despite non-compliance notice
• 180-day compliance period granted until February 10, 2025
• Option to appeal potential delisting or transfer to Nasdaq Capital Market

Negative

• Non-compliance with Nasdaq Global Market minimum MVPHS requirement of $5,000,000
• Risk of delisting from Nasdaq Global Market if compliance not regained
• MVPHS below required threshold for 33 consecutive business days

Insights

Financial Analyst

This notification from Nasdaq is a significant red flag for LRE. The company's failure to maintain the minimum $5 million market value of publicly held shares (MVPHS) indicates weak investor confidence and potential liquidity issues. With only 15% of the required MVPHS, LRE faces an uphill battle to regain compliance.

Investors should be cautious, as this situation could lead to:

• Reduced trading volume and share price volatility
• Difficulty in raising capital
• Potential delisting, which would severely impact shareholder value

The 180-day compliance period provides some breathing room, but LRE needs to take swift action to improve its market position and investor perception. The option to transfer to the Nasdaq Capital Market could be a lifeline, but it's generally seen as a step down in prestige.

Legal Expert

From a legal standpoint, LRE's non-compliance with Nasdaq's listing requirements puts the company in a precarious position. While not an immediate threat, it opens up several legal considerations:

• Disclosure obligations: LRE must ensure timely and accurate disclosure of this material information to shareholders.
• Fiduciary duty: The board and management have a heightened responsibility to address this issue promptly.
• Regulatory scrutiny: Increased attention from regulatory bodies may follow, potentially leading to additional compliance burdens.

The company's statement about considering "available options" is vague and may not satisfy the detail-oriented requirements of securities laws. Shareholders might argue for more specific plans to address the MVPHS deficiency.

Market Research Analyst

This news reveals deeper issues in LRE's market positioning and investor relations strategy. The persistently low MVPHS suggests a disconnect between the company's luxury real estate focus and its market valuation. Key points to consider:

• The Japanese luxury real estate market may be facing headwinds, affecting investor sentiment.
• LRE's corporate governance and transparency might be under scrutiny, given the significant gap between current MVPHS and requirements.
• The company's growth strategy and financial performance need critical evaluation.

To regain compliance, LRE must not only improve its share price but also increase the number of publicly held shares. This could involve a strategic overhaul, including potential equity offerings, enhanced investor relations, or even exploring M&A opportunities to boost market confidence and valuation.

TOKYO, Aug. 15, 2024 (GLOBE NEWSWIRE) -- Lead Real Estate Co., Ltd. (Nasdaq: LRE) (“LRE” or the “Company”), a Japanese real estate developer of luxury residential properties, including single-family homes and condominiums across Tokyo, Kanagawa prefecture and Sapporo, today announced that the Company received a written notification (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”) on August 12, 2024, notifying the Company that it is not in compliance with the minimum market value of publicly held shares ("MVPHS") requirement set forth in the Nasdaq Listing Rules for continued listing on the Nasdaq Global Market. 

Nasdaq Listing Rule 5450(b)(1)(C) requires listed securities on the Nasdaq Global Market to maintain a minimum MVPHS of US$5,000,000, and Nasdaq Listing Rule 5810(c)(3)(D) provides that the failure to meet the minimum MVPHS requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the Company’s MVPHS for the last 33 consecutive business days from June 25 to August 9, 2024, the Company no longer meets the MVPHS requirement.

The Notice does not impact the Company's listing on the Nasdaq Global Market at this time. In accordance with Nasdaq Listing Rule 5810(c)(3)(D), the Company has been provided 180 calendar days, or until February 10, 2025, to regain compliance with Nasdaq Listing Rule 5450(b)(1)(C). To regain compliance, the Company's MVPHS needs to close at $5,000,000 or more for a minimum of 10 consecutive business days at any time during the compliance period.

In the event that the Company does not regain compliance by February 10, 2025, Nasdaq will provide written notification to the Company that its American depositary shares (“ADSs”) are subject to delisting. At that time, the Company may appeal the relevant delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules. However, there can be no assurance that, if the Company does appeal the delisting determination by Nasdaq to the hearings panel, such an appeal would be successful. Alternatively, the Company may consider applying to transfer its securities to the Nasdaq Capital Market.

The Company's business operations have not been affected by the Notice. The Company intends to monitor its MVPHS and will consider using available options to regain compliance with the MVPHS requirement under the Nasdaq Listing Rules within the prescribed compliance period. During this time, the Company expects that the Company's ADSs will continue to be listed and traded on the Nasdaq Global Market.

About Lead Real Estate Co., Ltd

Lead Real Estate Co., Ltd is a Japanese developer of luxury residential properties, including single-family homes and condominiums, across Tokyo, Kanagawa prefecture, and Sapporo. In addition, the Company operates hotels in Tokyo and leases apartment building units to individual customers in Japan and Dallas, Texas.

The Company’s mission is to serve its customers by offering stylish, safe, and luxurious living. The Company’s vision is to adopt the Kaizen (continuous improvement) approach to seek to improve its operations, and to leverage its nationally recognized, award-winning luxury homes and strong market position in the luxury residential property market in Tokyo, Kanagawa prefecture, and Sapporo to create a global transaction platform allowing access to prime Japanese condominiums as well as overseas condominiums, including in the U.S. and Hong Kong.

For more information, please visit the Company’s website at https://www.lead-real.co.jp/en/.

Forward-looking Statements

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties related to market conditions and other factors that may affect its future results in the Company's registration statement and in its other filings with the U.S. Securities and Exchange Commission. Any forward-looking statements contained in this press release speak only as of the date hereof, and the Company specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact Information:

For Media and Investor Relations
Daisuke Takahashi
Chief Financial Officer
Lead Real Estate Co., Ltd
d-takahashi@lead-real.co.jp 
+81 3-5784-5127

Skyline Corporate Communications Group, LLC
Scott Powell, President
1177 Avenue of the America’s, 5^th Floor
New York, NY 10036
Office: (646) 893-5835
Email: info@skylineccg.com

FAQ

What is the minimum MVPHS requirement for LRE to maintain Nasdaq Global Market listing?

LRE must maintain a minimum market value of publicly held shares (MVPHS) of $5,000,000 to comply with Nasdaq Global Market listing requirements.

When did LRE receive the non-compliance notification from Nasdaq?

LRE received the non-compliance notification from Nasdaq on August 12, 2024.

How long does LRE have to regain compliance with Nasdaq's MVPHS requirement?

LRE has been given 180 calendar days, until February 10, 2025, to regain compliance with Nasdaq's MVPHS requirement.

What must LRE do to regain compliance with Nasdaq's MVPHS requirement?

To regain compliance, LRE's MVPHS must close at $5,000,000 or more for a minimum of 10 consecutive business days before February 10, 2025.