TCTM Announces Receipt of Nasdaq Notification Regarding Minimum Bid Price

Rhea-AI Summary

TCTM Kids IT Education (NASDAQ: TCTM) has received a notification from Nasdaq on January 3, 2025, indicating non-compliance with the minimum bid price requirement. The company's American depositary shares (ADSs) have traded below the required $1.00 per share for 30 consecutive business days.

The notification doesn't immediately affect TCTM's listing status. The company has a 180-day grace period until July 2, 2025, to regain compliance by maintaining a closing bid price of $1.00 or higher for at least ten consecutive business days. If unsuccessful, TCTM may be eligible for an additional 180-day compliance period, provided it meets other listing requirements. The company may consider a reverse stock split to address the issue.

Positive

• Eligible for additional 180-day compliance period if initial deadline is not met
• No immediate impact on Nasdaq listing status

Negative

• Stock trading below $1.00 minimum bid requirement for 30 consecutive days
• Risk of potential delisting if compliance not achieved by July 2, 2025
• May need to implement reverse stock split to maintain listing

Insights

Financial Analyst

The Nasdaq compliance issue signals deeper concerns for TCTM, with its sub-$1.00 share price reflecting significant market skepticism. With a market cap of just $9.9M, the company faces substantial challenges. The 180-day compliance window, while standard, puts considerable pressure on the stock, potentially forcing a reverse stock split - a move that, while mathematically maintaining value, often carries negative market perception.

The compliance warning typically triggers increased selling pressure as institutional investors, bound by minimum price requirements, may need to exit positions. The second 180-day extension possibility provides some breathing room, but historical patterns show companies receiving these notices often struggle to organically maintain compliance even after achieving it temporarily.

For context, Chinese education stocks have faced heightened regulatory scrutiny and market pressure, making organic price recovery particularly challenging. The company's statement about taking "reasonable measures" suggests potential capital restructuring ahead, which could lead to further dilution risks for current shareholders.

Market Research Analyst

The delisting warning represents a critical inflection point in TCTM's market position. In the Chinese education sector context, this development is particularly concerning given the ongoing regulatory environment and shifting consumer preferences in supplementary education. The $1.00 threshold violation isn't merely a technical issue - it's a symptom of broader market concerns about the company's business model sustainability and growth prospects.

Think of this situation like a canary in a coal mine - it's an early warning signal that requires immediate strategic intervention. The timing is especially challenging given the broader headwinds facing Chinese ADSs and the education technology sector. Historical data shows that approximately 60% of companies receiving similar notices either eventually delist or require significant corporate actions like reverse splits to maintain compliance.

BEIJING, Jan. 8, 2025 /PRNewswire/ -- TCTM Kids IT Education Inc. (NASDAQ: TCTM) ("TCTM" or the "Company"), a leading provider of IT-focused supplementary STEM education services in China, today announced that it received a written notification from the Staff of the Listing Qualifications Department of the Nasdaq Stock Market LLC ("Nasdaq") dated January 3, 2025 (the "Notification"), indicating that because the closing bid price of the Company's American depositary shares ("ADSs") for the last 30 consecutive business days was below the minimum bid price of US$1.00 per share, the Company no longer meets the minimum bid price requirement for the Nasdaq Capital Market, set forth in Nasdaq Listing Rule 5550(a)(2). The Notification has no immediate effect on the listing or the trading of the Company's ADSs on the Nasdaq Capital Market.

Pursuant to the Nasdaq Listing Rules 5810(c)(3)(A), the applicable grace period to regain compliance is 180 calendar days, or until July 2, 2025. The Company can cure this deficiency if the closing bid price of its ADS is $1.00 per share or higher for at least ten consecutive business days during the grace period. In the event the Company does not regain compliance by July 2, 2025, subject to the determination by the staff of Nasdaq, the Company may be eligible for an additional 180-day compliance period if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards, with the exception of the minimum bid price requirement. In this case, the Company will need to provide written notice of its intention to cure the deficiency during the second compliance period, including by effecting a reverse stock split, if necessary.

The Notification does not affect the Company's business operations, and the Company will take all reasonable measures to regain compliance within the prescribed grace period.

About TCTM Kids IT Education Inc.

TCTM is a leading provider of IT-focused supplementary STEM education services in China. Through its innovative education platform combining live distance instruction, classroom-based tutoring and online learning modules, TCTM offers IT-focused supplementary STEM education programs, including computer coding and robotics programming courses, etc., targeting students between three and eighteen years of age. Aiming to encourage "code to learn," TCTM embraces the latest trends in STEM education and technology to develop children's logical thinking and learning abilities while allowing them to discover their interests and potential.

Safe Harbor Statement

This current report contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. TCTM may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including any business outlook and statements about TCTM's beliefs and expectations, are forward-looking statements. Many factors, risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements.

For further information, please contact:

Investor Relations Contact
TCTM Kids IT Education Inc.
Email: ir@tctm.cn

View original content:https://www.prnewswire.com/news-releases/tctm-announces-receipt-of-nasdaq-notification-regarding-minimum-bid-price-302345897.html

SOURCE TCTM Kids IT Education Inc.

FAQ

What is the deadline for TCTM to regain Nasdaq compliance?

TCTM has until July 2, 2025, to regain compliance with Nasdaq's minimum bid price requirement.

How can TCTM regain Nasdaq compliance?

TCTM can regain compliance if its ADS closing bid price remains at $1.00 or higher for at least ten consecutive business days during the grace period.

What happens if TCTM fails to meet the July 2, 2025 deadline?

If TCTM fails to meet the deadline, it may be eligible for an additional 180-day compliance period if it meets other listing requirements.

Why did TCTM receive a Nasdaq notification?

TCTM received the notification because its ADS closing bid price remained below $1.00 for 30 consecutive business days, violating Nasdaq's minimum bid price requirement.

What measures might TCTM take to maintain Nasdaq listing?

TCTM may implement various measures, including a potential reverse stock split, to meet the minimum bid price requirement.