TOKYO - Earlyworks Co., Ltd. (NASDAQ:ELWS), a Japanese firm specializing in proprietary blockchain technology, has announced its return to compliance with Nasdaq's minimum bid price requirement. The Nasdaq Stock Market LLC confirmed that Earlyworks' American Depositary Shares (ADSs) maintained a trading price above $1.00 for 20 consecutive business days, from May 16 to June 14, 2024.
This development follows a period of uncertainty for the company, which had previously been notified by Nasdaq of a potential delisting due to its failure to meet the minimum bid price requirement. Earlyworks appealed the initial delisting determination on May 7, 2024, and subsequently presented a bid price compliance plan. On May 25, Nasdaq granted the company an extension until May 31 to demonstrate compliance.
With the minimum bid price condition now met, Nasdaq has determined to continue the listing of Earlyworks' ADSs. This decision arrives just ahead of the scheduled June 18 hearing before the Nasdaq Hearings Panel.
Earlyworks Co., Ltd. operates the Grid Ledgers System (GLS), a hybrid blockchain platform that integrates the features of both blockchain and database technology. GLS boasts high-speed processing, security, and versatility across various industry applications, including real estate, advertising, telecommunications, and financial services. The company aims to continually update GLS to support the infrastructure of emerging Web3 and metaverse environments.
This news is based on a press release statement from Earlyworks Co., Ltd. and reflects the company's current compliance status with Nasdaq listing requirements. Investors are encouraged to review the company's filings with the U.S. Securities and Exchange Commission for further details.
In other recent news, Earlyworks Co., Ltd. has announced a change in the ratio of its American Depository Shares (ADSs) to its ordinary shares, effectively acting as a one-for-five reverse ADS split. This adjustment, scheduled for May 16, 2024, aims to support liquidity and assist the company in meeting Nasdaq's minimum bid price requirement. The company's ADS holders will maintain their proportional equity interest without any impact.
In addition, registered holders of the company's certificated ADSs must surrender their shares to the Bank of New York Mellon (NYSE:BK) for cancellation and will receive one new ADS for every five existing ones surrendered. However, holders of uncertificated ADSs in the Direct Registration System and The Depository Trust Company will see their ADSs automatically exchanged.
This development follows Earlyworks' appeal against a Nasdaq delisting determination due to its failure to comply with the minimum bid price requirement. The company appealed on May 7, 2024, and a hearing has been scheduled for June 18, 2024. The appeal process has stayed any suspension or delisting action until a final decision is made.
InvestingPro Insights
In light of Earlyworks Co., Ltd.'s (NASDAQ:ELWS) recent return to compliance with Nasdaq's minimum bid price requirement, a glance at the company's financial health and market performance through InvestingPro's real-time data provides investors with a clearer picture of its current standing. With a market capitalization of $5.68 million, Earlyworks demonstrates a significant gross profit margin of 80.36% for the last twelve months as of Q2 2024, underscoring the company's ability to maintain a high level of profitability relative to its revenue.
Despite these strong profit margins, one of the InvestingPro Tips suggests that Earlyworks is quickly burning through cash, which could be a concern for sustainability in the long term. Additionally, the company has been experiencing a high price volatility, as evidenced by a 14.55% return over the last week, yet a stark decline of 89.5% over the last year. This volatility is an important consideration for investors looking for stability in their investments.
For those interested in delving deeper into the financial nuances of Earlyworks, InvestingPro offers a range of additional tips to guide investment decisions. Currently, there are 15 additional InvestingPro Tips available for Earlyworks, accessible via https://www.investing.com/pro/ELWS. Investors looking to take advantage of these insights can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing an even greater value for those seeking comprehensive financial analysis.
It is crucial for investors to consider both the positive and challenging aspects of Earlyworks' financial landscape as they assess the company's potential for growth, especially in the competitive and rapidly evolving blockchain technology market.
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