Earlyworks Co., Ltd. Granted Extension by Nasdaq Hearings Panel to Regain Compliance with Continued Listing Requirements

Rhea-AI Summary

Earlyworks (NASDAQ:ELWS), a Japanese blockchain technology company, has received an extension from the Nasdaq Hearings Panel to maintain its listing on the Nasdaq Capital Market until September 19, 2025. The company failed to meet Nasdaq's minimum market value requirement of $35 million and is now pursuing compliance through an alternative standard requiring minimum stockholders' equity of $2.5 million.

The extension is conditional upon Earlyworks filing public disclosures about compliance-achieving transactions, providing a recent balance sheet, and submitting 12-month income projections by the September deadline. The company's ADSs will continue trading on Nasdaq during this period.

Positive

• Granted extension until September 19, 2025 to maintain Nasdaq listing
• Alternative compliance path available through $2.5M stockholders' equity requirement
• ADSs remain listed and trading on Nasdaq during extension period

Negative

• Failed to maintain required $35M minimum market value of listed securities
• Did not regain compliance during initial 180-day grace period
• Company needs to secure strategic financing to meet compliance requirements

Insights

Financial Analyst

Earlyworks received Nasdaq extension to meet listing requirements, switching compliance path from market value to equity standards.

Earlyworks has secured a critical extension from the Nasdaq Hearings Panel, temporarily avoiding delisting after failing to maintain the required $35 million market value of listed securities. This reprieve extends through September 19, 2025, during which the company's shares will continue trading on the Nasdaq Capital Market.

The company is pivoting to an alternative compliance strategy, aiming to satisfy Nasdaq Listing Rule 5550(b)(1), which requires minimum stockholders' equity of $2.5 million rather than the market value threshold they couldn't maintain. This strategic shift suggests management recognizes challenges in boosting market capitalization in the near term.

To meet these requirements, Earlyworks is exploring strategic financing options and business alliances with external partners. By September 19, they must file comprehensive financial disclosures including:

• A recent balance sheet with pro forma adjustments reflecting compliance transactions
• Forward-looking income projections for the next 12 months
• Evidence of compliance with all Nasdaq Capital Market listing criteria

This extension provides breathing room but highlights underlying financial challenges. For investors, the continued Nasdaq listing preserves trading liquidity and market access, but the compliance struggle signals concerns about the company's financial position. The upcoming mandatory disclosures will offer critical insights into Earlyworks' strategy for sustainable compliance and future viability.

While this extension prevents immediate delisting, investors should carefully monitor the company's progress toward meeting the equity standard, as any capital-raising activities could potentially impact existing shareholdings.

TOKYO, June 26, 2025 (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 it has received a decision from the Nasdaq Hearings Panel (the “Panel”) granting the Company an exception to enable continued listing on the Nasdaq Capital Market.

As previously disclosed on May 7, 2025, the Company received a staff determination letter dated May 2, 2025 (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company did not regain compliance with Nasdaq Listing Rule 5550(b)(2), which requires listed companies to maintain a minimum market value of listed securities of $35 million. The Company’s securities had failed to meet this requirement for 30 consecutive trading days, and the Company did not regain compliance during the 180-calendar-day grace period that ended on April 28, 2025.

In response, the Company timely requested a hearing before the Panel, staying the suspension of trading and delisting process. The Company also informed Nasdaq of its intent to pursue compliance through an alternative standard under Nasdaq Listing Rule 5550(b)(1), which requires a minimum stockholders’ equity of $2.5 million (the “Equity Rule”). As part of its strategy, the Company has been evaluating and negotiating strategic financing options, including capital and business alliances with external partners.

Based on the information presented at the hearing, the Panel has granted Earlyworks an extension through September 19, 2025, to regain compliance with the continued listing standards, subject to the following conditions:

	1.	On or before September 19, 2025, the Company must file a public disclosure describing the transactions undertaken to achieve compliance with the Equity Rule and provide an indication of its equity following those transactions. This may include:
		A balance sheet not older than 60 days, with pro forma adjustments for all significant transactions and events; or An affirmative statement that the Company believes it has regained compliance, supported by a pro forma balance sheet submitted to the Panel and Nasdaq staff.

	2.	On or before September 19, 2025, the Company must provide the Panel with:
		Income projections for the next 12 months, with all underlying assumptions clearly stated; and Evidence of compliance with all applicable criteria for continued listing on the Nasdaq Capital Market.

The Company’s American Depositary Shares (ADSs) will remain listed and eligible for trading on the Nasdaq Capital Market during the extension period, as Earlyworks works toward regaining full compliance.

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

Why is Earlyworks (ELWS) at risk of Nasdaq delisting?

Earlyworks failed to maintain the required $35 million minimum market value of listed securities for 30 consecutive trading days and didn't regain compliance during the 180-day grace period.

What is the deadline for Earlyworks (ELWS) to regain Nasdaq compliance?

Earlyworks has until September 19, 2025 to regain compliance with Nasdaq's listing requirements through meeting the alternative $2.5 million stockholders' equity standard.

What must Earlyworks (ELWS) do to maintain its Nasdaq listing?

Earlyworks must file public disclosures about compliance transactions, provide a recent balance sheet, and submit 12-month income projections by September 19, 2025.

What alternative compliance standard is Earlyworks (ELWS) pursuing?

Earlyworks is pursuing compliance through Nasdaq Listing Rule 5550(b)(1), which requires a minimum stockholders' equity of $2.5 million.

Will Earlyworks (ELWS) continue trading on Nasdaq during the extension period?

Yes, Earlyworks' American Depositary Shares (ADSs) will remain listed and eligible for trading on the Nasdaq Capital Market during the extension period through September 19, 2025.