Shares of Earlyworks Co. Ltd. skyrocketed in very active trading Wednesday, after the blockchain-technology company’s co-founders disclosed increased ownership stakes.
The Tokyo-based company’s stock
ELWS,
blasted 416.5% higher toward a seven-month high in morning trading. Volume ballooned to 36.5 million shares, enough to make the stock the most actively traded on major U.S. exchanges. The full-day average volume over the past 30 days was about 323,300 shares.
The stock has already been halted five times for volatility within the first half hour after the 9:30 a.m. ET opening bell.
The company disclosed late Tuesday that co-Founder and Chief Executive Satoshi Kobayashi now owned 62.9% of the shares outstanding. That compares with the disclosure in September that Kobayashi owned a 52.4% stake.
And co-Founder and Chief Technology Officer Hiroki Yamamoto was disclosed to now own a 6.2% stake, compared with a previous disclosure of a 5.5% stake.
The company, which focuses on areas including NFTs and the metaverse, went public on July 25. Despite the stock’s big rally on Wednesday, it was still trading less than half the price of the initial public offering, of $5 a share.
In mid-January, the company disclosed that certain shareholders had filed suit against Kobayashi and the company, alleging that they intentionally delayed or misrepresented procedures necessary for the sale of shares, which deprived investors the opportunity to sell their shares at a higher price.
And in December, the company filed an amendment to its annual report filed in September, to restate the Controls and Procedures item. The item said the company has evaluated the effectiveness of its disclosure controls, regarding generally accepted accounting principles and reporting procedures to the U.S. Securities and Exchange Commission.
“Based on that evaluation, our management has concluded that, as of April 30, 2023, our disclosure controls and procedures were not effective due to the following material weakness: we do not have sufficient in-house personnel with sufficient knowledge of the U.S. GAAP and SEC reporting rules,” the company stated.
Keep in mind that in the annual report filed in September, the company said that given that it has “incurred significant losses” and needs to raise funds to sustain operations and meet obligations, there is “substantial doubt about the company’s ability to continue as a going concern.”
This story originally appeared on Marketwatch
