RISE Education Cayman Ltd. (REDU), a company that provides junior English language training services through its subsidiaries, has declined 4.50% during aftermarket trading session and consequently is trading at $0.50 at the time of the writing. The decline could be attributed to the receipt of the NASDAQ notice for non-compliance. On Tuesday, REDU stock closed the day at $0.53 after gaining an increase of 2.56% during the regular trading session.
Why REDU Declining?
In the late hours of Tuesday, REDU announced that on the 11th of January, the company received the notice from the Listing Qualifications Department of Nasdaq Stock Market that the company’s securities are decided to be delisted unless the Company timely requests a hearing before a Nasdaq Hearings Panel. The decision was based upon the conclusion that the Company is a “public shell”. Public shell is defined in Nasdaq Listing Rule 5101 as the result of the Company’s sale of substantially all of its assets on December 30, 2021, as well as the Company’s failure to timely file its interim balance sheet and income statement for the period ended June 30, 2021, with the Securities and Exchange Commission. The company said that it had requested a hearing before the Panel.
Closure of Sale
On 30th December, REDU announced that it had closed its previously announced sale in which it sold all the equity interests in Rise (Tianjin) Education Information Consulting Co., Ltd. to Wuhan Xinsili Culture Development Co., Ltd. on December 28, 2021. The sale also constituted of all of the equity interests in RISE Education International Limited and Rise IP (Cayman) Limited to Bain Capital Rise Education IV Cayman Limited on December 30, 2021. The company has sold substantially all of its assets upon completion of the above-mentioned sale.
Resignation of Accounting Firm
In late November, REDU announced that Ernst & Young Hua Ming LLP had resigned as the independent registered public accounting firm of the Company. The resignation became effective on the 19th of November 2021. The company said that it would intend to engage a new accounting firm in a short period.
Future Outlook for REDU
During the last three months, REDU stock has declined by more than 20%, the prime reason being the current uncertainty associated with the company. Looking ahead, potential investors should keep a close eye on the performance of the stock to make an informed decision regarding their investments.