Luokung Technology Corp. (LKCO) stock prices were down by 8.64% as of the market closing on May 5th, 2021, bringing the price per share down to USD$1.48. Subsequent pre-market fluctuations have seen the stock soar by 22.3%, bringing it up to USD$1.81
Suspension of Equity Trading
LKCO announced at the end of April 2021 that the trading of their ordinary shares would be suspended as of the commencement of the trading day on May 9th, 2021. In addition, the end of the trading day on May 7th, 2021 would see the halting of the trading of LKCO securities. These restrictions are a result of the company having been given a Communist Chinese military company designation, which put the LKCO at the mercy of Executive Order 13959.
LKCO Designated a CCMC
The U.S. Department of Defense added LKCO to the Section 1237 List of CCMCs on January 14th of 2021. In a strange sequence of events, the company had its name misspelled by the DoD, which resulted in the U.S. Department of the Treasure Office of Foreign Assets Control (OFAC) to notify LKCO that the misspelled company had been delisted, while LKCO was redesignated using it correct spelling.
End of LKCO
While divestment of LKCO ownership by U.S persons will be permitted until March 9th 2022, the start of the trading day on May 9th 2021 will see Nasdaq file a Form 25-NSE with the SEC. This form will result in the delisting and deregistration of LKCO securities on The Nasdaq Stock Market. As per the Nasdaq Listing Rule 5800 Series, LKCO intends to appeal the proceedings at a Hearings Panel.
Resisting CCMC Designation
LKCO and two U.S. shareholders have filed a joined complaint with the United States District Court for the District of Columbia in regard to the devastating developments. Under the complaint, the U.S. DoD’s designation of LKCO as a CCMC and the resulting restrictions stemming from Executive Order 13959 by former President Trump are both in violation of the law.
Request for Preliminary Injunction
Expecting the lawsuit to reach a conclusion past the date of what the lawsuit is fighting against, LKCO has filed a motion for a preliminary injunction that will defer the CCMC designation and associated trading restrictions until the case has been settled. With the company confident of an outcome in their favor, they argue that the failure to issue an injunction could end up having unmerited and disastrous effects on the company’s balance of equities as well as public interest.
Future Outlook for LKCO
The future of LKCO hinges on the outcome of the appeal against its CCMC designation, with current and potential investors waiting on the Court to make a decision. Despite seemingly impending doom lurking just around the corner, the company has assured shareholders that they are very likely to be able to prove that LKCO does not deserve a CCMC designation. Time will tell if this is the end for LKCO or the start of an era of unprecedented growth.