- The stock price of Luokung Technology Corp. (Nasdaq: LKCO) fell by 19.74%. This is why it happened.
The stock price of Luokung Technology Corp. (Nasdaq: LKCO) – a leading interactive location-based services and big data processing technology company in China – fell by 19.74% yesterday. Investors appear to be responding to a press release issued by the company.
Luokung had announced that it has has sought clarification of the deadline for U.S. persons to refrain from trading Luokung securities and derivatives. The deadline could be March 15, 2021 or May 27, 2021, depending on whether General License 1A (defined below) applies to Luokung. This update relates to Luokung’s previously issued statement: Luokung Announces Statement on Being Included in the Relevant List by the U.S Department of Defense.
On January 14, 2021, the U.S. Department of Defense (“DoD”) placed Luokung on a list of entities operating directly or indirectly in the United States and deemed to be “Communist Chinese Military Companies” (“CCMCs”) under Executive Order 13959, issued by former President Trump on November 12, 2020 (“EO 13959”). The DoD designated “Luokong Technology Corporation (LKCO)” as a CCMC under Section 1237 of the National Defense Authorization Act for Fiscal Year 1999 (“Section 1237”) on January 14, 2021.
“Based on EO 13959 and that listing date, the restrictions under EO 13959 would take effect on March 15, 2021. However, on January 27, 2021, the U.S. Department of the Treasury Office of Foreign Assets Control (“OFAC”) issued General License 1A – Authorizing Transactions Involving Securities of Certain Communist Chinese Military Companies (“General License 1A”). Under General License 1A, OFAC indicated that all transactions and activities prohibited by EO 13959, as amended by EO 13974 on January 13, 2021, were authorized through 9:30 am Eastern Daylight Time, May 27, 2021 for any “entity whose name closely matches, but does not exactly match, the name of” a CCMC,” wrote the company in a statement. “Clearly, the name listed by DoD under Section 1237 on January 14, 2021 is not an exact match of Luokung, and thus restrictions on U.S. persons’ trading of Luokung securities and derivatives may take effect on May 27, 2021, rather than March 15, 2021, under General License 1A.”
Luokung has sought clarification from OFAC for confirmation that General License 1A applies to it and that the deadline for trading in Luokung securities and derivatives by U.S. persons is May 27, 2021 instead of March 15, 2021. And Luokung will make further public announcements as warranted by future developments.
Going forward, Luokung and its external legal counsel are actively considering a variety of options, including seeking removal from the list or limiting or eliminating prohibitions under EO 13959, among other legal actions. And Luokung had confirmed that it is not owned, controlled or affiliated by the Chinese military, nor is it a CCMC under Section 1237.
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