Are Code Rebel Shareholders Getting Enough in the Merger?

Code Rebel Corp. (NASDAQ: CDRB) might be the only ray of light in Friday’s trading session, with the broad markets pushing new 52-week lows. This company’s bullish performance is in regards to some potential merger activity. The company has announced its entry into a non-binding letter of intent to engage in a merger with Aegis Identity Software.

Under the terms of the letter of intent, Aegis Identity will be merged with Code Rebel, which will remain the surviving entity. Aegis Identity’s shareholders will own 60% of the issued and outstanding shares of Code Rebel, determined on a fully diluted basis, immediately following the merger.

Code Rebel also has provided Aegis Identity with an unsecured loan of $500,000, which is evidenced by a promissory note of Aegis Identity that bears interest at the rate of 9% per annum, compounded annually. The loan will be discharged in the proposed merger.

If this merger is not consummated, then the loan will be due on June 30, 2016, or upon the occurrence of certain other specified events.
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Code Rebel is an enterprise software company that develops, licenses and supports software designed for cross-platform enterprise security and productivity.

Aegis Identity is slightly different. This company has built a sophisticated enterprise-class software platform to serve the needs of cybersecurity, digital identity management and access management. In three years, it has taken the education market by storm by gaining product adoption in both the higher education and K-12 markets.

Originally, Code Rebel entered the market at $12 back in May 2015. Within the first month of its trading, the stock more than tripled to its high when the market was hot in the early summer. Since that time, shares slowly slid to their current level, dropping about 90% from the high.

If Code Rebel does get picked up at the current price level, it will be less than half of the IPO price, but at this point it might be good to stop the bleeding.

Shares of Code Rebel were trading up over 130% at $5.02 on Friday, with a post-IPO trading range of $2.07 to $44.21.

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