A Hawaii company that made a big and lucrative splash on the NASDAQ stock market last year is accused of filing three financial reports containing inaccuracies following a recent halt of trading stock in the firm called Code Rebel Corp.
The U.S. Securities and Exchange Commission froze Code Rebel’s stock Friday and said there appeared to be a “lack of accurate information” about Code Rebel shares “because of questions regarding the accuracy of statements” in three financial reports the company filed since an initial public offering in May 2015.
The suspension of stock trading will last at least to May 19, the SEC said.
On Tuesday a New York law firm representing one Code Rebel shareholder filed a lawsuit against the company, its CEO Arben Kryeziu and Chief Financial Officer Reid Dabney. The complaint alleges that the company made false and misleading statements or failed to disclose statements that contained errors.
However, the lawsuit filed in federal court in New York by The Rosen Law Firm PA doesn’t cite any specific inaccuracies.
Meanwhile at least seven other law firms dealing in shareholder lawsuits have issued statements that they are looking into potential misrepresentations by Code Rebel.
Code Rebel announced Friday that it has not received any communication from the SEC regarding the accuracy of its financial reports, and that the company believes its audited reports are accurate.
Shares of Code Rebel stock last closed at $2.16 Thursday, up from a $1.53 low in February and a $38.80 high in June.
Code Rebel was founded on Maui in 2007 and initially sold software connecting PC and Mac computer systems.
A year ago the firm sold 1 million shares of stock for $5 apiece to investors. After that the company bought a Houston-based management and technology consulting firm called ThinOps Resources LLC. In March, Code Rebel made a tentative deal for Denver-based Aegis Identity Software Inc., which produces software to manage user identities and digital access for technology in the education field, to take over Code Rebel.
Code Rebel’s most recent financial report disclosed that the company lost $3.6 million last year, up from a $679,942 loss the year before. The company also said sales of its software dropped last year to $173,758 from $223,453 the year before, though total revenue rose to $526,399 from $223,453 due to the ThinOps acquisition.
