SCHEDULE 13D/A: Lynrock Lake Updates Allot Ltd. Stake Following Public Offering and Convertible Note Restructuring

Lynrock Lake LP and its affiliates have updated their beneficial ownership in Allot Ltd. to 21.8% after a public offering led to partial cash repayment and conversion of a $40 million convertible note, alongside a 75-day lock-up agreement.

Summary

• Lynrock Lake LP, Lynrock Lake Partners LLC, and Cynthia Paul collectively reported beneficial ownership of 21.8% of Allot Ltd.'s Ordinary Shares.
• This update follows Allot Ltd.'s public offering of ordinary shares, which closed on June 26, 2025.
• In connection with the public offering, a $40.0 million senior unsecured convertible promissory note held by Lynrock Fund was partially repaid and partially converted.
• Specifically, $31.41 million of the note's principal amount was repaid in cash.
• The remaining $8.59 million principal amount was converted into 1,249,995 Ordinary Shares at a conversion price of $8.00 per share, which was the public offering price.
• The total outstanding shares of Allot Ltd. after the public offering are reported as 45,994,386 Ordinary Shares, plus 1,666 shares from Ms. Paul's restricted share unit settlement.
• Lynrock Fund now directly holds 10,018,661 Ordinary Shares, and Ms. Paul holds 28,666 Ordinary Shares directly.
• Lynrock Fund, Allot's directors, executive officers (including Ms. Paul), and certain other shareholders entered into a customary 75-day lock-up agreement with the underwriters regarding their ordinary shares.

Sentiment

Score: 6

Explanation: The document reflects a planned capital raise and debt restructuring, which are generally positive for a company's financial health. However, the dilution from the public offering and debt conversion, along with the impending end of the lock-up period, introduce some potential future selling pressure. The overall sentiment is neutral to slightly positive as it indicates successful execution of a financing strategy.

Positives

• The partial repayment of the convertible note in cash ($31.41 million) reduces Allot Ltd.'s debt obligations to Lynrock Fund.
• The conversion of the remaining note balance into equity strengthens Allot Ltd.'s balance sheet by reducing debt and increasing equity.
• The public offering itself indicates Allot Ltd. successfully raised capital, which can be used for operations or growth initiatives.

Negatives

• The conversion of debt to equity at $8.00 per share, which was the public offering price, implies dilution for existing shareholders, especially if the conversion price was lower than the previous market price or original conversion terms.
• The 75-day lock-up agreement restricts Lynrock Fund and other major shareholders from selling shares for a specified period, potentially limiting their liquidity.

Risks

• The lock-up agreement could lead to a potential increase in selling pressure once the 75-day period expires, as major shareholders may then be free to sell their shares.
• Dilution of existing shareholders due to the issuance of new shares in the public offering and the conversion of the Lynrock Note into equity.

Future Outlook

The document indicates a 75-day lock-up period for major shareholders, including Lynrock Fund and company management, following the public offering, suggesting a period of stability in shareholding before potential future transactions by these parties.

Industry Context

This filing reflects a common corporate finance strategy where companies raise capital through public offerings and restructure existing debt, often involving major investors converting debt to equity. The lock-up agreement is a standard practice in public offerings to prevent immediate selling pressure from insiders and large shareholders, aiming to stabilize the stock price post-offering. This is typical for technology or cybersecurity companies like Allot Ltd. seeking to strengthen their balance sheet or fund growth initiatives.

Comparison to Industry Standards

• The 75-day lock-up period is a standard duration for public offerings, aligning with typical industry practices to ensure market stability post-issuance.
• The conversion of convertible debt into equity is a common mechanism for companies to deleverage and improve their financial structure, comparable to similar transactions seen in growth-oriented technology companies.
• The public offering price of $8.00 per share and the resulting dilution would need to be compared against Allot Ltd.'s historical trading prices and valuation metrics relative to its peers in the network security and traffic management industry to assess its competitiveness and investor reception.

Related Party Transactions

• Lynrock Fund, a related party through its beneficial ownership and Ms. Paul's role, engaged in a transaction with Allot Ltd. involving the partial repayment and conversion of a $40.0 million convertible promissory note.

Stakeholder Impact

• Shareholders: Existing shareholders experienced dilution due to the public offering and the conversion of the convertible note into new shares. The lock-up agreement provides short-term stability but could lead to selling pressure post-expiration.
• Creditors: The partial cash repayment of the convertible note reduces Allot Ltd.'s debt burden, which is positive for creditors.

Next Steps

• The 75-day lock-up period for major shareholders will expire, after which they will be free to sell shares, subject to market conditions and other regulations.
• Allot Ltd. will continue its operations, potentially utilizing the capital raised from the public offering.

Key Dates

Recommendation

Keywords

Allot Ltd., Lynrock Lake LP, Schedule 13D/A, Beneficial Ownership, Convertible Note, Public Offering, Equity Conversion, Lock-up Agreement, Shareholder Update, SEC Filing, Corporate Finance, Investment Management