20-F: HUB Cyber Security Ltd. Files 20-F Annual Report, Details Stock Option Plan and Financial Performance

HUB Cyber Security Ltd. releases its 20-F filing, outlining an amended stock option plan and providing details on its financial results for the fiscal year ended December 31, 2024.

Summary

• HUB Cyber Security Ltd. has filed its 20-F annual report, which includes details of its amended 2007 Israeli Employee Stock Option Plan.
• The document outlines the terms and conditions for granting stock options to employees and non-employees, including vesting schedules, exercise prices, and adjustments upon certain events.
• The report also covers the company's financial performance for the fiscal year ended December 31, 2024, with comparisons to previous years.
• As of December 31, 2024, the registrant had 3,553,818 ordinary shares outstanding, no par value.
• As of April 28, 2025, the registrant had 10,047,296 ordinary shares outstanding, no par value.
• The company reported net losses (including discontinued operations) of $39.1 million in 2024, $86.6 million in 2023, and $80 million in 2022.
• The report mentions an internal investigation related to misappropriation of company funds by a former senior officer.
• The company is taking corrective actions to address material weaknesses in its internal control over financial reporting.
• The company is also working to regain compliance with Nasdaq listing requirements.

Sentiment

Score: 3

Explanation: The document presents a mixed picture, with some positive steps taken to address past issues, but significant financial challenges and risks remain, leading to a low sentiment score.

Positives

• The company is taking corrective actions to address material weaknesses in its internal control over financial reporting.
• The company is working to regain compliance with Nasdaq listing requirements.
• The company has replaced top management and executive officers involved in the misappropriation of funds.
• The company has enacted and is enforcing tougher anti-fraud and anti-corruption policies, oversight, reviews, and checks.

Negatives

• The company reported net losses (including discontinued operations) of $39.1 million in 2024, $86.6 million in 2023, and $80 million in 2022.
• The company's independent registered public accounting firm has included an explanatory paragraph expressing substantial doubt about its ability to continue as a going concern.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company is in default under certain of its debt obligations.
• The company is facing regulatory scrutiny and potential enforcement actions related to misappropriation of company funds.
• The company's securities may be delisted from Nasdaq if it fails to meet continued listing requirements.

Risks

• The company's ability to continue as a going concern is contingent upon securing additional funding.
• Failure to remediate material weaknesses in internal control could impair the company's ability to produce timely and accurate financial statements.
• The company faces intense competition in the network security market.
• The company's reputation could be harmed by shortcomings or vulnerabilities in its solutions or security breaches experienced by customers.
• The company is subject to securities class actions and other litigation.
• Conditions in Israel, including the current war between Israel and Hamas, could materially and adversely affect the company's business.

Future Outlook

The company requires additional capital in the future in order to fund its growth strategy or to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances.

Industry Context

The network security market is rapidly evolving within the increasingly challenging cyber threat landscape. If our solutions fail to adapt to market changes and demands, sales may not continue to grow or may decline.

Comparison to Industry Standards

• The data fabric market is rapidly evolving, with major players including Informatica, IBM, Oracle, Microsoft, Talend, Snowflake, and others offering a variety of solutions across integrated data platforms, cloud-native architectures, and data virtualization technologies.
• Our primary competitors in the network security industry consist of Cisco Systems, Inc., Juniper Networks, Inc., Fortinet Inc., Check Point Software Technologies Ltd. and Palo Alto Networks, Inc., as well as companies that have network security capabilities as part of broader IT solutions offerings, such as Microsoft Corporation, McAfee, Inc., International Business Machines Corporation, Hewlett-Packard Enterprise Company and FireEye, Inc.
• Competitors in the data fabric market include Atlan, IBM, Oracle, Talend, SAP, Informatica, Cloudera, TIBCO, Amazon Web Services and data.world.

Legal Proceedings

• The company is subject to a number of securities class actions and other litigations and could be subject to additional litigation in the United States, Israel or elsewhere that could negatively impact our business, including resulting in substantial costs and liabilities.
• In September 2024, the Israel Securities Authority and the Israel Tax Authority conducted a search of HUB's office in the context of investigating former and current officers in connection with suspicions regarding violations of securities, penal and tax laws.
• In April 2025, investigators from the Israeli Tax Authority visited the offices of the Company.

Related Party Transactions

• The company has entered into agreements with certain third parties with whom Noah Hershcoviz, our Chief Executive Officer and director, is an affiliate.
• The company has entered into a Loan Agreement with J.J. Astor & Co. (Astor) pursuant to which Astor agreed to loan us $2,200,000 in consideration for a promissory note in the principal amount of $2,750,000 (the December 2024 Convertible Note).

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of additional ordinary shares or other equity securities.
• Shareholders may be unable to sell their securities unless an active market can be sustained.
• The company's ability to attract and retain qualified management, sales and marketing personnel who are critical to our business could be harmed.
• The company's reputation and business could be harmed based on real or perceived shortcomings, defects or vulnerabilities in our solutions or if our customers experience security breaches.

Next Steps

• The company will continue to take steps to remediate the material weaknesses in its internal control over financial reporting.
• The company will continue to seek to raise additional funds during 2025 through a variety of equity and/or debt financing arrangements.
• The company will continue to monitor and respond to any regulatory inquiries it may receive.

Key Dates

Keywords

stock option plan, cyber security, financial reporting, internal control, risk factors, going concern, material weaknesses, Nasdaq, delisting, financial results, capital raising, debt obligations, legal proceedings, Israel