20-F: HUB Cyber Security Ltd. Secures Funding Through Convertible Notes and Warrants

HUB Cyber Security Ltd. enters into a securities purchase agreement to issue convertible notes and warrants to accredited investors, aiming to raise capital for general corporate purposes.

Summary

• HUB Cyber Security Ltd. has entered into a Securities Purchase Agreement with accredited investors for the issuance of convertible notes and warrants.
• The offering relies on exemptions from securities registration under Regulation D of the Securities Act of 1933.
• Buyers will purchase convertible notes and warrants, convertible into Ordinary Shares and Warrant Shares, respectively.
• The closing will occur promptly after the agreement date, but no later than the next business day following the satisfaction or waiver of closing conditions.
• Buyers will pay the Purchase Price via wire transfer, and the Company will issue Convertible Notes and Warrants.
• The Company is entitled to withhold Israeli tax on interest payments unless Buyers provide a tax exemption or reduced withholding rate approval from the Israel Tax Authority.
• The Company will use the proceeds for general corporate purposes.
• The agreement includes various representations and warranties from both the Buyers and the Company, covering aspects such as organization, authority, compliance with laws, and financial disclosures.
• The Company is responsible for placement agents' fees, financial advisory fees, and brokers' commissions.
• The agreement is governed by New York law, with disputes adjudicated in New York City.

Sentiment

Score: 7

Explanation: The document outlines a standard financial transaction with clear terms and conditions. While it involves risk for the investors, it is a positive step for the Company to secure funding. The sentiment is neutral to slightly positive.

Positives

• The agreement allows HUB Cyber Security to raise capital without the need for full securities registration, saving time and resources.
• The funds raised will be used for general corporate purposes, providing flexibility for the Company's needs.
• The agreement includes standard protections for both the Company and the investors through representations, warranties, and covenants.

Negatives

• The convertible notes and warrants are subject to transfer restrictions, limiting the Buyers' ability to freely sell or transfer the securities.
• The Company is responsible for placement agents' fees, financial advisory fees, and brokers' commissions, which could reduce the net proceeds from the offering.
• The agreement is governed by New York law, which may not be as familiar to the Company as Israeli law.

Risks

• The Buyers are purchasing the securities for their own account and not with a view towards public sale or distribution, which could limit the liquidity of the investment.
• The Buyers acknowledge that the investment involves a high degree of risk and that they are able to bear the economic risk of a complete loss of their investment.
• The Company's representations and warranties are subject to a Material Adverse Effect qualification, which could limit the Buyers' recourse in the event of certain adverse events.
• The aggregate indemnification obligations of the Company are capped at 100% of the aggregate Purchase Price actually paid by the Buyers.

Future Outlook

The Company intends to use the proceeds from the sale of the Convertible Notes and the Warrants for general corporate purposes.

Industry Context

This announcement reflects a common financing strategy for companies, particularly in the technology sector, to raise capital through the issuance of convertible securities. The use of Regulation D allows the Company to access capital from accredited investors without the need for a full public offering.

Comparison to Industry Standards

• The terms of the convertible notes and warrants, such as the conversion price, warrant coverage, and exercise price, are generally consistent with industry standards for similar financing transactions.
• The use of a Maximum Percentage beneficial ownership limitation is a common feature in these types of agreements to prevent any single investor from gaining excessive control over the Company.
• The representations and warranties provided by both the Company and the Buyers are standard for securities purchase agreements.

Stakeholder Impact

• Shareholders: Potential dilution of ownership if the Convertible Notes are converted into Ordinary Shares and the Warrants are exercised.
• Employees: The funding could provide greater job security and opportunities for growth.
• Customers: The funding could lead to improved products and services.
• Suppliers: The funding could ensure timely payments and continued business relationships.
• Creditors: The issuance of Convertible Notes could increase the Company's debt burden.

Next Steps

• Buyers to pay the Purchase Price to the Company.
• Company to issue Convertible Notes and Warrants to the Buyers.
• Company to file required notices and/or applications to the Principal Market for the issuance and sale of the Securities.
• Company to take action necessary to have authorized and reserved for the purpose of issuance, no less than the number of Ordinary Shares issuable upon conversion of the Convertible Notes and exercise of the Warrants.

Key Dates

Keywords

convertible notes, warrants, securities purchase agreement, accredited investors, ordinary shares, regulation D, capital raise, cyber security