F-1/A: HUB Cyber Security Seeks to Register Shares for Resale Amid Financial Uncertainty

HUB Cyber Security Ltd. files an amendment to its registration statement for the potential issuance and resale of ordinary shares and warrants, amidst ongoing financial challenges and Nasdaq compliance issues.

Summary

• HUB Cyber Security Ltd. is filing an amendment to its F-1 registration statement to register the issuance of up to 1,891,847 ordinary shares upon exercise of warrants and the resale of up to 77,317,147 ordinary shares and 11,687 private warrants by selling securityholders.
• The company faces significant financial uncertainty, including negative cash flow, defaults on debt obligations totaling approximately $85.5 million as of June 30, 2024, and potential delisting from Nasdaq.
• The selling securityholders may offer these securities from time to time at prevailing market prices, negotiated prices, or through various methods of distribution.
• The company may receive up to approximately $41.9 million from the exercise of warrants, which it intends to use for general corporate purposes.
• The company's ability to continue as a going concern is contingent upon obtaining additional funding and curing outstanding defaults.
• The company is currently not in compliance with Nasdaq listing standards and has requested a hearing before the Nasdaq Hearings Panel scheduled for February 6, 2025.
• The company is involved in an internal investigation regarding allegations of misappropriation of company funds, which has led to regulatory scrutiny and substantial costs.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to the company's financial difficulties, Nasdaq compliance issues, and internal investigation. While there are some potential positives, the overall tone is concerning from an investment perspective.

Positives

• The company is collaborating with BlackSwan Technology (BST) with the goal of becoming a significant player in the secured data fabric industry.
• The company has a collaboration agreement with BST formalizing the terms of the collaboration between the parties.

Negatives

• The company has outstanding debt obligations of approximately $85.5 million as of June 30, 2024.
• The company is generating negative cash flow and is failing to meet obligations as they become due.
• The company is in default under certain of its debt obligations.
• The company has received a deficiency notice from Nasdaq for failing to meet the minimum bid price requirement.
• The company's Compliance Plan was not accepted by Nasdaq, leading to a potential delisting.
• The company is undergoing an internal investigation regarding allegations of misappropriation of company funds.
• The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.

Risks

• The company's previously disclosed internal investigation could lead to regulatory scrutiny and have a material adverse effect on its business.
• The company has a history of net losses and anticipates incurring net losses in the foreseeable future.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company is not currently in compliance with Nasdaq listing standards and faces potential delisting.
• The company's existing and future debt obligations could impair its liquidity and financial condition.
• The company may need to raise additional funds in the near future, and these funds may not be available when needed.
• Conditions in Israel, including the current war between Israel and Hamas, could materially and adversely affect the company's business.

Future Outlook

The company expects to be able to obtain additional sources of debt and equity financing, together with additional revenues from new business opportunities, following the filing of the 2023 Annual Report and interim condensed consolidated financial statements as of June 30, 2024.

Industry Context

The document relates to the cybersecurity industry, where HUB Cyber Security operates, and the broader financial markets, as it discusses the company's efforts to raise capital and maintain its Nasdaq listing.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards.
• The document does not provide specific comparisons to comparable companies.
• The document does not provide specific comparisons to global benchmarks.

Legal Proceedings

• The company is subject to a number of securities class actions and other litigations.
• The company's previously disclosed internal investigation was initiated to review allegations of misappropriation of company funds and other potential fraudulent actions regarding the use of company funds by a former senior officer of the company.

Stakeholder Impact

• Shareholders may experience a decline in the value of their shares due to the potential sale of a large number of ordinary shares.
• Employees may be affected by workforce reductions and potential disruptions to business operations.
• Customers may be impacted by the company's financial instability and potential changes in service offerings.
• Suppliers and creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• The company will request a hearing before the Nasdaq Hearings Panel on February 6, 2025.
• The company will continue to seek additional funding through equity and/or debt financing arrangements.
• The company will negotiate with debt holders to extend the term of their notes or convert them into ordinary shares.
• The company will work to cure outstanding defaults and regain compliance with Nasdaq listing standards.

Key Dates

Keywords

ordinary shares, warrants, convertible notes, registration statement, financial uncertainty, Nasdaq, debt, HUB Cyber Security, securityholders, financing