Hub Cyber Security Ltd. Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on November 29, 2024, reports material corporate events for Hub Cyber Security Ltd., a foreign private issuer based in Tel Aviv, Israel. The filing details two significant financing transactions: a settlement regarding an existing convertible note and a new private placement of a note and warrant.
Key Financial Metrics and Transactions
The filing does not provide standard financial statements (revenue, profit, cash flow, or margins) for a specific reporting period. Instead, it discloses specific debt and liquidity-related figures:
- Existing Debt (AGP): The balance sheet recorded obligations of approximately $5.7 million as of June 30, 2024, related to a convertible note issued to Alliance Global Partners (AGP) with a principal of approximately $5.2 million.
- New Financing: The company secured a new note with a principal amount of $1,000,000 from a private investor.
- Interest Rates: The new note carries a variable interest rate of 8.5% if repaid by November 29, 2024, or 8.5% plus 15% per annum thereafter. The AGP note carries 6% interest (18% default).
- Equity Instruments: The new financing includes a warrant exercisable for 1,500,000 ordinary shares at $0.55 per share.
Material Changes and Settlement Terms
The company entered into an amended and restated note with AGP on November 22, 2024, altering the repayment structure of the $5.7 million obligation:
- Conversion Plan: AGP will convert $250,000 of principal in each of seven 30-day periods (totaling $1.8 million), with the first conversion potentially at $320,000 and the final at $230,000.
- Debt Cancellation: Upon each conversion, one-seventh of the excess debt above $1.8 million will be cancelled. Full conversion of $1.8 million will extinguish the note.
- Conversion Price: Set at 93% of the prevailing market price with a $0.40 floor, subject to downward adjustment if market conditions persist below the floor.
- Default Condition: If $1.8 million is not converted by May 30, 2025, the original note terms will resume.
Outlook, Risks, and Contingencies
The new $1,000,000 note is secured by a first-priority pledge on the shares of the Qpoint group. The filing highlights several risks and contingencies:
- Repayment Deadline: The new note has a critical repayment date of November 29, 2024, to avoid the higher interest rate tier (8.5% + 15% p.a.).
- Conversion Rights: If the new note is not repaid by the deadline, the investor may convert principal into ordinary shares at a rate based on the 5-day average closing price, with a $0.50 floor.
- Ownership Limits: Conversion and warrant exercise are capped to prevent the investor and affiliates from beneficially owning more than 4.99% of ordinary shares.
- Market Price Sensitivity: The AGP settlement terms include a floor price that may be adjusted downward if the market price remains below $0.40 for three months.
Investor Verification Checklist
- Verify the company's ability to repay the $1,000,000 note by November 29, 2024, to avoid the punitive 15% additional interest rate.
- Confirm the current market price of ordinary shares relative to the $0.40 and $0.50 conversion floors to assess potential dilution.
- Monitor the progress of the AGP conversion schedule to ensure the $1.8 million threshold is met by May 30, 2025, to avoid reverting to original debt terms.
- Review the status of the Qpoint group shares pledged as collateral for the new note.
- Check for any subsequent filings regarding the actual repayment or conversion of the new note immediately following the November 29, 2024 deadline.