Hub Cyber Security Ltd. — Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, dated October 3, 2023, reports material financing activity during October 2023. On September 28, 2023, Hub Cyber Security Ltd. entered into a non-recourse loan agreement with Qpoint Technologies Ltd., an Israeli company in which Hub holds 46.52% and exercises effective control.
Financing and Key Terms
- Qpoint agreed to provide Hub with a loan of NIS 3.5 million, approximately $900,000.
- Qpoint extended the repayment deadline for NIS 6.5 million, approximately $1.7 million, of existing obligations from August 15, 2023 to February 28, 2024.
- Hub agreed to pay a loan installation fee of NIS 300,000, approximately $80,000.
- The loan bears interest at 11% annually. If payments are not made on time, the interest rate increases to 15% annually until repayment.
- The filing does not provide the loan’s maturity schedule beyond the February 28, 2024 repayment date or the total expected interest expense.
Collateral, Restrictions, and Material Changes
- Hub pledged all of its equity interests in Qpoint, representing 46.52% of Qpoint’s outstanding shares.
- Hub also pledged its interests in Qpoint’s jointly held subsidiaries: Aginix Engineering & Project Management Ltd. and Sensecom Consulting & Project Management Ltd., each representing 49.94%, and Integral Tele-management Services Ltd., representing 49.94%.
- If the loan is not repaid by February 28, 2024, Qpoint may foreclose on the pledged shares. If repayment is timely, the pledges will be canceled.
- For nine months after repayment, the parties agreed not to pursue certain actions involving Qpoint, including appointing a new chief executive officer, distributing dividends, obtaining credit or investments, or issuing or pledging shares of Qpoint or its subsidiaries.
Financial Metrics, Outlook, and Risks
The filing is limited to the loan transaction and does not provide revenue, profit, cash flow, margin, balance sheet, liquidity, debt-ratio, or operating guidance metrics for the reporting period.
The principal financial risk disclosed is the requirement to repay the loan and specified outstanding obligations by February 28, 2024. Failure to make timely payments would increase the interest rate to 15% and could allow Qpoint to foreclose on Hub’s pledged interests, including Hub’s stake in Qpoint and related subsidiaries.
The filing states that the Loan Agreement includes customary representations, warranties, and covenants. A translated copy was expected to be filed as an exhibit to Hub’s Annual Report on Form 20-F. The filing’s description is expressly incomplete and qualified by reference to the agreement.
Key Facts for Investors to Verify
- Whether the NIS 3.5 million loan and the NIS 6.5 million repayment extension were fully funded and recorded as described.
- The precise repayment mechanics, interest calculation, fees, and any additional covenants in the complete Loan Agreement.
- Whether Hub repaid the loan and related obligations by February 28, 2024 and whether the share pledges were released.
- The potential effect of foreclosure on Hub’s ownership, control, and financial results related to Qpoint and its subsidiaries.
- The translated Loan Agreement and any subsequent disclosures in Hub’s Form 20-F or later SEC filings.