Two months after completing its merger with a SPAC and starting to be traded in the US, < a href=https://hubsecurity.com/ target=new>Hub Cyber Security (Nasdaq: HUBC) has finally managed to raise money. The company has reported an agreement with Lind Global Asset Management VI LLC, managed by New York-based The Lind Partners, for an investment of $16 million in three tranches. Hub Security will issue to Lind convertible notes that will mature over two years. The company will have immediate access to the first tranche of $4.5 million, and will have access to the remaining two tranches, totaling $11.5 million, upon the fulfillment of certain conditions.
"This investment is expected to provide HUB Security with additional resources to fuel its rapid growth and development, enhance its financial stability, and enable the company to pursue its future plans," the company’s announcement says.
Hub Security, which in the past few months has been headed by Uzi (Azriel) Moskowitz, provides security solutions for servers and cloud computing. "The additional funding from The Lind Partners fortifies our balance sheet and enables us to position HUB Security as a leading confidential computing cybersecurity solutions provider in the market," Moskowitz said. As far as the conversion price is concerned, Hub said that this was confidential information.
Hub Cyber Security was founded in 2017 by Eyal Moshe, and was merged into a company on the Tel Aviv Stock Exchange in 2021 at a valuation of $89 million. In 2022, the company made a surprise announcement of a merger with a SPAC on Nasdaq at a valuation of $1.28 billion, five times its market cap on the Tel Aviv Stock Exchange at that time.
Just before that move was completed, in late February this year, Moshe was removed as CEO, and after the SPAC merger was completed it was reported that the company was investigating suspicions of embezzlement by him. Separately, there were difficulties over the merger. Among other things, three PIPE (private investment in public equity) investors failed to transfer $50 million that the company was supposed to receive. Later, it was reported that A-Labs, one of the three PIPE investors and also Hub’s investment banker, transferred $2 million to the company instead of the $20 million to which it had committed.
Hub’s share price plunged immediately after the merger was completed, because of its failure to raise the promised capital, and the share price was subsequently negatively affected by the report of the alleged embezzlement. Hub hired a private investigator to examine whether all the expenses incurred in the past few years were indeed for its needs.
The investigation uncovered unexplained expenses of NIS 2.5 million. Hub recently reported that the release of its financial statements for 2022 would be delayed because of the investigation it had undertaken.
After a drop of over 70% in its share price since it started to be traded on Wall Street, Hub is now traded at $0.70 per share, up from $0.60 before the agreement with The Lind Partners was announced, but still lower than the value at which the company was traded in the past on the Tel Aviv Stock Exchange, and 94% below the valuation in the SPAC merger.
The Lind Partners manages funds that invest in small- and mid-cap companies publicly traded in the US, Canada, Australia and the UK, in amounts ranging between $1 million and $30 million.
Published by Globes, Israel business news - en.globes.co.il - on May 10, 2023.
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