TEL AVIV - HUB Cyber Security Ltd. (NASDAQ: HUBC), an Israeli cybersecurity firm with a market capitalization of just $11.84 million, is contesting a delisting notice from the Nasdaq Stock Market. The company announced today that it received a Staff Delisting Determination from Nasdaq's Listing Qualifications Department and is exercising its right to appeal.
The delisting notice, received on December 11, 2024, follows a previous warning from Nasdaq on August 23, 2024, regarding HUB's non-compliance with the Nasdaq Global Market's minimum financial requirements. The company's total assets and total revenue for the most recently completed fiscal year and two of the last three fiscal years were each below the required $50 million threshold. Recent InvestingPro data shows the company's revenue at $33.36 million, with an 11.27% year-over-year decline and concerning liquidity metrics, including a current ratio of 0.21.
In response to the August notice, HUB Cyber Security submitted a compliance plan on October 9, 2024, aiming to regain conformity with Nasdaq's listing criteria. However, Nasdaq concluded that the plan did not demonstrate the company's ability to achieve or sustain compliance. InvestingPro analysis highlights several challenges, including significant debt burden and rapid cash burn rate. Subscribers can access 11 additional ProTips about HUBC's financial condition.
By filing an appeal before the December 18 deadline, HUB has secured a stay on the delisting, allowing its securities to remain listed and tradeable on the Nasdaq Global Market pending the outcome of the hearing. The company has expressed confidence in its improved financial position, which it believes supports its case for continued listing. However, the stock has declined 82.08% year-to-date, with weak gross profit margins of 8.47%.
Founded in 2017 by veterans of the Israeli Defense Forces' elite intelligence units, HUB Cyber Security specializes in advanced cybersecurity solutions and data protection technologies. The company operates in over 30 countries, providing services and cybersecurity computing appliances globally.
The press release also contains forward-looking statements regarding the company's financial condition and the appeal's outcome. These statements are subject to various risks and uncertainties, including the company's ability to resolve its liquidity and capital resource concerns, the impact of regional geopolitical conflicts, and legal or regulatory challenges.
Investors are reminded that the information is based on a press release statement, and there can be no assurance that the Nasdaq Hearings Panel will grant HUB Cyber Security's request to maintain its listing status.
In other recent news, HUB Cyber Security Ltd. has taken significant strides to improve its financial health. The company has reached an agreement to reduce its convertible note obligations by 70%, bringing down its debt from $5.7 million. This move is part of a broader initiative to strengthen HUB Security's financial position. In addition to the debt reduction, the company has received an additional $1 million investment from a private investor.
The firm is also making changes at the board level, with the appointment of Ms. Renah Persofsky as an independent director. Persofsky brings significant experience from her service on multiple boards, including both Nasdaq listed and private companies. This change is expected to contribute significantly to HUB Security's growth and corporate governance.
While grappling with financial challenges, HUB Cyber Security has secured multiple contracts, including a $2 million deal with the Israel Airports Authority. The company has also entered into an $8 million straight debt arrangement to support growth initiatives. Furthermore, HUB Cyber Security has partnered with Blackswan Technologies to develop Secured Data Fabric solutions. These recent developments highlight the company's strategic decisions to navigate its financial challenges.
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