Business Focus and Market Potential - HUB Cyber Security Ltd. reported a significant focus on two business lines: Confidential Computing and Secured Data Fabric, alongside Professional Services in cybersecurity[15] - The Confidential Computing market is projected to grow by 90-95% annually through 2026, indicating a strong demand for HUB's solutions[20] - The global confidential computing market was valued at $4.1 billion in 2022 and is projected to reach $184.5 billion by 2032, growing at a CAGR of 46.8% from 2023 to 2032[36] - HUB's zero trust Confidential Computing systems aim to protect data in use, addressing vulnerabilities that traditional cybersecurity solutions do not cover[19] - The Data Fabric solution aims to streamline data processing for large applications, reducing costs and risks associated with traditional ETL solutions[22] Financial Performance and Concerns - HUB anticipates continued net losses for the foreseeable future, raising concerns about its ability to operate as a going concern[7] - The company has identified material weaknesses in its internal control over financial reporting, which could impair its ability to produce accurate financial statements[7] - HUB is currently in default under certain debt obligations and needs to raise additional funds to execute its business plan[8] - The company has received a notice of delisting from Nasdaq, pending a hearing, which could impact its market presence[8] - For the six months ended June 30, 2024, the company's annual revenue decreased by $9,300,000 from $25,008,000 to $15,708,000, after neutralizing $5,704,000 from discontinued operation revenues[32] - Revenue for the six months ended June 30, 2024, was $15,708,000, a decrease of $9,300,000 or 37.2% compared to $25,008,000 in 2023[67] - Total net loss for the six months ended June 30, 2024, was $(26,363,000), a decrease of $38,123,000 or 59% compared to $(64,486,000) in 2023[66] Operational Metrics and Expenses - The company achieved a gross retention rate of 66% for customers generating over $15,708,000 in revenues over the trailing six months[32] - Gross profit increased to $1,496,000 for the six months ended June 30, 2024, compared to a loss of $(1,973,000) in 2023, representing an increase of $3,469,000 or 176%[73] - Research and development expenses for the six months ended June 30, 2024, were approximately 4% of revenue, with expectations for an increase in future periods[51] - Sales and marketing expenses as a percentage of revenue were approximately 17% for the six months ended June 30, 2024, with anticipated increases in future periods[55] - General and administrative expenses decreased significantly to $13,317,000 in 2024 from $35,937,000 in 2023, a reduction of $22,620,000 or 63%[76] - Operating loss improved to $(15,031,000) for the six months ended June 30, 2024, compared to $(59,559,000) in 2023, a decrease of $44,528,000 or 75%[66] Financing and Capital Structure - The company plans to finance operating costs over the next twelve months through equity and/or debt securities, reducing operating spend, and potentially divesting assets[92] - The company has engaged with potential investors for additional financing, but the outcome remains uncertain[96] - The Company has entered into March-June 2024 Notes with a total principal amount of $10 million, with repayment terms of 40% by August 10, 2024, and 60% by September 24, 2024[119] - The Company issued convertible notes totaling $3.1 million to accredited investors in late 2023, with a conversion rate capped at $2.50 or 75% of the average price of ordinary shares[123][124] - The Company also issued $550,000 in convertible notes to accredited investors in March 2024, with a conversion rate not lower than $1.50[125][126] - The Lind Financing agreement allows for up to $16,000,000 in secured convertible promissory notes and warrants to purchase ordinary shares[142] - The first tranche of the Lind Financing closed on May 8, 2023, with a purchase price of $6,000,000 and a principal amount of $7,200,000, including warrants for 2,458,210 ordinary shares[143] Future Outlook and Strategic Initiatives - The company plans to invest in growth in Europe and North America, targeting large enterprise customers and small to medium-sized businesses[53] - HUB's strategy includes expanding into new markets and enhancing its product offerings to adapt to the rapidly evolving cybersecurity landscape[6] - The company expects general and administrative expenses to increase due to costs associated with being a U.S. listed public company[56] - The company expects to increase its research and development efforts to produce confidential computing products, impacting future capital requirements[92]
HUB CYSEC(HUBCZ) - 2024 Q4 - Annual Report