HUBC Submits Annual Report on Form 20-F

 

UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549

 

FORM 20-F

 

(Mark
One)

☐ REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR SECTION 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

 

OR

 

☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For
the fiscal year ended December 31, 2025

 

OR

 

☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For
the transition period from         to         

 

OR

 

☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date
of event requiring this shell company report

 

Commission
file number: 001-41634

 

 

HUB
Cyber Security Ltd.

(Exact
name of Registrant as specified in its charter)

 

Not
Applicable

(Translation
of Registrant’s name into English)

 

State
of Israel

(Jurisdiction
of incorporation or organization)

 

30
Hacharoshet Street

Or
Yehuda, Israel

(Address
of principal executive offices)

 

Tuvia
Grossman

Chief
Legal Officer

+972-3-918-6066

 

HUB
Cyber Security Ltd.
30 Hacharoshet Street
Or Yehuda, Israel

(Name,
Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Securities
registered or to be registered, pursuant to Section 12(b) of the Act

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary shares, no par value		HUBC		Nasdaq Stock Market LLC
Warrants to purchase ordinary shares		HUBCW		Nasdaq Stock Market LLC
Warrants to purchase ordinary shares		HUBCZ		Nasdaq Stock Market LLC

 

Securities
registered or to be registered pursuant to Section 12(g) of the Act: None

 

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

 

 

Indicate
the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of the period
covered by the annual report. As of December 31, 2025, the registrant had 36,241,405 ordinary shares outstanding, no par value.
As of July 7, 2026, the registrant had 32,836,053 ordinary shares outstanding, no par value (adjusted for the 1-for-15 reverse split
effected on January 15, 2026, the 1-for-50 reverse split effected on April 20, 2026 and the 1-for-20 reverse split effected on June 5,
2026).

 

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

Yes ☐    No ☒

 

If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934.

 

Yes ☐    
No ☒

 

Note—Checking
the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 from their obligations under those Sections.

 

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒    
No ☐

 

Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).

 

Yes ☒    
No ☐

 

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☒		Emerging growth company	☒

 

If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report. ☐

 

If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐

 

Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

 

Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

  

☐ U.S. GAAP

☒

International Financial Reporting Standards as issued by the International Accounting Standards Board

☐ Other

 

If
“Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant
has elected to follow.

 

Item 17 ☐    
Item 18 ☐

 

If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).

 

Yes ☐    
No ☒

 

 

 

CONTENTS

 

ABOUT THIS ANNUAL REPORT		iii
PRESENTATION OF FINANCIAL AND OTHER INFORMATION		iv
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		v
PART I		1
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		1
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE		1
ITEM 3. KEY INFORMATION		1
A.	[Reserved.]	1
B.	Capitalization and Indebtedness	1
C.	Reasons for the Offer and Use of Proceeds	1
D.	Risk Factors	1
ITEM 4. INFORMATION ON THE COMPANY		58
A.	History and Development of the Company	58
B.	Business Overview	63
C.	Organizational Structure	72
D.	Property, Plants and Equipment	72
ITEM 4A. UNRESOLVED STAFF COMMENTS		73
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS		73
A.	Operating Results	73
B.	Liquidity and Capital Resources	82
C.	Research and Development, Patents and Licenses, Etc.	101
D.	Trend Information	101
E.	Critical Accounting Estimates	101
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		102
A.	Directors and Senior Management	102
B.	Compensation	104
C.	Board Practices	112
D.	Employees	125
E.	Share Ownership	126
F.	Disclosure of a registrant’s action to recover erroneously awarded compensation	126
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		126
A.	Major Shareholders	126
B.	Related Party Transactions	128
C.	Interests of Experts and Counsel	131
ITEM 8. FINANCIAL INFORMATION		131
A.	Consolidated Statements and Other Financial Information	131
B.	Significant Changes	133

 

 

ITEM 9. THE OFFER AND LISTING		133
A.	Offer and Listing Details	133
B.	Plan of Distribution	133
C.	Markets	133
D.	Selling Shareholders	133
E.	Dilution	133
F.	Expenses of the Issue	133
ITEM 10. ADDITIONAL INFORMATION		133
A.	Share Capital	133
B.	Memorandum and Articles of Association	133
C.	Material Contracts	134
D.	Exchange Controls	134
E.	Taxation	134
F.	Dividends and Paying Agents	147
G.	Statement by Experts	147
H.	Documents on Display	148
I.	Subsidiary Information	148
J.	Annual Report to Security Holders	148
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		148
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		148
PART II		149
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		149
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		149
ITEM 15. CONTROLS AND PROCEDURES		149
ITEM 16. [RESERVED]		151
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT		151
ITEM 16B. CODE OF ETHICS		151
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES		152
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES		152
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS		152
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT		153
ITEM 16G. CORPORATE GOVERNANCE		153
ITEM 16H. MINE SAFETY DISCLOSURE		154
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS		154
ITEM 16J. INSIDER TRADING POLICIES.		154
ITEM 16K. CYBERSECURITY.		154
PART III		156
ITEM 17. FINANCIAL STATEMENTS		156
ITEM 18. FINANCIAL STATEMENTS		156
ITEM 19. EXHIBITS.		156
SIGNATURES		164
INDEX		F-1

 

 

ABOUT
THIS ANNUAL REPORT

 

Except
where the context otherwise requires or where otherwise indicated in this Annual Report, the terms “HUB Cyber Security Ltd.,”
“HUB,” the “Company,” “we,” “us,” “our,” “our company” and “our
business” refer to HUB Cyber Security Ltd. and its subsidiaries.

 

All
references in this Annual Report to “Business Combination” refer to the transactions effected under the merger agreement,
dated as of March 23, 2022 (the “RNER Merger Agreement”), by and among Mount Rainier Acquisition Corp., a Delaware corporation
(“RNER”), HUB and Rover Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of HUB (“RNER Merger
Sub”). Pursuant to the RNER Merger Agreement, RNER Merger Sub merged with and into RNER, with RNER surviving the merger. Upon consummation
of the Business Combination and the other transactions contemplated by the RNER Merger Agreement on February 28, 2023, RNER became a
wholly owned subsidiary of HUB.

 

All
references in this Annual Report to “Israeli currency” and “NIS” refer to New Israeli Shekels, the terms “dollar,”
“USD” or “$” refer to U.S. dollars and the terms “€” or “euro” refer to the currency
introduced at the start of the third stage of European economic and monetary union pursuant to the treaty establishing the European Community,
as amended.

 

All
information in this Annual Report on Form 20-F relating to shares or price per share reflects the 1-for-10 reverse share splits effected
by us on March 28, 2025, the 1-for-15 reverse share split effected by us on January 15, 2026, the 1-for-50 reverse share split effected
by us on April 20, 2026 and the 1-for-20 reverse share split effected by us on June 5, 2026.

 

 

PRESENTATION
OF FINANCIAL AND OTHER INFORMATION

 

Our
financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the IASB (“IFRS”).
We present our consolidated financial statements in U.S. dollars.

 

Our
fiscal year ends on December 31 of each year. References to fiscal 2024 and 2024 are references to the fiscal year
ended December 31, 2024 and references to fiscal 2025 and 2025 are references to the fiscal year ended December 31, 2025.

 

Market
and Industry Data

 

Unless
otherwise indicated, information contained in this Annual Report concerning our industry and the regions in which we operate, including
our general expectations and market position, market opportunity, market share and other management estimates, is based on information
obtained from various independent publicly available sources and other industry publications, surveys and forecasts, which we believe
to be reliable based upon our management’s knowledge of the industry. We assume no liability for the accuracy and completeness
of such information to the extent included in this Annual Report. Such assumptions and estimates of our future performance and growth
objectives and the future performance of our industry and the markets in which we operate are necessarily subject to a high degree of
uncertainty and risk due to a variety of factors, including those discussed under the headings “Cautionary Statement Regarding
Forward-Looking Statements” Item 3.D. “Key Information—Risk Factors”
and Item 5. “Operating and Financial Review and Prospects” in this Annual Report.

 

Certain
monetary amounts, percentages and other figures included in this Annual Report have been subject to rounding adjustments. Certain
other amounts that appear in this Annual Report may not sum due to rounding. Revenue shown throughout this Annual Report is revenue from
continuing operations, unless otherwise stated.

 

Unless
otherwise noted, in this Annual Report we cite a source the first time a statement relying upon that source is made, and do not include
citations subsequently when that statement is repeated.

 

Trademarks

 

This
Annual Report contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks,
trade names and service marks referred to in this Annual Report may appear without the ® or TM symbols, but such references are not
intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights
to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service
marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

 

CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

In
addition to historical facts, this Annual Report contains forward-looking statements within the meaning of Section 27A of the U.S.
Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the U.S. Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
These forward-looking statements are principally contained in the sections entitled Item 3.D. “Key Information—Risk
Factors,” Item 4. “Information on the Company,” and Item 5. “Operating and Financial Review and Prospects.”
In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “might,”
“will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,”
“intend,” “seek,” “believe,” “estimate,” “predict,” “potential,”
“continue,” “contemplate,” “possible” or similar words. Statements regarding our future results of
operations and financial position, growth strategy and plans and objectives of management for future operations, including, among others,
expansion in new and existing markets, are forward-looking statements.

 

Forward-looking
statements involve a number of risks, including potential impairments, uncertainties and assumptions, and actual results or events may
differ materially from those projected or implied in those statements. Important factors that could cause such differences include, but
are not limited to: 

 

●

Our liquidity issues and our defaults under outstanding debt may force us to seek bankruptcy or insolvency court protection, which could materially adversely affect our business and operations.

 

●

We are a company with a history of net losses and anticipate that we may incur net losses for the foreseeable future. Moreover, our independent registered public accounting firm’s report, contained herein, includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to continue to operate in the future.

 

●

We have financed our operations and certain capital needs through various debt, convertible debt and equity issuances. Our existing and future debt obligations could impair our liquidity and financial condition. If we are unable to negotiate a solution for the payment of our outstanding debt or otherwise meet our debt obligations, the lenders could foreclose on our assets which could cause us to curtail or cease operations or have an adverse impact on our business, results of operations and financial condition and the price of our ordinary shares.

 

●

Conversions of our outstanding convertible debt at substantially discounted prices have caused, and may continue to cause, severe dilution to our existing shareholders and downward pressure on the market price of our ordinary shares.

 

●

We have not been able to consistently remain in compliance with the continued listing standards of the Nasdaq Stock Market LLC (“Nasdaq”). The persistence of such failure could result in a delisting of our securities, which could significantly impair the liquidity and market price of our ordinary shares.

 

●

Our previous reverse share splits, and any future reverse share splits, may decrease the liquidity of our ordinary shares and have a dilutive effect on the ownership of our existing shareholders, and we cannot assure you that any future reverse share split will result in a sustained increase in the market price of our ordinary shares.

 

●

Our ordinary shares could be subject to the “penny stock” rules in the future, which would impose additional sales practice requirements on broker-dealers and could severely limit the market price and liquidity of our ordinary shares.

 

 

●

We will need to raise additional funds in the near future in order to execute our business plan and these funds may not be available to us when we need them. If we cannot raise additional funds when we need them, our business, prospects, financial condition and operating results could be negatively affected.

 

●

We have identified material weaknesses in our internal control over financial reporting. If our remediation of the material weaknesses is not effective, or we fail to develop and maintain effective internal controls over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

 

	●	Our previously disclosed internal investigation was initiated to review allegations of misappropriation of Company funds and other potential fraudulent actions regarding the use of Company funds by a former senior officer of the Company. As a result of or in connection with the matters that were the subject of the investigation, we have been and may continue to be subject to certain regulatory scrutiny. In January 2026, the Israel Securities Authority concluded its investigation and transferred its investigation file to the Tel Aviv District Attorney’s Office for resolution. The outcome of any proceedings could have a material adverse effect on our business, financial condition and results of operations.
	●	An inability to attract new customers, retain existing customers and sell additional services to customers could adversely impact our revenue and results of operations.

 

●

Actions that we have taken or may take to reduce costs and rebalance investments may not result in anticipated savings or operational efficiencies, could result in total costs and expenses that are greater than expected, and could disrupt our business.

 

●

Our limited operating history makes it difficult to evaluate our business and future prospects and increases the risk of your investment.

 

●

Competition in the market for technology solutions, in general, is intense. If we are unable to compete effectively, our business, financial condition and results of operations could be harmed.

  

●

Our ability to introduce new products, features, integrations and enhancements is dependent on adequate research and development resources.

 

●

If we are unable to acquire large enterprise customers or sell additional products and services to our existing customers, our future revenues and operating results will be harmed.

 

●

We currently have and target many customers that are large corporations and government entities, which are subject to a number of challenges and risks, such as increased competitive pressures, administrative delays and additional approval requirements.

 

●

Certain members of our management team have limited experience managing a U.S. listed publicly traded company.

 

 

●

Uncertainties related to our recent management changes may adversely affect our business, strategy and financial results.

 

●

Our business relies on the performance of, and we face stark competition for, highly skilled personnel, including our management, other key employees and qualified employees, and the loss of one or more of such personnel or of a significant number of our team members or the inability to attract and retain executives and qualified employees we need to support our operations and growth, could harm our business.

 

●

Changes in tax laws or exposure to additional income tax liabilities could affect our future net profitability.

 

●

Our reputation and business could be harmed based on real or perceived shortcomings, defects or vulnerabilities in our solutions or if our internal systems or customers experience security breaches, which could have a material adverse effect on our business, reputation and operating results.

 

●

We incorporate artificial intelligence (AI) and machine learning (ML) into some of our services. This technology is new and developing and may present both compliance and reputational risks.

 

●

Undetected defects and errors may increase our costs and impair the market acceptance of our products and solutions.

 

●

We may not be able to adequately protect or enforce our intellectual property rights or prevent unauthorized parties from copying or reverse engineering our products or technology. Our efforts to protect and enforce our intellectual property rights and prevent third parties from violating our rights may be costly.

 

●

The dynamic regulatory environment around privacy and data protection may limit our offering or require modification of our products and services, which could limit our ability to attract new customers and support our existing customers and increase our operational expenses. We could also be subject to investigations, litigation, or enforcement actions alleging that we fail to comply with the regulatory requirements, which could harm our operating results and adversely affect our business.

 

●

We may be required to indemnify our directors and officers in certain circumstances.

 

●

A market for our securities may not be sustained, which would adversely affect the liquidity and price of our securities.

 

●

We are subject to a securities class action and other litigations and could be subject to additional litigation in the United States, Israel or elsewhere that could negatively impact our business, including resulting in substantial costs and liabilities. Specifically, we are subject to a pending lawsuit in the Supreme Court of the State of New York relating to our 2023 de-SPAC merger seeking damages of not less than $5.08 million, plus interest, attorneys’ fees and costs, and the plaintiff has filed a motion for entry of a default judgment, the entry of which could have a material adverse effect on our business, financial condition, results of operations and liquidity

 

●

Class action litigation due to stock price volatility or other factors could cause us to incur substantial costs and divert management’s attention and resources.

 

 

●

The market price and trading volume of our ordinary shares and warrants on Nasdaq has been extremely volatile and could decline significantly.

 

●

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below expectations of securities analysts and investors, resulting in a decline in our stock price.

 

●

Provisions of Israeli law and our articles of association may delay, prevent or make difficult an acquisition of us, prevent a change of control, and negatively impact our share price.

 

●

Our ordinary shares and warrants may not continue to be listed on a national securities exchange, which could limit investors’ ability to make transactions in such securities and subject us to additional trading restrictions.

 

●

If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our ordinary shares adversely, then the price and trading volume of our ordinary shares could decline.

 

●

As we are a “foreign private issuer” and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

 

●

Conditions in Israel, including the war between Israel and Hamas, Hezbollah and Iran could materially and adversely affect our business.

 

●

It may be difficult to enforce a U.S. judgment against us, our officers and directors and the Israeli experts named in this Annual Report in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors and these experts.

 

●

We may issue additional ordinary shares or other equity securities without seeking approval of our shareholders, which would dilute the ownership interests represented by our ordinary shares and may depress the market price of our ordinary shares.

 

●

We may not realize any value from the Evofem Notes and Purchase Rights, and the securities we issued as consideration for the Evofem Notes and Purchase Rights may prove to have been issued for assets that are ultimately worthless.

 

●

The Evofem Notes are unsecured, deeply subordinated junior obligations, and any cash recovery is remote.

 

●

Our ability to convert the Evofem Notes and exercise the Purchase Rights is subject to significant limitations although conversion or exercise (and subsequent sale of the resulting shares of Evofem common stock) is effectively our principal potential path to receiving value.

 

 

●

Even if we obtain shares of Evofem common stock, we may be unable to sell them at attractive prices or at all.

 

●

We issued a very large number of ordinary shares and Pre-Funded Warrants as consideration in the Evofem Transaction, resulting in substantial dilution to our shareholders, potentially in exchange for assets that may yield no return.

 

●

The pre-funded warrants issued in the Evofem Transaction cannot be exercised in full unless our shareholders approve the exercise and an increase in our authorized share capital, and such approval may not be obtained.

 

●

Future sales, or the perception of future sales, of the Consideration Shares could depress the market price of our ordinary shares.

 

●

We do not control Evofem, we have limited rights and limited information as a noteholder, and Evofem’s own disclosure and control environment present risks.

 

●

If our investment securities become a significant portion of our total assets, we could be deemed an investment company under the Investment Company Act of 1940, which could materially restrict our business.

 

Our
estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends which
affect or may affect our business, operations and industry. Although we believe that these estimates and forward-looking statements are
based upon reasonable assumptions, they are subject to numerous risks and uncertainties.

 

These
forward-looking statements are subject to a number of known and unknown risks, uncertainties, other factors and assumptions, including
the risks described in Item 3.D “Key Information—Risk Factors” and elsewhere in this Annual Report.

 

You
should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained
in this Annual Report primarily on our current expectations and projections about future events and trends that we believe may affect
our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject
to risks, uncertainties and other factors described in the section titled “Risk factors” and elsewhere in this Annual Report.
Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and
it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained
in this Annual Report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur,
and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

 

In
addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These
statements are based on information available to us as of the date of this Annual Report. While we believe that information provides
a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate
that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain,
and investors are cautioned not to unduly rely on these statements. We qualify all of our estimates and forward-looking statements by
these cautionary statements.

 

The
forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake
no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances after the date of
this Annual Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually
achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on
our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers,
dispositions, joint ventures or investments. 

 

 

PART I

 

Item 1.
Identity of Directors, Senior Management and Advisers

 

Not
applicable.

 

Item 2.
Offer Statistics and Expected Timetable

 

Not
applicable.

 

Item 3.
Key Information

 

A.
[Reserved.]

 

B.
Capitalization and Indebtedness

 

Not
applicable.

 

C.
Reasons for the Offer and Use of Proceeds

 

Not
applicable.

 

D.
Risk Factors

 

You
should carefully consider the risks described below before making an investment decision. Additional risks not presently known to
us or that we currently deem immaterial may also impair our business operations. Our business, financial condition or results of
operations could be materially and adversely affected by any of these risks. The trading price and value of our ordinary shares could decline
due to any of these risks, and you may lose all or part of your investment. This Annual Report also contains forward-looking statements
that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including the risks faced by us described below and elsewhere in this Annual Report. See “Cautionary
Statement Regarding Forward-Looking Statements” on page v of this Annual Report. Such risks include, but are not limited to:

 

Summary
Risk Factors

 

Risks
Related to Our Ability to Continue as a Going Concern, Our Internal Controls, Nasdaq Compliance, Financing and Related Matters

 

●

Our liquidity issues and our defaults under outstanding debt may force us to seek bankruptcy or insolvency court protection, which could materially adversely affect our business and operations.

 

●

We financed our operations and certain capital needs through various debt, convertible debt and equity issuances. Our existing and future debt obligations could impair our liquidity and financial condition. We are currently in default under certain of our debt obligations. If we are unable to negotiate a solution for the payment of our outstanding debt or otherwise meet our debt obligations, the lenders could foreclose on our assets which could cause us to curtail or cease operations or have an adverse impact on our business, results of operations and financial condition and the price of our ordinary shares.

 

 

●

All of our debt obligations have priority over our ordinary shares with respect to payment in the event of liquidation, dissolution or winding up, and there can be no assurance that any value would remain for the holders of our ordinary shares in such an event.

 

●

We are a company with a history of net losses and anticipate that we may incur net losses for the foreseeable future and may never be profitable. Moreover, our independent registered public accounting firm’s report, contained herein, includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to continue to operate in the future.

 

●

Conversions of our outstanding convertible debt at substantially discounted prices have caused, and may continue to cause, severe dilution to our existing shareholders and downward pressure on the market price of our ordinary shares.

 

●

We have not been able to consistently remain in compliance with the continued listing standards of the Nasdaq. The persistence of such failure could result in a delisting of our securities, which could significantly impair the liquidity and market price of our ordinary shares.

 

●

Our previous reverse share splits, and any future reverse share splits, may decrease the liquidity of our ordinary shares and have a dilutive effect on the ownership of our existing shareholders, and we cannot assure you that any future reverse share split will result in a sustained increase in the market price of our ordinary shares.

 

●

Our ordinary shares could be subject to the “penny stock” rules in the future, which would impose additional sales practice requirements on broker-dealers and could severely limit the market price and liquidity of our ordinary shares.

 

●

We will need to raise additional funds in the near future in order to execute our business plan and these funds may not be available to us when we need them. If we cannot raise additional funds when we need them, our business, prospects, financial condition and operating results could be negatively affected.

 

●

We have identified material weaknesses in our internal control over financial reporting. If our remediation of the material weaknesses is not effective, or we fail to develop and maintain effective internal controls over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

 

●

Our previously disclosed internal investigation was initiated to review allegations of misappropriation of Company funds and other potential fraudulent actions regarding the use of Company funds by a former senior officer of the Company. In January 2026, the Israel Securities Authority concluded its related investigation and transferred the investigation file to the Tel Aviv District Attorney’s Office (Taxation and Economic Crimes) for a resolution, the status of which remains uncertain. We are unable to predict the effectiveness of any remediation measures recommended by the Special Committee.  In addition, we have incurred and may continue to incur substantial costs in connection with the internal investigation, which could have a material adverse effect on our business, financial condition and results of operations.

 

 

Risks
Related to Our Business and Industry 

 

●

An inability to attract new customers, retain existing customers and sell additional services to customers could adversely impact our revenue and results of operations.

 

●

Actions that we have taken or may take to reduce costs and rebalance investments may not result in anticipated savings or operational efficiencies, could result in total costs and expenses that are greater than expected, and could disrupt our business.

 

●

Our limited operating history makes it difficult to evaluate our business and prospects and increases the risk of your investment.

 

●

Competition in the market for technology solutions, in general, is intense. If we are unable to compete effectively, our business, financial condition and results of operations could be harmed.

 

●

Our ability to introduce new products, features, integrations and enhancements is dependent on adequate research and development resources.

 

●

If we are unable to acquire large enterprise customers or sell additional products and services to our existing customers, our future revenues and operating results will be harmed.

 

●

We currently have and target many customers that are large corporations and government entities, which are subject to a number of challenges and risks, such as increased competitive pressures, administrative delays and additional approval requirements.

 

●

We have not fully succeeded to execute, integrate or realize the benefits expected from acquisitions, which may require significant management attention, disrupt our business and adversely affect our results of operations.

 

●

The market for our solutions may not continue to grow.

 

●

Our operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.

 

●

Certain members of our management team have limited experience managing a U.S. listed publicly traded company.

 

●

Due to our limited resources, we may be forced to focus on a limited number of commercial opportunities which may force us to pass on opportunities that could have a greater chance of success.

 

 

●

Uncertainties related to our recent management changes may adversely affect our business, strategy and financial results.

 

●

Our business relies on the performance of, and we face stark competition for, highly skilled personnel, including our management and other key employees, and the loss of one or more of such personnel or of a significant number of our team members or the inability to attract and retain executives and qualified employees we need to support our operations and growth, could harm our business.

 

●

Prolonged economic uncertainties or downturns in certain regions or industries could materially adversely affect our business.

 

●

Our sales and operations in international markets expose us to operational, financial and regulatory risks.

 

●

Changes in tax laws or exposure to additional income tax liabilities could affect our future profitability.

 

●

Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between forecasted and actual tax rates.

 

●

Fluctuations in currency exchange rates could harm our operating results and financial condition.

 

Risks
Related to Our Systems and Technology

 

●

Our reputation and business could be harmed based on real or perceived shortcomings, defects or vulnerabilities in our solutions or if our internal systems or customers experience security breaches, which could have a material adverse effect on our business, reputation and operating results.

 

●

We incorporate artificial intelligence (AI) and machine learning (ML) into some of our services. This technology is new and developing and may present both compliance and reputational risks.

 

●

Undetected defects and errors may increase our costs and impair market acceptance of our products and solutions.

 

●

Interruption or failure of our information technology and communications systems could impact our ability to effectively provide our products and services.

 

●

We may incorporate third-party technologies in our products, which would make us dependent on the providers of these technologies and exposes us to potential intellectual property claims.

 

●

If our products do not effectively interoperate with our customers’ existing or future IT infrastructures, implementations of our products could be delayed or canceled, which could harm our business.

 

 

Risks
Related to Our Intellectual Property 

 

●

Our proprietary rights may be difficult to enforce, which could enable others to copy or use aspects of our products without compensating us.

 

●

We may not be able to adequately protect or enforce our intellectual property rights or prevent unauthorized parties from copying or reverse engineering our products or technology. Our efforts to protect and enforce our intellectual property rights and prevent third parties from violating our rights may be costly.

 

●

Third-party claims that we are infringing intellectual property, whether successful or not, could subject us to costly and time-consuming litigation or expensive licenses, and our business could be adversely affected.

 

●

Certain of our products contain third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to sell our products or expose us to other risks.

 

●

We rely on unpatented proprietary technology, trade secrets, designs, experiences, workflows, data, processes, software, and know-how.

 

Risks
Related to Our Legal and Regulatory Environment 

 

●

We are subject to a securities class action and other litigations and could be subject to additional litigation in the United States, Israel or elsewhere that could negatively impact our business, including resulting in substantial costs and liabilities. Specifically, we are subject to a pending lawsuit in the Supreme Court of the State of New York relating to our 2023 de-SPAC merger seeking damages of not less than $5.08 million, plus interest, attorneys’ fees and costs, and the plaintiff has filed a motion for entry of a default judgment, the entry of which could have a material adverse effect on our business, financial condition, results of operations and liquidity.

 

●

The dynamic regulatory environment around privacy and data protection may limit our offering or require modification of our products and services, which could limit our ability to attract new customers and support our existing customers and increase our operational expenses. We could also be subject to investigations, litigation, or enforcement actions alleging that we fail to comply with the regulatory requirements, which could harm our operating results and adversely affect our business.

 

●

Failure to comply with applicable economic sanctions laws and regulations could harm our business.

 

●

Our business may be affected by sanctions, export controls and similar measures targeting Russia and other countries and territories as well as other responses to Russia’s military conflict in Ukraine, including indefinite suspension of operations in Russia and dealings with Russian entities by many multi-national businesses across a variety of industries.

 

 

●

We are subject to complex, evolving regulatory requirements that may be difficult and expensive to comply with and that could negatively impact our business.

 

●

We are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation.

 

●

If we fail to comply with environmental requirements, our business, financial condition, operating results and reputation could be adversely affected.

 

●

Scrutiny of sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs or otherwise adversely impact our business.

 

●

Our business could be negatively affected as a result of the actions of activist shareholders, and such activism could impact the trading value of our securities.

 

●

We may be required to indemnify our directors and officers in certain circumstances.

 

●

Our current and future cash balances and any investment portfolio we may have may be adversely affected by market conditions and interest rates.

 

Risks
Related to Being a U.S. Listed Public Company

 

●

We continue to incur significant costs as a result of operating as a U.S. listed public company, and our management needs to devote substantial time to compliance initiatives.

 

●

A market for our securities may not be sustained, which would adversely affect the liquidity and price of our securities.

 

●

If we fail to remediate our material weaknesses or if we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

 

Risks
Related to Ownership of Our Ordinary Shares and Warrants  

 

●

The market price and trading volume of our ordinary shares and warrants on Nasdaq has been extremely volatile and could decline significantly.

 

●

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below expectations of securities analysts and investors, resulting in a decline in our share price.

 

 

●

We do not intend to pay dividends for the foreseeable future. Accordingly, you may not receive any return on investment unless you sell your HUB ordinary shares for a price greater than the price you paid for them.

 

●

Our actual financial results may differ materially from any guidance we may publish from time to time.

 

●

If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our ordinary shares or warrants adversely, then the price and trading volume of our ordinary shares could decline.

 

●

We are eligible to be treated as an emerging growth company, as defined in the Securities Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors because we may rely on these reduced disclosure requirements.

 

●

We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

 

●

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

 

●

As we are a “foreign private issuer” and follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

 

●

We are subject to ongoing reporting obligations and potential penalties under the Israeli Securities Law.

 

●

Our Articles provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims arising under the Securities Act.

 

●

We may issue additional ordinary shares or other equity securities without seeking approval of our shareholders, which would dilute your ownership interests and may depress the market price of our ordinary shares and warrants.

 

●

Issuances of our ordinary shares have, and in the future may continue to significantly dilute the holdings of existing shareholders, and future resales of our ordinary shares may cause the market price of our ordinary shares and warrants to drop significantly, even if our business is doing well.

 

●

If we or any of our subsidiaries are characterized as a Passive Foreign Investment Company (“PFIC”) for U.S. federal income tax purposes, U.S. Holders may suffer adverse tax consequences.

 

●

If a U.S. Holder is treated as owning at least 10% of our stock, such U.S. Holder may be subject to adverse U.S. federal income tax consequences.

 

●

As a result of the Business Combination, the IRS may not agree that we should be treated as a non-U.S. corporation for U.S. federal income tax purposes.

 

 

Risks
Related to Our Incorporation and Operations in Israel

 

●

Conditions in Israel could materially and adversely affect our business.

 

●

As a public company incorporated in Israel, we may become subject to further compliance obligations and market trends or restrictions, which may strain our resources and divert management’s attention.

 

●

Our Articles and Israeli law could prevent a takeover that shareholders consider favorable and could also reduce the market price of our ordinary shares.

 

●

Provisions of Israeli law and the Articles may delay, prevent or make difficult an acquisition of HUB, prevent a change of control, and negatively impact our share price.

 

●

We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.

 

●

Certain tax benefits that may be available to us, if obtained, would require us to continue to meet various conditions and such benefits may be terminated or reduced in the future, which could increase our costs and taxes.

 

●

It may be difficult to enforce a U.S. judgment against us, our officers and directors and the Israeli experts named in this Annual Report in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors and these experts.

 

●

Your rights and responsibilities as a shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.

 

●

The Articles provide that unless we consent otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes between us and our shareholders under the Companies Law and the Israeli Securities Law.

 

●

We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the combined company’s ordinary share price, which could cause the price of our shares to fall and shareholders to lose some or all of their investment.

 

Risk
Factors Relating to the Evofem Transaction

 

●

We may not realize any value from the Evofem Notes and Purchase Rights, and the securities we issued as consideration for the Evofem Notes and Purchase Rights may prove to have been issued for assets that are ultimately worthless.

 

 

●

The Evofem Notes are unsecured, deeply subordinated junior obligations, and any cash recovery is remote.

 

●

Our ability to convert the Evofem Notes and exercise the Purchase Rights is subject to significant limitations although conversion or exercise (and subsequent sale of the resulting shares of Evofem common stock) is effectively our principal potential path to receiving value.

 

●

Even if we obtain shares of Evofem common stock, we may be unable to sell them at attractive prices or at all.

 

●

We issued a very large number of ordinary shares and Pre-Funded Warrants as consideration in the Evofem Transaction, resulting in substantial dilution to our shareholders, potentially in exchange for assets that may yield no return.

 

●

The pre-funded warrants issued in the Evofem Transaction cannot be exercised in full unless our shareholders approve the exercise and an increase in our authorized share capital, and such approval may not be obtained.

 

●

Future sales, or the perception of future sales, of the Consideration Shares could depress the market price of our ordinary shares.

 

●

We do not control Evofem, we have limited rights and limited information as a noteholder, and Evofem’s own disclosure and control environment present risks.

 

●

If our investment securities become a significant portion of our total assets, we could be deemed an investment company under the Investment Company Act of 1940, which could materially restrict our business.

 

Risks
Related to Our Ability to Continue as a Going Concern, Our Internal
Controls, Nasdaq Compliance, Financing and Related Matters

 

Our
liquidity issues and our defaults under outstanding debt may force us to seek bankruptcy or insolvency court protection, which could
materially adversely affect our business and operations.

 

Due
to the uncertainty about our ability to obtain sufficient cash to service current and future liabilities, there is a risk that, among
other things: (i) third parties’ confidence in our ability to develop, market and deliver our solutions could be adversely impacted,
which could impair our ability to execute on our business strategy; (ii) it may become more difficult to retain, attract or replace key
employees; (iii) employees could be distracted from performance of their duties or more easily attracted to other career opportunities;
and (iv) our suppliers, vendors and service providers could renegotiate the terms of our arrangements, terminate their relationship with
us or require financial assurances from us. As of the date of this Annual Report, two motions to declare us and our subsidiary, Comsec
Ltd., insolvent have been submitted to court, and we are currently in breach of a court-approved settlement with the unsecured creditors
of Comsec. While we are in the process of seeking to remove these motions and to resolve the breach, there can be no assurance that we
will be successful in doing so.

 

 

Seeking
bankruptcy or insolvency court protection could have a material adverse effect on our business, financial condition, results of operations
and liquidity. For as long as a bankruptcy or insolvency proceeding continued, our senior management would be required to spend a significant
amount of time and effort dealing with the reorganization instead of focusing on our business operations. Bankruptcy or insolvency court
protection also could make it more difficult to retain management and other key personnel necessary to the success and growth of our
business. In addition, during the period of time we are involved in such a proceeding, our customers and suppliers might lose confidence
in our ability to reorganize our business successfully and could seek to establish alternative commercial relationships. We are currently
evaluating strategic alternatives to address our liquidity issues, but we cannot assure you that any of our strategies will yield sufficient
funds to meet our working capital or other liquidity needs, and any such alternative measures may be unsuccessful or may not permit us
to meet scheduled obligations, which could cause us to default on our obligations. As a result, we may seek bankruptcy or insolvency
court protection to continue our efforts to restructure our business and capital structure and may have to liquidate our assets and may
receive less than the value at which those assets are carried on our consolidated financial statements.

 

We
financed our operations and certain capital needs through various debt, convertible debt and equity issuances. Our existing and future
debt obligations could impair our liquidity and financial condition. We are currently in default under certain of our debt obligations.
If we are unable to negotiate a solution for the payment of our outstanding debt or otherwise meet our debt obligations, the lenders
could foreclose on our assets which could cause us to curtail or cease operations or have an adverse impact on our business, results
of operations and financial condition and the price of our ordinary shares.

 

We are currently in default
under certain of our convertible loans totaling approximately $43 million and under certain of our debt obligations totaling approximately
$7 million. Upon an event of default under our outstanding debt, the holders of such debt may exercise all rights and remedies available
under the terms of the notes or applicable laws.

 

We
are currently in discussions with certain holders of the outstanding debt regarding possible solutions for the payment of the overdue
amortization payments, including the possible extension of the outstanding obligations and, in some cases, extinguishing the entire loan.
However, there can be no assurance that our discussions will be successful and, if we are not successful in finding an acceptable resolution
to the existing default or the impending event of default, the holders of the outstanding debt will be able to seek judgement for the
full amount due and may seek to foreclose on our assets, which would adversely affect our business or possibly force us to cease operations
and commence liquidation proceedings. Our debt and financial obligations:

 

●

impair our liquidity;

 

●

make it more difficult for us to satisfy our other obligations;

 

●

require us to dedicate cash flow to payments on our debt and financial obligations, which reduces the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements;

 

●

imposes restrictions on our ability to incur other indebtedness, grant liens on our assets, and impedes us from obtaining additional financing in the future for working capital, capital expenditures, acquisitions and general corporate purposes;

 

 

●

adversely affects our ability to enter into strategic transactions, public or private equity offerings, and similar agreements, or requires us to obtain the consent to enter into such transactions;

 

●

makes us more vulnerable in the event of a downturn in our business prospects and limits our flexibility to plan for, or react to, changes in our industry and markets; and

 

●

places us at a competitive disadvantage when compared to our competitors.

 

In
addition, since January 1, 2026, outstanding debt was converted into approximately 4,591,633 of our ordinary shares (post-reverse splits).
The conversion of such substantial amounts of the outstanding debt into ordinary shares has caused significant dilution to the ownership
interests of our existing shareholders and may continue to do so in the future. Sales in the public market of our ordinary shares issuable
upon such conversion has adversely affected prevailing market prices of our ordinary shares and required us to effect multiple reverse
splits in order to maintain the Nasdaq minimum bid price requirement. In addition, the existence of the outstanding debt may encourage
short selling by market participants because the conversion of the outstanding debt would likely depress the price of our ordinary shares.

 

All
of our debt obligations have priority over our ordinary shares with respect to payment in the event of liquidation, dissolution or winding
up, and there can be no assurance that any value would remain for the holders of our ordinary shares in such an event.

 

If
we were to liquidate, dissolve or wind up, our ordinary shares would rank below all debt claims against us. As a result, holders of our
ordinary shares will not be entitled to receive any payment or other distribution of assets upon our liquidation, dissolution or winding
up until after all of our obligations to our debt holders have been satisfied. Our outstanding convertible debt is secured by, among
other things, charges on our assets, and if we are unable to repay outstanding borrowings when due, the holders of such debt may have
the right to proceed against the collateral securing such indebtedness. As of the date of this Annual Report, two motions have been submitted
to court to declare us and our subsidiary, Comsec Ltd., insolvent, and we are in default under certain of our outstanding debt. If we
are forced to seek bankruptcy or insolvency court protection, or if any of our significant obligations are accelerated, holders of our
ordinary shares could lose all or substantially all of their investment in us.

 

We
are a company with a history of net losses and anticipate that we may incur net losses for the foreseeable future and may never be profitable.
Moreover, our independent registered public accounting firm’s report, contained herein, includes an explanatory paragraph that
expresses substantial doubt about our ability to continue as a going concern, indicating the possibility that we may not be
able to continue to operate in the future.

 

We
have incurred net losses each year since our inception, including net losses (including discontinued operations) of approximately $119.8
million, $39.0 million and $86.6 million in the years ended December 31, 2025, 2024 and 2023, respectively. In addition, we
may continue to incur net losses for the foreseeable future, and we may not achieve or maintain profitability in the future. Because
the market for our network security solutions and products is rapidly evolving and has not yet reached widespread adoption, it is difficult
for us to predict our future results of operations or the limits of our market opportunity. We cannot be certain when, if ever, we will
become profitable. Even if we were to become profitable, we might not be able to sustain such profitability on a quarterly or annual
basis.

 

 

We
continue to generate negative cash flow, requiring constant and immediate cash injections to continue to operate, failing to meet obligations
as they become due, including financial, suppliers debts and other ordinary course of operations costs. In addition, and as a result
of our ongoing operating losses, we had outstanding liabilities that could not be met by our revenues, including payments due to our
debt holders, vendors and service providers and government duties, which has led to legal action against us and attachments being placed
on certain of our bank accounts. During certain periods in 2024 and 2025, we were unable to make required deposits in employee pension
and severance funds, which were later paid and settled and payments due for certain periods in 2025 and 2026 were paid in June 2026.
Furthermore, we have been unable to fully pay required withholding taxes on employee compensation payments and government fees. Certain
of our subsidiaries also did not make timely tax filings with the ITA for several years. We have reached a settlement agreement with
the unsecured creditors of Comsec (although we are currently in breach of the settlement arrangement) and are in the process of removing
two motions that were submitted to court to declare the Company and Comsec as insolvent. We apply the law with respect to all aspects
of the employment of our employees including with respect to hiring and termination procedures, equal opportunity and anti-discrimination
laws and other conditions of employment. In many cases, the terms of employment of our employees exceed the minimum required under Israeli
labor laws including, but not limited to, with respect to the minimum wage, vacation days, retirement savings and sick days. We have
recently transferred amounts to cover outstanding liabilities and are working to make payments for outstanding liabilities to governmental
institutions such as social security and the Israeli National Insurance Institute. For more information about these motions, see “Item
8.A – Consolidated Statements and Other Financial Information” and Note 22 to our audited consolidated financial statements
for the year ended December 31, 2025 included in this Annual Report.

 

Primarily
because of our losses incurred to date and our expected continued future losses, our independent registered public accounting firm has
included in its report an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Our ability
to continue as a going concern is contingent upon, among other factors, the sale of ordinary shares to obtain additional funding to support
our operations and/or obtaining alternate financing and the ability to cure our outstanding defaults or that these obligations may be
negotiated on terms that are favorable to us, if at all. Management currently believes that it will be necessary for us to secure additional
funds to continue our existing business operations and to fund our obligations. We have raised and will continue to seek to raise additional
funds during 2026 through a variety of equity and/or debt financing arrangements; however, there can be no assurance that we will be
able to obtain funds on commercially acceptable terms, if at all. If we cannot generate sufficient revenues, reduce cost and/or secure
additional financing on acceptable terms, we may be required to, among other things, alter our business strategy, significantly curtail
or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. See “—We will need
to raise additional funds in the near future in order to execute our business plan and these funds may not be available to us when we
need them. If we cannot raise additional funds when we need them, our business, prospects, financial condition and operating results
could be negatively affected” below for additional information.

 

If
we are unable to obtain funding, refinance or restructure our existing obligations, or otherwise improve our liquidity, we may not be
able to service our liabilities when they become due. As of the date of this Annual Report, two motions have been submitted to court
to declare us and our subsidiary, Comsec Ltd., insolvent, and we are currently in breach of a court-approved settlement with the unsecured
creditors of Comsec. While we are pursuing the removal of these motions and a resolution of the breach, there can be no assurance of
a successful outcome. If any of our significant obligations are accelerated, we may not be able to repay the obligations that become
immediately due and would face severe liquidity constraints. We are currently evaluating strategic alternatives to address our liquidity
issues, but we cannot assure you that any of our strategies will yield sufficient funds to meet our working capital or other liquidity
needs, and any such alternative measures may be unsuccessful or may not permit us to meet scheduled obligations, which could cause us
to default on our obligations. As a result, we may be forced to seek bankruptcy or insolvency court protection to continue our efforts
to restructure our business and capital structure and may have to liquidate our assets and may receive less than the value at which
those assets are carried on our consolidated financial statements.

 

 

Conversions
of our outstanding convertible debt at substantially discounted prices have caused, and may continue to cause, severe dilution to our
existing shareholders and downward pressure on the market price of our ordinary shares.

 

The
outstanding principal and accrued but unpaid interest under our convertible debt may be converted by the holders into ordinary shares
at conversion prices that are subject to substantial discounts to the prevailing market price of our ordinary shares. As a result, conversions
have occurred, and may continue to occur, at conversion prices that bear little or no relationship to the historical or expected fundamental
value of our ordinary shares. In the last 12 months, outstanding debt was converted into a substantial number of our ordinary shares.
The conversion of such substantial amounts of debt into ordinary shares has caused significant dilution to the ownership interests of
our existing shareholders and has caused, and we expect will continue to cause, significant downward pressure on the market price of
our ordinary shares. For example, between April 20, 2026, the effective date of our 1-for-50 reverse share split, and May 20, 2026, our
outstanding ordinary shares increased from 1,282,052 to 44,052,835, more than 3,000% in only ten days, as a result of conversions of
outstanding convertible debt at substantially discounted prices.

 

Separately,
in order to regain or maintain compliance with the Nasdaq Minimum Bid Price Requirement, we have effected four reverse share splits between
March 2025 and June 2026: a 1-for-10 reverse share split on March 28, 2025, a 1-for-15 reverse share split on January 15, 2026, a 1-for-50
reverse share split on April 20, 2026 and a 1-for-20 reverse share split on June 5, 2026. While Nasdaq rules do not impose a specific
limit on the number of times a listed company may effect a reverse share split to maintain or regain compliance with the Minimum Bid
Price Requirement, Nasdaq has stated that a series of reverse share splits may undermine investor confidence in securities listed on
Nasdaq. Accordingly, Nasdaq may determine that it is not in the public interest to maintain our listing, even if we regain compliance
with the Minimum Bid Price Requirement as a result of a further reverse share split.

 

The
existence of our outstanding convertible debt may also encourage short selling by market participants because the conversion of such
debt at substantially discounted prices would likely depress the price of our ordinary shares. If there are significant short sales of
our ordinary shares, the share price of our ordinary shares may decline more than it would in an environment without such activity, which
may, in turn, cause other holders of our ordinary shares to sell their shares. Sales of a substantial number of ordinary shares in the
public market, or the perception that these sales might occur, could depress the market price of our ordinary shares and could impair
our ability to raise capital through the sale of additional equity securities, all of which could have a material adverse effect on our
liquidity and financial condition.

 

We
have not been able to consistently remain in compliance with the continued listing standards of the Nasdaq. The persistence of such failure
could result in a delisting of our securities, which could significantly impair the liquidity and market price of our ordinary shares.

 

We
have not been able to consistently comply with Nasdaq’s continued listing standards, including requirements related to timely financial
reporting, minimum bid price, and market value. While we have taken aggressive measures to regain compliance in the past, including multiple
reverse share splits and appeals to the Nasdaq Hearings Panel, there is no guarantee that these or future actions will be successful.
If we fail to satisfy the continued listing requirements of Nasdaq such as the corporate governance requirements or the minimum closing
bid price requirement, or certain value-based requirements, Nasdaq will take steps to delist our securities. Such a delisting would likely
have a negative effect on the price of the securities and would impair shareholders’ ability to sell or purchase the securities
when they wish to do so as well as adversely affect our ability to issue additional securities and obtain additional financing in the
future.

 

On
May 20, 2024, we received a notification letter from the Listing Qualifications Department of Nasdaq stating that we were not in compliance
with the requirements of Nasdaq Listing Rule 5250(c)(1) (the “Reporting Rule”) as a result of not having timely filed our
annual report for the fiscal year ended December 31, 2023 (the “2023 Annual Report”) with the SEC. Under the Nasdaq rules,
the Company had 60 calendar days, or until July 19, 2024, to file the 2023 Annual Report or to submit to Nasdaq a plan to regain compliance
with the Nasdaq Listing Rules. On July 19, 2024, we submitted a plan of compliance to achieve and sustain compliance with the Reporting
Rule. Following submission of this plan of compliance, Nasdaq determined to grant an exception to enable us to regain compliance with
the aforesaid rule, subject to our filing of the 2023 Annual Report with the SEC on or before August 19, 2024. We initially filed the
2023 Annual Report on August 16, 2024.

 

 

On
July 16, 2024, we received a deficiency notice from Nasdaq informing us that our ordinary shares have failed to comply with the $1.00
minimum bid price required for continued listing under Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”)
based upon the closing bid price of our ordinary shares for the 30 consecutive business days prior to the date of the deficiency notice.
The deficiency notice did not result in the immediate delisting of our ordinary shares from Nasdaq. In accordance with Nasdaq Listing
Rule 5810(c)(3)(A), we were given 180 calendar days from, or until January 13, 2025, to regain compliance with the Minimum Bid Price
Requirement.

 

In
addition, on August 23, 2024 we received a deficiency notice from the staff of the Listing Qualifications department of Nasdaq (the “Staff”)
informing us that we are no longer in compliance with Nasdaq Listing Rule 5450(b)(3) (the “Total Assets and Total Revenue Requirement”)
because our total assets and total revenue for the most recently completed fiscal year and two of the last three most recently completed
fiscal years were each below the minimum $50 million threshold for continued listing on The Nasdaq Global Market. In accordance with
Nasdaq Listing Rule 5810(c)(2)(A), we had 45 calendar days, or until October 7, 2024, to submit a plan to Nasdaq to evidence compliance
with Nasdaq’s continued listing criteria (the “Compliance Plan”). On October 9, 2024, we submitted the Compliance Plan
to Nasdaq. On December 11, 2024, we received another notice from Nasdaq stating that the Compliance Plan did not evidence our ability
to achieve near term compliance with continued listing requirements or sustain such compliance over an extended period of time. Accordingly,
we were notified that our securities would be delisted from the Nasdaq Global Market, unless we request a hearing before the Nasdaq Hearings
Panel (the “Panel”), which request would stay any further action by the Staff at least until the hearing process concludes.
On December 18, 2024, we requested a hearing before the Panel. Our hearing before the Panel was held on February 6, 2025, and on February
28, 2025 we announced that the Panel has granted the Company’s request to continue its listing on Nasdaq. In making its decision,
following the hearing, the Panel considered the Company’s entire record, including background information about the Company, its
business description, financial information, market data and compliance history. Based on the information presented to the Panel, including
the Company’s success, as of February 7, 2025, in bringing its market value of listed securities above the $35 million minimum,
the Panel granted the Company’s request for continued listing on Nasdaq, subject to the Company filing an application to transfer
to The Nasdaq Capital Market by March 5, 2025, and demonstrating compliance with the minimum bid price and the market value of listed
securities (“MVLS”) requirements by March 31, 2025.

 

On
February 26, 2025, Nasdaq confirmed to us via email that we had regained compliance with the MVLS Rules. On February 27, 2025, we received
a notice from Nasdaq informing us that Nasdaq granted our request to continue our listing on the Nasdaq Stock Market, subject to (i)
on or before March 5, 2025, our filing of an application to transfer our securities to the Nasdaq Capital Market and (ii) on or before
March 31, 2025, our demonstrating compliance with the Minimum Bid Price Requirement and the continued listing requirement that we maintain
either a minimum of $2,500,000 in shareholders’ equity or $35,000,000 market value of listed securities or $500,000 of net income
from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years, as set
forth in Nasdaq Listing Rule 5550(b)(2) (“MVLS Rules”). In addition, on March 4, 2025, we filed an application to transfer
our securities to the Nasdaq Capital Market. On March 28, 2025, we effected a 1-for-10 reverse share split of our ordinary shares in
an effort to regain compliance with the Minimum Bid Price Requirement. On June 12, 2025, Nasdaq formally confirmed that we satisfy both
the Minimum Bid Price Requirement and the MVLS thresholds. 

 

On
January 15, 2026, we effected a 1-for-15 reverse share split of our ordinary shares in an effort to maintain compliance with the Minimum
Bid Price Requirement, which we subsequently achieved. On April 20, 2026, we effected a 1-for-50 reverse share split of our ordinary
shares and on June 5, 2026, we effected a 1-for-20 reverse share split of our ordinary shares, both in an effort to maintain compliance
with the Minimum Bid Price Requirement. Our reliance on multiple reverse share splits (including four such splits between March 2025
and June 2026) may be perceived negatively by the market and indicates a persistent difficulty in maintaining the minimum requirements
for listing. While Nasdaq rules do not impose a specific limit on the number of times a listed company may effect a reverse share split
to maintain or regain compliance with the Minimum Bid Price Requirement, Nasdaq has stated that a series of reverse share splits may
undermine investor confidence in securities listed on Nasdaq. Accordingly, Nasdaq may determine that it is not in the public interest
to maintain our listing, even if we regain compliance with the Minimum Bid Price Requirement as a result of the reverse share splits
described above. Future issuances of our ordinary shares, including upon conversions of our outstanding convertible debt at substantially
discounted prices, may put further downward pressure on the market price of our ordinary shares, which could increase the risk of further
non-compliance with the Minimum Bid Price Requirement and the risk that Nasdaq may determine that our continued listing is not in the
public interest. In addition, the resulting market price of our ordinary shares following any reverse share split may not attract new
investors, including institutional investors, may not satisfy the investing requirements of those investors, and may result in our ordinary
shares being subject to the “penny stock” rules in the future, which would impose additional sales practice requirements
on broker-dealers and could severely limit the market price and liquidity of our ordinary shares.

 

 

On
January 21, 2026, we received a letter from Nasdaq notifying us that, for the period from December 5, 2025 to January 20, 2026, our MVLS
was below the MVLS Rule threshold. Pursuant to Nasdaq Listing Rule 5810(c)(3)(C), we have a compliance period of 180 calendar days, or
until July 20, 2026 (the “Compliance Period”), to regain compliance with the MVLS Rule. If at any time during the Compliance
Period, our MVLS is at least $35 million for a minimum of ten consecutive business days, Nasdaq will provide us a written confirmation
of compliance and this matter will be closed. In the event that we do not regain compliance with the MVLS Rule during the Compliance
Period, Nasdaq will provide written notification that our securities will be subject to delisting. In the event of such notification,
the Nasdaq rules permit us an opportunity to appeal Nasdaq’s determination. We are currently evaluating options to regain compliance
with the MVLS Rule.

 

As
described above, we have used all reasonable efforts to achieve compliance with the Minimum Bid Price Requirement and MVLS Rule. However,
no assurance can be given that we will be able to maintain compliance with the Total Assets and Total Revenue Requirement, the Minimum
Bid Price Requirement, the MVLS Rules, or comply with the other standards that we are required to meet in order to maintain a listing
on such exchange or that Nasdaq will transfer our securities to the Nasdaq Capital Market. Our failure to meet these requirements or
transfer our securities to the Nasdaq Capital Market may result in our securities being delisted from Nasdaq.

 

On
May 18, 2026, we received a deficiency notice from the Nasdaq stating that we are not in compliance with Nasdaq Listing Rule 5250(c)(1)
because we had not yet filed our Annual Report on Form 20-F for the period ended December 31, 2025 with the Securities and Exchange Commission
(the “SEC”). In accordance with Nasdaq Listing Rules, we had 60 calendar days (until July 17, 2026) to submit a plan to regain
compliance. If Nasdaq accepted our plan, Nasdaq can grant an exception of up to 180 calendar days from the due date of the Form 20-F,
or until November 11, 2026, to regain compliance. With the filing of this Annual Report on Form 20-F, we will have regained compliance
with this requirement within the applicable cure period.

 

In
the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would
allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities
from dropping below the Minimum Bid Price Requirement or prevent future non-compliance with Nasdaq’s listing requirements. Additionally,
if our securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on OTC Markets, an inter-dealer automated
quotation system for equity securities that is not a national securities exchange, the liquidity and price of HUB’s securities
may be more limited than if it were quoted or listed on Nasdaq or another national securities exchange as the liquidity that Nasdaq provides
would no longer be available to investors. Shareholders may be unable to sell their securities unless a market can be established or
sustained, and we could face a lengthy process to re-list the ordinary shares, if at all.

 

Our
previous reverse share splits, and any future reverse share splits, may decrease the liquidity of our ordinary shares and have a dilutive
effect on the ownership of our existing shareholders, and we cannot assure you that any future reverse share split will result in a sustained
increase in the market price of our ordinary shares.

 

The
liquidity of our ordinary shares may be adversely affected by a reverse share split given the reduced number of shares that will be outstanding
following any such reverse share split, especially if the market price of our ordinary shares does not increase as a result of the reverse
share split. In addition, a reverse share split may increase the number of shareholders who own odd lots (less than 100 shares) of our
ordinary shares, creating the potential for such shareholders to experience an increase in the cost of selling their shares and greater
difficulty effecting such sales. While we expect that the reduction in the number of outstanding ordinary shares will proportionally
increase the market price of our ordinary shares, we cannot assure you that any reverse share split will increase the market price of
our ordinary shares by a multiple of the reverse share split ratio, or result in any permanent or sustained increase in the market price
of our ordinary shares. The market price of our ordinary shares will continue to be based, in part, on our performance and other factors
unrelated to the number of shares outstanding.

 

 

A
reverse share split also reduces the number of outstanding ordinary shares without reducing the number of authorized but unissued ordinary
shares, which has the effect of increasing the number of ordinary shares available for issuance. The issuance of additional ordinary
shares may have a dilutive effect on the ownership of our existing shareholders. The current economic environment in which we operate,
the debt we carry, and otherwise volatile equity market conditions could limit our ability to raise new equity capital in the future
on favorable terms or at all. In addition, following any reverse share split, the resulting market price of our ordinary shares may not
attract new investors, including institutional investors, may not satisfy the investing requirements of those investors, and the trading
liquidity of our ordinary shares may not improve.

 

Our
ordinary shares could be subject to the “penny stock” rules in the future, which would impose additional sales practice requirements
on broker-dealers and could severely limit the market price and liquidity of our ordinary shares.

 

The
U.S. Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in “penny
stocks,” generally defined as non-exchange-traded equity securities with a price of less than $5.00 per share, subject to certain
exceptions. While our ordinary shares are not currently considered “penny stock” because they are listed on the Nasdaq Capital
Market, if our ordinary shares were to be delisted from the Nasdaq Capital Market and we are unable to maintain a per-share price above
$5.00 (or otherwise satisfy an applicable exception), our ordinary shares would become “penny stock.”

 

The
penny stock rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks
to persons other than those who qualify as “established customers” or “accredited investors.” Among other things,
broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks, provide a standardized risk
disclosure document, current bid and offer quotations, the broker-dealer’s and salesperson’s compensation in the transaction,
monthly account statements showing the market value of each penny stock held in the customer’s account, a special written determination
that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the transaction.
These requirements may have the effect of reducing the level of trading activity in the secondary market for any security that becomes
subject to the penny stock rules and may discourage broker-dealers from effecting transactions in our ordinary shares, which could severely
limit the market price and liquidity of our ordinary shares and may affect the ability of holders to resell our ordinary shares. In addition,
many brokerage firms will discourage or refrain from recommending investments in penny stocks, and most institutional investors will
not invest in penny stocks. As a result, penny stocks may have a limited market and, consequently, limited liquidity.

 

We
will need to raise additional funds in the near future in order to execute our business plan and these funds may not be available to
us when we need them. If we cannot raise additional funds when we need them, our business, prospects, financial condition and operating
results could be negatively affected. 

 

We
require additional capital in the future in order to fund our growth strategy or to respond to technological advancements, competitive
dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances. We may also
determine to raise equity or debt financing for other reasons. For example, in order to further enhance business relationships with current
or potential customers or partners, we may issue equity or equity-linked securities to such current or potential customers or partners.

 

We
may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If we raise additional funds through
the issuance of equity or convertible debt or other equity-linked securities, our existing shareholders could experience significant
dilution. In addition, any debt financing obtained by us in the future, whether in the form of a credit facility or otherwise, could
involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make
it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are
unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow or support
our business and to respond to business challenges could be significantly limited. In addition, because our decision to issue debt or
equity in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount,
timing, nature or success of our future capital raising efforts.

 

 

We
have identified material weaknesses in our internal control over financial reporting. If our remediation of the material weaknesses is
not effective, or we fail to develop and maintain effective internal controls over financial reporting, our ability to produce timely
and accurate financial statements or comply with applicable laws and regulations could be impaired.

 

As
described below, we appointed a special committee of Independent Directors in 2023 to oversee an internal investigation related to alleged
misappropriation of Company funds and other potentially fraudulent actions regarding the use of Company funds by a former senior officer
of the Company. As such, our management identified material weaknesses in our internal control over financial reporting as of December
31, 2021 relating to deficiencies in the design and operation of the procedures relating to the closing of our financial statements.
We continued to identify material weaknesses in our internal control over financial reporting through December 31, 2025, which have not
been fully remedied to date. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements
will not be prevented or detected on a timely basis.

 

The
material weaknesses included, but are not limited to:

 

●

Lack of sufficient number of personnel with an appropriate level of knowledge and experience in accounting for complex or non-routine transactions;

 

●

The fact that our policies and procedures with respect to the review, supervision and monitoring of our accounting and reporting functions were either not designed, not properly put in place or not operating effectively;

 

●

Deficiencies in the design and operations of the procedures relating to the timely closing of financial books at the quarter and fiscal year end;

 

●

Insufficient oversight of certain signatory rights relating to our financial accounts;

 

●

Ineffective design and implementation of Information Technology General Controls including improperly designed controls pertaining to change management and user access rights over systems that are critical to our system of financial reporting; and

 

●

Incomplete segregation of duties in certain types of transactions and processes (excluding monetary transactions, where there is a clear distinction between the preparer and the signer vis-a-vis financial institutions).

 

During
the fourth quarter of 2024 and through 2025, we undertook certain corrective actions in order to address and remediate these material
weaknesses including (i) the recruitment of additional financial personnel in our finance department with an appropriate level of knowledge
and experience; (ii) the establishment of risk and control matrices and implemented controls over material business processes; (iii)
the design of operation of procedures related to timely closing of financial books, including the assignment of clear responsibilities,
deadlines and appropriate segregation of duties; (iv) the formalization of signatory rights; and (v) establishment of controls over the
change management process and permissions to the financial system. However, since the implementation of these controls only commenced
in the fourth quarter of 2024, these controls were not in place for a sufficient period of time to allow management to conclude they
were operating effectively throughout a significant portion of the year. Accordingly, management concluded that internal control over
financial reporting was not effective as of December 31, 2025, due to these material weaknesses.

 

Under
the Companies Law, the board of directors is required to appoint an internal auditor recommended by the audit committee. Our current
internal auditor is Joseph Ginossar of Fahn Kanne, an affiliate of Grant Thornton International. The role of the internal auditor is
to examine, among other things, whether the Company’s actions comply with applicable law and proper business procedures. The internal
auditor may not be an interested party, a director or an officer of the Company, or a relative of any of the foregoing, nor may the internal
auditor be our independent accountant or a representative thereof.

 

 

Further,
there can be no guarantee that the Internal Investigation (as defined below) and subsequent inquiries revealed all instances of inaccurate
disclosure or other deficiencies, or that other existing or past inaccuracies or deficiencies will not be revealed in the future. Our
failure to correct these deficiencies or our failure to discover and address any other deficiencies could result in inaccuracies in our
financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory
filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading
price of our ordinary shares and warrants, may be materially adversely affected.

 

We
cannot assure you the measures we have been taking or that we take in the future will be sufficient to remediate the material weaknesses
or that they will prevent future material weaknesses. Additional material weaknesses or failure to maintain effective internal control
over financial reporting could cause us to fail to meet our reporting obligations as a public company and may result in a restatement
of our financial statements for prior periods. In addition, these deficiencies could cause investors to lose confidence in our reported
financial information, limiting our access to capital markets, adversely affecting our operating results and leading to declines in the
trading price of our ordinary shares and warrants.

 

Our
independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting
until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered
public accounting firm may issue a report that is adverse in the event our internal controls over financial reporting do not operate
effectively. If we are not able to complete our initial assessment of our internal controls and otherwise implement the requirements
of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) in a timely manner or with adequate compliance,
our independent registered public accounting firm may not be able to certify as to the effectiveness of our internal controls over financial
reporting. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the
results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the
effectiveness of our internal control over financial reporting that we will eventually be required to include in its periodic reports
that are filed with the SEC. If we are unable to remediate our existing material weaknesses or identify additional material weaknesses
and are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting
is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our
internal control over financial reporting once we are no longer an emerging growth company, investors may lose confidence in the accuracy
and completeness of the financial reports and the market price of our ordinary shares and warrants could be negatively affected, and
we could become subject to investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial
and management resources. For more information regarding these remedial actions and enhancement measures, see “Item 15. Controls
and Procedures—Material Weaknesses in Internal Control Over Financial Reporting.”

 

Our
previously disclosed internal investigation was initiated to review allegations of misappropriation of Company funds and other potential
fraudulent actions regarding the use of Company funds by a former senior officer of the Company. In January 2026, the Israel Securities
Authority concluded its related investigation and transferred the investigation file to the Tel Aviv District Attorney’s Office
(Taxation and Economic Crimes) for a resolution, the status of which remains uncertain. We are unable to predict the effectiveness of
any remediation measures recommended by the Special Committee. In addition, we have incurred and may continue to incur substantial
costs in connection with the internal investigation, which could have a material adverse effect on our business, financial condition
and results of operations.

 

In
2023, our board of directors appointed a Special Committee of Independent Directors (the “Special Committee”) to oversee
an internal investigation (the “Internal Investigation”) in order to review certain allegations of misappropriation of Company
funds and other potential fraudulent actions regarding the use of Company funds by a former senior officer of ours. During the course
of the Internal Investigation, the Special Committee, together with its outside advisers, believed that it found sufficient evidence
to support a determination that Mr. Eyal Moshe, our former Chief Executive Officer and President of U.S. operations and former member
of the board of directors, and Ms. Ayelet Bitan, our former Chief of Staff and wife of Mr. Moshe, misappropriated (from a Company bank
account over which Mr. Moshe had sole signatory rights) a total of approximately NIS 2 million (approximately $582,000) for personal
use. Further, in certain instances, evidence reviewed by the Special Committee demonstrated that Mr. Moshe authorized payments to contractors
without either (i) proper documentation and signatory approval; or (ii) required budget and expense reports. The employment of Mr. Moshe
was terminated for cause, effective July 24, 2023, and Mr. Moshe resigned from our board on August 15, 2023. Additionally, we commenced
two legal actions in Israel against Ms. Bitan and against Mr. Moshe to dispute their requests for severance payments in accordance with
Israeli law in connection with these determinations by the Special Committee.

 

 

Additionally,
the Special Committee believed that it found sufficient evidence to determine that, one of our controllers, with the permission of Mr.
Moshe, used Company credit cards for personal use in the amount of approximately NIS 400,000 (approximately $110,000). These personal
expenses were neither factored into the controller’s payroll nor properly documented in our financial books and records. Additionally,
Mr. Moshe approved a bonus of NIS 250,000 to the controller. However, this bonus was not paid to the controller but instead was paid
to a third party at the controller’s direction. Prior to the commencement of legal proceedings, we reached a settlement with the
controller whereby the amount of the bonus in the amount of NIS 250,000 plus VAT was repaid to us and all his options and RSUs were cancelled.

 

Since
the completion of the Internal Investigation, we performed a restructuring of our top management and executive officers, in addition
to enacting and enforcing tougher anti-fraud and anti-corruption policies, oversight, reviews and checks. All of the management and executive
officers that served in the Company during the time when the misappropriation occurred have since left the Company and been replaced.
To the best of the Company’s knowledge, the past misappropriation of funds has no current or further impact on the Company, its
finances and its business, and is not expected to affect the Company or its expected growth in the future.

 

These
events regarding the Special Committee and Internal Investigation are the subject of regulatory review and expose us and our directors
and officers to possible investigations and possible enforcement actions by regulators both in Israel and the United States, including
the Israel Securities Authority (“ISA”), Israel Tax Authority, SEC, Nasdaq and/or the U.S. Department of Justice (“DOJ”).
In September 2024, the ISA and the Israel Tax Authority conducted a search of HUB’s office in the context of investigating former
and current officers in connection with suspicions regarding violations of securities, penal and tax laws. To HUB’s best knowledge,
the suspicions are related, among other things, to the subject matter of the Internal Investigation. In addition, in April 2025,
investigators from the Israeli Tax Authority visited the offices of the Company. To HUB’s best knowledge, this visit concerned
developments in the investigation related to the actions of a former Financial Controller of the Company, which were also addressed in
the Internal Investigation. According to a letter provided to the Company in January 2026 by the ISA, the ISA’s investigation has
been concluded, and the investigation file concerning the Company has been transferred to the Tel Aviv District Attorney’s Office
(Taxation and Economic Crimes) for a resolution, the status of which remains uncertain. These events may also expose the Company and
its directors and officers to possible investigations or enforcement actions by other regulators, including the SEC, Nasdaq and/or the
DOJ. We have provided certain information and documentation to certain regulatory authorities and are prepared to respond to any regulatory
inquiry it may receive. Our management and our board of directors do not currently believe there are any impacts on our financial statements.
If we were to be subject to an investigation or enforcement action from a regulatory agency it could have a material adverse effect on
our business, financial position and results of operations.

 

If
any federal authorities were to ultimately determine that we violated any laws or regulations, we may be exposed to a broad range of
civil and criminal sanctions including, but not limited to, injunctive relief, disgorgement, fines, penalties, modifications to business
practices including the termination or modification of existing business relationships, the imposition of compliance programs and the
retention of a monitor to oversee future compliance by us, which could be costly and burdensome to our management, and could adversely
impact our business, prospects, reputation, financial condition, liquidity, results of operations or cash flows. Even if an inquiry or
investigation does not result in any adverse determinations, it potentially could create negative publicity and give rise to third-party
litigation or other actions, which could also have a material adverse effect on our business, financial condition, results of operations
and cash flows.

 

The
Special Committee is neither a civil nor a criminal court of law and no court has yet substantiated the findings of the Special Committee.
It is possible that a court of law may find differently than the Special Committee has, which could expose us to counterclaims from Mr.
Moshe, Ms. Bitan or others. Additionally, while we have informed Mr. Moshe that he has been summarily dismissed as an employee, Mr. Moshe
resigned from our board of directors.

 

 

We
have commenced legal actions in Israel against Ms. Bitan and against Mr. Moshe to dispute their requests for severance payments in accordance
with Israeli law. Two actions were undertaken against Ms. Bitan. In the initial action, the court granted an injunction preventing her
from accessing her accumulated severance package. In the second action, it was requested that the court order that these sums be returned
to the Company. In the action against Mr. Moshe, the court was requested to grant an injunction against accessing the accumulated severance
package and to order the return of the sums to us. These actions are time limited, so the initial action against Ms. Bitan was initiated
prior to the completion of the Special Committee Report and as such was based upon the limited information known at that time. On September
7, 2025, the parties entered into a court approved settlement agreement, pursuant to which the parties provided a mutual release of claims
and we released all severance payment contributions to Mr. Moshe and Ms. Bitan and paid Ms. Bitan a retirement grant of NIS 250,000.
For further details, see Note 22 to our audited consolidated financial statements for the year ended December 31, 2025 included in this
Annual Report.

 

There
can be no assurance that others will not bring forth any claims or commence any litigation against us in connection with Mr. Moshe’s
dismissal, his resignation from the board, our challenging Ms. Bitan’s severance payments or the publication of the Special Committee’s
findings from the Internal Investigation.

 

Further,
we incurred substantial costs and diverted management resources in connection with the Internal Investigation, and the Internal Investigation
itself caused us to fail to timely file our Annual Reports on Form 20-F for the fiscal years ended December 31, 2022 and 2023 with the
SEC. We may also incur material costs associated with our indemnification arrangements with our current and former directors and certain
of our officers, as well as other indemnitees related to lawsuits or regulatory proceedings that have arisen and may arise in the future
from the Internal Investigation.

 

Our
reported material weaknesses in internal control over financial reporting subjects us to additional litigation and regulatory examinations,
investigations, proceedings or court orders, including additional cease and desist orders, the suspension of trading of our securities,
delisting of our securities, the assessment of civil monetary penalties and other equitable remedies. In addition, the remediation of
the material weaknesses (set forth below in Item 15. “Controls and Procedures”) will require us to incur additional costs
and to divert management resources in the upcoming periods, which could adversely affect our business, financial condition, results of
operations, and growth prospects.

  

Risks
Related to Our Business and Industry

 

An
inability to attract new customers, retain existing customers and sell additional services to customers could adversely impact our revenue
and results of operations.

 

Currently,
we generate the majority of our revenues from our Professional Services division, which, among other services, enables enterprise clients
to identify, manage and respond to cybersecurity threats with comprehensive, bundled solutions that provide a crucial layer of protection
for organizations as well as a means to manage associated risk and compliance. More recently, we have focused on providing secured data
fabric based solutions to the financial services sector.

 

We
were not successful in penetrating the secured data fabric market and our ability to maintain or increase our revenues and achieve profitability
may be impacted by a number of factors, including our ability to attract new customers, retain existing customers and sell our solutions
and professional services to additional customers. We may incur higher customer acquisition or retention costs as we seek to grow our
customer base and expand our markets. Moreover, to the extent we are unable to retain and sell additional services to existing customers,
including as part of our initiative to address existing accounts that have substandard margins, our revenue and results of operations
may decrease. The loss of business from any of our major customers, whether by the cancellation of existing contracts, the failure to
obtain renewal of these contracts or win new business or lower overall demand for our services, could materially and adversely impact
our revenue and results of operations.

 

 

Actions
that we have taken or may take to reduce costs and rebalance investments may not result in anticipated savings or operational efficiencies,
could result in total costs and expenses that are greater than expected, and could disrupt our business.

 

We
have in the past and may again implement a plan to reduce our workforce in order to become more efficient in our costs and to optimize
facilities-related costs. Such plans are meant to improve operational efficiencies and align our investments more closely with our strategic
priorities. We may incur additional expenses associated with the reduction in our workforce not contemplated by such plans, such as employment
litigation costs, which may have an impact on other areas of our liabilities and obligations and contribute to losses in future periods.
We may not realize, in full or in part, the anticipated benefits and savings from such plans due to unforeseen difficulties, delays or
unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings, our operating results and financial
condition would be adversely affected.

 

Furthermore,
ongoing implementation of such plans and reductions in force may be disruptive to our operations. For example, a workforce reduction
could result in attrition beyond planned staff reductions, increased difficulties in our day-to-day operations and reduced employee morale.
If employees who were not affected by the few rounds of reduction in force seek alternative employment, we could incur unplanned additional
expense to ensure adequate resourcing and fail to attract and retain qualified management, sales and marketing personnel who are critical
to our business. Our failure to do so could harm our business and our future performance.

 

Our
limited operating history makes it difficult to evaluate our business and prospects and increases the risk of your investment.

 

Significant
portions of our growth have been through mergers and acquisitions. As a result, there is limited information that investors can use in
evaluating our business, strategy, operating plan, results, and prospects. We currently derive most of our revenues from our Professional
Services division. We intended to derive most of our revenues from our Products and Technology division, including our secured data fabric
and confidential computing protection solutions, however, we only succeeded in deriving a small portion of our revenues from technology
and product-oriented solutions, including our secured data fabric and confidential computing solution and have since impaired and shut
down that business. In addition, we have encountered and expect to continue to encounter risks and uncertainties frequently experienced
by growing companies in rapidly evolving industries. If we do not address these risks successfully, or if the assumptions we use to plan
and operate our business are incorrect or change, our results of operations could differ materially from our expectations, and our business,
financial condition, and results of operations could be materially adversely affected.

 

Competition
in the market for technology solutions, in general, is intense. If we are unable to compete effectively, our business, financial condition
and results of operations could be harmed. 

 

The
markets in which we operate are characterized by intense competition, constant innovation, rapid adoption of different technological
solutions and services, and evolving security threats. We compete with a multitude of companies that offer a broad array of network security
products and that employ different approaches and delivery models to address these evolving threats.

 

The
cybersecurity professional services markets are experiencing heightened competition driven by rapid technological advancements, evolving
regulatory landscapes, and increasing client demands. Major players like IBM, Microsoft, SAP, Oracle, and SAS Institute are expanding
their offerings through strategic acquisitions and the integration of AI and machine learning to provide comprehensive, cloud-based GRC
solutions. This technological innovation enables more efficient risk management and compliance processes, allowing organizations to automate
regulatory adherence reports and detect threats more effectively. Simultaneously, the cybersecurity consulting sector is witnessing a
shift as clients may favor technology firms over traditional consultancies. This trend underscores the importance for traditional firms
to demonstrate their unique value propositions.

 

 

In
addition, IT security spending is spread across a wide variety of solutions and strategies, including, for example, endpoint, network
and cloud security, vulnerability management and identity and access management. Organizations continually evaluate their security priorities
and investments and may allocate their IT security budgets to other solutions and strategies and may not adopt or expand use of our solutions.
Accordingly, we may also compete for budgetary reasons with additional vendors that offer threat protection solutions in adjacent or
complementary markets to ours.

 

Most
of our competitors have greater financial, personnel and other resources than we have, which may limit our ability to effectively compete
with them. We also expect to continue to face additional competition as new participants enter the market or extend their portfolios
into related technologies. Current and future participants may also be able to respond more quickly to new or emerging technologies and
changes in customer demands and to devote greater resources to the development, promotion and sale of their products than we can. Larger
companies with substantial resources, brand recognition and sales channels may form alliances with or acquire competing security solutions
and emerge as significant competitors.

 

Competition
may result in lower prices or reduced demand for our solutions and a corresponding reduction in our ability to recover costs, which may
impair our ability to achieve, maintain and increase profitability. Furthermore, the dynamic market environment poses a challenge in
predicting market trends and expected growth. We cannot assure you that we will be able to implement our business strategy in a manner
that will allow us to be competitive. If any of our competitors offer products or services that are more competitive than ours, we could
lose market share and our business, financial condition and results of operations could be materially and adversely affected as a result.

 

Our
ability to introduce new products, features, integrations and enhancements is dependent on adequate research and development resources. 

 

To
remain competitive, we must maintain adequate research and development resources, such as the appropriate personnel and development technology,
to meet the demands of the market. If we are unable to offer high level and new services in our Professional Services division, develop
new products, features, integrations and enhancements internally due to certain constraints, such as employee turnover, a lack of management
ability or a lack of other research and development resources, our business may be harmed. Moreover, research and development projects
can be technically challenging and expensive. The nature of these research and development cycles may cause us to experience delays between
the time we incur expenses associated with research and development and the time we are able to offer compelling features, integrations
and enhancements and generate revenue, if any, from such investment. If we expend a significant amount of resources on research and development
and our efforts do not lead to the successful introduction or competitive improvement of products, features, integrations and enhancements,
it could harm our business, results of operations and financial condition. For example, we are in the process of developing our “single
chip” solution, which is a complicated process and there is no assurance that we will be able to successfully release this solution
as planned. In addition, our failure to maintain adequate research and development resources or to compete effectively with the research
and development programs of our competitors may harm our business, results of operations and financial condition.

 

If
we are unable to acquire large enterprise customers or sell additional products and services to our existing customers, our future revenues
and operating results will be harmed. 

 

Our
success and continued growth will depend in part on our ability to sell our solutions to existing customers. If we are unable to succeed
in such efforts, we will likely be unable to generate revenue growth at desired or projected rates.

 

In
addition, competition in the industry may lead us to acquire fewer new customers or result in our providing more favorable commercial
terms to new or existing customers. Macro-economic effects may also affect our ability to maintain our customer base and expand it.

 

 

Additional
factors that impact our ability to acquire new customers or sell additional products and services to our existing customers include the
consumption of their past purchases, a reduction in the perceived need for network security, the size of our prospective and existing
customers’ IT budgets, the utility and efficacy of our solution offerings, whether proven or perceived, changes in our pricing
models, and general economic conditions. These factors may have a material negative impact on future revenues and operating results.

 

We
currently have and target many customers that are large corporations and government entities, which are subject to a number of challenges
and risks, such as increased competitive pressures, administrative delays and additional approval requirements. 

 

Many
of our existing and potential customers are large corporations and government agencies who store sensitive data. Selling to large corporations
and government entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense
without any assurance that HUB will complete a sale. Large enterprise customers frequently demand terms of sale which are less favorable
than the prevailing market terms. In addition, government demand and payment for our products and services may be impacted by public
sector budgetary cycles and funding authorizations, funding reductions, government shutdowns or delays, such that any of these occurrences
may adversely affect public sector demand for our products. Finally, some large corporations and government entities require products
such as ours to be certified by industry-approved security agencies or regulatory bodies that govern them as a pre-condition of purchasing
them. We cannot be certain that any certificate or regulatory approval will be granted or that we would be able to satisfy the technological
and other requirements to maintain certifications or regulatory approvals. The loss of any of our existing certificates or regulatory
approvals, or the failure to obtain new ones, could result in the imposition of various penalties, reputational harm, loss of existing
customers or could deter new and existing customers from purchasing our solutions, any of which could adversely affect our business,
operating results or financial condition.

 

We
have not fully succeeded to execute, integrate or realize the benefits expected from acquisitions, which may require significant management
attention, disrupt our business and adversely affect our results of operations. 

 

As
part of our business strategy and in order to remain competitive, we continually evaluate acquiring or making investments in complementary
companies, products or technologies. We may not be able to find suitable acquisition candidates or complete such acquisitions on favorable
terms. We may incur significant expenses, divert employee and management time and attention from other business-related tasks and our
organic strategy and incur other unanticipated complications while engaging with potential target companies where no transaction is eventually
completed.

 

If
we do complete acquisitions, it may not ultimately strengthen our competitive position or achieve our goals or expected growth, and any
acquisitions we complete could be viewed negatively by our customers or experience unexpected competition from market participants. Any
integration process may require significant time and resources. We may not be able to manage the process successfully and may experience
a decline in our profitability as we incur expenses prior to fully realizing the benefits of the acquisition. We acquired a number of
companies and certain assets within the past three years and greatly increased our number of employees and fields of operation. The smooth
integration into our company of the operations of these companies and of their employees is an important part of our sales and growth
plan. The staff of the first company that was acquired, A.L.D. Advanced Logistics Development Ltd., is the foundation upon which we built
our Professional Services division, and the strengths of the second acquired company, Comsec Ltd. and the third one Qpoint Technologies
Ltd. (“QPoint”), in marketing, support, sales and cybersecurity consulting are the foundation of our sales efforts. Finally,
we believed that our January 2025 acquisition of BST, the fourth company, had the potential to solidify our position as a leading provider
of secured data fabric solutions in the future, offering a critical safeguard for banks, financial institutions and other industries
navigating an increasingly complex regulatory and cybersecurity environment, however this did not ultimately succeed. We believed that
the above mentioned acquisitions would give us direct access to a large number of blue-chip customers around the world, which would have
saved us a significant amount of time that would be needed to penetrate these markets organically. Our failure to smoothly integrate
the operations and employees of these companies into our goals and plans will and has reduced our prospects for growth. There is no assurance
that the acquired companies, including their personnel and operations, can be successfully integrated with our existing employees and
operations.

 

 

We
could also expend significant cash and incur acquisition-related costs and other unanticipated liabilities associated with the acquisition,
the product or the technology, such as contractual obligations, potential security vulnerabilities of the acquired company and our products
and services and potential intellectual property infringement. For example, during 2023, one of Comsec’s subsidiaries, Comsec Distribution,
had financial, operational and commercial difficulties, cessation of sales starting July 2023, layoffs and departures of employees so
that as of December 31, 2023, there were no business activities in Comsec Distribution. In addition, we acquired assets of Legacy Technologies
GmbH (“Legacy”), a European cyber firm, however we have yet to recognize any revenues or acquire new customers from the Legacy
assets and it remains extremely uncertain as to when, if at all, we may be able to do so. In fiscal year 2022 we recorded an impairment
loss of $8.7 million for the assets acquired from Legacy. Certain subsidiaries of BST were classified as “held for sale”
and subsequently sold to third parties during 2025. We have not been successful in achieving the strategic plans we had for the secured
data fabric business due to financial, development and other challenges, and as a result, as of December 31, 2025, we recorded a full
impairment on the technology asset acquired in the BST acquisition. During June 2026 we ceased BST’s operations, terminated BST’s
main commercial contract and terminated the employees of this business. In addition, any acquired technology or product may not comply
with legal or regulatory requirements and may expose us to regulatory risk and require us to make additional investments to make them
compliant.

 

We
may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition
transaction, including accounting charges and tax liabilities. We could become subject to legal claims following an acquisition or fail
to accurately forecast the potential impact of any claims. Any of these issues could have a material adverse impact on our business and
results of operations.

 

The
market for our solutions may not continue to grow. 

 

Continued
growth of the industries in which we compete will depend, to a great extent, upon:

 

●

the adoption of data security measures for data encryption and data loss-prevention technologies;

 

●

continued access to mobile application program interface, applications and application stores;

 

●

expansion of government regulation of the internet and governmental and non-governmental requirements and standards with respect to data security and privacy;

 

●

general economic conditions in the markets in which we and our customers operate;

 

●

the continued expansion of internet usage and the number of organizations that allow for remote working;

 

●

the continued adoption of “cloud” infrastructure by organizations;

 

●

the ability of the infrastructures implemented by organizations to support an increasing number of users and services;

 

●

the continued development of new and improved services for implementation across the internet and between the internet and intranets; and

 

●

the continued media attention on penetration of supposedly secure networks by cyber attackers and other malicious intruders.

 

A
failure or slowdown in one or more of the trends listed above may delay the purchase by large organizations of network security equipment
and may reduce demand for our products.

 

 

Our
operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality
and other factors, some of which are beyond our control, resulting in a decline in our stock price. 

 

Our
results of operations have fluctuated in the past and may vary significantly in the future. As such, historical comparisons of our operating
results may not be meaningful. Accordingly, the results of any fiscal year should not be relied upon as an indication of future performance.
Our financial results may fluctuate as a result of a variety of factors, many of which are outside of our control and may not fully reflect
the underlying performance of our business. These fluctuations could adversely affect our ability to meet expectations or those of securities
analysts or investors. If we do not meet these expectations for any period, the value of our business and our securities, or those of
the combined company, could decline significantly. Factors that may cause these quarterly fluctuations include, without limitation, those
listed below:

 

●

The timing of revenues generated and/or recognizable in any period;

 

●

Pricing changes we may adopt to drive market adoption or in response to competitive pressure;

 

●

Loss of customers, our ability to retain existing customers and attract new customers;

 

●

Our ability to develop, introduce and sell services and products in a timely manner that meet customer requirements;

 

●

Disruptions in our sales efforts or termination of our relationship with suppliers or subcontractors;

 

●

Delays in customers’ purchasing cycles or deferments of customers’ purchases in anticipation of new services or updates from us or our competitors;

  

●

Fluctuations in demand pressures for our products;

 

●

The timing and rate of broader market adoption of our solutions;

 

●

Any change in the competitive dynamics of our markets, including consolidation of competitors, regulatory developments and new market entrants;

 

●

Adverse litigation, judgments, settlements or other litigation-related costs, or claims that may give rise to such costs; and

 

●

General economic, industry and market conditions, including trade disputes.

 

Certain
members of our management team have limited experience managing a U.S. listed publicly traded company. 

 

Some
of our management team has limited experience managing a U.S. listed publicly traded company, interacting with U.S. public company investors
and complying with the increasingly complex laws pertaining to U.S. listed public companies. Our management team may not successfully
or efficiently manage these roles and responsibilities. As a U.S. listed public company, we are subject to significant regulatory oversight
and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These obligations
and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management
of our business, which could adversely affect our business, financial condition and operating results.

 

 

Due
to our limited resources, we may be forced to focus on a limited number of commercial opportunities which may force us to pass on opportunities
that could have a greater chance of success.

 

Due
to our current cash situation and our overall limited resources and capabilities, we will have to decide to focus on pursuing a limited
number of commercial opportunities. As a result, we may forego or delay pursuit of certain business opportunities that later prove to
have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on profitable market opportunities.
Additionally, our spending on research and development programs may not yield any commercially viable products. If we make incorrect
determinations regarding the viability or market potential of any or all of our products and offerings or misread trends in the cybersecurity
industry, our business, prospects, financial condition and results of operations could be materially adversely affected.

 

Uncertainties
related to our recent management changes may adversely affect our business, strategy and financial results.

 

On
March 31, 2026, Noah Hershcoviz resigned from his position as Chief Executive Officer and a member of the Board of Directors, effective
immediately. Renah Persofsky, our Chairperson of the Board, has taken on a greater role in HUB’s management while we seek a replacement
for Mr. Hershcoviz. During May and June of 2026, four more of our executive management departed: Shai Schiller (Head of Strategy), Nachman
Geva (Chief Technology Officer), Paul Parisi (Chief Revenue Officer) and John Rogers (President of the Americas Region).

 

As
a result of these frequent management transitions, combined with the current challenges facing our businesses, we are subject to significant
uncertainties regarding our future business strategy and direction. These uncertainties may cause or result in disruptions to our business
and distractions to our employees and management; difficulty in recruiting, hiring, motivating, and retaining talented and skilled personnel,
including current members of management; and difficulty in negotiating, maintaining, or consummating business or strategic relationships
or transactions.

 

Furthermore,
the search for a permanent CEO may be prolonged, and we cannot assure you that the selected person will effectively transition into the
role or ultimately be successful. During this search and transition period, there may continue to be uncertainties and concerns for employees
and management, as well as for current and potential customers, other business partners and shareholders. Any of these factors could
have a material adverse effect on our business, financial condition, cash flows and results of operations or reputation, and could cause
the market value of our shares and/or debt securities to decline.

 

Our
business relies on the performance of, and we face stark competition for, highly skilled personnel, including our management and other
key employees, and the loss of one or more of such personnel or of a significant number of our team members or the inability to attract
and retain executives and qualified employees we need to support our operations and growth, could harm our business. 

 

Our
success and future growth depend upon the continued services of our management team and other key employees, including in companies we
acquired. Our leadership team are critical to our overall management, as well as the continued development of our solutions, culture
and strategic direction. From time to time, there may be changes in our management team resulting from the hiring or departure of executives
and key employees, which could disrupt our business. Though sometimes new management can contribute and provide a new beneficial approach,
we are currently conducting a global search for a permanent Chief Executive Officer and we have recently made significant changes to
our executive management team in an effort to reduce costs and increase efficiency. We are also dependent on the continued service of
our existing engineering team because of the complexity of our product and solutions. We may terminate any employee’s employment
at any time, with or without cause, and any employee may resign at any time, with or without cause, subject only to the notice periods
prescribed by their respective agreements if done without cause. The loss of one or more members of our senior management or key employees
could harm our business, and we may not be able to find adequate replacements. There is no assurance that we will be able to retain the
services of any members of our senior management or key employees.

 

 

In
addition, we must attract and retain new highly qualified personnel in order to execute our growth plan. We have had difficulty quickly
filling certain open positions in the past and expect to have significant future hiring needs. Competition is intense, particularly in
Israel and other areas in which we have offices, for engineers experienced in designing and developing IT products, research and development
specialists, providers of professional services in the cyber field and experienced sales professionals. In order to continue to access
top talent, we may continue to grow our footprint of office locations, which may add to the complexity and costs of our business operations.
From time to time, we have experienced, and expect to continue to experience, difficulty in hiring and retaining employees with appropriate
qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have and we may
not succeed in recruiting additional experienced or professional personnel, retaining personnel or effectively replacing current personnel
who may depart with qualified or effective successors. If we hire employees from competitors or other companies, their former employers
may attempt to assert that these employees, or we, have breached their legal obligations, resulting in a diversion of our time and resources.
In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their employment.
If the perceived value of our equity awards declines, experiences significant volatility, such that prospective employees believe there
is limited upside to the value of our equity awards, it may adversely affect our ability to offer competitive compensation packages and
thereby adversely impact our ability to recruit and retain key employees. If we fail to attract new personnel or fail to retain and motivate
our current personnel, our business and future growth prospects would be harmed. In addition, as a result of the intense competition
for highly qualified personnel, the high-tech industry has also experienced and may continue to experience significant wage inflation.
Accordingly, our efforts to attract, retain and develop personnel may also result in significant additional expenses, which could adversely
affect our profitability.

 

We
enter into non-competition agreements with our employees in certain jurisdictions. These agreements prohibit our employees from competing
with us or working for our competitors for a limited period. We may be unable to enforce these agreements under the laws of the jurisdictions
in which those employees work, and it may be difficult for us to restrict our competitors from benefiting from the expertise our former
employees developed while working for us. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings
of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material
interests of the employer that have been recognized by the courts, such as the protection of a company’s trade secrets or other
intellectual property.

 

Prolonged
economic uncertainties or downturns in certain regions or industries could materially adversely affect our business. 

 

Our
business depends on our current and prospective customers’ ability and willingness to invest money in network security, which in
turn is dependent upon their overall economic health. Negative economic conditions in the global economy or certain regions, including
conditions resulting from financial and credit market fluctuations, exchange rate fluctuations, or inflation, could cause a decrease
in corporate spending on network security solutions and services. Other matters that influence consumer confidence and spending, including
political unrest, public health crises, terrorist attacks, armed conflicts (such as the conflict between Russia and Ukraine) and natural
disasters could also negatively affect our customers’ spending on our solutions and services. A significant portion of our business
operations are concentrated in core geographic areas such as the Middle East and Europe, and if they were to experience economic downturns,
this could severely affect our business operations. In addition, some of our business operations depend on emerging markets that are
less resilient to fluctuations in the global economy. In 2025, we generated $28.1 million of our revenues from Israel, $2.9 million of
our revenues from Europe and less than $1 million from the rest of the world.

 

In
addition, a significant portion of our revenue is generated from customers in the financial services industry, including banking and
insurance. Negative economic conditions may cause customers generally, and in that industry in particular, to reduce their IT spending.
Customers may delay or cancel IT projects perceived to be discretionary, choose to focus on in-house development efforts or seek to lower
their costs by renegotiating contracts. Further, customers may be more likely to make late payments in worsening economic conditions,
which could lead to increased collection efforts and require us to incur additional associated costs to collect expected revenues. If
the economic conditions of the general economy or industries in which we operate worsen from present levels, our results of operations
could be adversely affected.

 

 

Our
sales and operations in international markets expose us to operational, financial and regulatory risks. 

 

We
currently offer our solutions in several countries and intend to continue to expand our international operations. While we have committed
resources to expanding our international operations and sales channels, these efforts may not be successful. International operations
are subject to a number of other risks, including:

 

●

Exchange rate fluctuations;

 

●

Political and economic instability, particularly in emerging markets;

 

●

Global or regional health crises;

 

●

Potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud;

 

●

Less effective protection of intellectual property;

 

●

Difficulties and costs of staffing and managing foreign operations, including recruiting and retaining talented and capable employees;

 

●

Import and export laws, including technology import and export license requirements, and the impact of tariffs;

 

●

Trade restrictions, including as a result of boycotts, trade disputes or other disputes between countries or regions in which we sell and operate;

 

●

Difficulties in complying with a variety of foreign laws and legal standards and changes in regulatory requirements;

 

●

Difficulties in collecting receivables from foreign entities or delayed revenue recognition;

 

●

The introduction of exchange controls and other restrictions by foreign governments; and

 

●

Changes in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws.

 

There
is no assurance that the foregoing factors will not have a material adverse effect on our future revenues and, as a result, on our business,
operating results and financial condition.

 

Changes
in tax laws or exposure to additional income tax liabilities could affect our future profitability. 

 

Factors
that could materially affect our future, effective tax rates, include but are not limited to:

 

●

Changes in tax laws or the regulatory environment;

 

●

Changes in accounting and tax standards or practices;

 

●

Changes in the composition of operating income by tax jurisdiction; and

 

●

our operating results before taxes.

 

 

Because
we do not have a long operating history and have significant expansion plans, our effective tax rate may fluctuate in the future. Future
effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded, changes in the composition
of earnings in countries with differing tax rates, changes in deferred tax assets and liabilities, or changes in tax laws.

 

Forecasting
our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between forecasted
and actual tax rates. 

 

We
conduct business in several countries and is subject to taxation in many of such jurisdictions. The taxation of HUB’s business
is subject to the application of multiple and sometimes conflicting tax laws and regulations, as well as multinational tax conventions.
HUB’s effective tax rate will depend upon the geographic distribution of its worldwide earnings or losses, the tax regulations
and tax holidays in each geographic region, the availability of tax credits and the effectiveness of its tax planning strategies. The
application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves
are subject to change as a result of changes in fiscal policy, changes in legislation and the evolution of regulations and court rulings.
Consequently, tax authorities may impose tax assessments or judgments against HUB that could materially impact its tax liability and
effective income tax rate.

 

The
Organization for Economic Co-operation and Development (“OECD”), an international association comprised of 37 countries,
including the United States, has issued and continues to issue guidelines and proposals that change various aspects of the existing framework
under which HUB’s tax obligations are determined in many of the countries in which it does business. Due to HUB’s international
business activities, any changes in the taxation of such activities could increase its tax obligations in many countries and may increase
its worldwide effective tax rate.

 

Fluctuations
in currency exchange rates could harm our operating results and financial condition. 

 

We
offer our solutions to customers globally and have sales in several countries. Although a portion of our cash generated from revenue
is denominated in U.S. dollars, most of our revenues and operating expenses are incurred in Israel and denominated in Israeli New Shekels.
As a result, our consolidated U.S. dollar financial statements are subject to fluctuations due to changes in exchange rates as our revenues
and operating expenses are translated from NIS into U.S. dollars. If the significant fluctuation in the value of the U.S. dollar relative
to the NIS will continue, it will have an impact on the U.S. dollar amount of our future operating expenses. Our financial results are
also subject to changes in exchange rates that impact the settlement of transactions in non-local currencies. Because we conduct business
in currencies other than U.S. dollars but report our results of operations in U.S. dollars, it also faces re-measurement exposure to
fluctuations in currency exchange rates, which could hinder our ability to predict future results and earnings and could materially and
adversely impact our financial condition and results of operations. We evaluate periodically the various currencies to which we are exposed
and take selective hedging measures to reduce the potential adverse impact from the appreciation or the devaluation of our non-U.S. dollar-denominated
expenses, as appropriate and as reasonably available to us. There can be no assurances that our hedging activities will be successful
in protecting us from adverse impacts from currency exchange rate fluctuations.

 

Risks
Related to Our Systems and Technology

 

Our
reputation and business could be harmed based on real or perceived shortcomings, defects or vulnerabilities in our solutions or if our
internal systems or customers experience security breaches, which could have a material adverse effect on our business, reputation and
operating results.

 

If
any of our systems, our customers’ cloud or on-premises environments, or our internal systems are breached or if unauthorized access
to customer or third-party data is otherwise obtained, public perception of our business may be harmed, and we may lose business and
incur losses or liabilities. Network security products, solutions and services such as ours are complex in development, design and
deployment and may contain errors, bugs, misconfigurations or vulnerabilities that are potentially incapable of being remediated or detected
until after their deployment, if at all. Any real or perceived errors, bugs, design failures, defects, vulnerabilities, misconfigurations
in our solutions or untimely or insufficient remediation thereof, could cause our solutions to not meet specifications, be vulnerable
to security attacks or fail to secure networks or applications which could negatively impact customer operations and consequently harm
our business and reputation.

 

 

Because
our solutions and services are used by our customers to protect and manage large data sets that often contain proprietary, confidential,
and sensitive information (it may include in some instances personal or identifying information and personal health information), components
protected by our products will be perceived by computer hackers as an attractive target for attacks, and our software could face threats
of unintended exposure, exfiltration, alteration, deletion or loss of data. Additionally, because some of our customers use our solutions
to store, transmit and otherwise process proprietary, confidential, or sensitive information and complete mission-critical tasks, they
have a lower risk tolerance for security vulnerabilities in our solutions and services than for vulnerabilities in other, less critical,
software products and services.

 

In
addition, we may suffer significant adverse publicity and reputational harm if our solutions are associated, or are believed to be associated
with, or fail to reasonably protect against, a security attack or a breach at a high-profile customer. Moreover, any actual or perceived
cyber-attack, other security breach, exposure or theft of ours or our customers’ data, regardless of whether the breach or theft
is attributable to the failure of our solutions, could:

 

●

adversely affect the market’s perception of our solutions,

 

●

cause current or potential customers to look to our competitors for alternatives,

 

●

require us to expend significant financial resources to analyze, correct or eliminate any vulnerabilities, and

 

●

lead to investigations, litigation, fines and penalties, any of which could have a material adverse effect on our operations, financial condition and reputation.

 

We,
and the third-party vendors upon which we rely, have experienced, and may in the future experience, cybersecurity threats, including
threats or attempts to disrupt our information technology infrastructure and unauthorized attempts to gain access to sensitive or confidential
information. We and our third-party vendors’ technology systems may be damaged or compromised by malicious events, such as cyber-attacks
(including computer viruses, malicious and destructive code, phishing attacks, and denial of service attacks), physical or electronic
security breaches, natural disasters, fire, power loss, telecommunications failures, personnel misconduct, and human error. Such attacks
or security breaches may be perpetrated by internal bad actors, such as employees or contractors, or by third parties (including traditional
computer hackers, persons involved with organized crime, or foreign state or foreign state-supported actors). Cybersecurity threats can
employ a wide variety of methods and techniques, which may include the use of social engineering techniques, are constantly evolving,
and have become increasingly complex and sophisticated; all of which increase the difficulty of detecting and successfully defending
against them.

 

Furthermore,
because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until
after they are launched against a target, we and our third-party vendors may be unable to anticipate these techniques or implement adequate
preventative measures. Although prior cyber-attacks directed at us have not had a material impact on our financial results, and we are
continuing to bolster our threat detection and mitigation processes and procedures, we cannot guarantee that future cyber-attacks against
our own computer components or components owned by third parties that are protected by our solutions, will not have a material impact
on our business or financial results.

 

Security
breaches or defects in our solutions could result in loss or alteration of, or unauthorized access to, customers’ data and compromise
our customers’ networks and applications that are secured by our solutions. If such a security breach results in the disruption
or loss of availability, integrity or confidentiality of customers’ data, we could incur significant liability to our customers
and to businesses or individuals whose information was being handled by our customers, in addition to regulatory agencies. Many governments
have enacted laws requiring companies to provide notice of data security incidents involving certain types of data, including personal
data. In addition, most of our customers contractually require us to notify them of data security breaches. If an actual or perceived
breach of security measures, unauthorized access to our system or the systems of the third-party customers that are protected by our
solutions occurs, we may face direct or indirect liability, costs, or damages, contract termination, our reputation in the industry and
with current and potential customers may be compromised, our ability to attract new customers could be negatively affected and our business,
financial condition, and results of operations could be materially and adversely affected.

 

 

Further,
a successful hacking of systems that are protected by our solutions could result in the loss of information; significant remediation
costs; litigation, disputes, regulatory action, or investigations that could result in damages, material fines, and penalties; indemnity
obligations; interruptions in the operation of our business, including our ability to provide new product features, new solutions, or
services to our customers; and other liabilities. Moreover, our remediation efforts may not be successful. Any or all of these issues,
or the perception that any of them have occurred, could negatively affect our ability to attract new customers, cause existing customers
to terminate or not renew their agreements, hinder our ability to obtain and maintain required or desirable cybersecurity certifications
and result in reputational damage, any of which could materially adversely affect our results of operations, financial condition and
prospects. As our focus and business continue to shift towards cybersecurity and managing sensitive and large amounts of data, the risk
will intensify as more of a premium is placed on our cybersecurity efforts.

 

There
is no guarantee that our solutions will be free of flaws or vulnerabilities. Our customers may also misuse or improperly install our
solutions, which could result in vulnerabilities to a breach or theft of business data. There can be no assurance that limitation of
liability, indemnification or other protective provisions that we attempt to include in our contracts with customers, vendors, partners,
or others would be applicable, enforceable or adequate in connection with a security breach, or would otherwise protect us from any such
liabilities or damages with respect to any particular claim.

 

We
maintain different types of insurance, subject to applicable deductibles and policy limits, but our insurance may not be sufficient to
cover the financial, legal, business, or reputational losses that may result from an interruption or breach of our systems. We also cannot
be sure that our existing general liability insurance coverage and coverage for cyber liability or errors or omissions will continue
to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims or that the insurer
will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available
insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible
or co-insurance requirements, could result in our business, financial condition and results of operations being materially adversely
affected. In addition, our cybersecurity risk could be increased because of the ongoing military conflicts between Israel and Hamas and
other terrorist organizations and Russia and Ukraine and the related sanctions imposed against Russia. We implement continuous multi-layered
cybersecurity protection for our operations and resources and have an internal professional group of cybersecurity services to ensure
protection against attacks by state actors, including any new cybersecurity threats that may be presented by the unfolding conflicts
between Israel and Hamas and other terrorist organizations and Russia and Ukraine.

 

We incorporate
artificial intelligence (AI) and machine learning (ML) into some of our services. This technology is new and developing and may present
both compliance and reputational risks.

 

We
rely on AI and machine learning in the operation of some of our services or solutions. The AI models that we use are trained using various
data sets. If our AI models are incorrectly designed or implemented, they may produce inaccurate or unreliable results, negatively impacting
the performance and reliability of our products or solutions. The effectiveness of our AI models depends on the quality and completeness
of the data used for training. Any malfunction or unexpected behavior in our AI-driven systems could disrupt our operations and potential
loss of revenue. Additionally, failures in the performance of our AI models could damage our reputation, erode customer trust, and result
in loss of business and negative publicity.

 

Undetected
defects and errors may increase our costs and impair market acceptance of our products and solutions. 

 

Our
products and solutions have occasionally contained, and may in the future contain, undetected defects or errors, especially when first
introduced or when new versions are released, due to defects or errors that we fail to detect, including in components supplied to us
by third parties. In addition, because our customers integrate our products into their networks with products from other vendors, it
may be difficult to identify the product that has caused the problem in the network. Regardless of the source of these defects or errors,
we will then need to divert the attention of our engineering personnel from our product development efforts to detect and correct these
errors and defects. In the past, we have not incurred significant warranty or repair costs, nor have we been subject to liability claims
for material damages related to product errors or defects, nor have we experienced any material lags or delays as a result thereof. However,
there can be no assurance that these costs, liabilities and delays will continue to be immaterial in the future. Any insurance coverage
that we maintain may also not provide sufficient protection should a claim be asserted. Moreover, the occurrence of errors and defects,
whether caused by our products or the components supplied by another vendor, may result in significant customer relations problems, and
injure our reputation, thereby impairing the market acceptance of our products.

 

 

Interruption
or failure of our information technology and communications systems could impact our ability to effectively provide our products and
services. 

 

The
availability and effectiveness of our services depend on the continued operation of information technology and communications systems.
Our systems will be vulnerable to damage or interruption from, among others, physical theft, fire, terrorist attacks, natural disasters,
power loss, war, telecommunications failures, viruses, denial or degradation of service attacks, ransomware, social engineering schemes,
insider theft or misuse or other attempts to harm our systems. We utilize reputable third-party service providers or vendors for all
of our IT and communications systems, and these providers could also be vulnerable to harms similar to those that could damage our systems,
including sabotage and intentional acts of vandalism causing potential disruptions. Some of our systems will not be fully redundant,
and our disaster recovery planning cannot account for all eventualities. Any problems with our third-party cloud hosting providers could
result in lengthy interruptions in our business. In addition, our services and functionality consist of highly technical and complex
technology which may contain errors or vulnerabilities that could result in interruptions in our business or the failure of our systems.

 

We
may incorporate third-party technologies in our products, which would make us dependent on the providers of these technologies and exposes
us to potential intellectual property claims. 

 

Our
products and services may contain certain technologies that are purchased and/or licensed from other companies. Third-party developers
or owners of such technologies may be unwilling to sell to us or enter into, or renew, license agreements with us for the technologies
that we need on acceptable terms, or at all. If we cannot purchase these products or obtain licenses for these technologies, we could
lose a competitive advantage compared to our competitors who are able to license these technologies. In addition, when we obtain licenses
for third-party technologies, we may have little or no ability to determine in advance whether the technology infringes the intellectual
property rights of others. Our suppliers and licensors may not be required or may not be able to indemnify us if claims of infringement
are asserted against us, or they may be required to indemnify us only up to a maximum amount, and we would be responsible for any costs
or damages above such maximum amount. Any failure to obtain licenses for intellectual property or any exposure to liability as a result
of incorporating third-party technologies into our products could materially and adversely affect our business, results of operations,
and financial condition.

 

If
our products do not effectively interoperate with our customers’ existing or future IT infrastructures, implementations of our
products could be delayed or canceled, which could harm our business. 

 

Our
products must effectively interoperate with our customers’ existing or future IT infrastructures, which often have different specifications,
utilize multiple protocol standards, deploy products from multiple vendors and contain multiple generations of products that have been
added over time. If we find errors in the existing software or defects in the hardware used by our customers’ infrastructure or
problematic network configurations or settings, we may need to modify our software or hardware so that our products will interoperate
with our customers’ infrastructure and business processes.

 

We
may not deliver or maintain interoperability quickly or cost-effectively, or at all. These efforts require capital investment and engineering
resources. If we fail to maintain compatibility of our products with our customers’ internal networks and infrastructures, our
customers may not be able to fully utilize our services and products, and we may, among other consequences, lose or fail to increase
our market share and number of customers and experience reduced demand for our products, and our business, financial condition and results
of operations could be materially adversely affected.

 

 

Risks
Related to Our Intellectual Property

 

Our
proprietary rights may be difficult to enforce, which could enable others to copy or use aspects of our products without compensating
us. 

 

We
rely primarily on a combination of trademark, copyright, and trade secret laws, as well as confidentiality procedures and contractual
provisions, to protect our proprietary technology. We generally no longer rely on patent protection for our solutions and may, in the
future, elect not to maintain our existing patents or pursue new patent applications. To the extent we do not have patent protection
for our inventions, we may be unable to prevent others from using our technology or from developing and marketing relevant products that
are similar to or compete with our own. Furthermore, because we do not actively monitor the legal status of our historical patent filings
or consistently maintain them, such assets may lapse or be challenged without our knowledge, rendering them ineffective as defensive
assets.

 

The
process of obtaining and maintaining patent protection is expensive and time-consuming, and we may not be able to, or may choose not
to, prosecute necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, recent changes to patent
rules in the United States and other jurisdictions may bring into question the validity of certain software-related intellectual property
and may make it more difficult and costly to enforce proprietary rights.

 

Despite
our efforts to protect our intellectual property, unauthorized parties may attempt to copy aspects of our products or obtain and use
information that we regard as proprietary. We generally enter into confidentiality or license agreements with our employees, consultants,
vendors, and customers and generally limit access to and distribution of our proprietary information. However, we cannot guarantee that
the steps taken by us will prevent misappropriation of our technology, especially regarding trade secrets which, once disclosed, may
lose their legal protection.

 

Policing
unauthorized use of our technology or products is difficult. In addition, the laws of some foreign countries do not protect proprietary
rights to as great an extent as the laws of the United States or Israel, and many foreign countries do not enforce these laws as diligently.
From time to time, legal action by us may be necessary to protect our trade secrets, determine the validity and scope of the proprietary
rights of others, or defend against claims of infringement. Such litigation could result in substantial costs and diversion of resources
and could negatively affect our business, operating results, and financial condition. If we are unable to protect our proprietary rights
(including aspects of our software and products protected by trade secret or copyright), we may find ourselves at a competitive disadvantage
to others who need not incur the additional expense, time, and effort required to create the innovative products that we offer.  

 

We
may not be able to adequately protect or enforce our intellectual property rights or prevent unauthorized parties from copying or reverse
engineering our products or technology. Our efforts to protect and enforce our intellectual property rights and prevent third parties
from violating our rights may be costly. 

 

The
success of our products and business depends in part on our ability to obtain patents and other intellectual property rights and maintain
adequate legal protection for our products. We rely on a combination of service mark, and trade secret laws, as well as confidentiality
procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection.

 

We
cannot be sure that any trademarks will be registered with respect to our currently pending applications in a manner that provides adequate
defensive protection or competitive advantages, if at all. We may file for trademarks in the United States and other international jurisdictions,
but such protections may not be available in all countries in which we operate or in which we seek to enforce our intellectual property
rights, or may be difficult to enforce in practice. For example, the legal environment relating to intellectual property protection in
certain emerging market countries where we may operate in the future is relatively weaker, often making it difficult to create and enforce
such rights. Our currently-registered intellectual property and any intellectual property that may be issued or registered, as applicable,
in the future with respect to pending or future applications may not provide sufficiently broad protection or may not prove to be enforceable
in actions against alleged infringers. We cannot be certain that the steps we have taken will prevent unauthorized use of our technology
or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive to or infringe
our intellectual property.

 

 

Protecting
against the unauthorized use of our intellectual property, products and other proprietary rights is expensive and difficult, particularly
internationally. We believe that our intellectual property is foundational in the area of confidential computing and we intend to enforce
the intellectual property portfolio that we have built. Unauthorized parties may attempt to copy or reverse engineer our technology or
certain aspects of our products that we consider proprietary. Litigation may be necessary in the future to enforce or defend our intellectual
property rights, to prevent unauthorized parties from copying or reverse engineering our products or technology to determine the validity
and scope of the proprietary rights of others or to block the importation of infringing products into the U.S., Israel or other jurisdictions
in which we seek to protect our intellectual property rights.

 

Any
such litigation, whether initiated by us or a third party, could result in substantial costs and diversion of management resources, either
of which could adversely affect our business, operating results and financial condition. Even if we obtain favorable outcomes in litigation,
we may not be able to obtain adequate remedies, especially in the context of unauthorized parties copying or reverse engineering our
products or technology.

 

Effective
trademark, service mark, copyright and trade secret protection may not be available in every country in which our products are available
and competitors based in other countries may sell infringing products in one or more markets. Failure to adequately protect our intellectual
property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive
advantage, and our business, financial condition and results of operations could be materially adversely affected.

 

Third-party
claims that we are infringing intellectual property, whether successful or not, could subject us to costly and time-consuming litigation
or expensive licenses, and our business could be adversely affected. 

 

Participants
in our industry typically protect their technology, especially embedded software, through copyrights and trade secrets. As a result,
there is frequent litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights.
We may in the future receive inquiries from other intellectual property holders and may become subject to claims that we infringe their
intellectual property rights, particularly as we expand our presence in the market, expand to new use cases and face increasing competition.
In addition, parties may claim that the names and branding of our products infringe their trademark rights in certain countries or territories.
If such a claim were to prevail, we may have to change the names and branding of our products in the affected territories and could incur
other costs.

  

We
may in the future need to initiate infringement claims or litigation in order to try to protect our intellectual property rights. In
addition to litigation where we are a plaintiff, our defense of intellectual property rights claims brought against us or our customers
or suppliers, with or without merit, could be time-consuming, expensive to litigate or settle, could divert management resources and
attention and could force us to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments
and may not be available on acceptable terms or at all. Further, a party making such a claim, if successful, could secure a judgment
that requires us to pay substantial damages or obtain an injunction and we may also lose the opportunity to license our technology to
others or to collect royalty payments. An adverse determination could also invalidate or narrow our intellectual property rights and
adversely affect our ability to offer our products to our customers and may require that we procure or develop substitute products that
do not infringe, which could require significant effort and expense. If any of these events were to materialize, our business, financial
condition and results of operations could be materially adversely affected.

 

Certain
of our products contain third-party open-source software components, and failure to comply with the terms of the underlying open-source
software licenses could restrict our ability to sell our products or expose us to other risks. 

 

Our
products contain software modules licensed to us by third-party authors under “open source” licenses. From time to time,
there have been claims against companies that distribute or use open-source software in their products and services, asserting that open-source
software infringes the claimants’ intellectual property rights. We could be subject to suits by parties claiming infringement of
intellectual property rights in what we believe to be licensed open-source software. Use and distribution of open-source software may
entail greater risks than the use of third-party commercial software, as, for example, open-source licensors generally do not provide
warranties or other contractual protections regarding infringement claims or the quality of the code. Some open-source licenses contain
requirements that we make available source code for modifications or derivative works we create based upon the type of open-source software
we use. If we combine our proprietary software with open-source software in a certain manner, HUB could, under certain open-source licenses,
be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar
products with lower development effort and time and ultimately could result in a loss of product sales for HUB.

 

 

Although
we monitor our use of open-source software to avoid subjecting our products to conditions we do not intend, the terms of many open-source
licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in a way that, for example,
could impose unanticipated conditions or restrictions on our ability to commercialize our products. In this event, we could be required
to seek licenses from third parties to continue offering our products, to make our proprietary code generally available in source code
form, to re-engineer our products, or to discontinue the sale of our products if re-engineering could not be accomplished on a timely
basis, and our business, financial condition and results of operations could be materially adversely affected.

  

We
rely on unpatented proprietary technology, trade secrets, designs, experiences, workflows, data, processes, software, and know-how. 

 

We
rely on proprietary information (such as trade secrets, designs, experiences, workflows, data, know-how, and confidential information)
to protect intellectual property that may not be patentable or subject to copyright, trademark, trade dress, trade secrets or service
mark protection, or that we believe is best protected by means that do not require public disclosure. We generally seek to protect this
proprietary information by entering into confidentiality agreements, or consulting, services or employment agreements that contain non-disclosure
and non-use provisions with our employees, consultants, customers, contractors, and third parties. However, we may fail to enter into
the necessary agreements, and even if entered into, such agreements may be breached or may otherwise fail to prevent disclosure, third-party
infringement, or misappropriation of our proprietary information, may be limited as to their term and may not provide adequate remedies
in the event of unauthorized disclosure or use of proprietary information. We have limited control over the protection of trade secrets
used by our current or future manufacturing counterparties and suppliers and could lose future trade secret protection if any unauthorized
disclosure of such information occurs. In addition, our proprietary information may otherwise become known or be independently developed
by our competitors or other third parties. To the extent that our employees, consultants, customers, contractors, advisors, and other
third parties use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting
know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary
rights, and failure to obtain or maintain protection for our proprietary information could adversely affect our competitive business
position. Furthermore, laws regarding trade secret rights in certain markets where we operate may afford little or no protection to our
trade secrets.

 

We
also rely on physical and electronic security measures to protect our proprietary information but cannot provide assurance that these
security measures will not be breached or provide adequate protection for our property. There is a risk that third parties may obtain
and improperly utilize our proprietary information to our competitive disadvantage. We may not be able to detect or prevent the unauthorized
use of such information or take appropriate and timely steps to enforce our intellectual property rights, and our business, financial
condition and results of operations could be materially adversely affected.

 

Risks
Related to Our Legal and Regulatory Environment 

 

We
are subject to a securities class action and other litigations and could be subject to additional litigation in the United States, Israel
or elsewhere that could negatively impact our business, including resulting in substantial costs and liabilities. Specifically, we are
subject to a pending lawsuit in the Supreme Court of the State of New York relating to our 2023 de-SPAC merger seeking damages of not
less than $5.08 million, plus interest, attorneys’ fees and costs, and the plaintiff has filed a motion for entry of a default
judgment, the entry of which could have a material adverse effect on our business, financial condition, results of operations and liquidity.

 

From
time to time, we are subject to litigation or claims that could negatively affect our business operations and financial position. We
and certain of our directors and officers have been named as defendants in a number of lawsuits that could cause us to incur unforeseen
expenses, service disruptions, and otherwise occupy a significant amount of our management’s time and attention, any of which,
if determined adversely to us, could have a material adverse impact on our business, financial condition, results of operations, cash
flows, growth prospects and reputation.

 

 

For
additional information on the class action and other lawsuits and for information concerning additional litigation proceedings, see Note
22 to our audited consolidated financial statements for the year ended December 31, 2025 included in this Annual Report.

 

We
also from time to time receive inquiries and subpoenas and other types of information requests from government regulators and authorities
and we may become subject to related claims and other actions related to our business activities. While the ultimate outcome of investigations,
inquiries, information requests and related legal proceedings is difficult to predict, such matters can be expensive, time-consuming
and distracting, and adverse resolutions or settlements of those matters may result in, among other things, modification of our business
practices, reputational harm or costs and significant payments, any of which could negatively affect our business operations and financial
position.

 

On
February 27, 2026, DC Rainier SPV LLC, the former sponsor of Mount Rainier Acquisition Corp., commenced an action against us and A-Labs
Finance & Advisory Ltd. in the Supreme Court of the State of New York, County of New York (Index No. 151513/2026), alleging fraud
and related claims in connection with the February 2023 de-SPAC merger between Mount Rainier Acquisition Corp. and our predecessor entity.
The plaintiff alleges, among other things, that (i) we and A-Labs misrepresented the existence of approximately $50 million of purportedly
“irrevocable” private investment in public equity (PIPE) financing commitments (including approximately $10 million purportedly
committed by A-Labs itself) prior to the closing of the de-SPAC merger, none of which was funded, and (ii) we concealed misappropriation
of Company funds by our former Chief Executive Officer and the misuse of Company credit cards by a former controller, as well as the
existence of material weaknesses in our internal control over financial reporting for the years ended December 31, 2021 and 2022. The
plaintiff seeks damages of not less than $5,080,027, plus interest, attorneys’ fees and costs.

 

On
April 28, 2026, the plaintiff filed a motion for entry of a default judgment against us, with a return date of May 29, 2026, on the grounds
that we did not respond to the complaint within the time prescribed by the New York Civil Practice Law and Rules. As of the date of this
Annual Report, we have not yet appeared in the action. We plan to seek to vacate any entry of default and to oppose the motion, asserting
that service was not properly made. If a default judgment is entered against us in the amount sought by the plaintiff (or any substantial
portion thereof), or if we are otherwise found liable for damages, it could have a material adverse effect on our financial condition,
liquidity and the trading price of our ordinary shares, particularly given our existing liquidity constraints, and could increase the
risk that we may be forced to seek bankruptcy or insolvency court protection. Any efforts to vacate or appeal a default judgment, or
to defend the underlying claims, would be costly, would divert management resources and would have an uncertain outcome. Further, we
may be subject to additional similar litigation in the future relating to disclosures made in connection with the de-SPAC merger or otherwise,
and the costs and outcomes of any such litigation could also have a material adverse effect on our business, financial condition and
results of operations.

 

The
dynamic regulatory environment around privacy and data protection may limit our offering or require modification of our products and
services, which could limit our ability to attract new customers and support our existing customers and increase our operational expenses.
We could also be subject to investigations, litigation, or enforcement actions alleging that we fail to comply with the regulatory requirements,
which could harm our operating results and adversely affect our business. 

 

Federal,
state and international bodies continue to adopt, enact, and enforce new laws and regulations, as well as industry standards and guidelines,
addressing cybersecurity, privacy, data protection and the collection, processing, storage, cross-border transfer and use of personal
information.

 

We
are subject to diverse laws and regulations relating to data privacy, including but not limited to the EU General Data Protection Regulation 2016/679
(“GDPR”), the California Consumer Privacy Act (“CCPA”), the Health Insurance Portability and Accountability Act
as amended by the Health Information Technology for Economic and Clinical Health Act (“HIPAA”), the UK Data Protection Act
2018, national privacy laws of EU Member States, the Israeli Privacy Protection Law, 1981 (“PPL”) and other laws relating
to privacy, data protection, and cloud computing. These laws are evolving rapidly, as exemplified by the recent adoption by the European
Commission of a new set of Standard Contractual Clauses; the prospect of a new European “ePrivacy Regulation” (to replace
the existing “ePrivacy Directive,” Directive 2002/58 on Privacy and Electronic Communications); the California Privacy Rights
Act, which took effect on January 1, 2023 and created obligations with respect to certain data relating to consumers, significantly expanded
the CCPA, including by introducing additional obligations such as data minimization and storage limitations, granting additional rights
to consumers, such as correction of personal information and additional opt-out rights, and created a new entity, the California Privacy
Protection Agency, to implement and enforce the law; and the adoption of a significant amendment to the PPL, known as Amendment 13, which
took effect in August 2025 and notably enhances the investigative powers of the Privacy Protection Authority and increase the potential
monetary sanctions for violations. Similar laws coming into effect in U.S. states, adoption of a comprehensive U.S. federal data privacy
law, and new legislation in international jurisdictions may continue to change the data protection landscape globally and could result
in us expending considerable resources to meet these requirements. Compliance with these laws, as well as efforts required to understand
and interpret new legal requirements, require HUB to expend significant capital and other resources. We could be found to not be in compliance
with obligations or suffer from adverse interpretations of such legal requirements either as directly relating to our business or in
the context of legal developments impacting our customers or other businesses, which could impact our ability to offer our products or
services, impact operating results, or reduce demand for our products or services.

 

 

Compliance
with privacy and data protection laws and contractual obligations may require changes in services, business practices, or internal systems
resulting in increased costs, lower revenue, reduced efficiency, or greater difficulty in competing with companies that are not subject
to these laws and regulations. For example, GDPR and the UK compliance regime impose several stringent requirements for controllers and
processors of personal data and increase our obligations such as, requiring robust disclosures to individuals, establishing an individual
data rights regime, setting timelines for data breach notifications, imposing conditions for international data transfers, requiring
detailed internal policies and procedures and limiting retention periods. Ongoing compliance with these and other legal and contractual
requirements may necessitate changes in services and business practices, which may lead to the diversion of engineering resources from
other projects. Additionally, given our overall cash position, liquidity concerns and lack of resources, we do not have sufficient capability
to adequately maintain ongoing compliance with all relevant legal and contractual requirements or timely and properly implement new policies
and procedures to comply with new and changing laws and regulations.

 

As
a company that focuses on cybersecurity, our customers may rely on our products and services as part of their own efforts to comply with
security control obligations under GDPR and other laws and contractual commitments. If our products or services are found insufficient
to meet these standards in the context of an investigation into us or our customers, or we are unable to engineer products that meet
these standards, we could experience reduced demand for our products or services. There is also increased international scrutiny of cross-border
transfers of data, including by the EU for personal data transfers to countries such as the U.S., following recent case law and regulatory
guidance. This increased scrutiny, as well as evolving legal and other regulatory requirements around the privacy or cross-border transfer
of personal data could increase our costs, restrict our ability to store and process data as part of our solutions, or, in some cases,
impact our ability to offer our solutions or services in certain jurisdictions.

 

Enactment
of further privacy laws in the U.S., at the state or federal level, or introduction of new services or products that are subject to additional
regulations, as well as ensuring compliance of solutions that we obtained through acquisitions, may require us to expend considerable
resources to fulfill regulatory obligations, and could carry the potential for significant financial or reputational exposure to our
business, delay introduction to the market and affect adoption rates.

 

Claims
that we have breached our contractual obligations or failed to comply with applicable privacy and data protection laws, even if we are
not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
In addition to litigation, we could face regulatory investigations, negative market perception, potential loss of business, enforcement
notices and/or fines (which, for example, under GDPR / UK regime can be up to 4% of global turnover for the preceding financial year
or €20 / £17.5 million, whichever is higher).

 

Failure
to comply with applicable economic sanctions laws and regulations could harm our business. 

 

Failure
to comply with trade compliance and economic sanctions laws and regulations of the U.S., the EU (including Germany), Israel and the UK
and other applicable international jurisdictions could materially adversely affect our reputation and operations.

 

Our
business must be conducted in compliance with applicable economic and trade sanctions laws and regulations, such as those administered
and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department
of Commerce, the United Nations Security Council, the EU, His Majesty’s Treasury of the United Kingdom and other relevant sanctions
authorities. Our global operations expose us to the risk of violating, or being accused of violating, economic and trade sanctions laws
and regulations.

 

While
we have taken certain precautions to prevent our solutions from being provided in violation of applicable trade controls laws and regulations,
our products may have been in the past, and could in the future be, provided inadvertently, and without our knowledge, in violation of
such laws. Violations of U.S. trade controls laws and regulations can result in significant fines or penalties and possible criminal
liability for responsible employees and managers, in addition to potential reputational harm.

 

 

Any
change in export or import regulations, economic sanctions or related laws or regulations, or change in the countries, governments, persons
or technologies targeted by such regulations, could result in decreased use of our solutions by, or in our decreased ability to export
or sell our solutions to, existing or potential end-customers with international operations. Any decreased use of our solutions or limitation
on our ability to export or sell our solutions could adversely affect our business, financial condition, results of operations, and growth
prospects.

 

Our
business may be affected by sanctions, export controls and similar measures targeting Russia and other countries and territories as well
as other responses to Russia’s military conflict in Ukraine, including indefinite suspension of operations in Russia and dealings
with Russian entities by many multi-national businesses across a variety of industries. 

 

As
a result of Russia’s military conflict in Ukraine, governmental authorities in the United States, the EU and the UK, among others,
launched an expansion of coordinated sanctions and export control measures, including:

 

●

blocking sanctions on some of the largest state-owned and private Russian financial institutions (and their subsequent removal from SWIFT);

 

●

blocking sanctions against Russian and Belarusian individuals, including the Russian President, other politicians and those with government connections or involved in Russian military activities;

 

●

blocking sanctions against certain Russian businessmen and their businesses, some of which have significant financial and trade ties to the EU;

 

●

blocking of Russia’s foreign currency reserves and prohibition on secondary trading in Russian sovereign debt and certain transactions with the Russian Central Bank, National Wealth Fund and the Ministry of Finance of the Russian Federation;

 

●

expansion of sectoral sanctions in various sectors of the Russian and Belarusian economies and the defense sector;

 

●

United Kingdom sanctions introducing restrictions on providing loans to, and dealing in securities issued by, persons connected with Russia;

 

●

restrictions on access to the financial and capital markets in the EU, as well as prohibitions on aircraft leasing operations;

 

●

sanctions prohibiting most commercial activities of U.S. and EU persons in Crimea and Sevastopol;

 

●

enhanced export controls and trade sanctions targeting Russia’s imports of technological goods as a whole, including tighter controls on exports and reexports of dual-use items, stricter licensing policy with respect to issuing export licenses, and/or increased use of “end-use” controls to block or impose licensing requirements on exports, as well as higher import tariffs and a prohibition on exporting luxury goods to Russia and Belarus;

 

●

closure of airspace to Russian aircrafts; and

 

●

ban on imports of Russian oil, liquefied natural gas and coal to the U.S.

 

As
the conflict in Ukraine continues, there can be no certainty regarding whether the governmental authorities in the United States, the
EU, the UK or other counties will impose additional sanctions, export controls or other measures targeting Russia, Belarus or other territories.
Furthermore, in retaliation against new international sanctions and as part of measures to stabilize and support the volatile Russian
financial and currency markets, the Russian authorities also imposed significant currency control measures aimed at restricting the outflow
of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of
various products and other economic and financial restrictions.

 

 

We
must be ready to comply with the existing and any other potential additional measures imposed in connection with the conflict in Ukraine.
The imposition of such measures could adversely impact our business, including preventing us from performing existing contracts, recognizing
revenue, pursuing new business opportunities or receiving payment for products already supplied or services already performed with customers.

 

Furthermore,
even if an entity is not formally subject to sanctions, customers and business partners of such entity may decide to reevaluate or cancel
projects with such entity for reputational or other reasons. As a result of the ongoing conflict in Ukraine, many U.S. and other multi-national
businesses across a variety of industries, including consumer goods and retail, food, energy, finance, media and entertainment, tech,
travel and logistics, manufacturing and others, have indefinitely suspended their operations and paused all commercial activities in
Russia and Belarus. As a result of the outbreak of the war in Ukraine, we have ceased to conduct any business operations in the region.
We may seek to resume operations in the area, dependent on the outcome of the hostilities. While we do not currently have any material
operations or business in Russia or Ukraine, depending on the extent and breadth of sanctions, export controls and other measures that
may be imposed in connection with the conflict in Ukraine, it is possible that our business, financial condition and results of operations
could be materially and adversely affected.

 

We
are subject to complex, evolving regulatory requirements that may be difficult and expensive to comply with and that could negatively
impact our business. 

 

Our
business and operations are subject to a variety of often changing regulatory requirements in the countries in which we operate or offer
our solutions, including, among other things, with respect to trade compliance, anti-corruption, sanction regimes, information security,
data privacy and protection, tax, labor and government contracts. Compliance with these regulatory requirements may be onerous, time-consuming,
and expensive, especially where these requirements are inconsistent from jurisdiction to jurisdiction, or where the jurisdictional reach
of certain requirements is not clearly defined or seeks to reach across national borders. Regulatory requirements in one jurisdiction
may make it difficult or impossible to do business in another jurisdiction. We may also be unsuccessful in obtaining permits, licenses,
or other authorizations required to operate our business, such as for the marketing or sale or import or export of our products and services.

 

While
we endeavor to implement policies, procedures and systems designed to achieve compliance with these regulatory requirements, there is
no assurance that these policies, procedures, or systems will be adequate, that we or our personnel will not violate these policies and
procedures or applicable laws and regulations or that we will have sufficient resources to meet these regulatory requirements or any
changes to these regulatory requirements. Violations of these laws or regulations may harm our reputation and deter government agencies
and other existing or potential customers or partners from purchasing our solutions. Furthermore, non-compliance with applicable laws
or regulations could result in fines, damages, criminal sanctions against us, our officers, or our employees, restrictions on the conduct
of our business and damage to our reputation.

 

Moreover,
regulatory requirements are subject to constant updates, modifications and revisions by the authorities adopting and implementing such
requirements which result in uncertainty as well as difficulties in planning ahead of time. Adapting our practices, policies and procedures
to this ever-changing regulatory environment involves resources and time and requires our regulatory compliance teams to be on the watch
for any actual or potential changes and may have an impact on our ability to pursue business opportunities and anticipate the future
results.

 

We
are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws, and non-compliance with such laws can subject us
to criminal penalties or significant fines and harm our business and reputation. 

 

We
are subject to anti-corruption and anti-bribery and similar laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended
(the “FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, U.S. Travel Act, the USA PATRIOT
Act, the U.K. Bribery Act 2010, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 5737-1977, the Israeli Prohibition on Money Laundering
Law, 5760-2000, and other anti-corruption, anti-bribery laws and anti-money laundering laws in countries in which we conduct activities.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and generally
prohibit companies and their employees and agents from directly or indirectly promising, authorizing, making, offering, soliciting, or
receiving improper payments of anything of value to or from government officials or others in the private sector. As we increase our
international sales and business, our risks under these laws may increase. Although we have internal policies and procedures, including
a code of ethics and proper business conduct, reasonably designed to promote compliance with anti-bribery laws, HUB cannot be sure that
our employees or other agents will not engage in prohibited conduct and render HUB responsible under the FCPA, the U.K. Bribery Act or
any similar anti-bribery laws in other jurisdictions. Noncompliance with these laws could subject HUB to investigations, sanctions, settlements,
prosecutions, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions,
collateral litigation, adverse media coverage and other consequences. Any investigations, actions or sanctions could harm our business,
results of operations and financial condition.

 

 

If
we fail to comply with environmental requirements, our business, financial condition, operating results and reputation could be adversely
affected. 

 

We
are subject to various environmental laws and regulations, including laws governing the hazardous material content of our products, laws
relating to real property and future expansion plans and laws concerning the recycling of Electrical and Electronic Equipment (“EEE”).
The laws and regulations to which we may be subject include the EU RoHS Directive, EU Regulation 1907/2006 — Registration,
Evaluation, Authorization and Restriction of Chemicals (the “REACH Regulation”) and the EU Waste Electrical and Electronic
Equipment Directive (the “WEEE Directive”), as well as the implementing legislation of the EU member states. Similar laws
and regulations have been passed or are pending in China, South Korea, Norway and Japan and may be enacted in other regions, including
in the United States, and we may in the future be subject to these laws and regulations.

 

The
EU RoHS Directive and the similar laws of other jurisdictions ban or restrict the presence of certain hazardous substances such as lead,
mercury, cadmium, hexavalent chromium and certain fire-retardant plastic additives in electrical equipment, including our products. HUB
attempts to comply with these laws, including research and development costs, costs associated with assuring the supply of compliant
components and costs associated with writing off scrapped noncompliant inventory. HUB expects to continue to incur costs related to environmental
laws and regulations in the future.

 

As
part of the Circular Economy Action Plan, the European Commission amended the EU Waste Framework Directive (“WFD”) to include
a number of measures related to waste prevention and recycling, whereby we may be responsible for submitting product data to a database
of hazardous substances established under the WFD and managed by the European Chemicals Agency. We may incur costs to comply with this
new requirement.

 

The
EU has also adopted the WEEE Directive, which requires electronic goods producers to be responsible for the collection, recycling and
treatment of such products. Although currently our EU international channel partners may be responsible for the requirements of this
directive as the importer of record in most of the European countries in which we sell our products, changes in interpretation of the
regulations may cause us to incur costs or have additional regulatory requirements in the future to meet in order to comply with this
directive, or with any similar laws adopted in other jurisdictions.

 

Our
failure to comply with these and future environmental rules and regulations could result in reduced sales of our products, increased
costs, substantial product inventory write-offs, reputational damage, penalties and other sanctions.

 

Scrutiny
of sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs or otherwise adversely impact
our business.

 

Public
companies have recently faced scrutiny related to ESG practices and disclosures from certain investors, capital providers,
shareholder advocacy groups, other market participants and other stakeholder groups. Such scrutiny may result in increased costs, enhanced
compliance or disclosure obligations, or other adverse impacts on our business, financial condition or results of operations. If our ESG practices
and reporting do not meet investor or other stakeholder expectations, we may be subject to investor or regulator engagement regarding
such matters. Our failure to comply with any applicable ESG rules or regulations could lead to penalties and adversely impact our reputation,
access to capital and employee retention. Such ESG matters may also impact our third-party contract manufacturers and other
third parties on which we rely, which may augment or cause additional impacts on our business, financial condition, or results of operations.

 

Our
business could be negatively affected as a result of the actions of activist shareholders, and such activism could impact the trading
value of our securities. 

 

In
recent years, U.S. and non-U.S. companies listed on securities exchanges in the U.S. have been faced with governance-related demands
from activist shareholders, unsolicited tender offers and proxy contests. Although as a foreign private issuer we are not subject to
U.S. proxy rules, responding to any action of this type by activist shareholders could be costly and time-consuming, disrupting our operations
and diverting the attention of management and our employees. Such activities could interfere with our ability to execute our strategic
plans. In addition, a proxy contest for the election of directors at our annual meeting would require us to incur significant legal fees
and proxy solicitation expenses and require significant time and attention by management and our board of directors. The perceived uncertainties
due to such actions of activist shareholders also could affect the market price of our securities.

 

 

We
may be required to indemnify our directors and officers in certain circumstances. 

 

Our
Articles of Association (the “Articles”) allow us to indemnify, exculpate and insure our directors and senior officers to
the fullest extent permitted under the Israeli Companies Law, 5759-1999 (the “Companies Law”). As such, we have entered into
agreements with each of our directors and senior officers to indemnify, exculpate and insure them against some types of claims, subject
to dollar limits and other limitations. Subject to Israeli law, these agreements generally provide that HUB will indemnify each of these
directors and senior officers for any of the following liabilities or expenses that they may incur due to an act performed or failure
to act in their capacity as directors or senior officers:

 

●

Monetary liability imposed on the director or senior officer in favor of a third party in a judgment, including a settlement or an arbitral award confirmed by a court.

 

●

Reasonable legal costs, including attorneys’ fees, expended by a director or senior officer as a result of an investigation or proceeding instituted against the director or senior officer by a competent authority; provided, however, that such investigation or proceeding concludes without the filing of an indictment against the director or senior officer and either:

 

●

No financial liability was imposed on the director or senior officer in lieu of criminal proceedings, or

 

●

Financial liability was imposed on the director or senior officer in lieu of criminal proceedings, but the alleged criminal offense does not require proof of criminal intent.

 

●

Reasonable legal costs, including attorneys’ fees, expended by the director or senior officer or for which the director or senior officer is charged by a court:

 

●

In an action brought against the director or senior officer by us, on our behalf or on behalf of a third party,

 

●

In a criminal action in which the director or senior officer is found innocent, or

 

●

In a criminal action in which the director or senior officer is convicted, but in which proof of criminal intent is not required.

 

Our
current and future cash balances and any investment portfolio we may have may be adversely affected by market conditions and interest
rates. 

 

We
currently have limited cash resources and liquidity. As such we expect to maintain balances of cash and cash equivalents for purposes
of acquisitions and general corporate purposes. While we do not currently hold any marketable securities, there is no guarantee that
we will not maintain marketable securities in the future. The performance of the capital markets affects the values of funds that are
held in marketable securities. These assets are subject to market fluctuations, changes in interest rates and credit spreads, market
liquidity and various other factors, including, without limitation, rating agency downgrades that may impair their value, or unexpected
changes in the financial markets’ healthiness worldwide. In addition, in case we hold liquid investments in the future and would
like to liquidate some of our investments and turn them into cash, we will be dependent on market conditions and liquidity opportunities,
which may be impacted by global economic trends.

 

 

Risks
Related to Being a U.S. Listed Public Company

 

We
continue to incur significant costs as a result of operating as a U.S. listed public company, and our management needs to devote substantial
time to compliance initiatives. 

 

As
a public company subject to reporting requirements in the United States, we incur significant legal, accounting and other expenses, and
these expenses may increase even more after we are no longer an emerging growth company, as defined in Section 2(a) of the Securities
Act. As a public company in the United States, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act,
the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Our
management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and
regulations have caused us to incur significant legal and financial compliance costs and have made some activities to be more time-consuming
and costly. As a result, the preparation and filing of this Annual Report was exceedingly time consuming and costly for us. We have not
always filed our Annual Report by the prescribed deadline and are filing this Annual Report late, and we cannot be certain that similar
situations would not occur in the future. Additionally continued delinquency in the timely submission of future filings could lead to
the SEC instituting administrative proceedings pursuant to Section 12(j) of the Exchange Act to suspend or revoke the registration of
our ordinary shares. These costs will likely increase our net loss in the short term. We cannot predict or estimate the amount or timing
of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult
for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

 

A
market for our securities may not be sustained, which would adversely affect the liquidity and price of our securities. 

 

The
price of our securities has and may continue to fluctuate significantly due to the performance of our business as well as general market
and economic conditions. In addition, the price of our securities can vary due to general economic conditions and forecasts, our general
business conditions and the release of our financial reports. Additionally, if our securities become delisted from Nasdaq and are quoted
on OTC Markets (an inter-dealer automated quotation system for equity securities that is not a national securities exchange), the liquidity
and price of our securities may be more limited than if we were quoted or listed on the NYSE, Nasdaq or another national securities exchange.
You may be unable to sell your securities unless an active market can be sustained.

 

If
we fail to remediate our material weaknesses or if we fail to maintain an effective system of disclosure controls and internal control
over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could
be impaired.

 

As
discussed above, in connection with the review of our consolidated financial statements for the years ended December 31, 2025, 2024 and
2023, included in this Annual Report, our management identified material weaknesses in our internal control over financial reporting.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control
over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure
that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and
reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the
Exchange Act, is accumulated and communicated to our principal executive and financial officers. We believe that any disclosure controls
and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons,
by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in
our control system, misstatements due to error or fraud may occur and not be detected.

 

 

We
are also continuing to try to improve our internal control over financial reporting. In order to maintain and improve the effectiveness
of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will
continue to expend, significant resources, including accounting-related costs and significant management oversight. If any of these new
or improved controls and systems do not perform as expected, we may experience material weaknesses in our controls. In addition to our
results determined in accordance with IFRS, we believe certain non-IFRS measures and key metrics may be useful in evaluating our operating
performance. We present certain non-IFRS financial measures and key metrics in this Annual Report and intend to continue to present certain
non-IFRS financial measures and key metrics in future filings with the SEC and other public statements. Any failure to accurately report
and present our non-IFRS financial measures and key metrics could cause investors to lose confidence in our reported financial and other
information, which would likely have a negative effect on the trading price of our ordinary shares.

 

While
we are in the process of implementing remediation measures to address the material weaknesses identified by our management, our current
controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, additional
material weaknesses or other weaknesses in our disclosure controls and internal control over financial reporting may be discovered in
the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement
could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our consolidated
financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also
could adversely affect the results of periodic management evaluations that we will be required to include in our second annual report
that we file with the SEC and annual independent registered public accounting firm attestation reports regarding the effectiveness of
our internal control over financial reporting that we will be required to include in our annual reports after we lose our status as an
“emerging growth company.” Ineffective disclosure controls and procedures and internal control over financial reporting could
also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on
the trading price of our ordinary shares. In addition, if we are unable to continue to meet these requirements, we may not be able to
remain listed on Nasdaq.

 

We
are required to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting
pursuant to Section 404(a) of the Sarbanes-Oxley Act. See “Item 15. Controls and Procedures—Management’s Annual Report
on Internal Control over Financial Reporting.” This assessment includes disclosure of any material weaknesses identified by our
management in our internal control over financial reporting. The rules governing the standards that must be met for our management to
assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.
Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business.
Additionally, while we remain an emerging growth company, our independent registered public accounting firm is not required to formally
attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. At
such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with
the level at which our internal control over financial reporting is documented, designed or operating.

 

We
continue to be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and
challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, and adopt
a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control
processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting
and improvement process for internal control over financial reporting. The company is working to improve its control system through the
implementation of an internal audit. The process of procuring insurance includes conducting a risk survey to identify where there is
an increased level of risk. This process allows for an intelligent lowering of the risk levels that the Company is exposed to by improving
the control system.

 

 

Despite
our efforts, there is a risk that we will not be able to conclude, within the prescribed time frame or at all, that our internal control
over financial reporting is effective as required by Section 404 of the Sarbanes-Oxley Act. If we cannot properly remediate our material
weaknesses and develop our internal controls, or identify additional material weaknesses it could result in an adverse reaction in the
financial markets due to a loss of confidence in the reliability of our financial statements. As a result, the market price of our ordinary
shares could be negatively affected, and we could become subject to investigations by the SEC or other regulatory authorities, which
could require additional financial and management resources.

 

Any
failure to maintain effective disclosure controls and internal control over financial reporting could adversely affect our business,
financial condition, and results of operations and could cause a decline in the price of our ordinary shares.

  

Risks
Related to Ownership of Our Ordinary Shares and Warrants  

 

The
market price and trading volume of our ordinary shares and warrants on Nasdaq has been extremely volatile and could decline significantly. 

 

The
stock markets, including Nasdaq on which we have listed our ordinary shares and warrants under the symbols “HUBC,” “HUBCW”
and “HUBCZ,” respectively, have from time to time experienced significant price and volume fluctuations. The market price
for our securities, particularly our ordinary shares, has declined significant in recent months, losing approximately 99% of their value,
limiting the ability of our investors and business partners to resell their shares at or near the price at which they invested. In addition,
the trading volume in our ordinary shares and warrants has already and may continue to fluctuate and cause significant price variations
to occur. We cannot assure you that the market price of our ordinary shares and warrants will not continue to fluctuate widely or further
decline significantly in the future in response to a number of factors, including, among others, the following:

 

●

the realization of any of the risk factors presented in this Annual Report or any additional filing that we make with the SEC;

 

●

actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, gross margin, Adjusted EBITDA, results of operations, liquidity or financial condition;

 

●

additions and departures of key personnel;

 

●

failure to comply with the requirements of Nasdaq;

 

●

failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

 

●

regulatory inquiries or investigations resulting from our previously disclosed Internal Investigation;

 

●

future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our securities including due to the expiration of contractual lock-up agreements;

 

●

publication of research reports about us;

 

 

●

the performance and market valuations of other similar companies;

 

●

failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors;

 

●

new laws, regulations, subsidies, or credits or new interpretations of existing laws applicable to is;

 

●

commencement of, or involvement in, litigation involving HUB;

 

●

broad disruptions in the financial markets, including sudden disruptions in the credit markets;

 

●

speculation in the press or investment community;

 

●

actual, potential or perceived control, accounting or reporting problems;

 

●

changes in accounting principles, policies and guidelines; and

 

●

other events or factors, including those resulting from infectious diseases, health epidemics and pandemics (including the COVID-19 public health emergency or any resurgence thereof), natural disasters, war, acts of terrorism or responses to these events.

 

In
the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market
price of their shares. This type of litigation could result in substantial costs and divert our management’s attention and resources,
which could have a material adverse effect on us.

 

If
our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect,
our operating results could fall below expectations of securities analysts and investors, resulting in a decline in our share price. 

 

The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. HUB’s management
bases its estimates on various assumptions that it believes to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our operating
results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions. These could
cause HUB’s operating results to fall below the expectations of securities analysts and investors, resulting in a decline in HUB’s
stock price. Significant assumptions and estimates used in preparing HUB’s consolidated financial statements include those related
to revenue recognition, valuation of inventory, accounting for Business Combination, contingent liabilities and accounting for income
taxes.

 

We
do not intend to pay dividends for the foreseeable future. Accordingly, you may not receive any return on investment unless you sell
your HUB ordinary shares for a price greater than the price you paid for them. 

 

We
have never declared or paid any cash dividends on our shares. We currently intend to retain all available funds and any future earnings
for use in the operation of our business and do not anticipate paying any dividends on the HUB ordinary shares in the foreseeable future.
Consequently, you may be unable to realize a gain on your investment except by selling such shares after price appreciation, which may
never occur.

 

 

Our
board of directors has sole discretion whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency,
and amount will depend upon its future, operations and earnings, capital requirements and surplus, general financial condition, contractual
restrictions and other factors that its directors may deem relevant. The Companies Law imposes restrictions on our ability to declare
and pay dividends. See “Dividend and Liquidation Rights” in Exhibit 2.1 to this Annual Report for additional information.
Payment of dividends may also be subject to Israeli withholding taxes. See “Item 10.E —Additional Information—Taxation”
for additional information.

 

If
securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they
change their recommendations regarding our ordinary shares or warrants adversely, then the price and trading volume of our ordinary shares
could decline.

 

The
trading market for our ordinary shares and warrants will be influenced by the research and reports that industry or financial analysts
publish about our business. We do not control these analysts, or the content and opinions included in their reports. As a relatively
new public company, the analysts who publish information about our ordinary shares and warrants have had relatively little experience
with us, which could affect their ability to accurately forecast our results and make it more likely that we fail to meet their estimates.
In the event we obtain industry or financial analyst coverage, if any of the analysts who cover us issues an inaccurate or unfavorable
opinion regarding us, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to publish
reports on us regularly, our visibility in the financial markets could decrease, which in turn could cause our share price or trading
volume to decline.

 

We
are eligible to be treated as an emerging growth company, as defined in the Securities Act, and we cannot be certain if the reduced disclosure
requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors because we may rely on
these reduced disclosure requirements.

 

We
qualify as an emerging growth company within the meaning of the Securities Act, and we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, which could make our securities less attractive to investors and may make it more
difficult to compare our performance with other public companies.

 

We
are eligible to be treated as an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by
the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised financial accounting standards until such
time as those standards apply to private companies. We intend to take advantage of this extended transition period under the JOBS Act
for adopting new or revised financial accounting standards.

 

For
as long as we continue to be an emerging growth company, we may also take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies, including presenting only limited selected financial
data and not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result,
our shareholders may not have access to certain information that they may deem important. We could be an emerging growth company for
up to five years, although circumstances could cause us to lose that status earlier, including if our total annual gross revenue
exceeds $1.235 billion, if we issue more than $1.0 billion in non-convertible debt securities during any three-year period, or if before
that time we are a “large accelerated filer” under U.S. securities laws.

 

We
cannot predict if investors will find our ordinary shares less attractive because we may rely on these exemptions. If some investors
find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share
price may be more volatile. Further, there is no guarantee that the exemptions available to us under the JOBS Act will result in significant
savings. To the extent that we choose not to use exemptions from various reporting requirements under the JOBS Act, we will incur additional
compliance costs, which may impact our business, financial condition, results of operations, growth prospects and reputation.

 

 

We
are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting
obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

 

We
report under the Exchange Act as a non-U.S. company with foreign private issuer status. We qualify as a foreign private issuer under
the Exchange Act, and consequently we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public
companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in
respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public
reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time
and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing
unaudited financial and other specified information, although we are subject to Israeli laws and regulations with regard to certain of
these matters and intend to furnish comparable quarterly information on Form 6-K. In addition, foreign private issuers are not required
to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers
that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year
and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days
after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers
from making selective disclosures of material information. As a result of all of the above, you may not have the same protections afforded
to shareholders of a company that is not a foreign private issuer.

 

We
may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

 

As
discussed above, we are a foreign private issuer, and therefore are not required to comply with all of the periodic disclosure and current
reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business
day of an issuer’s most recently completed second fiscal quarter, and, accordingly, our next determination will be made on June 30,
2026. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are
owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to
meet additional requirements necessary to avoid loss of foreign private issuer status. If we lose our foreign private issuer status,
we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed
and extensive than the forms available to a foreign private issuer. We would also have to mandatorily comply with U.S. federal proxy
requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery
provisions of Section 16 of the Exchange Act. In addition, we would lose our ability to rely upon exemptions from certain corporate
governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer,
we would incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer.

 

As
we are a “foreign private issuer” and follow certain home country corporate governance practices, our shareholders may not
have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

 

As
a foreign private issuer, we have the option to, and do, follow certain home country corporate governance practices rather than those
of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following.
For instance, we follow home country practice in Israel with regard to the (i) quorum requirement for shareholder meetings and (ii) the
requirement to obtain shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity-based
compensation plans, issuances that will result in a change of control of the Company, certain transactions other than a public offering
involving issuances of a 20% or more interest in the Company and certain acquisitions of the shares or assets of another company). We
may in the future elect to follow home country practices in Israel with regard to other matters as well. Following our home country governance
practices as opposed to the requirements that would otherwise apply to a U.S. company listed on the Nasdaq Global Market may provide
less protection to you than what is accorded to investors under the Nasdaq Stock Market listing rules applicable to domestic U.S. issuers.
See Item16G. “Corporate Governance.”

 

 

We are subject to ongoing reporting obligations
and potential penalties under the Israeli Securities Law.

 

As a company whose securities
were listed on the Tel Aviv Stock Exchange (the “TASE”), even though we delisted them from the TASE in March 2023, the Israeli
Securities Law, 5728-1968 (the “Israeli Securities Law”) continues to apply and we are still subject to certain reporting
obligations in Israel unless otherwise exempt in accordance with Israeli law. We have petitioned the Israeli Securities Authority to
cease our reporting requirements in Israel, given that we are no longer traded on the TASE, but the outcome of such petition remains
uncertain and we may be forced to continue reporting pursuant to Israeli law requirements. We have not filed reports under the Israeli
Securities Law after we started reporting in the United States under the Securities Act in March 2023. This could result in the imposition
of penalties under the Israel Securities Law. In addition, as a company incorporated in the State of Israel, regardless of the outcome
of the petition to cease our reporting requirements in Israel, we will remain subject to the jurisdiction of the Companies Law that apply
to all Israeli incorporated companies.

 

Our
Articles provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive
forum of resolution of any claims arising under the Securities Act. 

 

Our
Articles provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United
States shall be the sole and exclusive forum for any claim asserting a cause of action arising under the Securities Act (for the avoidance
of any doubt, such provision does not apply to any claim asserting a cause of action arising under the Exchange Act). Section 22
of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly,
both U.S. state and federal courts have jurisdiction to entertain such claims. This choice of forum provision may limit a shareholder’s
ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees
and may increase the costs associated with such lawsuits, which may discourage such lawsuits against us and our directors, officers and
employees. However, the enforceability of similar forum provisions in other companies’ organizational documents has been challenged
in legal proceedings, and there is uncertainty as to whether courts would enforce the exclusive forum provisions in the Articles. If
a court were to find these provisions of the Articles inapplicable to, or unenforceable in respect of, one or more of the specified types
of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely
affect our business, financial condition, results of operations, growth prospects. Any person or entity purchasing or otherwise acquiring
any interest in our share capital shall be deemed to have notice of and to have consented to the choice of forum provisions of the Articles
described above. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other
claim for which the U.S. federal courts have exclusive jurisdiction.

 

We
may issue additional ordinary shares or other equity securities without seeking approval of our shareholders, which would dilute your
ownership interests and may depress the market price of our ordinary shares and warrants. 

 

We
may choose to seek third party financing to provide additional working capital for our business, in which event we may issue additional
equity securities or take out loans convertible into equity securities. We may also issue additional HUB ordinary shares or other equity
securities of equal or, subject to applicable law, of senior rank in the future for any reason or in connection with, among other things,
future acquisitions, the redemption of outstanding warrants or repayment of outstanding indebtedness, without shareholder approval, in
a number of circumstances.

 

The
issuance of additional HUB ordinary shares or other equity securities of equal or, subject to any applicable law, senior rank would have
the following effects:

 

●

our existing shareholders’ proportionate ownership interest in HUB will decrease;

 

●

the amount of cash available per share, including for payment of any dividends in the future, may decrease;

 

●

the relative voting strength of each previously outstanding ordinary share may be diminished; and

 

●

the market price of our ordinary shares may decline.

 

 

We
may also seek additional capital through debt financings. The incurrence of indebtedness would result in increased fixed payment obligations
and could involve restrictive covenants, such as limitations on our ability to incur additional debt, to make capital expenditures, to
create liens or to redeem shares or declare dividends, which could adversely affect our ability to conduct our business.

 

Issuances
of our ordinary shares have, and in the future may continue to, significantly dilute the holdings of existing shareholders, and future
resales of our ordinary shares may cause the market price of our ordinary shares and warrants to drop significantly, even if our business
is doing well. 

 

As
of July 7, 2026, there were 32,836,053 outstanding ordinary shares (adjusted for the 1-for-15 reverse split effected on January 15, 2026,
the 1-for-50 reverse split effected on April 20, 2026 and the 1-for-20 reverse split effected on June 5, 2026). We have issued a substantial
number of convertible notes and warrants that may be converted or exercised into our ordinary shares, which has significantly diluted
our existing shareholders and has, and may in the future continue to, adversely affect the market price of our ordinary shares. Since
January 1, 2026, convertible notes were converted into approximately 4,591,633 of our ordinary shares (post-reverse splits). As of June
30, 2026, such securities are convertible or exercisable into an aggregate of 83,459,200 ordinary shares. Many of such notes and warrants
are subject to anti-dilution adjustments that would result in their becoming convertible or exercisable for additional shares and the
reduction of the conversion or exercise price if we were to issue securities at a purchase price (or conversion or exercise price) of
less than $5.00 per share.

 

Pursuant
to the terms of private investments made by certain equity holders, we are required to register the securities of such equity holders.
Upon the effectiveness of any registration statement we file to register securities issued or issuable in connection with such private
investments in a registered offering of securities pursuant to the Securities Act or otherwise in accordance with Rule 144 under
the Securities Act, our shareholders may sell large amounts of ordinary shares and warrants in the open market or in privately negotiated
transactions, which could have the effect of increasing the volatility in the trading price of our ordinary shares or warrants or putting
significant downward pressure on the price of our ordinary shares or warrants. Additionally, downward pressure on the market price of
our ordinary shares or warrants will likely result from sales of our ordinary shares issued in connection with the exercise of warrants.
Further, sales of our ordinary shares or warrants upon expiration of the applicable lockup period could encourage short sales by market
participants. Generally, short selling means selling a security, contract or commodity not owned by the seller. The seller is committed
to eventually purchase the financial instrument previously sold. Short sales are used to capitalize on an expected decline in the security’s
price. Short sales of our ordinary shares or warrants could have a tendency to depress the price of our ordinary shares or warrants,
respectively, which could increase the potential for short sales.

 

In consideration for the acquisition of BST, HUB issued to BST’s
equity holders 197 ordinary shares and pre-funded warrants to purchase 44 ordinary shares of HUB. The exercise of the pre-funded warrants
was limited to the extent that, upon exercise, the holder and its affiliates would hold more than 4.99% of HUB’s outstanding ordinary
shares. The ordinary shares were subject to transfer restrictions until June 2026. The actual or perceived availability of these shares
for sale may further depress the trading price of our ordinary shares.

 

If
we or any of our subsidiaries are characterized as a Passive Foreign Investment Company (“PFIC”) for U.S. federal income
tax purposes, U.S. Holders may suffer adverse tax consequences.

 

A
non-U.S. corporation generally will be treated as a PFIC for U.S. federal income tax purposes, in any taxable year if either (1) at
least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (generally based
on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the
production of passive income. We believe we were not a PFIC in 2025. Based on the current and anticipated composition of our and our
subsidiaries’ income, assets and operations, there is a risk that we may be treated as a PFIC for future taxable years. Moreover,
the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you that the Internal Revenue
Service (the “IRS”) will not take a contrary position or that a court will not sustain such a challenge by the IRS.

 

 

Whether
we or any of our subsidiaries are a PFIC for any taxable year is a factual determination that depends on, among other things, the composition
of our and our subsidiaries’ income and assets, and the market value of our and our subsidiaries’ shares and assets. Changes
in the composition of our and our subsidiaries’ income, composition or composition of assets may cause us to be or become a PFIC
for the current or subsequent taxable years. Whether we are treated as a PFIC for U.S. federal income tax purposes is a factual determination
that must be made annually at the close of each taxable year and, thus, is subject to significant uncertainty.

 

If
we are a PFIC for any taxable year, a U.S. Holder (as defined in “Certain Material U.S. Federal Income Tax Considerations”)
of our ordinary shares or warrants may be subject to adverse tax consequences and may incur certain information reporting obligations.
Such adverse consequences of PFIC status may be alleviated if a U.S. Holder makes a “mark to market” election or an election
to treat us as a “qualified electing fund,” or QEF. These elections would result in an alternative treatment (such as mark-to-market
treatment) of our ordinary shares. A U.S. Holder may make a QEF election with respect to our ordinary shares only if we provide U.S. Holders
on an annual basis with certain financial information specified under applicable U.S. Treasury regulations. There can be no assurance
that we will have timely knowledge of our status as a PFIC in the future or that we will timely provide U.S. Holders with the required
information on an annual basis to allow U.S. Holders to make a QEF election with respect to our ordinary shares in the event we are treated
as a PFIC for any taxable year. U.S. Holders who hold or have held our securities during a period when we were or are a PFIC will generally
be subject to the foregoing rules unless we cease to be a PFIC and such U.S. Holder makes a “deemed sale” election with respect
to our ordinary shares. For a further discussion, see “Certain Material U.S. Federal Income Tax Considerations—Passive Foreign
Investment Company Rules.” U.S. Holders of our ordinary shares and our warrants are strongly encouraged to consult their own advisors
regarding the potential application of these rules to us and the ownership of our ordinary shares and/or warrants.

 

If
a U.S. Holder is treated as owning at least 10% of our stock, such U.S. Holder may be subject to adverse U.S. federal income tax
consequences.

 

For
U.S. federal income tax purposes, if a U.S. Holder is treated as owning (directly, indirectly or constructively) at least 10% of the
value or voting power of our stock, such person may be treated as a “United States shareholder” with respect to us, or any
of our subsidiaries, if we or such subsidiary is a “controlled foreign corporation.” If, as expected, we have one or more
U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as a controlled foreign corporation regardless of whether we
are treated as a controlled foreign corporation.

 

Certain
United States shareholders of a controlled foreign corporation may be required to report annually and include in their U.S. federal taxable
income their pro rata share of the controlled foreign corporation’s “Subpart F income” and, in computing their “global
intangible low-taxed income,” “tested income” and a pro rata share of the amount of certain U.S. property (including
certain stock in U.S. corporations and certain tangible assets located in the United States) held by the controlled foreign corporation
regardless of whether such controlled foreign corporation makes any distributions. The amount includable by a United States shareholder
under these rules is based on a number of factors, including potentially, but not limited to, the controlled foreign corporation’s
current earnings and profits (if any), tax basis in the controlled foreign corporation’s assets, and foreign taxes paid by the
controlled foreign corporation on its underlying income. Failure to comply with these reporting obligations (or related tax payment obligations)
may subject such United States shareholder to significant monetary penalties and may extend the statute of limitations with respect to
such United States shareholder’s U.S. federal income tax return for the year for which reporting (or payment of tax) was due.
We cannot provide any assurances that we will assist U.S. Holders in determining whether we or any of our subsidiaries are treated as
a controlled foreign corporation for U.S. federal income tax purposes or whether any U.S. Holder is treated as a United States shareholder
with respect to any of such controlled foreign corporations or furnish to any holder information that may be necessary to comply with
reporting and tax paying obligations if we, or any of our subsidiaries, is treated as a controlled foreign corporation for U.S. federal
income tax purposes. U.S. Holders should consult their own advisors regarding the potential application of these rules to an investment
in our ordinary shares or warrants.

 

 

As
a result of the Business Combination, the IRS may not agree that we should be treated as a non-U.S. corporation for U.S. federal income
tax purposes.

 

Under
current U.S. federal income tax law, a corporation generally will be considered to be a U.S. corporation for U.S. federal income tax
purposes if it is created or organized in the United States or under the law of the United States or of any State. Accordingly, under
generally applicable U.S. federal income tax rules, we, given our incorporation and tax residency in Israel, would generally be classified
as a non-U.S. corporation for U.S. federal income tax purposes. Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code”),
and the Treasury regulations promulgated thereunder, however, contain specific rules that may cause a non-U.S. corporation to be treated
as a U.S. corporation for U.S. federal income tax purposes. If it were determined that we are treated as a U.S. corporation for U.S.
federal income tax purposes under Section 7874 of the Code and the Treasury regulations promulgated thereunder, we would be liable for
U.S. federal income tax on our income in the same manner as any other U.S. corporation and certain distributions made by us to holders
that are not U.S. Holders (as defined in “Certain Material U.S. Federal Income Tax Considerations”) of our ordinary shares
may be subject to U.S. withholding tax.

 

Based
on the terms of the Business Combination and certain factual assumptions, we do not currently expect to be treated as a U.S. corporation
for U.S. federal income tax purposes under Section 7874 of the Code after the Business Combination. However, the application of Section
7874 of the Code is complex, subject to detailed regulations (the application of which is uncertain in various respects and would be
impacted by changes in such U.S. Treasury regulations with possible retroactive effect) and subject to certain factual uncertainties.
Accordingly, there can be no assurance that the IRS will not challenge our status as a non-U.S. corporation for U.S. federal income tax
purposes under Section 7874 of the Code or that such challenge would not be sustained by a court.

 

If
the IRS were to successfully challenge under Section 7874 of the Code our status as a non-U.S. corporation for U.S. federal income tax
purposes, we and certain of our shareholders may be subject to significant adverse tax consequences, including a higher effective corporate
income tax rate and future withholding taxes on certain of our shareholders, depending on the application of any applicable income tax
treaty that may apply to reduce such withholding taxes.

 

You
should consult your own advisors regarding the application of Section 7874 of the Code to the Business Combination and the tax consequences
if our classification as a non-U.S. corporation is not respected.

 

The
remainder of this discussion assumes that we will not be treated as a U.S. corporation for U.S. federal income tax purposes under Section
7874 of the Code.

 

Risks
Related to Our Incorporation and Operations in Israel

 

Conditions
in Israel could materially and adversely affect our business.

 

Many
of our employees, including certain management members, operate from our offices that are located in Israel. In addition, a number of
our officers and directors are residents of Israel. Accordingly, political, economic, and military conditions in Israel and the surrounding
region may directly affect our business and operations. Terrorist attacks and hostilities within Israel and the recent hostilities between
Israel and Hamas, Hezbollah, the Houthis and Iran have also heightened these risks, including the wider war with Iran that began in February
2026. We are unable to predict the ramifications of the current military hostilities in the Middle East.

 

 

While
a ceasefire has been entered into between Israel and Hamas and later between Israel and Iran, the situation remains fragile and verbal
threats and sporadic violations persist and may potentially escalate in the future to more active hostilities. It is possible that other
terrorist organizations, including Palestinian militant organizations in the West Bank, as well as other hostile countries, will engage
in hostilities against Israel or Israeli interests.

 

There
can be no assurance that attacks launched against Israel will not damage our facilities, which could result in a disruption of our business.
Further, these events may be intertwined with wider macroeconomic indications of a deterioration of Israel’s economic standing
that may involve a downgrade in Israel’s credit rating by rating agencies, which may have an adverse effect on us and our ability
to effectively conduct our operations.

 

The
Israel Defense Force (the “IDF”), the national military of Israel, is a conscripted military service, subject to certain
exceptions. In addition, many Israeli citizens are obligated to perform several weeks of annual military reserve duty each year until
they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a
military conflict, may be called to active duty. In response to increases in terrorist and military activity, there have been periods
of significant call-ups of military reservists, especially following the invasion by Gaza-based terrorists on October 7, 2023. It is
possible that there will be military reserve duty call-ups in the future. Several of our employees and management members are subject
to military service in the IDF and have been and may be called to serve. Since October 7, 2023, approximately 60 of our employees served
in active duty, including our former CEO and CTO. While these call-ups have not resulted in material disruption to our operations to
date, extended reserve duty obligations are expected to continue in the coming years, and significant increase in the scope or duration
of such service could disrupt our operations and adversely affect our business.

  

Any
armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions, could harm our
results of operations and could make it more difficult for us to raise capital. Parties with whom we do business may decline to travel
to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary in order to meet
our business partners face to face. In addition, the political and security situation in Israel may result in parties with whom we have
agreements involving performance in Israel refusing to perform their commitments under those agreements. Further, in the past, the State
of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of
Israel and with Israeli companies, and the recent hostilities and their depiction in certain news outlets and social media platforms
have increased anti-Israel sentiment around the world, which could lead to adverse political and economic ramifications. Any interruption
or curtailment of trade between Israel and its trading partners could adversely affect our operations and results of operations.

 

Our
commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli
government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot
assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages
incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would
likely negatively affect business conditions and could harm our results of operations.  

  

As
a public company incorporated in Israel, we may become subject to further compliance obligations and market trends or restrictions, which
may strain our resources and divert management’s attention. 

 

Being
an Israeli company publicly traded in the United States and being subject to both U.S. and Israeli rules and regulations may make it
more expensive for us to obtain directors and officers liability insurance, and we may be required to continue incurring substantially
higher costs for reduced coverage. In addition, as a company that had publicly offered securities in Israel via prospectus, even though
we were approved by the Israeli court and delisted from the TASE, the Israeli Securities Law shall continue to apply and we shall still
be subject to certain reporting obligations in Israel unless otherwise exempt in accordance with Israeli law. These factors could also
make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on its audit committee,
and qualified executive officers. In accordance with the provisions of the Companies Law, approval of our directors and officers insurance
is limited to the terms of our duly approved compensation policy, unless otherwise approved by our shareholders.

 

 

Our
Articles and Israeli law could prevent a takeover that shareholders consider favorable and could also reduce the market price of our
ordinary shares. 

 

Certain
provisions of Israeli law and the Articles could have the effect of delaying or preventing a change in control and may make it more difficult
for a third party to acquire us or for our shareholders to elect different individuals to our board of directors, even if doing so would
be beneficial to our shareholders, and may limit the price that investors may be willing to pay in the future for the HUB ordinary shares.
Among other things:

 

●

Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased;

 

●

Israeli corporate law requires special approvals for certain transactions involving a company with its directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions;

 

●

Israeli corporate law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;

 

●

Our Articles divide our directors into three classes, each of which is elected once every three years;

 

●

Our Articles require that any amendment thereto will be approved by our board of directors, in addition to by a vote of the holders of a majority of our outstanding ordinary shares entitled to vote present and voting on the matter at a general meeting of shareholders;

 

●

Our Articles do not permit a director to be removed except by a vote of the holders of at least 65% of the outstanding shares entitled to vote at a general meeting of shareholders; and

 

●

Our Articles provide that the board of directors may fill director vacancies.

 

Further,
Israeli tax considerations may make certain transactions undesirable to HUB or to some of our shareholders whose country of residence
does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. For example, Israeli tax law does not
recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral
in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions. Moreover, with respect to certain
share swap transactions, the tax deferral is limited in time, and when such time expires the tax becomes payable even if no disposition
of the shares has occurred. See the section titled “Taxation — Taxation of Our Shareholders.”

 

Provisions
of Israeli law and the Articles may delay, prevent or make difficult an acquisition of HUB, prevent a change of control, and negatively
impact our share price. 

 

Israeli
corporate law regulates acquisitions of shares through tender offers and mergers, requires special approvals for transactions involving
directors, officers or significant shareholders, and regulates other matters that may be relevant to these types of transactions. Furthermore,
Israeli tax considerations may make potential acquisition transactions unappealing to us or to some of our shareholders. For example,
Israeli tax law may subject a shareholder who exchanges his or her ordinary shares for shares in a foreign corporation, to taxation before
disposition of the investment in the foreign corporation. These provisions of Israeli law may delay, prevent or make an acquisition of
HUB, which could prevent a change of control and, therefore, depress the price of our shares.

 

 

We
may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result
in litigation and adversely affect our business.

 

A
significant portion of our intellectual property has been developed by our employees in the course of their employment by us. Under the
Israeli Patents Law, 5727-1967 (the “Patents Law”), inventions conceived by an employee during and as a result of his or
her employment with a company are regarded as “service inventions,” which belong to the employer, absent an agreement between
the employee and employer providing otherwise. The Patents Law also provides that if there is no agreement between an employer and an
employee determining whether the employee is entitled to receive consideration for service inventions and on what terms, this will be
determined by the Israeli Compensation and Royalties Committee (the “Committee”), a body constituted under the Patents Law.
Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that
in certain circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis,
the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Further,
the Committee has not yet determined one specific formula for calculating this remuneration, but rather uses the criteria specified in
the Patents Law. Although we generally enter into agreements with our employees pursuant to which such individuals assign to us all rights
to any inventions created during and as a result of their employment with us, we may face claims demanding remuneration in consideration
for assigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current
and/or former employees, or be forced to litigate such monetary claims (which will not affect our proprietary rights), which could negatively
affect our business.

 

Certain
tax benefits that may be available to us, if obtained, would require us to continue to meet various conditions and such benefits may
be terminated or reduced in the future, which could increase our costs and taxes.

 

We
may be eligible for certain tax benefits provided to “Preferred Technological Enterprises” under the Israeli Law for the
Encouragement of Capital Investments, 5719-1959, referred to as the “Investment Law.” If we obtain tax benefits under the
“Preferred Technological Enterprises” regime then, in order to remain eligible for such tax benefits, we will need to continue
to meet certain conditions stipulated in the Investment Law and its regulations, as amended. If these tax benefits are reduced, canceled
or discontinued, our Israeli taxable income may be subject to the standard Israeli corporate tax rate (currently 23%). Additionally,
if we increase our activities outside of Israel through acquisitions, for example, our activities might not be eligible for inclusion
in future Israeli tax benefit programs. See “Taxation.”

 

It
may be difficult to enforce a U.S. judgment against us, our officers and directors and the Israeli experts named in this Annual Report
in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors and
these experts.

 

Most
of our directors or officers are not residents of the United States and most of their and our assets are located outside the United States.
Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States
against us or our non-U.S. directors and officers may be difficult to obtain within the United States. We have been informed by our legal
counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain
a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on
a violation of U.S. securities laws against us or our non-U.S. officers and directors because Israel may not be the most appropriate
forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not
U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact,
which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little
binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel,
which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.

 

 

Moreover,
an Israeli court will not enforce a non-Israeli judgment if (among other things) it was given in a state whose laws do not provide for
the enforcement of judgments of Israeli courts (subject to exceptional cases), or if its enforcement is likely to prejudice the sovereignty
or security of the State of Israel, or if it was obtained by fraud or in absence of due process, or if it is at variance with another
valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was
pending before a court or tribunal in Israel, at the time the foreign action was brought.

 

Your
rights and responsibilities as a shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities
of shareholders of U.S. corporations.

 

We
are incorporated under Israeli law. The rights and responsibilities of holders of the ordinary shares are governed by the Articles and
the Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in
typical U.S. corporations. In particular, pursuant to the Companies Law each shareholder of an Israeli company has to act in good faith
and in a customary manner in exercising his or her rights and fulfilling his or her obligations toward the company and other shareholders
and to refrain from abusing his or her power in the company, including, among other things, in voting at the general meeting of shareholders
and class meetings, on amendments to a company’s articles of association, increases in a company’s authorized share capital,
mergers, and transactions requiring shareholders’ approval under the Companies Law. In addition, a controlling shareholder of an
Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the
power under the articles of association to appoint or prevent the appointment of a director or officer in the Company, or has other powers
toward the Company has a duty of fairness toward the Company. However, Israeli law does not define the substance of this duty of fairness.
There is limited case law available to assist in understanding the implications of these provisions that govern shareholder behavior.

 

The
Articles provide that unless we consent otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for
substantially all disputes between us and our shareholders under the Companies Law and the Israeli Securities Law.

 

The
competent courts of Tel Aviv, Israel shall, unless we consent otherwise in writing, be the exclusive forum for (i) any derivative action
or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or
other employee of ours to us or our shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies
Law or the Israeli Securities Law. This exclusive forum provision is intended to apply to claims arising under Israeli law and would
not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have
exclusive jurisdiction. Such exclusive forum provision in the Articles will not relieve us of our duties to comply with federal securities
laws and the rules and regulations thereunder, and shareholders will not be deemed to have waived our compliance with these laws, rules
and regulations. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing
for disputes with us or our directors or other employees, which may discourage lawsuits against us, our directors, officers and employees.

 

We
may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative
effect on our financial condition, results of operations and the combined company’s ordinary share price, which could cause the
price of our shares to fall and shareholders to lose some or all of their investment. 

 

We
may be forced to further write-down or write-off assets, restructure our operations, or incur impairment or other charges that could
result in us reporting losses. Unexpected risks may arise and previously known risks may materialize. Even though these charges may be
non-cash items and would not have an immediate impact on our liquidity, the fact that we may report charges of this nature could contribute
to negative market perceptions of us or our securities. In addition, charges of this nature may cause us to violate net worth or other
covenants to which we may be subject as a result of assuming pre-existing debt held by our business or by virtue of the us obtaining
additional debt financing. Accordingly, any of our shareholders could suffer a reduction in the value of their shares. Such shareholders
are unlikely to have a remedy for such reduction in value.

 

 

Risk
Factors Relating to the Evofem Transaction

 

We
may not realize any value from the Evofem Notes and Purchase Rights, and the securities we issued as consideration for the Evofem Notes
and Purchase Rights may prove to have been issued for assets that are ultimately worthless.

 

In
June 2026, we acquired senior subordinated convertible notes of Evofem Biosciences, Inc. (“Evofem”) with an aggregate outstanding
balance of approximately $5.4 million (the “Evofem Notes”) and certain prepaid rights to receive shares of Evofem common
stock in an aggregate amount of approximately $10.2 million (the “Purchase Rights”), for an aggregate purchase price of approximately
$49.3 million payable solely in our ordinary shares and pre-funded warrants (the “Evofem Transaction”). Evofem is in severe
financial distress. In its Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 filed with the SEC on May 15, 2026, Evofem
disclosed total assets of approximately $7.4 million against total liabilities of approximately $80.2 million, a stockholders’
deficit of approximately $77.6 million, limited cash resources, and substantial doubt about its ability to continue as a going concern.
Evofem’s senior secured lender has asserted a claim that vastly exceeds Evofem’s total assets, has declared defaults and
cancelled a forbearance agreement, and has threatened foreclosure on substantially all of Evofem’s assets. If Evofem is liquidated,
forecloses, restructures, or files for bankruptcy protection, we may receive no cash payment and no equity value in respect of the Evofem
Notes or the Purchase Rights. Accordingly, the Evofem Notes and Purchase Rights may ultimately prove to have little or no realizable
value, and we may be required to write down or write off the entire carrying value of these securities, even though we issued a very
substantial amount of our equity securities to acquire them.

 

The
Evofem Notes are unsecured, deeply subordinated junior obligations, and any cash recovery is remote.

 

The
Evofem Notes are junior subordinated obligations of Evofem. They are unsecured and are subordinated in right of cash payment to Evofem’s
senior secured notes (reported by Evofem at approximately $123.2 million of total outstanding balance as of March 31, 2026 and secured
by substantially all of Evofem’s assets, including its intellectual property) and to Evofem’s Adjuvant notes (reported by
Evofem as having a carrying value of approximately $33.4 million), which constitute “Permitted Senior Indebtedness” senior
to the Evofem Notes. Contractual put rights under the Evofem Notes that could otherwise generate cash for holders, including puts tied
to subsequent placements and asset sales, are exercisable only after all Permitted Senior Indebtedness is paid in full, and any change-of-control
redemption claim likewise is subordinated behind senior debt. Because the senior claims far exceed Evofem’s total assets, we do
not expect to recover cash on the Evofem Notes at maturity or otherwise, and the notes maturing December 1, 2026 are unlikely to be repaid
when due. A payment default at maturity, cross-defaults among Evofem’s debt instruments (which can be triggered at low thresholds),
or enforcement action by the senior secured lender could further impair or eliminate any residual value.

 

Our
ability to convert the Evofem Notes and exercise the Purchase Rights is subject to significant limitations although conversion or exercise
(and subsequent sale of the resulting shares of Evofem common stock) is effectively our principal potential path to receiving value.

 

Because
the possibility of our cash recovery on the Evofem Notes is remote, our principal potential source of consideration is conversion of
the Evofem Notes, and exercise of the Purchase Rights, into shares of Evofem common stock at the current conversion or exercise price
(as applicable) of $0.0154 per share, and our subsequent sale of those shares. That option is subject to a number of significant limitations.
First, Evofem does not currently have sufficient authorized common stock to permit conversion and exercise in full of its outstanding
convertible securities and equity-linked instruments, as its authorized share capital is approximately 3.0 billion shares while its fully
diluted share count (assuming conversion of all convertible instruments) is significantly higher. Second, the Evofem Notes contain a
9.99% beneficial-ownership limitation that by its terms may not be waived and applies to successor holders, which would prevent us from
converting more than a small portion of our position at any one time. Third, Evofem has disclosed a potential reverse stock split (in
a ratio of up to 1-for-1,500), and the Evofem Notes contain anti-dilution and stock-combination adjustment provisions (including full-ratchet
and “event market price” reset mechanics) that would reset the conversion terms of the Evofem Notes upon such events and
could materially reduce the number of shares issuable to us or the value of conversion. As a result of the above, there can be no assurance
that we will be able to convert the Evofem Notes or exercise the Purchase Rights, in either case in whole or in part, or that any such
conversion or exercise will yield any realizable value.

 

 

Even
if we obtain shares of Evofem common stock, we may be unable to sell them at attractive prices or at all.

 

Evofem’s
common stock is currently quoted on the OTCID market. Trading on such market is limited, sporadic and volatile, and the common stock
trades at a low absolute price. This may subject transactions in the stock to the SEC’s penny stock rules and additional broker-dealer
requirements, which could affect our ability to sell shares of Evofem common stock and the value we could receive from any such sale.
In addition, the shares of Evofem common stock issuable to us upon conversion or exercise would be “restricted securities”
and could be sold only pursuant to an effective registration statement or an exemption from registration such as Rule 144 of the Securities
Act, subject to applicable holding periods and other conditions, which could limit our ability to resell such securities. In addition,
if we were deemed an “affiliate” of Evofem (including by reason of the size of our as-converted position, which on an as-converted
basis would represent a substantial majority of Evofem’s outstanding common stock), our resales would be subject to volume, manner
of sale and other limitations under Rule 144, and we would be subject to beneficial ownership reporting and potentially other obligations
under the U.S. federal securities laws. Any significant sale by us of the shares of common stock could itself cause a significant decline
in the market price of Evofem common stock given its limited liquidity. As a result of the above, even if we acquire shares of Evofem
common stock we may not be able to sell such shares or to sell them at attractive prices.

 

We
issued a very large number of ordinary shares and Pre-Funded Warrants as consideration in the Evofem Transaction, resulting in substantial
dilution to our shareholders, potentially in exchange for assets that may yield no return.

 

As
consideration in the Evofem Transaction, we issued an aggregate of 31,623,000 Consideration Shares (including the ordinary shares issuable
upon exercise of the Pre-Funded Warrants). This compares to 4,291,960 ordinary shares outstanding immediately prior to such issuance.
Assuming full exercise of the Pre-Funded Warrants, the Consideration Shares would represent a substantial majority of our outstanding
share capital, and our shareholders prior to the Evofem Transaction have experienced, and upon exercise of the Pre-Funded Warrants will
experience, very significant dilution of their ownership, voting power and economic interest. If the Evofem Notes and Purchase Rights
ultimately yield little or no value, our shareholders will have borne this dilution in exchange for assets of little or no worth, which
could materially and adversely affect the market price of our ordinary shares.

 

The
pre-funded warrants issued in the Evofem Transaction cannot be exercised in full unless our shareholders approve the exercise and an
increase in our authorized share capital, and such approval may not be obtained.

 

The
pre-funded warrants are subject to a 4.99% beneficial ownership limitation by their current holders. We have undertaken to call a meeting
of our shareholders as soon as reasonably practicable to approve the full exercise of the pre-funded warrants, the issuance of all ordinary
shares issuable upon such exercise, and an increase in our authorized share capital. There can be no assurance that our shareholders
will approve these proposals or as to the timing of any approval. If shareholder approval is not obtained, the pre-funded warrants will
remain subject to the beneficial ownership limitation by their current holders and may not be exercisable in full, which could give rise
to claims or disputes with holders of the pre-funded warrants, adversely affect our relationships with these investors, and create uncertainty
regarding our capital structure. Seeking approval will also involve the time and expense of a shareholder meeting, and the pendency of
these proposals may create an overhang on the market for our ordinary shares.

 

Future
sales, or the perception of future sales, of the Consideration Shares could depress the market price of our ordinary shares.

 

The
Consideration Shares were issued in a private placement and constitute restricted securities. In the future holders of the Consideration
Shares may sell such shares pursuant to Rule 144 or, if we grant or effect registration rights, pursuant to a resale registration statement.
The number of ordinary shares issuable upon exercise of the pre-Funded Warrants is very large relative to our public float and historical
trading volumes. Sales of a substantial number of our ordinary shares by holders of Consideration Shares, or the market’s perception
that such sales may occur (including upon or following shareholder approval), could materially depress the market price of our ordinary
shares and impair our ability to raise capital in the future.

 

 

We
do not control Evofem, we have limited rights and limited information as a noteholder, and Evofem’s own disclosure and control environment
present risks.

 

The
Evofem Notes and Purchase Rights do not entitle us to board representation, voting rights (except as required by law) or control over
Evofem’s business, management, strategy or capital structure. Evofem may take actions that are adverse to our interests, including
incurring or restructuring indebtedness, effecting recapitalizations or reverse stock splits, issuing additional securities that dilute
the shares underlying our instruments, or agreeing to transactions with its senior creditors that impair junior claims. In addition,
amendments and waivers under the note documentation generally require specified holder thresholds, and we may be bound by actions of
other holders or unable to effect amendments we consider desirable. Our assessment of the Evofem Notes and Purchase Rights is based substantially
on Evofem’s public filings and information provided to us in connection with the transaction. In its public filings Evofem disclosed
material weaknesses in its internal control over financial reporting. In addition, its public disclosure may not be complete, accurate
or timely.

 

If
our investment securities become a significant portion of our total assets, we could be deemed an investment company under the Investment
Company Act of 1940, which could materially restrict our business.

 

Following
the Evofem Transaction, we hold convertible notes and equity-linked instruments of another company. If the value of these and any other
investment securities were to constitute a significant portion of our total assets, we could be deemed to be an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, absent an applicable exemption. Registration or regulation as an
investment company would impose burdensome requirements on us, including restrictions on our capital structure, transactions with affiliates
and ability to issue securities, and compliance could be impracticable for a company like ours. We intend to conduct our business, and
to monitor our asset composition, so as not to be deemed an investment company, but there can be no assurance that we will not be required
to take remedial actions, such as disposing of assets on unfavorable terms, to avoid that result.

 

Item
4. Information on the Company

 

A. History
and Development of the Company

 

HUB
began operations in 1984 as A.L.D. Advanced Logistics Development Ltd. (“ALD”) and is engaged in developing and marketing
quality management software tools and solutions. HUB Cyber Security TLV Ltd. (“HUB TLV”) was founded in 2017. On February 28,
2021, HUB TLV and ALD signed a share swap merger agreement, pursuant to which HUB TLV became a wholly owned subsidiary of ALD and the
shareholders of HUB TLV owned 51% of ALD’s issued and outstanding share capital (the “ALD Merger”). The ALD Merger
was completed on June 21, 2021 and ALD later changed its name to Hub Cyber Security (Israel) Ltd. and later to Hub Cyber Security
Ltd. Following the ALD Merger, we developed unique technology and products in the field of confidential computing, with the intention
to be a significant player in the cyber security industry.

 

As
of March 1, 2023, HUB began trading on Nasdaq following the completion of the Business Combination Agreement with Mount Rainier Acquisition
Corp.

 

In
November 2023, HUB began to collaborate with BlackSwan Technologies, Inc. (“BST”) with the goal of becoming a significant
player in the secured data fabric industry. BST’s technologies and solutions were mostly needed by government entities, banks and
financial institutions, and large regulated enterprises. Pursuant to this collaboration, we began integrating BST technology with HUB
technology and we were granted rights to utilize deliverables created under the collaboration, along with a license to access and use
certain of BST’s intellectual property. We were also granted an option to purchase all of the outstanding share capital or assets
of BST.

 

 

On
January 27, 2025, HUB consummated an Agreement and Plan of Merger with BST, pursuant to which BST and its subsidiaries became subsidiaries
of HUB. We paid a purchase price of $41.6 million for the transaction, which was accounted for as an asset acquisition. We subsequently
divested four of the BST subsidiaries that were not integrated into our business operations. We executed the acquisition of BST believing
it would accelerate the development of our secure data fabric offering by integrating BST’s technology with our existing platform.
We have not been successful in achieving the strategic plans we had for the secured data fabric business due to financial, development
and other challenges, and as a result, as of December 31, 2025, we recorded a full impairment with respect to the technology asset
acquired in the BST acquisition. During June 2026 we ceased BST’s operations, terminated BST’s main commercial contract and terminated
the employees of this business.

 

The
Company is implementing a comprehensive restructuring, during which the Board and management team have taken steps to improve liquidity,
simplify the Company’s organizational structure, cut operating costs and strengthen corporate governance. This includes the Evofem
transaction, reduction of operating expenses and headcount, and the engagement of Deloitte to support out restructuring efforts. For
further details, see “—Recent Developments” below. The Board continues to explore various strategic alternatives intended
to maximize value for shareholders and position HUB for future growth.

 

Corporate
Information

 

Our website
address is www.hub-technologies.com. Information contained on, or that can be accessed through, our website does not constitute
a part of this Annual Report and is not incorporated by reference herein. We have included our website address in this Annual Report
solely for informational purposes. The SEC maintains an Internet site that contains reports, proxy and information statements, and other
information regarding issuers, such as we, that file electronically, with the SEC at www.sec.gov.

 

The
main address of our principal offices is 30 Hacharoshet Street, Or Yehuda, Israel and our telephone number is +972-3-918-6066. For securities
matters related to specific securities filings, our agent for service of process in the U.S. is Puglisi & Associates, 850 Library
Avenue, Newark, Delaware 19711. For other matters, our agent for service of process in the U.S. is Northwest Registered Agent LLC, 418
Broadway STE N, Albany, New York 12207. We are registered with the Israeli Registrar of Companies (registration number 511029373). 

 

For
a description of our principal capital expenditures and divestitures for the two years ended December 31, 2025 and for those
currently in progress, see Item 5. “Operating and Financial Review and Prospects.”

 

Recent
Developments

 

Acquisition
of Evofem Convertible Notes and Purchase Rights; Issuance of Securities

 

On
June 26, 2026, we entered into securities purchase agreements (each, a “Purchase Agreement” and, collectively, the “Purchase
Agreements”) with certain holders (each, a “Seller” and, collectively, the “Sellers”) of senior subordinated
convertible notes (the “Evofem Notes”) of Evofem Biosciences, Inc., a Delaware corporation (“Evofem”), and of
certain purchase rights to acquire securities of Evofem (the “Purchase Rights”). Pursuant to the Purchase Agreements, the
Company agreed to purchase from the Sellers all of their respective Evofem Notes and Purchase Rights, free and clear of liens, in exchange
solely for the issuance of equity securities of the Company as described below.

 

Evofem
is a commercial-stage biopharmaceutical company with two innovative women’s health products: (i) PHEXX^®, a non-hormonal
prescription contraceptive vaginal gel and (ii) SOLOSEC^®, a single-dose oral antimicrobial agent for the treatment of
two common sexual health infections – bacterial vaginosis (BV) and trichomoniasis.

 

 

The
Evofem Notes acquired by the Company consist of Evofem’s senior subordinated convertible notes governed by a common form of note
(the “SSN Notes” and the “Aditxt Notes”), comprising the exchanged senior subordinated convertible notes originally
issued between December 2022 and September 2023 and restructured effective December 1, 2023 (maturing December 1, 2026), together with
senior subordinated convertible notes issued in the same form maturing April 8, 2028 and June 26, 2028. The Evofem Notes are junior subordinated
obligations of Evofem (subordinated in right of cash payment to Evofem’s senior secured notes and other senior debt obligations
of Evofem), bear interest at 8% per annum compounding monthly (payable at maturity), and are convertible, at the holder’s election,
into shares of Evofem common stock at a conversion price of $0.0154 per share (subject to customary adjustment for stock splits, stock
dividends, recapitalizations and similar events), subject to a 4.99% or 9.99% beneficial ownership limitation. Based on the aggregate
outstanding balance of the Evofem Notes acquired by the Company (approximately $5,373,556), the Evofem Notes would be convertible into
approximately 348,932,233 shares of Evofem common stock, without factoring in the beneficial ownership limitation. The Purchase Rights
acquired by the Company are exercisable for Evofem common stock at the same $0.0154 per share price and, based on the aggregate amount
of the Purchase Rights acquired (approximately $10,153,890), would be exercisable into approximately 659,343,507 shares of Evofem common
stock. In the aggregate, the Evofem Notes and Purchase Rights acquired by the Company would be convertible into, and exercisable for,
approximately 1,008,275,740 shares of Evofem common stock (in each case before giving effect to any beneficial-ownership limitations
and Evofem’s available authorized common stock), which if fully converted and exercised, will give the Company an 88% ownership
of Evofem based on the current outstanding shares (or 14% on a fully diluted basis, assuming full issuance of all potential shares issuable
for all convertible instruments outstanding).

 

The
aggregate purchase price payable by the Company for the Evofem Notes and Purchase Rights was approximately $49,331,891 (the “Purchase
Price”), payable solely in ordinary shares of the Company, no par value, and/or pre-funded warrants to purchase ordinary shares
(the “Pre-Funded Warrants” and, together with the ordinary shares issued as consideration, the “Consideration Shares”),
and not in cash. The number of Consideration Shares issuable to each Seller is equal to such Seller’s portion of the Purchase Price
divided by $1.560 per share, the closing price of the Ordinary Shares on the Nasdaq Stock Market on June 24, 2026. As aggregate consideration
under the Purchase Agreements, the Company issued 31,623,000 Consideration Shares (including the ordinary shares issuable upon exercise
of the Pre-Funded Warrants).

 

Pursuant
to the Purchase Agreements, the Consideration Shares were issued as ordinary shares except to the extent that such issuance would cause
a Seller, together with its affiliates and any persons acting in concert with it, to beneficially own or hold in excess of 4.99% of the
Company’s outstanding ordinary shares after giving effect to the issuance (the “Beneficial Ownership Limitation”),
in which case the portion that would otherwise exceed the Beneficial Ownership Limitation was issued in the form of Pre-Funded Warrants.
Accordingly, at the closing the Company issued an aggregate of 1,794,901 Ordinary Shares and issued Pre-Funded Warrants exercisable for
an aggregate of 29,828,099 Ordinary Shares. The number of ordinary shares issued to any individual Seller was limited so that such Seller
would not exceed the Beneficial Ownership Limitation (a maximum of 225,417 Ordinary Shares per Seller, based on 4,291,960 Ordinary Shares
outstanding immediately prior to the issuance), with the balance of such Seller’s Consideration Shares issued in the form of Pre-Funded
Warrants. Certain Sellers whose existing beneficial ownership already equaled or exceeded 4.99% received all of their Consideration Shares
in the form of Pre-Funded Warrants.

 

Each
Pre-Funded Warrant has an exercise price of $0.001 per Ordinary Share, may be exercised on a cash or cashless basis, and is not exercisable
to the extent the holder would exceed the Beneficial Ownership Limitation.

 

The
Company has agreed to call a meeting of its shareholders as soon as reasonably practicable following the closing to approve (i) the full
exercise of the Pre-Funded Warrants and the issuance of all ordinary shares issuable upon exercise thereof and (ii) an increase in the
Company’s authorized share capital sufficient to permit such issuance in full. Upon receipt of such shareholder approval, the 4.99%
Beneficial Ownership Limitation applicable to the Pre-Funded Warrants will automatically be lifted, and the Pre-Funded Warrants will
thereafter be exercisable in full in accordance with their terms.

 

 

The
Consideration Shares, and the ordinary shares issuable upon exercise of the Pre-Funded Warrants, were offered and issued in reliance
upon the exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”),
provided by Section 4(a)(2) thereof (and/or Regulation S) promulgated thereunder, and will constitute “restricted securities.”

 

In
July 2026, we entered into a promissory note with Evofem pursuant to which we provided a loan to Evofem in the principal amount of $706,304,
bearing interest of 12% per annum, compounded monthly. The loan matures 11 months from the effective date, unless accelerated due to
an event of default. The loan included an administration fee equal to 2% of the total loan amount, due on the effective date and a weekly
monitoring fee of $2,000, accruing from the effective date and payable on the maturity date. Evofem is entitled to use the proceeds of
the loan exclusively for making payments to its suppliers for the manufacture, production, and distribution of its products, PHEXX and
SOLOSEC.

 

Restructuring

 

The
Evofem transaction is the latest milestone in a comprehensive restructuring that the Company has implemented, during which the Board
and management team have taken steps to improve liquidity, simplify the Company’s organizational structure, cut operating costs
and strengthen corporate governance.

 

As
part of this plan, the Company has substantially reduced operating expenses, eliminating many external consultants and contractors and
reducing headcount solely at the HUB level by approximately 50%. During May and June 2026, we executed a targeted workforce reduction
of approximately 10% of all our employees or full-time employee equivalents in order to improve our operational efficiency. Most of the
reduction was related to the cessation of activities in the BST business.

 

The
Company has also engaged Deloitte to support its restructuring efforts, operational improvements and financial planning as it works to
strengthen its balance sheet. Additionally, the Board continues to explore various strategic alternatives intended to maximize value
for shareholders and position HUB for future growth. The Company believes the Evofem transaction reflects a first step in a disciplined
approach to pursuing strategic opportunities while preserving liquidity.

 

Liquidity

 

Since
inception, HUB has incurred losses and generated negative cash flows from operations and has funded its operations, research and development,
capital expenditure and working capital requirements through revenue received from customers, bank loans and other debt facilities and
government grants, as well as equity contributions from shareholders. We intend to finance operating costs over the next twelve months
through a combination of future issuances of equity and/or debt securities, reducing operating expenses and divesting assets.

 

As
a result of liquidity and cash flow concerns that have arisen due to factors related to our business operations, together with the Internal
Investigation, we face significant uncertainty regarding the adequacy of our liquidity and capital resources and our ability to repay
our obligations as they become due. We are generating negative cash flow, requiring constant and immediate cash injections to continue
to operate, and are failing to meet obligations as they become due, including financial, suppliers debts and other ordinary course of
operations costs. In addition, and as a result of our ongoing operating losses, we had outstanding liabilities that could not be met by
our revenues, including defaults under certain loans, payments due to our debt holders, vendors and service providers and government duties,
which resulted in a seizure being placed on certain of our bank accounts. During certain periods in 2024 and 2025, we were unable to make
required deposits in employee pension and severance funds, which were later paid and settled and payments due for certain periods in 2025
and 2026 were paid in June 2026. Furthermore, we have been unable to fully pay required withholding taxes on employee compensation payments
and government fees. Certain of our subsidiaries also did not make timely tax filings with the ITA for several years. Our independent
registered public accounting firm has included in its report an explanatory paragraph expressing substantial doubt about our ability to
continue as a going concern.

 

 

For
a discussion regarding our liquidity, cash resources and debt facilities, see Item 5.B. “Liquidity and Capital Resources.”

 

In
2025 and in 2026, we engaged a restructuring consultant to negotiate with creditors in order to reach voluntary agreements to reduce
a portion of their respective outstanding debt and enable us to continue our operations.

 

Internal
Investigation

 

In
August 2023, the Special Committee comprised of independent directors appointed by our board of directors completed the independent Internal
Investigation into potential misconduct involving Eyal Moshe (our former Chief Executive Officer and President of U.S. Operations and
former member of our board of directors) and Ayelet Bitan (former Chief of Staff and wife of Mr. Moshe), the Special Committee also conducted
a review of our financial department and relevant policies, procedures and internal controls. The Special Committee believed that it
found sufficient evidence to support a determination that Mr. Moshe and Ms. Bitan misappropriated (from a Company bank account over which
Mr. Moshe had sole signatory rights) a total of approximately NIS 2 million (approximately $582,000) for personal use. Further, in certain
instances, evidence reviewed by the Special Committee demonstrated that Mr. Moshe authorized payments to contractors without either (i)
proper documentation and signatory approval; or (ii) required budget and expense reports. The employment of Mr. Moshe was terminated
for cause, effective July 24, 2023, and Mr. Moshe resigned from our board on August 15, 2023. Additionally, we commenced two legal actions
in Israel against Ms. Bitan and against Mr. Moshe to dispute their requests for severance payments in accordance with Israeli law in
connection with these determinations by the Special Committee. For further details, see Note 22 to our audited consolidated financial
statements for the year ended December 31, 2025 included in this Annual Report.

 

Additionally,
the Special Committee believed that it found sufficient evidence to determine that, one of our controllers, with the permission of Mr.
Moshe, used HUB credit cards for personal use in the amount of approximately NIS 400,000 (approximately $110,000). These personal expenses
were neither factored into the controller’s payroll nor properly documented in our financial books and records. Additionally, Mr.
Moshe approved a bonus of NIS 250,000 to the controller. However, this bonus was not paid to the controller but instead was paid to a
third party at the controller’s direction. Prior to the commencement of legal proceedings, we reached a settlement with the controller
whereby the amount of the bonus in the amount of NIS 250,000 plus VAT was repaid to us and all his options and RSUs were cancelled.

 

Since
the completion of the Internal Investigation, we performed a restructuring of our top management and executive officers, in addition
to enacting and enforcing tougher anti-fraud and anti-corruption policies, oversight, reviews and checks. All of the management and executive
officers that served in HUB during the time when the misappropriation occurred have since left HUB and have been replaced. To the best
of our knowledge, the past misappropriation of funds has no current or further impact on HUB, its finances and its business, and is not
expected to affect HUB or its expected growth in the future. The board of directors and management also took action to implement other
significant remedial measures, including commencing a process to develop and implement enhanced internal controls over financial reporting
and disclosure controls.

 

In
September 2024, the ISA and the Israel Tax Authority conducted a search of HUB’s office in the context of investigating former
and current officers in connection with suspicions regarding violations of securities, penal and tax laws. To HUB’s best knowledge,
the suspicions are related, among other things, to the subject matter of the Internal Investigation. In addition, in April 2025,
investigators from the Israeli Tax Authority visited the offices of the Company. To HUB’s best knowledge, this visit concerned
developments in the investigation related to the actions of a former Financial Controller of the Company, which were also addressed in
the Internal Investigation. According to a letter provided to the Company in January 2026 by the ISA, the ISA’s investigation has
been concluded, and the investigation file concerning the Company has been transferred to the Tel Aviv District Attorney’s Office
(Taxation and Economic Crimes) for a resolution, the status of which remains uncertain.

 

 

B.
Business Overview

 

In
this section “we,” “us,” “our” and “HUB” refer to HUB Cyber Security Ltd.

 

Overview 

 

In
2025, HUB focused on two symbiotic lines of business: (1) the Products and Technology division – secured data fabric and confidential
computing; and (2) the Professional Services division – cyber security and other technology services.

 

Products
and Technology Division

 

●

HUB’s Products and Technology division focuses on research and development of HUB’s products and solutions.

 

●

HUB’s product solutions were marketed and licensed directly to banks, financial services, government agencies, defense organizations, research institutions and large enterprises.

 

●

We recorded a significant impairment of this division as of December 31, 2025, for the secured data fabric business, which ceased operations in June 2026.

 

Professional
Services Division

 

The
Professional Services division is comprised of services performed by Comsec, QPoint and certain ALD activities.

 

●

ALD provides quality control in complex engineering projects and ensuring smooth and reliable execution in mission critical processes.

 

●

Comsec provides cyber risk assessment, risk mitigation and cyber incident response services to customers worldwide. Comsec customers are large enterprises, militaries and government agencies, and Comsec has deep and long-term connections with the IT procurement departments in those organizations and is recognized by them as an approved provider.

 

●

QPoint provides a variety of tech solutions and services, including software development and testing, cybersecurity, information systems, consulting, and training. Its team of over 145 engineers provides advanced technological expertise, offering readily available and professional solutions to leading Israeli companies and organizations.

 

Management,
Sales, and Distribution

 

●

HUB’s Management, Sales, and Distribution team oversees marketing, sales, and related commercial activities to advance and support the distribution of HUB’s product solutions and services.

 

●

They oversee strategic planning, resource allocation, and operational execution to align our goals with market demands and ensure sustainable growth.

 

●

This team drives revenue by identifying customer needs, closing deals, and ensuring effective delivery and support of software products through various channels.

 

  

Our
Operations

 

In
2025, we operated in several countries and provided innovative cybersecurity computing appliances, secured data fabric services and zero
trust confidential computing as well as cybersecurity and reliability, availability, maintainability and safety (RAMS) professional services.

 

Since
2021, HUB has completed four acquisitions of cybersecurity consulting services and distribution companies – ALD, Comsec, QPoint
and BST. This provided HUB with an established customer base, including governmental agencies and enterprises that were expected to be
prime targets for its data fabric and confidential computing solutions.

 

We
have not been successful in achieving the strategic plans we had for the secured data fabric business due to financial, development and
other challenges, and as a result, as of December 31, 2025, we recorded a full impairment on the technology asset acquired in the BST
acquisition. During June 2026 we ceased BST’s operations, terminated BST’s main commercial contract and terminated the employees
of this business.

 

The
Company is implementing a comprehensive restructuring, during which the Board and management team have taken steps to improve liquidity,
simplify the Company’s organizational structure, cut operating costs and strengthen corporate governance. This includes the Evofem
transaction, reduction of operating expenses and headcount, and the engagement of Deloitte to support out restructuring efforts. The
Board continues to explore various strategic alternatives intended to maximize value for shareholders and position HUB for future growth.
 

 

Technology
Background 

 

How
Data Works in a Network 

 

In
a network setting, code and data are moved and stored in structured formats called packets. Within a network, packets exist in three
states:

 

●

At rest (stored in a memory) — packets at rest may include data that is stored in a mass storage system such as on the ‘cloud’ or in the network’s own random access memory (“RAM”) or storage drives.

 

●

In transit (moving from component to component within a network) — data has been loaded into packets for sending into or out of a network or for moving between components inside a network. Code or data in packets are typically encrypted when in transit or at rest so that even if the packet is captured and sent out of the network, its data remains unreadable.

 

●

In use (being worked on by a processor) — data is being processed by a CPU, GPU or other processor that run programs, algorithms, application programming interface (“APIs”) or applications. Data in use is generally decrypted, and this decrypted data is a primary target of cyber-attackers.

 

Protecting
Data in Use 

 

Significant
progress has been made to protect sensitive data in transit and in storage. However, sensitive data is still vulnerable when in use.
For example, while Transparent Database Encryption (“TDE”) protects data in storage, that data must be stored in cleartext
in the database buffer pool so that SQL queries can be processed, rendering it vulnerable to memory-scraping malware and privileged user
abuse.

 

This
concern around protecting data in use has held back many organizations from delegating computations to the cloud and from sharing private
data with peers for collaborative analytics.

 

 

HUB’s
Offerings

 

HUB’s
Products and Technology Division:

 

Secured
Data Fabric

 

In
November 2023, HUB began to collaborate with BST with the goal to become a significant player in the secured data fabric industry, and
on January 27, 2025, HUB consummated a merger agreement with BST resulting in BST and its subsidiaries becoming subsidiaries of HUB.
We paid a purchase price of $41.6 million for the transaction, which was accounted for as an asset acquisition. We subsequently divested
four of the BST subsidiaries that were not integrated into our business operations. We executed the acquisition of BST believing it would
accelerate the development of our secure data fabric offering by integrating BST’s technology with our existing platform. We have
not been successful in achieving the strategic plans we had for the secured data fabric business due to financial, development and other
challenges, and as a result, as of December 31, 2025, we recorded a full impairment with respect to the technology asset acquired
in the BST acquisition. During June 2026 we ceased BST’s operations, terminated BST’s main commercial contract and terminated the
employees of this business.

 

Confidential
Computing

 

Confidential
computing is a strong solution for cyber protection as it assumes that hackers have already infiltrated a computer and that an administrator’s
credentials have been compromised. HUB’s zero trust confidential computing systems protect data and applications by running them
within secure enclaves that are governed by policies and managed with strict, rule-based filters to prevent unauthorized access to the
processor as well as by and between microservices. This approach ensures data security, unrelated to the vulnerability of the computing
infrastructure.

 

HUB’s
confidential computing solution has three configurations (HUB Vault, HUB PCIe Card and Hub Guard) that were available for commercial
sale. We have currently ceased operations of this product offering.

 

This
business has currently ceased operations along with the secured data fabric business.

  

HUB’s
Professional Services Division:

 

The
HUB Professional Services division is built upon three groups of subsidiaries: Comsec, ALD and QPoint.

 

Comsec

 

In
November 2021, we completed the acquisition of Comsec Ltd. and its subsidiaries. Comsec provides innovative cybersecurity services with
more than 30 years serving customers in Israel and across the world. The professional services portfolio provides consulting services
to identify and mitigate risks in customers’ cybersecurity environments.

 

Most
of Comsec’s customers are large enterprises, militaries and government agencies, and Comsec has long-term connections with the
IT procurement departments in those organizations and is recognized as an approved provider.

 

Comsec
specializes in governance risk compliance (“GRC”) and strategic consulting services. The company helps clients assess their
gaps to relevant regulatory requirements and propose solutions to mitigate the gaps and become compliant. As part of the GRC offerings,
there is focus on the credit card industry which has stringent requirements in place for implementation of cybersecurity controls. HUB
provides a chief information security officer as a service to clients that do not have sufficient internal resources to manage cybersecurity
in their organization. Comsec’s compliance and GRC services also include GDPR and other regulatory compliance assessments and remediation
work.

 

The
application security offerings help organizations assess their risk and vulnerabilities in their application landscape. The services
provided are aligned with the Secure Development Lifecycle methodology and helps clients and their development departments with assessing
risk (testing and threat modeling), training their developers, scanning code for vulnerabilities, recommending mitigation activities
and implementation of security controls.

 

 

Offensive
security offerings mimic what criminal organizations and hackers are attempting to do to compromise organizations. The teams rely on
their expertise and tooling to try and find vulnerabilities in the organization’s environment and exploit them to access critical
assets and systems. This enables clients to mitigate the found exploitations and plug gaps in their cybersecurity posture before being
exploited by hackers and/or criminal organizations.

 

Infrastructure
security services provide testing services on infrastructure-related equipment and environments. The team utilizes penetration testing
equipment to validate the security posture and identify potential vulnerabilities with a focus on cloud computing.

 

Reacting
to cyber incidents in a fast and decisive manner is key to mitigating harm. HUB has incident response teams available at all times to
receive calls from clients that may be experiencing a breach or ransomware attack. The experienced teams investigate the incident and
assist the client with activities to minimize the impact and restore operations to normal.

 

Comsec
also provides training to organizations’ employees in the field of cybersecurity. A catalog of over 50 training courses is available
to the client base and market.

  

Comsec
provides services to more than 100 active clients and has served over 1,000 customers across industries and geographies. Customers include
some of the largest banks, insurance companies, telecommunications organizations, industrial organizations and high tech companies around
the globe. Comsec also partners with organizations across the globe to provide their customers with the same high quality services that
Comsec provides directly. Partners include large outsourcing organizations as well as specialized niche companies that value Comsec’s
add-on services.

 

Comsec
explores opportunities to provide its services to large outsourcing companies in Europe and around the world that lack critical security
services, struggle with demand and cannot provide high-quality profiles.

 

Comsec
Competition and Competitive market

 

Although
there are a large number of cybersecurity organizations, the market need far outpaces the growth in our competitors. Comsec stands out
to the competition because its core services are developed and implemented in the Israeli market first. The Israeli market is demanding
and innovative, and Comsec has the opportunity to bring these innovative services to an international clientele.

 

Major
competitors include global consulting firms. While these organizations are large, Comsec stands out through innovative and cutting-edge
services catered to the latest trends and threats. Other competitors are more country-specific cybersecurity services companies. Against
these companies, Comsec believes it can show its experience in the global market, the breadth and depth of the service portfolio and
the quality of service.

 

ALD

 

RAMS
– Reliability Products and Services

 

HUB
merged with ALD in 2021. ALD was founded in 1984 and became publicly traded on TASE in 2000. ALD was an engineering services provider
specializing in quality, reliability and safety control for complex engineering projects and dependability of mission critical processes.
ALD’s culture of exacting quality standards and superior reliability and safety is highly complementary with the cybersecurity
industry’s emphasis on impenetrability and safety from external or internal threats. ALD’s experience and reputation enable
it to provide high-quality cybersecurity integration services to large-enterprise customers of HUB. 

 

ALD’s
customers include those in the aerospace, defense, government and transportation industries.

 

The
reliability of the products and services division is built upon the acquisition of ALD, a global leader in innovative Reliability, Availability,
Maintainability and Safety Assessment (“RAMS”) products and services for more than 30 years to customers in Israel and across
the globe.

 

 

The
ALD consulting team consists of experts in the fields of RAMS, LCC and ILS. The team provides solutions in the fields of aviation, transportation,
construction, infrastructure and renewable energy. Proposed solutions include preparation of RAMS and quality control plans, allocation
of professional personnel to projects and establishment of quality systems and certification of standards.

 

Some
of ALD’s customers are world-leading commercial companies as well as major defense, transportation and government organizations.

 

As
RAMS collects and analyses large amounts of data, it would be natural for HUB to include a Data Fabric solution to manage these data
assets.

 

ALD
Software  

 

ALD
Software Suite is a result of 40 years of expertise in development of safety and reliability analysis software for world-class civil
and military aviation, communication, space and electronics organizations.

 

The
software suite consists of a set of integrated tools covering reliability prediction, availability, maintainability analysis, safety
assessment, quality management, safety management, industrial process control and more:

 

RAM
Commander: 

 

RAM
Commander is the reliability and safety software that covers engineering tasks related to reliability of electronic, electro-mechanical
and mechanical systems. RAM Commander modules include reliability prediction, RBD, fault tree analysis, event tree
analysis, FMECA and testability analysis, FMEA process and design and more. 

 

Safety
Commander:

 

Safety
Commander is an off-the-shelf software that provides fail-safe design for any System of System Safety Assessment (“SoSSA”)
across multiple industries, including aerospace, rail, communication and energy. With the ability to perform safety analysis integration
on the level of an aircraft or system-of-systems, Safety Commander sets itself apart as a unique solution in the market.

 

FavoWeb:

 

FavoWeb
FRACAS is ALD web-based and user-configurable Failure Reporting, Analysis and Corrective Action System (“FRACAS”) that
captures information about equipment or a process throughout its life cycle, from design, production testing, and customer support.

 

ALD
College

 

ALD
College offers various courses in the areas of quality and reliability. Our courses are designed for different levels of students and
objectives. They range from short courses on quality control to full 250-hour academic courses on quality engineering. Courses correspond
to the American Society for Quality’s programming for the CQM/CQE/CRE/CSQE. Our courses are designed for both private participants
and institutions. Courses for large customers can be tailored to meet specific needs and delivered at either ALD College or at the customer’s
site.

 

Outsourcing

 

In
the framework of its outsourcing activity, ALD offers its customers a variety of services and solutions of positioning professional
and qualified manpower in accordance to customers’ needs and demands.

 

 

ALD
specializes in locating, qualifying and placement of qualified manpower in the following areas: Quality Engineering, Quality Assurance,
Failure Analysis, Reliability Engineering, Quality Control, FMEA/ FMECA Analyses, Standardization (ISO, AS) Thermal Design and Audits.

 

QPoint

 

In
April 2024, we completed the acquisition of all shares of QPoint that we did not yet own at that time, constituting 53.5% of QPoint’s
outstanding shares.

 

This
acquisition was strategically aligned with our mission to establish a leading global professional services and secure data fabric ecosystem.
QPoint has a diverse customer base of over 100 clients, including renowned brands such as Rafael Advanced Defense Systems, the Israel
Airports Authority and the Ministry of Defense of Israel.

 

QPoint
provides a variety of tech solutions and consulting across various verticals, including innovative data management and security solutions,
including software development and testing, cybersecurity, information systems, consulting, and training. QPoint’s team of engineers
provides advanced technological expertise, offering readily available and professional solutions to leading Israeli companies and organizations. This
strategic integration enhances HUB’s capabilities in safeguarding sensitive information across various sectors.

 

QPoint
has expertise in software engineering, testing, cybersecurity, ICT, web, mobile, project management and complex integration processes,
which bring invaluable additions to HUB’s portfolio and expands HUB’s market reach, revenue stability and customer support.
There is a significant cross-selling opportunity between QPoint and HUB’s expanded offerings, with customers spanning various industries,
including the healthcare, government, energy, defense, and financial sectors. The acquisition of QPoint significantly broadens HUB’s
customer base and service offerings as a result of QPoint’s market presence and compelling service solutions, and also integrates
a financially sound partner poised to make a significant contribution to HUB’s overall financial well-being.

 

Most
of QPoint’s customers are large enterprises, militaries and government agencies, and QPoint has deep and long-term connections
with the IT procurement departments in those organizations and is recognized as an approved provider.

 

Competition

 

The
markets in which HUB operates are characterized by intense competition, constant innovation, rapid adoption of different technological
solutions and services, and evolving security threats. HUB competes with a multitude of companies that offer a broad array of products
and services that employ different approaches and delivery models to address these evolving threats.

 

Cybersecurity
Competitive Landscape

 

HUB
may face competition due to changes in the manner that organizations utilize IT assets and the security solutions applied to them. Cybersecurity
spending is spread across a wide variety of solutions and strategies, including endpoint, network and cloud security, vulnerability management
and identity and access management. Organizations continually evaluate their security priorities and investments and may allocate their
cybersecurity budgets to other solutions and strategies and may not adopt or expand use of HUB’s solution. Accordingly, HUB may
also compete for budgetary reasons, to a certain extent, with additional vendors that offer threat protection solutions in adjacent or
complementary markets to HUB’s.

 

 

Professional
Services Competitive Landscape

 

The
cybersecurity professional services markets are experiencing heightened competition driven by rapid technological advancements, evolving
regulatory landscapes, and increasing client demands. Major players like IBM, Microsoft, SAP, Oracle, and SAS Institute are expanding
their offerings through strategic acquisitions and the integration of AI and machine learning to provide comprehensive, cloud-based GRC
solutions. This technological innovation enables more efficient risk management and compliance processes, allowing organizations to automate
regulatory adherence reports and detect threats more effectively. Simultaneously, the cybersecurity consulting sector is witnessing a
shift as clients may favor technology firms over traditional consultancies. This trend underscores the importance for traditional firms
to demonstrate their unique value propositions.

 

Nonetheless,
the demand for professionals with cybersecurity expertise is surging, as organizations seek to navigate complex regulatory environments
and bolster their cybersecurity frameworks. The convergence of regulation and cybersecurity services, coupled with the integration of
advanced technologies, is reshaping the competitive landscape, compelling firms to innovate and adapt to maintain a competitive edge.

 

Intellectual
Property

 

HUB
considers its intellectual property rights, including those in its know-how and the software code of its proprietary solution, to be,
in the aggregate, material to its business. HUB protects its intellectual property rights by relying on federal and state statutory and
common law rights, foreign laws where applicable, as well as contractual restrictions.

 

As
of December 31, 2025, we owned six registered patents in the United States, as well as one U.S. patent application, which was recently
allowed; however, these patents have not being actively maintained and their legal status is not currently being monitored by us. In
addition, HUB owns and uses trademarks and service marks on or in connection with its proprietary solution, including both unregistered
common law marks and issued trademark registrations. Finally, HUB has registered domain names for websites that it uses in its business.

 

HUB
designs, tests and updates its products, services and websites regularly, and it has developed its proprietary solutions in-house. HUB’s
know-how is an important element of its intellectual property. The development and management of its solution requires sophisticated
coordination among many specialized employees. HUB takes steps to protect its know-how, trade secrets and other confidential information,
in part, by entering into confidentiality agreements with its employees, consultants, developers and vendors who have access to confidential
information, and generally limiting access to and distribution of HUB’s confidential information.

 

While
most of the intellectual property HUB uses is developed and owned by HUB, it has obtained rights to use intellectual property of third
parties through licenses and services agreements. Although HUB believes these licenses are sufficient for the operation of its business,
these licenses typically limit HUB’s use of the third parties’ intellectual property to specific uses and for specific time
periods.

 

HUB
may pursue additional intellectual property protection to the extent it believes would advance its business objectives and maintain its
competitive position. Notwithstanding these efforts, there can be no assurance that HUB will adequately protect its intellectual property
or that it will provide any competitive advantage. From time to time, HUB expects to face in the future allegations by third parties,
including its competitors, that HUB has infringed their trademarks, copyrights, patents and other intellectual property rights or challenging
the validity or enforceability of HUB’s intellectual property rights. HUB is not presently a party to any such legal proceedings
that, in the opinion of HUB’s management, would individually or taken together have a material adverse effect on HUB’s business,
financial condition, results of operations or cash flows.

 

 

Government
Regulation and Compliance

 

Data
Protection Laws and Regulations 

 

HUB
is subject to various federal, state, and international laws and regulations that affect companies conducting business on digital platforms,
including those relating to privacy, data protection, the Internet, mobile applications, content, advertising and marketing activities.
New and evolving laws and regulations, and changes in their enforcement and interpretation, may require changes to HUB’s technology,
solutions, or business practices, which may significantly limit the ways in which HUB collects and processes data of individuals, communicate
with users, serve advertisements and generally operate HUB’s business. This may increase HUB’s compliance costs and otherwise
adversely affect HUB’s business and results of operations. As HUB’s business expands to include additional solutions and
industries, including the financial services sector, and HUB’s operations continue to expand internationally, HUB’s compliance
requirements and costs may increase and HUB may be subject to increased regulatory scrutiny.

 

The
data HUB collects and otherwise processes is integral to HUB’s business, technology, solutions and services, providing HUB with
insights to improve its solution and customization and integration of its solution to customers’ network. HUB’s collection,
use, receipt, storage and other processing of data in its business subjects it to numerous U.S. state and federal laws and regulations,
and foreign laws and regulations, addressing privacy, data protection and the collection, storing, sharing, use, transfer, disclosure,
protection and processing of certain types of data. Such regulations include, for example, the European Union General Data Protection
Regulation 2016/679 (the “GDPR”) as implemented by EU member states, the Privacy and Electronic Communications Directive
2002/58/EC, the UK Data Protection Act 2018 (which retains the GDPR under UK law), the Israeli Privacy Protection Regulations (Data Security)
2017, the Children’s Online Privacy Protection Act, Section 5(a) of the Federal Trade Commission Act, and other applicable laws
globally.

 

Our
activities in the cybersecurity market require that we comply with laws and regulations in the area of data privacy and data protection
governing the collection, use, retention, sharing and security of personal data. For example, the GDPR and UK DP Laws (each as referenced
above), include operational requirements for companies that receive or process personal data of residents of the EU and the UK, and non-compliance
may result in significant penalties. Many other countries in which we operate have their own data protection and data security laws that
we need to comply with in collecting, utilizing, or otherwise processing personal data from our customers and/or visitors to their websites
and others.

 

HUB
also may be subject to the California Consumer Privacy Act, or the CCPA, which imposes heightened transparency obligations, creates new
data privacy rights for California residents, and carries the potential for significant enforcement penalties for non-compliance as well
as a private right of action for certain data breaches. We also may be subject to the California Privacy Rights Act, or CPRA, which took
effect on January 1, 2023 and created obligations with respect to certain data relating to consumers, significantly expanded the CCPA,
including by introducing additional obligations such as data minimization and storage limitations, granting additional rights to consumers,
such as correction of personal information and additional opt-out rights, and created a new entity, the California Privacy Protection
Agency, to implement and enforce the law. Similar laws coming into effect in U.S. states, adoption of a comprehensive U.S. federal data
privacy law, and new legislation in international jurisdictions may continue to change the data protection landscape globally and could
result in us expending considerable resources to meet these requirements.

 

Non-compliance
with these laws could result in fines, regulatory investigations, reputational damage, orders to cease or change HUB’s processing
of data, enforcement notices or assessment notices for a compulsory audit, civil claims for damages, as well as associated costs, diversion
of internal resources and reputational harm. Although HUB takes extensive efforts to comply with all applicable laws and regulations,
HUB can provide no assurance that it will not be subject to regulatory and/or private action, including fines for non-compliance with
data protection and privacy laws, including in the event of a security incident.

 

HUB
works to comply with, and to support customers and partners in their efforts to comply with, applicable laws and regulations relating
to privacy, data protection and information security. HUB maintains privacy information notices for individuals whose personal data is
processed, enters into data processing agreements, conducts data protection impact assessments, product and feature reviews, maintains
a reasonably exhaustive list of data collected and processed, and responds to privacy-related queries and requests. HUB takes a variety
of technical and organizational security measures and other procedures and protocols to protect data, including data pertaining to users
and employees. Despite measures HUB puts in place, HUB may be unable to anticipate or prevent unauthorized access to or disclosure of
such data.

 

 

To
read more about HUB’s approach to laws and regulations relating to privacy, data protection, and information security, please see
the section titled “Risk Factors — Risks Related to Our Legal and Regulatory Environment.”

 

Anti-Bribery,
Anti-Corruption and Sanctions Laws and Regulations 

 

Our
operations are subject to anti-bribery and anti-corruption laws and regulations, including the Foreign Corrupt Practices Act (“FCPA”),
and economic and trade sanctions, including those administered by the Office of Foreign Assets Control of the U.S. Treasury, the U.S.
Department of State and the EU. These statutes generally prohibit providing anything of value to foreign officials for the purposes of
obtaining or retaining business or securing any improper business advantage. HUB may deal with both governments and state-owned business
enterprises, the employees of which are considered foreign officials for purposes of these laws.

  

Cybersecurity

 

In
July 2023, the U.S. Securities and Exchange Commission adopted the Risk Management, Strategy, Governance, and Incident Disclosure Final
Rule (the “Cybersecurity Final Rule”) enhancing disclosure requirements for registered companies covering cybersecurity risk
and management. The Cybersecurity Final Rule requires registrants to disclose material cybersecurity incidents on Form 8-K within four
business days of a determination that a cybersecurity incident is material, or for foreign private issuers like us, on Form 6-K promptly
after making such determination, and such materiality determination must be made without unreasonable delay. The rule also requires periodic
disclosures of, among other things, details on the company’s processes to assess, identify, and manage cybersecurity risks, cybersecurity
governance, and management’s role in overseeing such a compliance program, including the board of directors’ oversight of
cybersecurity risks.

 

We
have implemented a security program consisting of policies, procedures, and technology to maintain the privacy, security and integrity
of our information, systems, and networks. Among other things, the program includes controls designed to limit and monitor access to
authorized systems, networks, and data, prevent inappropriate access or modification, and monitor for threats or vulnerability. See “Risk
Factors—Risks Related to Our Systems and Technology—As a cybersecurity provider, if any of our systems, our customers’
cloud or on-premises environments, or our internal systems are breached or if unauthorized access to customer or third-party data is
otherwise obtained, public perception of our business may be harmed, and we may lose business and incur losses or liabilities.”

 

Financial
Services

 

We
are not currently subject to laws and regulations applicable to the financial services sector. However, some of our products are subject
to regulation and supervision by our customers’ regulators and we, as a service provider to the financial services sector undertake
certain compliance obligations. If we were to become directly subject to financial service regulations or if the third-party risk management
requirements applicable to us were to change, our business model may need to be substantially altered and we may not be able to continue
to operate our business as it is currently operated. Failure by us, or any of our customers, to comply with applicable laws and regulations
could have a material adverse effect on our business, financial position and results of operations. 

 

Other
Regulations 

 

In
addition, HUB is subject or might be subject to laws and regulations relating to antitrust, competition, intellectual property, AI and
other matters. HUB has implemented internal policies designed to minimize and detect potential violations of laws and regulations in
a timely manner, but can provide no assurance that such policies and procedures will be followed at all times or will effectively detect
and prevent violations of the applicable laws by one or more of its employees, consultants, agents, or partners.

 

 

Legal
Proceedings

 

HUB
is subject to claims and legal proceedings that have arisen both as a result of the Business Combination and the Company’s commencement
of trading in the United States and in the ordinary course of its business. Such matters are inherently uncertain, and there can be no
guarantee that the outcome of any such matter will be decided favorably to the Company or that the resolution of any such matter will
not have a material adverse effect upon the HUB’s business, financial condition, results of operation, cash flows and reputation.
HUB does not believe that any of such pending claims and legal proceedings will have a material adverse effect on its results of operations.
HUB records a liability in its consolidated financial statements for such matters when a loss is known or considered probable and the
amount can be reasonably estimated. HUB reviews these estimates each accounting period as additional information is known and adjusts
the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably
estimated, HUB estimates, provides the appropriate accrual and discloses the possible loss or range of loss to the extent necessary for
its consolidated financial statements not to be misleading. If the loss is not probable or cannot be reasonably estimated, a liability
is not recorded in its consolidated financial statements.

 

For
a description of the Company’s current legal proceedings, see Note 22 to our audited consolidated financial statements for the
year ended December 31, 2025 included in this Annual Report. Inclusion of such proceedings by HUB is not an admission that these proceedings,
if determined adversely to HUB, would have a material adverse effect on HUB’s results of operations.

 

C.
Organizational Structure

 

The
following table sets forth our material subsidiaries as of April 30, 2026, all of which are wholly owned, directly or indirectly, with
the exception of ALD Software Ltd., of which we own 98.63%.

 

Name of Subsidiary		Jurisdiction of Organization
HUB Cyber Security TLV Ltd.		Israel
ALD Software Ltd.		Israel
ALD College Ltd.		Israel
Qpoint Technologies Ltd.		Israel
QPoint Solutions Ltd.		Israel
Sensecom Consulting & Project Management Ltd.		Israel
Aginix Engineering & Project Management Ltd.		Israel
Comsec Ltd.		Israel
Comsec International Information Security B.V.		The Netherlands
BlackSwan Technologies, Inc.		Delaware, United States
BlackSwan Technologies GmbH		Germany

 

D.
Property, Plants and Equipment

 

Our
principal facility is located in Or Yehuda (near Tel Aviv), Israel, which consists of approximately 1,600 square meters (approximately
17,222 square feet) of leased office space. This facility currently accommodates our professional services division, with the remainder
of our employees working on a fully remote basis. The lease for this facility expires in March 2028, with an option to extend the lease
for an additional five years beyond the current term. HUB also currently leases offices in the Netherlands. HUB believes that its
facilities are adequate to meet its needs for the immediate future, and that, should it be needed, suitable additional space will be
available to accommodate any such expansion of its operations.

 

 

Item 4A. Unresolved
Staff Comments

 

None.

 

Item 5. Operating
and Financial Review and Prospects

 

A.
Operating Results

 

You should read the following
discussion together with the consolidated financial statements and related notes included elsewhere in this Annual Report. The statements
in this discussion regarding industry outlook, our expectations regarding our future performance, planned investments in our expansion
into additional geographies, research and development, sales and marketing and general and administrative functions as well as other non-historical
statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties,
including, but not limited to, the risks and uncertainties described in Item 3.D entitled “Risk Factors” and “Cautionary
Statement Regarding Forward-Looking Statements” included elsewhere in this Annual Report. Our actual results may differ materially
from those contained in or implied by any forward-looking statements.

 

Certain information called
for by this Item 5, including a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported
previously in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024, filed with the SEC on May 1, 2025 under the
section entitled “Item 5—Operating and Financial Review and Prospects,” and is incorporated herein by reference.

 

Overview

 

In 2025, HUB focused on two
symbiotic lines of business: (1) the Products and Technology division – secured data fabric and confidential computing; and (2)
the Professional Services division – cyber security and other technology services.

 

Products and Technology Division

 

●

HUB’s Products and Technology division focuses on research and development of HUB’s products and solutions.

 

●

HUB’s product solutions were marketed and licensed directly to banks, financial services, government agencies, defense organizations, research institutions and large enterprises.

 

●

We recorded a significant impairment of this division as of December 31, 2025, for the secured data fabric business, which ceased operations in June 2026.

 

Professional Services Division

 

The Professional Services
division is comprised of services performed by Comsec, QPoint and certain ALD activities.

 

●

ALD provides quality control in complex engineering projects and ensuring smooth and reliable execution in mission critical processes.

 

●

Comsec provides cyber risk assessment, risk mitigation and cyber incident response services to customers worldwide. Comsec customers are large enterprises, militaries and government agencies, and Comsec has deep and long-term connections with the IT procurement departments in those organizations and is recognized by them as an approved provider.

 

●

QPoint provides a variety of tech solutions and services, including software development and testing, cybersecurity, information systems, consulting, and training. Its team of over 145 engineers provides advanced technological expertise, offering readily available and professional solutions to leading Israeli companies and organizations.

 

 

Management, Sales, and Distribution

 

●

HUB’s Management, Sales, and Distribution team oversees marketing, sales, and related commercial activities to advance and support the distribution of HUB’s product solutions and services.

 

●

They oversee strategic planning, resource allocation, and operational execution to align our goals with market demands and ensure sustainable growth.

 

●

This team drives revenue by identifying customer needs, closing deals, and ensuring effective delivery and support of software products through various channels.

 

Our Operations

 

In 2025, we operated in several
countries and provided innovative cybersecurity computing appliances, secured data fabric services as well as cybersecurity and reliability,
availability, maintainability and safety (RAMS) professional services. Our zero trust confidential computing product received positive
initial market feedback, with detailed discussions held with interested parties in Israel, EMEA, APAC and the United States, including
well established companies in the telecommunications, insurance, banking and technology sectors.

 

Since 2021, HUB has completed
four acquisitions of cybersecurity consulting services and distribution companies – ALD, Comsec, QPoint and BST. This provided HUB
with an established and trusted customer base, including governmental agencies and enterprises that were expected to be prime targets
for its data fabric and confidential computing solutions.

 

We have not been successful
in achieving the strategic plans we had for the secured data fabric business due to financial, development and other challenges, and as
a result, as of December 31, 2025, we recorded a full impairment on the technology asset acquired in the BST acquisition. During June
2026 we ceased BST’s operations, terminated BST’s main commercial contract and terminated the employees of this business.

 

On June 26, 2026, we entered
into securities purchase agreements (each, a “Purchase Agreement” and, collectively, the “Purchase Agreements”)
with certain holders (each, a “Seller” and, collectively, the “Sellers”) of senior subordinated convertible notes
(the “Evofem Notes”) of Evofem Biosciences, Inc., a Delaware corporation (“Evofem”), and of certain purchase rights
to acquire securities of Evofem (the “Purchase Rights”). Pursuant to the Purchase Agreements, the Company agreed to purchase
from the Sellers all of their respective Evofem Notes and Purchase Rights, free and clear of liens, in exchange solely for the issuance
of equity securities of the Company as described below. For more information, see “Item 4.A – Information on the Company
– History and Development of the Company – Recent Developments.”

 

Evofem is a commercial-stage
biopharmaceutical company with two innovative women’s health products: (i) PHEXX^®, a non-hormonal prescription contraceptive
vaginal gel and (ii) SOLOSEC^®, a single-dose oral antimicrobial agent for the treatment of two common sexual health infections
– bacterial vaginosis (BV) and trichomoniasis.

 

In July 2026, we entered
into a promissory note with Evofem pursuant to which we provided a loan to Evofem in the principal amount of $706,304, bearing interest
of 12% per annum, compounded monthly. The loan matures 11 months from the effective date, unless accelerated due to an event of default.
The loan included an administration fee equal to 2% of the total loan amount, due on the effective date and a weekly monitoring fee of
$2,000, accruing from the effective date and payable on the maturity date. Evofem is entitled to use the proceeds of the loan exclusively
for making payments to its suppliers for the manufacture, production, and distribution of its products, PHEXX and SOLOSEC.

 

The Evofem transaction is
the latest milestone in a comprehensive restructuring that the Company has implemented, during which the Board and management team have
taken steps to improve liquidity, simplify the Company’s organizational structure, cut operating costs and strengthen corporate
governance.

 

As part of this plan, the
Company has substantially reduced operating expenses, eliminating many external consultants and contractors and reducing headcount solely
at the HUB level by approximately 50%. During May and June 2026, we executed a targeted workforce reduction of approximately 10% of all
our employees or full-time employee equivalents in order to improve our operational efficiency. Most of the reduction was related to the
cessation of activities in the BST business.

 

The Company has also engaged
Deloitte to support its restructuring efforts, operational improvements and financial planning as it works to strengthen its balance sheet.
Additionally, the Board continues to explore various strategic alternatives intended to maximize value for shareholders and position HUB
for future growth. The Company believes the Evofem transaction reflects a first step in a disciplined approach to pursuing strategic opportunities
while preserving liquidity.

 

 

Basis of presentation

 

The Company’s financial
statements are prepared in accordance with International Financial Reporting Standards, or IFRS as issued by the International Accounting
Standards Board (“IASB”).

 

Our Segments

 

We organize our business
into two reporting segments:

 

(i) Product and Technology
Segment – we develop and market integrated cybersecurity hardware/software solutions that allow organizations to protect their RAM
or confidential computing data to create a reliable work environment. We offer data and cybersecurity and system security and reliability
solutions and related services such as consulting, planning, training, integrating and ongoing servicing of cybersecurity, risk management,
system quality, reliability and security projects and fully managed corporate cybersecurity services. We recently expanded our data security
services into Trust Rails, the framework that allows institutions to enforce control, auditability and compliance across interactions
between systems.

 

(ii) Professional Services
Segment – we offer data and cybersecurity and system security and reliability solutions and related services such as consulting,
planning, training, integrating and ongoing servicing of cybersecurity, risk management, system quality, reliability and security projects
and fully managed corporate cybersecurity services.

 

These segments share unified
product development, operations, and administrative resources. The chief operating decision maker (the “CODM”), which is our
chairperson of the board, acting as principal executive, evaluates segment operating performance and makes resource allocation decisions
based on revenue, cost of revenue and operating profit (loss) from reportable segments.

 

Key Factors Affecting Our Results of Operations

 

Retention and Expansion of Customer Base

 

HUB’s results of operations
are driven by its ability to retain customers, increase revenue generated from existing customers and expand its customer base. The retention
of customers is a measure of the long-term value of customer agreements and HUB’s ability to establish and maintain deep, long-term
relationships with customers. A number of factors drive HUB’s ability to attract and retain customers, particularly large enterprise
customers (which HUB defines as customers that represent 10% or more of total revenue), including customers’ satisfaction with HUB’s
solutions provided by its technical staff, services and pricing, customers’ technology budgets, and the effectiveness of HUB’s
efforts to help its customers realize the benefits of its solutions.

 

For the year ended December
31, 2025, HUB’s annual revenue increased by 7% from $29.6 million for the year ended December 31, 2024 to $31.7 million for the
year ended December 31, 2025.

 

HUB achieved a gross retention
rate of 90% and 87% as of December 31, 2024 and 2025, respectively, for customers who generated over $27.7 million revenues over the trailing
12 months.

 

 

Impact of Acquisitions

 

HUB has historically grown
through selected acquisitions and, in addition to efforts to grow its confidential computing business organically, it acquired parallel
technology like BST’s secured data fabric. HUB’s results of operations have been, and are expected to continue to be, affected
by such acquisitions. We are currently conducting an evaluation process of potential strategic opportunities, with the goal of enhancing
value for our shareholders.

 

On February 28, 2021, HUB
TLV and ALD entered into a merger agreement, pursuant to which HUB TLV became a wholly owned subsidiary of HUB and the shareholders of
HUB TLV owned 51% of HUB’s issued and outstanding share capital. The transaction was completed on June 21, 2021. According to IAS36,
we perform an impairment test each to ensure that the net book value of the assets are recoverable. If enterprise value is lower compared
to the carrying amount of the business unit, then an impairment entry must be recorded. We have used third party evaluation services to
perform impairment tests since December 31, 2023, where the profit and loss approach was selected, based on five parameters: depreciation
and amortization, capital expenditures, investment in working capital, weighted average cost of capital and sensitivity analysis. The
outcome of this analysis has been reflected in our financial statements. Since ALD will not generate cash flow as expected, it has a negative
affect on the cash flow of the Company and its subsidiaries. To mitigate and address this risk, the Company focuses on two main areas:
(1) seeking new business opportunities in the overall services arena and (2) exploring and evaluating additional capital investments that
will result in positive cash flow impact.

 

On September 27, 2021, HUB
entered into an agreement for the purchase of the entire issued and outstanding share capital of Comsec Ltd. (“Comsec”). Comsec
provides cybersecurity consulting, design, testing and control services and sells data security and cybersecurity software and hardware
solutions. The purchase price of this acquisition was NIS 70 million and the transaction was completed on November 17, 2021. Since December
31, 2023, Comsec’s distribution activity has been classified as a “discontinued operation” under IFRS 5, “Non-current
Assets Held for Sale and Discontinued Operations.” As a result, the performance presentation for this activity is separate from
the ongoing business, which does not have a direct impact on the operating results and cash flow. 

 

In May 2022, HUB entered
into an asset purchase agreement with Legacy Technologies GmbH (“Legacy”), a European cyber firm with an extensive EMEA distribution
network of cyber solutions for major government and enterprise data centers. The acquired assets were mainly comprised of customer relationships
of Legacy. The transaction was completed on July 5, 2022. In fiscal year 2022, HUB recorded an impairment loss of $8,738 thousand for
the assets acquired from Legacy, due to the fact that revenue was not recognized or that HUB had not acquired new customers from Legacy’s
assets. As a result, HUB concluded that such assets were no longer viable and would not generate economic benefits in future.

 

On April 3, 2024, HUB acquired
the shares of QPoint that it did not yet own at that time, constituting 53.5% of QPoint’s outstanding shares for NIS 25,000,000
in cash. This acquisition was strategically aligned with the Company’s mission to establish a leading global secure data fabric
ecosystem. QPoint has a diverse customer base of over 100 clients, including renowned brands, such as Rafael Advanced Defense Systems,
the Israel Airport Authority and the Ministry of Defense of Israel.

 

In November 2023, HUB began
to collaborate with BST with the goal of becoming a significant player in the secured data fabric industry, and on January 27, 2025, HUB
consummated a merger agreement with BST resulting in BST and its subsidiaries becoming subsidiaries of HUB. As a result of the acquisition,
HUB issued to BST equity holders 197 ordinary shares and pre-funded warrants to purchase 44 ordinary shares of HUB. The exercise of the
pre-funded warrants is limited to the extent that, upon exercise, the holder and its affiliates would hold more than 4.99% of HUB’s
outstanding ordinary shares. The ordinary shares issued in the transaction are also subject to transfer restrictions. HUB accounted for
the transaction as an asset acquisition rather than a business combination. The acquired asset was initially recognized at a cost of $43
million. Following an impairment assessment performed in accordance with IAS 36 Impairment of Assets, the asset was fully amortized as
of December 31, 2025. We have not been successful in achieving the strategic plans we had for the secured data fabric business due to
financial, development and other challenges. During June 2026 we ceased BST’s operations, terminated BST’s main commercial
contract and terminated the employees of this business.

 

Innovation

 

HUB may continue to invest
in research and development to maintain solution differentiation and grow the community of large enterprise customers. In the short-term,
HUB may make continual investments in upgrading technology to continue providing customers a reliable and effective solution.

 

For the year ended December
31, 2025, HUB’s research and development expenses as a percentage of revenue were approximately 8.7%.

 

 

Investment in Growth

 

Although HUB currently has
limited cash resources, it may make significant investments in the future in order to execute potential new strategic opportunities, with
the goal of enhancing value for its shareholders, thereby prioritizing long-term growth over short-term profitability. 

 

As a result, sales and marketing
expenses may increase on an absolute basis in future periods, which would be expected to contribute to long-term growth, but may negatively
impact short-term profitability, as they drive an increase in operating expenses in advance of revenues attributable to such investments,
as well as a decrease in free cash flow.

 

For the year ended December
31, 2025, sales and marketing expenses as a percentage of revenue were approximately 32%.

 

Components of our Results of Operations

 

Revenue

 

Revenue is primarily generated
from rendering professional services, including consulting, planning, training, integrating and servicing our cybersecurity, risk management,
system quality, reliability and security projects. Revenue is recognized in the period in which the services are provided.

 

Cost of Revenue

 

Cost of revenue primarily
consists of salaries and related expenses associated with teams integral in providing HUB’s service, subcontractors and consultant
expenses, share-based compensation, as well as depreciation and material costs and amortization of intangible assets.

 

Research and Development Expenses, net

 

Research and development
expenses include costs incurred in developing, maintaining, and enhancing our products and technology. Additional expenses include costs
related to development, consulting, including share-based compensation, travel and other related costs. HUB believes that continuing to
invest in research and development efforts is essential to maintaining its competitive position. HUB expects research and development
expenses, net from government grants, to increase in the future as it continues to broaden its product portfolio.

 

Sales and Marketing Expenses

 

Sales and marketing expenses
consist primarily of salaries and other related costs including share-based compensation, sales and sales support functions, as well as
advertising and promotional personnel. Sales and marketing expenses also include depreciation and amortization and impairment of intangible
assets.

 

General and Administrative Expenses

 

General and administrative
expenses include costs incurred to support and operate our business. These costs primarily include personnel-related salary costs including
share-based compensation, professional services related to finance, legal, IT consulting and outsourcing, as well as impaired costs associated
with intangible assets (including the full amortization of BST).

 

Additionally, we expect to
continue to incur significant expenses associated with being a public company, including costs of additional personnel, accounting, audit,
legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements,
director and officer insurance costs, and investor and public relations costs.

 

Finance Income and Finance Expenses

 

Finance income and finance
expenses primarily consist of revaluation of financial instruments which are measured on fair market value as well as income and expenses
associated with fluctuations in foreign exchange rates, interest payable or received and bank fees.

 

 

Taxes on Income

  

Taxes on income consist primarily
of income taxes related to the jurisdictions in which HUB conducts business. HUB’s effective tax rate is affected by non-deductible
expenses, utilization of tax losses from prior years for which deferred taxes were not recognized, effect on deferred taxes at a rate
different from the primary tax rate and differences in previous tax assessments.

 

Results of Operations 

 

The following table sets
forth HUB’s operating results for the years ended December 31, 2025 and 2024. We have derived this data from our consolidated financial
statements included elsewhere in this Annual Report. This information should be read in conjunction with our consolidated financial statements
and related notes included elsewhere in this Annual Report. The results of historical periods are not necessarily indicative of the results
of operations for any future period.

 

		Year ended December 31,												%
		2025				2024				Change				Change
		(In $ thousands)				(In $ thousands)				(In $ thousands)
Revenue			31,662				29,562				2,100				7.1	%
Cost of Revenue			26,372				24,515				1,857				7.6	%
Gross Profit			5,290				5,047				243				4.8	%
Research and development expenses, net			2,745				2,002				743				37.1	%
Sales and marketing expenses			10,200				4,182	*			6,018				143.9	%
General and administrative expenses			66,724				24,905	*			41,819				167.9	%
Other expenses, net			(4,094	)			181				(4,275	)			(2,362	)%
Operating loss			(70,285	)			(26,223	)			(44,062	)			168	%
Financial income			(2,227	)			(2,220	)			(7	)			0.2	%
Financial expenses			49,248				12,586				36,662				291.3	%
Loss before taxes on income			(117,306	)			(36,589	)			(80,717	)			220.6	%
Taxes on income			743				557				186				33.4	%
Net loss from continuing operation			(118,049	)			(37,146	)			(80,903	)			217.8	%
Net income (loss) from discontinued operation			(1,741	)			(1,885	)			(144	)			7.6	%
Total net loss			(119,790	)			(39,031	)			(80,759	)			206.9	%

 

*	Expenses related to the Company’s public listing and capital raising activities in 2024 were reclassified from sales and marketing expenses to general and administrative expenses.

 

 

Comparison of the Years Ended December 31,
2025 and 2024

 

Revenue

 

Revenue was $31,662,000 and
$29,562,000 for the years ended December 31, 2025 and 2024, respectively, an increase of $2,100,000 or 7.1%, for the year ended December
31, 2025, compared to 2024.

 

The increase in revenues
was mainly due to the professional services division, as the Company entered into new contracts with customers from the governmental sector.

 

The table below sets forth
a breakdown of HUB’s revenue by customer location for the years ended December 31, 2025 and 2024.

 

		Year ended December 31,												Change
		2025				2024				Change				%
		(In $ thousands)				(In $ thousands)
Israel			28,141				27,808				333				1.2	%
America			234				699				(465	)			(66.5	)%
Europe			2,855				1,055				1,800				170.6	%
Asia Pacific			432				–				432				100	%
Total		$	31,662			$	29,562				2,100				7.1	%

 

Cost of Revenue

 

Cost of revenue was $26,372,000
and $24,515,000 for the years ended December 31, 2025 and 2024, respectively, an increase of $1,857,000 or 7.6% for the year ended December
31, 2025, compared to 2024.

 

The increase was mainly
due to an increase in headcount which resulted in an increase in payroll and payroll related expenses.

 

Gross Profit

 

Gross profit was $5,290,000
and $5,047,000 for the years ended December 31, 2025 and 2024, respectively, an increase of $243,000 or 4.8%, for the year ended December
31, 2025, compared to 2024. The increase was mainly due to entry into new contracts signed during 2024 with higher profitability that
continued and expanded into 2025. 

 

Research and Development Expenses, net

 

Research and development
expenses, mainly attributed to the Product and Technology Segment, were $2,745,000 and $2,002,000 for the years ended December 31, 2025
and 2024, respectively, an increase of $743,000 or 37.1% for the year ended December 31, 2025, compared to 2024. The increase was mainly
due to higher consulting fees in the amount of $228,000, share based compensation expenses of $174,000, and additional headcount resulting
in an increase of $136,000, partially offset by a decrease of $86,000 from settlements with former employes reached during 2025.

 

Sales and Marketing Expenses

 

Sales and marketing expenses
were $10,200,000 and $4,182,000,000 for the years ended December 31, 2025 and 2024, respectively, an increase of $6,018,000 or 143.9%
for the year ended December 31, 2025, compared to 2024. The increase was mainly due to impairment of an intangible asset related to a
customer relationship of $3.1 million and an additional increase in consulting activities resulting in an increase of $3 million. Expenses
related to the Company’s public listing and capital raising activities in 2024 were reclassified from sales and marketing expenses
to general and administrative expenses.

 

General and Administrative Expenses

 

General and administrative
expenses were $66,724,000 and $24,905,000 for the years ended December 31, 2025 and 2024, respectively, an increase of $41,819,000 or
167.9% for the year ended December 31, 2025, compared to 2024. The increase was mainly attributable to an increase resulting from a $43,554,000
impairment loss and an $11,000,000 class action settlement expense, partially offset by approximately $9,800,000 related to the settlement
arrangement with Oppenheimer & Co., a decrease of approximately $3,761,000 in consulting expenses in connection with the settlement
arrangement with A-Labs and a decrease in the Company’s public listing and capital raising activities resulting in a decrease of
$1,000,000. Expenses related to the Company’s public listing and capital raising activities in 2024 were reclassified from sales
and marketing expenses to general and administrative expenses.

 

 

Other Expenses, net

 

Other expenses, net were
an income of $4,094,000 and expenses of $181,000 for the years ended December 31, 2025, and 2024, respectively, an increase of $4,275,000,
or 2,362% for the year ended December 31, 2025, compared to 2024. The increase was mainly due to the divestment of BlackSwan “held
for sale” entities during the second half of 2025. 

 

Financial Income and Finance Expenses

 

Financial expenses were $49,248,000 and $12,586,000 for the years ended
December 31, 2025, and 2024, respectively, and financial income was $2,227,000 and $2,220,000 for the years ended December 31, 2025, and
2024, respectively, resulting in a net increase of $36,655,000 of finance expenses for the year ended December 31, 2025, compared to 2024.
The increase is primarily attributed to convertible components measurement, warrants measurement and interest expenses recorded in 2025
compared to 2024.

 

Taxes on Income

 

Taxes on income were $743,000
and $557,000 for the years ended December 31, 2025, and 2024, respectively. This increase in tax expense was primarily derived from receipt
of a final tax assessment related to prior years in the professional services segment.

 

Key Performance Indicators and Non-IFRS Financial
Metrics

 

HUB monitors the key business
metrics set forth below to help it evaluate its business and growth trends, establish budgets, measure the effectiveness of its sales
and marketing efforts, and assess operational efficiencies. The calculation of the key metrics discussed below may differ from other similarly
titled metrics used by other companies, securities analysts or investors.

 

Key Performance Indicators

 

The following table summarizes
the key performance indicators that HUB uses to evaluate its business for the periods presented.

  

		Year ended December 31												%
		2025				2024				Change				Change
		(in $ thousands)
Revenue
Product and Technology Segment (1)			1,439				1,039				400				38	%
Professional Services Segment (2)			30,223				28,523				1,700				6	%
Total		$	31,662			$	29,562				2,100				7	%

 

(1)

The Product and Technology Segment develops and markets integrated cybersecurity hardware/software solutions that allow organizations to protect their RAM or confidential computing data to create a reliable work environment and also from customer identity products derived from BlackSwan’s technology.

 

(2)

The Professional Services Segment offers data and cybersecurity and system security and reliability solutions and related services such as consulting, planning, training, integrating and ongoing servicing of cybersecurity, risk management, system quality, reliability and security projects and full managed corporate cybersecurity services.

 

		Year ended December 31												%
		2025				2024				Change				Change
		(in $ thousands)
Segment results (operating loss)
Product and Technology Segment			(11,660	)			(9,137	)			(2,523	)			28	%
Professional Services Segment			(58,625	)			(17,086	)			(41,539	)			243	%
Total		$	(70,285	)		$	(26,223	)			(44,062	)			168	%

 

 

Non-IFRS Financial Metrics

 

In addition to HUB’s
results determined in accordance with IFRS, HUB’s management believes that the following non-IFRS financial measures are useful
in evaluating HUB’s operating performance.

 

Adjusted EBITDA

 

HUB defines Adjusted EBITDA
as net loss as adjusted for income taxes, finance income, finance expenses, depreciation and amortization, impairments, share-based compensation
expense and other one-time costs. Adjusted EBITDA is included in this Annual Report because it is a key metric used by management and
HUB’s board of directors to assess its financial performance. Adjusted EBITDA is frequently used by analysts, investors and other
interested parties to evaluate companies in HUB’s industry. Management believes that Adjusted EBITDA is an appropriate measure of
operating performance because it eliminates the impact of expenses that do not relate directly to the performance of the underlying business.

 

Adjusted EBITDA is not an
IFRS measure of HUB’s financial performance or liquidity and should not be considered as alternatives to net income or loss as a
measure of financial performance, as alternatives to cash flows from operations as a measure of liquidity, or as alternatives to any other
performance measure derived in accordance with IFRS. Adjusted EBITDA should not be construed as an inference that HUB’s future results
will be unaffected by unusual or other items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s
discretionary use, as it does not reflect HUB’s tax payments and certain other cash costs that may recur in the future, including,
among other things, cash requirements for costs to replace assets being depreciated and amortized.

 

Management compensates for
these limitations by relying on HUB’s IFRS results in addition to using Adjusted EBITDA as a supplemental measure. HUB’s measure
of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

 

		Year ended December 31,												%
		2025				2024				Change				Change
		(In $ thousands)
Net loss from continuing operation		$	(118,049	)		$	(37,146	)			(80,903	)			218	%
Adjusted EBITDA		$	(21,220	)		$	(18,912	)			(2,308	)			10.9	%

 

Adjusted EBITDA decreased
in the year ended December 31, 2025, primarily due to significant growth in operational costs across all of our business (see analysis
below).

 

		Year ended December 31,												%
		2025				2024				Change				Change
		(In $ thousands)
Net loss		$	(118,049	)		$	(37,146	)			(80,903	)			218	%
Financial income(1)			(2,227	)			(2,220	)			(7	)			0.3	%
Financial expenses(1)			49,248				12,586				36,662				291	%
Taxes on income			743				557				186				33	%
Depreciation and amortization(2)			1,896				2,379				(483	)			(20	)%
Share-based compensation expense(3)			3,189				2,070				1,119				54	%
One time cost(4)			(2,704	)			2,209				(4,913	)			(222	)%
Impairment of goodwill and intangibles(5)			46,684				653				46,031				7,049	%
Adjusted EBITDA		$	(21,220	)		$	(18,912	)		$	(2,308	)			10.9	%

 

1.	Represents mainly financial expenses, net, which were recorded in connection with convertible loans and warrants issued during 2024 and 2025.

 

2.	Represents the amortization of the intangible assets as well as recurring depreciation of company’s fixed assets.

 

3.	Represents non-cash share-based compensation expenses.

 

4.

The increase in one-time costs was primarily driven by an $11 million provision recorded in connection with the U.S. class action settlement, partially offset by a reversal of the Oppenheimer provision in the amount of $9.8 million and a gain from loss of control in subsidiaries in the amount of $4.6 million.

 

5.	Represents impairment of other intangibles, primarily for the BST technology asset.

 

 

B. Liquidity and Capital Resources

 

Going Concern

 

Since inception, HUB has
incurred losses and generated negative cash flows from operations and has funded its operations, research and development, capital expenditure
and working capital requirements through revenue received from customers, bank loans and other debt facilities and government grants,
as well as equity contributions from shareholders.

 

As of December 31, 2025,
HUB’s cash and cash equivalents were approximately $1,763,000. The Company intends to finance operating costs over the next twelve
months through a combination of future issuances of equity and/or debt securities, reducing operating expenses and divesting assets.

 

Our future capital requirements
will depend on many factors, including, but not limited to, our growth, market acceptance of our offerings, the timing and extent of spending
to support our efforts to develop our platform, and the expansion of sales and marketing activities. We will need to seek additional equity
or debt financing from outside sources, and we may not be able to raise it on terms acceptable to us or at all. If we issue additional
equity securities to raise additional funds, further dilution to existing shareholders may occur. However, we cannot predict with certainty
the outcome of our actions to generate liquidity, including the availability of additional financing. If we are unable to raise additional
capital when desired, our business, financial condition, and results of operations could be adversely affected.

 

As a result of liquidity and cash flow concerns that have arisen resulting
from our business operations, we face significant uncertainty regarding the adequacy of our liquidity and capital resources and our ability
to repay our obligations as they become due. We generate negative cash flow, require constant and immediate cash injections to continue
to operate, and are failing to meet obligations as they become due, including financial debt, suppliers’ debts and other ordinary
course operational costs. In addition, and as a result of our ongoing operating losses, we had outstanding liabilities that could not
be met by our revenues, including defaults under certain loans, payments due to our debt holders, vendors and service providers and government
duties, which resulted in a seizure being placed on certain of our bank accounts. During certain
periods in 2024 and 2025, we were unable to make required deposits in employee pension and severance funds, which were later paid and
settled and payments due for certain periods in 2025 and 2026 were paid in June 2026. Furthermore, we have been unable to fully
pay required withholding taxes on employee compensation payments and government fees. Certain
of our subsidiaries also did not make timely tax filings with the ITA for several years. Our independent registered public accounting
firm has included in its report an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

 

The significant uncertainty
regarding our liquidity and capital resources and our ability to repay our obligations as they become due, provides substantial doubt
about our ability to continue as a going concern for the next twelve months from the date of issuance of this Annual Report. The Company’s
management is closely monitoring the situation and has been attempting to alleviate the liquidity and capital resources concerns through
workforce reductions, interim financing facilities and other capital raising efforts.

 

Following the filing of this
Annual Report, we expect to be able to obtain additional sources of debt and equity financing, together with additional revenues from
new business opportunities and have engaged with potential investors with regards to such financing alternatives. However, such opportunities
remain uncertain and are predicated upon events and circumstances which are outside our control. The inability to borrow or raise sufficient
funds on commercially reasonable terms, would have serious consequences to our business, financial condition, results of operations and
growth prospects.

 

Our
ability to continue as a going concern is contingent upon, among other factors, the sale of ordinary shares to obtain additional funding
to support our operations and/or obtaining alternate financing. Management currently believes that it will be necessary for us to secure
additional funds to continue our existing business operations and to fund our obligations. We have raised and will continue to seek to
raise additional funds during 2026 through a variety of equity and/or debt financing arrangements; however, there can be no assurance
that we will be able to obtain funds on commercially acceptable terms, if at all. If we cannot generate sufficient revenues, reduce cost
and/or secure additional financing on acceptable terms, we may be required to, among other things, alter our business strategy, significantly
curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms.

 

We
expect to use any such proceeds for general corporate and working capital purposes, which would increase our liquidity, but our ability
to fund our operations is not dependent upon receipt of cash proceeds from the exercise of the warrants. We believe the likelihood that
warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the market
price of our ordinary shares. If the market price for our ordinary shares is less than the respective prices of the warrants, we believe
warrant holders will be unlikely to exercise their warrants.

  

See “—Financings”
below for more details on our recent efforts to fund operating activities.

 

The Company believes that
its available cash will not be sufficient to meet its current obligations for a period of at least twelve months from the date of the
filing of this Annual Report. Accordingly, the Company has concluded there is substantial doubt about its ability to continue as a going
concern.

 

 

Material Cash Requirements

 

The table below summarizes
certain material cash requirements as of the year ended December 31, 2025 that will affect HUB’s future liquidity. HUB plans to
utilize its liquidity and cash flows from business operations, including investments, to fund its material cash requirements.

 

		2025				2026				2027				2028				2029				Thereafter				Total
		Total (in thousands)
Loans from bank			5,607				–				–				–				–				–				5,607
Loans from others			8,376				–				–				–				–								8,376
Lease liabilities			1,155				569				139				–				–				–				1,863
Liabilities for government grants			288				43				39				36				32				119				557
Total		$	15,426			$	612			$	178			$	36			$	32			$	119			$	16,403

 

Cash Flows Summary

 

The following table shows
a summary of HUB’s cash flows for the years ended December 31, 2025 and 2024.

 

		Year ended December 31,												%
		2025				2024				Change				Change
		(In thousands)
Net cash provided by / (used in):
Net cash used in operating activities		$	(31,398	)		$	(17,110	)			(14,288	)			84	%
Net cash provided by / (used in) investing activities			(133	)			(452	)			319				(71	)%
Net cash provided by financing activities			25,343				17,176				8,167				47.55	%
Exchange rate differences on cash and cash equivalents			4,866				(51	)			4,917				(9,641	)%
Net (decrease) in cash and cash equivalents		$	(1,322	)		$	(437	)		$	(885	)			203	%

 

Cash Flows Used in Operating Activities

 

Net cash used in operating activities was $31,398,000 for the year
ended December 31, 2025, reflecting a net loss of $119,790,000 and non-cash adjustments of $95,076,000, which primarily consists of intangible
assets and goodwill impairment in an aggregate amount of $44,741,000, finance expenses related to convertible loans and warrants in an
aggregate amount of $31,079,000, issuance of shares in an aggregate amount of $6,408,000, share-based compensation expenses in an aggregate
amount of $2,693,000 and depreciation and amortization in an aggregate amount of $1,896,000. In addition, decreases in asset and liability
items in 2025 were $5,377,000, which was primarily affected by an increase other accounts payable in the amount of $4,034,000.

 

Net
cash used in operating activities was $17,110,000 for the year ended December 31, 2024, reflecting a net loss of $39,031,000 and non-cash
adjustments of $16,615,000 which primarily consists of finance expenses related to convertible loans and warrants in an aggregate amount
of $7,227,000, issuance of shares in an aggregate amount of $2,420,000, share-based compensation expenses in an aggregate amount of $2,070,000,
intangible assets and goodwill impairment in an aggregate amount of $653,000 and depreciation and amortization in an aggregate amount
of $2,379,000. In addition, changes in asset and liability items in 2024 were $8,810,000, which was primarily affected by an increase
in other accounts payable in the amount of $7,776,000.

 

 

Cash Flows Used in Investing Activities

 

Net
cash used in investing activities was $133,000 for the year ended December 31, 2025, compared to $452,000 for the year ended December
31, 2024, resulting in a decrease of $319,000. The decrease was primarily due to withdrawal (investment) from a restricted bank deposit
in the amount of $157,000.

 

Cash Flows Provided by Financing Activities

 

Cash
flows provided by financing activities primarily relate to proceeds from issuances of shares, short-term credit from banks and government
grants, which have been used to fund working capital and for general corporate purposes.

 

Net
cash provided by financing activities was $25,343,000 for the year ended December 31, 2025, compared to $17,176,000 for the year ended
December 31, 2024, an increase of $8,167,000. The increase was primarily due to an increase in receipt of short-term loans in an amount
of $6,342,000.  

 

Loans

 

HUB PrivCap Funding Loan and Settlement

 

On February 21, 2025, HUB entered into a loan agreement (the “PrivCap
Loan”) with PrivCap Funding, LLC. The PrivCap Loan provided for a $175,000 principal amount with a total repayment obligation of
$235,000 (including interest and fees) due by March 1, 2025. The loan proceeds were used to engage Sideways Frequency LLC for marketing
services. The PrivCap Loan provided that if full repayment was not received by March 17, 2025, HUB would transfer 31 unrestricted ordinary
shares at $7,500 per share to PrivCap Funding on March 18, 2025, with a $2,000 per day penalty for any delay in share transfer.

 

In connection with the PrivCap Loan, HUB modified existing warrants
previously issued to Daniel Cohen under Securities Purchase Agreements dated December 20, 2023 and January 9, 2024. Effective February
15, 2025, the aggregate exercise price under these warrants was increased to $1,200,000, with an exercise price of $7,500 per share. Additionally,
HUB issued 13 new warrants to Jamie Goldstein under the same terms, exercisable at $7,500 per share.

 

On August 6, 2025, HUB entered into a settlement agreement with PrivCap
Funding and Daniel Cohen (collectively, “PrivCap”) to resolve all obligations under the PrivCap Loan through an equity settlement.
Under the settlement agreement, HUB agreed to transfer 6 unrestricted ordinary shares to PrivCap by August 22, 2025, provided the stock
price is at least $41,250 per share on the transfer date. If the share price falls below $41,250 per share, HUB must transfer additional
shares to ensure the total value equals no less than $275,000. The settlement agreement includes a penalty of 1 additional share per day
for any delay beyond the August 22, 2025 deadline. Upon completion of the share transfer, all parties release claims related to the original
loan agreement. On August 21, 2025, Hub issued 7 ordinary shares to PrivCap pursuant to the aforementioned settlement agreement.

 

HUB Agile Capital Loan

 

On April 29, 2025, HUB entered
into a Business Loan and Security Agreement (the “Agile Loan”) with Agile Capital Funding, LLC (as Collateral Agent), Agile
Lending, LLC (as Lead Lender), and other lenders. The Agile Loan provided for a $2,000,000 term loan, including a $200,000 administrative
agent fee, resulting in net proceeds of $1,800,000 to HUB. The total repayment amount, including interest and fees, is $2,980,000. The
loan matures 30 weeks from the effective date with weekly repayment scheduled throughout the term which has not yet been fully satisfied.
Interest accrues from the effective date until paid in full, with a default rate of 5% above the applicable rate upon an event of default.
HUB agreed to secure the Agile Loan by a continuing security interest in substantially all of HUB’s property, rights, and assets,
including accounts, equipment, inventory, intellectual property, and shares in HUB Cyber Security, Inc. and BlackSwan Technologies, Inc.

 

The Agile Loan contains various
customary covenants and includes negative covenants that restrict HUB from disposing of business or property, changing key management
(Noah Hershcoviz and Lior Davidsohn). Events of default include payment defaults, covenant breaches, material adverse changes, insolvency,
and judgments exceeding $50,000.

 

As of the date of this Annual
Report, the Agile Loan was fully repaid under the August 2025 Notes. See “Financings – August 2025 Financing” below.

 

 

HUB Mizrahi Loans

 

In December 2024, Comsec
Ltd. and Bank Mizrahi entered into a debt settlement agreement concerning the restructuring of the overall outstanding debt of Comsec
Distribution Ltd. Pursuant to the settlement agreement, the parties agreed that the outstanding debt amount of NIS 23 million will be
repaid over 24 months with quarterly installments, commencing on June 30, 2025. Interest will accrue at a rate of Prime (Bank of Israel
intrabank plus 1.5%) plus 3.25%. In addition, Bank Mizrahi agreed to waive any claims or objections regarding the debts, interest rates,
or associated banking charges. Bank Mizrahi reserves the right to demand immediate repayment if the debtors breach the settlement agreement
or if significant events occur that cast doubt on the debtors’ ability to meet obligations.

 

The debt settlement agreement
with Bank Mizrahi replaced the following loans, which were outstanding prior to the settlement date:

 

1.

Loan date July 6, 2020: Originally NIS 5,000 thousand ($1,452 thousand), bearing interest of Prime + 1.5%.

 

2.

Loan dated September 1, 2021: Originally NIS 980 thousand ($309 thousand), bearing interest of Prime + 1.5%.

 

3.

Loan dated September 1, 2021: Originally NIS 6,000 thousand ($1,934 thousand), bearing interest of Prime + 1.95%.

 

4.

On-call Loans: Aggregate principal amount of NIS 34,106 thousand, bearing interest of 8.1%.

 

As of December 31, 2025,
the remaining principal amount is NIS 14,598 thousand ($4,576 thousand).

 

QPoint Loans

 

On-call loans received by
QPoint, in an aggregate principal amount of NIS 3,400 thousand ($1,066 thousand). The loan bears interest of Prime + 1.1%. As of December
31, 2025, the remaining principal amount is $1,066 thousand. 

 

Aginix Loans

 

On July 19, 2024, Aginix
Engineering and Project Management Ltd. (“Aginix”), a wholly-owned subsidiary of QPoint, received a loan from Bank Hapoalim,
with an original principal amount of NIS 1,200 thousand ($334 thousand), which was repayable in 12 installments beginning in August 2024.
The loan bears interest of 7%. As of December 31, 2025, the loan was fully repaid.

 

On December 31, 2024, Aginix
received a loan from Bank Hapoalim, with an original principal amount of NIS 500 thousand ($137 thousand), which was repayable in 12 installments
beginning in January 2025. The loan bears interest of 6.5%. As of December 31, 2025, the loan was fully repaid.

 

During 2025, Aginix received
several loans aggregating to approximately NIS 2,800 thousand ($878 thousand), bearing an annual interest rate of approximately 7%. The
loans are repayable through monthly installments of principal and interest. As of December 31, 2025, the outstanding balance of these
loans amounted to approximately NIS 1,525 thousand ($478 thousand).

 

BlackSwan Loans

 

Following the merger with
BlackSwan on January 27, 2025, BlackSwan had two outstanding loans.

 

On August 9, 2022, BlackSwan
received a loan from Yossi Lahav Consultants, with an original principal amount of $1,500 thousand. The loan bears accrued fixed interest
of $750 thousand. BlackSwan did not meet the repayment terms of this loan. On June 4, 2024, Yossi Lahav Consultants filed a claim against
BlackSwan and others for failure to meet the repayment terms and for related damages. For further details, see Note 22 to our audited
consolidated financial statements for the year ended December 31, 2025 included in this Annual Report.

 

On September 8, 2022, BlackSwan
received a loan from A-Labs Consultants with an original principal amount of $200 thousand. The loan bears, bearing accrued interest of
approximately 2.42%. As of the date of this Annual Report, this loan has not yet been repaid.

 

 

Financings

 

August 2025 Financing

 

On August 27, 2025, we entered
into a securities purchase agreement (the “August 2025 SPA”) providing for the issuance of subordinated convertible notes
(the “August 2025 Notes”) to certain accredited investors, including Keystone, in the aggregate original principal amount
of up to $20,000,000 to be issued in multiple closings. Closings under the August 2025 SPA can be held over a period of one year at the
election of Keystone.

 

The notes issued in June
2025 (see “—June 2025 SPA”) resulted in aggregate cash proceeds of $3,625,000 and in the exchange of notes issued
by us in March and April 2025 in the aggregate principal amount of $2,187,500.

 

At the initial closing of
the August 2025 SPA, we issued August 2025 Notes in the aggregate original principal amount of $7,850,000 for an aggregate purchase price
of $7,000,000 in cash and in the exchange of the notes that we issued previously to investors in June 2025. In addition, the Company issued
warrants to purchase 90 ordinary shares.

 

In the first additional closing
under the August 2025 SPA, held on September 4, 2025, the Company issued and sold Amended Notes in the aggregate principal amount of $2,968,750
and warrants to purchase an aggregate of 34 ordinary shares, in consideration for cash payments in the aggregate amount of $2,375,000,
under the same terms as the initial closing.

 

The August 2025 Notes mature
on August 27, 2027 and bear interest at 4% per annum, payable quarterly in ordinary shares under certain equity conditions (including
the effectiveness of a resale registration statement) or, at the Company’s option, in cash. Late payments accrue interest at an
additional premium of 8% per year. No scheduled amortization payments are required.

 

The August 2025 Notes are
subordinated to existing senior indebtedness not to exceed $25 million in aggregate. They contain various restrictive covenants, including
limitations on dividends, incurrence of indebtedness, certain subsequent equity placements, asset sales and certain variable rate transactions.

 

The August 2025 Notes are
convertible into ordinary shares at the option of the holders at an initial conversion price of $43,200 per share, subject to anti-dilution
adjustments for certain dilutive issuances. Holders may elect an alternate conversion price at the lower of the fixed conversion price
or 95% of lowest VWAP during the five days up to and including the date of conversion, subject to a $15,000 floor price. If such conversion
price is lower than the floor price, the Company would be required to pay the balance in cash.

 

The August 2025 Notes contain
several mandatory and optional redemption provisions. Holders also have optional redemption rights in respect of financings pursuant to
equity lines of credit and at-the-market offerings, allowing them to require redemption of up to their pro-rata portion of 30% of net
proceeds from eligible transactions at a 110% of the redemption amount. Holders also have the right to exchange their August 2025 Notes
for the securities issued in a subsequent placement, at a 10% discount. The Company has the right to redeem all a portion of the August
2025 Notes, from time to time, at 120% of the conversion amount.

 

On October 15, 2025, the
Company and certain accredited investors, including Keystone, entered into Amendment No. 1 to the August 2025 SPA increasing the aggregate
principal amount of notes issuable thereunder to $35,000,000, adding additional investors and amending the form of note as described below
(the “Amended Note”).

 

In the second additional
closing under the August 2025 SPA, held on October 16, 2025, the Company issued and sold Amended Notes in the aggregate principal amount
of $20,525,625 and warrants to purchase an aggregate of 237 ordinary shares, in consideration for (i) cash payments in the aggregate amount
of $7,250,000 with the principal amount of $10,019,374, (ii) the partial exchange of August 2025 Notes in the aggregate principal amount
of $9,568,751 (at a 10% discount) and (iii) the exchange of $750,000 owed under the Company’s Business Loan and Security Agreement
(the “Agile Loan”) with Agile Capital Funding, LLC (as Collateral Agent) and Agile Lending, LLC (as Lead Lender), dated April
29, 2025, with a new principal amount of $937,500.

 

On December 31, 2025, the
Company held an additional closing under the August 2025 SPA in the aggregate principal amount of $1,250 thousand, for an aggregate purchase
price of $1,000 thousand and warrants to purchase an aggregate of 14 ordinary shares. On December 31, 2025, the Company and certain accredited
investors, including Keystone, entered into Amendment No. 2 to the August 2025 SPA, increasing the aggregate principal amount of notes
issuable thereunder to $47,250,000.

 

As of December 31, 2025, a total amount of $11,625 thousand was received
in cash and $1,500 thousand were converted into 100 ordinary shares.

 

The Amended Notes have a
term of two years from the date of issuance thereof. They do not bear interest, except during the pendency of an event of default, in
which case the rate will be 9% per year. Late payments accrue interest at an additional premium of 8% per year. Commencing approximately
30 days after the effectiveness of the Company’s Form F-1 for an equity line of credit, the Company will be required to repay a
pro rata portion of the principal and interest accrued thereon on the first trading day of each calendar month, in cash or shares (subject
to equity conditions) at its election.

 

The Amended Notes are subordinated
to existing senior indebtedness not to exceed $25 million in aggregate. They contain various restrictive covenants, including limitations
on dividends, incurrence of indebtedness, certain subsequent equity placements, asset sales and certain variable rate transactions.

 

The Amended Notes are convertible
into ordinary shares at the option of the holders at an initial conversion price of $43,200 per share, subject to anti-dilution adjustments
for certain dilutive issuances. Holders may elect an alternate conversion price at the lower of the fixed conversion price or 90% of lowest
VWAP during the 20 days up to and including the date of conversion, subject to a $15,000 floor price (or 20% of the Nasdaq minimum price
if there’s an event of default). If such conversion price is lower than the floor price, the Company would be required to pay the balance
in cash.

 

The Amended Notes contain
several mandatory and optional redemption provisions. Holders also have optional redemption rights in respect of financings pursuant to
equity lines of credit and at-the-market offerings, allowing them to require redemption of up to their pro-rata portion of 30% of net
proceeds from eligible transactions at a 110% of the redemption amount. Holders also have the right to exchange their Amended Notes for
the securities issued in a subsequent placement, at a 10% discount. The Company has the right to redeem all a portion of the Amended Notes,
from time to time, at 120% of the conversion amount.

 

In change of control transactions (with control defined based on a 50%
threshold), holders may require redemption at 115% of the conversion amount. Holders also have participation rights in future financings,
with the right to purchase their pro-rata portion of 30% of any subsequent placement exceeding $5,000,000 in the aggregate.

 

Upon events of default (including
registration statement failures, trading suspensions, conversion failures, or material breaches), holders may require redemption at 120%
of the conversion amount. Upon any bankruptcy event of default, the Company must immediately pay all outstanding amounts multiplied by
a 120% redemption premium without requiring notice or demand from holders.

 

The August 2025 Warrants
have an initial exercise price of $54,000 per share, subject to decrease on days 30, 60 and 90 following the issuance date to 20% below
the prevailing market price at that time and to anti-dilution adjustments for certain dilutive issuances. The August 2025 Warrants have
a term of three years. Cashless exercise is permitted after six months if a resale registration statement is not effective. In connection
with a “fundamental transaction,” the holder has the right to exchange its warrant for a similar warrant in the successor
entity or cash pursuant to a Black-Scholes formula. Upon an event of default, the holder has the right to redeem its warrant for cash
based on a Black-Scholes formula.

 

The August 2025 Notes, the
Amended Notes and the August 2025 Warrants are subject to a beneficial ownership limitation of 4.99% (subject to increase to 9.99% with
61-day notice and shareholder approval) to prevent any holder from exceeding this threshold. We are required to reserve 200% of the shares
issuable upon conversion of all August 2025 Notes, Amended Notes and August 2025 Warrants at the applicable conversion price or exercise
price.

 

Concurrently with the entry
into the August 2025 SPA, we entered into a registration rights agreement, whereby we undertook to file with the SEC a Form F-1 registration
statement within 45 days from the initial closing in order to register for resale the shares issuable upon the conversion and/or exercise
of the August 2025 Notes and August 2025 Warrants and the Placement Agent Warrant (as defined below) and to use our reasonable best efforts
to cause the registration statement to be effective within 90 days from the initial closing (or 120 days in the event of a full SEC review).
The same rights apply with respect to the shares issuable upon conversion of the Amended Notes. The registration rights agreement provides
for liquidated damages for certain defaults equal to 1% of the original principal amount of the August 2025 Notes for each 30-day period
until the default is cured, up to an aggregate of 10% thereof. The registration rights agreement contains other customary terms and conditions,
including indemnification obligations.

 

Rodman & Renshaw LLC
acted as sole placement agent for the offering. The fees of the placement agent consisted of a total of $300,000 in cash and the issuance
of a warrant to purchase an aggregate of 1 ordinary share on the same terms and conditions as the warrants issued to investors in the
offering, except for the potential adjustment of the exercise price on days 30, 60 and 90.

 

June 2025 SPA

 

On June 30, 2025, we entered
into a securities purchase agreement (the “June 2025 SPA”) providing for the issuance of subordinated convertible notes (the
“June 2025 Notes”) to certain accredited investors, including Keystone, in the aggregate original principal amount of $6,719
thousand. At the closing, we received an aggregate purchase price of $3,625 thousand in cash and the exchange of the notes that we issued
previously to investors in March and April 2025 in the aggregate principal amount of $2,187 thousand. The June 2025 Notes issued in consideration
for cash were issued with a 20% original issue discount, and the June 2025 Notes issued in consideration for our outstanding notes were
issued on a dollar-for-dollar basis. Out of the June 2025 Notes $6,000 thousand were subsequently exchanged for new notes issued under
the August 2025 SPA. As of December 31, 2025, a total amount of $3,625 thousand was received in cash.

 

 

March 2025 Notes

 

On March 27, 2025, the Company
completed the issuance of a series of notes (the “March 2025 Notes”) to certain investors, including Keystone Capital Partners,
LLC as the lead investor (“Keystone” and collectively with the other investors, the “March 2025 Note Investors”),
in an aggregate principal amount of $1,625,000 and original issue discount of $325,000, for an aggregate purchase price of $1,300,000.
The March 2025 Notes originally matured on December 11, 2025, did not bear interest, and included a prepayment option at a premium of
125%. In addition, the Company was required to use the cash proceeds deriving from a financing in which it receives proceeds of at least
$10 million to repay the March 2025 Notes.

 

The March 2025 Note Investors
had the right to convert the principal amount into ordinary shares of the Company upon the occurrence of a subsequent equity financing
pursuant to which the Company receives at least $5 million, subject to certain conditions.

 

The conversion of the March
2025 Notes was limited to the extent that, upon their conversion, a March 2025 Note Investor and its affiliates would in aggregate beneficially
own more than 4.99% of the Company’s outstanding share capital at any time. The March 2025 Notes were exchanged with the June 2025
SPA, which thereafter was replaced with the August 2025 Financing described herein.

 

ELOC Transaction

 

Concurrently with the investment
by the March 2025 Note Investors described above, the Company entered into an Ordinary Shares Purchase Agreement (the “ELOC Purchase
Agreement”) with Keystone, pursuant to which the Company has the right to sell to Keystone up to an aggregate of $50 million
of newly issued ordinary shares (the “ELOC Shares”).

  

As consideration for Keystone’s
commitment to purchase ELOC Shares upon the terms of and subject to satisfaction of the conditions set forth in the ELOC Purchase Agreement,
the Company agreed to issue to Keystone a note in a principal amount of $1,000,000 and an additional commitment note on May 28, 2025,
in the principal amount of $1,500,000, each of which does not bear interest and has a maturity date of December 11, 2025 and November
28, 2026, respectively (the “Commitment Note”). The Commitment Note is due by way of conversion into the Company’s shares
based on the closing share price of the Company’s shares on the date immediately prior to the maturity date, provided that in each
case the applicable conversion price shall not be lower than twenty percent (20%) of the closing sale price of the Company’s shares
on the issuance date of the Commitment Note. The Commitment Note can be converted prior to the maturity date by either the Company or
Keystone at any time following the earlier of (i) the date on which the shares issuable upon conversion are registered under a registration
statement filed with the SEC or (ii) September 11, 2025. In the event of a conversion prior to the maturity date, the number of Company
shares to be issued upon the conversion of the Commitment Note will be based on the closing share price on the day prior to the issuance
of the conversion notice provided that the closing sale price on the day prior to the issuance of the conversion notice is not lower than
10% as compared to the closing sale price on the date immediately prior thereto. The conversion of the Commitment Note will be limited
to the extent that, upon its conversion, Keystone and its affiliates would in aggregate beneficially own more than 4.99% of the Company’s
outstanding share capital at any time.

 

In addition, in connection
with the ELOC Purchase Agreement, the Company and Keystone entered into a Registration Rights Agreement pursuant to which the Company
undertook to register with the SEC the shares issuable upon conversion of the Commitment Note and the ELOC Shares that the Company has
the right to sell to Keystone.

 

The Company does not have
a right to commence any sales of ELOC Shares to Keystone under the ELOC Purchase Agreement before a registration statement of such shares
is declared effective by the SEC and the final form of prospectus is filed with the SEC (the “Commencement Date”). Following
such date, the Company will control the timing and amount of any sales of ELOC Shares to Keystone. Actual sales of shares of ELOC Shares
to Keystone under the ELOC Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including,
among others, market conditions, the trading price of the ELOC Shares and determinations by the Company as to the appropriate sources
of funding for the Company and its operations. The Company is obligated to use 33% proceeds from the sale of ELOC Shares to repay the
principal amount under the March 2025 Notes.

  

As of December 31, 2025,
an amount of $1,600,000 was converted into 107 shares.

 

Under the ELOC Purchase Agreement,
on any business day on which the closing sale price of the Company’s shares is equal to or greater than $0.05 (the “Fixed
Purchase Date”), the Company may direct Keystone to purchase shares (a “Fixed Purchase”) at a purchase price equal
to 95% of the lesser of (i) the daily volume-weighted average price (the “VWAP”) of the Company’s shares for the five
(5) trading days immediately preceding the applicable fixed purchase date and (ii) the lowest sale price on the applicable Fixed Purchase
Date, provided, that Keystone’s committed obligation under any single Fixed Purchase shall not exceed $50,000.

 

In addition to Fixed Purchases,
on any business day on which the Company has directed Keystone to purchase the maximum allowable Fixed Purchase amount, the Company may
also direct Keystone to purchase additional shares on the trading day immediately following the purchase date for such Fixed Purchase
(the “VWAP Purchase Date” and such purchase, a “VWAP Purchase”) at a purchase price equal to 90% of the lesser
of (i) the closing sale price of the Company’s shares on the applicable VWAP Purchase Date and (ii) the VWAP during the period on
the applicable VWAP Purchase Date beginning at the opening of trading and ending on the earlier of (1) close of trading, (2) the time
at which the trading volume of the Company’s shares on Nasdaq has reached the number of shares to be sold in the VWAP Purchase divided
by 30%, and (3) the time at which the sale price of the Company’s shares on Nasdaq is 75% of the closing sale price on the date
on which the Company directs Keystone to make a VWAP Purchase (such period, the “VWAP Purchase Period”), provided, that Keystone’s
committed obligation under any single VWAP Purchase shall not exceed the lesser of (a) 300% of the number of shares sold in the corresponding
Fixed Purchase and (b) 30% of the trading volume of the VWAP Purchase Period.

 

 

In addition, on a VWAP Purchase
Date, the Company may also direct Keystone to purchase on such day, an additional number of shares (an “Additional VWAP Purchase”)
at a purchase price equal to 90% of the lesser of (i) the VWAP beginning at the completion of any prior VWAP Purchases and the last Additional
VWAP Purchase, as applicable, and ending on the earlier of (1) close of trading, (2) the time at which the trading volume of the Company’s
shares on Nasdaq has reached the number of shares to be sold in the Additional VWAP Purchase divided by 30%, and (3) the time at which
the sale price of the Company’s shares on Nasdaq is 75% of the closing sale price on the date on which the Company directs Keystone
to make an Additional VWAP Purchase (such period, the “Additional VWAP Purchase Period”), and (ii) the lowest sale price on
such day, provided, that Keystone’s committed obligation under any single Additional VWAP Purchase shall not exceed the lesser of
(a) 300% of the number of shares sold in the Fixed Purchase that corresponded to the VWAP Purchase corresponding to the Additional VWAP
Purchase and (b) 30% of the trading volume of the Additional VWAP Purchase Period.

 

Keystone’s aggregate
committed obligation under a VWAP Purchase and all Additional VWAP Purchases for a particular VWAP Purchase Date shall not exceed $1,000,000
in the aggregate.

 

The ELOC Purchase Agreement
provides that the Company may not issue or sell any shares under the ELOC Purchase Agreement if the issuance or sale of such shares would
result in Keystone and its affiliates beneficially owning more than 4.99% of the Company’s outstanding share capital at any time.

 

Julestar Financing Transaction

 

In February 2025, the Company
entered into a Loan Agreement with Julestar LLC, a New York limited liability company (“Julestar”), pursuant to which
Julestar loaned us $2,650,000 in consideration for a promissory note in the principal amount of $3,117,647 (the “Julestar Note”).
The principal amount, and interest thereon, was required to be repaid in 40 weekly installments over the 10-month term of the loan. The
Julestar Note accrued interest at a rate of 10% per annum. To secure the repayment of the Julestar Note, the Company undertook to grant
a subordinated pledge over the shares of certain of its subsidiaries, subject to the consent of a senior lender within 60 days, however
this consent was not obtained.

 

The Loan Agreement included
the issuance of five-year warrants to purchase 35 ordinary shares (the “Julestar Warrants”), subject to downward adjustment
in the number of underlying shares in the event of early repayment of the Julestar Note in full or upward adjustment in the event the
Julestar Note is not repaid in full within 90 days of the issuance date. The exercise price of the Julestar Warrants is $75,000 per share,
subject to adjustment in certain circumstances, including dilutive issuances. The Julestar Warrants are subject to a limitation that prohibits
ownership of more than 4.99% of Company’s outstanding share capital at any time.

 

The Company undertook to
register the shares issuable upon the exercise of the Julestar Warrants with the Securities and Exchange Commission on a Form F-1 or Form
F-3.

 

Since the Company did not
repay the loan within 90 days, as of May 5, 2025, the Company amended the warrants to increase the number of shares issuable thereunder
by an additional 113 shares at an exercise price of $75,000 per share, subject to adjustment in certain circumstances, including dilutive
issuances. The Company repaid $1,300 thousand owing under the Julestar Note in 2025.

 

As a result of the issuance
of the Julestar Warrants, the exercise price of the warrant to purchase 35 ordinary shares issued in an earlier financing transaction
on December 30, 2024 automatically decreased from $127,500 to $75,000 per share.

 

In June 2026, the Company
repaid $1.35 million to Julestar.

 

J.J. Astor Financing

 

In December 2024, the Company
entered into a Loan Agreement with J.J. Astor & Co. (“Astor”) pursuant to which Astor agreed to loan us $2,200,000 in
consideration for a promissory note in the principal amount of $2,750,000 (the “December 2024 Convertible Note”). After fees
and expenses, the net proceeds of the loan were $2,087,000. The December 2024 Convertible Note is payable in 40 weekly installments of
$68,750 each in cash or registered ordinary shares, at our election. The December 2024 Convertible Note will not accrue interest (unless
there is an event of default).

 

The Company is entitled to
prepay the December 2024 Convertible Note at any time, with declining discounts for prepayment within 30, 60 or 90 days. Upon an event
of default, the outstanding principal amount will increase to 110% of the outstanding principal amount, plus interest thereon at the rate
of 16% per annum. The December 2024 Convertible Note will be convertible by Astor following an event of default.

 

 

The conversion price of the
December 2024 Convertible Note is 80% of the average of the four lowest VWAP prices for the 20 trading days prior to conversion but not
lower than the 20% of the average of the four lowest VWAP prices for the 20 trading days prior to the closing date. To the extent that
the conversion price is lower than such minimum price, the Company will be required to pay a make-whole payment.

 

One-half of the net proceeds
of the amount the Company raises in any subsequent equity financing of less than $5 million will be required to be used to prepay the
December 2024 Convertible Note, and all of larger equity financings will be required to be used to prepay the December 2024 Convertible
Note.

 

The Company agreed to issue
to Astor a five-year warrant to purchase 8 ordinary shares at an exercise price of $127,500 per share (the “December 2024 Warrant”),
subject to adjustment in certain circumstances, including dilutive issuances. The Company undertook to register the shares issuable upon
conversion of the December 2024 Convertible Note and upon exercise of December 2024 Warrant on our registration statement on Form F-1.
If there is no such registration statement in effect, the holder of the December 2024 Warrant will be entitled to exercise on a cashless
basis. On January 13, 2025, Astor assigned the December 2024 Warrant to Wolverine Flagship Fund Trading Limited, which now holds the rights
under the December 2024 Warrant. The December 2024 Convertible Note and December 2024 Warrant are subject to a limitation that prohibits
ownership of more than 4.99% our outstanding share capital at any time.

 

Each of the Company’s
subsidiaries agreed to guarantee the December 2024 Convertible Note and the Company and each of its subsidiaries agreed to grant a subordinated
pledge over its assets to secure the December 2024 Convertible Note, each to become effective following an event of default and receipt
of consent from our senior lenders. Failure to obtain such consents will be deemed an event of default under the December 2024 Convertible
Note.

 

On May 28, 2025, we amended
the Loan Agreement with Astor to add an additional loan in the amount of $1,560,000, which was evidenced by a $1,853,750 convertible promissory
note payable in 40 weekly installments of $46,343 each (the “May 2025 Convertible Note”). After fees and expenses, the net
proceeds of this loan were approximately $1,477,600. We agreed that Astor would hold back $926,875 from the proceeds to ensure the payment
of weekly installments. The May 2025 Convertible Note matures on March 30, 2026 and has terms substantially similar to the December 2024
Convertible Note. We also issued to Astor a warrant to purchase 42 ordinary shares at $37,500 per share on terms substantially similar
to the December 2024 Warrant. On July 16, 2025, Astor assigned the warrant to Wolverine Flagship Fund Trading Limited, which now holds
the rights thereunder.

 

In connection with the issuance
of the May 2025 Convertible Note, Astor agreed to waive the default under the December 2024 Convertible Note caused by our failure to
pay some of the weekly installments. As a result of the default, the principal amount under the December 2024 Convertible Note was increased
by 10%, the interest rate during the period in which the default was continuing was increased to 16% per year, compounded monthly, and
the December 2024 Convertible Note became convertible at the option of the holder thereof.

 

As of the date of this Annual
Report, the Company has paid an aggregated amount of $840,000 and Astor has converted the principal amount of $2,165,497 of the December
2024 Convertible Note into our ordinary shares, pursuant to which conversions we have issued 98 ordinary shares.

 

Claymore Capital Financings

 

In August 2024, we entered
into Securities Purchase Agreements with multiple private investors to raise gross proceeds of approximately $3.3 million in exchange
for the issuance of convertible notes (the “August 2024 Notes”) with an aggregate principal amount of approximately $4.0 million
and warrants to acquire an aggregate of approximately 313 ordinary shares of the Company. The August 2024 Notes are unsecured, have a
term of two years and do not accrue interest. They are convertible into ordinary shares of the Company at any time at the option of the
holder of each note at a price equal to the lower of $105,000 or the price per share of which the Company sells shares to a third party,
but in no event less than $75,000. The August 2024 Warrants are exercisable for a period of three years at an exercise price of $150,000
per share. Claymore Capital PTY Ltd. (“Claymore”) served as the placement agent for this transaction and received a fee of
approximately $233,000 in cash and a warrant to purchase approximately 7 ordinary shares of the Company on terms substantially similar
to the terms of the August 2024 Warrants. The Company entered into a consulting agreement with the placement agent for an initial period
of three months, during which the placement agent was paid a fee of $15,000 per month.

 

In August 2024, Claymore
agreed to extend a loan to the Company in the amount of $500,000 with interest at the rate of 10% of the principal amount until it was
subsequently repaid in August 2024. In November 2024, Claymore agreed to extend a loan of an additional $200,000 with interest at the
cumulative rate of 20% of the principal amount until it was subsequently repaid in December 2024. In November 2024, Claymore agreed to
extend a loan of an additional $500,000 at the cumulative rate of 45% of the principal amount until it was subsequently repaid in February
2025.

 

In November and December
2024, Claymore and investors introduced by Claymore made follow-on investments on the terms of the August 2024 financing in the aggregate
amount of $1,150,000 in exchange for convertible notes with an aggregate principal amount of $1,391,500 and warrants to purchase an aggregate
of 10 ordinary shares. The convertible notes are unsecured, have a term of two years and do not accrue interest. They are convertible
into ordinary shares of the Company at any time at the option of the holder of each note at a price of $150,000. The warrants to purchase
an aggregate of 10 ordinary shares are exercisable for a period of three years at an exercise price of $107,145 per share. Claymore’s
placement fees for the foregoing follow-on investments amounted to $77,000 in cash, 7 ordinary shares and a warrant to purchase 2 ordinary
shares on the same terms of the investors’ warrants. The Company extended the consulting agreement with the placement agent for
a period of 12 months, during which the placement agent will be paid a fee of $15,000 per month.

 

 

In December 2024, Claymore
and investors introduced by Claymore loaned us an aggregate of $1,262,500 in exchange for notes with an aggregate principal amount of
$1,402,778 and warrants to purchase an aggregate of 8 ordinary shares. The notes are unsecured, and do not accrue interest. However, in
the event that the note has not been repaid by the maturity date, interest will accrue at a rate of 5% per month. The notes are repayable
at the earlier of (i) the six-month anniversary of the issuance of the note or (ii) five business days following the closing of a financing
of at least $10,000,000 or the sale of our QPoint subsidiary. If the notes are not repaid by the maturity date, they will be convertible
at a conversion price of $75,000. The notes provide that if the notes are not repaid by March 31, 2025, the holders thereof will be entitled
to receive collateral to secure the notes. The warrants to purchase an aggregate of 8 ordinary shares are exercisable for a period of
three years at an exercise price of $75,000 per share. Claymore’s placement fees for the foregoing loan amounted to $77,875 in cash,
and a warrant to purchase 8 ordinary shares on the same terms of the investors’ warrants.

 

In January and February 2025,
Claymore and investors introduced by Claymore made follow-on investments on the terms of the August 2024 financing in the aggregate amount
of $1,467,000 in exchange for convertible notes with an aggregate principal amount of $1,775,070 and warrants to purchase an aggregate
of 13 ordinary shares.

 

The convertible notes
are unsecured, have a term of two years and do not accrue interest. They are convertible into ordinary shares of the Company at any
time at the option of the holder of each note at a price of $75,000. The warrants to purchase an aggregate of 13 ordinary shares are
exercisable for a period of three years at an exercise price of $107,145 per share. Claymore’s placement fees for the
foregoing follow-on investments amounted to $102,690 in cash, 9 ordinary shares and a warrant to purchase 3 ordinary shares on the
same terms of the investors’ warrants.

 

In February 2025, Claymore
agreed to extend a loan to the Company in the amount of $255,000 with interest at the rate of 19% of the principal amount and a maturity
date of April 18, 2025. Claymore received pre-funded warrants to purchase 1 ordinary share as fees for the foregoing loan. Claymore agreed
to extend the repayment of the loan until May 18, 2025, in exchange for an additional pre-funded warrant to purchase 1 ordinary share.

 

In March 2025, Claymore investors
agreed to extend a loan to the Company with a principal amount of $200,000 and a face value of $300,000 until it was subsequently repaid
in March 2025. Claymore received pre-funded warrant to purchase 1 ordinary share as fees for the foregoing loan.

 

In April 2025, Claymore made
follow-on investments on the terms of the August 2024 financing in the aggregate amount of $928,000 in exchange for convertible notes
with an aggregate principal amount of $1,122,880 and warrants to purchase an aggregate of 8 ordinary shares. The convertible notes are
unsecured, have a term of two years and do not accrue interest. They are convertible into ordinary shares of the Company at any time at
the option of the holder of each note at a price of $105,000, subject to adjustment in certain circumstances, including dilutive issuances,
but no lower than $75,000. The warrants to purchase an aggregate of 8 ordinary shares are exercisable for a period of three years at an
exercise price of $150,000 per share. In the event that the conversion price of the note is reduced, the exercise price of the warrant
will be reduced proportionately. Claymore’s placement fees for the foregoing follow-on investments amounted to $64,960 in cash,
pre-funded warrant to purchase 22 ordinary shares and a warrant to purchase 6 ordinary shares on the same terms of the investors’
warrants. The Company extended the consulting agreement with the placement agent for an additional period of 12 months, until October
31, 2026, during which the placement agent will be paid a fee of $20,000 per month.

 

In June 2025, we issued to
Claymore a convertible note with a principal amount of $2,760,000 and a pre-funded warrant to purchase an aggregate of 20 ordinary shares
in consideration for investments in multiple installments in the aggregate amount of $2,400,000. The convertible note is unsecured, has
a term of five years, does not accrue interest and is not prepayable without consent of the holder. It is convertible into ordinary shares
of the Company at any time at the option of the holder at a price of $45,000, subject to adjustment in certain circumstances, including
dilutive issuances. In case of a default, the holder of the note will be entitled to receive collateral in the amount of the outstanding
principal amount.

 

In July 2025, we issued a
convertible note to an investor introduced by Claymore, with a principal amount of $1,150,000 in consideration for an investment of $1,000,000,
on terms substantially similar to the note issued to Claymore in June 2025 described above. Claymore received pre-funded warrants to purchase
13 ordinary shares as fees for the foregoing loan.

 

In August 2025, we issued
to Claymore a convertible note with a principal amount of $575,000 and a pre-funded warrant to purchase an aggregate of 6 ordinary shares
in consideration of an agreement to invest an aggregate amount of $500,000. The convertible note is unsecured, has a term of five years,
does not accrue interest and is not prepayable without consent of the holder. It is convertible into ordinary shares of the Company at
any time at the option of the holder at a price of $45,000, subject to adjustment in certain circumstances, including dilutive issuances.
In case of a default, the holder of the note will be entitled to receive collateral in the amount of the outstanding principal amount.

 

 

The conversion of the notes
and warrants issued in the foregoing financings are limited to the extent that, upon conversion or exercise, the holder and its affiliates
would in the aggregate beneficially own more than 4.99% of the Company’s outstanding ordinary shares. The Company has undertaken
to register the resale of the ordinary shares underlying such notes and warrants on a registration statement with the SEC.

 

As of the date of this Annual
Report, Claymore and several investors introduced by Claymore, converted an aggregate principal amount of $10.8 million of the notes issued
to them into our ordinary shares, pursuant to which conversions we have issued 280 ordinary shares.

 

Additionally, in July 2025
and August 2025, we entered into subscription agreements with an investor, Oozi Cats, whose investment was arranged by Claymore, for the
purchase of an aggregate of 32 ordinary shares at $45,000 per share, for total proceeds of $1.5 million. Specifically, 16 shares were
purchased in July 2025 for $750,000 and 16 shares were purchased in August 2025 for $750,000. Mr. Cats is subject to a 5% beneficial ownership
limitation. Concurrently with these investments, we issued pre-funded warrants to Claymore to purchase an aggregate of 37 ordinary shares
(18 ordinary shares in July 2025 and 18 ordinary shares in August 2025). Both pre-funded warrant series expire five years from their respective
issuance dates (or upon an exit transaction if earlier) and are subject to a 4.99% beneficial ownership limitation.

 

As of December 31, 2025,
the accredited investor introduced by Claymore converted the principal amount of $500 thousand of the notes issued to him into ordinary
shares, pursuant to which conversions the Company issued 33 ordinary shares. In addition, Claymore has exercised its prefunded warrants
into 13 ordinary shares.

 

In August 2025, the Company
issued Claymore a convertible note with a principal amount of $575 thousand and a prefunded warrant to purchase 6 ordinary shares in consideration
for $500 thousand. The convertible note is unsecured, has a term of five years, does not accrue interest and is not prepayable without
consent of the holder. It is convertible into ordinary shares of the Company at any time at the option of the holder at a price of $45,000
per share, subject to adjustment in certain circumstances, including dilutive issuances. In case of a default, the holder of the note
will be entitled to receive collateral in aggregated amount equal to the outstanding principal amount.

 

As of December 31, 2025,
Claymore exercised prefunded warrants into 6 ordinary shares.

 

In November 2025, the Company
issued to Claymore 100 prefunded warrants in exchange for the cancellation of prior agreements with the Company regarding marketing services
and a price adjustment to the convertible note issued to Claymore.

 

In November 2025, the Company
entered into an amendment of a March 2025 loan with Claymore Capital and two investors who were introduced by Claymore, with respect to
the March 2025 loan provided by the two investors. Pursuant to the amendment, the $140,000 loan was repaid through the issuance of 9 ordinary
shares to the lenders.

 

Settlement-Related Convertible Notes

 

In February 2025, in connection
with the settlement agreements that the Company entered into with each of Oppenheimer and Dominion, as described below under “—Settlements
with Oppenheimer and Dominion,” Claymore agreed to make, on the Company’s behalf, all of the cash payments that the Company
was required to make to Oppenheimer and Dominion under the respective settlement agreements. Under the Oppenheimer settlement agreement,
the Company was required to pay Oppenheimer an aggregate of $3.0 million in scheduled installments through December 2025, and under the
Dominion settlement agreement, the Company was required to pay Dominion an aggregate of $4.5 million in scheduled installments through
December 2025.

 

In consideration for Claymore’s
agreement to make the foregoing payments on the Company’s behalf, the Company issued to Claymore convertible notes in the aggregate
principal amount of $13.5 million, comprised of (i) a convertible note in the principal amount of $6 million in connection with the Oppenheimer
settlement (the “Oppenheimer Settlement Note”) and (ii) a convertible note in the principal amount of $7.5 million in connection
with the Dominion settlement (the “Dominion Settlement Note” and, together with the Oppenheimer Settlement Note, the “Settlement
Notes”). The Settlement Notes do not bear interest and were each repayable by way of mandatory conversion into the Company’s
ordinary shares on the fifth anniversary of the respective issuance date, subject to earlier conversion at Claymore’s option.

 

In June 2025, Claymore exercised its right to convert each of the Settlement
Notes in full prior to maturity. Upon conversion, the Company issued to Claymore an aggregate of 14 ordinary shares, comprised of 6 ordinary
shares issued upon conversion of the Oppenheimer Settlement Note and 8 ordinary shares issued upon conversion of the Dominion Settlement
Note, in each case at the contractual conversion price applicable to the respective Settlement Note. As of the date of this annual report,
Claymore has made, on the Company’s behalf, all of the cash payments that the Company was required to make to Oppenheimer and Dominion
under the respective settlement agreements, and the Company has no remaining payment obligations to Oppenheimer or Dominion under the
respective settlement agreements.

 

 

July 2025 Warrants

 

In July 2025, we agreed to
re-issue warrants to purchase an aggregate of 166 ordinary shares to investors who participated in our financing in April 2022 of ordinary
shares and warrants. In light of subsequent market price changes and the Company’s multiple reverse share splits between February
2023 and March 2025, the warrants were re-issued in July 2025 with adjusted pricing and quantity terms to compensate investors for all
cumulative effects. As of August 31, 2025, such warrants to purchase an aggregate of 154 ordinary shares have been issued. The warrants
are exercisable for cash at a price of $120,000 per share and expire on January 14, 2027. Most of the warrants are subject to early expiration
if they are not exercised within 14 days after the market price of the ordinary shares equals or exceeds $120,000 per share for ten trading
days in a period of 20 consecutive trading days.

 

March-November 2024 Financing and Restructure

 

In March-November 2024, we
sold to an accredited investor (the “March-November 2024 Investor”), in a series of unregistered private transactions, notes
(the “March-November 2024 Notes”) with an aggregate principal amount of $11,000,000, and warrants (the “March-November
2024 Warrants”) pursuant to a Securities Purchase Agreement entered into with the March-November 2024 Investor (the “March-November
2024 Purchase Agreement”). Our acquisition of QPoint’s shares that were not held by us to complete ownership of 100% of QPoint
shares was partially funded by proceeds we received pursuant to the March-November 2024 Purchase Agreement.

 

The loan amount under the
March-November 2024 Notes was repayable by the Company on (a) November 29, 2024 with respect to $1,000,000 of the principal amount and
(b) with respect to the remaining $10,000,000, the earlier of (i) August 10, 2024 with respect to $4,000,000 of the principal amount and
September 24, 2024 with respect to $6,000,000 of the principal amount, or (ii) five (5) business days following the closing of a financing
in the Company of at least $25,000,000. The principal amount under the March-November 2024 Notes carries a variable interest rate based
on the date of repayment as follows: (a) with respect to $8,000,000 of the principal amount, (i) for the principal amount repaid on or
prior to May 12, 2024, 7%, (ii) for the principal amount repaid following May 12, 2024 and on or prior to June 12, 2024, a rate between
7% and 8.5% of such principal amount computed by adding to 7% the result obtained by multiplying 1.5 by the quotient of the number of
days elapsed in such period until (and including) the repayment date divided by the number of days in such period, and (iii) for the principal
amount repaid following June 12, 2024, 8.5% of such principal amount plus 15% per annum, on the basis of the actual number of days elapsed
commencing from the date following June 12, 2024 and ending on the repayment date; (b) with respect to $2,000,000 of the principal amount,
(i) for the principal amount repaid on or prior to September 24, 2024, 10%, and (ii) for the principal amount repaid following September
24, 2024, 10% of such principal amount plus 15% per annum, on the basis of the actual number of days elapsed commencing from the date
following September 24, 2024 and ending on the repayment date; and (c) with respect to $2,000,000 of the principal amount, (i) for the
principal amount repaid on or prior to November 29, 2024, 8.5% of such principal amount, and (ii) for the principal amount repaid following
November 29, 2024, 8.5% of such principal amount plus 15% per annum, on the basis of the actual number of days elapsed commencing from
the date following November 29, 2024 and ending on the repayment date.

 

If the March-November 2024
Notes are not repaid prior to the applicable maturity date, the March- November 2024 Investor may convert the applicable portion of the
outstanding loan amount into the Company’s ordinary shares at a rate equal to the arithmetic average of the closing price of the
ordinary shares in the five (5) trading days prior to the date of conversion, provided that such conversion rate shall not be lower than
$75,000. The loan amount is secured by a pledge on the shares of the QPoint group. Additionally, for so long as the loan amount under
the March- November 2024 Notes is outstanding, the Company has undertaken to cause the QPoint group to adopt a dividend policy and designate
dividend proceeds for the repayment of the loan amount.

 

The March-November 2024 Warrants issued under the March-November 2024
Purchase Agreement were exercisable as follows: (i) March-November 2024 Warrants exercisable into 29 ordinary shares were exercisable
at an exercise price equal to $105,000 per share until March 12, 2027, (ii) March-November 2024 Warrants exercisable into 7 ordinary shares
were exercisable at an exercise price equal to $75,000 per share until April 3, 2027, (iii) March-November 2024 Warrants exercisable into
13 ordinary shares were exercisable at an exercise price equal to $105,000 per share until June 26, 2027, (iv) March-November 2024 Warrants
exercisable into 1 ordinary shares were exercisable at an exercise price equal to $75,000 per share until June 26, 2027, and (v) March-November
2024 Warrants exercisable into 10 ordinary shares were exercisable at an exercise price equal to $82,500 per share until June 26, 2027.

 

 

The conversion of the March-November
2024 Notes and the exercise of the March-November 2024 Warrants will be limited to the extent that, upon the conversion or exercise, the
March-November 2024 Investor and its affiliates would in aggregate beneficially own more than 4.99% of the ordinary shares.

 

On February 17, 2025, HUB
and the March-November 2024 Investor agreed to amend the terms of the March-November 2024 Notes and the March-November 2024 Warrants.
Pursuant to the amended terms, the maturity date of each of the March-November 2024 Notes, having an aggregate principal amount of $11
million (plus accrued interest), was extended to August 16, 2025. Additionally, per the amendment terms, in the event the notes are not
paid or converted in full by April 1, 2025, from and after April 1, 2025, the current interest rate of the notes will increase from 15%
per annum to 20% per annum. 

 

Pursuant to the amendment,
the exercise price of each of the March-November 2024 Warrants was changed to a unified exercise price of NIS 266,550 (being the NIS equivalent
of $75,000 per share based on the last published exchange rate published by the Bank of Israel on the date of the amendment) and the term
of the March-November 2024 Warrants was extended to a unified end date of February 17, 2030. The Company also issued to the March-November
2024 Investor an additional warrant exercisable into 13 ordinary shares at an exercise price
of $75,000 per share and a pre-funded warrant exercisable into 66 ordinary shares, in each case until February 17, 2030, and
in each, the exercise of the new warrants will
be limited to the extent that, upon the exercise of the new warrants, the March-November 2024 Investor would
not beneficially own more than 4.99% of our outstanding ordinary shares.

 

Additionally, pursuant to
the amended terms, the March-November 2024 Investor agreed to sell all or a signification portion of the notes to a third party who will
convert the notes and attempt to sell the resulting conversion shares. The March-November 2024 Investor agreed by no later than April
2, 2025, to inform the Company in writing of the amount of proceeds the March-November 2024 Investor irrevocably received from the sale
of such conversion shares by the third party, in which case the Company shall be deemed to have repaid the principal and accrued interest
under the converted notes in the amount equal to the sale proceeds. In the event that the sale proceeds are lower than the aggregate principal
and accrued interest under the converted notes thereon, the Company agreed to issue to the March-November 2024 Investor a convertible
note in the principal amount equal to such shortfall amount (and if the sale proceeds (and any repayments from the Company) are less than
$6.5 million, also the interest that would have accrued on the converted notes in accordance with their terms had they not been converted).
The new note would have an interest rate of 20% per annum, commencing retroactively from the date of conversion of the converted notes,
and a maturity date of August 16, 2025, and otherwise the same terms and conditions as the converted notes. In the event that, at April
2, 2025, the March-November 2024 Investor holds unsold conversion shares, then warrants held by the March-November 2024 Investor will
be exercised for an equivalent number of ordinary shares pursuant to the terms thereof and such conversion shares will be deemed to be
issued pursuant to such exercise in lieu of the issuance of new ordinary shares.

 

On
August 16, 2025, the Company entered into a Fifth Amendment to the Securities Purchase Agreement with the March-November 2024 Investor
that: (i) extended the maturity date of all convertible notes of the Company in the aggregate principal amount of $11,000,000 for an additional
six months from August 16, 2025 to February 16, 2026; (ii) implemented compound interest, whereby interest now accrues on previously accrued
interest commencing from the amendment date; and (iii) facilitated the introduction of Seven Knots, LLC, which has undertaken to purchase
the convertible notes from the March-November 2024 Investor, pursuant to a separate note purchase and assignment agreement dated August
20, 2025. The amendment maintains all other existing terms and conditions of the notes, including the Company’s obligation to repay
the principal amount plus all accrued interest.

 

On
August 20, 2025, the March-November 2024 Investor entered into a Note Purchase and Assignment Agreement with Seven Knots, LLC for the
sale of all outstanding convertible notes for a purchase price of $14,054,165, representing the principal amount plus accrued interest
through August 31, 2025, with adjustments for additional interest thereafter. Seven Knots is required to purchase at least $6,000,000
of the notes within 60 days and the remaining balance within 90 days from the agreement date. If Seven Knots fails to meet these payment
milestones, the Fifth Amendment automatically terminates. On August 18, 2025, prior to the purchase agreement, the March-November 2024
Investor converted $1,500,000 of the June 26, 2024 note at a conversion price of $45,000 per share, resulting in the issuance of 33 ordinary
shares directly to Seven Knots, LLC. This conversion amount counts toward the initial $6,000,000 purchase requirement. Once Seven Knots
completes the full purchase, the Company’s repayment obligations to the March-November 2024 Investor will be considered fully satisfied;
however, these milestones were not met in full and therefore the Fifth Amendment automatically terminated, putting us in breach of the
March-November 2024 Notes.

 

To
compensate Seven Knots for its undertakings to Mr. Gottdiener in the note purchase and assignment agreement, we issued to the purchaser
a convertible note in the principal amount of $1,500,000. The note bears no interest and matures on August 20, 2026 by way of conversion
into ordinary shares. The note is also convertible, in whole or in part, at the option of the holder at any time. The conversion price
is the lower of (i) $45,000 and (ii) 95% of the lowest VWAP of the Ordinary Shares during the five consecutive trading day period ending
and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice, subject to the
Nasdaq floor price. The holder is also entitled to redeem all or portion of the note in cash from the holder’s pro rata portion
of 33% of the proceeds received by the Company pursuant to an equity line of credit or at-the-market offering, at a price of 110% of the
amount being redeemed. The holder is subject to a beneficial ownership limitation of 4.99%.

 

 

On
September 17, 2025, the Company entered into a Master Exchange Agreement (the “Exchange Agreement”) with the Exchange Accredited
Investor, which undertook in August 2025 to purchase the convertible notes issued to the March-November 2024 Investor. On the same date,
the Exchange Accredited Investor entered into a Note Purchase Agreement with AGP to purchase AGP’s note having a principal amount
(plus accrued interest) of $2,248 thousand for a purchase price of $750 thousand. Pursuant to the Exchange Agreement, the Exchange Accredited
Investor has the right to exchange all or a portion of its notes for new notes, which have substantially the same terms and conditions
as the Amended Notes. After giving effect to applicable original issue discount, under the terms of the Exchange Agreement, up to $16,420
thousand aggregate principal amount of outstanding notes are exchangeable for up to $19,840 thousand aggregate principal amount of new
notes under the Exchange Agreement. Astor has an option to purchase from the Exchange Accredited Investor, up to one-half of the new notes
issued pursuant to the Exchange Agreement and Keystone has an option to purchase from the Exchange Accredited Investor, up to 25% of the
new notes issued pursuant to the Exchange Agreement.

 

The
note bears no interest and matures on the second anniversary from the issuance of each note. The note is also convertible, in whole or
in part, at the option of the holder at any time. The conversion price of (i) $43,200or (ii) 90% (or 80% in case of default) of the lowest
VWAP of the Ordinary Shares during the twenty consecutive trading day period ending and including the trading day immediately preceding
the delivery or deemed delivery of the applicable conversion notice, subject to the Nasdaq floor price. The holder is subject to a beneficial
ownership limitation of 4.99%.

 

As
of December 31, 2025, notes in the aggregate principal amount of $9,004 thousand have been exchanged under the Exchange Agreement for
Amended Notes in the aggregate principal amount of $11,063 thousand.

 

As
of December 31, 2025, a total amount of $6,662,682 was converted into 361 ordinary shares.

 

On
June 4, 2026, the Company and the March-November 2024 Investor entered into a Sixth Amendment to the Securities Purchase Agreement. Pursuant
to this amendment, the Company issued a Secured Convertible Note (the “June 2026 Note”) in the original principal amount of
$5,556,000 in exchange for a cash investment in the same amount. This investment followed sales of notes in multiple installments
from the March-November 2024 Investor to Seven Knots, LLC pursuant to their Note Purchase and Assignment Agreement, dated August 20, 2025.
Such agreement was amended on June 3, 2026 to accommodate additional note purchases from time to time up to an aggregate principal amount
of $8,000,000. The June 2026 Note bears interest at 20% per annum, computed on a 360-day basis and including interest on interest.
The Note is secured pari passu by the same Charged Assets that secure existing outstanding notes under the Securities
Purchase Agreement. The outstanding principal and accrued interest are due and payable on the earlier of (i) June 11, 2026, or (ii) five
business days following the closing of a sale by the Company of QPoint Technologies Ltd. Commencing June 11, 2026, the holder is entitled
to demand repayment of all or a portion of the June 2026 Note upon two business days’ notice. The holder may convert any portion
of the outstanding loan amount into Ordinary Shares at a price equal to the arithmetic average of the Closing Sale Prices of the Ordinary
Shares for the five Trading Days prior to the conversion date, subject to a floor price of $0.71 per share. Conversion is subject to a
beneficial ownership limitation of 4.99%. From June 3, 2026 to June 30, 2026, the Company raised aggregate proceeds of $4,706,304 in private
placements from accredited investors in exchange for convertible notes in the aggregate principal amount of $5,882,880, representing a
20% original issue discount. The convertible notes were issued under the Exchange Agreement and have a maturity date of two years from
their respective dates of issuance.

 

2023-2024 Investment by Accredited Investors

 

Between November 2023 and
January 2024, the Company entered into Securities Purchase Agreements (the “First 2023-2024 Accredited Investor SPAs”) providing
for the sale by the Company to certain accredited investors (the “First 2023-2024 Accredited Investors”), in unregistered
private transactions, of convertible notes with an aggregate principal amount of $3,100,000 (the “First 2023-2024 Accredited Investor
Notes”), and warrants exercisable into one ordinary share for each ordinary share issuable to the Investors upon the conversion
of the principal amount of the First 2023-2024 Accredited Investor Notes, assuming conversion on the respective issuance dates of the
Notes (the “First 2023-2024 Accredited Investor Warrants”).

 

The aggregate principal amount
of the First 2023-2024 Accredited Investor Notes was convertible into our ordinary shares at a rate of the lower of (i) $$375,000 and
(ii) the product of 75% multiplied by the arithmetic average of the volume-weighted average price of the ordinary shares in the five (5)
trading days prior to the date of conversion, provided that such conversion rate would not be lower than $225,000. The First 2023-2024
Accredited Investor Notes did not bear interest and were repayable on the three-month anniversary of their issuance, subject to earlier
conversion by the First 2023-2024 Accredited Investors. The First 2023-2024 Accredited Investors had the right to convert the First 2023-2024
Accredited Investor Notes, in whole or in part, at any time following their issuance.

 

The First 2023-2024 Accredited
Investor Notes were subsequently fully converted by the First 2023-2024 Accredited Investors.

 

In February 2025, the Company
and the First 2023-2024 Accredited Investors agreed to amend the terms of the First 2023-2024 Accredited Investor SPAs and the First 2023-2024
Accredited Investor Warrants. Pursuant to the amended terms, the exercise price of each of the First 2023-2024 Accredited Investor Warrants
was changed to a unified exercise price of $150,000 per share and the Company issued to the First 2023-2024 Accredited Investors additional
warrants exercisable into 11 ordinary shares at an exercise price of $150,000 per
share and 9 ordinary shares.

 

 

Second 2023-2024 Accredited Investor Financing
Transaction

 

In March 2024, the Company
entered into Securities Purchase Agreements (the “Second 2023-2024 Accredited Investor SPAs”) providing for the sale by the
Company to certain accredited investors (the “Second 2023-2024 Accredited Investors” and together with the First 2023-2024
Accredited Investors, the “2023-2024 Accredited Investors”), in unregistered private transactions, of convertible notes with
an aggregate principal amount of $550,000 (the “Second 2023-2024 Accredited Investor Notes”), and warrants exercisable into
1 ordinary share for each ordinary share issuable to the Investors upon the conversion of the principal amount of the Second 2023-2024
Accredited Investor Notes, assuming conversion on the respective issuance dates of the Notes (the “Second 2023-2024 Accredited Investor
Warrants”).

 

The aggregate principal amount
of the Second 2023-2024 Accredited Investor Notes is convertible into our ordinary shares at a rate equal to the arithmetic average of
the volume-weighted average price of the ordinary shares in the five (5) trading days prior to the date of conversion, provided that such
conversion rate would not be lower than $225,000. The Second 2023-2024 Accredited Investor Notes do not bear interest and are repayable
on March 14, 2027, subject to earlier conversion by the Second 2023-2024 Accredited Investors. The Second 2023-2024 Accredited Investors
have the right to convert the Second 2023-2024 Accredited Investor Notes, in whole or in part, at any time following their issuance.

 

Pursuant to the First 2023-2024
Accredited Investor SPAs, we issued First 2023-2024 Accredited Investor Warrants which are exercisable into 1 ordinary share. The First
2023-2024 Accredited Investor Warrants are exercisable until January 1, 2027 for an exercise price equal to the closing price of the ordinary
shares as of the respective issuance dates of the First 2023-2024 Accredited Investor Warrants and have a weighted average exercise price
of $3,495,000. Pursuant to the Second 2023-2024 Accredited Investor SPAs, we issued Second 2023-2024 Accredited Investor Warrants which
were exercisable into 1 ordinary share. The Second 2023-2024 Accredited Investor Warrants were exercisable until September 14, 2025 for
an exercise price of $225,000. The exercise of the 2023-2024 Accredited Investor Warrants will be limited to the extent that, upon their
exercise, a 2023-2024 Accredited Investor and its affiliates would in the aggregate beneficially own more than 4.99% of our ordinary shares.

 

In February 2025, HUB and
the First 2023-2024 Accredited Investors agreed to amend the terms of the First 2023-2024 Accredited Investor SPAs and the First 2023-2024
Accredited Investor Warrants. Pursuant to the amended terms, the exercise price of each of the First 2023-2024 Accredited Investor Warrants
was changed to a unified exercise price of $150,000 per share and the Company also issued an additional warrant exercisable into 11 ordinary
shares at an exercise price of $150,000 per share. In addition, the Company issued
9 ordinary shares to the First 2023-2024 Accredited Investors.

 

In addition, in February
2025, HUB and the Second 2023-2024 Accredited Investors agreed to amend the terms of the Second 2023-2024 Accredited Investor SPAs, the
Second 2023-2024 Accredited Investor Notes and the Second 2023-2024 Accredited Investor Warrants. Pursuant to the amended terms, the exercise
price of each of the First 2023-2024 Accredited Investor Warrants was changed to a unified exercise price of $172,500 per share, and the
Company issued to the Second 2023-2024 Accredited Investors additional warrants exercisable into 11 ordinary shares at
an exercise price of $150,000 per share, and the conversion price of each of the Second 2023-2024 Accredited Investor Notes
was changed to a unified conversion price of $171,300 per share.

 

The Second 2023-2024 Accredited
Investors were subsequently fully converted by the Second 2023-2024 Accredited Investors.

 

Shayna Loans

 

On each of February 23, 2023,
June 11, 2023 and July 7, 2023, we entered into Convertible Loan Agreements (together the “Shayna Loan Agreements”) with Shayna
LP, a Cayman Islands company (“Shayna”), in the amounts of NIS 10 million (approximately $2.8 million), NIS 5 million (approximately
$1.4 million) and NIS 1.85 million (approximately $500,000) respectively (each a “Shayna Loan” and, together, the “Shayna
Loans”). The Shayna Loans were subsequently amended in 2024 pursuant to a series of agreements with Shayna and Akina Holding Limited
(“Akina”), which assigned most of Shayna’s rights to Akina and established new conversion and warrant terms. All original
interest, conversion, and warrant provisions under the Shayna Loan Agreements were superseded by the 2024 amendments.

 

 

The Shayna Loans were amended
in March–May 2024 through a series of agreements with Shayna and Akina. On March 31, 2024, the Company entered into the first amendment
with Shayna and Akina, pursuant to which Shayna and Akina are entitled to convert the Shayna Loans into a total of 34 ordinary shares,
based on an agreed USD/NIS exchange rate of NIS 3.65 and a conversion price of $135,000.00 per share. Under this amendment, Akina will
receive 25 ordinary shares, while Shayna will receive 8 ordinary shares. Additionally, warrants have been issued for the purchase of the
same number of ordinary shares at an exercise price of $135,000 per share, with Akina entitled to 25 ordinary shares and Shayna entitled
to 8 ordinary shares. Furthermore, a customary clause limits the beneficial ownership of both Shayna and Akina to 4.99% of the Company’s
outstanding ordinary shares.

 

On April 18, 2024, the Company
entered into the second amendment with Shayna and Akina, pursuant to which if Akina defaults on its payment installments to Shayna, Shayna
will have the right to assume all of Akina’s conversion rights under the Shayna Loan Agreements.

 

On May 9, 2024, the Company
entered into the third amendment with Shayna and Akina, pursuant to which a cash payment of $1,150,800 for Shayna’s consulting services
under the Convertible Loan Agreements was converted into 8 ordinary shares of the Company, calculated at a price of $135,000 per share.
Additionally, Shayna was issued a warrant to purchase 8 ordinary shares of the Company at an exercise price of $120,000 per share, with
an exercise period of six months.

 

During 2024, Akina converted
the loan under the Convertible Loan Agreements into our ordinary shares, pursuant to which conversions we have issued 35 ordinary shares
and exercised the warrant and purchased 29 ordinary shares of the Company at an exercise price of $135,000. In addition, Shayna exercised
the warrant and purchased 8 ordinary shares of the Company at an exercise price of $120,000.

 

Lind Financing

 

On May 4, 2023, we entered into a Securities Purchase Agreement (the
“Lind SPA”) with Lind Global Asset Management VI LLC, an investment fund managed by The Lind Partners, a New York based institutional
fund manager (together, “Lind”). Pursuant to the Lind SPA, the Company agreed to issue to Lind up to two secured convertible
promissory notes in three tranches (the “Lind Notes” and each a “Lind Note”) for gross proceeds of up to $16,000,000
and warrants (the “Lind Warrants” and each a “Lind Warrant”) to purchase the Company’s ordinary shares.
The Lind SPA and Lind Note were subsequently amended in August and November 2023.

 

 

As of the date of this Annual Report, Lind has converted the principal
amount of the Lind Note into our ordinary shares and exercised most of the Lind Warrants. Only a small number of Lind Warrants remain
outstanding.

 

Convertible Notes

 

Upon the closing of the Business
Combination agreement the Company entered into two convertible notes agreements (collectively, the “Convertible Notes Agreements”)
with Alliance Global Partners (“AGP”), the representative of the underwriters in RNER’s IPO and a stockholder of RNER,
and another vendor involved in the Business Combination (the “Vendor”). Pursuant to the Convertible Notes Agreements, AGP
purchased convertible notes of and from the Company in an aggregate principal amount of $5,219,319 and the Vendor purchased convertible
notes of and from the Company in an aggregate principal amount of $349,319 (each, a “Convertible Note”). Each Convertible
Notes will bear interest at a rate of 6% per annum, has a maturity date of March 1, 2024 and will be convertible for Company Ordinary
Shares at AGP’s or the Vendor’s option, as applicable, at any time prior to the respective Convertible Notes being paid in
full. The proceeds from the Convertible Notes Agreements were used to pay expenses in connection with the closing of the Business Combination
agreement. The loan from AGP was neither paid nor converted. 

 

AGP alleged that the Company
was in default under the Convertible Notes Agreements, having failed to make the required payments thereunder, and the parties are in
a commercial dispute. The Company has entered into a settlement with AGP with respect to the convertible note of the Company issued to
AGP on February 28, 2023 (the “Original Note”). The Original Note has a principal amount of approximately $5.2 million
and provides for interest at the rate of 6% per year and default interest at the rate of 18% per year. The Original Note provided for
amortization payments commencing on June 1, 2023, with final maturity on March 1, 2024. The obligations under the Original Note
are recorded in the Company’s balance sheet as of June 30, 2024 at approximately $5.7 million.

 

On November 22, 2024, the
Company and AGP entered into an amended and restated note dated (the “Amended Note”), which contemplates the AGP will convert
$250,000 of the principal amount in each of seven 30-day periods, up to an aggregate amount of $1.8 million (but the first conversion
can be in the amount of $320,000 and final conversion $230,000). Upon each conversion, one-seventh of the excess debt above $1.8 million
will be cancelled. Upon conversion of the full $1.8 million, the Amended Note will be extinguished. If an aggregate amount of $1.8 million
is not converted by May 30, 2025, the terms of the Original Note will again apply, unless otherwise agreed by the parties. The Amended
Note contains a conversion price equal to 93% of the prevailing market price, subject to a $60,000 floor. The floor price may be adjusted
downward after three months if the market price falls below the floor price and does not subsequently increase above the floor price.

 

During the year ended December
31, 2024, AGP converted an aggregate amount of $1,070,000, which was allocated to two parts: until November 2024, an aggregate amount
of $500,000 which was converted into 4 ordinary shares, while the remaining amount of $570,000, which was subject to the November 2024
Amended Note, converted into 8 ordinary shares. During January and February 2025, AGP converted an aggregated amount of $500,000 into
6 ordinary share.

 

On September 17, 2025, an
accredited investor entered into a Note Purchase Agreement with AGP to purchase AGP’s note having a principal amount (plus accrued
interest) of $2,248,000 for a purchase price of $750 thousand.

 

BST Loan

 

We entered into a Loan and
Security Agreement with BlackSwan Technologies, Inc., a Delaware corporation (“BST”), with an effective date of December 4,
2023 (the “BST Loan Agreement”). Under the BST Loan Agreement, we may make, at our sole discretion, cash advances to BST,
from time to time, until June 30, 2024, in an aggregate principal amount of up to $6,000,000.

 

The principal amounts we
lend to BST under the BST Loan Agreement accrue interest at a fixed rate per annum equal to 15% and are repayable on January 1, 2025,
provided that BST has the right to prepay any outstanding loan amounts upon at least two days prior notice. Upon the occurrence of certain
customary events of default, any outstanding loan amounts are immediately repayable and overdue obligation will carry interest at a fixed
rate per annum equal to 18%.

 

As a continuing security
for the full and punctual payment and performance when due (whether at stated maturity, acceleration or otherwise) of BST’s obligations
under the BST Loan Agreement, each of BST and its subsidiary, BlackSwan Technologies GmbH, a German company (“BST Germany”),
granted us a first ranking fixed charge and pledge in all of the rights and interests of BST, BST Germany and their subsidiaries (i) under
any agreements entered into by any of them following the effective date of the BST Loan Agreement and any rights to receive proceeds thereunder
and (ii) in any Intellectual Property.

 

We have provided BST an aggregate amount of $2,732 thousand under the
BST Loan Agreement. Following the merger between us and BST on January 27, 2025, the balance was classified as an inter-company receivable
and is no longer included as a credit facility. 

 

 

A-Labs Loan

 

On January 16, 2023, we entered
into a loan agreement with A-Labs Finance and Advisory Ltd. (“A-Labs”), pursuant to which A-Labs agreed to issue us a $1,000,000
principal amount note for gross proceeds of $900,000 (the “A-Labs Loan”). The principal amount A-Labs Loan is due to be repaid
in one repayment on January 16, 2026 (the Maturity Date”) (36 months from the execution of the A-Labs Loan). The A-Labs Loan bears
interest at 12% per annum and interest became payable quarterly commencing on April 1, 2023 until the Maturity Date. Overdue payments
will accrue interest in arrears at the rate of 18% per annum from the relevant payment date until such payment is made. In addition, we
paid A-Labs the sum of $4.2 million between July 2021 and March 2023 as consulting fees under a financial advisory services agreement
entered into July 2021 (the “A-Labs Agreement”) and we issued to A-Labs warrants to purchase 27 of our ordinary shares. Additionally,
in March 2023, a total of $2.2 million that was owed to A-Labs pursuant to the A-Labs Agreement was converted into our ordinary shares
at a conversion price of $1,500,000 per ordinary share. This conversion of amounts we owed to A-Labs under the A-Labs Agreement, was effected
to partially satisfy the commitment that A-Labs made to us to purchase $20 million of our ordinary shares in the private placement in
connection with the closing of our business combination with Mount Rainier Acquisition Corp., a Delaware special purpose acquisition company,
in 2023 (the “PIPE Financing”). In December 2022, we amended the A-Labs Agreement to provide that for each financing
transaction closed, in addition to paying a commission to A-Labs in cash, we would be required to issue warrants to purchase ordinary
shares in an amount equal to the cash consideration that would otherwise be payable under the financial advisory services agreement divided
by 4.81, which warrants shall be exercisable for 4 years and at an exercise price of NIS 72,150(regardless of the price per share paid
by investors in the relevant financing transaction). Additionally, we committed to provide compensation under the A-Labs Agreement for
all investors with whom we would enter into a financing transaction prior to our shares being listed for trading on the Nasdaq regardless
of whether such investors were introduced to the Company by A-Labs. In each of September 2022 and January 2023, we paid to A-Labs an additional
commission of $50,000 in exchange for extra services provided by A-Labs over the course of certain fund raising efforts and loan issuances.
Additionally, as part of the Shayna Loans, we paid to A-Labs commissions totaling $140,000 for services provided as part of the fund raising
efforts. The term of the A-Labs Agreement was for 12 months following the execution in July 2021, provided that the A-Labs Agreement will
automatically renew for additional 12 month terms unless either party provides written notice to the other party of its intention not
to renew at least 30 days prior to the end of such initial 12 month term or any renewed terms. Additionally, the A-Labs Agreement may
be terminated by either party upon a minimum of 30 days prior written notice. In August 2023, we received from A-Labs a waiver of the
retainer fees for the services. Nevertheless, as of the date of this Annual Report, there remain unpaid fees of $3,298,000 under the A-Labs
Agreement.

 

On November 6, 2025, we entered
into a settlement agreement with each of A-Labs, MOFO Holdings LLC and Viserion Ltd. (the “PIPE Investors”), which had entered
into subscription agreements with us to invest an aggregate of $50 million in the PIPE Financing. After all the other closing conditions
for the business combination were met, we decided to proceed with the closing despite not having received the funds payable under the
Subscription Agreements from the PIPE Investors. The signing of the settlement agreements followed a mediation process, which was approved
by our Audit Committee and Board of Directors, and by our shareholders on December 16, 2025. According to the settlement agreement, taking
into account the parties’ respective claims and the various agreements between them, no funds or other form of consideration shall
be paid or transferred from the PIPE Investors to us, and we shall not pay any funds or any other form of consideration to any of the
PIPE Investors, all in exchange for full and absolute waivers by the parties toward each other (including shareholders, officers, directors
parent and subsidiaries thereof, and anyone acting on behalf of any of them).

 

Additionally, according to
the settlement, we will repay to A-Labs the amount outstanding in connection with a secured loan extended by A-Labs to us on January 17,
2023 in the amount of $900,000, which with original issuance discount and accrued interest amounts to $1,800,000. The repayment will be
in the form of our ordinary shares based on the lowest closing price of the ordinary shares on Nasdaq during the five trading days preceding
the date of the shareholders’ approval, which was on December 16, 2025. The shares will be subject to the following lock-up periods:
40% of the shares will be restricted for a period of 40 days, 30% will be restricted for a period of 70 days, 25% will be restricted for
a period of 100 days and 5% will be restricted for a period of 130 days. The 5% tranche will be subject to a one-time upward or downward
adjustment to the extent that the sum of (i) the proceeds from the sale of shares by A-Labs and (ii) the current market value of the shares
held by A-Labs are less than or greater than $1,800,000, respectively. A-Labs must make reasonable commercial efforts to maximize the
consideration it receives for the sale of shares. The sale of shares by A-Labs on Nasdaq on any trading day may not exceed 5% of the current
day’s trading volume of the ordinary shares thereon.

 

In April 2026, we received
a letter addressed to our directors from counsel to A-Labs, demanding that we pay the $1,800,000 plus interest. In May 2026, the Company’s
counsel responded by rejecting all allegations raised by A-Labs in their letter.

 

In addition, on April 16,
2026, an application was filed against the Company to hold it liable for a judgment awarded against A-Labs in favor of Teshua Ltd., based
on the alleged amount of $1,800,000. The Company explained that it was unable to realize the shares due to an attachment imposed on A-Labs
and/or its representatives, and that, in any event, at present the matter does not concern the amount alleged by A-Labs, but rather shares
whose value is substantially lower. A hearing on this matter is scheduled for July 21, 2026.

 

Separately, on February 27,
2026, DC Rainier SPV LLC, the former sponsor of Mount Rainier Acquisition Corp., filed a complaint against the Company and A-Labs in the
Supreme Court of the State of New York alleging, among other things, that the Company and A-Labs misrepresented the existence of approximately
$50 million of PIPE financing commitments in connection with the Mount Rainier business combination, and on April 28, 2026, the plaintiff
filed a motion for entry of a default judgment against the Company seeking not less than $5,080,027, plus interest, fees and costs. For
more information, see Note 28(7) to our audited consolidated financial statements for the year ended December 31, 2025 included in this
Annual Report.

 

 

Settlements with Oppenheimer and Dominion

 

In
February 2025, we reached a settlement agreement with Oppenheimer & Co., Inc. (“Oppenheimer”) for $3 million, with $1.1
million being paid on the effective date and the remaining balance payable in ten monthly payments of $200,000 from March to December
2025 (with the first payment being $100,000). As part of the settlement arrangement, Claymore Capital Pty Ltd. (“Claymore”)
agreed to make on the Company’s behalf, all the payments that the Company is required to make under the settlement agreement with
Oppenheimer. In consideration, the Company issued Claymore a convertible note in the principal amount of $6 million. The note was convertible
at the option of the holder at a discount of 25% to the prevailing market price, but not higher than $225,000 or lower than the Nasdaq
floor price. The note did not bear interest and matured on February 18, 2030, at which time we were entitled to convert the note into
ordinary shares. As of June 2025, Claymore converted the note in full into 122 ordinary shares, at a conversion price of $45,000 per share
and made all required payments to Oppenheimer. See “—Settlement-Related Convertible Notes” above.

 

In
February 2025, we also reached a settlement agreement with Dominion Capital LLC and its affiliates (together, “Dominion”)
for $4.5 million, with $400,000 being payable by February 21, 2025, $200,000 payable by March 3, 2025 and the remaining balance payable
in ten monthly payments of $390,000 from March to December 2025. As a result, the Israeli insolvency proceedings that were initiated by
Dominion in 2023 were dismissed on March 7, 2025.As part of the settlement arrangement, Claymore agreed to make on the Company’s
behalf all the payments that the Company is required to make under the settlement agreement with Dominion. In consideration, the Company
issued Claymore a convertible note in the principal amount of $7.5 million. The note was convertible at the option of the holder at a
discount of 25% to the prevailing market price, but not higher than $225,000 or lower than the Nasdaq floor price. The note did not bear
interest and matured on February 20, 2030, at which time we were entitled to convert the note into ordinary shares. As of June 2025, Claymore
converted the note in full into 166 ordinary shares, at a conversion price of $45,000 per share and made all required payments to Dominion.
See “—Settlement-Related Convertible Notes” above.

 

Debt Arrangement with Comsec Creditors

 

On March 24, 2024, we entered
into a debt settlement agreement with certain creditors of Comsec. Comsec’s total liabilities amount to approximately NIS 52.0 million
(approximately $16.3 million) divided between different groups of creditors with different priorities, which is covered by a guarantee
by us of up to NIS 36.3 million (approximately $11.4 million).  

 

As of December 31, 2025,
Comsec’s total liabilities amount to $265 thousand. The amount paid under the debt settlement agreement to unsecured creditors amounted
to $135 thousand. As of the date of this Annual Report, the Company is in material breach of the debt settlement agreement.  

 

Foreign Currency Exchange Rate Risk

 

Though HUB operates internationally,
its operations are primarily located in Israel and the majority of its expenses are denominated in New Israeli Shekels, or NIS. HUB is
subject to fluctuations in foreign currency rates in connection with these arrangements.

 

Interest Rate Risk

 

Interest rate risk is the
risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

 

HUB’s exposure to the
risk of changes in market interest rates relates primarily to HUB’s long-term liabilities with floating interest. This risk is of
primary focus to HUB given its current dependency on debt financing and the ability to obtain future debt financing. HUB manages its interest
rate risk by seeking to have a balanced portfolio of fixed and variable rate loans.

 

 

JOBS Act

 

We qualify as an “emerging
growth company,” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended, or the Securities Act, as modified by
the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we continue to be an emerging growth company,
we are permitted to and intend to take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable
to other public companies, including: (i) presentation of only two years of audited financial statements and only two years of related
Operating and Financial Review and Prospects disclosure; (ii) an exemption from the auditor attestation requirements regarding our internal
control over financial reporting required by Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);
(iii) an exemption from the requirement that our auditor’s report include disclosure regarding “critical audit matters”;
and (iv) an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”),
requiring mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit
and the financial statements. We may take advantage of these provisions until the last day of the fiscal year during which we mark the
fifth anniversary of February 28, 2023, the date of the first sale of our ordinary shares pursuant to an effective registration statement
under the Securities Act. However, if certain events occur prior to the end of such five-year period, including if (i) we become a “large
accelerated filer” under the Exchange Act, (ii) our annual gross revenues exceed $1.235 billion, or (iii) we issue more than $1.0
billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year
period. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We have elected to take advantage
of such extended transition period, which means that when an accounting standard is issued or revised and it has different application
dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This election is irrevocable. As a result, our financial statements may not be comparable to those
of companies that comply with public company effective dates.

 

C. Research and Development, Patents and
Licenses, Etc. 

 

For a discussion of our research
and development policies, see Item 4B. “Business Overview” and Item 3D. “Key Information —Risk Factors —Risks
Related to Our Incorporation and Operations in Israel.”

 

For a description of our
intellectual property, please see Item 4B. “—Intellectual Property.”

 

D. Trend Information 

 

Other than as described in
Item 3D. “Key Information —Risk Factors” and in Item 5A. “Operating and Financial Review” of this Annual
Report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect
on our results of operations or financial condition, liquidity or capital resources, or that caused the disclosed financial information
to be not necessarily indicative of future operating results or financial condition.

 

E. Critical Accounting Estimates

 

We describe our significant
accounting policies and estimates in Note 3 to our annual financial statements for the year ended December 31, 2025. We believe that these
accounting policies and estimates are critical in order to fully understand and evaluate our financial condition and results of operations.

 

We prepare our financial statements
in accordance with IFRS as issued by the IASB.

 

The preparation of financial
statements in conformity with IFRS requires management to make accounting estimates and assessments that involve use of judgment and that
affect the amounts of assets and liabilities presented in the financial statements, the disclosure of contingent assets and liabilities
at the dates of the financial statements, the amounts of revenues and expenses during the reporting periods and the accounting policies
adopted by the Company. Actual results could differ from those estimates.

 

Recent Accounting Pronouncements

 

See Note 4 to our audited
consolidated financial statements for the year ended December 31, 2025 included in this Annual Report for recently adopted accounting
pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Annual Report.

 

 

Item 6.
Directors, Senior Management and Employees

 

A.
Directors and Senior Management

 

Management
and Board of Directors

 

The
following table sets forth the name, age and position of each of our executive officers and directors as of July 15, 2026:

 

Name		Age		Position
Executive Officers (5)
Limor Zur-Stoller		56		Chief Financial Officer
Tuvia Grossman		45		General Counsel and Chief Legal Officer
Directors
Renah Persofsky (1)(2)(3)(4)(5)		67		Chairperson of the Board
Shlomo Bibas (1)(2)(4)		56		Director
Ilan Flato (1)(2)(3)(4)		69		Director
Vineet Malhotra (1)(2)(4)		53		Director
Uzi Moskovich		62		Director

 

(1)	Member of our audit committee

 

(2)	Member of our compensation committee

 

(3)	Member of our nominating and governance committee

 

(4)	Independent director under the rules of Nasdaq

 

(5)

On March 31, 2026, Noah Hershcoviz resigned from his position as Chief Executive Officer and a member of the Board of Directors, effective immediately. Renah Persofsky, our Chairperson of the Board, has taken on a greater role in HUB’s management while we seek a replacement for Mr. Hershcoviz.   During May 2026, John Rogers, President of the Americas Region, and Paul Parisi, Chief Revenue Officer, resigned from their positions, effective immediately.   During June 2026, Nachman Geva, our Chief Technology Officer, and Shai Schiller, our Head of Strategy, resigned from their positions, effective immediately.

 

 

Executive
Officers

 

Limor
Zur-Stoller has served as our Chief Financial Officer since January 2026. Prior to joining HUB, Ms. Zur-Stoller served as Chief Financial
Officer of Xjet Ltd. From 2021 to 2023, she served as Chief Financial Officer of HIL Applied Medical, from 2020 to 2021, as Chief Financial
Officer of Smart Agro, from 2018 to 2020, as Chief Financial Officer of Rootility Ltd. and from 2016 to 2018, as Chief Financial Officer
of Nutrinia Ltd. From 2008 to 2016, she served as Chief Financial Officer of Rosetta Genomics Ltd., Rosetta Green Ltd., a spin-off from
Rosetta Genomics and then became Israel Finance Lead of Monsanto Inc. following their purchase of Rosetta Green. Ms. Zur-Stoller is a
certified CPA and holds an M.B.A. degree in Business Administration and Finance and a B.A. in Accounting and Economics.

 

Tuvia
Grossman has served as our General Counsel and Chief Legal Officer since January 2025. Prior to joining HUB, Mr. Grossman served
as the General Counsel and Chief Legal Officer of Pangea IT Ltd., a hi-tech company providing biometrically secured technology and big
data solutions for the governmental sector, from 2014 to 2024. From 2012 to 2014, he served as the Director of Legal & Business Affairs
of Tahal Water Energy Ltd. From 2010 to 2012, he served as a lawyer at ERM Law, from 2005 to 2010, he served as a lawyer at Gornitzky
& Co. and from 2004 to 2005, at the Supreme Court of Israel. Mr. Grossman holds a J.D. degree in Law from Chicago-Kent University
of Law.

 

Directors

 

Renah
Persofsky has served as a member of HUB’s Board of Directors since November 2024 and as Active Chairperson of HUB’s
Board of Directors since March 2025. Ms. Persofsky has over 40 years of wide-ranging business experience. She served as the
Chief Executive Officer of Strajectory Corp. from 2010 to November 2024 and served as an executive consultant of Canadian Imperial
Bank of Commerce (NYSE: CM) from 2012 to 2023. Ms. Persofsky served as the Chairwoman of BookJane Corp. from 2016 to 2022, as a
director of Greenlane Holdings (Nasdaq: GNLN) from 2022 to 2025, as a director at Oceansix Future Paths Ltd. (TSXV: OSIX) (f/k/a K.B.
Recycling Industries Ltd.) from 2021 to 2025 and as a director of Alkemy Solutions from 2021 to 2025. She has served as a director of
Tilray Brands, Inc. (Nasdaq: TLRY) (f/k/a Aphria Inc.) since 2017 and the Vice Chairwoman and Lead Director since October 2019 as
the Chairwoman of Green Gruff Inc. since 2020, as a director of Hydrofarm LLC since 2020 and as a director of Gauzy Ltd. since March
2026. Ms. Persofsky has also previously served as an executive consultant to many iconic brands including Tim Hortons, Canadian Tire
(OTCMKTS: CDNAF), Canada Post and Interac, and was an executive officer of the Bank of Montreal (NYSE: BMO). Ms. Persofsky
previously co-chaired the Canadian Minister’s Advisory Committee on Electronic Commerce, and she also served as a special
advisor to Canada’s Minister of Foreign Affairs and Trade. Ms. Persofsky received her degree from the Rotman School of Management
at the University of Toronto.

 

Shlomo
Bibas has served as a member of HUB’s Board of Directors since April 2025. From August 2022 to August 2025, Mr. Bibas
served as Senior Vice President Operations and Chief Technology Officer at the Woodbridge Group. From 2018 to 2022, he served as Senior
Vice President and Global Chief Information Officer at Celestica Inc. From 2012 to 2018, he served as Senior Vice President Global Operations
and Chief Information Officer at Apotex Inc. Prior to that, Mr. Bibas was a Partner at Accenture, where he led the Canadian High-Tech
practice and held several international assignments. Mr. Bibas served as Independent Director of the Board of Aphria Inc. (now Tilray
Brands, Inc.) from 2018 to 2021 and has served as a director at Gauzy Ltd. since March 2023. Since 2007, Mr. Bibas has served on the
boards of various private, public, for-profit and not-for-profit organizations. From 2018 to 2025, he served as Vice Chairman of the
Board of Cayuse Technologies LLP and from 2013 to 2017, he served as a director at Indigena Solutions. Mr. Bibas holds a B.A.Sc. in Mechanical
Engineering from the University of Toronto and an ICD.D designation from the Rotman School of Management and the Institute of Corporate
Directors.

 

Ilan
Flato has served as a member of HUB’s Board of Directors since April 2023. Mr. Flato has served as President
of The Association of Publicly Traded Companies on the Tel-Aviv Stock Exchange since January 2012. From 2009 until 2018, Mr. Flato
served as a director at two Israeli Provident Funds. From 2009 until April 2018, Mr. Flato served as Chairman of the Business
Executive of Kibbutz Kfar Blum. From January 2018 until April 2020, Mr. Flato served as Chairman of the Business Executive
of Kibbutz Naan. Since 2004, Mr. Flato has functioned as an independent financial adviser. Until 2004, Mr. Flato served as
the VP for planning, economics and online banking at United Mizrahi Bank and as the Chief Economist of the bank. From 1992 until 1996,
Mr. Flato served as the Economic Advisor to the Prime Minister of Israel. Prior to that position, Mr. Flato served in the Israeli
Treasury Office as the deputy director of the budget department. Additionally, Mr. Flato served as a director of Tower Semiconductor
Ltd. from February 2009 until July 2025. Mr. Flato has also served as a member of the board of directors of many government-owned companies.
Mr. Flato holds a B.A. degree in economics from Tel-Aviv University, an LL.B. degree from Netanya College, an M.A. degree in
law from Bar-Ilan University and an MSIT from Clark University.

 

 

Vineet
Malhotra has served as a member of our board of directors since December 2025. Mr. Malhotra has served as the Chief Executive Officer
and Co-Founder of Monie Payments Corp., a fintech company developing digitally disruptive payment solutions across North America, since
2023. From 2004 to 2023, Mr. Malhotra held several senior executive positions at Canadian Imperial Bank of Commerce (CIBC), including
Managing Director and Head of the Alternate Solutions Group and Chief Executive Officer of Simplii Financial, CIBC’s Canadian direct
banking brand launched in 2017 and serving approximately two million clients. Prior to joining CIBC, Mr. Malhotra held leadership roles
at Manulife Financial from 1999 to 2004 and at IBM Global Services from 1995 to 1999, after beginning his career at Ernst & Young
in 1994. Mr. Malhotra holds a B.A. in Mathematics, Finance and Accounting from Wilfrid Laurier University in Waterloo, Canada, and has
attended the Executive Education Program at Harvard Business School.

 

Uzi
Moskovich has served as a member of our board of directors since June 2021. Mr. Moskovich served as our Chief Executive
Officer from February 2023 to December 2023. Prior to becoming our Chief Executive Officer in February 2023, Mr. Moskovich served as
our Chairman from April 2022 to February 2023. Mr. Moskovich has served as the Chief Executive Officer of Interionet since
March 2024. Prior to that, Mr. Moskovich served as Chief Executive Officer of Wave Guard Technologies Ltd. from February 2019 to
January 2023. Mr. Moskovich served as a Vice President at Israel Aerospace Industries (IAI) from January 2017 to November 2018. Mr. Moskovich
served as a member of the board of directors of BrandShield Systems Plc (LSE: BRSD.L) from 2019 to 2023 and Migdal Insurance and Financial
Holdings Ltd (TASE: MGDL.TA) from 2017 to 2021. Mr. Moskovich received a B.Sc. degree in Aeronautical Engineering from the Technion
Israel Institute of Technology in Haifa, Israel, an M.B.A. from New York University and an M.Sc. in Strategic Studies from the US Army
War College.

 

B.
Compensation

 

Directors

 

Under
the Companies Law, the compensation of a public company’s directors requires the approval of (i) its compensation committee,
(ii) its board of directors and, unless exempted under regulations promulgated under the Companies Law, (iii) the approval
of its shareholders at a general meeting. In addition, if the compensation of a public company’s directors is inconsistent with
the company’s compensation policy, then those inconsistent provisions must be separately considered by the compensation committee
and board of directors, and approved by the shareholders by a special vote in one of the following two ways:

 

●

at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, vote in favor of the inconsistent provisions of the compensation package, excluding abstentions; or

 

●

the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the inconsistent provisions of the compensation package does not exceed two percent (2%) of the aggregate voting rights in the Company.

 

Executive
officers other than the chief executive officer

 

The
Companies Law requires the compensation of a public company’s executive officers (other than the chief executive officer and who
do not also serve as a director) be approved in the following order: (i) the compensation committee, (ii) the company’s
board of directors, and (iii) if such compensation arrangement is inconsistent with the company’s stated compensation policy,
the company’s shareholders (by a special vote as discussed above with respect to the approval of director compensation that is
inconsistent with the compensation policy).

 

 

However,
there are exceptions to the foregoing approval requirements with respect to such non-director executive officers. If the shareholders
of the company do not approve the compensation of such a non-director executive officer, the compensation committee and board of directors
may override the shareholders’ disapproval for such non-director executive officer provided that the compensation committee and
the board of directors each document the basis for their decision to override the disapproval of the shareholders and approve the compensation.

 

An
amendment to an existing compensation arrangement with a non-director executive officer requires only the approval of the compensation
committee, if the compensation committee determines that the amendment is immaterial. However, if such non-director executive officer
is subordinate to the chief executive officer, an immaterial amendment to an existing compensation arrangement shall not require the
approval of the compensation committee if (i) such amendment is approved by the chief executive officer, (ii) the company’s
compensation policy allows for such immaterial amendments to be approved by the chief executive officer and (iii) the engagement
terms are consistent with the company’s compensation policy.

 

Chief
executive officer

 

Under
the Companies Law, the compensation of a public company’s chief executive officer is required to be approved by: (i) the company’s
compensation committee, (ii) the company’s board of directors and (iii) the company’s shareholders (by a special
vote as discussed above with respect to the approval of director compensation that is inconsistent with the compensation policy). However,
if the shareholders of the company do not approve the compensation arrangement with a chief executive officer who does not serve as a
director, the compensation committee and board of directors may override the shareholders’ decision provided that they each document
the basis for their decision. The approval of each of the compensation committee and board of directors should be in accordance with
the company’s compensation policy; however, in special circumstances, they may approve compensation terms of a chief executive
officer that are inconsistent with such policy provided that they have considered those provisions that must be included in the compensation
policy according to the Companies Law and that shareholder approval was obtained (by a special majority vote as discussed above with
respect to the approval of director compensation that is inconsistent with the compensation policy).

 

In
the case of a new chief executive officer, the compensation committee may waive the shareholder approval requirement with regard to the
compensation of a candidate for the chief executive officer position if the compensation committee determines that: (i) the compensation
arrangement is consistent with the company’s compensation policy, (ii) the chief executive officer candidate did not have,
on the date of his appointment or during the two-year period preceding his appointment, an “affiliation” (including an employment
relationship, a business or professional relationship or control) with the company or a controlling shareholder of the company or a relative
thereof and (iii) subjecting the approval of the engagement to a shareholder vote would impede the company’s ability to employ
the chief executive officer candidate. However, if the chief executive officer candidate will serve as a member of the board of directors,
such candidate’s compensation terms as chief executive officer must be approved in accordance with the rules applicable to
approval of compensation of directors.

 

Compensation
of Executive Officers and Directors

 

The
aggregate cash compensation and benefits in kind, paid by us and our subsidiaries to our executive officers and directors as a group
for the year ended December 31, 2025, was approximately $3,365,632.

 

The
following is a summary of the salary expenses and social benefit costs of our five most highly compensated executive officers in 2025,
or the “Covered Executives.” All amounts reported reflect the cost to the Company as recognized in our financial statements
for the year ended December 31, 2025⁽¹⁾. U.S. dollar amounts indicated for compensation of our Covered Executives are
in dollars.

 

Name and Principal Position(2)		Base Salary ($)(3)				Variable compensation ($)				Equity-Based Compensation ($)(4)				Total ($)
Noah Hershcoviz
Former Chief Executive Officer and Director(5)			564,468				451,289				206,225				1,221,982
Lior Davidsohn
Former Interim CFO(6)			374,176				–				–				374,176
Nachman Geva
Former Chief Technology Officer(7)			367,851				–				138,268				506,119
Shai Schiller
Former Head of Strategy(8)			435,416				–				104,785				540,201
Tuvia Grossman
General Counsel and Chief Legal Officer			479,246				–				239,848				719,094

 

 

(1)	All amounts reported in the table are in terms of cost to us, as recorded in our financial statements.
(2)	All Covered Executives listed in the table are our full-time employees. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for 2025.
(3)	Amounts reported in this column include the base salary and the social benefits paid by us on behalf of the Covered Executives, convalescence pay, contributions made by the company to an insurance policy or a pension fund, work disability insurance, severance, educational fund and payments for social security.
(4)	Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2025 with respect to equity-based compensation grants. The relevant amounts underlying the equity awards granted to our officers during 2025, will continue to be expensed in our financial statements over a four-year period during the years 2025 – 2028 on account of the 2025 grants in similar annualized amounts. All equity-based compensation grants to our Covered Executives were made in accordance with the parameters of our Company’s compensation policy and were approved by our compensation committee and board of directors.
(5)	Noah Hershcoviz served as Chief Executive Officer from December 2023 and as a member of HUB’s board of directors from October 2023 until he resigned from those positions on March 31, 2026.
(6)	Lior Davidsohn served as Interim Chief Financial Officer from February 2024 to December 2025. Limor Zur-Stoller was appointed Chief Financial Officer in January 2026.
(7)	Nachman Geva served as Chief Technology Officer from January 2024 until he resigned from his position in June 2026.
(8)	Shai Schiller served as Head of Strategy from October 2023 until he resigned from his position in June 2026.

 

At
our annual general meeting of shareholders in December 2025, our shareholders approved the following compensation payable to each of
our directors in respect of 2026 and onward, with the cash portion of the compensation to be paid promptly following the end of each
calendar quarter (or at the termination of the director’s service in the event of the director’s termination prior thereto):

 

●

An annual fee of $50,000 for each member of the board of directors or $130,000 for the chairman of the board of directors (or, in each case, a pro-rata portion thereof in the event of service for less than a full calendar year);

 

●

An annual fee of $10,000 for each member of the Audit Committee (or $15,000 for the chair), $8,000 for each member of the Compensation Committee (or $12,000 for the chair), $6,000 for each member of the Nominating and Governance Committee (or $9,000 for the chair) (or, in each case, a pro-rata portion thereof in the event of service for less than a full calendar year) and, if applicable, $15,000 for each member (including the chair) of a special committee that may be established by the board of directors from time to time (even if less than a full calendar year);

 

 

●

In addition, a non-employee director will be entitled to an additional annual fee if such non-employee director participated in more than 15 meetings of the board of directors and its committees in a calendar year, equal to a pro rata amount of the annual board of director membership fee, based on the applicable number of meetings attended; and

 

●

On the date of each annual general meeting, each non-executive director is granted RSUs with a value based on the closing market price of our Ordinary Shares on the Nasdaq Stock Market on the date of grant (or the next trading day). If a director serves on multiple committees, they are entitled to the aggregate value of all applicable positions listed below:   Position Chair Member Board of Directors $400,000 $130,000 Audit Committee $150,000 $50,000 Compensation Committee $150,000 $50,000 Nominating and Governance Committee $150,000 $50,000

 

Position		Chair				Member
Board of Directors		$	400,000			$	130,000
Audit Committee		$	150,000			$	50,000
Compensation Committee		$	150,000			$	50,000
Nominating and Governance Committee		$	150,000			$	50,000

 

Each grant of RSUs vests in eight equal monthly installments, subject to continued service, with the first vesting date occurring one month from the date of grant. Directors appointed between annual meetings receive a pro-rata RSU grant on their date of appointment. The grant value is calculated based on the number of months elapsed since the preceding annual meeting.

 

RSUs issued to U.S.-resident directors shall be classified as non-qualified, while RSUs issued to Israel-resident directors shall be issued under the Capital Gains tax track pursuant to Section 102 of the Israeli Income Tax Ordinance (New Version), 1961 (the “Ordinance”).

 

Share
Option Plans

 

2007
Employee Stock Option Plan 

 

In
2007, HUB (ALD prior to its merger with HUB) adopted its 2007 Employee Stock Option Plan (the “2007 Plan”), as amended from
time to time. The 2007 Plan provides for the grant of options to the employees, directors, office holders, service providers and consultants
of HUB and its subsidiaries and affiliates.

 

Authorized
Shares. As of December 31, 2025, there were no ordinary shares reserved and available for issuance under the 2007 Plan pursuant
to previously granted options awards that remain outstanding. We no longer grant any awards under the 2007 Plan, though previously granted
options under the 2007 Plan remain outstanding under the 2007 Plan.

 

Administration. HUB’s
board of directors, or a duly authorized committee of the board of directors (the “Administrator”), administers the 2007
Plan. Under the 2007 Plan, the Administrator has the authority, subject to applicable law, to (among other things) interpret the terms
of the 2007 Plan and any notices of grant or options granted thereunder, designate recipients of option grants, determine and amend the
terms of awards, including: the number of shares underlying each award, provisions concerning the time and extent to which the options
may be exercised and the nature of restrictions as to transferability, the class and the exercise price of an option or purchase price
per share covered by an award, the fair market value of HUB ordinary shares, the time of grant and vesting schedule applicable to an
award (including the determination to accelerate an award and/or amend the vesting schedule), the method of payment for shares purchased
upon the exercise or (if applicable) vesting of an award or for satisfaction of any tax withholding obligation arising in connection
with the award or such shares, the time of the expiration of the awards, the effect of the grantee’s termination of employment,
the cancellation or the suspension of awards, prescribe the forms of agreement under which each award is granted, and take all other
actions and make all other determinations necessary or desirable for, or incidental to, the administration of the 2007 Plan and any award
under the 2007 Plan.

 

 

Eligibility. The
2007 Plan provides for granting awards under various tax regimes, including, without limitation, in compliance with Section 102
(“Section 102”) of the Israeli Income Tax Ordinance (New Version) (the “Ordinance”) and Section 3(i)
of the Ordinance.

 

Section 102
of the Ordinance allows employees, directors and officers who are not controlling shareholders and are considered Israeli residents to
receive favorable tax treatment for compensation in the form of shares or options under certain terms and conditions. HUB’s non-employee
service providers and controlling shareholders who are considered Israeli residents may only be granted options under Section 3(i) of
the Ordinance, which does not provide for similar tax benefits. Section 102 includes two alternatives for tax treatment involving
the issuance of options or shares to a trustee for the benefit of the grantees and also includes an additional alternative for the issuance
of options or shares directly to the grantee. Section 102(b)(2) of the Ordinance, the most favorable tax treatment for the grantee,
permits the issuance to a trustee under the “capital gain track.”

 

Grant. All
awards granted pursuant to the 2007 Plan are evidenced by a written agreement between HUB and the grantee or a written notice delivered
by HUB (the “Award Agreement”). The Award Agreement sets forth the terms and conditions of the award, including the type
of award, number of shares subject to such award, manner of exercise, term and vesting schedule (including performance goals or measures)
and the exercise price, if applicable.

 

Exercise. An
award under the 2007 Plan may be exercised by providing HUB (or to any third party designated by HUB) with a written notice of exercise
and full payment of the exercise price for such shares underlying the award, if applicable, in such form and method as may be determined
by the Administrator and permitted by applicable law. An award may not be exercised for a fraction of a share. With regard to tax withholding,
exercise price and purchase price obligations arising in connection with awards under the 2007 Plan, the Administrator may, in its discretion,
among others, accept cash or otherwise provide for net withholding of shares in a cashless or net exercise mechanism.

 

Transferability. Other
than by will, the laws of descent and distribution or as otherwise provided under the 2007 Plan, and unless otherwise determined by the
Administrator, neither the awards nor any right in connection with such awards are assignable or transferable.

 

Termination
of Employment. In the event of termination of a grantee’s employment or service with HUB or any of its affiliates, all
vested and exercisable awards held by such grantee as of the date of termination may be exercised within three months after such
date of termination, unless otherwise determined by the Administrator. Any awards which are unvested as of the date of such termination,
or which are vested but not exercised within the three-month period following such termination, will terminate.

 

In
the event of termination of a grantee’s employment or service with HUB or any of its affiliates due to such grantee’s death
or disability, all vested and exercisable awards held by such grantee as of the date of termination may be exercised, within one year
after such date of termination, unless otherwise provided by the Administrator. Any awards which are unvested as of the date of such
termination or which are vested but not exercised within the one-year period following such termination, will terminate.

 

Notwithstanding
any of the foregoing, if a grantee’s employment or services with HUB or any of its affiliates is terminated for “cause”
(as defined in the 2007 Plan), unless otherwise determined by the Administrator, all outstanding awards held by such grantee (whether
vested or unvested) will terminate on the date of such termination.

 

Transactions. In
the event of an exchange or change of HUB’s ordinary shares by declaration of a stock split, consolidation or exchange of share
capital of HUB recapitalization, or other similar occurrences, the number and class and kind of shares subject to the 2007 Plan and any
options granted thereunder shall be adjusted and, the exercise price per share covered the options shall be appropriately adjusted. No
adjustment shall be made by reason of the distribution of subscription rights on outstanding shares.

 

 

In
the event of a merger, acquisition, reorganization, amalgamation or consolidation of HUB, or a sale of all, or substantially all of HUB’s
assets (“Transaction”), (i) all outstanding shares subject to the unexercised portions of outstanding options will be replaced
or substituted by the successor corporation in such Transaction and appropriate adjustments shall be made to the exercise price and all
other terms and conditions shall remain unchanged, all as determined by the Administrator or (ii) if the outstanding options are not
assumed or substituted the Administrator may provide for an acceleration of vesting of unvested options as of the date that is ten days
from the date of the Transaction.

 

In
the event HUB is voluntarily liquidated or dissolved, all vested and unexercised options shall become exercisable within ten days of
notice to the grantee, and following such period, all remaining outstanding options will terminate immediately.

 

2021
Employee Stock Option Plan 

 

In
2021, HUB adopted the 2021 Employee Stock Option Plan (“2021 Plan”). The 2021 Plan provides for the grant of equity-based
incentive awards to HUB’s and its affiliates’ employees, directors, office holders, service providers and consultants in
order to incentivize them to increase their efforts on behalf of HUB or its affiliates and to promote the success of HUB’s business.

 

Authorized Shares. As
of December 31, 2025, there were 13,559 ordinary shares reserved and available for issuance under the 2021 Plan (before adjustment for
the 1-for-15 reverse split effected on January 15, 2026, the 1-for-50 reverse split effected on April 20, 2026 and the 1-for-20 reverse
split effected on June 5, 2026). Following the adoption of the 2021 Plan, HUB ceased making grants under the 2007 Plan, though previously
granted options under the 2007 Plan remain outstanding under the 2007 Plan.

 

Administration. HUB’s
board of directors, or a duly authorized committee of the board of directors (the “Administrator”), will administer the 2021
Plan. Under the 2021 Plan, the Administrator has the authority, subject to applicable law, to interpret the terms of the 2021 Plan and
any award agreements or awards granted thereunder, designate recipients of awards, determine and amend the terms of awards, including
the exercise price of an option award, the fair market value of an ordinary share, the time and vesting schedule applicable to an award
or the method of payment for an award, accelerate or amend the vesting schedule applicable to an award, prescribe the forms of agreement
for use under the 2021 Plan and take all other actions and make all other determinations necessary for the administration of the 2021
Plan.

 

The
Administrator also has the authority to approve the conversion, substitution, cancellation or suspension under and in accordance with
the 2021 Plan of any or all option awards or ordinary shares, and the authority to modify option awards to eligible individuals who are
foreign nationals or are individuals who are employed outside Israel or the United States of America to recognize differences in local
law, tax policy or custom, in order to effectuate the purposes of the 2021 Plan but without amending the 2021 Plan.

 

The
Administrator also has the authority to amend and rescind rules and regulations relating to the 2021 Plan or terminate the 2021 Plan
at any time. No termination or amendment of the 2021 Plan shall affect any then outstanding award unless expressly provided by the Administrator.

 

Eligibility. The
2021 Plan provides for granting awards under various tax regimes, including, without limitation, in compliance with Section 102
of the Ordinance, and Section 3(i) of the Ordinance and for awards granted to our United States employees or service providers,
including those who are deemed to be residents of the United States for tax purposes, Section 422 of the Code and Section 409A
of the Code.

 

 

Grants. All
awards granted pursuant to the 2021 Plan will be evidenced by an award agreement, in a form approved, from time to time, by the Administrator
in its sole discretion. The award agreement will set forth the terms and conditions of the award, including the type of award, number
of shares subject to such award, vesting schedule and conditions (including performance goals or measures) and the exercise price, if
applicable. Certain awards under the 2021 Plan may constitute or provide for a deferral of compensation, subject to Section 409A
of the Code, which may impose additional requirements on the terms and conditions of such awards.

 

Unless
otherwise determined by the Administrator and stated in the award agreement, and subject to the conditions of the 2021 Plan, awards vest
and become exercisable under the following schedule: 25% of the shares covered by the award on the first anniversary of the vesting commencement
date determined by the Administrator (and in the absence of such determination, the date on which such award was granted) and 12.5% of
the shares covered by the award at the end of each subsequent six-month period thereafter over the course of the following three years;
provided that the grantee remains continuously as an employee or provides services to HUB throughout such vesting dates.

 

Each
award will expire up to ten years from the date of the grant thereof, unless such shorter term of expiration is otherwise designated
by the Administrator.

 

Awards. The
2021 Plan provides for the grant of stock options (including incentive stock options and nonqualified stock options), ordinary shares,
restricted shares units (“RSUs”), restricted shares, share purchase rights and other share-based awards.

 

Options
granted under the 2021 Plan to HUB employees who are U.S. residents may qualify as “incentive stock options” within the meaning
of Section 422 of the Code, or may be non-qualified stock options. The exercise price of an option may not be less than the par
value of the shares (if the shares bear a par value) for which such option is exercisable, otherwise an exercise price of an award of
less than the par value of the shares (if shares bear a par value) shall comply with section 304 of the Companies Law. The exercise price
of a non-qualified stock option shall not be less than 100% of the fair market value of a share on the date of grant of such option or
such other amount as may be required pursuant to the section 409A of the Code. Notwithstanding the foregoing, a non-qualified stock option
may be granted with an exercise price lower than the minimum exercise price set forth above if such award is granted pursuant to an assumption
or substitution for another option in a manner qualifying under the provisions of that complies with section 424(a) of the Code 1.409A-1(b)(5)(v)(D)
of the U.S. Treasury Regulations or any successor guidance. The exercise price of an Incentive Stock Option granted under the 2021 Plan
may not be less than 100% of the fair market value of the underlying share on the date of grant or such other amount as may be required
pursuant to the Code. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than the minimum
exercise price set forth above if such Award is granted pursuant to an assumption or substitution for another option in a manner that
complies with the provisions of Section 424(a) of the Code. In the case of Incentive Stock Options granted to a ten percent
shareholders, (i) the exercise price shall not be less than 110% of the fair market value of the underlying share on the date of
grant, and (ii) the exercise period shall not exceed five (5) years from the effective date of grant of such grant.

 

Exercise. An
award under the 2021 Plan may be exercised by providing HUB with a written notice of exercise and full payment of the exercise price
for such shares underlying the award, if applicable, in such form and method as may be determined by the Administrator and permitted
by applicable law. An award may not be exercised for a fraction of a share. With regard to tax withholding, exercise price and purchase
price obligations arising in connection with awards under the 2021 Plan, the Administrator may, in its discretion, accept cash, check,
provide for net withholding of shares in a cashless or net exercise mechanism.

 

Transferability. Other
than by will, the laws of descent and distribution or as otherwise provided under the 2021 Plan or by the Administrator, neither the
awards nor any right in connection with such awards are assignable or transferable.

 

 

Termination
of Employment. In the event of termination of a grantee’s employment or service with HUB or any of its affiliates, all
vested and exercisable awards held by such grantee as of the date of termination may be exercised within ninety days after such date
of termination, unless otherwise determined by the Administrator, but in no event later than the date of expiration of the award as set
forth in the award agreement. After such ninety days period, all such unexercised awards will terminate.

 

In
the event of termination of a grantee’s employment or service with HUB or any of its affiliates due to such grantee’s death
or permanent disability, all vested and exercisable awards held by such grantee as of the date of termination may be exercised within
one year after such date of termination, unless otherwise determined in the grantee’s award agreement. Any awards which are unvested
as of the date of such termination or which are vested but not then exercised within the one-year period following such date, will terminate.

 

The
Administrator may, prior to the date of termination, extend the exercise period for the vested and exercisable options for a period not
to exceed the period during which the options by their terms would otherwise have been exercisable.

 

Notwithstanding
any of the foregoing, if a grantee’s employment or services with HUB or any of its affiliates is terminated for “cause”
(as defined in the 2021 Plan), subject to the discretion of the Company, all outstanding awards held by such grantee (whether vested
or unvested) will terminate on the date of such termination.

 

Voting
Rights. Grantees will not have the rights as a shareholder of HUB with respect to any shares covered by an award until the award
has vested and/or the grantee has exercised such award, paid any exercise price for such award and becomes the record holder of the shares.

 

Dividends. Grantees
holding HUB Ordinary Shares issued upon the exercise or vesting of RSUs will be entitled to receive dividends and other distributions
with respect to the quantity of their holdings, subject to HUB’s Articles of Association and applicable taxation.

 

Transactions. In
the event of an exchange or change of HUB’s ordinary shares by declaration of a stock split, consolidation or exchange of share
capital of HUB recapitalization, or other similar occurrences, the number and class and kind of shares subject to the 2021 Plan and any
options granted thereunder shall be adjusted and, the exercise price per share covered the options shall be appropriately adjusted. No
adjustment shall be made by reason of the distribution of subscription rights on outstanding shares.

 

In
the event of a merger, acquisition, reorganization, amalgamation or consolidation of HUB, or a sale of all, or substantially all of HUB’s
assets (“Transaction”), (i) all outstanding shares subject to the unexercised portions of outstanding options will be replaced
or substituted by the successor corporation in such Transaction and appropriate adjustments shall be made to the exercise price and all
other terms and conditions shall remain unchanged, all as determined by the Administrator or (ii) if the outstanding options are not
assumed or substituted the Administrator may provide for an acceleration of vesting of unvested options as of the date that is ten days
from the date of the Transaction.

 

In
the event HUB is voluntarily liquidated or dissolved, all vested and unexercised options shall become exercisable within ten days of
notice to the grantee, and following such period, all remaining outstanding options will terminate immediately.

 

 

C.
Board Practices

 

Corporate
Governance Practices

 

As
an Israeli company, we are subject to various corporate governance requirements under the Companies Law, relating to matters such as
external directors, the audit committee, the compensation committee and an internal auditor. See below under “—External directors.”

 

In
March 2025, the Constitution, Law and Justice Committee of the Israeli Parliament approved the version of a proposed amendment to the
Companies Law relating to public companies without a controlling shareholder, such as HUB. The Parliament is expected to vote on such
amendment in the near future for the purpose of final enactment. If enacted, the amendment is expected to go into effect 12 months after
its official publication. The proposed amendment would apply various corporate governance requirements that are believed to be better
suited to companies with decentralized ownership structures.

 

Generally,
the proposed amendment includes, among other things, lowering the threshold for the presumption of ‘control’ from 50% to
25% of the means of control of the company; changes to the composition of the board of directors (generally, the replacement of the requirement
to appoint two “external directors” with the requirement to appoint a majority of “independent directors”); the
nomination of candidates for the position of director on behalf of the board of directors by an independent nomination committee; the
requirement to approve extraordinary transactions with “significant holders” (holding 10% or more of the voting rights in
a company) by the audit committee and board of directors; the requirement to approve extraordinary transactions with directors, their
relatives or entities controlled by them (even if not compensation related) by the audit committee, board of directors and shareholders
(by a simple majority); and the requirement that the term of office of a director expire no later than the third annual general meeting
(without preventing re-appointment for additional terms), provided that at any given time, the terms of at least half of the directors
will expire at the next two annual general meetings. As a Nasdaq-listed company, we are already subject to some of these requirements,
such as a majority of independent directors and a nominating committee.

 

We
are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act. As a foreign private issuer
we will be permitted to comply with Israeli corporate governance practices instead of the certain listing rules of Nasdaq, provided
that we disclose which requirements we are not following and the equivalent Israeli requirements.

 

We
rely on this “foreign private issuer exemption” with respect to the quorum requirement for shareholder meetings and with
respect to Nasdaq shareholder approval rules. Whereas under the corporate governance rules of Nasdaq, a quorum requires the presence,
in person or by proxy, of holders of at least 33 1/3% of the total issued and outstanding voting power of our shares at each general
meeting of shareholders, pursuant to the Articles, and as permitted under the Companies Law, the quorum required for a general meeting
of shareholders will consist of at least two shareholders present in person or by proxy in accordance with the Companies Law who hold
or represent at least 33 1/3% of the total outstanding voting power of our shares, except if (i) any such general meeting of shareholders
was initiated by and convened pursuant to a resolution adopted by the board of directors and (ii) at the time of such general meeting,
we qualify as a “foreign private issuer,” then in such case, the requisite quorum will consist of two or more shareholders
present in person or by proxy who hold or represent at least 25% of the total outstanding voting power of our shares (and if the meeting
is adjourned for a lack of quorum, the quorum for such adjourned meeting will be, subject to certain exceptions, any number of shareholders).
We otherwise intend to comply with the rules generally applicable to U.S. domestic companies listed on the Nasdaq. We may, however, in
the future decide to rely upon the “foreign private issuer exemption” for purposes of opting out of some or all of the other
Nasdaq listing rules.

 

Additionally,
in the event that misconduct or other inappropriate behavior is found within our company, our Board has the ability to conduct internal
investigations in order to determine the nature of the conduct and to form committees and hire advisors to properly address and remediate
any findings. See “Item 4. Information on the Company—History and Development of the Company—Recent Developments—Internal
Investigation.”

 

For
more information regarding our corporate governance practices and foreign private issuer status, see Item 16G. “Corporate
Governance.”

 

 

Board
of Directors

 

Under
the Companies Law and our Articles, our business and affairs are managed under the direction of our board of directors. Our board of
directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or to executive management.
Our Chief Executive Officer (referred to as a “general manager” under the Companies Law) is responsible for our day-to-day
management. Our Chief Executive Officer is appointed by, and serves at the discretion of, our board of directors, subject to the employment
or consulting agreement that we have entered into with him. All other executive officers are appointed by the Chief Executive Officer,
subject to applicable corporate approvals, and are subject to the terms of any applicable employment or consulting agreements that we
may enter into with them.

 

We
comply with the rules of Nasdaq requiring that a majority of our directors are independent. Our board of directors has determined that
all of our directors, other than Uzi Moskovich are independent under such rules.

 

Under
our Articles, the number of directors on our board of directors will be no less than three and no more than eleven, divided into three
classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of one-third of the total number of
directors constituting the entire board of directors. At each annual general meeting of our shareholders, the election or re-election
of directors following the expiration of the term of office of the directors of that class of directors will be for a term of office
that expires on the third annual general meeting following such election or re-election. Therefore, at each annual general meeting, the
term of office of only one class of directors expires.

 

Our
directors are divided among the three classes as follows:

 

●

the Class I director is Ilan Flato, and his term will expire at the annual general meeting of shareholders to be held in 2026;

 

●

the Class II directors are Uzi Moskovich and Vineet Malhotra, and their terms will expire at our annual meeting of shareholders to be held in 2027; and

 

●

the Class III directors are Shlomo Bibas and Renah Persofsky, and their terms will expire at our annual meeting of shareholders to be held in 2028.

 

Our
directors will generally be appointed by a simple majority vote of holders of our ordinary shares, participating and voting (in person
or by proxy) at an annual general meeting of our shareholders, provided that (i) in the event of a contested election, the method of
calculation of the votes and the manner in which the resolutions will be presented to our shareholders at the general meeting shall be
determined by our board of directors in its discretion, and (ii) in the event that our board of directors does not or is unable
to make a determination on such matter, then the directors will be elected by a plurality of the voting power represented at the general
meeting in person or by proxy and voting on the election of directors.

 

Each
director will hold office until the annual general meeting of our shareholders in the year in which such director’s term expires,
unless the tenure of such director expires earlier pursuant to the Companies Law or unless such director is removed from office as described
below.

 

Our
Articles generally require a vote of the holders of a majority of our outstanding ordinary shares entitled to vote present and voting
on the matter at a general meeting of shareholders (referred to as simple majority) to adopt a shareholders resolution. In addition,
vacancies on our board of directors may be filled by a vote of a simple majority of the directors then in office. A director so appointed
will hold office until the next annual general meeting of our shareholders for the election of the class of directors in respect of which
the vacancy was created. In the case of a vacancy due to the number of directors being less than the maximum number of directors stated
in our Articles, the new director filling the vacancy will serve until the next annual general meeting of our shareholders for the election
of the class of directors to which such director was assigned by our board of directors. Directors may also be dismissed or removed by
a resolution adopted at a general meeting of shareholders by holders of at least 65% of our outstanding ordinary shares of the total
voting power of our shareholders.

 

Chairperson
of the Board

 

Our
Articles provide that the board of directors shall appoint a member of the board to serve as the Chairperson. Under the Companies Law,
the chief executive officer of a public company, or a relative of the chief executive officer, may not serve as the chairperson of the
board of directors, and the chairperson of the board of directors, or a relative of the chairperson, may not be vested with authorities
of the Chief Executive Officer unless approved by a special majority of the company’s shareholders for a period not exceeding three
years from each such approval. The chairperson of the board of directors, or a relative of the chairperson, may not be vested with authorities
of the Chief Executive Officer unless approved by a special majority of the company’s shareholders for a period not exceeding three
years from each such approval.

 

In
addition, a person who is subordinated, directly or indirectly, to the chief executive officer may not serve as the chairperson of the
board of directors, the chairperson of the board of directors may not be vested with authorities that are granted to persons who are
subordinated to the chief executive officer, and the chairperson of the board of directors may not serve in any other position in the
company or in a controlled subsidiary, but may serve as a director or chairperson of a controlled subsidiary.

 

Our
Board of Directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as
to provide independent oversight of management. The Board of Directors believes that, given the dynamic and competitive environment in
which we operate, the optimal board leadership structure may vary as circumstances warrant.

 

At
present, the Board of Directors has chosen to separate the two roles of Chief Executive Officer and Chairperson of the Board of Directors,
as our current leadership structure promotes balance between the authority of those who oversee our business and those who manage it
on a day-to-day basis. Renah Persofsky serves as non-executive Active Chairperson of the Board of Directors.

 

Nevertheless,
the Board of Directors recognizes that it is important to retain the organizational flexibility to determine whether the roles of the
Chairperson of the Board of Directors and Chief Executive Officer should be separated or combined in one individual. The Board of Directors
periodically evaluates whether the board leadership structure should be changed in light of specific circumstances applicable to us.

  

External
directors

 

Under
the Companies Law, companies incorporated under the laws of the State of Israel that are “public companies,” including companies
with shares listed on Nasdaq, are required to appoint at least two external directors. Pursuant to regulations promulgated under the
Companies Law, companies with shares traded on certain U.S. stock exchanges, including Nasdaq, which do not have a “controlling
shareholder,” may, subject to certain conditions, “opt out” from the Companies Law requirements to appoint external
directors and related Companies Law rules concerning the composition of the audit committee and compensation committee of the board
of directors. In accordance with these regulations, we have elected to “opt out” from these requirements under the Companies
Law. 

 

Audit
Committee

 

Companies
Law requirements

 

Under
the Companies Law, the board of directors of a public company must appoint an audit committee.

 

 

Listing
requirements

 

Under
the listing rules of the Nasdaq, we are required to maintain an audit committee consisting of at least three independent directors,
each of whom is financially literate and one of whom has accounting or related financial management expertise.

 

Our
audit committee consists of Ilan Flato, Renah Persofsky, Shlomo Bibas and Vineet Malhotra. Ilan Flato serves as the chairperson of the
audit committee. All members of our audit committee meet the requirements for financial literacy under the applicable rules and
regulations of the SEC and the listing rules of the Nasdaq. Our board of directors has determined that each of Ilan Flato and Renah
Persofsky is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined
by the listing rules of Nasdaq.

 

Our
board of directors has determined that each member of our audit committee is “independent,” as such term is defined in Rule 10A-3(b)(1) under
the Exchange Act, which is different from the general test for independence of board and committee members.

 

Audit
committee role

 

Our
board of directors has adopted an audit committee charter setting forth the responsibilities of the audit committee, which are consistent
with the Companies Law, the SEC rules, and the listing rules of the Nasdaq. These responsibilities include:

 

●

retaining and terminating our independent auditors, subject to ratification by the board of directors, and in the case of retention, subject to ratification by the shareholders;

 

●

pre-approving audit and non-audit services to be provided by the independent auditors and related fees and terms;

 

●

overseeing the accounting and financial reporting processes of our company;

 

●

managing audits of our financial statements

 

●

preparing all reports as may be required of an audit committee under the rules and regulations promulgated under the Exchange Act;

 

●

reviewing with management and our independent auditor our annual and quarterly financial statements prior to publication, filing, or submission to the SEC;

 

●

recommending to the board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement fees and terms, in accordance with the Companies Law, as well as approving the yearly or periodic work plan proposed by the internal auditor;

 

●

reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters that may have a material impact on the financial statements;

 

 

●

identifying irregularities in our business administration, inter alia, by consulting with the internal auditor or with the independent auditor, and suggesting corrective measures to the board of directors;

 

●

reviewing policies and procedures with respect to transactions (other than transactions related to compensation or terms of services) between the Company and officers and directors, affiliates of officers or directors, or transactions that are not in the ordinary course of the Company’s business and deciding whether to approve such acts and transactions if so required under the Companies Law;

 

●

reviewing the findings of any internal investigation into matters involving suspected fraud or irregularity or a failure of internal control systems of a material nature and report the matter to the Board; and

 

●

establishing procedures for handling employee complaints relating to the management of our business and the protection to be provided to such employees.

 

Compensation
Committee

 

Companies
Law requirements

 

Under
the Companies Law, the board of directors of a public company must appoint a compensation committee.

  

Listing
requirements

 

Under
the listing rules of the Nasdaq, we are required to maintain a compensation committee consisting of at least two independent directors.

 

Our
compensation committee consists of Shlomo Bibas, Renah Persofsky, Ilan Flato and Vineet Malhotra. Shlomo Bibas serves as chairperson
of the compensation committee. Our board of directors has determined that each member of our compensation committee is independent under
the listing rules of the Nasdaq, including the additional independence requirements applicable to the members of a compensation
committee.

 

Compensation
committee role

 

In
accordance with the Companies Law, the responsibilities of the compensation committee are, among others, as follows:

 

●

making recommendations to the board of directors with respect to the approval of the compensation policy for office holders and, once every three years, with respect to any extensions to a compensation policy that was adopted for a period of more than three years;

 

●

reviewing the implementation of the compensation policy and periodically making recommendations to the board of directors with respect to any amendments or updates to the compensation policy;

 

●

resolving whether to approve arrangements with respect to the terms of office and employment of office holders, which require the approval of the compensation committee pursuant to the Companies Law; and

 

●

exempting, under certain circumstances, a transaction with our Chief Executive Officer from the approval of our shareholders.

 

 

Our
board of directors has adopted a compensation committee charter setting forth the responsibilities of the committee, which are consistent
with the listing rules of the Nasdaq and include among others:

 

●

recommending to our board of directors for its approval a compensation policy, in accordance with the requirements of the Companies Law, as well as other compensation policies, incentive-based compensation plans, and equity-based compensation plans, overseeing the development and implementation of such policies, and recommending to our board of directors any amendments or modifications the committee deems appropriate, including as required under the Companies Law;

 

●

reviewing and approving the granting of options and other incentive awards to our Chief Executive Officer and other executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, including evaluating their performance in light of such goals and objectives;

 

●

approving and exempting certain transactions regarding office holders’ compensation pursuant to the Companies Law; and

 

●

administering our equity-based compensation plans, including without limitation, approving the adoption of such plans, amending and interpreting such plans, and the awards and agreements issued pursuant thereto, and making and determining the terms of awards to eligible persons under the plans.

 

Compensation
policy under the Companies Law

 

In
general, under the Companies Law, the board of directors of a public company must approve a compensation policy after receiving and considering
the recommendations of the compensation committee. In addition, our compensation policy must be approved at least once every three years,
first, by our board of directors, upon recommendation of our compensation committee, and second, by a simple majority of the ordinary
shares present, in person or by proxy, and voting (excluding abstentions) at a general meeting of shareholders, provided that either:

 

●

the majority of such ordinary shares is comprised of shares held by shareholders who are not controlling shareholders and shareholders who do not have a personal interest in such compensation policy; or

 

●

the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation policy voting against the policy does not exceed two percent (2%) of the aggregate voting rights in the company.

 

Under
special circumstances, the board of directors may approve the compensation policy despite the objection of the shareholders on the condition
that the compensation committee and then the board of directors decide, on the basis of detailed grounds, and after discussing again
the compensation policy, that approval of the compensation policy, despite the objection of shareholders, is for the benefit of the company. 

 

 

The
compensation policy must be based on certain considerations, include certain provisions and reference certain matters as set forth in
the Companies Law. The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement
of office holders, including exculpation, insurance, indemnification, or any monetary payment or obligation of payment in respect of
employment or engagement. The compensation policy must be determined and later reevaluated according to certain factors, including: the
advancement of the company’s objectives, business plan and long-term strategy; the creation of appropriate incentives for office
holders, while considering, among other things, the company’s risk management policy; the size and the nature of the company’s
operations; and with respect to variable compensation, the contribution of the office holder towards the achievement of the company’s
long-term goals and the maximization of its profits, all with a long-term objective and according to the position of the office holder.
The compensation policy must furthermore consider the following additional factors:

 

●

The Officer’s level of education, skills, expertise, seniority (in the Company, specifically, and in his profession, in general), professional experience, and achievements.

 

●

The Officer’s position, areas of responsibility, and terms of employment pursuant to former employment agreements signed with him;

 

●

The Officer’s contribution to the Company’s business, the attainment of its strategic targets, and the realization of its work plans, profits, resilience, and stability.

 

●

The extent of the Officer’s responsibilities.

 

●

The need of the Company to hire and retain an Officer with unique skills, knowledge, or expertise.

 

●

The existence or absence of a substantive change in the Officer’s position or function or the Company’s demands on him;

 

●

The Company’s size and nature of its operations;

 

●

Relation to tenure and employment terms which include retirement bonuses – the tenure or employment period of the Officer, the terms of his tenure and employment during said period, the Company’s performance during said period, the Officer’s contribution to attaining the Company’s targets and generating its profits, and the circumstances of the retirement.

 

●

The conditions of the market in which the Company operates at any relevant time, including the Officer’s salary terms when compared to the salary terms of Officers with similar positions (or positions of a similar level) in companies with similar characteristics to the Company’s operation.

 

●

The level of difficulty in locating, recruiting, and retaining Officers and the need to offer an attractive compensation package in a global, competitive market; and (c) changes in the Company’s operation market, operation scope, and complexity.

 

 

Our
compensation policy is designed to retain and motivate our directors and executive officers, incentivize superior individual excellence,
align the interests of our directors and executive officers with our long-term performance, and provide a risk management tool. To that
end, a portion of our executive officer compensation package is targeted to reflect our short and long-term goals, as well as the executive
officer’s individual performance. Our compensation policy also includes measures designed to reduce the executive officer’s
incentives to take excessive risks that may harm the Company in the long-term, such as limits on the value of cash bonuses and equity-based
compensation, limitations on the ratio between the variable and the total compensation of an executive officer, and minimum vesting periods
for equity-based compensation.

 

Our
compensation policy also addresses our executive officers’ individual characteristics (such as their respective position, education,
scope of responsibilities, and contribution to the attainment of our goals) as the basis for compensation variation among our executive
officers and considers the internal ratios between compensation of our executive officers and directors and other employees. Pursuant
to our compensation policy, the compensation that may be granted to an executive officer may include: base salary, annual bonuses, signing
bonuses and other cash bonuses (such as special bonuses with respect to any special achievements), equity-based compensation, benefits
and retirement and termination of service arrangements. All cash bonuses are limited to a maximum amount linked to the executive officer’s
base salary.

 

An
annual cash bonus may be awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. The
annual cash bonus that may be granted to our executive officers, other than our Chief Executive Officer, will be based on performance
objectives and a discretionary evaluation of the executive officer’s overall performance by our Chief Executive Officer and subject
to minimum thresholds. The annual cash bonus that may be granted to executive officers, other than our Chief Executive Officer, may alternatively
be based entirely on a discretionary evaluation. The performance objectives for the annual cash bonus of executive officers, other than
our Chief Executive Officer, is required to be approved by the board of directors after recommendation of the compensation committee
and the Chief Executive Officer.

 

The
measurable performance objectives of our Chief Executive Officer will be determined annually by our compensation committee and board
of directors. A non-material portion of the Chief Executive Officer’s annual cash bonus, as provided in our compensation policy,
may be based on a discretionary evaluation of the Chief Executive Officer’s overall performance by the compensation committee and
the board of directors.

 

Under
our compensation policy, our executive officers’ (including members of our board of directors) equity-based compensation is designed
in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives
being to enhance the alignment between the executive officers’ interests with our long-term interests and those of our shareholders
and to strengthen the retention and the motivation of executive officers in the long term. Our compensation policy provides for executive
officer compensation in the form of share options or other equity-based awards, such as restricted shares and restricted share units,
in accordance with our then-current equity incentive plan. All equity-based incentives granted to executive officers shall be subject
to vesting periods in order to promote long-term retention of those executive officers. Our compensation policy sets the minimum exercise
price of the options and the cap for the equity-based compensation. Equity-based compensation shall be granted from time to time and
be individually determined and awarded according to the performance, educational background, prior business experience, qualifications,
role, and the personal responsibilities of the executive officer.

 

In
addition, our compensation policy will allow us to exculpate, indemnify, and insure our executive officers and directors to the maximum
extent permitted by Israeli law subject to certain limitations set forth therein.

 

Our
compensation policy provides for compensation to the members of our board of directors either (i) in accordance with the amounts
provided in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by
the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be
amended from time to time, or (ii) in accordance with the amounts determined in our compensation policy.

 

 

Our
compensation policy includes our Policy for Recovery of Erroneously Awarded Compensation, in compliance with the requirements of the
Nasdaq rules.

 

Our
amended compensation policy, as approved by our shareholders in November 2023, was filed as an exhibit to our Annual Report filed on
August 16, 2024, and amended on October 22, 2024.

 

Nominating
and Governance Committee 

 

Our
nominating and governance committee consists of Renah Persofsky, Shlomo Bibas and Ilan Flato. Renah Persofsky serves as chairperson of
the nominating and governance committee. Our board of directors has adopted a nominating and governance committee charter setting forth
the responsibilities of the committee, which include:

  

●

overseeing and assisting our board in reviewing and recommending nominees for election of directors;

 

●

assessing the performance of the members of our board;

 

●

establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending to our board a set of corporate governance guidelines applicable to our business;

 

●

recommending to our board of directors the Company’s overall environmental, social, and governance strategies, including, but not limited to environmental, health and safety, corporate social responsibility, sustainability, philanthropy, corporate governance, reputation, diversity, equity and inclusion, community issues, political contributions and lobbying, and other public policy matters relevant to the Company (collectively, “ESG Matters”);

 

●

overseeing the Company’s policies, practices, and performance with respect to ESG Matters; and

 

●

reporting to the board of directors of the Company about current and emerging topics relating to ESG Matters that may affect the business, operations, performance, or public image of the Company or are otherwise pertinent to the Company and its stakeholders and, if appropriate, detailing actions taken in relation to the same.

 

Internal
Auditor

 

Under
the Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of the audit
committee. The role of the internal auditor is, among other things, to review the Company’s compliance with applicable law and
orderly business procedure. Under the Companies Law, the internal auditor cannot be an interested party, an office holder, or a relative
of an interested party or an office holder. Nor may the internal auditor be the company’s independent auditor or its representative.
An “interested party” is defined in the Companies Law as (i) a holder of 5% or more of the issued share capital or voting
power in a company, (ii) any person or entity who has the right to designate one or more directors or to designate the chief executive
officer of the company, or (iii) any person who serves as a director or as chief executive officer of the company. Joseph Ginossar
of Fahn Kanne, an affiliate of Grant Thornton International, serves as our internal auditor.

 

 

Approval
of Related Party Transactions under Israeli Law

 

Fiduciary
duties of directors and executive officers

 

The
Companies Law codifies the fiduciary duties that office holders owe to a company. An office holder is defined in the Companies Law as
a general manager, chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities
of any of these positions regardless of such person’s title, a director, and any other manager directly subordinate to the general
manager. Each person listed in the table under “Our Management — Management and Board of Directors” is an office holder
under the Companies Law.

 

An
office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care requires an office holder to
act with the level of care with which a reasonable office holder in the same position would act under the same circumstances. The duty
of care includes, among other things, a duty to use reasonable means, in light of the circumstances, to obtain:

 

●

information on the business advisability of a given action brought for the office holder’s approval or performed by virtue of the office holder’s position; and

  

●

all other important information pertaining to such action.

 

The
duty of loyalty requires an office holder to act in good faith and in the best interests of the Company, and includes, among other things,
the duty to:

 

●

refrain from any act involving a conflict of interest between the performance of the office holder’s duties in the company and the office holder’s other duties or personal affairs;

 

●

refrain from any activity that is competitive with the business of the company;

 

●

refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for the office holder or others; and

 

●

disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of the office holder’s position.

 

Under
the Companies Law, a company may approve an act, specified above, which would otherwise constitute a breach of the office holder’s
duty of loyalty, provided that the office holder is acting in good faith, neither the act nor its approval harms the company, and the
personal interest of the office holder is disclosed a sufficient time before the approval of such act. Any such approval is subject to
the terms of the Companies Law setting forth, among other things, the appropriate bodies of the company required to provide such approval
and the methods of obtaining such approval.

 

Disclosure
of personal interests of an office holder and approval of certain transactions

 

The
Companies Law requires that an office holder promptly disclose to the board of directors any personal interest and all related material
information known to such office holder concerning any existing or proposed transaction with the company. A personal interest includes
an interest of any person in an act or transaction of a company, including a personal interest of one’s relative or of a corporate
body in which such person or a relative of such person is a 5% or greater shareholder, director, or general manager or in which such
person has the right to appoint at least one director or the general manager, but excluding a personal interest stemming solely from
one’s ownership of shares in the company. A personal interest includes the personal interest of a person for whom the office holder
holds a voting proxy or the personal interest of the office holder with respect to the officer holder’s vote on behalf of a person
for whom he or she holds a proxy even if such shareholder has no personal interest in the matter.

 

 

If
it is determined that an office holder has a personal interest in a non-extraordinary transaction (meaning any transaction that is in
the ordinary course of business, on market terms and that is not likely to have a material impact on the company’s profitability,
assets or liabilities), approval by the board of directors is required for the transaction unless the company’s articles of association
provide for a different method of approval. Any such transaction that is adverse to the company’s interests may not be approved
by the board of directors.

 

Approval
first by the company’s audit committee and subsequently by the board of directors is required for an extraordinary transaction
(meaning any transaction that is not in the ordinary course of business, not on market terms or that is likely to have a material impact
on the company’s profitability, assets or liabilities) in which an office holder has a personal interest.

 

A
director and any other office holder who has a personal interest in a transaction which is considered at a meeting of the board of directors
or the audit committee may generally (unless it is with respect to a transaction which is not an extraordinary transaction) not be present
at such a meeting or vote on that matter unless a majority of the directors or members of the audit committee, as applicable, have a
personal interest in the matter. If a majority of the directors have a personal interest in the matter, then shareholder approval is
also required.

 

Certain
disclosure and approval requirements apply under Israeli law to certain transactions with controlling shareholders, certain transactions
in which a controlling shareholder has a personal interest, and certain arrangements regarding the terms of service or employment of
a controlling shareholder. For these purposes, a controlling shareholder is any shareholder that has the ability to direct the company’s
actions, including any shareholder holding 25% or more of the voting rights if no other shareholder owns more than 50% of the voting
rights in the company. Two or more shareholders with a personal interest in the approval of the same transaction are deemed to be one
shareholder for this purpose.

 

For
a description of the approvals required under Israeli law for compensation arrangements of officers and directors, see “Item 6.
Directors, Senior Management and Employees—B. Compensation.”

 

Shareholder
duties

 

Pursuant
to the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and other shareholders
and to refrain from abusing his or her power with respect to the company, including, among other things, in voting at a general meeting
and at shareholder class meetings with respect to the following matters:

 

●

an amendment to the company’s articles of association;

 

●

an increase of the company’s authorized share capital;

 

 

●

interested party transactions that require shareholder approval.

 

In
addition, a shareholder has a general duty to refrain from discriminating against other shareholders.

 

 

Certain
shareholders also have a duty of fairness toward the company. These shareholders include any controlling shareholder, any shareholder
who knows that it has the power to determine the outcome of a shareholder vote, and any shareholder who under the articles of association
has the power to appoint or to prevent the appointment of an office holder of the company or exercise any other rights available to it
under the company’s articles of association with respect to the company. The Companies Law does not define the substance of this
duty of fairness, except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach
of the duty of fairness.

 

Exculpation,
insurance and indemnification of office holders

 

Under
the Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty. An Israeli company
may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a
result of a breach of duty of care, but only if a provision authorizing such exculpation is included in its articles of association.
The Articles include such a provision. An Israeli company may not exculpate a director from liability arising out of a prohibited dividend
or distribution to shareholders.

 

An
Israeli company may indemnify an office holder from the following liabilities and expenses incurred for acts performed as an office holder,
either in advance of an event or following an event, provided a provision authorizing such indemnification is contained in its articles
of association:

 

●

a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the above mentioned events and amount or criteria;

 

●

reasonable litigation expenses, including legal fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (2) in connection with a monetary sanction;

 

●

reasonable litigation expenses, including legal fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third-party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent;

 

●

expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law; and

 

●

expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder pursuant to certain provisions of the Israeli Economic Competition Law, 5758-1988.

 

 

An
Israeli company may insure an office holder against the following liabilities incurred for acts performed as an office holder if and
to the extent provided in the company’s articles of association:

 

●

a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;

 

●

a breach of the duty of care to the company or to a third-party, including a breach arising out of the negligent conduct of the office holder;

 

●

a financial liability imposed on the office holder in favor of a third-party;

 

●

a financial liability imposed on the office holder in favor of a third-party harmed by a breach in an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law; and

 

●

expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law.

 

An
Israeli company may not exempt, indemnify or insure an office holder against any of the following:

 

●

a breach of the duty of loyalty, except with respect to insurance coverage or indemnification, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;

 

●

a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;

 

●

an act or omission committed with intent to derive illegal personal benefit; or

 

●

a fine, monetary sanction, or forfeit levied against the office holder.

 

Under
the Companies Law, exculpation, indemnification, and insurance of office holders must be approved by the compensation committee and the
board of directors (and, with respect to directors and the chief executive officer, by the shareholders). However, under regulations
promulgated under the Companies Law, the insurance of office holders shall not require shareholder approval and may be approved by only
the compensation committee if the engagement terms are determined in accordance with the company’s compensation policy, which was
approved by the shareholders by the same special majority required to approve a compensation policy, provided that the insurance policy
is on market terms and the insurance policy is not likely to materially impact the company’s profitability, assets, or obligations.

 

The
Articles allow us to exculpate, indemnify, and insure our office holders to the maximum extent permitted by law. Our office holders are
currently covered by a directors and officers’ liability insurance policy.

 

 

We
have entered into agreements with each of our directors and executive officers exculpating them in advance, to the fullest extent permitted
by law, from liability to us for damages caused to us as a result of a breach of duty of care, and undertaking to indemnify them to the
fullest extent permitted by law. This indemnification is limited to events determined as foreseeable by the board of directors based
on our activities and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances.

 

The
maximum indemnification amount to be set forth in such agreements is limited to an amount equal to the higher of $100 million, 25% of
our total shareholders’ equity as reflected in our most recent consolidated financial statements prior to the date on which the
indemnity payment is made and 10% of our total market capitalization calculated based on the average closing price of ordinary shares
over the 30 trading days prior to the actual payment, multiplied by the total number of our issued and outstanding shares as of
the date of the payment (other than indemnification for an offering of securities to the public, including by a shareholder in a secondary
offering, in which case the maximum indemnification amount is limited to the gross proceeds raised by us and/or any selling shareholder
in such public offering). The maximum amount set forth in such agreements is in addition to any amount paid (if paid) under insurance
and/or by a third-party pursuant to an indemnification arrangement.

 

In
the opinion of the SEC, indemnification of directors and office holders for liabilities arising under the Securities Act, however, is
against public policy and therefore unenforceable.

 

There
is no pending litigation or proceeding against any of HUB’s office holders as to which indemnification is being sought, and, except
as described in Note 22 to our audited consolidated financial statements for the year ended December 31, 2025 included in this Annual
Report, HUB is not aware of any pending or threatened litigation that may result in claims for indemnification by any office holder.

 

Approval
of Private Placements under Israeli Law

 

Under
the Companies Law, a private placement of securities requires approval by the board of directors and the shareholders of a company if
it will cause a person to become a controlling shareholder or if:

 

●

the securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance;

 

●

some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and

 

●

the transaction will increase the relative holdings of a shareholder that holds 5% or more of the company’s outstanding share capital or voting rights or that will cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or voting rights.

 

D. Employees

 

HUB
has always strived to foster a culture that emphasizes the importance of its team and that values creativity, professionalism, transparency,
obligation to dissent and responsibility. HUB believes that its hiring decisions reflect this culture.

 

 

Through
multiple growth phases, HUB has drawn talent and leadership from the technology and cybersecurity industries to achieve its vision. As
of December 31, 2025, we had a total of 310 employees or full-time employee equivalents worldwide, including:

 

●

21 employees or full-time employee equivalents in the corporate functions and headquarters.

 

●

20 employees or full-time employee equivalents in the Technology and Product Division.

 

●

269 employees or full-time employee equivalents in the Professional Services Division.

 

The
Company has implemented a comprehensive restructuring, during which the Board and management team have taken steps to improve liquidity,
simplify the Company’s organizational structure, cut operating costs and strengthen corporate governance. As part of this plan,
the Company has substantially reduced operating expenses, eliminating many external consultants and contractors and reducing headcount
solely at the HUB level by approximately 50%. During May and June 2026, we executed a targeted workforce reduction of approximately 10%
of our employees or full-time employee equivalents in order to improve our operational efficiency. Most of the reduction was related
to the cessation of activities in the BST business.

 

We
adhere to applicable law with respect to all aspects of the employment of our employees including with respect to hiring and termination
procedures, equal opportunity and anti-discrimination laws and other conditions of employment. In many cases, the terms of
employment of our employees exceed the minimum required under Israeli labor laws including, but not limited to, with respect to the minimum
wage, vacation days, retirement savings and sick days. As per the requirements of the law, we make payments to the National
Insurance Institute.

  

None
of our employees work under any collective bargaining agreements. Extension orders issued by the Israeli Ministry of Economy and Industry
apply to us and affect matters such as length of working hours and week, recuperation pay, travel expenses and pension rights. None of
our employees are represented by a labor union, and HUB considers its employee relations to be in good standing. We have never experienced
labor related work stoppages or strikes and believe that our relations with our employees are satisfactory.

 

E.
Share Ownership

 

For
information regarding the share ownership of directors and officers, see. “Major Shareholders” in Item 7.A below.
For information as to our equity incentive plans, see “Compensation of Directors and Executive Officers —Share Option
Plans.” in Item 6.B above.

 

F. Disclosure
of a Registrant’s Action to Recover Erroneously Awarded Compensation

 

There
was no erroneously awarded compensation that was required to be recovered pursuant to the HUB Cyber Security Ltd. Policy for Recovery
of Erroneously Awarded Compensation during the fiscal year ended December 31, 2025.

 

Item 7.
Major Shareholders and Related Party Transactions

 

A. Major
Shareholders

 

The
following table sets forth information regarding the beneficial ownership of our ordinary shares as of June 30, 2026 by:

 

●

each person known by us who is the beneficial owner of 5% or more of our outstanding ordinary shares;

 

●

each of our executive officers and directors individually; and

 

●

all of our executive officers and directors as a group.

 

 

Beneficial
ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. A person
is a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to
vote or to direct the voting of the security, or “investment power,” which includes the power to dispose of or to direct
the disposition of the security or has the right to acquire such powers within 60 days of June 30, 2026. Unless otherwise indicated,
we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares (of the applicable
type) beneficially owned by them.

 

Except
as otherwise noted herein, the number and percentage of our ordinary shares beneficially owned is determined in accordance with
Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose.
Under such rule, beneficial ownership includes any of our ordinary shares as to which the holder has sole or shared voting power or investment
power and also any of our ordinary shares which the holder has the right to acquire within 60 days of the date hereof through the
exercise of any option, warrant or any other right. The column entitled “Percentage of Voting Power” reflects the overall
voting power of a given shareholder based on the composition of his, her or its share ownership.

 

A
description of any material relationship that our principal shareholders have had with us or any of our affiliates within the past three years
is included under “Certain Relationships and Related Party Transactions.”

 

For
a description of the voting rights attached to our ordinary shares, please see “Voting Rights.” Unless otherwise noted
below, each shareholder’s address is 30 Hacharoshet Street, Or Yehuda, Israel.

 

All
amounts in the table have been adjusted for the 1-for-15 reverse split effected on January 15, 2026, the 1-for-50 reverse split effected
on April 20, 2026 and the 1-for-20 reverse split effected on June 5, 2026.

 

Name and Address of Beneficial Owner		Amount and Nature of Beneficial Ownership				% of Outstanding Shares
5% or Greater Shareholders
None
Directors and Executive Officers of HUB:
Limor Zur-Stoller			–				–
Tuvia Grossman (1)			2				*
Shlomo Bibas (2)			44				*
Renah Persofsky (3)			71				*
Ilan Flato (4)			39				*
Uzi Moskovich (5)			15				*
Vineet Malhotra (6)			22				*
All executive officers and directors as a group (7 individuals)			193				*

 

*	Less than 1% of our outstanding ordinary shares.

 

 

(1)	Consists of 2 ordinary shares. Does not include 1 restricted share unit which has been granted but has not vested and will not vest within 60 days of June 30, 2026.

(2)	Consists of 30 ordinary shares and 14 restricted share units. Does not include 24 restricted share units which have been granted but have not vested and will not vest within 60 days of June 30, 2026.

(3)	Consists of 45 ordinary shares and 26 restricted share units. Does not include 41 restricted share units which have been granted but have not vested and will not vest within 60 days of June 30, 2026.

(4)	Consists of 25 ordinary shares and 14 restricted share units. Does not include 23 restricted share units which have been granted but have not vested and will not vest within 60 days of June 30, 2026.

(5)	Consists of 10 ordinary shares and 5 restricted share units. Does not include 8 restricted share units which have been granted but have not vested and will not vest within 60 days of June 30, 2026.

(6)	Consists of 13 ordinary shares and 9 restricted share units. Does not include 13 restricted share units which have been granted but have not vested and will not vest within 60 days of June 30, 2026.

 

Significant
Changes in Ownership

 

To
our knowledge, other than as disclosed in the table above, our other filings with the SEC and this Annual Report, there has been no significant
change in the percentage ownership held by any major shareholder during the past three years.

 

Voting
Rights

 

Other
than the voting undertakings under the Shareholder and Sponsor Support Agreement, described below under “Related Party Transactions—Rights
of Appointment,” which have been fully performed already and have therefore expired, no major shareholders listed above had or
have voting rights with respect to their ordinary shares that are different from the voting rights of other holders of our ordinary shares. 

 

Change
in Control Arrangements

 

We
are not aware of any arrangement that may at a subsequent date, result in a change of control of the Company.

 

Registered
Holders

 

Based
on a review of the information provided to us by our transfer agent, as of June 30, 2026, there were 12 registered holders of our ordinary
shares (one of which, Cede & Co., is a United States registered holder, holding approximately 4,309,755 shares, which represents
71.55% of our outstanding ordinary shares). The number of record holders in the United States is not representative of the number of
beneficial holders nor is it representative of where such beneficial holders are resident since many of these ordinary shares were held
by brokers or other nominees.

 

B. Related
Party Transactions

 

The
following is a description of related-party transactions we have entered into since January 1, 2025 with any of the members of the
board of directors, executive officers or holders of more than 5% of any class of our voting securities at the time of such transaction.

 

 

Agreements
with officers

 

Employment
Agreements. We have entered into employment or consulting agreements with each of our executive officers, and the terms of each individual’s
employment or service, as applicable, have been approved by our board of directors. These agreements provide for notice periods of varying
duration for termination of the agreement by us or by the relevant executive officer, during which time the executive officer will continue
to receive base salary and benefits. These agreements also contain customary provisions regarding noncompetition, confidentiality of
information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable
law. Transactions with related parties also include employment agreements with relatives of certain directors or officers, each duly
approved by the Board of Directors or its Audit Committee.

 

Options
and restricted share units. Since our founding, we have granted options to purchase ordinary shares to our executive officers and
directors. Additionally, since August 2021, we have granted restricted share units and restricted shares to our executive officers and
directors.

 

Exculpation,
indemnification, and insurance. The Articles permit us to exculpate, indemnify and insure certain of our officeholders (as such term
is defined under the Companies Law) to the fullest extent permitted by the Companies Law. We have entered into agreements with certain
officeholders, exculpating them from a breach of their duty of care to us to the fullest extent permitted by law and undertaking to indemnify
them to the fullest extent permitted by law, subject to certain exceptions, including with respect to liabilities resulting from the
closing of the Business Combination to the extent that these liabilities are not covered by insurance.

 

Agreements
with Blackswan and A-Labs. We have entered into agreements with certain third parties with whom Noah Hershcoviz, our former
Chief Executive Officer and director, is an affiliate. Specifically, we entered into the BST merger agreement with BST, a company in
which Mr. Hershcoviz served as a director and in which a company wholly-owned by Mr. Hershcoviz held shares, with an effective date of
January 15, 2025. In addition, Mr. Hershcoviz serves as Managing General Partner of The 12.64 Fund, which was a significant shareholder
of BST. See Item 5.B. “Liquidity and Capital Resources—Financings” and Item 4.A. “History and Development of
the Company—Recent Developments.”

 

Additionally, on January 16, 2023, we entered into a loan agreement
with A-Labs Finance and Advisory Ltd. (“A-Labs”), a company in which Mr. Hershcoviz served as Managing Partner, Head of Investment
Banking, as further described in Item 5.B. “Liquidity and Capital Resources—Financings.” In addition, we paid A-Labs
the sum of $4.2 million between July 2021 and March 2023 as consulting fees under a financial advisory services agreement entered into
July 2021 (the “A-Labs Agreement”) and we issued to A-Labs warrants to purchase 27 of our ordinary shares. Additionally, in
March 2023, a total of $2.2 million that was owed to A-Labs pursuant to the A-Labs Agreement was converted into our ordinary shares at
a conversion price of $1,500,000 per ordinary share. This conversion of amounts we owed to A-Labs under the A-Labs Agreement, was effected
to partially satisfy the commitment that A-Labs made to us to purchase $20 million of our ordinary shares in the private placement in
connection with the closing of our business combination with Mount Rainier Acquisition Corp., a Delaware special purpose acquisition company,
in 2023 (the “PIPE Financing”). In December 2022, we amended the A-Labs Agreement to provide that for each financing
transaction closed, in addition to paying a commission to A-Labs in cash, we would be required to issue warrants to purchase ordinary
shares in an amount equal to the cash consideration that would otherwise be payable under the financial advisory services agreement divided
by NIS 4.81, which warrants shall be exercisable for 4 years and at an exercise price of NIS 72,150 (regardless of the price per share
paid by investors in the relevant financing transaction). Additionally, we committed to provide compensation under the A-Labs Agreement
for all investors with whom we would enter into a financing transaction prior to our shares being listed for trading on the Nasdaq regardless
of whether such investors were introduced to the Company by A-Labs. In each of September 2022 and January 2023, we paid to A-Labs an additional
commission of $50,000 in exchange for extra services provided by A-Labs over the course of certain fund raising efforts and loan issuances.
Additionally, as part of the Shayna Loans, we paid to A-Labs commissions totaling $140,000 for services provided as part of the fund raising
efforts. The term of the A-Labs Agreement was for 12 months following the execution in July 2021, provided that the A-Labs Agreement will
automatically renew for additional 12 month terms unless either party provides written notice to the other party of its intention not
to renew at least 30 days prior to the end of such initial 12 month term or any renewed terms. Additionally, the A-Labs Agreement may
be terminated by either party upon a minimum of 30 days prior written notice. In August 2023, we received from A-Labs a waiver of the
retainer fees for the services. Nevertheless, as of the date of this Annual Report, there remain unpaid fees of $3,298,000 under the A-Labs
Agreement.

 

 

On
November 6, 2025, we entered into a settlement agreement with each of A-Labs, MOFO Holdings LLC and Viserion Ltd. (the “PIPE Investors”),
which had entered into subscription agreements with us to invest an aggregate of $50 million in the PIPE Financing. After all the other
closing conditions for the business combination were met, we decided to proceed with the closing despite not having received the funds
payable under the Subscription Agreements from the PIPE Investors. The signing of the settlement agreements followed a mediation process,
which was approved by our Audit Committee and Board of Directors, and by our shareholders on December 16, 2025. According to the settlement
agreement, taking into account the parties’ respective claims and the various agreements between them, no funds or other form of
consideration shall be paid or transferred from the PIPE Investors to us, and we shall not pay any funds or any other form of consideration
to any of the PIPE Investors, all in exchange for full and absolute waivers by the parties toward each other (including shareholders,
officers, directors parent and subsidiaries thereof, and anyone acting on behalf of any of them).

 

Additionally,
according to the settlement, we will repay to A-Labs the amount outstanding in connection with a secured loan extended by A-Labs to us
on January 17, 2023 in the amount of $900,000, which with original issuance discount and accrued interest amounts to $1,800,000. The
repayment will be in the form of our ordinary shares based on the lowest closing price of the ordinary shares on Nasdaq during the five
trading days preceding the date of the shareholders’ approval, which was on December 16, 2025. The shares will be subject to the
following lock-up periods: 40% of the shares will be restricted for a period of 40 days, 30% will be restricted for a period of 70 days,
25% will be restricted for a period of 100 days and 5% will be restricted for a period of 130 days. The 5% tranche will be subject to
a one-time upward or downward adjustment to the extent that the sum of (i) the proceeds from the sale of shares by A-Labs and (ii) the
current market value of the shares held by A-Labs are less than or greater than $1,800,000, respectively. A-Labs must make reasonable
commercial efforts to maximize the consideration it receives for the sale of shares. The sale of shares by A-Labs on Nasdaq on any trading
day may not exceed 5% of the current day’s trading volume of the ordinary shares thereon.

 

As
of March 31, 2026, Mr. Hershcoviz no longer serves as our Chief Executive Officer and no longer serves as a member of our board of directors.

 

In
April 2026, we received a letter addressed to our directors from counsel to A-Labs, demanding that we pay the $1,800,000 plus interest.
In May 2026, the Company’s counsel responded by rejecting all allegations raised by A-Labs in their letter.

 

In
addition, on April 16, 2026, an application was filed against the Company to hold it liable for a judgment awarded against A-Labs in
favor of Teshua Ltd., based on the alleged amount of $1,800,000. The Company explained that it was unable to realize the shares due to
an attachment imposed on A-Labs and/or its representatives, and that, in any event, at present the matter does not concern the amount
alleged by A-Labs, but rather shares whose value is substantially lower. A hearing on this matter is scheduled for July 21, 2026.

 

Private
Placement with Chairman. In January 2023, we entered into an agreement with our former Chairman of our Board of Directors, Kasbian
Nuriel Chirich, prior to when he became the Chairman of our Board of Directors in February 2023, for the purchase and sale of 5,000 ordinary
shares in consideration for $100,000. As of the date of this Annual Report, we have not issued such 5,000 ordinary shares.

 

 

C.
Interests of Experts and Counsel

 

Not
applicable.

 

Item 8.
Financial Information

 

A.
Consolidated Statements and Other Financial Information

 

Consolidated
Financial Statements

 

See
Item 18. “Financial Statements.”

 

Legal
and Arbitration Proceedings

 

From
time to time, we are and may be subject to various legal proceedings, contingencies and claims that arise in the course of business,
including some claims from current or former employees and directors, as well as governmental and other regulatory investigations and
proceedings.

 

Legal
Proceedings

 

For information regarding legal
proceedings, see Note 22 to our audited consolidated financial statements for the year ended December 31, 2025 included in this Annual
Report.

 

 

Legal
Proceedings That Were Resolved in 2025

 

1.

The law firm of Amit Pollak Matalon filed a claim on April 23, 2025, for NIS 441,624 in unpaid legal fees for services to BlackSwan Technologies, Inc. On July 21, 2025, the court approved a settlement requiring the Company to pay NIS 461,624 (including expenses) to dismiss the claim, which has been paid. The Company has recognized a provision in its financial statements in respect of this matter.

 

2.

A claim was filed against BlackSwan Technologies, Inc. by 8 Allocate OU in a U.S. court on April 4, 2024, for $178,738. The case resulted in a default judgment of $148,348 on January 29, 2024. On November 10, 2025, the plaintiff sought court permission to file subpoenas and restraining notices against the Company and its affiliates to compel production of documents or assets belonging to BlackSwan, which would be used to satisfy the judgment. On November 28, 2025, a lien was placed on the bank account of a Company subsidiary. On December 10, 2025, the Company paid the judgment in full and the lien was released.

 

3.

On October 27, 2024, a claim was filed against Comsec for NIS 145,922 in unpaid social benefits for Comsec employees insured by the Phoenix Insurance Company Ltd. The amounts were paid on September 3, 2025, and the claim was dismissed at the request of the parties.

 

4.

On July 17, 2025, a claim was filed against the Company for NIS 81,950 in unpaid social benefits for employees insured by the Phoenix Insurance Company Ltd. The payments were subsequently made, and the claim was dismissed on September 16, 2025.

 

Dividend
Policy

 

HUB
does not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance
operations and expand our business. Our board of directors has sole discretion whether to pay dividends. If our board of directors decides
to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that our directors may deem relevant.

 

The
Companies Law imposes restrictions on our ability to declare and pay dividends. See “Dividend and Liquidation Rights”
in Exhibit 2.1 to this Annual Report for additional information. See also “Item 3.D Risk Factors—Risks Related to
Our Ordinary Shares— We do not intend to pay dividends for the foreseeable future. Accordingly, you may not receive any return
on investment unless you sell your ordinary shares for a price greater than the price you paid for such shares.”

 

Payment
of dividends may be subject to Israeli withholding taxes. See “Israeli Tax Considerations” for additional information.

 

 

B. Significant
Changes

 

None.

 

Item 9.
The Offer and Listing

 

A. Offer
and Listing Details

 

Our
ordinary shares and warrants commenced trading on Nasdaq on March 1, 2023 under the symbol “HUBC,” “HUBCW”
and “HUBCZ,” respectively. Prior to this, no public market in the United States existed for our ordinary shares or warrants.

 

B. Plan
of Distribution

 

Not
applicable.

 

C. Markets

 

Our
ordinary shares commenced trading on Nasdaq on March 1, 2023.

 

D. Selling
Shareholders

 

Not
applicable.

 

E. Dilution

 

Not
applicable.

 

F. Expenses
of the Issue

 

Not
applicable.

 

Item 10.
Additional Information

 

A. Share
Capital

 

Not
applicable.

 

B. Memorandum
and Articles of Association

 

Copies
of our amended and restated articles of association and memorandum of association are attached as Exhibits 1.1 and Exhibit 1.2,
respectively, to this Annual Report. The information called for by this Item is set forth in Exhibit 2.1 to this Annual Report
and incorporated by reference herein. 

 

 

C. Material
Contracts

 

Except
as disclosed below or otherwise disclosed in this Annual Report in Item 4.A “History and Development of the Company,”
Item 4.B “Business Overview,” Item 5.B “Operating and Financial Review and Prospects—Liquidity and
Capital Resources,” Item 6.C “Board Practices,” Item 7.B “Related Party Transactions” and Item 19
“Exhibits,” we are not currently, nor have we been for the two years immediately preceding the date of this Annual Report,
party to any material contract, other than contracts entered into in the ordinary course of business.

 

BST
Merger Agreement

 

On January 27, 2025, HUB consummated an Agreement and Plan of Merger
with BST, pursuant to which BST and its subsidiaries became subsidiaries of HUB. We paid a purchase price of $41.6 million for the transaction,
which was accounted for as an asset acquisition. We subsequently divested four of the BST subsidiaries that were not integrated into our
business operations. As a result of the acquisition, HUB issued to BST equityholders 197 ordinary shares and pre-funded warrants to purchase
44 ordinary shares of HUB. The exercise of the pre-funded warrants is limited to the extent that, upon exercise, the holder and its affiliates
hold more than 4.99% of the Company’s outstanding ordinary shares. The ordinary shares issued in the transaction are also subject
to transfer restrictions. We have not been successful in achieving the strategic plans we had for the secured data fabric business due
to financial, development and other challenges, and as a result, as of December 31, 2025, we recorded a full impairment with respect to the technology asset acquired in the BST acquisition. During June 2026 we ceased BST’s operations, terminated BST’s main
commercial contract and terminated the employees of this business.

 

QPoint
Acquisition

 

On
April 3, 2024 the Company acquired for NIS 25,000,000 in cash the shares of QPoint that it did not yet own at that time, constituting
53.5% of QPoint’s outstanding shares. Payments were agreed to be carried out in three installments as follows: (i) NIS 4,000,000
on the signing date; (ii) NIS 16,000,000 on the closing date (which was April 8, 2024); and (iii) additional NIS 5,000,000 no later than
February 10, 2025 (of which NIS 2,500,000 was already paid as of June 5, 2024). As of date of this annual report, the total amount has been fully paid.

 

D. Exchange
Controls

 

There
are currently no Israeli currency control restrictions on remittances of dividends on our ordinary shares, proceeds from the sale of
the ordinary shares or interest or other payments to non-residents of Israel, except for shareholders who are subjects of countries that
are, have been, or will be, in a state of war with Israel.

 

E. Taxation

 

The
following description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership
and disposition of our ordinary shares and warrants. You should consult your own tax advisor concerning the tax consequences of your
particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

 

 

Israeli
tax considerations and government programs

 

The
following is a brief summary of the material Israeli tax laws applicable to us, and certain Israeli Government programs that benefit
us. This section also contains a discussion of material Israeli tax consequences concerning the ownership and disposition of our ordinary
shares. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his
or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of such
investors include residents of Israel, traders in securities, not for profit organizations, pension funds and other exempt institutional
investors, partnerships and other transparent entities, individuals under the tax regime for “new immigrants” or “returning
residents” and other taxpayers who are subject to special tax regimes not covered in this discussion. To the extent that the discussion
is based on new tax legislation that has not yet been subject to judicial or administrative interpretation, we cannot assure you that
the appropriate tax authorities or the courts will accept the views expressed in this discussion. The discussion below is subject to
change, including due to amendments under Israeli law or changes to the applicable judicial or administrative interpretations of Israeli
law, which change could affect the tax consequences described below.

 

General
corporate tax structure in Israel

 

Israeli
companies are generally subject to corporate tax. Since 2018, the corporate tax rate has been 23%. However, the effective tax rate payable
by a company that derives income from a Preferred Enterprise, a Special Preferred Enterprise, a Preferred Technology Enterprise or a
Special Preferred Technology Enterprise (as discussed below) may be considerably less. Capital gains derived by an Israeli company are
generally subject to the prevailing regular corporate tax rate.

 

Law
for the Encouragement of Industry (Taxes), 5729-1969

 

The
Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to as the “Industry Encouragement Law,” provides
several tax benefits for “Industrial Companies.” We believe that we currently qualify as an Industrial Company within the
meaning of the Industry Encouragement Law.

 

The
Industry Encouragement Law defines an “Industrial Company” as an Israeli resident-company, incorporated in Israel, of which
90% or more of its income in any tax year, other than income from certain government loans, is derived from an “Industrial
Enterprise” owned by it and located in Israel or in the “Area,” in accordance with the definition under section 3A
of the Israeli Income Tax Ordinance (New Version) 1961 (the “Ordinance”). An “Industrial Enterprise” is defined
as an enterprise which is held by an Industrial Company whose principal activity in a given tax year is industrial production.

 

Following
are the main tax benefits available to Industrial Companies:

 

●

Amortization of the cost of purchased patent, rights to use a patent, and know-how that were purchased in good faith and are used for the development or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which such rights were first exercised;

 

●

Under limited conditions, an election to file consolidated tax returns with controlled Israeli Industrial Companies;

 

●

Expenses related to a public offering are deductible in equal amounts over three years commencing on the year of the offering.

 

 

Eligibility
for benefits under the Industry Encouragement Law is not contingent upon approval of any governmental authority. There can be no assurance
that we will continue to qualify as an Industrial Company or that the benefits described above will be available in the future.

  

Tax
benefits and grants for research and development

 

Israeli
tax law allows, under certain conditions, a tax deduction for expenditures, including capital expenditures, for the year in which
they are incurred. Expenditures are deemed related to scientific research and development projects, if:

 

●

The expenditures are approved by the relevant Israeli government ministry, determined by the field of research;

 

●

The research and development must be for the promotion of the company; and

 

●

The research and development is carried out by or on behalf of the company seeking such tax deduction.

 

The
amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific
research and development projects. No deduction under these research and development deduction rules is allowed if such deduction
is related to an expense invested in an asset depreciable under the general depreciation rules of the Ordinance. Expenditures that
are unqualified under the conditions above are deductible in equal amounts over three years.

 

From
time to time we may apply to the Israel Innovation Authority for approval to allow a tax deduction for all or most of research and development
expenses during the year incurred. There can be no assurance that such application will be accepted. If we will not be able to deduct
research and development expenses during the year of the payment, we will be able to deduct research and development expenses during
a period of three years commencing in the year of the payment of such expenses.

 

Law
for the Encouragement of Capital Investments 5719-1959

 

The
Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the “Investment Law,” provides certain
incentives for capital investments in production facilities (or other eligible assets).

 

The
Investment Law was significantly amended effective as of April 1, 2005 (the “2005 Amendment”), as of January 1,
2011 (the “2011 Amendment”) and as of January 1, 2017 (the “2017 Amendment”). Pursuant to the 2005 Amendment,
tax benefits granted in accordance with the provisions of the Investment Law prior to its revision by the 2005 Amendment remain in force
but any benefits granted subsequently are subject to the provisions of the amended Investment Law. Similarly, the 2011 Amendment introduced
new benefits to replace those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment.
However, companies entitled to benefits under the Investment Law as in effect prior to January 1, 2011 were entitled to choose to
continue to enjoy such benefits, provided that certain conditions are met, or elect instead, irrevocably, to forego such benefits and
have the benefits of the 2011 Amendment apply. The 2017 Amendment introduces new benefits for Technological Enterprises, alongside the
existing tax benefits.

 

 

Tax
benefits under the 2011 amendment

 

The
2011 Amendment canceled the availability of the benefits granted to Industrial Companies under the Investment Law prior to 2011 and,
instead, introduced new benefits for income generated by a “Preferred Company” through its “Preferred Enterprise”
(as such terms are defined in the Investment Law) as of January 1, 2011. The definition of a Preferred Company includes a company
incorporated in Israel that is not fully owned by a governmental entity, and that has, among other things, Preferred Enterprise status
and is controlled and managed from Israel. Pursuant to the 2011 Amendment, a Preferred Company is entitled to a reduced corporate tax
rate of 15% with respect to its income derived by its Preferred Enterprise in 2011 and 2012, unless the Preferred Enterprise is located
in a specified development zone, in which case the rate will be 10%. Under the 2011 Amendment, such corporate tax rate was reduced from
15% and 10%, respectively, to 12.5% and 7%, respectively, in 2013, and was increased to 16% and 9% respectively. Pursuant to the 2017
Amendment, in 2017 and thereafter, the corporate tax rate for a Preferred Enterprise remained 16%, while the reduced rate for a specified
development zone was decreased to 7.5%. Income derived by a Preferred Company from a “Special Preferred Enterprise” (as such
term is defined in the Investment Law) would be entitled, during a benefits period of 10 years, to further reduced tax rates of
8%, or 5% if the Special Preferred Enterprise is located in a specified development zone. Since January 1, 2017, the definition for “Special
Preferred Enterprise” includes less stringent conditions.

  

Dividends
distributed from income which is attributed to a “Preferred Enterprise” during 2014 and thereafter will be subject to withholding
tax at source at the following rates: (i) Israeli resident corporations-0%, (although, if such dividends are subsequently
distributed to individuals or a non-Israeli company the below rates detailed in sub sections (ii) and (iii) shall
apply) (ii) Israeli resident individuals-20% (iii) non-Israeli residents (individuals and corporations)-
25% or 30%, and subject to the receipt in advance of a valid certificate from the Israel Tax Authority (“ITA”) allowing for
a reduced tax rate—20%, or a reduced tax rate under the provisions of any applicable double tax treaty.

 

We
currently do not benefit from the 2011 Amendment.

 

New
tax benefits under the 2017 amendment that became effective on January 1, 2017

 

The
2017 Amendment provides that a technology company satisfying certain conditions will qualify as a “Preferred Technology Enterprise”
and will thereby enjoy a reduced corporate tax rate of 12% on income that qualifies as “Preferred Technology Income,” as
defined in the Investment Law. The tax rate is further reduced to 7.5% for a Preferred Technology Enterprise located in development zone
“A.” In addition, a Preferred Technology Company will enjoy a reduced corporate tax rate of 12% on capital gain derived from
the sale of certain “Benefitted Intangible Assets” (as defined in the Investment Law) to a related foreign company if the
Benefitted Intangible Assets were acquired from a foreign company after January 1, 2017 for at least NIS 200 million, and the
sale receives prior approval from the Israel Innovation Authority. The 2017 Amendment further provides that a technology company satisfying
certain conditions (group consolidated revenues of at least NIS 10 billion) will qualify as a “Special Preferred Technology Enterprise”
and will thereby enjoy a reduced corporate tax rate of 6% on “Preferred Technology Income” regardless of the company’s
geographic location within Israel. In addition, a Special Preferred Technology Enterprise will enjoy a reduced corporate tax rate of
6% on capital gain derived from the sale of certain “Benefitted Intangible Assets” to a related foreign company if the Benefitted
Intangible Assets were either developed by the Special Preferred Enterprise or acquired from a foreign company after January 1,
2017, and the sale received prior approval from the Israel Innovation Authority. A Special Preferred Technology Enterprise that acquires
Benefitted Intangible Assets from a foreign company for more than NIS 500 million will be eligible for these benefits for at least
ten years, subject to certain approvals as specified in the Investment Law.

 

 

Dividends
distributed to Israeli shareholders by a Preferred Technology Enterprise or a Special Preferred Technology Enterprise, paid out of Preferred
Technology Income, are generally subject to withholding tax at source at the rate of 20% (in the case of non-Israeli shareholders—subject
to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate, 20% or such lower rate as may be provided
in an applicable tax treaty). However, if such dividends are paid to an Israeli company, no tax is required to be withheld (although,
if such dividends are subsequently distributed to individuals or a non-Israeli company, the aforesaid will apply). If such
dividends are distributed to a foreign company that holds solely or together with other foreign companies 90% or more in the Israeli
company and other conditions are met, the withholding tax rate will be 4%, or such lower rate as may be provided in an applicable tax
treaty. 

 

We
believe that we may be eligible to the tax benefits under the 2017 Amendment. It should be noted that the proportion of income that may
be considered Preferred Technology Income and enjoy the tax benefits described above, should be calculated according to the Nexus Formula,
which is based on the proportion as that of qualifying research and development expenditures in the IP compared to overall research and
development expenditures.

 

Taxation
of our shareholders

 

Capital
gains taxes applicable to non-Israeli resident shareholders

 

A non-Israeli resident
who derives capital gains from the sale of shares in an Israeli resident company that were purchased after the company was listed for
trading on a stock exchange outside of Israel, should be exempt from Israeli tax unless, among others, the shares were held through a
permanent establishment that the non-resident maintains in Israel. If not exempt, a non-Israeli resident shareholder
would generally be subject to tax on capital gain at the ordinary corporate tax rate (23% in 2026), if generated by a company, or at
the rate of 25%, if generated by an individual, or 30%, if generated by an individual who is a “substantial shareholder”
(as defined under the Ordinance), at the time of sale or at any time during the preceding 12-month period (or if the shareholder
claims a deduction for interest and linkage differences expenses in connection with the purchase and holding of such shares). A “substantial
shareholder” is generally a person who alone or together with such person’s relative or another person who collaborates with
such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation.
“Means of control” generally include, among others, the right to vote, receive profits, nominate a director or an executive
officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source
of such right. Individual and corporate shareholders dealing in securities in Israel are taxed at the tax rates applicable to business
income (a corporate tax rate for a corporation (23% in 2025 and 2026) and a marginal tax rate of up to 47% for an individual in 2026,
not including surtax), unless contrary provisions in a relevant tax treaty apply. Non-Israeli corporations will not be entitled
to the foregoing exemption if Israeli residents: (i) have a controlling interest more than 25% in such non-Israeli corporation
or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation,
whether directly or indirectly. In addition, such exemption is not applicable to a person whose gains from selling or otherwise disposing
of the shares are deemed to be business income.

 

Additionally,
a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable
tax treaty. For example, under Convention Between the Government of the United States of America and the Government of the State of Israel
with Respect to Taxes on Income, as amended (the “United States-Israel Tax Treaty”), the sale, exchange or other disposition
of shares by a shareholder who is a United States resident (for purposes of the treaty) holding the shares as a capital asset and is
entitled to claim the benefits afforded to such a resident by the United States Israel Tax Treaty (a “Treaty U.S. Resident”)
is generally exempt from Israeli capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition
is attributed to real estate located in Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed
to royalties; (iii) the capital gain arising from the such sale, exchange or disposition is attributed to a permanent establishment
in Israel, under certain terms; (iv) such Treaty U.S. Resident holds, directly or indirectly, shares representing 10% or more of
the voting capital during any part of the 12 month period preceding the disposition, subject to certain conditions; or (v) such
Treaty U.S. Resident is an individual and was present in Israel for 183 days or more during the relevant taxable year. In each
case, the sale, exchange or disposition of our ordinary shares would be subject to Israeli tax, to the extent applicable; however, under
the United States-Israel Tax Treaty, the taxpayer may be permitted to claim a credit for such taxes against the U.S. federal income tax
imposed with respect to such sale, exchange or disposition, subject to the limitations under U.S. law applicable to foreign tax credits.
The United States-Israel Tax Treaty does not provide such credit against any U.S. state or local taxes.

 

 

In
some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration
may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax
on their capital gains in order to avoid withholding at source at the time of sale (i.e., resident certificate or other documentation).
Specifically, in transactions involving a sale of all of the shares of an Israeli resident company, in the form of a merger or otherwise,
the ITA may require from shareholders who are not liable for Israeli tax to sign declarations in forms specified by this authority or
obtain a specific exemption from the ITA to confirm their status as non-Israeli tax residents, and, in the absence of such
declarations or exemptions, may require the purchaser of the shares to withhold taxes at source.

 

A non-Israeli resident
who realizes capital gains derived from the sale of our ordinary shares from which tax was withheld is generally exempt from the obligation
to file tax returns in Israel with respect to such income, provided that (i) such income was not generated from business conducted
in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return
is required to be filed, and (iii) the taxpayer is not obligated to pay surtax (as further explained below).

 

Taxation
of non-Israeli shareholders on receipt of dividends

 

Non-Israeli residents
(either individuals or corporations) are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares
at the rate of 25%, which tax will be withheld at source, unless a lower tax rate is provided in an applicable treaty between Israel
and the shareholder’s country of residence (subject to the receipt in advance of a valid certificate from the ITA allowing for
a reduced tax rate). With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or
on any time during the preceding twelve months, the applicable tax rate is 30%. Such dividends are generally subject to Israeli
withholding tax at a rate of 25% so long as the shares are registered with a nominee company (as such term is used in the Israeli Securities
Law), whether the recipient is a substantial shareholder or not, and, subject to the receipt in advance of a valid certificate from the
ITA allowing for a reduced tax rate, 20% if the dividend is distributed from income attributed to a Preferred Enterprise or Preferred
Technology Enterprise or such lower rate as may be provided in an applicable tax treaty. For example, under the United States-Israel
Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our ordinary shares who is a Treaty
U.S. Resident is 25%. However, generally, the maximum rate of withholding tax on dividends, not generated by a Preferred Enterprise or
a Preferred Technology Enterprise, that are paid to a United States corporation holding 10% or more of the outstanding voting capital
throughout the tax year in which the dividend is distributed as well as during the previous tax year, is 12.5%, provided that
not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. If dividends
are distributed from income attributed to a Preferred Enterprise or a Preferred Technological Enterprise and the foregoing conditions
are met, such dividends are subject to a withholding tax rate of 15% for a shareholder that is a United States corporation. The aforementioned
rates under the United States-Israel Tax Treaty would not apply if the dividend income is derived through a permanent establishment of
the Treaty U.S. resident in Israel. If the dividend is attributable partly to income derived from a Preferred Enterprise, or a Preferred
Technology Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions
of the two types of income. We cannot assure you that we will designate the profits that we may distribute in a way that will reduce
shareholders’ tax liability.

 

A non-Israeli resident
who receives dividends from which tax was withheld is generally exempt from the obligation to file tax returns in Israel with respect
to such income, provided that (i) such income was not generated from business conducted in Israel by the taxpayer, (ii) the
taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed, and (iii) the
taxpayer is not obligated to pay surtax (as further explained below).

 

 

Surtax

 

Subject
to the provisions of an applicable tax treaty, individuals who are subject to tax in Israel (whether any such individual is an Israeli
resident or non-Israeli resident) are also subject to (i) an additional tax at a rate of 3% on annual income (including, but not limited
to, dividends, interest and capital gain) exceeding NIS 721,560 for 2025 through 2027, which amount will be updated annually starting
January 1, 2028, based on the changes to the Israeli consumer price index (the “Threshold Amount”), and (ii) an additional
tax at a rate of 2% on annual “Capital Income” (including capital gains, dividends, and interest, other than income according
to Section 2(1) or 2(2) of the Ordinance or income from personal exertion) exceeding the Threshold Amount.

 

Estate
and gift tax

 

Israeli
law presently does not impose estate or gift taxes.

 

Certain
Material U.S. Federal Income Tax Considerations

 

The
following is a description of certain material U.S. federal income tax consequences of the acquisition, ownership and disposition
of our ordinary shares and warrants. This description addresses only the U.S. federal income tax consequences to U.S. Holders
(as defined below) that hold our ordinary shares or warrants as capital assets within the meaning of Section 1221 of the Code, and
that have the U.S. dollar as their functional currency. This discussion is based upon the Code, applicable U.S. Treasury regulations,
administrative pronouncements and judicial decisions, in each case as in effect on the date hereof, all of which are subject to change
(possibly with retroactive effect). No ruling has been or will be requested from the IRS regarding the tax consequences of the acquisition,
ownership or disposition of the ordinary shares and warrants, and there can be no assurance that the IRS will agree with the discussion
set out below. This summary does not address any U.S. tax consequences other than U.S. federal income tax consequences (e.g.,
the estate and gift tax, the alternative minimum tax or the Medicare tax on net investment income) and does not address any state, local
or non-U.S. tax consequences.

 

This
description does not address tax considerations applicable to holders that may be subject to special tax rules, including, without limitation:

 

●

banks, financial institutions or insurance companies;

 

●

real estate investment trusts or regulated investment companies;

 

●

dealers or brokers;

 

●

traders that elect to mark to market;

 

●

tax exempt entities or organizations;

 

●

“individual retirement accounts” and other tax deferred accounts;

 

●

certain former citizens or long term residents of the United States;

 

●

persons that are resident or ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States;

 

 

 

●

persons that acquired our ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation for the performance of services;

 

●

persons holding our ordinary shares or warrants as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes;

 

●

partnerships or other pass through entities and persons holding ordinary shares or warrants through partnerships or other pass through entities; or

 

●

holders that own directly, indirectly or through attribution 5% or more of the total voting power or value of all of our outstanding shares.

 

For
purposes of this description, a “U.S. Holder” is a beneficial owner of our ordinary shares or warrants that, for U.S. federal
income tax purposes, is:

 

●

an individual who is a citizen or resident of the United States;

 

●

a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia;

 

●

an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

 

●

a trust if such trust has validly elected to be treated as a United States person for U.S. federal income tax purposes or if (1) a court within the United States is able to exercise primary supervision over its administration and (2) one or more United States persons have the authority to control all of the substantial decisions of such trust.

 

If
a partnership (or any other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our ordinary
shares or warrants, the tax treatment of a partner in such partnership will generally depend on the status of the partner and the activities
of the partnership. Such a partner or partnership should consult its tax advisor as to the particular U.S. federal income tax consequences
of acquiring, owning and disposing of our ordinary shares or warrants in its particular circumstance.

 

You
should consult your tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, owning
and disposing of our ordinary shares and warrants.

 

 

Distributions
on Ordinary Shares

 

Subject
to the discussion below under “—Passive Foreign Investment Company Rules,” if we make distributions of cash
or property on the ordinary shares, the gross amount of such distributions (including any amount of foreign taxes withheld) will be treated
for U.S. federal income tax purposes first as a dividend to the extent of our current and accumulated earnings and profits (as determined
for U.S. federal income tax purposes), and then as a tax-free return of capital to the extent of the U.S. Holder’s tax
basis, with any excess treated as capital gain from the sale or exchange of the shares. If we do not provide calculations of our earnings
and profits under U.S. federal income tax principles, a U.S. Holder should expect all cash distributions to be reported as
dividends for U.S. federal income tax purposes. Dividends paid with respect to our ordinary shares will not be eligible for the
“dividends-received” deduction generally allowed to corporate U.S. Holders in respect of dividends received from U.S. corporations.

 

Subject
to the discussion below under “—Passive Foreign Investment Company Rules,” dividends received by certain non-corporate
U.S. Holders (including individuals) may be “qualified dividend income,” which is taxed at the lower applicable capital
gains rate, provided that:

 

●

either (a) the shares are readily tradable on an established securities market in the United States, or (b) we are eligible for the benefits of a qualifying income tax treaty with the United States that includes an exchange of information program;

 

●

we are neither a PFIC (as discussed below under below under “—Passive Foreign Investment Company Rules”) nor treated as such with respect to the U.S. Holder for the taxable year in which the dividend is paid or the preceding taxable year;

 

●

the U.S. Holder satisfies certain holding period requirements; and

 

●

the U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property.

 

There
can be no assurances that we will be eligible for benefits of an applicable comprehensive income tax treaty between the United States
and Israel (the “Treaty”). In addition, there also can be no assurance that the ordinary shares will be considered
“readily tradable” on an established securities market in the United States in accordance with applicable legal authorities.
Furthermore, we will not constitute a “qualified foreign corporation” for purposes of these rules if we are a PFIC for the
taxable year in which we pay a dividend or for the preceding taxable year. See “—Passive Foreign Investment Company Rules.”
U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for dividends paid with respect
to the ordinary shares.

 

Subject
to certain complex conditions and limitations, Israeli taxes withheld on any distributions on our ordinary shares and not refundable
to a U.S. Holder may be eligible for credit against the U.S. Holder’s federal income tax liability or, at such holder’s election,
may be eligible for a deduction in computing such holder’s U.S. federal income tax liability. However, as a result of recent changes
to the U.S. foreign tax credit rules, a withholding tax generally may need to satisfy certain additional requirements in order to be
considered a creditable tax for a U.S. Holder. We have not determined whether these requirements have been met and, accordingly, no assurance
can be given that any withholding tax on dividends paid by us will be creditable. The election to deduct, rather than credit, foreign
taxes, is made on a year-by-year basis and applies to all foreign taxes paid by a U.S. Holder or withheld from a U.S. Holder that year.
Subject to certain exceptions, dividends on the ordinary shares will generally constitute foreign source income for foreign tax credit
limitation purposes. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of
income. For this purpose, dividends distributed by us with respect to the ordinary shares generally should constitute “passive
category income” but could, in the case of certain U.S. Holders, constitute “general category income.” The rules
relating to the determination of the foreign tax credit are complex, and U.S. Holders should consult their tax advisor to determine whether
and to what extent such holder will be entitled to this credit.

 

 

Sale,
Exchange, Redemption or Other Taxable Disposition of Ordinary Shares and Warrants.

 

Subject
to the discussion below under “—Passive Foreign Investment Company Rules,” a U.S. Holder generally will
recognize gain or loss on any sale, exchange, redemption or other taxable disposition of ordinary shares or warrants in an amount equal
to the difference between (i) the amount realized on the disposition and (ii) such U.S. Holder’s adjusted tax basis in such
ordinary shares and/or warrants. Any gain or loss recognized by a U.S. Holder on a taxable disposition of ordinary shares or warrants
generally will be capital gain or loss. A non-corporate U.S. Holder, including an individual, who has held the ordinary shares and/or
warrants for more than one year generally will be eligible for reduced tax rates for such long-term capital gains. The deductibility
of capital losses is subject to limitations.

 

Any
such gain or loss recognized generally will be treated as U.S. source gain or loss for U.S. foreign tax credit purposes, subject
to certain possible exceptions under the Treaty. U.S. Holders are urged to consult their own tax advisor regarding the ability to
claim a foreign tax credit and the application of the Treaty to such U.S. Holder’s particular circumstances.

 

Exercise
or Lapse of a Warrant

 

Except
as discussed below with respect to the cashless exercise of a warrant, a U.S. Holder generally will not recognize gain or loss upon
the acquisition of an ordinary share on the exercise of a warrant for cash. A U.S. Holder’s tax basis in ordinary shares received
upon exercise of the warrant generally should be an amount equal to the sum of the U.S. Holder’s tax basis in the warrant
received therefore and the exercise price. The U.S. Holder’s holding period for an ordinary share received upon exercise of
the warrant will begin on the date following the date of exercise (or possibly the date of exercise) of the warrant and will not include
the period during which the U.S. Holder held the warrant. If a warrant is allowed to lapse unexercised, a U.S. Holder that
has otherwise received no proceeds with respect to such warrant generally will recognize a capital loss equal to such U.S. Holder’s
tax basis in the warrant.

 

The
tax consequences of a cashless exercise of a warrant are not clear under current U.S. federal income tax law. A cashless exercise
may be tax-deferred, either because the exercise is not a realization event or because the exercise is treated as a recapitalization
for U.S. federal income tax purposes. In either situation, a U.S. Holder’s basis in the ordinary shares received would
equal the U.S. Holder’s basis in the warrants exercised therefore. If the cashless exercise is not treated as a realization
event, a U.S. Holder’s holding period in the ordinary shares would be treated as commencing on the date following the date
of exercise (or possibly the date of exercise) of the warrants. If the cashless exercise were treated as a recapitalization, the holding
period of the ordinary shares would include the holding period of the warrants exercised therefore.

 

It
is also possible that a cashless exercise of a warrant could be treated in part as a taxable exchange in which gain or loss would be
recognized in the manner set forth above under “—Sale, Exchange, Redemption or Other Taxable Disposition of Ordinary Shares
and Warrants.” In such event, a U.S. Holder could be deemed to have surrendered warrants equal to the number of ordinary shares
having an aggregate fair market value equal to the exercise price for the total number of warrants to be exercised. The U.S. Holder
would recognize capital gain or loss in an amount generally equal to the difference between (i) the fair market value of the warrants
deemed surrendered and (ii) the U.S. Holder’s tax basis in such warrants deemed surrendered. In this case, a U.S. Holder’s
tax basis in the ordinary shares received would equal the sum of (i) U.S. Holder’s tax basis in the warrants deemed exercised
and (ii) the exercise price of such warrants. A U.S. Holder’s holding period for the ordinary shares received in such case
generally would commence on the date following the date of exercise (or possibly the date of exercise) of the warrants.

 

Due
to the absence of authority on the U.S. federal income tax treatment of a cashless exercise of warrants, there can be no assurance
which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law.
Accordingly, U.S. Holders should consult their own tax advisors regarding the tax consequences of a cashless exercise of warrants.

 

 

Possible
Constructive Distributions

 

The
terms of each warrant provide for an adjustment to the number of ordinary shares for which the warrant may be exercised or to the exercise
price of the warrant in certain events. An adjustment which has the effect of preventing dilution generally is not taxable. A U.S. Holder
of a warrant would, however, be treated as receiving a constructive distribution from us if, for example, the adjustment increases the
holder’s proportionate interest in our assets or earnings and profits (for instance, through an increase in the number of ordinary
shares that would be obtained upon exercise of such warrant) as a result of a distribution of cash or other property such as other securities
to the holders of the ordinary shares which is taxable to the U.S. Holders of such shares as described under “—Distributions
on Ordinary Shares” above. Such constructive distribution would be subject to tax as described under that section in the same
manner as if the U.S. Holder of such warrant received a cash distribution from us equal to the fair market value of such increased
interest.

 

Passive
Foreign Investment Company Rules

 

The
treatment of U.S. Holders of the ordinary shares or warrants could be materially different from that described above, if we are
treated as a PFIC for U.S. federal income tax purposes. A non-U.S. entity treated as a corporation for U.S. federal income
tax purposes generally will be a PFIC for U.S. federal income tax purposes for any taxable year if either:

 

●

at least 75% of its gross income for such year is passive income; or

 

●

at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income.

 

For
this purpose, we will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of
any other entity treated as a corporation for U.S. federal income tax purposes in which we owns, directly or indirectly, 25% or
more (by value) of the stock.

 

We
believe we were not a PFIC in 2025. Based on the current and anticipated composition of our and our subsidiaries’ income, assets
and operations, there is a risk that we may be treated as a PFIC for future taxable years. However, there can be no assurances in
this regard, nor can there be any assurances with respect to our status as a PFIC in any future taxable year. Moreover, the application
of the PFIC rules is subject to uncertainty in several respects, and we can make no assurances that the IRS will not take a contrary
position or that a court will not sustain such a challenge by the IRS.

 

Whether
we are or any of our subsidiaries is treated as a PFIC is determined on an annual basis. The determination of whether we are or any of
our subsidiaries is a PFIC is a factual determination that depends on, among other things, the composition of our income and assets,
and the market value of our and our subsidiaries’ shares and assets. Changes in the composition of our or any of our subsidiaries’
income or composition of our or any of our subsidiaries’ assets may cause us to be or become a PFIC for the current or subsequent
taxable years. Moreover, the value of our assets (including unbooked goodwill) for purposes of the PFIC determination may be determined
by reference to our market capitalization, which could fluctuate significantly.

 

Under
the PFIC rules, if we were considered a PFIC at any time that a U.S. Holder owns ordinary shares or warrants, we would continue
to be treated as a PFIC with respect to such investment unless (i) we ceased to be a PFIC and (ii) the U.S. Holder made a “deemed
sale” election under the PFIC rules. If such election is made, a U.S. Holder will be deemed to have sold its ordinary shares
or warrants at their fair market value on the last day of the last taxable year in which we are classified as a PFIC, and any gain from
such deemed sale would be subject to the consequences described below. After the deemed sale election, the ordinary shares or warrants
with respect to which the deemed sale election was made will not be treated as shares in a PFIC unless we subsequently become a PFIC.

 

 

For
each taxable year that we are treated as a PFIC with respect to a U.S. Holder’s ordinary shares or warrants, the U.S. Holder
will be subject to special tax rules with respect to any “excess distribution” (as defined below) received and any gain realized
from a sale or disposition (including a pledge) of its ordinary shares (collectively the “Excess Distribution Rules”), unless
the U.S. Holder makes a valid QEF election or mark-to-market election as discussed below. Distributions received by a U.S. Holder
in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable
years or the U.S. Holder’s holding period for the ordinary shares will be treated as excess distributions. Under these special
tax rules:

 

●

the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares;

 

●

the amount allocated to the current taxable year, and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are a PFIC, will be treated as ordinary income; and

 

●

the amount allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for each such year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

 

Under
the Excess Distribution Rules, the tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution
cannot be offset by any net operating losses, and gains (but not losses) realized on the sale of the ordinary shares or warrants cannot
be treated as capital gains, even though the U.S. Holder holds the ordinary shares or warrants as capital assets.

 

Certain
of the PFIC rules may impact U.S. Holders with respect to equity interests in subsidiaries and other entities which we may hold,
directly or indirectly, that are PFICs (collectively, “Lower-Tier PFICs”). There can be no assurance, however, that we do
not own, or will not in the future acquire, an interest in a subsidiary or other entity that is or would be treated as a Lower-Tier PFIC.
U.S. Holders should consult their own tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

 

If
we are a PFIC, a U.S. Holder of ordinary shares (but not warrants) may avoid taxation under the Excess Distribution Rules described
above by making a “qualified electing fund” (“QEF”) election. However, a U.S. Holder may make a QEF election
with respect to its ordinary shares only if we provide U.S. Holders on an annual basis with certain financial information specified
under applicable U.S. Treasury regulations. There can be no assurance that we will have timely knowledge of our status as a PFIC
in the future or that we will timely provide U.S. Holders with the required information on an annual basis to allow U.S. Holders to make
a QEF election with respect to our ordinary shares in the event we are treated as a PFIC for any taxable year. The failure to provide
such information on an annual basis could prevent a U.S. Holder from making a QEF election or result in the invalidation or termination
of a U.S. Holder’s prior QEF election. In addition, U.S. Holders of warrants will not be able to make a QEF election
with respect to their warrants.

 

In
the event we are a PFIC, a U.S. Holder that makes a QEF election with respect to its ordinary shares would generally be required
to include in income for each year that we are treated as a PFIC the U.S. Holder’s pro rata share of our ordinary earnings
for the year (which would be subject to tax as ordinary income) and net capital gains for the year (which would be subject to tax at
the rates applicable to long-term capital gains), without regard to the amount of any distributions made in respect of the ordinary shares.
Any net deficits or net capital losses of ours for a taxable year would not be passed through and included on the tax return of the U.S. Holder,
however. A U.S. Holder’s basis in the ordinary shares would be increased by the amount of income inclusions under the qualified
electing fund rules. Dividends actually paid on the ordinary shares generally would not be subject to U.S. federal income tax to
the extent of prior income inclusions and would reduce the U.S. Holder’s basis in the ordinary shares by a corresponding amount.

 

 

If
we own any interests in a Lower-Tier PFIC, a U.S. Holder generally must make a separate QEF election for each Lower-Tier PFIC, subject
to us providing the relevant tax information for each Lower-Tier PFIC on an annual basis.

 

If
a U.S. Holder does not make a QEF election (or a mark-to-market election, as discussed below) effective from the first taxable year
of a U.S. Holder’s holding period for the ordinary shares in which we are a PFIC, then the ordinary shares will generally
continue to be treated as an interest in a PFIC, and the U.S. Holder generally will remain subject to the Excess Distribution Rules.
A U.S. Holder that first makes a QEF election in a later year may avoid the continued application of the Excess Distribution Rules
to its ordinary shares by making a “deemed sale” election. In that case, the U.S. Holder will be deemed to have sold
the ordinary shares at their fair market value on the first day of the taxable year in which the QEF election becomes effective, and
any gain from such deemed sale would be subject to the Excess Distribution Rules described above. A U.S. Holder that is eligible
to make a QEF election with respect to its ordinary shares generally may do so by providing the appropriate information to the IRS in
the U.S. Holder’s timely filed tax return for the year in which the election becomes effective.

 

U.S. Holders
should consult their own tax advisors as to the availability and desirability of a QEF election.

 

Alternatively,
a U.S. Holder of “marketable stock” (as defined below) may make a mark-to-market election for its ordinary shares to
elect out of the Excess Distribution Rules discussed above if we are treated as a PFIC. If a U.S. Holder makes a mark-to-market
election with respect to its ordinary shares, such U.S. Holder will include in income for each year that we are treated as a PFIC
with respect to such ordinary shares an amount equal to the excess, if any, of the fair market value of the ordinary shares as of the
close of the U.S. Holder’s taxable year over the adjusted basis in the ordinary shares. A U.S. Holder will be allowed
a deduction for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the
taxable year. However, deductions will be allowed only to the extent of any net mark-to-market gains on the ordinary shares included
in the U.S. Holder’s income for prior taxable years. Amounts included in income under a mark-to-market election, as well as
gain on the actual sale or other disposition of the ordinary shares, will be treated as ordinary income. Ordinary loss treatment will
also apply to the deductible portion of any mark-to-market loss on the ordinary shares, as well as to any loss realized on the actual
sale or disposition of the ordinary shares, to the extent the amount of such loss does not exceed the net mark-to-market gains for such
ordinary shares previously included in income. A U.S. Holder’s basis in the ordinary shares will be adjusted to reflect any
mark-to-market income or loss. If a U.S. Holder makes a mark-to-market election, any distributions we make would generally be subject
to the rules discussed above under “—Distributions on Ordinary Shares,” except the lower rates applicable to
qualified dividend income would not apply. U.S. Holders of warrants will not be able to make a mark-to-market election with respect
to their warrants.

 

The
mark-to-market election is available only for “marketable stock,” which is stock that is regularly traded on a qualified
exchange or other market, as defined in applicable U.S. Treasury regulations. The ordinary shares, which are currently listed on
Nasdaq, are expected to qualify as marketable stock for purposes of the PFIC rules provided the ordinary shares remain listed on Nasdaq,
but there can be no assurance that the ordinary shares will remain listed on Nasdaq or be “regularly traded” for purposes
of these rules. Because a mark-to-market election cannot be made for equity interests in any Lower-Tier PFICs, a U.S. Holder that
does not make the applicable QEF elections generally will continue to be subject to the Excess Distribution Rules with respect to its
indirect interest in any Lower-Tier PFICs as described above, even if a mark-to-market election is made for us.

 

If
a U.S. Holder does not make a mark-to-market election (or a QEF election, as discussed above) effective from the first taxable year
of a U.S. Holder’s holding period for the ordinary shares in which we are a PFIC, then the U.S. Holder generally will
remain subject to the Excess Distribution Rules. A U.S. Holder that first makes a mark-to-market election with respect to the ordinary
shares in a later year will continue to be subject to the Excess Distribution Rules during the taxable year for which the mark-to-market
election becomes effective, including with respect to any mark-to-market gain recognized at the end of that year. In subsequent years
for which a valid mark-to-mark election remains in effect, the Excess Distribution Rules generally will not apply. A U.S. Holder
that is eligible to make a mark-to-market with respect to its ordinary shares may do so by providing the appropriate information on IRS
Form 8621 and timely filing that form with the U.S. Holder’s tax return for the year in which the election becomes effective.
U.S. Holders should consult their own tax advisors as to the availability and desirability of a mark-to-market election, as well
as the impact of such election on interests in any Lower-Tier PFICs.

 

 

A
U.S. Holder of a PFIC may be required to file an IRS Form 8621 on an annual basis. U.S. Holders should consult their own tax
advisors regarding any reporting requirements that may apply to them if we are a PFIC.

 

U.S. Holders
are strongly encouraged to consult their tax advisors regarding the application of the PFIC rules to their particular circumstances.

 

Information
Reporting and Backup Withholding

 

Information
reporting requirements may apply to dividends received by U.S. Holders of ordinary shares and the proceeds received on sale or other
taxable disposition of ordinary shares or warrants effected within the United States (and, in certain cases, outside the United States),
in each case other than U.S. Holders that are exempt recipients (such as corporations). Backup withholding (currently at a rate
of 24%) may apply to such amounts if the U.S. Holder fails to provide an accurate taxpayer identification number (generally on an
IRS Form W-9 provided to the paying agent of the U.S. Holder’s broker) or is otherwise subject to backup withholding. U.S. Holders
should consult their own tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

 

Backup
withholding is not an additional tax. Amounts withheld as backup withholding generally may be credited against the taxpayer’s U.S. federal
income tax liability, and a taxpayer may obtain a refund of any excess amounts withheld under the backup withholding rules by timely
filing the appropriate claim for a refund with the IRS and furnishing any required information.

 

Foreign
asset reporting

 

Certain
U.S. Holders may be required to file IRS Form 926, Return by U.S. Transferor of Property to a Foreign Corporation, and IRS Form 5471,
Information Return of U.S. Persons With Respect to Certain Foreign Corporations, reporting transfers of cash or other property to us
and information relating to the U.S. Holder and us. Substantial penalties may be imposed upon a U.S. Holder that fails to comply. See
also the discussion regarding Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing
Fund, above.

 

Certain
U.S. Holders are required to report their holdings of certain foreign financial assets, including equity of foreign entities, if the
aggregate value of all of these assets exceeds certain threshold amounts, by filing IRS Form 8938 with their federal income tax return.
Our ordinary shares and warrants are expected to constitute foreign financial assets subject to these requirements unless they are held
in an account at certain financial institutions. U.S. Holders are urged to consult their tax advisors regarding their information reporting
obligations, if any, with respect to their ownership and disposition of our ordinary shares and/or warrants and the significant penalties
for non-compliance.

 

THE
DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO AN INVESTOR. EACH INVESTOR IS URGED
TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES
OR WARRANTS IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS. 

 

F. Dividends
and Paying Agents

 

Not
applicable.

 

G. Statement
by Experts

 

Not
applicable.

 

 

H. Documents
on Display

 

We
are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information
with the SEC, including annual reports on Form 20-F and reports on Form 6-K. Our filings with the SEC are also available to
the public through the SEC’s website at http://www.sec.gov. This site contains reports and other information about issuers, like
us, that file electronically with the SEC. The address of that website is www.sec.gov.

 

As
a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and
content of proxy statements, and our officers, directors and principal shareholders are exempt from the short-swing profit recovery provisions
contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and
financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
However, we will file with the SEC, within 120 days after the end of each subsequent fiscal year, or such applicable time as
required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting
firm. We also intend to furnish certain other material information to the SEC under cover of Form 6-K.

 

I.
Subsidiary Information

 

Not
applicable.

 

J. Annual
Report to Security Holders

 

Not
applicable.

 

Item 11.
Quantitative and Qualitative Disclosures about Market Risk

 

We
are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial
position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of foreign currency
exchange rates and interest rates, which are discussed in detail below.

 

Foreign
currency risk

 

Though
we operate internationally, our operations are primarily located in Israel and the majority of our expenses are denominated in NIS. As
a result, fluctuations in foreign currency rates may affect our business and operations.

 

In
addition, our financial results are reported in USD, and changes in the exchange rate between the USD and local currencies in those countries
in which we operate (primarily the NIS) may affect the results of our operations. The USD cost of our operations in countries other than
the United States, is negatively influenced by revaluation of the USD against other currencies.

 

During
2025, the value of the U.S. dollar weakened against the NIS by approximately 12.53%. Our most significant foreign currency exposures
are related to our operations in Israel.

 

Interest
Rate Risk

 

Interest
rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates.

 

Our
exposure to the risk of changes in market interest rates relates primarily to our long-term liabilities with floating interest. This
risk is of primary focus to us given our current dependency on debt financing and the ability to obtain future debt financing. We manage
our interest rate risk by seeking to have a balanced portfolio of fixed and variable rate loans.

 

Item 12.
Description of Securities Other than Equity Securities

 

Not
applicable.

 

 

PART II

 

Item 13.
Defaults, Dividend Arrearages and Delinquencies

 

None.

 

Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds

 

None.

 

Item 15.
Controls and Procedures

  

(a)
Disclosure Controls and Procedures

 

Evaluation
of disclosure controls and procedures

 

We
maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are
designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated
and communicated to our management, including our Principal Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosures. Any controls and procedures, no matter how well-designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. Our management, with the participation of our Principal Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of
December 31, 2025. Based upon that evaluation, our Principal Executive Officer and Chief Financial Officer concluded that, as of December
31, 2025, our disclosure controls and procedures were not effective due to the material weaknesses identified by management, as described
below. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive
Officer, to allow timely decisions regarding required disclosures.

 

(b)
Management’s Annual Report on Internal Control over Financial Reporting

 

Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Rule 13a-15(f) under the Exchange Act. Our management conducted an assessment of the effectiveness of our internal control over financial
reporting as of December 31, 2025, based on the criteria set forth in Internal Control—Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on that assessment, our management concluded
that our internal control over financial reporting was not effective as of December 31, 2025, due to material weaknesses in internal
control over financial reporting.

 

As
defined in Regulation 12b-2 under the Exchange Act, a “material weakness” is a deficiency, or combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual
or interim consolidated financial statements will not be prevented, or detected on a timely basis.

 

 

Material
weaknesses in internal control over financial reporting

 

In
connection with the Internal Investigation described in this Annual Report and the audit of our consolidated financial statements included
in this Annual Report, our management identified material weaknesses in our internal control over financial reporting as of December
31, 2022 and 2021 relating to deficiencies in the design and operation of the procedures relating to the closing of our financial statements.
We continued to identify material weaknesses in our internal control over financial reporting as of December 31, 2023 and 2024, which
had not been remedied as of December 31, 2025.

 

These
included: (i) lack of sufficient number of personnel with an appropriate level of knowledge and experience in accounting for complex
or non-routine transactions; (ii) the fact that our policies and procedures with respect to the review, supervision and monitoring of
our accounting and reporting functions were either not designed, not properly put in place or not operating effectively; (iii) deficiencies
in the design and operations of the procedures relating to the timely closing of financial books at the quarter and fiscal year end;
(iv) insufficient oversight of certain signatory rights relating to our financial accounts; (v) ineffective design and implementation
of Information Technology General Controls including improperly designed controls pertaining to change management and user access rights
over systems that are critical to the Company’s system of financial reporting; and (vi) incomplete segregation of duties in certain
types of transactions and processes (excluding monetary transactions, where there is a clear distinction between the preparer and the
signer vis-a-vis financial institutions).

 

During
the fourth quarter of 2024 and throughout 2025, we undertook certain corrective action in order to address and remediate these material
weaknesses including (i) the recruitment of additional financial personnel in our finance department with an appropriate level of knowledge
and experience; (ii) the establishment of risk and control matrices and implemented controls over material business processes; (iii)
the design of operation of procedures related to timely closing of financial books, including the assignment of clear responsibilities,
deadlines and appropriate segregation of duties; (iv) the formalization of signatory rights; and (v) establishment of controls over the
change management process and permissions to the financial system. However, since the implementation of these controls only commenced
in the fourth quarter of 2024 and throughout 2025, these controls were not in place for a sufficient period of time to allow management
to conclude they were operating effectively throughout a significant portion of the fiscal year ended December 31, 2025. Accordingly,
management concluded that internal control over financial reporting was not effective as of December 31, 2025, due to these material
weaknesses. We intend to continue to take steps to remediate the material weaknesses described above and further continue re-assessing
the design of controls, the testing of controls and modifying processes designed to improve our internal control over financial reporting.
We plan to continue to assess our internal controls and procedures and intend to take further action as necessary or appropriate to address
any other matters we identify or are brought to our attention. We will not be able to fully remediate these material weaknesses until
these steps have been completed and have been operating effectively for a sufficient period of time. The implementation of our remediation
will be ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained
period of financial reporting cycles. We may also conclude that additional measures may be required to remediate the material weaknesses
in our internal control over financial reporting.

 

We
cannot assure you that the measures we have been taking or that we take in the future will be sufficient to remediate the material weaknesses
we identified or avoid the identification of additional material weaknesses in the future. If the steps we take do not remediate the
material weaknesses in a timely manner, there could continue to be a reasonable possibility that this control deficiency or others could
result in another material misstatement of our annual or interim financial statements that would not be prevented or detected on a timely
basis.

 

 

For
more information, see “Item 3.D. Risk Factors – Risks Related to Our Business and Industry – We have identified material
weaknesses in our internal control over financial reporting. If our remediation of the material weaknesses is not effective, or we fail
to develop and maintain effective internal controls over financial reporting, our ability to produce timely and accurate financial statements
or comply with applicable laws and regulations could be impaired.”

 

(c)
Attestation Report of the Registered Public Accounting Firm

 

This
Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting due to an exemption for emerging growth companies provided in the JOBS Act.

 

(d)
Changes in internal control over financial reporting

 

Except
as otherwise described herein, there were no changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the period covered by this Annual Report that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 16.
[Reserved]

 

Item 16A.
Audit Committee Financial Expert

 

Our
board of directors has determined that each of Ilan Flato, Renah Persofsky and Vineet Malhotra is an audit committee financial expert
as defined by the SEC rules and has the requisite financial experience as defined by the listing rules of Nasdaq.

 

Our
board of directors has determined that each member of our audit committee is “independent” as such term is defined in Rule 10A-3(b)(1) under
the Exchange Act, which is different from the general test for independence of board and committee members.

 

Item 16B.
Code of Ethics

 

We
have adopted a Code of Business Conduct and Ethics that applies to all our employees, officers and directors. Our Code of Business Conduct
and Ethics addresses, among other things, competition and fair dealing, gifts and entertainment, conflicts of interest, international
business laws, financial matters and external reporting, company assets, confidentiality and corporate opportunity requirements and the
process for reporting violations of the Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics is intended to meet
the definition of “code of ethics” under Item 16B. of Form 20-F under the Exchange Act.

 

We
will disclose on our website any amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics that applies to
our directors or executive officers to the extent required under the rules of the SEC or Nasdaq. Our Code of Business Conduct and
Ethics is available on our website at https://www.investors.hubsecurity.com. The information contained on or through our website, or
any other website referred to herein, is not incorporated by reference in this Annual Report. We granted no waivers under our Code of
Business Conduct and Ethics.

 

 

Item 16C.
Principal Accounting Fees and Services

 

The
table below sets out the total amount of services rendered to us by Kost, Forer, Gabbay & Kasierer, a member of EY Global, for
services performed in the years ended December 31, 2024 and 2025, and breaks down these amounts by category of service:

 

		2025				2024
		(in thousands)
Audit Fees		$	775			$	1,100
Audit Related Fees			214				450
Tax Fees			75				200
Total			1,064				1,750

 

Audit
Fees

 

Audit
fees for the years ended December 31, 2025 and 2024 include fees for the audit of our annual financial statements. This category
also includes services that the independent accountant generally provides, such as assistance with and review of documents filed with
the SEC.

 

Audit
Related Fees

 

Audit
related fees relate to assurance and associated services that traditionally are performed by the independent auditor, statutory tax reports
and consents.

 

Tax
Fees

 

Tax
fees for the years ended December 31, 2025 and 2024 were related to ongoing tax, tax compliance and tax planning services. 

 

Pre-Approval
Policies and Procedures

 

The
advance approval of the Audit Committee or members thereof, to whom approval authority has been delegated, is required for all audit
and non-audit services provided by our auditors.

 

All
services provided by our auditors are approved in advance by either the Audit Committee or members thereof, to whom authority has been
delegated, in accordance with the Audit Committee’s pre-approval policy.

 

Item 16D.
Exemptions from the Listing Standards for Audit Committees

 

Not
applicable.

 

Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

None.

 

 

Item 16F.
Change in Registrant’s Certifying Accountant

 

None.

 

Item 16G.
Corporate Governance

 

As
an Israeli company, we are subject to various corporate governance requirements under the Companies Law, relating to matters such as
external directors, the audit committee, the compensation committee and an internal auditor.

 

We
are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act. As a foreign private issuer
we will be permitted to comply with Israeli corporate governance practices instead of the certain listing rules of Nasdaq, provided
that we disclose which requirements we are not following and the equivalent Israeli requirements.

 

We
rely on this “foreign private issuer exemption” with respect to the following:

 

●

Distribution of certain reports to shareholders. As opposed to the Nasdaq Listing Rules, which require listed issuers to make certain reports, such as annual reports, interim reports and quarterly reports, available to shareholders in one of a number of specific manners, Israeli law does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is to distribute such reports to shareholders, but to make such reports available through a public website. In addition to making such reports available on a public website, we plan to make our audited financial statements available to our shareholders at our offices and will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC’s proxy solicitation rules. See “Item 10. Additional Information—Documents on Display” for a description of our Exchange Act reporting obligations.

 

●

Quorum requirement for shareholder meetings. Under Nasdaq corporate governance rules, a quorum would require the presence, in person or by proxy, of holders of at least 33.3% of the total issued outstanding voting power of our shares at each general meeting of shareholders. Pursuant to the Articles and as permitted under the Companies Law, the quorum required for a general meeting of shareholders will consist of at least two shareholders present in person or by proxy who hold or represent at least 33.3% of the total outstanding voting power of our shares, except if (i) any such general meeting of shareholders was initiated by and convened pursuant to a resolution adopted by the board of directors and (ii) at the time of such general meeting, we qualify as a “foreign private issuer,” in which case the requisite quorum will consist of two or more shareholders present in person or by proxy who hold or represent at least 25% of the total outstanding voting power of our shares (and if the meeting is adjourned for a lack of quorum, the quorum for such adjourned meeting will be, subject to certain exceptions, any number of shareholders).

 

●

Shareholder approval. We will seek shareholder approval for all corporate actions requiring such approval under requirements of the Companies Law, rather than seeking approval for corporate actions in accordance with Nasdaq Capital Market Listing Rule 5635. In particular, under this Nasdaq Capital Market rule, shareholder approval is generally required for: (i) an acquisition of shares or assets of another company that involves the issuance of 20% or more of the acquirer’s shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption or amendment of equity compensation arrangements; and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (or via sales by directors, officers or 5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. By contrast, under the Companies Law, shareholder approval is required for, among other things: (i) transactions with directors or the chief executive officer concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors and shareholders are all required (provided that, under regulations promulgated under the Companies Law, the insurance of office holders shall not require shareholder approval and may be approved by only the compensation committee in certain circumstances), (ii) material private placements of shares, which require shareholder approval under the conditions described under “Item 6. Directors, Senior Management and Employees—C. Board Practices—Approval of Private Placements under Israeli Law,” (iii) Extraordinary Transactions with controlling shareholders of publicly held companies, which require the special approval described under “Item 6. Directors, Senior Management and Employees—C. Board Practices—Approval of Related Party Transactions under Israeli Law,” and (iv) terms of office and employment or other engagement of the controlling shareholder of the Company or such controlling shareholder’s relative, which require the special approval described under “Item 6. Directors, Senior Management and Employees—B. Compensation” and “Item 6. Directors, Senior Management and Employees—C. Board Practices—Approval of Related Party Transactions under Israeli Law.” In addition, under the Companies Law, a merger requires approval of the shareholders of each of the merging companies. See also “Compensation of officers” above.

 

 

We
otherwise intend to comply with the rules generally applicable to U.S. domestic companies listed on the Nasdaq. We may, however,
in the future decide to rely upon the “foreign private issuer exemption” for purposes of opting out of some or all of the
other Nasdaq listing rules.

 

Item 16H.
Mine Safety Disclosure

 

Not
applicable.

 

Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 

Not
applicable.

 

Item 16J.
Insider Trading Policies

 

We
have adopted an Insider Trading Policy which governs the purchase, sale and other dispositions of our securities by our directors, officers,
employees and contractors that is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations
and the listing standards of Nasdaq. A copy of our Insider Trading Policy is filed as Exhibit 11.1 to this Annual Report. 

 

Item 16K.
Cybersecurity

 

Cybersecurity
Risk Management and Strategy

 

We
have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability
of our critical systems, information, and our customers’ data. Our cybersecurity policies, standards, processes, and practices
are part of our information security management program, which is aligned to our ISO 27001 certification, an international standard to
manage information security.

 

Our
cybersecurity risk management program includes a secure software development program intended to reduce the introduction of risks into
our software, a software vulnerability and patch management program, and cybersecurity incident detection, response, and recovery programs,
among others. Our cybersecurity risk team aims to integrate cybersecurity risks into our overall company’s risk management system
and processes on an on-going basis. 

 

Key
elements of our cybersecurity risk management program include, but are not limited to the following:

 

●

a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents and risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment;

 

●

a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;

 

 

●

the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; and

 

●

a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.

 

We
have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially
affected us, including our operations, business strategy, results of operations, or financial condition. 

 

Cybersecurity
Governance

 

Our
Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight
of cybersecurity and other information technology risks. The Audit Committee oversees management’s implementation of our cybersecurity
risk management program.

 

Additionally,
our risk monitoring systems, including our cybersecurity monitoring systems, are regularly audited by our internal auditors as well as
cyber security audit companies. We consider the results of external and internal audits of our risk detection and monitoring systems
and implement modifications as necessary.

 

The
Audit Committee receives reports from management and the internal auditor on our cybersecurity risks. In addition, management updates
the Audit Committee and Board of Directors, as necessary, regarding significant cybersecurity incidents. In addition, the Audit Committee
regularly receives reports from management on such topic.

 

Our
cybersecurity management team, including our Chief Financial Officer, VP Information Technology, Chief Information Security Officer and
General Counsel and Chief Legal Officer, are responsible for assessing and managing our material risks from cybersecurity threats. The
team is primarily responsible for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel
and our retained external cybersecurity consultants. By the nature of our business, our management team gained expertise in cybersecurity,
each member bringing years of experience and strategic leadership in cyber security.

 

Our
cybersecurity management team is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity
risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other
information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports
produced by security tools deployed in the IT environment. 

 

 

PART
III

 

Item 17.
Financial Statements

 

We
have provided financial statements pursuant to Item 18.

 

Item 18.
Financial Statements

 

The
audited consolidated financial statements as required under Item 18 are attached hereto starting on page F-1 of this Annual
Report. The audit report of Kost, Forer, Gabbay & Kasierer, a member of EY Global, an independent registered public accounting
firm, is included herein preceding the audited consolidated financial statements.

 

Item 19.
Exhibits

 

List
all exhibits filed as part of the registration statement or Annual Report, including exhibits incorporated by reference.

 

Incorporation by Reference

Exhibit No.

Description

Form

File No.

Exhibit No.

Filing Date

Filed / Furnished

1.1

Amended and Restated Articles of Association of HUB Cyber Security Ltd.

6-K

001-41634

99.2

December 13, 2023

1.2

Memorandum of Association of HUB Cyber Security Ltd.

20-F

001-41634

1.2

August 16, 2024

2.1

Description of Securities

*

4.1††

Form of Director and Officer Indemnification Agreement.

F-4

333-267035

10.11

November 17, 2022

4.2††

Compensation Policy for Directors and Officers.

6-K

001-41634

Annex A to Exhibit 99.1

October 5, 2023

4.3††

Specimen Ordinary Share Certificate of HUB Cyber Security (Israel) Ltd.

F-4

333-267035

4.7

November 17, 2022

4.4††

2007 Employee Stock Option Plan, as amended

20-F

001-41634

4.4

May 1, 2025

4.5††

2021 Employee Stock Option Plan, as amended

20-F

001-41634

4.5

May 1, 2025

4.6

Form of Amended and Restated Warrant Agreement, by and among Mount Rainier Acquisition Corp., Hub Cyber Security (Israel) Ltd. and American Stock Transfer & Trust Company, LLC, as warrant agent.

F-4

333-267035

4.9

August 24, 2022

4.7

Form of Amended and Restated Convertible Note dated November 22, 2024

20-F

001-41634

4.9

May 1, 2025

4.8

Form of Registration Rights Agreement dated February 28, 2023

20-F

001-41634

4.10

August 15, 2023

4.9

Demand Promissory Note, dated February 28, 2023, by and between HUB Cyber Security Ltd. and Dominion Capital LLC

20-F

001-41634

4.11

August 15, 2023

4.10

First Amendment to Senior Secured Demand Promissory Note dated March 28, 2023, by and between HUB Cyber Security Ltd. and Dominion Capital LLC

20-F

001-41634

4.12

August 15, 2023

4.11

Equity Purchase Agreement, dated March 28, 2023 by and between HUB Cyber Security Ltd. and Dominion Capital LLC

6-K

001-41634

99.1

March 30, 2023

 

 

4.12		English Translation of Convertible Loan Agreement, dated June 11, 2023, by and between, Hub Cyber Security Ltd. and Shayna L.P.		20-F		001-41634		4.18		August 15, 2023
4.13		English Translation of Convertible Loan Agreement, dated July 9, 2023, by and between, Hub Cyber Security Ltd. and Shayna L.P.		20-F		001-41634		4.19		August 15, 2023
4.14		Financial Advisory Services Agreement dated as of July 20, 2021, by and between Hub Cyber Security Ltd. and A-Labs Finance and Advisory Ltd.		20-F		001-41634		4.20		August 15, 2023
4.15		Addendum No. 1 to Financial Advisory Services Agreement dated as of December 28, 2022, by and between Hub Cyber Security Ltd. and A-Labs Finance and Advisory Ltd.		20-F		001-41634		4.21		August 15, 2023
4.16		English Translation of Loan Agreement, dated January 16, 2023 by and between HUB Cyber Security Ltd. and A-Labs Finance and Advisory Ltd.		20-F		001-41634		4.22		August 15, 2023
4.17		Commitment Letter, dated November 16, 2021 by and among, Bank Mizrahi Tefahot Ltd, HUB Cyber Security Ltd. and Comsec Ltd.		20-F		001-41634		4.23		August 15, 2023
4.18		Form of Securities Purchase Agreement by and between HUB Cyber Security Ltd. and First 2023-2024 Accredited Investors.		20-F		001-41634		4.26		August 16, 2024
4.19		Form of Amendment to Securities Purchase Agreement by and between HUB Cyber Security Ltd. and First 2023-2024 Accredited Investors.		20-F		001-41634		4.26		May 1, 2025
4.20		Form of Convertible Promissory Note by and between HUB Cyber Security Ltd. and First 2023-2024 Accredited Investors.		20-F		001-41634		4.27		August 16, 2024
4.21		Form of Warrant issued by HUB Cyber Security Ltd. to First 2023-2024 Accredited Investors.		20-F		001-41634		4.28		August 16, 2024
4.22		Form of Securities Purchase Agreement by and between HUB Cyber Security Ltd. and Second 2023-2024 Accredited Investors.		20-F		001-41634		4.29		August 16, 2024

 

 

4.23		Form of Amendment to Securities Purchase Agreement by and between HUB Cyber Security Ltd. and Second 2023-2024 Accredited Investors.		20-F		001-41634		4.30		May 1, 2025
4.24		Form of Convertible Promissory Note by and between HUB Cyber Security Ltd. and Second 2023-2024 Accredited Investors.		20-F		001-41634		4.30		August 16, 2024
4.25		Form of Warrant issued by HUB Cyber Security Ltd. to Second 2023-2024 Accredited Investors.		20-F		001-41634		4.31		August 16, 2024
4.26		Form of Securities Purchase Agreement by and between HUB Cyber Security Ltd. and March-November 2024 Investor.		20-F		001-41634		4.32		August 16, 2024
4.27		Amendment to Securities Purchase Agreement, Warrant and Note, dated April 3, 2024.		20-F		001-41634		4.33		August 16, 2024
4.28		Second Amendment to Securities Purchase Agreement, Warrants and Notes, dated June 26, 2024.		20-F		001-41634		4.34		August 16, 2024
4.29		Third Amendment to Securities Purchase Agreement, Warrants and Notes, dated November 5, 2024.		20-F		001-41634		4.36		May 1, 2025
4.30		Fourth Amendment to Securities Purchase Agreement, Warrants and Notes, dated February 17, 2024.		20-F		001-41634		4.37		May 1, 2025
4.31		Form of Convertible Promissory Note by and between HUB Cyber Security Ltd. and March-November 2024 Investor.		20-F		001-41634		4.35		August 16, 2024
4.32		Form of Warrant issued by HUB Cyber Security Ltd. to March-November 2024 Investor.		20-F		001-41634		4.36		August 16, 2024
4.33		Fifth Amendment to Securities Purchase Agreement dated August 16, 2025 between Hub Cyber Security Ltd. and Tamas Gottdiener.		F-1		333-289996		10.40		September 3, 2025
4.34		Note Purchase and Assignment Agreement dated August 20, 2025 between Tamas Gottdiener and Seven Knots, LLC.		F-1		333-289996		10.41		September 3, 2025

 

 

4.35		Form of Amended and Restated Warrant to Purchase Ordinary Shares issued by HUB Cyber Security Ltd. to March-November 2024 Investor.		20-F		001-41634		4.40		May 1, 2025
4.36		Form of Pre-funded Warrant issued by HUB Cyber Security Ltd. to March-November 2024 Investor.		20-F		001-41634		4.41		May 1, 2025
4.37		Share Purchase Agreement between HUB Cyber Security Ltd., Gyro Sky Solutions Ltd., Dolet Systems Ltd., Gari Brizinov, Yaacov Golpur, Qpoint Technologies Ltd., Sensecom Consulting and Projects Management Ltd., Aginix Engineering and Project Management Ltd. and Integral Telemanagement Services Ltd., dated April 3, 2024.#†		20-F		001-41634		4.37		August 16, 2024
4.38		Loan and Security Agreement, dated December 4, 2023, among HUB Cyber Security Ltd. and BlackSwan Technologies, Inc.		20-F		001-41634		4.38		August 16, 2024
4.39		First Amendment to Convertible Loan Agreement, dated August 17, 2023, by and between HUB Cyber Security Ltd. and Shayna LP		20-F		001-41634		4.39		August 16, 2024
4.40		First Amendment to Convertible Loan Agreement, dated March 31, 2024, by and between HUB Cyber Security Ltd., Shayna LP and Akina Holdings Limited		20-F		001-41634		4.40		August 16, 2024
4.41		Second Amendment to Convertible Loan Agreement, dated April 18, 2024, by and between HUB Cyber Security Ltd., Shayna LP and Akina Holdings Limited		20-F		001-41634		4.41		August 16, 2024
4.42		Third Amendment to Convertible Loan Agreement, dated May 9 2024, by and between HUB Cyber Security Ltd., Shayna LP and Akina Holdings Limited		20-F		001-41634		4.42		August 16, 2024
4.43^#		English Translation of Form of Debt Settlement Agreement, dated March 24, 2024, between a vendor, Comsec Ltd., Comsec Distribution Ltd. and Hub Cyber Security Ltd.		20-F		001-41634		4.43		August 16, 2024

 

 

4.44		Specimen Warrant Certificate of HUB Cyber Security (Israel) Ltd.		F-4		333-267035		4.8		November 17, 2022
4.45		Form of Securities Purchase Agreement, dated as of August 18, 2024, between HUB Cyber Security Ltd. and the investors identified on the signature pages thereto		F-1		333-282109		10.42		September 13, 2024
4.46		Form of Convertible Note issued by HUB Cyber Security Ltd. on August 18, 2024		F-1		333-282109		10.43		September 13, 2024
4.47		Form of Warrant issued by HUB Cyber Security Ltd. on August 18, 2024		F-1		333-282109		10.44		September 13, 2024
4.48		Form of Placement Agent Warrant issued by HUB Cyber Security Ltd. on August 18, 2024		F-1		333-282109		10.45		September 13, 2024
4.49		Business Combination Agreement, dated as of March 23, 2022, by and among HUB Cyber Security Ltd., Mount Rainier Acquisition Corp. and Rover Merger Sub.		F-4		333-267035		2.1		September 13, 2024
4.50		Collaboration and Option Agreement by and between HUB Cyber Security Ltd. and BlackSwan Technologies, Inc.		F-1		333-282109		10.47		September 13, 2024
4.51		English Translation of Form of Debt Settlement Agreement, dated December 19, 2024, between Bank Mizrahi-Tefahot Ltd., Comsec Ltd., Comsec Distribution Ltd. and Hub Cyber Security Ltd.		F-1/A		333-282109		10.49		December 31, 2024
4.52		Form of Loan Agreement dated December 30, 2024, by and between HUB Cyber Security Ltd. and J.J. Astor & Co.		F-1/A		333-282109		10.50		December 31, 2024
4.53		Form of Registration Rights Agreement dated December 30, 2024, by and between HUB Cyber Security Ltd. and J.J. Astor & Co.		F-1/A		333-282109		10.51		December 31, 2024
4.54		Form of December 2024 Warrant		F-1/A		333-282109		10.52		December 31, 2024
4.55		Form of December 2024 Convertible Note		F-1/A		333-282109		10.53		December 31, 2024
4.56		Form of Pledge and Security Agreement		F-1/A		333-282109		10.54		December 31, 2024
4.57		Form of Subsidiary Guarantee		F-1/A		333-282109		10.55		December 31, 2024

 

 

4.58		Form of Loan Agreement dated February 4, 2025, by and between HUB Cyber Security Ltd. and Julestar LLC		20-F		001-41634		4.63		May 1, 2025
4.59		Form of Registration Rights Agreement dated February 4, 2025, by and between HUB Cyber Security Ltd. and the investors thereto		20-F		001-41634		4.64		May 1, 2025
4.60		Form of Julestar Warrant		20-F		001-41634		4.65		May 1, 2025
4.61		Form of Julestar Promissory  Note		20-F		001-41634		4.66		May 1, 2025
4.62		Form of Subsidiary Guarantee		20-F		001-41634		4.67		May 1, 2025
4.63		Note Purchase Agreement dated February 18, 2025 between HUB Cyber Security Ltd. and Claymore Capital Pty Ltd.,		20-F		001-41634		4.68		May 1, 2025
4.64		Form of Convertible Note issued by HUB Cyber Security Ltd. on February 18, 2025		20-F		001-41634		4.69		May 1, 2025
4.65		Confidential Settlement Agreement and General Release effective February 19, 2025 between Oppenheimer & Co., HUB Cyber Security Ltd. and Claymore Capital Pty Ltd.,		20-F		001-41634		4.70		May 1, 2025
4.66		Note Purchase Agreement dated February 20, 2025 between HUB Cyber Security Ltd. and Claymore Capital Pty Ltd.,		20-F		001-41634		4.71		May 1, 2025
4.67		Form of Convertible Note issued by HUB Cyber Security Ltd. on February 20, 2025		20-F		001-41634		4.72		May 1, 2025
4.68		Forbearance and Settlement Agreement dated February 20, 2025 by and between Dominion Capital LLC and HUB Cyber Security Ltd.		Schedule 13D/A		005-94107		99.7		April 23, 2025
4.69		Form of Promissory Note		20-F		001-41634		4.74		May 1, 2025
4.70		Ordinary Share Purchase Agreement dated March 11, 2025, by and between HUB Cyber Security Ltd. and Keystone Capital Partners, LLC		20-F		001-41634		4.75		May 1, 2025

 

 

4.71		Form of Registration Rights Agreement dated March 11, 2025, by and between HUB Cyber Security Ltd. and Keystone Capital Partners, LLC		20-F		001-41634		4.76		May 1, 2025
4.72		Form of Commitment Note dated March 11, 2025		20-F		001-41634		4.77		May 1, 2025
4.73		Agreement and Plan of Merger, dated as of January 15, 2025, by and among BlackSwan Technologies, Inc., Hub Cyber Security Ltd., BST Merger Sub, Inc., and Ranan Grobman		20-F		001-41634		4.78		May 1, 2025
4.74		Commitment Note dated May 28, 2025		F-1		333-289996		10.82		September 3, 2025
4.75		Loan Agreement dated February 21, 2025, by and between Hub Cyber Security Ltd. and PrivCap Funding, LLC.		F-1		333-289996		10.83		September 3, 2025
4.76		Settlement Agreement dated August 6, 2025, by and among Hub Cyber Security Ltd. and PrivCap Funding LLC and Daniel Cohen.		F-1		333-289996		10.84		September 3, 2025
4.77†^		Securities Purchase Agreement dated August 27, 2025, by and among Hub Cyber Security Ltd. and the purchasers thereto		F-1		333-289996		10.85		September 3, 2025
4.78		First Amendment to Securities Purchase Agreement dated October 15, 2025, by and among Hub Cyber Security Ltd. and the purchasers thereto, with form of Amended and Restated Subordinated Convertible Note										*
4.79		Second Amendment to Securities Purchase Agreement dated December 31, 2025, by and among Hub Cyber Security Ltd. and the purchasers thereto										*
4.80		Registration Rights Agreement dated August 27, 2025 by and among Hub Cyber Security Ltd. and the undersigned purchasers thereto		F-1		333-289996		10.87		September 3, 2025
4.81		Form of Warrant		F-1		333-289996		10.88		September 3, 2025
4.82		Form of Warrant Issuance Letter Agreement dated July 14, 2025		F-1		333-289996		10.90		September 3, 2025
4.83		Form of Warrant dated July 14, 2025		F-1		333-289996		10.91		September 3, 2025
4.84		Form of Subscription Agreement		F-1		333-289996		10.92		September 3, 2025
4.85		Form of Pre-Funded Warrant		F-1		333-289996		10.93		September 3, 2025
4.86		Convertible Promissory Note dated August 20, 2025		F-1		333-289996		10.94		September 3, 2025
4.87		Master Exchange Agreement, dated September 17, 2025										*
4.88		Form of Note										*

 

 

4.89

Form of Purchase Agreement, dated as of June 26, 2026, by and among HUB Cyber Security Ltd. and the Evofem Sellers party thereto

6-K

001-41634

99.1

July 1, 2026

4.90

Form of Pre-Funded Warrant for Evofem Sellers

6-K

001-41634

99.2

July 1, 2026

8.1

List of Subsidiaries

*

11.1

Insider Trading Policy of HUB Cyber Security Ltd.

*

12.1

Principal Executive Officer and Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*

13.1

Principal Executive Officer and Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

**

97.1††

Policy for Recovery of Erroneously Awarded Compensation

6-K

001-41634

Appendix A to 99.1

October 5, 2023

 

101.INS		Inline XBRL Instance Document.		*
101.SCH		Inline XBRL Taxonomy Extension Schema Document.		*
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.		*
101.DEF		Inline XBRL Taxonomy Definition Linkbase Document.		*
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.		*
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document		*
104		Inline XBRL for the cover page of this Annual Report on Form 20-F (embedded within the Inline XBRL document)

 

 

 

#	Unofficial English translation from Hebrew original.

 

†	Schedules and exhibits to this Exhibit omitted pursuant to Instructions as to Exhibits to Form 20-F. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

 

††	Indicates management contract or compensatory plan or arrangement.

 

^	Portions of this exhibit (indicated by asterisks) have been omitted under rules of the U.S. Securities and Exchange Commission permitting the confidential treatment of select information.

 

Certain
agreements filed as exhibits to this Annual Report contain representations and warranties that the parties thereto made to each other.
These representations and warranties have been made solely for the benefit of the other parties to such agreements and may have been
qualified by certain information that has been disclosed to the other parties to such agreements and that may not be reflected in such
agreements. In addition, these representations and warranties may be intended as a way of allocating risks among parties if the statements
contained therein prove to be incorrect, rather than as actual statements of fact. Accordingly, there can be no reliance on any such
representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter
of any such representations and warranties may have changed since the date of such agreements.

 

 

SIGNATURES

 

The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this Annual Report on its behalf.

 

	HUB CYBER SECURITY LTD.
Date: July 17, 2026	By:	/s/ Limor Zur-Stoller
	Name:	Limor Zur-Stoller
	Title:	Chief Financial Officer (as Principal Executive Officer)

 

 

HUB
CYBER SECURITY LTD.

 

CONSOLIDATED
FINANCIAL STATEMENTS

 

AS
OF DECEMBER 31, 2025

 

INDEX

 

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID:1281)	F-2
Consolidated Statements of Financial Position	F-3 – F-4
Consolidated Statements of Profit or (Loss)	F-5
Consolidated Statements of Comprehensive Income (Loss)	F-6
Consolidated Statements of Changes in Shareholders’ Equity (Deficit)	F-7 – F-9
Consolidated Statements of Cash Flows	F-10 – F-11
Notes to Consolidated Financial Statements	F-12 – F-102

 

 

Kost Forer Gabbay & Kasirer 144 Menachem Begin Road, Building A Tel-Aviv 6492102, Israel

Tel: +972-3-6232525 ey.com

 

Report of Independent Registered Public Accounting
Firm

 

To the Shareholders and the Board of Directors
of HUB Cyber Security Ltd.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated
statements of financial position of HUB Cyber Security Ltd. (the Company) as of December 31, 2025 and 2024, the related consolidated statements
of profit or loss, comprehensive loss, changes in shareholders’ equity (deficit) and cash flows for each of the three years in the
period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2025, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

The Company’s Ability to Continue as
a Going Concern

 

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 1b to the financial statements, the Company has suffered
recurring operating losses and, as of December 31, 2025, has an accumulated deficit of $346,032 thousand, a working capital deficiency
of $119,524 thousand, and net cash used in operating activities of $31,398 thousand for the year ended December 31, 2025, and has stated
that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events
and conditions and management’s plans regarding these matters are also described in Note 1b. The most recent year consolidated financial
statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Kost Forer Gabbay & Kasierer

A Member of EY Global

 

We have served as the Company’s auditor
since 2021.

 

Tel-Aviv, Israel

July 17, 2026

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION

USD in thousands

 

						December 31,
		Note				2025				2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			6				1,763				3,085
Restricted cash and bank deposit							681				528
Trade receivables, net			7				8,778				7,897
Other assets			8				4,881				6,892
							16,103				18,402
NON-CURRENT ASSETS:
Long-term restricted deposit							216				165
Property and equipment, net			10				348				487
Right-of-use assets			9				1,711				2,151
Goodwill			11				2,142				1,874
Intangible assets, net			11				827				4,337
Deferred taxes			25				151				–
							5,395				9,014
							21,498				27,416

 

The accompanying notes are an integral part of
the consolidated financial statements.

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION

USD in thousands

 

				December 31,
		Note		2025				2024
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term loans		13			13,983				13,534
Convertible loans		17			1,626				24,763
Trade payables		14			9,825				8,200
Current maturities of lease liabilities		9			1,155				975
Current maturities of other liabilities		11c			5,430				5,244
Warrants liabilities*		17			2,684				13,884
Other accounts payable		15			43,168				39,474
Convertible loans measured at fair value		15			57,756				–
					135,627				106,074
NON-CURRENT LIABILITIES:
Long-term liabilities		16			317				217
Lease liabilities		9			709				1,212
Deferred tax liabilities		25			60				79
Net employee defined benefit liabilities		19			455				651
					1,541				2,159
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:		20
Share capital and premium					193,022				117,247
Share options					25,938				10,918
Treasury shares					(1,230	)			(1,230	)
Other reserves					12,666				18,523
Accumulated deficit					(346,032	)			(226,245	)
					(115,636	)			(80,787	)
Non-controlling interests					(34	)			(30	)
Total shareholders’ equity (deficit)					(115,670	)			(80,817	)
					21,498				27,416

 

 

The accompanying notes are an integral part of
the consolidated financial statements.

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF PROFIT OR LOSS

USD in thousands, except share and per share data

 

				Year ended December 31,
		Note		2025				2024				2023
Revenues					31,662				29,562				42,657
Cost of revenues		24a			26,372				24,515				41,907
Gross profit					5,290				5,047				750
Research and development expenses, net		24b			2,745				2,002				5,886
Sales and marketing expenses		24c			10,200				4,182	*			10,694
General and administrative expenses		24d			66,724				24,905	*			49,172
Other expenses (income), net		24e			(4,094	)			181				12,723
Operating loss					(70,285	)			(26,223	)			(77,725	)
Finance income		24f			(2,227	)			(2,220	)			(484	)
Finance expenses		24f			49,248				12,586				7,194
Loss before taxes on income					(117,306	)			(36,589	)			(84,435	)
Taxes on income (tax benefit)		25			743				557				171
Loss from continuing operation					(118,049	)			(37,146	)			(84,606	)
Net income (loss) from discontinued operation		12			(1,741	)			(1,885	)			(2,030	)
Attributable to:
Equity holders of the Company					(119,787	)			(39,757	)			(87,446	)
Non-controlling interests					(3	)			726				810
					(119,790	)			(39,031	)			(86,636	)
Loss per share attributable to equity holders of the Company ($):
Basic and diluted loss per share from continuing operation				$	(105.2	)**		$	(214,500	)**		$	(1,320,000	)**
Basic and diluted loss per share from discontinued operation				$	(1.6	)**		$	(10,500	)**		$	(31,500	)**
Weighted average number of shares outstanding used in computation of basic and diluted loss per share					1,122	**			176	**			64	**

 

 

 

The accompanying notes are an integral part of
the consolidated financial statements.

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS

USD in thousands

 

				Year ended December 31,
		Note		2025				2024				2023
				USD in thousands
Loss from continuing operation					(118,049	)			(37,146	)			(84,606	)
Loss from discontinued operation					(1,741	)			(1,885	)			(2,030	)
Other comprehensive loss, net of taxes:
Amounts that will not be reclassified subsequently to profit or loss:
Actuarial gain from defined benefit plan					43				168				92
Foreign currency translation from functional currency to presentation currency					(9,090	)			(242	)			(940	)
Total other comprehensive loss					(9,047	)			(74	)			(848	)
Total comprehensive loss					(128,837	)			(39,105	)			(87,484	)
Attributable to:
Equity holders of the Company					(128,833	)			(39,781	)			(88,232	)
Non-controlling interests					(4	)			676				748
					(128,837	)			(39,105	)			(87,484	)

 

The accompanying notes are an integral part of
the consolidated financial statements.

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

USD in thousands

 

		Attributable to equity holders of the Company
		Share capital and premium				Treasury shares				Share options				Reserve for transactions with noncontrolling interests				Reserve for share-based payment transactions				Reserve for remeasurement of defined benefit plan				Foreign currency translation adjustments				Accumulated deficit				Total				Non- controlling interests				Total deficit Shareholders’ equity
		USD in thousands
Balance as of January 1, 2025			117,247				(1,230	)			10,918				(3,286	)			26,093				(502	)			(3,782	)			(226,245	)			(80,787	)			(30	)			(80,817	)
Total loss			–				–				–				–				–				–				–				(119,787	)			(119,787	)			(3	)			(119,790	)
Other comprehensive loss			–				–				–				–				–				43				(9,089	)			–				(9,046	)			(1	)			(9,047	)
Total comprehensive income (loss)			–				–				–				–				–				43				(9,089	)			(119,787	)			(128,833	)			(4	)			(128,837	)
Cashless exercise of liability warrants			3,130				–				–				–				–				–				–				–				3,130				–				3,130
Conversion of convertible loans			32,348				–								–				–				–				–				–				32,348				–				32,348
Issuance of Prefunded warrants			10,164				–				2,628				–				–				–				–				–				12,792				–				12,792
Reclassification of warrants from liability to equity							–				10,529				–				–				–				–				–				10,529				–				10,529
Share-based payment issued for services			2,958				–				98				–				–				–				–				–				3,056				–				3,056
Issuance of shares in consideration of BlackSwan acquisition			23,549				–				1,765				–				–				–				–				–				25,314				–				25,314
Conversion of loans			275				–				–				–				–				–				–				–				275				–				275
Cost of share-based payment			3,351				–				–				–				3,189				–				–				–				6,540				–				6,540
Balance as of December 31, 2025			193,022				(1,230	)			25,938				(3,286	)			29,282				(459	)			(12,871	)			(346,032	)			(115,636	)			(34	)			(115,670	)

 

The accompanying notes are an integral part of
the consolidated financial statements.

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

USD in thousands

 

		Attributable to equity holders of the Company
		Share capital and premium				Treasury shares				Share options				Reserve for transactions with noncontrolling interests				Reserve for share-based payment transactions				Reserve for remeasurement of defined benefit plan				Foreign currency translation adjustments				Accumulated deficit				Total				Non- controlling interests				Total deficit Shareholders’ equity
		USD in thousands
Balance as of January 1, 2024			103,386				(1,230	)			10,918				–				24,165				(670	)			(3,590	)			(186,488	)			(53,509	)			2,776				(50,733	)
Total loss			–				–				–				–				–				–				–				(39,757	)			(39,757	)			726				(39,031	)
Other comprehensive loss			–				–				–				–				–				168				(192	)			–				(24	)			(50	)			(74	)
Total comprehensive income (loss)			–				–				–				–				–				168				(192	)			(39,757	)			(39,781	)			676				(39,105	)
Warrants exercise			3,422				–				–				–				–				–				–				–				3,422				–				3,422
Options exercise			143				–				–				–				(142	)			–				–				–				1				–				1
Conversion of convertible loans			7,876				–								–				–				–				–				–				7,876				–				7,876
Issuance of shares			2,420				–				–				–				–				–				–				–				2,420				–				2,420
Transactions with Non controlling interest			–				–				–				(3,286	)			–				–				–				–				(3,286	)			(3,482	)			(6,768	)
Cost of share-based payment			–				–				–				–				2,070				–				–				–				2,070				–				2,070
Balance as of December 31, 2024			117,247				(1,230	)			10,918				(3,286	)			26,093				(502	)			(3,782	)			(226,245	)			(80,787	)			(30	)			(80,817	)

 

The accompanying notes are an integral part of
the consolidated financial statements.

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

USD in thousands

 

		Attributable to equity holders of the Company
		Share capital and premium				Treasury shares				Share options				Warrants payable				Reserve for share-based payment transactions				Reserve for remeasurement of defined benefit plan				Foreign currency translation adjustments				Accumulated deficit				Total				Non- controlling interests				Total Shareholders’ equity
		USD in thousands
Balance as of January 1, 2023			81,620				(1,230	)			10,291				76				18,172				(762	)			(2,712	)			(99,042	)			6,413				2,397				8,810
Total loss			–				–				–				–				–				–				–				(87,446	)			(87,446	)			810				(86,636	)
Other comprehensive loss			–				–				–				–				–				92				(878	)							(786	)			(62	)			(848	)
Total comprehensive income (loss)			–				–				–				–				–				92				(878	)			(87,446	)			(88,232	)			748				(87,484	)
Warrants exercise			286								(52	)																							234				–				234
Options exercise			2,893																(1,122	)															1,771				–				1,771
Issuance of shares to Equity line of Credit (“ELOC’)			1,570				–				–				–				–				–				–				–				1,570				–				1,570
Conversion of convertible loans			6,143				–				–				–				–				–				–				–				6,143				–				6,143
Issuance of shares and warrants related to the PIPE, net of issuance expenses			3,557				–				–				–				–				–				–				–				3,557				–				3,557
Issuance of shares and warrants			110				–				679				(76	)			–				–				–				–				712				–				712
Issuance of shares related to RNER merger transaction (Note 5)			7,208				–				–				–				–				–				–				–				7,208				–				7,208
Dividend distribution to non-controlling interests			–				–				–				–				–				–				–				–				–				(369	)			(369	)
Cost of share-based payment			–				–				–				–				7,115				–				–				–				7,115				–				7,115
Balance as of December 31, 2023			103,386				(1,230	)			10,918				–				24,165				(670	)			(3,590	)			(186,488	)			(53,509	)			2,776				(50,733	)

 

The accompanying notes are
an integral part of the consolidated financial statements.

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF CASH FLOWS

USD in thousands

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Cash flows from operating activities:
Loss			(119,790	)			(39,031	)			(86,636	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to the profit or loss items:
Finance expenses, net			2,193				1,231				13
Other expenses			13				445				192
Financial liabilities recorded as listing expenses			–				–				7,648
Finance expenses related to convertible loans and warrants			28,648				7,227				5,016
Revaluation of liability to Legacy			186				269				810
ELOC			–				–				1,570
Share listing expenses			–				–				12,312
Cost of share-based payment to consultants and employees			6,408				2,420				–
Cost of share-based payment			3,189				2,070				7,115
Issuance of prefunded warrants			12,792				–				–
Depreciation and amortization			1,896				2,379				7,637
Impairment of goodwill and intangible assets			44,741				653				15,258
Change in employee benefit liabilities, net			(223	)			(42	)			(43	)
Gain on loss of control in subsidiaries *			(4,599	)
Change in deferred tax liabilities			(168	)			(37	)			(39	)
			95,076				16,615				57,489
Changes in asset and liability items:
Decrease (increase) in trade receivables			687				1,890				13,242
Decrease (increase) in other assets			447				665				(4,730	)
Increase (decrease) in trade payables			(2,500	)			(1,591	)			(3,436	)
Decrease (increase) in inventories			–				–				1,812
Change in balances of government grants			63				70				(824	)
Decrease (increase) in other accounts payable			(4,034	)			4,733	**			7,980
			(5,337	)			5,767	**			14,044
Cash paid and received during the year for:
Interest paid, net			(971	)			(277	)			(717	)
Taxes paid			(376	)			(184	)**			(382	)
			(1,347	)			(461	)			(1,099	)
Net cash used in operating activities			(31,398	)			(17,110	)			(16,202	)

 

 

HUB CYBER SECURITY LTD.

CONSOLIDATED
STATEMENTS OF CASH FLOWS

USD in thousands

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Cash flows from investing activities:
(Investment in) restricted bank deposit			(157	)			(337	)			(1,493	)
Withdrawal from restricted cash			57				1,407				3,926
Change in long-term deposits			–				177				–
Purchase of property and equipment			(33	)			(84	)			(297	)
Credit line to a related party			–				(1,615	)			–
Net cash provided by (used in) investing activities			(133	)			(452	)			2,136
Cash flows from financing activities:
Issuance of ordinary shares, net of issuance expenses			–				–				2,379
Repayment of lease liabilities			(1,001	)			(1,017	)			(1,711	)
Exercise of options and convertible warrants			–				5,146				2,005
Receipt of short-term loans			32,880				19,815				15,227
Acquisition of non-controlling interest			–				(6,768	)			–
Repayment of short-term loans			(6,536	)			–				(4,973	)
Net cash provided by financing activities			25,343				17,176				12,927
Exchange rate differences on cash and cash equivalents			4,866				(51	)			667
(Decrease) in cash and cash equivalents			(1,322	)			(437	)			(472	)
Cash and cash equivalents at the beginning of the year			3,085				3,522				3,994
Cash and cash equivalents at the end of the year			1,763				3,085				3,522
Non-cash transactions:
BST merger *			18,514
Right-of-use asset and liability			343				627				(2,516	)
actuarial (gain) loss from defined benefit plan			(43	)			–				–
Employee benefit assets and liabilities			2,693				168				97
Reclassification of deferred issuance cost to equity			–				–				1,384
Dividend distribution to non-controlling interests			–				–				369
Reclassification of liability to equity			10,259				2,670				–
Exercise of warrants			3,130				–				–
Conversion of convertible loans			32,348				7,876				6,143

 

 

 

The accompanying notes are an integral part of
the consolidated financial statements.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

HUB Cyber Security Ltd. (formerly:
Hub Cyber Security (Israel) Ltd.) (“the Company” or “HUB”) was incorporated under the laws of the State of Israel
in 1984 and is engaged in developing and marketing quality management software tools and professional services solutions. The Company’s
headquarters are located in Or Yehuda, Israel. The Company and its subsidiaries (collectively, the “Group”) are engaged in
developing reliable quality assurance systems that support process and product enhancement and also operates in the industry of secured
data fabric. The Group’s main customers are organizations and institutions operating in the security, electronics, aviation, telecommunications,
banking, and other sectors in Israel and worldwide. Following the merger between the Company and HUB Cyber Security TLV Ltd., the Company
also operates in the confidential computing and network security industry.

 

The Company’s ordinary shares
began trading on the Nasdaq Capital Market on March 1, 2023. The Company’s ordinary shares were previously listed on the Tel Aviv
Stock Exchange from January 23, 2000 to February 28, 2023.

 

 

The Company’s financial statements
have been prepared on a basis that assumes that it will continue as a going concern and that the Company’s ordinary course of business
will continue in alignment with management’s 2026-2027 business plan. However, the Company still faces significant uncertainty
regarding the adequacy of its liquidity and capital resources arising from its business operations and its ability to repay its obligations
as they become due, including financial debt, suppliers’ debts and other ordinary course operational costs.

 

The Company’s management is
closely monitoring the situation and has been attempting to alleviate the liquidity and capital resources concerns through workforce reductions,
interim financing facilities and other capital raising efforts. However, such efforts remain uncertain and are predicated upon events
and circumstances which are outside the Company’s control.

 

As of December 31, 2025, the Company
incurred accumulated losses in the amount of $346,032 thousand and had a negative working capital in the amount of $119,524 thousand.
Also, for the year ended December 31, 2025, the Company used $31,398 thousand in operating activities. The Company expects to continue
to incur losses in 2026 and potentially thereafter as well. On December 31, 2025, the Company’s cash and cash equivalents position
was approximately $1,763 thousand, which is not sufficient to fund the Company’s planned operations for at least a year beyond the
date of the filing date of the consolidated financial statements and the Company requires an immediate cash injection to fund its operations.
In addition, and as a result of its ongoing operating losses, the Company has insufficient revenues to cover its outstanding liabilities,
including defaults under certain loans, payments due to its debt holders, vendors, service providers and government duties, which resulted
in a seizure being placed on certain of its bank accounts. The Company had outstanding payments due for certain periods in 2025 and 2026
for employee pension and severance funds that were paid in June 2026 and has been unable to fully pay required withholding taxes on employee
compensation payments and government fees. Certain of its subsidiaries also have not made timely tax filings with the Israeli Tax Authority
for several years.

 

Furthermore, there are several legal
claims against the Company. For more information, see Note 22.

 

These factors raise substantial doubts
regarding the Company’s ability to continue as a going concern.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 –

GENERAL (Cont.)

 

The consolidated financial statements
for the year ended December 31, 2025 do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to
continue as a going concern. Such adjustments could be material.

 

 

On July 16, 2024, the Company received
a deficiency notice from the Nasdaq Stock Market (“Nasdaq”) informing it that the Company ordinary shares have failed to comply
with the $1.00 minimum bid price required for continued listing under Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”)
based upon the closing bid price of the Company ordinary shares for the 30 consecutive business days prior to the date of the deficiency
notice. The deficiency notice did not result in the immediate delisting of the Company’s ordinary shares from Nasdaq. In accordance
with Nasdaq Listing Rule 5810(c)(3)(A), the Company was given 180 calendar days from, or until January 13, 2025, to regain compliance
with the Minimum Bid Price Requirement.

 

In addition, on August 23, 2024 the
Company received a deficiency notice from the staff of the Listing Qualifications department of Nasdaq (the “Staff”) informing
it that it is no longer in compliance with Nasdaq Listing Rule 5450(b)(3) (the “Total Assets and Total Revenue Requirement”)
because its total assets and total revenue for the most recently completed fiscal year and two of the last three most recently completed
fiscal years were each below the minimum $50 million threshold for continued listing on The Nasdaq Global Market. In accordance with
Nasdaq Listing Rule 5810(c)(2)(A), the Company had 45 calendar days, or until October 7, 2024, to submit a plan to Nasdaq to evidence
compliance with Nasdaq’s continued listing criteria (the “Compliance Plan”). On October 9, 2024, the Company submitted
the Compliance Plan to Nasdaq. On December 11, 2024, the Company received another notice from Nasdaq stating that the Compliance Plan
did not evidence the Company’s ability to achieve near term compliance with continued listing requirements or sustain such compliance
over an extended period of time. Accordingly, the Company was notified that its securities would be delisted from the Nasdaq Global Market,
unless it requests a hearing before the Nasdaq Hearings Panel (the “Panel”), which request would stay any further action
by the Staff at least until the hearing process concludes. On December 18, 2024, the Company requested a hearing before the Panel. The
Company’s hearing before the Panel was held on February 6, 2025, and on February 28, 2025, the Company announced that the Panel
has granted its request to continue its listing on Nasdaq. In making its decision, following the hearing, the Panel considered the
Company’s entire record, including background information about the Company, its business description, financial information, market
data and compliance history. Based on the information presented to the Panel, including the Company’s success, as of February 7,
2025, in bringing its market value of listed securities above the $35 million minimum, the Panel granted the Company’s request
for continued listing on Nasdaq, subject to the Company filing an application to transfer to The Nasdaq Capital Market by March 5, 2025,
and demonstrating compliance with the minimum bid price and the market value of listed securities (“MVLS”) requirements by
March 31, 2025.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 –

GENERAL (Cont.)

 

On February 26, 2025, the Staff
confirmed to the Company via email that it had regained compliance with the MVLS Rules. On February 27, 2025, the Company received a
notice from Nasdaq informing the Company that Nasdaq granted its request to continue listing on the Nasdaq Stock Market, subject to
(i) on or before March 5, 2025, its filing of an application to transfer its securities to the Nasdaq Capital Market and (ii) on or
before March 31, 2025, the Company’s demonstrating compliance with the minimum bid price requirement and the continued listing
requirement that the Company maintains either a minimum of $2,500 thousand in shareholders’ equity or $35,000 thousand market
value of listed securities or $500 thousand of net income from continuing operations for the most recently completed fiscal year or
two of the three most recently completed fiscal years, as set forth in Nasdaq Listing Rule 5550(b)(2) (“MVLS
Rules”).

 

On March 4, 2025, the Company filed
an application to transfer its securities to the Nasdaq Capital Market.

 

On March 28, 2025, the Company effected
a 1-for-10 reverse share split of its ordinary shares in an effort to regain compliance with the Nasdaq minimum bid price requirement.

 

On June 12, 2025, Nasdaq formally
confirmed that the Company satisfies both the Minimum Bid Price Requirement and the MVLS thresholds.

 

On January
15, 2026, the Company effected a 1-for-15 reverse share split of its ordinary shares in an effort to maintain compliance with the Minimum
Bid Price Requirement, which was subsequently achieved. On April 20, 2026, the Company effected a 1-for-50 reverse share split of its
ordinary shares and on June 5, 2026, the Company effected a 1-for-20 reverse share split of its ordinary shares, both. in an effort to
maintain compliance with the Minimum Bid Price Requirement.

 

On January 21, 2026, the Company received a letter from Nasdaq notifying
it that, for the period from December 5, 2025 to January 20, 2026, the Company’s MVLS was below the MVLS Rule threshold. Pursuant
to Nasdaq Listing Rule 5810(c)(3)(C), the Company has a compliance period of 180 calendar days, or until July 20, 2026 (the “Compliance
Period”), to regain compliance with the MVLS Rule. If at any time during the Compliance Period, the Company’s MVLS is at
least $35 million for a minimum of ten consecutive business days, Nasdaq will provide the Company a written confirmation of compliance
and this matter will be closed. In the event that the Company does not regain compliance with the MVLS Rule during the Compliance Period,
Nasdaq will provide written notification that the Company’s securities will be subject to delisting. In the event of such notification,
the Nasdaq rules permit the Company an opportunity to appeal Nasdaq’s determination. The Company is currently evaluating options
to regain compliance with the MVLS Rule.

 

Although the Company will use all reasonable efforts to achieve compliance with the Minimum
Bid Price Requirement and MVLS Rule, there can be no assurance that it will be able to regain compliance with the Minimum Bid Price Requirement
or the MVLS Rule or will otherwise be in compliance with other Nasdaq continued listing requirements.

 

On May 18, 2026, the Company
received a deficiency notice from the Nasdaq stating that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) because
it had not yet filed its Annual Report on Form 20-F for the period ended December 31, 2025 with the Securities and Exchange Commission
(the “SEC”). In accordance with Nasdaq Listing Rules, the Company had 60 calendar days (until July 17, 2026) to submit a
plan to regain compliance. If Nasdaq accepted the Company’s plan, Nasdaq can grant an exception of up to 180 calendar days from
the due date of the Form 20-F, or until November 11, 2026, to regain compliance.

 

d.	Merger between the Company and Mount Rainier Acquisition Corp.:

 

On March 23, 2022, the Company entered into a definitive business combination agreement (the “Business Combination Agreement”) with Mount Rainier Acquisition Corp., a Delaware corporation (“RNER”) and Rover Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of HUB (“Merger Sub”). Pursuant to the Business Combination Agreement, Merger Sub merged with and into RNER, with RNER surviving the merger (the “Reverse Recapitalization”). Upon consummation of the Reverse Recapitalization and the other transactions contemplated by the Business Combination Agreement (the “Transactions”) on February 28, 2023 (the “Closing Date”), RNER became a wholly owned subsidiary of HUB.

 

Prior to the Closing Date, in connection
with the closing of the Transactions, the Company and its shareholders recapitalized the Company’s equity securities whereby each
ordinary share of the Company was converted into 0.712434 ordinary shares of the Company (the “February 2023 Share Split”).
In addition, as part of the February 2023 Share Split, each outstanding option to purchase an ordinary share was converted into an option
to purchase 0.712434 ordinary shares and the exercise price of such option was increased by dividing the exercise price by 0.712434.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 –

GENERAL (Cont.)

 

The Transactions were accounted for
as a reverse recapitalization, in accordance with the relevant International Financial Reporting Standards (“IFRS”) standard
as issued by the International Accounting Standard Board (“IASB”) and the Group was deemed to be the accounting acquirer.
RNER did not meet the definition of a business in accordance with IFRS 3 – “Business Combinations,” and the Transactions were
instead accounted for within the scope of IFRS 2 – “Share-based payment” (“IFRS 2”), as a share-based payment
transaction in exchange for a public listing service. In accordance with IFRS 2 the Company recorded a one-time share-based share listing
expense of $12,312 thousand at the closing of the Merger Agreement that was calculated based on the excess of the fair value of the Company’s
shares issued to public investors over the fair value of the identifiable net assets of RNER that were acquired. For more information,
see Note 5.

 

e.	BlackSwan Technologies, Inc. (“BST”)

 

In November 2023, the Company began
to collaborate with BST with the goal to become a significant player in the secured data fabric industry.

 

The Company has provided BST an aggregate
amount of $2,732 thousand under the BST Loan Agreement (as defined below) dated as of December 4, 2023. Following the merger between the
Company and BST on January 27, 2025, the balance was classified as an inter-company receivable and is no longer included as a credit facility. For
more information, see Note 26a.

 

 

On January 15, 2025, the Company entered
into an Agreement and Plan of Merger with BST, pursuant to which, on January 27, 2025, BST merged with and into a wholly-owned subsidiary
of the Company. As a result of the merger, BST and its subsidiaries became subsidiaries of the Company and the equity holders of BST received
197 ordinary shares of the Company and pre-funded warrants to purchase 44 ordinary shares of HUB. Such shares constituted approximately
42.56% of the Company’s outstanding ordinary shares on a post-closing basis and approximately 29.91% of the Company’s share
capital on a fully-diluted, post-closing basis (after giving effect to additional shares issuable pursuant to adjustment mechanisms under
existing securities, but excluding existing warrants that were significantly out-of-the-money, unvested equity grants, and convertible
notes that were expected to be repaid and not converted). The exercise of the pre-funded warrants is limited to the extent that upon exercise,
the holder and its affiliates would hold more than 4.99% of the Company’s outstanding ordinary. The ordinary shares were subject
to transfer restrictions until June 2026.

 

BST had five subsidiaries:

 

A.

BlackSwan Technologies (PVT) Ltd. (Sri Lanka)

 

B.

BlackSwan Technologies sp Z.O.O. (Poland)

 

C.

Cognitive Systems Ltd. (Israel)

 

D.

BlackSwan Technologies AI Limited (UK)

 

E.

BlackSwan Technologies GmbH (Germany)

 

The four subsidiaries listed in A-D
above were defined as held for sale under IFRS 5 and were divested during 2025.

 

The fair value of the consideration
was estimated at approximately $25,314,000, based on the Company’s share price on the Nasdaq Stock Market on the acquisition date,
which was $6.97 per ordinary share.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 –

GENERAL (Cont.)

 

Below is a summary of BST’s balance sheet as of the
acquisition date:

 

		As of January 27, 2025
		USD in thousands
Assets
Property, plant and equipment, net			3
Trade receivables, net			436
Total assets			439
Liabilities
Liabilities to suppliers, employees, and other liabilities			(4,134	)
Loans			(6,176	)
Net held-for-sale liabilities			(6,426	)
Total liabilities			(16,736	)
			(16,297	)
Fair value of consideration			(25,314	)
Intangible asset – Technology			(41,611	)

 

The acquisition analysis indicates that
the Company acquired a group of assets and liabilities that do not meet the definition of a business.

 

In accordance with IFRS 3, the Company
allocated the purchase cost to the identifiable individual assets and liabilities based on their relative fair values at the acquisition
date. A transaction or event of this type does not give rise to goodwill. The Company identified one intangible asset, which is the technology.
The entire purchase price was allocated to this intangible asset.

 

As the time of the acquisition, BST
had four subsidiaries operating in the UK, Poland, Sri Lanka and Israel, which were not part of the Company’s core operations. The
Company’s management determined that these entities were not expected to be integrated into the Company’s ongoing business
and were therefore classified at the acquisition date as assets and liabilities held for sale, in accordance with IFRS 5 – Non-current
Assets Held for Sale and Discontinued Operations.

 

For a description of the terms of the
ordinary shares issued in the BST acquisition, see above.

 

For a description of the BST Loan Agreement,
see above.

 

As of December 31, 2025, the Company
recorded a full impairment loss on the technology asset acquired in the BST acquisition. See Note 11.

 

 

In
February 2025, the Company reached a settlement agreement with Oppenheimer & Co., Inc. (“Oppenheimer”) for $3,000 thousand,
with $1,100 thousand being paid on the effective date and the remaining balance payable in ten monthly payments of $200 thousand from
March to December 2025 (with the first payment being $100 thousand). As part of the settlement arrangement, Claymore Capital Pty Ltd.
(“Claymore”) agreed to make on the Company’s behalf, all the payments that the Company is required to make under the
settlement agreement with Oppenheimer. In consideration, the Company issued Claymore a convertible note in the principal amount of $6,000
thousand. The note was convertible at the option of the holder at a discount of 25% to the prevailing market price, but not higher than
$225,000 or lower than the Nasdaq floor price. The note did not bear interest and matured on February 18, 2030, at which time the Company
was entitled to convert the note into ordinary shares. As of December 31, 2025, Claymore converted the note in full into 122 ordinary
shares, at a conversion price of $45,000 per share. As of the date of this Annual Report, the entire outstanding reserve balance of $12,800
thousand has been fully settled. For more information, see Note 5.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 –

GENERAL (Cont.)

 

 

In February 2025, the Company also reached a settlement agreement with Dominion Capital LLC and its affiliates (together, “Dominion”) for $4,500 thousand, with $400 thousand being payable by February 21, 2025, $200 thousand payable by March 3, 2025 and the remaining balance payable in ten monthly payments of $390 thousand from March to December 2025. As a result, the Israeli insolvency proceedings filed by Dominion in December 2023 were dismissed on March 7, 2025. As part of the settlement arrangement, Claymore agreed to make on the Company’s behalf all the payments that the Company is required to make under the settlement agreement with Dominion. In consideration, the Company issued Claymore a convertible note in the principal amount of $7,500 thousand. The note was convertible at the option of the holder at a discount of 25% to the prevailing market price, but not higher than $225,000 or lower than the Nasdaq floor price. The note did not bear interest and matured on February 20, 2030, at which time the Company was entitled to convert the note into ordinary shares. As of December 31, 2025, Claymore converted the note in full into 166 ordinary shares, at a conversion price of $45,000 per share. As of the date of this Annual Report, the entire outstanding balance owed to Dominion has been fully repaid.

 

i.	Israel Securities Authority and the Israel Tax Authority

 

On September 17, 2024, the ISA and the Israel Tax Authority conducted a search of the Company’s office in the context of investigating former and current officers in connection with suspicions regarding violations of securities, penal and tax laws. To the Company’s best knowledge, the suspicions are related, among other things, to the subject matter of the Internal Investigation. On April 22, 2025, investigators from the Israeli Tax Authority visited the offices of the Company. To the Company’s best knowledge, the visit related to developments in the Internal Investigation related to the actions of a former financial controller of the Company, which were also addressed in the Internal Investigation. In addition, according to a letter provided to the Company in January 2026 by the ISA, the investigation has been concluded, and the investigation file concerning the Company has been transferred to the Tel Aviv District Attorney’s Office (Taxation and Economic Crimes) for a resolution, the status of which remains uncertain.

 

NOTE 2 –

MATERIAL ACCOUNTING POLICIES

 

The following accounting policies have
been applied consistently in the financial statements for all periods presented, unless stated otherwise.

 

a.

Basis of presentation of the financial statements:

 

These financial statements have been
prepared in accordance with IFRS as issued by the IASB.

 

The Company’s financial statements
have been prepared on a cost basis, except for financial instruments measured at fair value through profit or loss and also “Other
Comprehensive Income.”

 

The Company has elected to present
the profit or loss items using the function of expense method.

 

b.

The operating cycle:

 

The Company’s operating cycle
is one year.

 

c.

Consolidated financial statements:

 

The consolidated financial statements
comprise the financial statements of companies that are controlled by the Company (subsidiaries). Control is achieved when the Company
has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability
to affect those returns through its power over the subsidiary. In assessing control, the effect of potential voting rights is considered
only if they are substantive.

 

Non-controlling interests in subsidiaries
represent the equity in subsidiaries not attributable, directly or indirectly, to a parent. Non-controlling interests are presented in
equity separately from the equity attributable to the equity holders of the Company. Profit or loss and components of other comprehensive
income are attributed to the Company and to non-controlling interests. Losses are attributed to non-controlling interests even if they
result in a negative balance of non-controlling interests in the consolidated statement of financial position. For more information,
see Note 23(b).

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 –

MATERIAL ACCOUNTING POLICIES (Cont.)

 

d.

Business combinations and goodwill:

 

To determine whether a transaction
is accounted for as an asset acquisition or business combination, the Company applies a concentration test to evaluate if substantially
all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
If the test is met, the transaction is accounted for as an asset acquisition. If the concentration test is not met, the integrated set
of activities and assets is considered a business based on whether there are inputs and substantive processes in place. For transactions
accounted for as asset acquisitions, the cost, including certain transaction costs, is allocated to the assets acquired on the basis of
relative fair values.

 

Business combinations are accounted
for by applying the acquisition method. The cost of the acquisition is measured at the fair value of the consideration transferred on
the acquisition date with the addition of non-controlling interests in the acquiree. In each business combination, the Company chooses
whether to measure the non-controlling interest in the acquiree based on their fair value on the acquisition date or at their proportionate
share in the fair value of the acquiree’s net identifiable assets.

 

Direct acquisition costs are carried
to the statement of profit or loss as incurred.

 

Goodwill is initially measured at cost,
which represents the excess of the acquisition consideration and the amount of non-controlling interests over the net identifiable assets
acquired and liabilities assumed.

 

e.

Functional currency, presentation currency and foreign currency:

 

1.

Functional currency and presentation currency:

 

The Group determines the functional
currency of each entity in the Group. Items included in the financial statements of each of the Company’s entities are measured
using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Company’s
functional currency is New Israeli Shekel (“NIS”). The consolidated financial statements are presented in US dollars (“USD”
or “$”), which is the Company’s presentation currency.

 

The results and financial position
of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the
presentational currency are translated into the presentational currency as follows:

 

●

Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

 

●

Income and expenses for each statement of profit or loss and statement of comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

 

●

All resulting exchange differences are recognized in other comprehensive income (loss).

 

2.

Transactions, assets and liabilities in foreign currency:

 

Transactions denominated in foreign
currency (other than the functional currency) are recorded upon initial recognition at
the exchange rate at the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency
are translated at each reporting date into the functional currency at the exchange rate at that date. Exchange rate differences, other
than those capitalized to qualifying assets, are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign
currency and measured at cost are translated at the exchange rate at the date of the transaction. Non-monetary assets and liabilities
denominated in foreign currency and measured at fair value are translated into the functional currency using the exchange rate prevailing
at the date when the fair value was determined.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 –

MATERIAL ACCOUNTING POLICIES (Cont.)

 

f.

Revenue recognition:

 

Revenue from contracts with customers
is recognized when the control over the goods or services is transferred to the customer.

 

Revenue from rendering of services:

 

Revenue from rendering of services
is recognized over time, during the period the customer simultaneously receives and consumes the benefits provided by the Company’s
performance. The Company charges its customers based on payment terms agreed upon in specific agreements. Payment terms and conditions
vary by contract type, although terms generally include a requirement to pay within 30 to 90 days. When payments are made before or after
the service is performed, the Company recognizes the resulting contract asset or liability.

 

Contract balances:

 

The Company charges customers as the
work progresses in accordance with the contractual terms. Amounts billed are classified as trade receivables in the statement of financial
position. When revenue from performance obligation of a contract are recognized in profit or loss before the customer is charged, the
unbilled amounts are recorded as part of the trade receivables.

 

Amounts received from customers in
advance of performance by the Company are recorded as contract liabilities and recognized as revenue in profit or loss when the work is
performed.

 

Determining the transaction Price

 

The transaction price is the amount
of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding
amounts collected on behalf of third parties (for example, some sales taxes). The Company applies the practical expedient of significant
finance component. That is, the promised amount of consideration is not adjusted for the effects of a significant financing component
if the period between the transfer of the promised good or service and the payment is one year or less.

 

Costs of obtaining a contract:

 

The Company has elected to apply the
practical expedient allowed by IFRS 15 according to which incremental costs of obtaining a contract are recognized as an expense when
incurred if the amortization period of the asset
is one year or less.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 –

MATERIAL ACCOUNTING POLICIES (Cont.)

 

 

Deferred taxes:

 

Deferred taxes are computed in respect
of temporary differences between the carrying amounts in the financial statements and the amounts attributed for tax purposes.

 

Deferred taxes are measured at the
tax rate that is expected to apply when the asset is realized or the liability is settled, based on tax laws that have been enacted or
substantively enacted by the reporting date.

 

Deferred tax assets are reviewed at
each reporting date and reduced to the extent that it is not probable that they will be utilized. Deductible carryforward losses and temporary
differences for which deferred tax assets had not been recognized are reviewed at each reporting date and a respective deferred tax asset
is recognized to the extent that their utilization is probable.

 

Taxes that would apply in the event
of the disposal of investments in subsidiaries have not been taken into account in computing deferred taxes, as long as the disposal of
the investments in subsidiaries is not probable in the foreseeable future. Also, deferred taxes that would apply in the event of distribution
of earnings by subsidiaries as dividends have not been taken into account in computing deferred taxes, since the distribution of dividends
does not involve an additional tax liability or since it is the Company’s policy not to initiate distribution of dividends from
a subsidiary that would trigger an additional tax liability.

 

Deferred taxes are offset if there
is a legally enforceable right to offset a current tax asset against a current tax liability and the deferred taxes relate to the same
taxpayer and the same taxation authority.

 

 

Separately acquired intangible assets
are measured on initial recognition at cost including directly attributable costs. Intangible assets acquired in a business combination
are measured at fair value at the acquisition date. Expenditures relating to internally generated intangible assets are recognized in
profit or loss when incurred.

 

Intangible assets with a finite useful
life are amortized over their useful life on a straight-line basis and reviewed for impairment whenever there is an indication that the
asset may be impaired. The amortization period and the amortization method for an intangible asset are reviewed at least at the end of
each year.

 

Patents:

 

The patents are for a period of ten
years with an option for renewal at the end of the period.

 

The useful life of intangible assets
is as follows:

 

		Years
Patents		10
Customer relations		3.5 – 10
Order backlog		1
Technology		3 – 6

 

Gains or losses from the derecognition
of an intangible asset are measured as the difference between the net disposal proceeds and the cost of the asset and carried to profit
or loss.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 –

MATERIAL ACCOUNTING POLICIES (Cont.)

 

i.

Impairment of non-financial assets:

 

The Company evaluates the need to record
an impairment of non-financial assets whenever events or changes in circumstances indicate that the carrying amount is not recoverable.
If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount.

 

The recoverable amount is the higher
of fair value less costs of sale and value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax
discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does not generate independent cash
flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in profit or loss.

 

An impairment loss of an asset, other
than goodwill, is reversed only if there have been changes in the estimates used to determine the asset’s recoverable amount since
the last impairment loss was recognized. Reversal of an impairment loss, as above, shall not be increased above the lower of the carrying
amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in
prior years and its recoverable amount. The reversal of impairment loss of an asset presented at cost is recognized in profit or loss.

 

A reversal of an impairment loss for
each cash generating unit shall be allocated to the assets of the unit, except for goodwill, pro rata with the carrying amount to each
of the assets within the measurement scope of IAS 36. The reversal is limited so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognized for the asset in prior years.

 

The following criteria are applied
in assessing impairment of these specific assets:

 

Goodwill in respect of subsidiaries:

 

The Company reviews goodwill for impairment
at least once a year, on December 31, or more frequently if events or changes in circumstances indicate that there is an impairment.

 

Goodwill is tested for impairment by
assessing the recoverable amount of the cash-generating unit (or group of cash-generating units) to which the goodwill has been allocated.
Each cash-generating unit to which the goodwill is allocated shall represent the lowest level within the Company at which the goodwill
is monitored for internal management purposes and not be larger than an operating segment. An impairment loss is recognized if the recoverable
amount of the cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is less than the carrying
amount of the cash-generating unit (or group of cash-generating units). Any impairment loss is allocated first to goodwill. Impairment
losses recognized for goodwill cannot be reversed in subsequent periods.

 

j.

Financial instruments:

 

1.

Financial liabilities:

 

a)

Financial liabilities measured at amortized cost:

 

Financial liabilities are initially
recognized at fair value less transaction costs that are directly attributable to the issue of the financial liability. After initial
recognition, the Company measures all financial liabilities at amortized cost.

 

b)

Financial liabilities measured at fair value through profit or loss:

 

At initial recognition, the Company
measures financial liabilities that are not measured at amortized cost at fair value. Transaction costs are recognized in profit or loss.
After initial recognition, changes in fair value are recognized in profit or loss.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 –

MATERIAL ACCOUNTING POLICIES (Cont.)

 

2.

Derecognition of financial liabilities:

 

A financial liability is derecognized
only when it is extinguished, that is when the obligation specified in the contract is discharged or cancelled or expires. A financial
liability is extinguished when the debtor discharges the liability by paying in cash, other financial assets, goods or services; or is
legally released from the liability.

 

When there is a modification in the
terms of an existing financial liability, the Company evaluates whether the modification is substantial.

 

If the terms of an existing financial
liability are substantially modified, such modification is accounted for as an extinguishment of the original liability and the recognition
of a new liability. The difference between the carrying amounts of the above liabilities is recognized in profit or loss. 

 

If the modification is not substantial,
the Company recalculates the carrying amount of the liability by discounting the revised cash flows at the original effective interest
rate and any resulting difference is recognized in profit or loss.

 

When evaluating whether the modification
in the terms of an existing liability is substantial, the Company considers both quantitative and qualitative factors.

 

3.

Warrants to ordinary shares:

 

According to IAS 32, “Financial
Instruments: Presentation”, derivatives which will be settled only by the issuer exchanging fixed amounts of cash to fixed numbers
of the Company’s ordinary shares will be classified as equity. Otherwise, the instrument should be classified as a financial liability.
Therefore, the Group has classified such warrants as a financial liability. The warrant instrument is initially recognized at fair value,
and subsequently measured at fair value. Changes in fair value are recognized in profit or loss. When the fair value of the identified
financial instruments measured at Level 2 or Level 3 in the fair value hierarchy exceeds the total consideration received by the Company,
the ‘Day 1’ loss is deferred and recognized on a straight-line basis over the term of the instruments.

 

k.

Fair value measurement:

 

Fair value is the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date.

 

Fair value measurement is based on
the assumption that the transaction will take place in the asset’s or the liability’s principal market, or in the absence
of a principal market, in the most advantageous market.

 

The fair value of an asset or a liability
is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants
act in their economic best interest.

 

Fair value measurement of a non-financial
asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best
use or by selling it to another market participant that would use the asset in its highest and best use.

 

The Group uses valuation techniques
that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.

 

All assets and liabilities measured
at fair value or for which fair value is disclosed are categorized into levels within the fair value hierarchy based on the lowest level
input that is significant to the entire fair value measurement:

 

●

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

●

Level 2 – inputs other than quoted prices included within Level 1 that are observable directly or indirectly.

 

●

Level 3 – inputs that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data).

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 –

MATERIAL ACCOUNTING POLICIES (Cont.)

 

 

A provision in accordance with IAS
37 is recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. When the Group expects part or all of the expense to be reimbursed, for example under an insurance contract,
the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense is recognized in
the statement of profit or loss net of any reimbursement.

 

The Group includes the following type
of provisions in the financial statements:

 

A provision for claims is recognized
when the Group has a present legal or constructive obligation as a result of a past event, that it is more likely than not that an outflow
of resources embodying economic benefits will be required by the Group to settle the obligation and a reliable estimate can be made of
the amount of the obligation.

 

m.

Employee benefit liabilities:

 

The Group has several employee benefit
plans:

 

1.

Short-term employee benefits:

 

Short-term employee benefits are benefits
that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render
the related services. These benefits include salaries, paid annual leave, paid sick leave, recreation and social security contributions
and are recognized as expenses as the services are rendered. A liability in respect of a cash bonus is recognized when the Group has a
legal or constructive obligation to make such payment as a result of past service rendered by an employee and a reliable estimate of the
amount can be made.

 

2.

Post-employment benefits:

 

The plans are normally financed by
contributions to insurance companies and classified as defined contribution plans or as defined benefit plans.

 

The Group has defined contribution
plans pursuant to Section 14 to the Severance Pay Law under which the Group usually pays fixed contributions and will have no legal or
constructive obligation to pay further contributions if the fund does not hold sufficient amounts to pay all employee benefits relating
to employee service in the current and prior periods. Contributions to the defined contribution plan in respect of severance or retirement
pay are recognized as an expense when contributed concurrently with performance of the employee’s services.

 

The Group also operates a defined benefit
plan in respect of severance pay pursuant to the Severance Pay Law. According to the law, employees are entitled to severance pay upon
dismissal or retirement. The liability for termination of employment is measured using the projected unit credit method. The actuarial
assumptions include expected salary increases and rates of employee turnover based on the estimated timing of payment. The amounts are
presented based on discounted expected future cash flows using a discount rate determined by reference to market yields at the reporting
date on high quality corporate bonds that are linked to the Israeli Consumer Price Index with a term that is consistent with the estimated
term of the severance pay obligation.

 

In respect of its severance pay obligation
to certain of its employees, the Company usually makes current deposits in severance pay funds and insurance companies (the “plan
assets”). Plan assets comprise assets held by a long-term employee benefit fund or qualifying insurance policies. Plan assets are not available
to the Group’s own creditors and cannot be returned directly to the Group.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 –

MATERIAL ACCOUNTING POLICIES (Cont.)

 

The liability for employee benefits
shown in the statement of financial position reflects the present value of the defined benefit obligation less the fair value of the plan
assets.

 

Remeasurements of the net liability
are recognized in other comprehensive income in the period in which they occur.

 

n.

Basic and diluted net profit (loss) per share:

 

In computing diluted loss per share
for the years ended December 31, 2025, December 31, 2024, December 31, 2023 no account was taken of the potential dilution that could
occur upon the exercise of employee and investors stock options, amounting to 10,910, 218
and 44, respectively, since they had an anti-dilutive effect on loss per share.

 

NOTE 3 –

SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS

 

In the process of applying the significant
accounting policies, the Group has made the following judgments which have the most significant effect on the amounts recognized in the
financial statements:

 

a.

Estimates and assumptions:

 

The preparation of the financial statements
requires management to make estimates and assumptions that have an effect on the application of the accounting policies and on the reported
amounts of assets, liabilities, revenues and expenses. Changes in accounting estimates are reported in the period of the change in estimate.

 

The key assumptions made in the financial
statements concerning uncertainties at the reporting date and the critical estimates computed by the Group that may result in a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

–

Impairment of goodwill:

 

The Group reviews goodwill for impairment
at least once a year. This requires management to make an estimate of the projected future cash flows from the continuing use of the cash-generating
unit (or a group of cash-generating units) to which the goodwill is allocated and also to choose a suitable discount rate for those cash
flows. For more information, see Note 2i.

 

–

Impairment of other intangible assets

 

The carrying values of the long-lived
intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may no longer be recoverable. If any indication exists, then the asset’s recoverable amount is estimated. Determining the recoverable
amount is subjective and requires management to estimate
future growth, profitability, discount and terminal growth rates, and project future cash flows, among other factors. Future events and
changing market conditions may impact the assumptions as to prices, costs or other factors that may result in changes to the estimates
of future cash flows. If the Company concludes that a definite or indefinite long-lived intangible asset is impaired, the Company will
recognize a loss in an amount equal to the excess of the carrying value of the asset over its fair value at the date of impairment.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 3 –

SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS (Cont.)

 

The fair value at the date of the impairment
becomes the new cost basis and will result in a lower depreciation expense than for periods before the asset’s impairment. 

 

 

In estimating the likelihood of outcome
of legal claims filed, threatened litigation and unasserted claim against the Group, the companies in the Group rely on the opinion of
their legal counsel. These estimates are based on the legal counsel’s best professional judgment, taking into account the stage
of proceedings and legal precedents in respect of the different issues. Since the outcome of the claims will be determined in courts,
the results could differ from these estimates.

 

–

Deferred tax assets:

 

Deferred tax assets are recognized
for unused carryforward tax losses and deductible temporary differences to the extent that it is probable that taxable profit will be
available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax
assets that can be recognized, based upon the timing and level of future taxable profits, its source and the tax planning strategy. See
also Note 2g above.

 

–

Severances and other post-employment benefits:

 

The liability in respect of post-employment
defined benefit plans is determined using actuarial valuations. The actuarial valuation involves making assumptions about, among others,
the discount rate, rate of salary increases and employee turnover rate. The carrying amount of the liability may be significantly affected
by changes in these estimates.

 

–

IAS 1, “Presentation of Financial Statements”:

 

In January 2020, the IASB issued
an amendment to IAS 1, “Presentation of Financial Statements” regarding the criteria for determining the classification of
liabilities as current or non-current (the “Original Amendment”). In October 2022, the IASB issued a subsequent amendment
(the “Subsequent Amendment”).

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 4 –

DISCLOSURE OF NEW STANDARDS IN THE PERIOD

 

According to the Subsequent Amendment:

 

●

Only financial covenants with which an entity must comply on or before the reporting date will affect a liability’s classification as current or non-current.

 

●

In respect of a liability for which compliance with financial covenants is to be evaluated within twelve months from the reporting date, disclosure is required to enable users of the financial statements to assess the risks related to that liability. The Subsequent Amendment requires disclosure of the carrying amount of the liability, information about the financial covenants, and the facts and circumstances at the end of the reporting period that could result in the conclusion that the entity may have difficulty in complying with the financial covenants.

 

According to the Original Amendment,
the conversion option of a liability affects the classification of the entire liability as current or non-current unless the conversion
component is an equity instrument.

 

The Original Amendment and Subsequent
Amendment are both effective for annual periods beginning on or after January 1, 2024 and must be applied retrospectively. The Original
Amendment and Subsequent Amendment did not have an impact on the Company’s consolidated financial statements, other than for the
warrant liabilities which the Company classified as a current liability beginning on January 1, 2024 with a retrospective effect.

 

–

Amendments to IAS 21, “The Effects of Changes in Foreign Exchange Rates”:

 

In August 2023, the IASB issued “Amendments
to IAS 21: Lack of Exchangeability (Amendments to IAS 21, “The Effects of Changes in Foreign Exchange Rates”)” (the
“Amendments”) to clarify how an entity should assess whether a currency is exchangeable and how it should measure and determine
a spot exchange rate when exchangeability is lacking.

 

The Amendments set out the requirements
for determining the spot exchange rate when a currency lacks exchangeability. The Amendments require disclosure of information that will
enable users of financial statements to understand how a currency not being exchangeable affects or is expected to affect the entity’s
financial performance, financial position and cash flows.

 

The Amendments applied for annual reporting
periods beginning on or after January 1, 2025. The amendments did not have a material impact on the Company’s consolidated financial
statements.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 4 –

DISCLOSURE OF NEW STANDARDS IN THE PERIOD (Cont.)

 

Changes in accounting policies – initial
application of new financial reporting and accounting standards and amendments to existing financial reporting and accounting standards
in the period prior to their adoption:

 

IFRS 18 “Presentation and Disclosure in Financial Statements” (IFRS 18)

 

IFRS 18 replaces IAS 1
“Presentation of Financial Statements.” The main changes in the new standard are as below:

 

i.

Improved comparability in the statement of profit or loss. IFRS 18 requires entities to classify all income and expenses within their statement of profit or loss into one of five categories: operating; investing; financing; income taxes; and discontinued operations. The first three categories are new, to improve the structure of the income statement, and requires all entities to provide new defined subtotals, including operating profit or loss. The improved structure and new subtotals will give investors a consistent starting point for analyzing entities’ performance and make it easier to compare entities.

 

ii.

Enhanced transparency of management-defined performance measures. IFRS 18 requires entities to disclose explanations of those entity-specific measures that are related to the income statement, referred to as management-defined performance measures.

 

iii.

Useful grouping of information in the financial statements. IFRS 18 sets out enhanced guidance on how to organize information and whether to provide it in the primary financial statements or in the notes. The changes are expected to provide more detailed and useful information. IFRS 18 also requires entities to provide more transparency regarding operating expenses, helping investors to find and understand the information they need.

 

The Amendments apply for annual reporting
periods beginning on or after January 1, 2027. Earlier adoption is permitted. The Company is still evaluating the effect of this amendment
on its consolidated financial statements.

 

NOTE 5 –

MERGER AGREEMENT WITH SPECIAL PURPOSE ACQUISITION COMPANY (“SPAC”)

 

On March 22, 2022, the Company’s
board of directors approved the Company’s engagement in a merger transaction, which consisted of signing a series of binding agreements
including a merger agreement (“the merger transaction”), between the Company and Mount Rainier Acquisition Corp., a Delaware
corporation (“RNER”), an unrelated third party which was traded on the Nasdaq Global Market that raised approximately $175,000
thousand as a SPAC. The Company hired A-Labs Advisory and Finance Ltd. (“A-Labs”), an investment banking firm in which the
Company’s former chief executive officer served as a managing partner, and Oppenheimer to assist the merger transaction. 

 

The merger transaction relied on the
proforma enterprise value of the merged company of approximately $1.28 billion (before the money), as agreed upon with RNER and with the
PIPE investors (as defined below), including share options and potential free cash flows of up to approximately $225,000 thousand in the
merged company (insofar as none of the SPAC shareholders redeem their investment before the merger transaction closing in keeping with
their rights, see further details below).

 

In connection with the merger transaction,
qualifying Israeli and U.S. institutional investors (the “PIPE investors”) engaged to invest $50,000 thousand based on the
merger company’s agreed value as described above in a private placement to be invested in the Company at closing.

 

On January 11, 2023, the Company announced
that all the closing conditions for the merger transaction were met and the completion of the merger transaction was subject only to the
absence of a legal impediment. Shortly before the closing date of the merger transaction, the Company effected a reverse share split to
cause the value of the outstanding ordinary shares immediately prior to the transaction closing date to be equal to $1,500,000 per share.

 

The Company’s shares began trading
on Nasdaq on March 1, 2023.

 

99% of the shareholders entitled to
withdraw their investment of $175,000 thousand elected to redeem their investment upon the approval of the merger.

 

In March 2023, the Company raised $4,000
thousand from two of the PIPE investors.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 5 –

MERGER AGREEMENT WITH SPECIAL PURPOSE ACQUISITION COMPANY (“SPAC”) (Cont.)

 

In December 2021, the Company entered
into an agreement with Oppenheimer to provide financial advisory services. In connection with the Reverse Recapitalization, the Company
agreed to pay to Oppenheimer a transaction fee upon the consummation of the Reverse Recapitalization equal to 1% of the aggregate value
of the Company implied by the value of the Company’s ordinary shares issued to RNER’s stockholders in the Reverse Recapitalization
on a fully diluted basis, plus the principal amount of any debt or other liabilities of HUB outstanding as of the closing date of the
Reverse Recapitalization. Based on the valuation of $1.28 billion ascribed to the shares issued to RNER’s stockholders in the
Reverse Recapitalization in March 2023, the amount owed to Oppenheimer at the closing of the Reverse

 

Recapitalization was approximately
$12,800 thousand. As of December 31, 2024 and 2023, the Company recorded a cost provision of $12,800 thousand.

 

On June 12, 2023, Oppenheimer filed
a claim against the Company alleging, among other things, breach of contract, breach of covenant of good faith and fair dealing and quantum
meruit in connection with investment banking advice and services provided by Oppenheimer in connection with the Company’s Reverse
Recapitalization with Mount Rainier Acquisition Corp.

 

Effective February 19, 2025, the parties
settled for $3 million: $1.1 million paid on the effective date and the balance in ten monthly payments of $200,000 from March to December
2025 (with the first payment being $100,000). As part of the settlement arrangement, Claymore agreed to make, on the Company’s behalf,
all payments the Company is required to make under the settlement agreement with Oppenheimer. In consideration, the Company issued Claymore
a $6 million convertible note. Claymore subsequently converted the note in full and made all required payments to Oppenheimer. As of the
date of this Annual Report, the entire outstanding reserve balance of $12,800 thousand has been fully settled.

 

The transactions were accounted for
as a reverse recapitalization, in accordance with the relevant IFRS standard and the Group was deemed to be the accounting acquirer. RNER
did not meet the definition of a business in accordance with IFRS 3 – “Business Combinations,” and the Transactions were instead
accounted for within the scope of IFRS 2, as a share-based payment transaction in exchange for a public listing service. In accordance
with IFRS 2, the Company recorded a one-time share-based share listing expense of $12,312 thousand at the closing of the Reverse Recapitalization
that was calculated based on the excess of the fair value of the Company’s shares issued to public investors over the fair value
of the identifiable net assets of RNER that were acquired:

 

		Amount				Number of shares*
		USD in thousands except for share amounts
Shares issued to RNER shareholders							3
Closing price of the Company’s share on Nasdaq as of March 1, 2023 ($)			2,385,000
(A) Fair value of the Company’s shares issued to RNER shareholders			7,208
Public Warrants issued to RNER shareholders							0
Closing price of the Company’s warrants on Nasdaq as of March 1, 2023 ($)			255,000
Private Warrants issued to RNER shareholders							0
Fair Value of the Company’s warrants on as of March 1, 2023 ($)			199,500
(B) Fair value of the Company’s warrants issued to RNER shareholders			2,711
RNER assets			588
RNER liabilities			(2,981	)
(C) Net liabilities of RNER			(2,393	)
IFRS 2 Listing expenses (A+B-C)			12,312

 

*	Shares and per share amounts have been retroactively adjusted to reflect the reverse share splits as described in Note 20a.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 6 –

CASH AND CASH EQUIVALENTS

 

		December 31,
		2025				2024
		USD in thousands
Cash and cash equivalents in NIS			1,226				858
Cash and cash equivalents in USD			355				2,213
Cash and cash equivalents in Euro			175				12
Cash and cash equivalents in other currency			7				2
			1,763				3,085

 

NOTE 7 –

TRADE RECEIVABLES, NET

 

		December 31,
		2025				2024
		USD in thousands
Accounts receivable			10,224				8,325
Unbilled receivables			243				768
Checks collectible			33				29
Allowance for doubtful debt			(1,722	)			(1,225	)
Trade receivables, net			8,778				7,897

 

The Company grants its customers interest-free credit for
an average period of 90 days. Impaired debts are accounted for through recording an allowance for doubtful accounts.

 

In certain circumstances and based
on management’s evaluation, the Company records provisions for allowances for doubtful accounts on outstanding debts of greater
than 120 days.

 

Following is information about the
credit risk exposure of the Company’s trade receivables:

 

						Past due trade receivables
		Not past due				< 30 days				31-60 days				60-90 days				90-120 days				>120 days				Total
		USD in thousands
Trade receivables before allowance for doubtful accounts			7,736				455				295				134				50				1,830				10,500
Allowance for doubtful accounts			–				–				–				–				–				1,722				1,722
December 31, 2025			7,736	*			455				295				134				50				108				8,778
December 31, 2024			4,897	*			168				111				50				10				2,661				7,897

 

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

		December 31,
		2025				2024
		USD in thousands
Government authorities			2,803				1,934
Prepaid expenses			2,078				1,128
Related parties’ assets (1)			–				3,830
			4,881				6,892

 

 

 

a.

Disclosures for leases in which the Company acts as lessee:

 

1)

The Group companies have entered into leases of buildings and motor vehicles which are used for their ongoing operations.

 

2)

The Company’s leases of buildings have a lease term of 2–10 years whereas leases of motor vehicles have lease terms of 3–4 years.

 

3)

Information on leases:

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Interest expense on lease liabilities			103				193				181
Total cash outflow for leases			1,001				1,017				1,711

 

b.

Lease extension and termination options:

 

The Company has leases that include
both extension and termination options. These options provide flexibility in managing the leased assets and align with the Company’s
business needs.

 

In leases that contain noncancelable
lease periods of 3–10 years, the Company did not include in the lease term the exercise of extension options existing in the lease agreements.

 

In leases of motor vehicles, the Company
does not include in the lease term the exercise of extension options since the Company does not ordinarily exercise options that extend
the lease period beyond five years (without the extension option).

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 9 –

LEASES (Cont.)

 

c.

Disclosures in respect of right-of-use assets, net:

 

2025

 

		Office lease				Motor Vehicles				Total
		USD in thousands
Cost:
Balance as of January 1, 2025			4,149				2,851				7,000
Additions during the year:
New leases			–				343				343
Terminated lease			(50	)			(16	)			(66	)
Classification			–				6				6
Adjustments arising from indexation			28				–				28
Adjustments arising from translating financial statements from functional currency to presentation currency			593				433				1,026
Balance as of December 31, 2025			4,720				3,617				8,337
Accumulated depreciation:
Balance as of January 1, 2025			2,897				1,951				4,848
Additions during the year:
Depreciation in the year			411				589				1,000
Adjustments arising from translating financial statements from functional currency to presentation currency			449				329				778
Balance as of December 31, 2025			3,757				2,869				6,626
Depreciated cost as of December 31, 2025			963				748				1,711

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 9 –

LEASES (Cont.)

 

2024

 

		Office lease				Motor Vehicles				Total
		USD in thousands
Cost:
Balance as of January 1, 2024			4,124				2,418				6,542
Additions during the year:
New leases			–				633				633
Terminated lease			–				(25	)			(25	)
Classification			–				(168	)			(168	)
Adjustments arising from indexation			47				–				47
Adjustments arising from translating financial statements from functional currency to presentation currency			(22	)			(7	)			(29	)
Balance as of December 31, 2024			4,149				2,851				7,000
Accumulated depreciation:
Balance as of January 1, 2024			2,532				1,500				4,032
Additions during the year:
Depreciation in the year			343				452				795
Adjustments arising from translating financial statements from functional currency to presentation currency			22				(1	)			21
Balance as of December 31, 2024			2,897				1,951				4,848
Depreciated cost as of December 31, 2024			1,252				900				2,152

 

d.

For an analysis of maturity dates of lease liabilities, see Note 16b.

 

e.

The Company has leases of motor vehicles for a period of up to 12 months and for periods of 12-36 months. For lease periods up to 12 months, the Company applies the practical expedient in IFRS 16 and recognizes lease payments as an expense using the straight-line method over the lease term.

 

 

In May 2017, the Company entered into a lease for 1,600 square meters of office space in the city of Or Yehuda, Israel. The lease is for a period of ten years with an option for extension by another five years. The monthly lease fees are approximately NIS 110 thousand ($34.5 thousand), linked to the Israeli Consumer Price Index of May 2017 with the addition of VAT. The lease period began on April 1, 2018.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 10 –

PROPERTY AND EQUIPMENT, NET

 

Composition and movement:

 

2025

 

		Office furniture and equipment				Computers and peripheral equipment				Leasehold improvements				Total
		USD in thousands
Cost:
Balance as of January 1, 2025			190				938				213				1,341
Purchases in the year			–				32				1				33
Disposals during the year			–				–				–				–
Adjustments arising from translating financial statements from functional currency to presentation currency			26				128				29				183
Balance as of December 31, 2025			216				1,098				243				1,557
Accumulated depreciation:
Balance as of January 1, 2025			109				629				116				854
Depreciation in the year			16				163				60				239
Disposals during the year			–				–				–				–
Adjustments arising from translating financial statements from functional currency to presentation currency			17				83				16				116
Balance as of December 31, 2025			142				875				192				1,209
Depreciated cost as of December 31, 2025			74				223				51				348

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 10 –

PROPERTY AND EQUIPMENT, NET (Cont.)

 

2024

 

		Motor vehicles				Office furniture and equipment				Computers and peripheral equipment				Leasehold improvements				Total
		USD in thousands
Cost:
Balance as of January 1, 2024			33				236				1,030				520				1,819
Purchases in the year			62				–				18				5				85
Disposals during the year			(95	)			(45	)			(104	)			(305	)			(549	)
Adjustments arising from translating financial statements from functional currency to presentation currency			–				(1	)			(6	)			(7	)			(14	)
Balance as of December 31, 2024			–				190				938				213				1,341
Accumulated depreciation:
Balance as of January 1, 2024			30				108				530				116				784
Depreciation in the year			41				18				199				75				333
Disposals during the year			(71	)			(16	)			(96	)			(74	)			(257	)
Adjustments arising from translating financial statements from functional currency to presentation currency			–				(1	)			(4	)			(1	)			(6	)
Balance as of December 31, 2024			0				109				629				116				854
Depreciated cost as of December 31, 2024			0				81				309				97				487

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11 –

GOODWILL AND INTANGIBLE ASSETS, NET

 

a.

Composition and movement:

  

		Patents				Goodwill				Customer relations, order backlog (1)				Technology and supplier relationships (2)				Total
		USD in thousands
Cost:
Balance as of January 1, 2024			31				2,467				15,595				1,092				19,185
Impairment recognized in the year (1)			–				(571	)			(82	)			–				(653	)
Adjustments arising from translating financial statements from functional currency to presentation currency			(1	)			(22	)			(99	)			(6	)			(128	)
Balance as of December 31, 2024			30				1,874				15,414				1,086				18,404
Acquisition of BlackSwan technology asset at cost upon initial consolidation, January 27, 2025			–				–				–				41,611				41,611
Foreign currency translation adjustments			–				–				–				1,943				1,943
Impairment recognized in the year (2d)			–				–				(3,130	)			(43,554	)			(46,684	)
Adjustments arising from translating financial statements from functional currency to presentation currency			–				268				1,549				–				1,817
Balance as of December 31, 2025			30				2,142				13,833				1,086				17,091
Accumulated amortization:
Balance as of January 1, 2024			18				–				10,192				1,092				11,302
Amortization recognized in the year (1)			6				–				947				–				953
Adjustments arising from translating financial statements from functional currency to presentation currency							–				(56	)			(6	)			(62	)
Balance as of December 31, 2024			24				–				11,083				1,086				12,193
Amortization recognized in the year (1)			6				–				918				–				924
Adjustments arising from translating financial statements from functional currency to presentation currency							–				1,005				–				1,005
Balance as of December 31, 2025			30				–				13,006				1,086				14,122
Net balance:
As of December 31, 2025			–				2,142				827				–				2,969
As of December 31, 2024			6				1,874				4,331				–				6,211

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11 –

GOODWILL AND INTANGIBLE ASSETS, NET (Cont.)

 

 

 

b.

For the years ended December 31, 2025 and 2024, the criteria for recognition in intangible asset related to development have not been met and therefore all development costs have been recognized as an expense in profit or loss.

 

c.

In May 2022, the Company entered into an Asset Purchase Agreement with Legacy Technologies GmbH (“Legacy”) a European cyber firm with an extensive EMEA distribution network of cyber solutions for major government and enterprise data centers. The acquired assets were mainly comprised of customer relationships of Legacy. The transaction was completed on July 5, 2022. The total consideration for the sale and transfer of the acquired assets was $10,000 thousand in cash and additional contingent consideration of up to $12,000 thousand in restricted share units (“RSUs”) of the Company, subject to completion of several milestones established in the agreement. Half of the cash consideration was paid at the contract closing and the other half  has not been settled and is past due in accordance with the contractual repayment terms. The RSUs were treated as a post-combination transaction. For more information, see Note 21.

 

As of December 31, 2025 and 2024, $5,430
thousand and $5,244 thousand respectively, out of the remaining consideration liability are classified in the balance sheet under line-item
Current maturities of other liabilities. 

  

d.

Impairment loss of goodwill and intangible assets with defined useful life

 

For annual impairment testing of goodwill
and intangible assets with defined useful life the goodwill and other intangible assets of the Company were allocated to the two operating
segments which constitute the following three cash generating units (“CGUs”):

 

 

●

Professional Services

 

●

Products and Technology

 

The goodwill of the Products
and Technology CGU was fully impaired in 2024.

 

On January 27, 2025, the Company acquired
a technology asset from BlackSwan for a purchase price of $41.6 million. During the year ended December 31, 2025, based on management’s
assessment of the recoverable amount of the asset, the Company recognized a full impairment reducing the carrying
amount of the technology asset to zero as of December 31, 2025.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11 –

GOODWILL AND INTANGIBLE ASSETS, NET (Cont.)

 

As of December 31, 2025, the carrying
amount of the goodwill and intangible assets which were allocated to the Professional Services CGU were as follows (in USD thousands):

 

		Professional Services				Total
Goodwill			2,142				2,142
Customer relationship			827				827
Total			2,969				2,969

 

The Company performed its annual impairment
tests on December 31, 2025 and 2024, respectively. The recoverable amount of each CGU was assessed using the income approach model.

 

Products and Technology

 

As of December 31, 2025, the recoverable amount of the Products and
Technology CGU were determined based on a value in use calculation using cash flow projection from financial budget approved by senior
management covering a five-year period. The discount rate applied to cash flow projection is 24.5% for Products and Technology CGU. Cash
flows beyond the five-year period are extrapolated using a 3% growth rate. As a result of this analysis, the value in use of the Products
and Technology CGU was determined to be lower than their carrying amounts. An impairment in the amount of $43,554 thousand was recognized
in the Products and Technology CGU. The provision was recorded in impairment of goodwill and intangible assets expenses.

 

Professional Services

 

As of December 31, 2025, the recoverable
amount of the Professional Services CGU was determined based on a value in use calculation using cash flow projections from financial
budget approved by senior management covering a five-year period. The discount rate applied to cash flow projection is 20% for the Professional
Services CGU. Cash flows beyond the five-year period are extrapolated using a 3% growth rate. As a result of this analysis, the value
in use of the Professional Services CGU was determined to be higher than their carrying amounts. 

 

Consulting

 

As of December 31, 2025, the recoverable
amount of the consulting CGU was determined based on a value in use calculation using cash flow projections from financial budgets approved
by senior management covering a five-year period. The discount rate applied to cash flow projection is 20% for the consulting CGU. Cash
flows beyond the five-year period are extrapolated using a 3% growth rate for both CGUs. As a result of this analysis, the value in use
of the consulting CGU was determined to be lower than their carrying amount. Accordingly, the Company recognized an impairment loss equal
to the full carrying amount of $3,130 thousand of the related intangible asset, reducing its carrying amount to zero as of December 31,
2025.

 

Key assumptions

 

The calculation of value in use for
all of the cash generating units is most sensitive to the following key assumptions:

 

 

●

Growth rate used for the forecast period and to extrapolate cash flows beyond the forecast period.

 

Discount rates − Discount rates
represent the current market assessment of the risks specific to each cash-generating unit, taking into consideration the time value of
money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation
is based on the specific circumstances of the Company and its operating segments and is derived from its weighted average cost of capital
(WACC). The WACC takes into account both debt and equity.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 12 –

DISCONTINUED OPERATIONS

 

In November 2021, the Company completed
the acquisition of Comsec and its subsidiaries. During 2023, one of the subsidiaries, Comsec Distribution Ltd. (“Comsec Distribution”)
had financial, operational and commercials difficulties, cessation of sales starting July 2023, layoffs and departures of employees until
there were no employees in this subsidiary as of December 31, 2023.

 

As of December 31, 2023, based on the
analysis performed by the Company’s management, it has been determined that Comsec Distribution is considered an abandoned business
operation in accordance with IFRS 5 and constitutes a component of the Company that represents a separate major line of business and therefore
meets the criteria for classification as a discontinued operation.

 

Prior to the classification of Comsec
Distribution as a discontinued operation, the recoverable amount of certain items of account receivables and inventory were estimated
and an impairment loss in an amount of $431 thousand and $1,900 thousand, respectively were recognized in order to ascertain that the
carrying amount of the account receivables and inventory is not higher than their recoverable amount.

 

Below are data for the operating results
attributed to the discontinued operation:

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Revenues from sales			–				–				5,459
Cost of sales			–				–				(5,931	)
Gross profit (loss)			–				–				(472	)
Sales and marketing expenses			–				–				351
General and administrative expenses			–				–				851
Operating income (loss)			–				–				(1,674	)
Finance expenses, net			1,741				1,523				356
Income (loss) before taxes on income			(1,741	)			(1,523	)			(2,030	)
Taxes on income			–				362				–
Income (loss) after taxes on income			(1,741	)			(1,885	)			(2,030	)

 

Below are data for the net cash flows
provided by (used in) the discontinued operation:

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Net cash provided by discontinued operating activities			292				995				1,917
Net cash provided by (used in) discontinued investing activities			–				–				(1,026	)
Net cash used in discontinued financing activities			(292	)			(1,015	)			(1,375	)
Total net cash provided by (used in) discontinued operation			–				(20	)			(484	)

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 13 –

SHORT-TERM LOANS

 

 

		December 31,
		2025				2024
		USD in thousands
Short-term loans (1)-(18)			13,983				13,534
			13,983				13,534

  

(1)	Debt Settlement and Breach of Terms (Comsec Group):

 

On December 19, 2024, Comsec entered
into a debt settlement agreement with Mizrahi Tefahot Bank (the “Settlement Agreement”). The Settlement Agreement consolidated
various outstanding credit facilities into a single unified debt amounting to NIS 23,034 thousand (approximately $6,234 thousand). Pursuant
to the settlement agreement, the parties agreed that the outstanding debt amount of NIS 23 million will be repaid over 24 months with
quarterly installments, commencing on June 30, 2025. Interest will accrue at a rate of Prime (Bank of Israel intrabank plus 1.5%) plus
3.25%.

 

As of December 31, 2025, the remaining
principal amount is NIS 14,598 thousand ($4,576 thousand). As of December 31, 2025, the Group has not met the payment obligations or certain
other conditions set forth in the Settlement Agreement. Although the agreement originally provided for a multi-year repayment schedule,
the breach of terms grants the lender the contractual right to demand immediate repayment of the entire outstanding balance.

 

Consequently, in accordance with accounting
standards, the Group classified the entire balance of the consolidated loan as current liabilities in the Consolidated Statement of Financial
Position.

 

The following loans, which were outstanding
prior to the settlement date, were incorporated into the consolidated debt facility:

 

1.

Loan (July 6, 2020): Originally NIS 5,000 thousand ($1,452 thousand), bearing interest of Prime + 1.5%.

2.

Loan (September 1, 2021): Originally NIS 980 thousand ($309 thousand), bearing interest of Prime + 1.5%.

3.

Loan (September 1, 2021): Originally NIS 6,000 thousand ($1,934 thousand), bearing interest of Prime + 1.95%.

4.

On-call Loans: Aggregate principal amount of NIS 34,106 thousand, bearing interest of 8.1%.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 13 –

SHORT-TERM LOANS (Cont.)

 

 

(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 13 –

SHORT-TERM LOANS (Cont.)

 

 

 

(14)
(15)
(16)
(17)

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 13 –

SHORT-TERM LOANS (Cont.)

 

(18)	Following the merger with BST on January 27, 2025, BST had two outstanding loans.

 

1.

On August 9, 2022, BlackSwan received a loan from Yossi Lahav Consultants, with an original principal amount of $1,500 thousand. The loan bears accrued fixed interest of $750 thousand. BlackSwan did not meet the repayment terms of this loan. On June 4, 2024, Yossi Lahav Consultants filed a claim against BlackSwan and others for failure to meet the repayment terms and for related damages. For further details, see Note 22(6).

 

2.

On September 8, 2022, BlackSwan received a loan from A-Labs Consultants with an original principal amount of $200 thousand. The loan bears, bearing accrued interest of approximately 2.42%. As of the date of this Annual Report, this loan has not yet been repaid.

 

 

As
of December 31, 2025, the balance of bank loans taken by Aginix was approximately NIS 1,526 thousand ($478 thousand). Aginix has
made undertaking to the lending bank to meet the following financial covenants: (1) its adjusted equity will not be lower than NIS 500
thousand and (2) its ratio to balance sheet will not be lower than 10%. As of December 31, 2025, Aginix was in compliance with all financial
covenants required under its loan agreements.

 

NOTE 14 –

TRADE PAYABLES

 

		December 31,
		2025				2024
		USD in thousands
Open debts			9,825				7,969
Checks payable			–				231
			9,825				8,200

 

Trade payables
are non-interest bearing.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 15 –

OTHER ACCOUNTS PAYABLE

 

		December 31,
		2025				2024
		USD in thousands
Employees and payroll accruals			7,869				4,543
Accrued vacation pay			1,926				1,489
Government authorities			6,726				6,028
Accrued expenses			10,308				24,746
Current liability of government grants			240				270
Deferred revenues			896				680
Legal provision			11,722				–
Other			3,481				1,718
			43,168				39,474

  

NOTE 16 –

LONG-TERM LIABILITIES

 

Composition of other long-term liabilities:

 

Government grants:

 

The Company received grants from the
Government of Israel for participation in research and development in return for the payment of royalties of 3.5% on sales of products
resulting from the funded research and development up to 100% of the grants received.

 

The financial statements include the
liability in the amount which management expects to repay the Israel Innovation Authority (“IIA”) within ten years, discounted
at a rate of 11.5%.

 

The liabilities for government grants
are linked to the USD-NIS exchange rate.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 16 –

LONG-TERM LIABILITIES (Cont.)

 

As of December 31, 2025, total government
grants received by the Company were $557 thousand and no material amount was paid. No new grants were received during 2025.

 

Liabilities for government grants:

 

		Effective interest rate				Balance				Balance less current maturities
		%				USD in thousands
Liabilities for government grants as of December 31, 2025			11.5				557				269
Liabilities for government grants as of December 31, 2024			11.5				442				173

 

Government grant balances:

 

		December 31,
		2025				2024
		USD in thousands
Balance as of January 1			442				412
Grants received during the year			–				–
Liability revaluation			115				30
Balance as of December 31			557				442

 

Presented in the statement
of financial position as follows:

 

		December 31,
		2025				2024
		USD in thousands
In current liabilities			288				270
In non-current liabilities			269				172
		$	557			$	442

  

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES

 

a.	The maturity profile of lease liabilities and liabilities for government grants:

 

As of December
31, 2025:

 

		First year				Second year				Third year				Fourth year				Fifth year				Sixth year and onwards				Total
		USD in thousands
Lease liabilities			1,156				569				139				–				–				–				1,864
Liabilities for government grants			288				43				39				36				32				119				557
Total		$	1,444			$	612			$	178			$	36			$	32			$	119			$	2,421

 

 

 

On each of February 23, 2023, June 11, 2023 and July 7,
2023, the Company entered into Convertible Loan Agreements (together the “Shayna Loan Agreements”) with Shayna LP, a
Cayman Islands company (“Shayna”), in the amounts of NIS 10 million (approximately $2.8 million), NIS 5 million
(approximately $1.4 million) and NIS 1.85 million (approximately $500,000) respectively (each a “Shayna Loan” and,
together, the “Shayna Loans”). The Shayna Loans were subsequently amended in 2024 pursuant to a series of agreements
with Shayna and Akina Holding Limited (“Akina”), which assigned most of Shayna’s rights to Akina and established
new conversion and warrant terms. All original interest, conversion, and warrant provisions under the Shayna Loan Agreements were
superseded by the 2024 amendments.

 

The Shayna Loans were amended in March–May
2024 through a series of agreements with Shayna and Akina. On March 31, 2024, the Company entered into the first amendment with Shayna
and Akina, pursuant to which Shayna and Akina are entitled to convert the Shayna Loans into a total of 34 ordinary shares, based on an
agreed USD/NIS exchange rate of NIS 3.65 and a conversion price of $135,000.00 per share. Under this amendment, Akina will receive 25
ordinary shares, while Shayna will receive 8 ordinary shares. Additionally, warrants have been issued for the purchase of the same number
of ordinary shares at an exercise price of $135,000 per share, with Akina entitled to 25 ordinary shares and Shayna entitled to 8 ordinary
shares. Furthermore, a customary clause limits the beneficial ownership of both Shayna and Akina to 4.99% of the Company’s outstanding
ordinary shares.

 

On April 18, 2024, the Company entered
into the second amendment with Shayna and Akina, pursuant to which if Akina defaults on its payment installments to Shayna, Shayna will
have the right to assume all of Akina’s conversion rights under the Shayna Loan Agreements.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

On May 9, 2024, the Company entered
into the third amendment with Shayna and Akina, pursuant to which a cash payment of $1,150,800 for Shayna’s consulting services
under the Convertible Loan Agreements was converted into 8 ordinary shares of the Company, calculated at a price of $135,000 per share.
Additionally, Shayna was issued a warrant to purchase 8 ordinary shares of the Company at an exercise price of $120,000 per share, with
an exercise period of six months.

 

During 2024, Akina converted the loan
under the Convertible Loan Agreements into ordinary shares of the Company, pursuant to which conversions the Company issued 35 ordinary
shares and exercised the warrant and purchased 29 ordinary shares of the Company at an exercise price of $135,000. In addition, Shayna
exercised the warrant and purchased 8 ordinary shares of the Company at an exercise price of $120,000.

 

2.	Alliance Global Partners

 

On February 26, 2023, the Company entered
into two convertible notes agreements with Alliance Global Partners (“AGP”), the representative of the underwriters in RNER’s
IPO and a stockholder of RNER, and another vendor involved in the Reverse Recapitalization (the “Vendor”). Pursuant to the
convertible notes’ agreements, AGP and the Vendor purchased an aggregate principal amount of $5,219 thousand and $349 thousand of convertible
notes, respectively. Each convertible note will bear interest at a rate of 6% per annum, has a maturity date of March 1, 2024, and will
be optionally convertible for Company ordinary shares, at any time prior to the convertible notes being paid in full.

 

On November 22, 2024, the Company and
AGP entered into an amended and restated convertible note agreement (the “Amended Note”), which contemplates that AGP will
convert $250 thousand of the principal amount in each of seven 30-day periods, up to an aggregate amount of $1.8 million (but the first
conversion can be in the amount of $320 thousand and final conversion $230 thousand). Upon each conversion, one-seventh of the excess
debt above $1,800 thousand will be cancelled. Upon conversion of the full $1.8 million, the Amended Note will be extinguished. If an aggregate
amount of $1.8 million is not converted by May 30, 2025, the terms of the Original Note will again apply, unless otherwise agreed by the
parties. The Amended Note contains a conversion price equal to 93% of the prevailing market price, subject to a $ 60,000 floor. The floor
price may be adjusted downward after three months if the market price falls below the floor price and does not subsequently increase above
the floor price.

 

During the year ended December 31,
2023, the Company did not receive a conversion notice from AGP.

 

During the year ended December 31, 2024,
AGP converted an aggregate amount of $1,070 thousand. which was allocated to two parts: until November 2024, an aggregate amount of $500
thousand which was converted into 4 ordinary shares, while the remaining amount of $570 thousand, which was subject to the November 2024
Amended Note, converted into 8 ordinary shares. During January and February 2025, AGP converted an aggregated amount of $500 thousand
into 6 ordinary share.

 

On September 17, 2025, an accredited
investor entered into a Note Purchase Agreement with AGP to purchase AGP’s note having a principal amount (plus accrued interest)
of $2,248 thousand for a purchase price of $750 thousand.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

3.	2023-2024 Investment by Accredited Investors

 

Between November 2023 and January 2024,
the Company entered into Securities Purchase Agreements (the “First 2023-2024 Accredited Investor SPAs”) providing for the
sale by the Company to certain accredited investors (the “First 2023-2024 Accredited Investors”), in unregistered private
transactions, of convertible notes with an aggregate principal amount of $3,100 thousand (the “First 2023-2024 Accredited Investor
Notes”), and warrants exercisable into one ordinary share for each ordinary share issuable to the Investors upon the conversion
of the principal amount of the First 2023-2024 Accredited Investor Notes, assuming conversion on the respective issuance dates of the
Notes (the “First 2023-2024 Accredited Investor Warrants”).

 

The aggregate principal amount of the
First 2023-2024 Accredited Investor Notes was convertible into the Company’s ordinary shares at a rate of the lower of (i) $375,000
and (ii) the product of 75% multiplied by the arithmetic average of the volume-weighted average price of the ordinary shares in the five
(5) trading days prior to the date of conversion, provided that such conversion rate would not be lower than $225,000. The First 2023-2024
Accredited Investor Notes did not bear interest and were repayable on the three-month anniversary of their issuance, subject to earlier
conversion by the First 2023-2024 Accredited Investors. The First 2023-2024 Accredited Investors had the right to convert the First 2023-2024
Accredited Investor Notes, in whole or in part, at any time following their issuance.

 

The First 2023-2024 Accredited Investor
Notes were subsequently fully converted by the First 2023-2024 Accredited Investors.

 

In February 2025, the Company and the
First 2023-2024 Accredited Investors agreed to amend the terms of the First 2023-2024 Accredited Investor SPAs and the First 2023-2024
Accredited Investor Warrants. Pursuant to the amended terms, the exercise price of each of the First 2023-2024 Accredited Investor Warrants
was changed to a unified exercise price of $150,000 per share and the Company issued to the First 2023-2024 Accredited Investors additional
warrants exercisable into 11 ordinary shares at an exercise price of $150,000 per
share and 9 ordinary shares.

 

4.	Second 2023-2024 Accredited Investor Financing Transaction

 

In March 2024, the Company entered
into Securities Purchase Agreements (the “Second 2023-2024 Accredited Investor SPAs”) providing for the sale by the Company
to certain accredited investors (the “Second 2023-2024 Accredited Investors” and together with the First 2023-2024 Accredited
Investors, the “2023-2024 Accredited Investors”), in unregistered private transactions, of convertible notes with an aggregate
principal amount of $550,000 (the “Second 2023-2024 Accredited Investor Notes”), and warrants exercisable into 1 ordinary
share for each ordinary share issuable to the Investors upon the conversion of the principal amount of the Second 2023-2024 Accredited
Investor Notes, assuming conversion on the respective issuance dates of the Notes (the “Second 2023-2024 Accredited Investor Warrants”).

 

The aggregate principal amount of the
Second 2023-2024 Accredited Investor Notes is convertible into the Company’s ordinary shares at a rate equal to the arithmetic average
of the volume-weighted average price of the ordinary shares in the five (5) trading days prior to the date of conversion, provided that
such conversion rate would not be lower than $225,000. The Second 2023-2024 Accredited Investor Notes do not bear interest and are repayable
on March 14, 2027, subject to earlier conversion by the Second 2023-2024 Accredited Investors. The Second 2023-2024 Accredited Investors
have the right to convert the Second 2023-2024 Accredited Investor Notes, in whole or in part, at any time following their issuance.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

Pursuant to the First 2023-2024 Accredited
Investor SPAs, the Company issued First 2023-2024 Accredited Investor Warrants which are exercisable into 1 ordinary share. The First
2023-2024 Accredited Investor Warrants are exercisable until January 1, 2027, for an exercise price equal to the closing price of the
ordinary shares as of the respective issuance dates of the First 2023-2024 Accredited Investor Warrants and have a weighted average exercise
price of $3,495,000. Pursuant to the Second 2023-2024 Accredited Investor SPAs, we issued Second 2023-2024 Accredited Investor Warrants
which were exercisable into 1 ordinary share. The Second 2023-2024 Accredited Investor Warrants were exercisable until September 14, 2025,
for an exercise price of $225,000. The exercise of the 2023-2024 Accredited Investor Warrants will be limited to the extent that, upon
their exercise, a 2023-2024 Accredited Investor and its affiliates would in the aggregate beneficially own more than 4.99% of our ordinary
shares.

 

In February 2025, the Company and the
First 2023-2024 Accredited Investors agreed to amend the terms of the First 2023-2024 Accredited Investor SPAs and the First 2023-2024
Accredited Investor Warrants. Pursuant to the amended terms, the exercise price of each of the First 2023-2024 Accredited Investor Warrants
was changed to a unified exercise price of $150,000 per share and the Company also issued an additional warrant exercisable into 11 ordinary
shares at an exercise price of $150,000 per share. In addition, the Company issued
9 ordinary shares to the First 2023-2024 Accredited Investors.

 

In addition, in February 2025, the
Company and the Second 2023-2024 Accredited Investors agreed to amend the terms of the Second 2023-2024 Accredited Investor SPAs, the
Second 2023-2024 Accredited Investor Notes and the Second 2023-2024 Accredited Investor Warrants. Pursuant to the amended terms, the exercise
price of each of the First 2023-2024 Accredited Investor Warrants was changed to a unified exercise price of $172,500 per share, and the
Company issued to the Second 2023-2024 Accredited Investors additional warrants exercisable into 11 ordinary shares at
an exercise price of $150,000 per share, and the conversion price of each of the Second 2023-2024 Accredited Investor Notes
was changed to a unified conversion price of $171,300 per share.

 

The Second 2023-2024 Accredited Investors
were subsequently fully converted by the Second 2023-2024 Accredited Investors.

 

5.	March-November 2024 Financing and Restructure

 

In March-November 2024, the Company
sold to an accredited investor (the “March-November 2024 Investor”), in a series of unregistered private transactions, notes
(the “March-November 2024 Notes”) with an aggregate principal amount of $11,000 thousand, and warrants (the “March-November
2024 Warrants”) pursuant to a Securities Purchase Agreement entered into with the March-November 2024 Investor (the “March-November
2024 Purchase Agreement”). The Company’s acquisition of QPoint’s shares that were not held by the Company to complete
ownership of 100% of QPoint shares was partially funded by proceeds the Company received pursuant to the March-November 2024 Purchase
Agreement.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

The loan amount under the March-November
2024 Notes was repayable by the Company on (a) November 29, 2024 with respect to $1,000 thousand of the principal amount and (b) with
respect to the remaining $10,000 thousand, the earlier of (i) August 10, 2024 with respect to $4,000 thousand of the principal amount
and September 24, 2024 with respect to $6,000 thousand of the principal amount, or (ii) five (5) business days following
the closing of a financing in the Company of at least $25,000 thousand. The principal amount under the March-November 2024 Notes carries
a variable interest rate based on the date of repayment as follows: (a) with respect to $8,000 thousand of the principal amount, (i) for
the principal amount repaid on or prior to May 12, 2024, 7%, (ii) for the principal amount repaid following May 12, 2024 and on or prior
to June 12, 2024, a rate between 7% and 8.5% of such principal amount computed by adding to 7% the result obtained by multiplying 1.5
by the quotient of the number of days elapsed in such period until (and including) the repayment date divided by the number of days in
such period, and (iii) for the principal amount repaid following June 12, 2024, 8.5% of such principal amount plus 15% per annum, on the
basis of the actual number of days elapsed commencing from the date following June 12, 2024 and ending on the repayment date; (b) with
respect to $2,000 thousand of the principal amount, (i) for the principal amount repaid on or prior to September 24, 2024, 10%, and (ii)
for the principal amount repaid following September 24, 2024, 10% of such principal amount plus 15% per annum, on the basis of the actual
number of days elapsed commencing from the date following September 24, 2024 and ending on the repayment date; and (c) with respect to
$2,000 thousand of the principal amount, (i) for the principal amount repaid on or prior to November 29, 2024, 8.5% of such principal
amount, and (ii) for the principal amount repaid following November 29, 2024, 8.5% of such principal amount plus 15% per annum, on the
basis of the actual number of days elapsed commencing from the date following November 29, 2024 and ending on the repayment date.

 

If the March-November 2024 Notes are
not repaid prior to the applicable maturity date, the March-November 2024 Investor may convert the applicable portion of the outstanding
loan amount into the Company’s ordinary shares at a rate equal to the arithmetic average of the closing price of the ordinary shares
in the five (5) trading days prior to the date of conversion, provided that such conversion rate shall not be lower than $75,000. The
loan amount is secured by a pledge on the shares of the QPoint group. Additionally, for so long as the loan amount under the March-November
2024 Notes is outstanding, the Company has undertaken to cause the QPoint group to adopt a dividend policy and designate dividend proceeds
for the repayment of the loan amount.

 

The March-November 2024 Warrants issued under the March-November 2024
Purchase Agreement were exercisable as follows: (i) March-November 2024 Warrants exercisable into 29 ordinary shares were exercisable
at an exercise price equal to $105,000 per share until March 12, 2027, (ii) March-November 2024 Warrants exercisable into 7 ordinary shares
were exercisable at an exercise price equal to $75,000 per share until April 3, 2027, (iii) March-November 2024 Warrants exercisable into
13 ordinary shares were exercisable at an exercise price equal to $105,000 per share until June 26, 2027, (iv) March-November 2024 Warrants
exercisable into 1 ordinary shares were exercisable at an exercise price equal to $75,000 per share until June 26, 2027, and (v) March-November
2024 Warrants exercisable into 10 ordinary shares were exercisable at an exercise price equal to $82,500 per share until June 26, 2027.

 

The conversion of the March-November
2024 Notes and the exercise of the March-November 2024 Warrants will be limited to the extent that, upon the conversion or exercise, the
March-November 2024 Investor and its affiliates would in aggregate beneficially own more than 4.99% of the ordinary shares.

 

On February 17, 2025, the Company
and the March-November 2024 Investor agreed to amend the terms of the March-November 2024 Notes and the March-November 2024 Warrants.
Pursuant to the amended terms, the maturity date of each of the March-November 2024 Notes, having an aggregate principal amount of $11
million (plus accrued interest), was extended to August 16, 2025. Additionally, per the amendment terms, in the event the notes are not
paid or converted in full by April 1, 2025, from and after April 1, 2025, the current interest rate of the notes will increase from 15%
per annum to 20% per annum.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

Pursuant to the amendment, the exercise
price of each of the March-November 2024 Warrants was changed to a unified exercise price of NIS 266,550 (being the NIS equivalent of
$75,000 per share based on the last published exchange rate published by the Bank of Israel on the date of the amendment) and the term
of the March-November 2024 Warrants was extended to a unified end date of February 17, 2030. The Company also issued to the March-November
2024 Investor an additional warrant exercisable into 13 ordinary shares at an exercise price
of $75,000 per share and a pre-funded warrant exercisable into 66 ordinary shares, in each case until February 17, 2030, and
in each, the exercise of the new warrants will
be limited to the extent that, upon the exercise of the new warrants, the March-November 2024 Investor would
not beneficially own more than 4.99% of our outstanding ordinary shares.

 

Additionally, pursuant to the amended
terms, the March-November 2024 Investor agreed to sell all or a signification portion of the notes to a third party who will convert the
notes and attempt to sell the resulting conversion shares. The March-November 2024 Investor agreed by no later than April 2, 2025, to
inform the Company in writing of the amount of proceeds the March-November 2024 Investor irrevocably received from the sale of such conversion
shares by the third party, in which case the Company shall be deemed to have repaid the principal and accrued interest under the converted
notes in the amount equal to the sale proceeds. In the event that the sale proceeds are lower than the aggregate principal and accrued
interest under the converted notes thereon, the Company agreed to issue to the March-November 2024 Investor a convertible note in the
principal amount equal to such shortfall amount (and if the sale proceeds (and any repayments from the Company) are less than $6.5 million,
also the interest that would have accrued on the converted notes in accordance with their terms had they not been converted).

 

The new note would have an interest
rate of 20% per annum, commencing retroactively from the date of conversion of the converted notes, and a maturity date of August 16,
2025, and otherwise the same terms and conditions as the converted notes. In the event that, at April 2, 2025, the March-November 2024
Investor holds unsold conversion shares, then warrants held by the March-November 2024 Investor will be exercised for an equivalent number
of ordinary shares pursuant to the terms thereof and such conversion shares will be deemed to be issued pursuant to such exercise in lieu
of the issuance of new ordinary shares.

 

On August 16, 2025, the Company entered
into a Fifth Amendment to the Securities Purchase Agreement with the March-November 2024 Investor that: (i) extended the maturity date
of all convertible notes of the Company in the aggregate principal amount of $11,000,000 for an additional six months from August 16,
2025 to February 16, 2026; (ii) implemented compound interest, whereby interest now accrues on previously accrued interest commencing
from the amendment date; and (iii) facilitated the introduction of Seven Knots, LLC, which has undertaken to purchase the convertible
notes from the March-November 2024 Investor, pursuant to a separate note purchase and assignment agreement dated August 20, 2025. The
amendment maintains all other existing terms and conditions of the notes, including the Company’s obligation to repay the principal
amount plus all accrued interest.

 

The debt restructuring of the June 2025
loan was treated as extinguishment as of the August 2025 transition date, resulting in finance expenses of $12,291,435.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

On August 20, 2025, the March-November
2024 Investor entered into a Note Purchase and Assignment Agreement with Seven Knots, LLC for the sale of all outstanding convertible
notes for a purchase price of $14,054,165, representing the principal amount plus accrued interest through August 31, 2025, with adjustments
for additional interest thereafter. Seven Knots is required to purchase at least $6,000,000 of the notes within 60 days and the remaining
balance within 90 days from the agreement date. If Seven Knots fails to meet these payment milestones,
the Fifth Amendment automatically terminates. On August 18, 2025, prior to the purchase agreement, the March-November 2024 Investor converted
$1,500,000 of the June 26, 2024 note at a conversion price of $45,000 per share, resulting in the issuance of 33 ordinary shares directly
to Seven Knots, LLC. This conversion amount counts toward the initial $6,000,000 purchase requirement. Once Seven Knots completes the
full purchase, the Company’s repayment obligations to the March-November 2024 Investor will be considered fully satisfied; however,
these milestones were not met in full and therefore the Fifth Amendment automatically terminated, putting us in breach of the March-November
2024 Notes.

 

To compensate Seven Knots for its undertakings
to Mr. Gottdiener in the note purchase and assignment agreement, we issued to the purchaser a convertible note in the principal amount
of $1,500,000. The note bears no interest and matures on August 20, 2026 by way of conversion into ordinary shares. The note is also convertible,
in whole or in part, at the option of the holder at any time. The conversion price is the lower of (i) $45,000and (ii) 95% of the lowest
VWAP of the Ordinary Shares during the five consecutive trading day period ending and including the Trading Day immediately preceding
the delivery or deemed delivery of the applicable Conversion Notice, subject to the Nasdaq floor price. The holder is also entitled to
redeem all or portion of the note in cash from the holder’s pro rata portion of 33% of the proceeds received by the Company pursuant to
an equity line of credit or at-the-market offering, at a price of 110% of the amount being redeemed. The holder is subject to a beneficial
ownership limitation of 4.99%.

 

On September 17, 2025, the Company
entered into a Master Exchange Agreement (the “Exchange Agreement”) with the Exchange Accredited Investor, which undertook
in August 2025 to purchase the convertible notes issued to the March-November 2024 Investor. On the same date, the Exchange Accredited
Investor entered into a Note Purchase Agreement with AGP to purchase AGP’s note having a principal amount (plus accrued interest)
of $2,248 thousand for a purchase price of $750 thousand. Pursuant to the Exchange Agreement, the Exchange Accredited Investor has the
right to exchange all or a portion of its notes for new notes, which have substantially the same terms and conditions as the Amended Notes.
After giving effect to applicable original issue discount, under the terms of the Exchange Agreement, up to $16,420 thousand aggregate
principal amount of outstanding notes are exchangeable for up to $19,840 thousand aggregate principal amount of new notes under the Exchange
Agreement. Astor has an option to purchase from the Exchange Accredited Investor, up to one-half of the new notes issued pursuant to the
Exchange Agreement and Keystone has an option to purchase from the Exchange Accredited Investor, up to 25% of the new notes issued pursuant
to the Exchange Agreement.

 

The note bears no interest and matures
on the second anniversary from the issuance of each note. The note is also convertible, in whole or in part, at the option of the holder
at any time. The conversion price of (i) $43,200 or (ii) 90% (or 80% in case of default) of the lowest VWAP of the Ordinary Shares during
the twenty consecutive trading day period ending and including the trading day immediately preceding the delivery or deemed delivery of
the applicable conversion notice, subject to the Nasdaq floor price. The holder is subject to a beneficial ownership limitation of 4.99%.

 

As of December 31, 2025, notes in the
aggregate principal amount of $9,004 thousand have been exchanged under the Exchange Agreement for Amended Notes in the aggregate principal
amount of $11,063 thousand.

 

As of December 31, 2025, a total amount
of $6,662,682 was converted into 361 ordinary shares.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

On June 4, 2026, the Company and the
March-November 2024 Investor entered into a Sixth Amendment to the Securities Purchase Agreement. For more information, see Note 28.

 

 

In December 2024, the Company entered
into a Loan Agreement with J.J. Astor & Co. (“Astor”) pursuant to which Astor agreed to loan the Company $2,200 thousand
in consideration for a promissory note in the principal amount of $2,750 thousand (the “December 2024 Convertible Note”).
After fees and expenses, the net proceeds of the loan were $2,087 thousand. The December 2024 Convertible Note is payable in 40 weekly
installments of $68,750 each in cash or registered ordinary shares, at the Company’s election. The December 2024 Convertible Note
will not accrue interest (unless there is an event of default).

 

The Company is entitled to prepay the
December 2024 Convertible Note at any time, with declining discounts for prepayment within 30, 60 or 90 days. Upon an event of default,
the outstanding principal amount will increase to 110% of the outstanding principal amount, plus interest thereon at the rate of 16% per
annum. The December 2024 Convertible Note will be convertible by Astor following an event of default.

 

The conversion price of the December
2024 Convertible Note is 80% of the average of the four lowest VWAP prices for the 20 trading days prior to conversion but not lower than
the 20% of the average of the four lowest VWAP prices for the 20 trading days prior to the closing date. To the extent that the conversion
price is lower than such minimum price, the Company will be required to pay a make-whole payment.

 

One-half of the net proceeds of the
amount the Company raises in any subsequent equity financing of less than $5 million will be required to be used to prepay the December
2024 Convertible Note, and all of larger equity financings will be required to be used to prepay the December 2024 Convertible Note.

 

The Company agreed to issue to Astor
a five-year warrant to purchase 8 ordinary shares at an exercise price of $127,500 per share (the “December 2024 Warrant”),
subject to adjustment in certain circumstances, including dilutive issuances. The Company undertook to register the shares issuable upon
conversion of the December 2024 Convertible Note and upon exercise of December 2024 Warrant on our registration statement on Form F-1.
If there is no such registration statement in effect, the holder of the December 2024 Warrant will be entitled to exercise on a cashless
basis. On January 13, 2025, Astor assigned the December 2024 Warrant to Wolverine Flagship Fund Trading Limited, which now holds the rights
under the December 2024 Warrant. The December 2024 Convertible Note and December 2024 Warrant are subject to
a limitation that prohibits ownership of more than 4.99% our outstanding share capital at any time.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

Each of the Company’s subsidiaries
agreed to guarantee the December 2024 Convertible Note and the Company and each of its subsidiaries agreed to grant a subordinated pledge
over its assets to secure the December 2024 Convertible Note, each to become effective following an event of default and receipt of consent
from our senior lenders. Failure to obtain such consents will be deemed an event of default under the December 2024 Convertible Note.

 

On May 28, 2025, the Company amended
the Loan Agreement with Astor to add an additional loan in the amount of $1,560 thousand, which was evidenced by a $1,854 thousand convertible
promissory note payable in 40 weekly installments of $46 thousand each (the “May 2025 Convertible Note”). After fees and expenses,
the net proceeds of this loan were approximately $1,478 thousand. The Company agreed that Astor would hold back $927 thousand from the
proceeds to ensure the payment of weekly installments. The May 2025 Convertible Note matures on March 30, 2026, and has terms substantially
similar to the December 2024 Convertible Note. The Company also issued to Astor a warrant to purchase 42 ordinary shares at $37,500 per
share on terms substantially similar to the December 2024 Warrant. On July 16, 2025, Astor assigned the warrant to Wolverine Flagship
Fund Trading Limited, which now holds the rights thereunder.

 

In connection with the issuance of
the May 2025 Convertible Note, Astor agreed to waive the default under the December 2024 Convertible Note caused by the Company’s
failure to pay some of the weekly installments. As a result of the default, the principal amount under the December 2024 Convertible Note
was increased by 10%, the interest rate during the period in which the default was continuing was increased to 16% per year, compounded
monthly, and the December 2024 Convertible Note became convertible at the option of the holder thereof.

 

As of the date of this Annual Report,
the Company has paid an aggregated amount of $840,000 and Astor has converted the principal amount of $2,165,497 of the December 2024
Convertible Note into the Company’s ordinary shares, pursuant to which conversions the Company has issued 98 ordinary shares.

 

7.	Claymore Capital Financings

 

In August 2024, the Company entered
into Securities Purchase Agreements with multiple private investors to raise gross proceeds of approximately $3.3 million in exchange
for the issuance of convertible notes (the “August 2024 Notes”) with an aggregate principal amount of approximately $4,000
thousand and warrants to acquire an aggregate of approximately 313 ordinary shares of the Company. The August 2024 Notes are unsecured,
have a term of two years and do not accrue interest. They are convertible into ordinary shares of the Company at any time at the option
of the holder of each note at a price equal to the lower of $105,000.00 or the price per share of which the Company sells shares to a
third party, but in no event less than $75,000. The August 2024 Warrants are exercisable for a period of three years at an exercise price
of $150,000 per share. Claymore Capital PTY Ltd. (“Claymore”) served as the placement agent for this transaction and received
a fee of approximately $233 thousand in cash and a warrant to purchase approximately 7 ordinary shares of the Company on terms substantially
similar to the terms of the August 2024 Warrants. The Company entered into a consulting agreement with the placement agent for an initial
period of three months, during which the placement agent was paid a fee of $15,000 per month.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

In August 2024,
Claymore agreed to extend a loan to the Company in the amount of $500 thousand with interest at the rate of 10% of the principal amount
until it was subsequently repaid in August 2024. In November 2024, Claymore agreed to extend a loan of an additional $200 thousand with
interest at the cumulative rate of 20% of the principal amount until it was subsequently repaid in December 2024. In November 2024, Claymore
agreed to extend a loan of an additional $500,000 at the cumulative rate of 45% of the principal amount until it was subsequently repaid
in February 2025.

 

In November and December 2024, Claymore
and investors introduced by Claymore made follow-on investments on the terms of the August 2024 financing in the aggregate amount of $1,150,000
in exchange for convertible notes with an aggregate principal amount of $1,391,500 and warrants to purchase an aggregate of 10 ordinary
shares. The convertible notes are unsecured, have a term of two years and do not accrue interest. They are convertible into ordinary shares
of the Company at any time at the option of the holder of each note at a price of $150,000. The warrants to purchase an aggregate of 10
ordinary shares are exercisable for a period of three years at an exercise price of $107,145 per share. Claymore’s placement fees
for the foregoing follow-on investments amounted to $77,000 in cash, 7 ordinary shares and a warrant to purchase 2 ordinary shares on
the same terms of the investors’ warrants. The Company extended the consulting agreement with the placement agent for a period of
12 months, during which the placement agent will be paid a fee of $15,000 per month.

 

In December 2024, Claymore and investors
introduced by Claymore loaned us an aggregate of $1,262,500 in exchange for notes with an aggregate principal amount of $1,402,778 and
warrants to purchase an aggregate of 8 ordinary shares. The notes are unsecured, and do not accrue interest. However, in the event that
the note has not been repaid by the maturity date, interest will accrue at a rate of 5% per month. The notes are repayable at the earlier
of (i) the six-month anniversary of the issuance of the note or (ii) five business days following the closing of a financing of at least
$10,000,000 or the sale of our QPoint subsidiary. If the notes are not repaid by the maturity date, they will be convertible at a conversion
price of $75,000. The notes provide that if the notes are not repaid by March 31, 2025, the holders thereof will be entitled to receive
collateral to secure the notes. The warrants to purchase an aggregate of 8 ordinary shares are exercisable for a period of three years
at an exercise price of $75,000 per share. Claymore’s placement fees for the foregoing loan amounted to $77,875 in cash, and a warrant
to purchase 8 ordinary shares on the same terms of the investors’ warrants.

 

In January and February
2025, Claymore and investors introduced by Claymore made follow-on investments on the terms of the August 2024 financing in the aggregate
amount of $1,467,000 in exchange for convertible notes with an aggregate principal amount of $1,775,070 and warrants to purchase an aggregate
of 13 ordinary shares.

 

The convertible notes are unsecured,
have a term of two years and do not accrue interest. They are convertible into ordinary shares of the Company at any time at the option
of the holder of each note at a price of $75,000. The warrants to purchase an aggregate of 13 ordinary shares are exercisable for a period
of three years at an exercise price of $107,145 per share. Claymore’s placement fees for the foregoing follow-on investments amounted
to $102,690 in cash, 9 ordinary shares and a warrant to purchase 3 ordinary shares on the same terms of the investors’ warrants.

 

In February 2025, Claymore agreed to
extend a loan to the Company in the amount of $255,000 with interest at the rate of 19% of the principal amount and a maturity date of
April 18, 2025. Claymore received pre-funded warrants to purchase 1 ordinary share as fees for the foregoing loan. Claymore agreed to
extend the repayment of the loan until May 18, 2025, in exchange for an additional pre-funded warrant to purchase 1 ordinary share.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

In March 2025, Claymore investors agreed
to extend a loan to the Company with a principal amount of $200,000 and a face value of $300,000 until it was subsequently repaid in March
2025. Claymore received pre-funded warrant to purchase 1 ordinary share as fees for the foregoing loan.

 

In April 2025, Claymore made follow-on investments on the terms of
the August 2024 financing in the aggregate amount of $928,000 in exchange for convertible notes with an aggregate principal amount of
$1,122,880 and warrants to purchase an aggregate of 8 ordinary shares. The convertible notes are unsecured, have a term of two years and
do not accrue interest. They are convertible into ordinary shares of the Company at any time at the option of the holder of each note
at a price of $105,000, subject to adjustment in certain circumstances, including dilutive issuances, but no lower than $75,000. The warrants
to purchase an aggregate of 8 ordinary shares are exercisable for a period of three years at an exercise price of $150,000 per share.
In the event that the conversion price of the note is reduced, the exercise price of the warrant will be reduced proportionately. Claymore’s
placement fees for the foregoing follow-on investments amounted to $64,960 in cash, pre-funded warrant to purchase 22 ordinary shares
and a warrant to purchase 6 ordinary shares on the same terms of the investors’ warrants. The Company extended the consulting agreement
with the placement agent for an additional period of 12 months, until October 31, 2026, during which the placement agent will be paid
a fee of $20,000 per month.

 

In June 2025, we issued to Claymore
a convertible note with a principal amount of $2,760,000 and a pre-funded warrant to purchase an aggregate of 20 ordinary shares in consideration
for investments in multiple installments in the aggregate amount of $2,400,000. The convertible note is unsecured, has a term of five
years, does not accrue interest and is not prepayable without consent of the holder. It is convertible into ordinary shares of the Company
at any time at the option of the holder at a price of $45,000, subject to adjustment in certain circumstances, including dilutive issuances.
In case of a default, the holder of the note will be entitled to receive collateral in the amount of the outstanding principal amount.

 

In July 2025, we issued a convertible
note to an investor introduced by Claymore, with a principal amount of $1,150,000 in consideration for an investment of $1,000,000, on
terms substantially similar to the note issued to Claymore in June 2025 described above. Claymore received pre-funded warrants to purchase
13 ordinary shares as fees for the foregoing loan.

 

In August 2025, we issued to Claymore
a convertible note with a principal amount of $575,000 and a pre-funded warrant to purchase an aggregate of 6 ordinary shares in consideration
of an agreement to invest an aggregate amount of $500,000. The convertible note is unsecured, has a term of five years, does not accrue
interest and is not prepayable without consent of the holder. It is convertible into ordinary shares of the Company at any time at the
option of the holder at a price of $45,000, subject to adjustment in certain circumstances, including dilutive issuances. In case of a
default, the holder of the note will be entitled to receive collateral in the amount of the outstanding principal amount.

 

The conversion of the notes and warrants
issued in the foregoing financings are limited to the extent that, upon conversion or exercise, the holder and its affiliates would in
the aggregate beneficially own more than 4.99% of the Company’s outstanding ordinary shares. The Company has undertaken to register
the resale of the ordinary shares underlying such notes and warrants on a registration statement with the SEC.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

As of the date of this Annual Report,
Claymore and several investors introduced by Claymore, converted an aggregate principal amount of $10.8 million of the notes issued to
them into our ordinary shares, pursuant to which conversions we have issued 280 ordinary shares.

 

Additionally, in July 2025 and August
2025, we entered into subscription agreements with an investor, Oozi Cats, whose investment was arranged by Claymore, for the purchase
of an aggregate of 32 ordinary shares at $45,000 per share, for total proceeds of $1.5 million. Specifically, 16 shares were purchased
in July 2025 for $750,000 and 16 shares were purchased in August 2025 for $750,000. Mr. Cats is subject to a 5% beneficial ownership limitation.
Concurrently with these investments, we issued pre-funded warrants to Claymore to purchase an aggregate of 37 ordinary shares (18 ordinary
shares in July 2025 and 18 ordinary shares in August 2025). Both pre-funded warrant series expire five years from their respective issuance
dates (or upon an exit transaction if earlier) and are subject to a 4.99% beneficial ownership limitation.

 

As of December 31, 2025, the accredited
investor introduced by Claymore converted the principal amount of $500 thousand of the notes issued to him into ordinary shares, pursuant
to which conversions the Company issued 33 ordinary shares. In addition, Claymore has exercised its prefunded warrants into 13 ordinary
shares.

 

In August 2025, the Company issued
Claymore a convertible note with a principal amount of $575 thousand and a prefunded warrant to purchase 6 ordinary shares in consideration
for $500 thousand. The convertible note is unsecured, has a term of five years, does not accrue interest and is not prepayable without
consent of the holder. It is convertible into ordinary shares of the Company at any time at the option of the holder at a price of $45,000
per share, subject to adjustment in certain circumstances, including dilutive issuances. In case of a default, the holder of the note
will be entitled to receive collateral in aggregated amount equal to the outstanding principal amount.

 

As of December 31, 2025, Claymore exercised
prefunded warrants into 6 ordinary shares.

 

In November 2025, the Company issued
to Claymore 100 prefunded warrants in exchange for the cancellation of prior agreements with the Company regarding marketing services
and a price adjustment to the convertible note issued to Claymore.

 

In November 2025, the Company entered
into an amendment of a March 2025 loan with Claymore Capital and two investors who were introduced by Claymore, with respect to the March
2025 loan provided by the two investors. Pursuant to the amendment, the $140,000 loan was repaid through the issuance of 9 ordinary shares
to the lenders.

 

The loans described above include conversion
options. According to IAS 32, the conversion options are classified as financial liability, as the conversion rate does not comply with
the fixed-to-fixed requirements since the conversion ratio to ordinary share is not fixed and depends on the share price of the Company.

 

The instrument as a whole constitutes
a hybrid contract that include non-derivative host contract (“the loan”) and embedded derivative (the conversion option).

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

 

On February 4, 2025, the Company entered
into a Loan Agreement with Julestar LLC, a New York limited liability company (“Julestar”), pursuant to which Julestar loaned
the Company $2,650 thousand in consideration for a promissory note in the principal amount of $3,118 thousand (the “Julestar Note”).
The principal amount, and interest thereon, was required to be repaid in 40 weekly installments over the 10-month term of the loan. The
Julestar Note accrued interest at a rate of 10% per annum. To secure the repayment of the Julestar Note, the Company undertook to grant
a subordinated pledge over the shares of certain of its subsidiaries, subject to the consent of a senior lender within 60 days, however
this consent was not obtained.

 

The Loan Agreement included the issuance
of five-year warrants to purchase 35 ordinary shares, subject to downward adjustment in the number of underlying shares in the event of
early repayment of the Note in full or upward adjustment in the event the Julestar Note is not repaid in full within 90 days of the issuance
date. The exercise price of the warrants is $75,000 per share, subject to adjustment in certain circumstances, including dilutive issuances.
The warrants are subject to a limitation that prohibits ownership of more than 4.99% of Company’s outstanding share capital at any
time.

 

The Company undertook to register the
shares issuable upon the exercise of the Julestar warrants with the Securities and Exchange Commission on a Form F-1 or Form F-3.

 

Since the Company did not repay the
loan within 90 days, as of May 5, 2025, the Company amended the warrants to increase the number of shares issuable thereunder by an additional
113 shares at an exercise price of $75,000 per share, subject to adjustment in certain circumstances, including dilutive issuances. The
Company repaid $1,300 thousand owing under the Julestar Note in 2025.

 

As a result of the issuance of the Julestar
warrants, the exercise price of the warrant to purchase 35 ordinary shares issued in an earlier financing transaction on December 30,
2024 automatically decreased from $127,500 to $75,000 per share.

 

In June 2026, the Company repaid $1.35
million to Julestar.

 

 

On March 27, 2025, the Company completed
the issuance of a series of notes (the “March 2025 Notes”) to certain investors, including Keystone Capital Partners, LLC
as the lead investor (“Keystone” and collectively with the other investors, the “March 2025 Note Investors”),
in an aggregate principal amount of $1,625,000 and original issue discount of $325,000, for an aggregate purchase price of $1,300,000.
The March 2025 Notes originally matured on December 11, 2025, did not bear interest, and included a prepayment option at a premium of
125%. In addition, the Company was required to use the cash proceeds deriving from a financing in which it receives proceeds of at least
$10 million to repay the March 2025 Notes.

 

The March 2025 Note Investors had the
right to convert the principal amount into ordinary shares of the Company upon the occurrence of a subsequent
equity financing pursuant to which the Company receives at least $5 million, subject to certain conditions.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

The conversion of the March 2025 Notes
was limited to the extent that, upon their conversion, a March 2025 Note Investor and its affiliates would in aggregate beneficially own
more than 4.99% of the Company’s outstanding share capital at any time. The March 2025 Notes were exchanged with the June 2025 SPA,
which thereafter were replaced with the August 2025 Financing described herein.

 

 

Concurrently with the investment by
the March 2025 Note Investors described above, the Company entered into an Ordinary Shares Purchase Agreement (the “ELOC Purchase
Agreement”) with Keystone, pursuant to which the Company has the right to sell to Keystone up to an aggregate of $50 million
of newly issued ordinary shares (the “ELOC Shares”).

 

As consideration for Keystone’s
commitment to purchase ELOC Shares upon the terms of and subject to satisfaction of the conditions set forth in the ELOC Purchase Agreement,
the Company agreed to issue to Keystone a note in a principal amount of $1,000,000 and an additional commitment note on May 28, 2025,
in the principal amount of $1,500,000, each of which does not bear interest and has a maturity date of December 11, 2025 and November
28, 2026, respectively (the “Commitment Notes”). The Commitment Note is due by way of conversion into the Company’s
shares based on the closing share price of the Company’s shares on the date immediately prior to the maturity date, provided that
in each case the applicable conversion price shall not be lower than twenty percent (20%) of the closing sale price of the Company’s
shares on the issuance date of the Commitment Note. The Commitment Note can be converted prior to the maturity date by either the Company
or Keystone at any time following the earlier of (i) the date on which the shares issuable upon conversion are registered under a registration
statement filed with the SEC or (ii) September 11, 2025. In the event of a conversion prior to the maturity date, the number of Company
shares to be issued upon the conversion of the Commitment Note will be based on the closing share price on the day prior to the issuance
of the conversion notice provided that the closing sale price on the day prior to the issuance of the conversion notice is not lower than
10% as compared to the closing sale price on the date immediately prior thereto. The conversion of the Commitment Note will be limited
to the extent that, upon its conversion, Keystone and its affiliates would in aggregate beneficially own more than 4.99% of the Company’s
outstanding share capital at any time.

 

In addition, in connection with the
ELOC Purchase Agreement, the Company and Keystone entered into a Registration Rights Agreement pursuant to which the Company undertook
to register with the SEC the shares issuable upon conversion of the Commitment Note and the ELOC Shares that the Company has the right
to sell to Keystone.

 

The Company does not have a right to
commence any sales of ELOC Shares to Keystone under the ELOC Purchase Agreement before a registration statement of such shares is declared
effective by the SEC and the final form of prospectus is filed with the SEC (the “Commencement Date”). Following such date,
the Company will control the timing and amount of any sales of ELOC Shares to Keystone. Actual sales of shares of ELOC Shares to Keystone
under the ELOC Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among
others, market conditions, the trading price of the ELOC Shares and determinations by the Company as to the appropriate sources of funding
for the Company and its operations. The Company is obligated to use 33% proceeds from the sale of ELOC Shares to repay the principal amount
under the March 2025 Notes.

 

As of December 31, 2025, an amount
of $1,600,000 was converted into 107 shares.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

Under the ELOC Purchase Agreement,
on any business day on which the closing sale price of the Company’s shares is equal to or greater than $0.05 (the “Fixed
Purchase Date”), the Company may direct Keystone to purchase shares (a “Fixed Purchase”) at a purchase price equal
to 95% of the lesser of (i) the daily volume-weighted average price (the “VWAP”) of the Company’s shares for the five
(5) trading days immediately preceding the applicable fixed purchase date and (ii) the lowest sale price on the applicable Fixed Purchase
Date, provided, that Keystone’s committed obligation under any single Fixed Purchase shall not exceed $50,000.

 

In addition to Fixed Purchases, on
any business day on which the Company has directed Keystone to purchase the maximum allowable Fixed Purchase amount, the Company may also
direct Keystone to purchase additional shares on the trading day immediately following the purchase date for such Fixed Purchase (the
“VWAP Purchase Date” and such purchase, a “VWAP Purchase”) at a purchase price equal to 90% of the lesser of (i)
the closing sale price of the Company’s shares on the applicable VWAP Purchase Date and (ii) the VWAP during the period on the applicable
VWAP Purchase Date beginning at the opening of trading and ending on the earlier of (1) close of trading, (2) the time at which the trading
volume of the Company’s shares on Nasdaq has reached the number of shares to be sold in the VWAP Purchase divided by 30%, and (3)
the time at which the sale price of the Company’s shares on Nasdaq is 75% of the closing sale price on the date on which the Company
directs Keystone to make a VWAP Purchase (such period, the “VWAP Purchase Period”), provided, that Keystone’s committed
obligation under any single VWAP Purchase shall not exceed the lesser of (a) 300% of the number of shares sold in the corresponding Fixed
Purchase and (b) 30% of the trading volume of the VWAP Purchase Period.

 

In addition, on a VWAP Purchase Date,
the Company may also direct Keystone to purchase on such day, an additional number of shares (an “Additional VWAP Purchase”)
at a purchase price equal to 90% of the lesser of (i) the VWAP beginning at the completion of any prior VWAP Purchases and the last Additional
VWAP Purchase, as applicable, and ending on the earlier of (1) close of trading, (2) the time at which the trading volume of the Company’s
shares on Nasdaq has reached the number of shares to be sold in the Additional VWAP Purchase divided by 30%, and (3) the time at which
the sale price of the Company’s shares on Nasdaq is 75% of the closing sale price on the date on which the Company directs Keystone
to make an Additional VWAP Purchase (such period, the “Additional VWAP Purchase Period”), and (ii) the lowest sale price on
such day, provided, that Keystone’s committed obligation under any single Additional VWAP Purchase shall not exceed the lesser of
(a) 300% of the number of shares sold in the Fixed Purchase that corresponded to the VWAP Purchase corresponding to the Additional VWAP
Purchase and (b) 30% of the trading volume of the Additional VWAP Purchase Period.

 

Keystone’s aggregate committed
obligation under a VWAP Purchase and all Additional VWAP Purchases for a particular VWAP Purchase Date shall not exceed $1,000 thousand
in the aggregate.

 

The ELOC Purchase Agreement provides
that the Company may not issue or sell any shares under the ELOC Purchase Agreement if the issuance or sale of such shares would result
in Keystone and its affiliates beneficially owning more than 4.99% of the Company’s outstanding share capital at any time.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

 

On April 29, 2025, the Company entered
into a Business Loan and Security Agreement with Agile Capital Funding, LLC, as collateral agent, Agile Lending, LLC, as lead lender,
and other lenders (the “Agile Loan”). The Agile Loan provided for a $2,000 thousand term loan, including a $200 thousand administrative
agent fee, resulting in net proceeds to the Company of $1,800 thousand. The total repayment obligation under the Agile Loan, inclusive
of interest and fees, was $2,980 thousand. The Agile Loan matured 30 weeks following the effective date, with weekly repayment installments
scheduled throughout the term which has not yet been fully satisfied. Interest accrued from the effective date until paid in full, with
a default rate of 5% above the applicable rate upon an event of default.

 

The Company agreed to secure the Agile
Loan by a continuing security interest in substantially all of the Company’s property, rights and assets, including accounts, equipment,
inventory, intellectual property and the shares held by the Company in HUB Cyber Security, Inc. and BlackSwan Technologies, Inc. The Agile
Loan contains customary affirmative and negative covenants, including limitations on the disposition of business or property and changes
in key management. Events of default include payment defaults, breaches of covenants, material adverse changes, insolvency, and judgments
in excess of $50 thousand.

 

In October 2025, the Company applied
$1,500 thousand of the proceeds of the closing under the August 2025 SPA (see below) to repay a portion of the Agile Loan. The cancellation
of an additional $750 thousand of indebtedness owed under the Agile Loan was treated as part of the consideration for Amended Notes issued
at the second additional closing under the August 2025 SPA on October 15, 2025. In November 2025, the remaining balance of the Agile Loan
in the amount of $575 thousand was sold by Agile Lending, LLC to another investor and exchanged pursuant to a separate exchange agreement
with the Company for an Amended Note in the principal amount of $767 thousand. As of December 31, 2025, the Agile Loan has been fully
repaid.

 

 

On June 30, 2025, the Company entered
into a securities purchase agreement (the “June 2025 SPA”) providing for the issuance of subordinated convertible notes (the
“June 2025 Notes”) to certain accredited investors, including Keystone, in the aggregate original principal amount of $6,719
thousand. At the closing, the Company received an aggregate purchase price of $3,625 thousand in cash and the exchange of the notes that
the Company issued previously to investors in March and April 2025 in the aggregate principal amount of $2,187 thousand. The June 2025
Notes issued in consideration for cash were issued with a 20% original issue discount, and the June 2025 Notes issued in consideration
for our outstanding notes were issued on a dollar-for-dollar basis. Out of the June 2025 Notes $6,000 thousand were subsequently exchanged
for new notes issued under the August 2025 SPA. As of December 31, 2025, a total amount of $3,625 thousand was received in cash.

 

 

In July 2025, the Company agreed to
re-issue warrants to purchase an aggregate of 166 ordinary shares to investors who participated in our financing in April 2022 of ordinary
shares and warrants. In light of subsequent market price changes and the Company’s multiple reverse share splits between February
2023 and March 2025, the warrants were re-issued in July 2025 with adjusted pricing and quantity terms to compensate investors for all
cumulative effects. As of August 31, 2025, such warrants to purchase an aggregate of 154 ordinary
shares have been issued. The warrants are exercisable for cash at a price of $120,000 per share and expire on January 14, 2027.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

Most of the warrants are subject to early expiration if
they are not exercised within 14 days after the market price of the ordinary shares equals or exceeds $120,000 per share for ten trading
days in a period of 20 consecutive trading days.

 

 

On August 27, 2025, the Company entered
into a securities purchase agreement (the “August 2025 SPA”) providing for the issuance of subordinated convertible notes
(the “August 2025 Notes”) to certain accredited investors, including Keystone, in the aggregate original principal amount
of up to $20,000 thousand to be issued in multiple closings. Closings under the August 2025 SPA can be held over a period of one year
at the election of Keystone.

 

The notes issued in June 2025 (see
Note 17(12)) resulted in aggregate cash proceeds of $3,625,000 and in the exchange of notes issued by the Company in March and April 2025
in the aggregate principal amount of $2,187,500.

 

At the initial closing of the August
2025 SPA, the Company issued August 2025 Notes in the aggregate original principal amount of $7,850,000 for an aggregate purchase price
of $7,000,000 in cash and in the exchange of the notes that the Company issued previously to investors in June 2025. In addition, the
Company issued warrants to purchase 90 ordinary shares.

 

In the first additional closing under the August 2025 SPA, held on
September 4, 2025, the Company issued and sold Amended Notes in the aggregate principal amount of $2,968,750 and warrants to purchase
an aggregate of 34 ordinary shares, in consideration for cash payments in the aggregate amount of $2,375,000, under the same terms as
the initial closing.

 

The August 2025 Notes mature on August
27, 2027 and bear interest at 4% per annum, payable quarterly in ordinary shares under certain equity conditions (including the effectiveness
of a resale registration statement) or, at the Company’s option, in cash. Late payments accrue interest at an additional premium
of 8% per year. No scheduled amortization payments are required.

 

The August 2025 Notes are subordinated
to existing senior indebtedness not to exceed $25 million in aggregate. They contain various restrictive covenants, including limitations
on dividends, incurrence of indebtedness, certain subsequent equity placements, asset sales and certain variable rate transactions.

 

The August 2025 Notes are convertible
into ordinary shares at the option of the holders at an initial conversion price of $43,200 per share, subject to anti-dilution adjustments
for certain dilutive issuances. Holders may elect an alternate conversion price at the lower of the fixed conversion price or 95% of lowest
VWAP during the five days up to and including the date of conversion, subject to a $15,000 floor price. If such conversion price is lower
than the floor price, the Company would be required to pay the balance in cash.

 

The August 2025 Notes contain several
mandatory and optional redemption provisions. Holders also have optional redemption rights in respect of financings pursuant to equity
lines of credit and at-the-market offerings, allowing them to require redemption of up to their pro-rata portion of 30% of net proceeds
from eligible transactions at a 110% of the redemption amount. Holders also have the right to exchange their August 2025 Notes for the
securities issued in a subsequent placement, at a 10% discount. The Company has the right to redeem all a portion of the August 2025 Notes,
from time to time, at 120% of the conversion amount.

 

On October 15, 2025, the Company and
certain accredited investors, including Keystone, entered into Amendment No. 1 to the August 2025 SPA increasing the aggregate principal
amount of notes issuable thereunder to $35,000,000, adding additional investors and amending the form of note as described below (the
“Amended Note”).

 

In the second additional closing under
the August 2025 SPA, held on October 16, 2025, the Company issued and sold Amended Notes in the aggregate principal amount of $20,525,625
and warrants to purchase an aggregate of 237 ordinary shares, in consideration for (i) cash payments in the aggregate amount of $7,250,000
with the principal amount of $10,019,374, (ii) the partial exchange of August 2025 Notes in the aggregate principal amount of $9,568,751
(at a 10% discount) and (iii) the exchange of $750,000 owed under the Company’s Business Loan and Security Agreement (the “Agile
Loan”) with Agile Capital Funding, LLC (as Collateral Agent) and Agile Lending, LLC (as Lead Lender), dated April 29, 2025, with
a new principal amount of $937,500.

 

On December 31, 2025, the Company held
an additional closing under the August 2025 SPA in the aggregate principal amount of $1,250 thousand, for an aggregate purchase price
of $1,000 thousand and warrants to purchase an aggregate of 14 ordinary shares. On December 31, 2025, the Company and certain accredited
investors, including Keystone, entered into Amendment No. 2 to the August 2025 SPA, increasing the aggregate principal amount of notes
issuable thereunder to $47,250,000.

 

As of December 31, 2025, a total amount of $11,625 thousand was received
in cash and $1,500 thousand were converted into 100 ordinary shares.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

The Amended Notes have a term of two
years from the date of issuance thereof. They do not bear interest, except during the pendency of an event of default, in which case the
rate will be 9% per year. Late payments accrue interest at an additional premium of 8% per year. Commencing approximately 30 days after
the effectiveness of the Company’s Form F-1 for an equity line of credit, the Company will be required to repay a pro rata portion
of the principal and interest accrued thereon on the first trading day of each calendar month, in cash or shares (subject to equity conditions)
at its election.

 

The Amended Notes are subordinated to
existing senior indebtedness not to exceed $25 million in aggregate. They contain various restrictive covenants, including limitations
on dividends, incurrence of indebtedness, certain subsequent equity placements, asset sales and certain variable rate transactions.

 

The Amended Notes are convertible into
ordinary shares at the option of the holders at an initial conversion price of $43,200 per share, subject to anti-dilution adjustments
for certain dilutive issuances. Holders may elect an alternate conversion price at the lower of the fixed conversion price or 90% of lowest
VWAP during the 20 days up to and including the date of conversion, subject to a $15,000 floor price (or 20% of the Nasdaq minimum price
if there’s an event of default). If such conversion price is lower than the floor price, the Company would be required to pay the balance
in cash.

 

The Amended Notes contain several mandatory
and optional redemption provisions. Holders also have optional redemption rights in respect of financings pursuant to equity lines of
credit and at-the-market offerings, allowing them to require redemption of up to their pro-rata portion of 30% of net proceeds from eligible
transactions at a 110% of the redemption amount. Holders also have the right to exchange their Amended Notes for the securities issued
in a subsequent placement, at a 10% discount. The Company has the right to redeem all a portion of the Amended Notes, from time to time,
at 120% of the conversion amount.

 

In change of control transactions (with
control defined based on a 50% threshold), holders may require redemption at 115% of the conversion amount. Holders also have participation
rights in future financings, with the right to purchase their pro-rata portion of 30% of any subsequent placement exceeding $5,000,000
in the aggregate.

 

Upon events of default (including registration
statement failures, trading suspensions, conversion failures, or material breaches), holders may require redemption at 120% of the conversion
amount. Upon any bankruptcy event of default, the Company must immediately pay all outstanding amounts multiplied by a 120% redemption
premium without requiring notice or demand from holders.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

The August 2025 Warrants have an initial
exercise price of $54,000 per share, subject to decrease on days 30, 60 and 90 following the issuance date to 20% below the prevailing
market price at that time and to anti-dilution adjustments for certain dilutive issuances. The August 2025 Warrants have a term of three
years. Cashless exercise is permitted after six months if a resale registration statement is not effective. In connection with a “fundamental
transaction,” the holder has the right to exchange its warrant for a similar warrant in the successor entity or cash pursuant to
a Black-Scholes formula. Upon an event of default, the holder has the right to redeem its warrant for cash based on a Black-Scholes formula.

 

The August 2025 Notes, the Amended Notes
and the August 2025 Warrants are subject to a beneficial ownership limitation of 4.99% (subject to increase to 9.99% with 61-day notice
and shareholder approval) to prevent any holder from exceeding this threshold. We are required to reserve 200% of the shares issuable
upon conversion of all August 2025 Notes, Amended Notes and August 2025 Warrants at the applicable conversion price or exercise price.

 

Concurrently with the entry into the
August 2025 SPA, we entered into a registration rights agreement, whereby we undertook to file with the SEC a Form F-1 registration statement
within 45 days from the initial closing in order to register for resale the shares issuable upon the conversion and/or exercise of the
August 2025 Notes and August 2025 Warrants and the Placement Agent Warrant (as defined below) and to use our reasonable best efforts to
cause the registration statement to be effective within 90 days from the initial closing (or 120 days in the event of a full SEC review).
The same rights apply with respect to the shares issuable upon conversion of the Amended Notes. The registration rights agreement provides
for liquidated damages for certain defaults equal to 1% of the original principal amount of the August 2025 Notes for each 30-day period
until the default is cured, up to an aggregate of 10% thereof. The registration rights agreement contains other customary terms and conditions,
including indemnification obligations.

 

The debt restructuring of the June 2025
loan was treated as extinguishment as of the August 2025 transition date, resulting in finance expenses of $14,020,338.

 

Rodman & Renshaw LLC acted as sole
placement agent for the offering. The fees of the placement agent consisted of a total of $300,000 in cash and the issuance of a warrant
to purchase an aggregate of 1 ordinary share on the same terms and conditions as the warrants issued to investors in the offering, except
for the potential adjustment of the exercise price on days 30, 60 and 90.

 

15.	Warrant Term Extension

 

The Company has outstanding warrants
to purchase 1 ordinary share exercisable at NIS 167,427,000 (approximately $55,809,000 per share), which were issued in connection with
a private financing in February 2022 (the “2022 Warrants”). The 2022 Warrants currently trade on the Nasdaq Capital Market
under the symbol “HUBCZ.” The 2022 Warrants were scheduled to expire on August 22, 2025. To allow additional time for the
2022 Warrants to be exercised and to potentially generate future cash proceeds to the Company, on August 11, 2025, the Company extended
the expiration date of the 2022 Warrants to August 22, 2027.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

16.	Settlements with 2023 PIPE Investors

 

On January 16, 2023, we entered into
a loan agreement with A-Labs Finance and Advisory Ltd. (“A-Labs”), pursuant to which A-Labs agreed to issue us a $1,000,000
principal amount note for gross proceeds of $900,000 (the “A-Labs Loan”). The principal amount A-Labs Loan is due to be repaid
in one repayment on January 16, 2026 (the Maturity Date”) (36 months from the execution of the A-Labs Loan). The A-Labs Loan bears
interest at 12% per annum and interest became payable quarterly commencing on April 1, 2023 until the Maturity Date. Overdue payments
will accrue interest in arrears at the rate of 18% per annum from the relevant payment date until such payment is made. In addition, we
paid A-Labs the sum of $4.2 million between July 2021 and March 2023 as consulting fees under a financial advisory services agreement
entered into July 2021 (the “A-Labs Agreement”) and we issued to A-Labs warrants to purchase 27 of our ordinary shares. Additionally,
in March 2023, a total of $2.2 million that was owed to A-Labs pursuant to the A-Labs Agreement was converted into our ordinary shares
at a conversion price of $1,500,000 per ordinary share. This conversion of amounts we owed to A-Labs under the A-Labs Agreement, was effected
to partially satisfy the commitment that A-Labs made to us to purchase $20 million of our ordinary shares in the private placement in
connection with the closing of our business combination with Mount Rainier Acquisition Corp., a Delaware special purpose acquisition company,
in 2023 (the “PIPE Financing”). In December 2022, we amended the A-Labs Agreement to provide that for each financing
transaction closed, in addition to paying a commission to A-Labs in cash, we would be required to issue warrants to purchase ordinary
shares in an amount equal to the cash consideration that would otherwise be payable under the financial advisory services agreement divided
by 4.81, which warrants shall be exercisable for 4 years and at an exercise price of NIS 72,150 (regardless of the price per share paid
by investors in the relevant financing transaction). Additionally, we committed to provide compensation under the A-Labs Agreement for
all investors with whom we would enter into a financing transaction prior to our shares being listed for trading on the Nasdaq regardless
of whether such investors were introduced to the Company by A-Labs. In each of September 2022 and January 2023, we paid to A-Labs an additional
commission of $50,000 in exchange for extra services provided by A-Labs over the course of certain fund raising efforts and loan issuances.
Additionally, as part of the Shayna Loans, we paid to A-Labs commissions totaling $140,000 for services provided as part of the fund raising
efforts. The term of the A-Labs Agreement was for 12 months following the execution in July 2021, provided that the A-Labs Agreement will
automatically renew for additional 12 month terms unless either party provides written notice to the other party of its intention not
to renew at least 30 days prior to the end of such initial 12 month term or any renewed terms. Additionally, the A-Labs Agreement may
be terminated by either party upon a minimum of 30 days prior written notice. In August 2023, we received from A-Labs a waiver of the
retainer fees for the services. Nevertheless, as of the date of this Annual Report, there remain unpaid fees of $3,298,000 under the A-Labs
Agreement.

 

On November 6, 2025, the Company entered
into a settlement agreement with each of A-Labs, MOFO Holdings LLC and Viserion Ltd. (the “PIPE Investors”), which had entered
into subscription agreements with the Company to invest an aggregate of $50 million in the PIPE Financing. After all the other closing
conditions for the business combination were met, we decided to proceed with the closing despite not having received the funds payable
under the Subscription Agreements from the PIPE Investors. The signing of the settlement agreements followed a mediation process, which
was approved by the Company’s Audit Committee and Board of Directors, and by the Company’s shareholders on December 16, 2025.
According to the settlement agreement, taking into account the parties’ respective claims and the various agreements between them,
no funds or other form of consideration shall be paid or transferred from the PIPE Investors to the Company, and the Company shall not
pay any funds or any other form of consideration to any of the PIPE Investors, all in exchange for full and absolute waivers by the parties toward each other (including
shareholders, officers, directors parent and subsidiaries thereof, and anyone acting on behalf of any of them).

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

Additionally, according to the settlement,
the Company will repay to A-Labs the amount outstanding in connection with a secured loan extended by A-Labs to the Company on January
17, 2023 in the amount of $900,000, which with original issuance discount and accrued interest amounts to $1,800,000. The repayment will
be in the form of ordinary shares of the Company based on the lowest closing price of the ordinary shares on Nasdaq during the five trading
days preceding the date of the shareholders’ approval, which was on December 16, 2025. The shares will be subject to the following
lock-up periods: 40% of the shares will be restricted for a period of 40 days, 30% will be restricted for a period of 70 days, 25% will
be restricted for a period of 100 days and 5% will be restricted for a period of 130 days. The 5% tranche will be subject to a one-time
upward or downward adjustment to the extent that the sum of (i) the proceeds from the sale of shares by A-Labs and (ii) the current market
value of the shares held by A-Labs are less than or greater than $1,800,000, respectively. A-Labs must make reasonable commercial efforts
to maximize the consideration it receives for the sale of shares. The sale of shares by A-Labs on Nasdaq on any trading day may not exceed
5% of the current day’s trading volume of the ordinary shares thereon.

 

In April 2026, the Company received
a letter addressed to our directors from counsel to A-Labs, demanding that we pay the $1,800,000 plus interest. In May 2026, the Company’s
counsel responded by rejecting all allegations raised by A-Labs in their letter.

In addition, on April 16, 2026, an application was filed against the Company to hold it liable for a judgment awarded against A-Labs in
favor of Teshua Ltd., based on the alleged amount of $1,800,000. The Company explained that it was unable to realize the shares due to
an attachment imposed on A-Labs and/or its representatives, and that, in any event, at present the matter does not concern the amount
alleged by A-Labs, but rather shares whose value is substantially lower. A hearing on this matter is scheduled for July 21, 2026.

 

Separately, on February 27, 2026, DC
Rainier SPV LLC, the former sponsor of Mount Rainier Acquisition Corp., filed a complaint against the Company and A-Labs in the Supreme
Court of the State of New York alleging, among other things, that the Company and A-Labs misrepresented the existence of approximately
$50 million of PIPE financing commitments in connection with the Mount Rainier business combination, and on April 28, 2026, the plaintiff
filed a motion for entry of a default judgment against the Company seeking not less than $5,080,027, plus interest, fees and costs. For
more information, see Note 28.

 

17.	Consulting agreements:

 

In October 2025, the Company reached
a settlement with Mr. Moshe Bergman, who assisted the Company with obtaining the investment from the March-November 2024 Investor, with
respect to a requested service fee of $550,000. Pursuant to the settlement, the Company agreed to pay $100,000 in cash and issue 16 ordinary
shares.

 

On July 10, 2025, the Company entered
into a share purchase agreement with the BlackSwan investor referenced in Note 4(6), for the purchase of 16 shares for a total consideration
of $750,000, at a price of $45,000 per share.

 

On August 6, 2025, the Company entered
into an additional share purchase agreement with the BlackSwan investor referenced in Note 4(6), for the purchase of 16 shares for a total
consideration of $750,000 at a price of $45,000 per share.

 

 

HUB CYBER SECURITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

In November 2025, the Company entered
into a consulting agreement with Pey Capital PTE Ltd. pursuant to which Pey undertook to provide the Company with consulting and management
services related to the Company’s development, production, potential future launch and promotion of one or more utility tokens,
as well as advice related to the fintech market, blockchain currency and related matters. The agreement has a term of three years, and
the consulting fee consists of 66 ordinary shares, subject to reverse vesting in 36 equal monthly tranches.

 

c.

Warrants Liabilities

 

In February 2023, at the effective
time of the Reverse Recapitalization (the “Effective Time”), each unit of RNER (a “RNER Unit”) issued and outstanding
immediately prior to the Effective Time automatically detached and the holder of each such RNER Unit became deemed to hold one share of
RNER common stock (each a “RNER Share”) and one warrant of RNER entitling the holder to purchase three-fourths of one RNER
Share per warrant at a price of $1,725,000 per whole share (exercisable only for whole shares) (each, a “RNER Warrant”).

  

In addition, each RNER Share issued
and outstanding immediately prior to the Effective Time automatically converted into the right to receive 0.0899 (pre-reverse split of
1:15, 1;50, 1:20) ordinary shares, and each RNER Warrant issued and outstanding immediately prior to the Effective Time converted into
the right to receive 0.0899 (pre-reverse split of 1:15, 1;50, 1:20) warrants of the Company (a “New Warrant”) subject to downward
adjustment to the next whole number in case of fractions of warrants.

 

A total of 10 New Warrants to purchase
160,438 (pre-reverse split of 1:15, 1;50, 1:20) ordinary shares of the Company were issued to holders of the RNER warrants, of which 5,359
(pre-reverse split of 1:15, 1;50, 1:20) warrants are private warrants and the remaining 155,078 warrants are public warrants. As a result
of the conversion into the New Warrants, as well as the reverse share splits at a ratio of 1:10 that were effected in each of December
2023 and in March 2025, the exercise price increased to $1,280 per each share (pre-reverse split of 1:15, 1;50, 1:20).

 

The warrants were classified as financial
liability and measured at fair value as of the issuance date. After the initial recognition, at each period end date, the warrants measured
at fair value and all changes in fair value are recognized through profit or loss.

 

Through December 31, 2025, no warrants
were exercised into ordinary shares of the Company.

 

d.

Fair Value measurements

 

The carrying amounts of cash and cash equivalents,
restricted cash, restricted bank deposit, trade receivables, other account receivables, inventories, other short term loans, trade payables,
other payables and other long term loans approximate their fair values due to the short-term maturities of such instruments.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

The
following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis and indicates
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

 

		December 31, 2024
		Level 1				Level 3
Public warrants			583				–
Private warrants			–				13,301
Conversion component of convertible loans			–				5,141
Total			583				18,442

 

		December 31, 2025
		Level 1				Level 3
Public warrants			29				–
Private warrants			–				2,655
Conversion component of convertible loans			–				282
Convertible loans measured whole at fair value							57,756
Total			29				60,693

 

The
Company classifies its public warrants as Level 1 based on quoted market price in active markets.

 

The
Company measures the fair value of private warrants by the Black-Scholes model, which are classified as Level 3.

 

As
of December 31, 2025, and December 31, 2024, the Company did not have any instrument measures at fair value, which was classified as
Level 2.

 

The
Company measures the fair value of Conversion component of convertible loans and warrants by using Black-Scholes and Monte Carlo simulation
models. All of those components are classified, as Level 3, due to the use of unobservable inputs.

 

The
key inputs into the Black-Scholes models for the private warrants were as follows:

 

2024
Accredited Investors – Black and Scholes on warrants

 

		December 31, 2025
Risk- free interest rate			3.48	%
Expected term (years)			0.62–0.63
Expected volatility			135.88–136.37	%
Exercise price			75,000–172,500
Underlying share price			5,820

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

The
key inputs into the Black-Scholes or Monte Carlo simulation models for the Conversion component of convertible loans were as follows:

 

Shayna
Loan Agreements – Black Scholes on warrants

 

		December 31, 2025
Risk- free interest rate			3.67	%
Expected term (years)			0.25
Expected volatility			135.70	%
Exercise price			135,000
Underlying share price			5,820

 

Lind
Agreement – Black Scholes on warrants

 

		December 31, 2025
Risk- free interest rate			3.52	%
Expected term (years)			2.65
Expected volatility			154.39	%
Exercise price			75,000
Underlying share price			5,820

 

2024
Accreditor Investors Loan – Conversion component

 

		December 31, 2025
Risk- free interest rate			3.750	%
Expected term (years)			0.13
Expected volatility			145.74	%
Underlying share price			5,820

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

March-November 2024 Notes – Black Scholes on warrants

 

		December 31, 2025
Risk- free interest rate			3.65	%
Expected term (years)			4.13
Expected volatility			154.81	%
Exercise price			75,000
Underlying share price			5,820

 

Claymore
Convertible Loan – Black Scholes on warrants

 

		December 31, 2025
Risk- free interest rate			3.471–3.495	%
Expected term (years)			1.06–2.31
Expected volatility			144.30–157.00	%
Exercise price			21,430–75,000
Underlying share price			5,820

 

Claymore
Convertible Loan – Black Scholes – Conversion component

 

		December 31, 2025
Risk- free interest rate			3.50–3.84	%
Expected term (years)			0.63–5.00
Expected volatility			136.07–157.88	%
Exercise price			15,000–75,000
Underlying share price			5,820

 

Claymore
Convertible Loan – Monte Carlo – Conversion component 

 

		December 31, 2025
Risk- free interest rate			3.48	%
Expected term (years)			1–1.06
Expected volatility			152–156	%
Underlying share price			5,820

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

JJ
Astor Convertible Loan – Black Scholes on warrants

 

		December 31, 2025
Risk- free interest rate			3.64–3.68	%
Expected term (years)			4–4.41
Expected volatility			154.81	%
Exercise price			37,050–127,490
Underlying share price			5,820

 

Julestar – Black Scholes on warrants

 

		December 31, 2025
Risk-free interest rate			3.649%-3.671%
Expected term (years)			4.1–4.35
Expected volatility			154.81	%
Exercise price			15,000–28,500
Underlying share price			5,820

 

Canadian warrants – Black Scholes on
warrants

 

		December 31, 2025
Risk-free interest rate			3.480%-3.990 %
Expected term (years)			1.03–1.5
Expected volatility			149.93%-156.67 %
Exercise price			120,000
Underlying share price			5,820–42,000

 

Monte
Carlo Simulations – convertible loan valuations measured whole at fair value:

 

Claymore December 2024 and January 2025

 

		December 31, 2025
Risk-free interest rate			3.48	%
Expected term (years)			1.00–1.06
Expected volatility			151.86%-155.80	%
Exercise price			75,000–643,200
Underlying share price			5,820

 

Seven
Knots

 

			August 20, 2025 – December 31, 2025
Risk-free interest rate			3.47%-3.90	%
Expected term (years)			1.00–2.00
Expected volatility			146.13%-159.66	%
Exercise price			7,500–45,000
Underlying share price			5,820–37,498

 

Make-Whole

 

		December 31, 2025
Risk-free interest rate			3.47	%
Expected term (years)			2.00
Expected volatility			147.45	%
Exercise price			15,000–43,200
Underlying share price			5,820

 

Keystone

 

			August 27, 2025 – December 31, 2025
Risk-free interest rate			3.41%-3.59	%
Expected term (years)			1.00–3.00
Expected volatility			143.89%-159.89	%
Exercise price			6,900–54,000
Underlying share price			5,820–32,848

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 –

FINANCIAL LIABILITIES (Cont.)

 

ELOC

 

		December 31, 2025
Risk-free interest rate			3.50	%
Expected term (years)			0.91
Expected volatility			145.10	%
Exercise price			7,400
Underlying share price			5,820

 

March-November
2024 Notes

 

		December 31, 2025
Risk-free interest rate			3.75	%
Expected term (years)			0.13
Expected volatility			145.74	%
Exercise price			75,000
Underlying share price			5,820

 

JJ
Astor convertible loan

 

			August 4, 2025 – December 31, 2025
Risk-free interest rate			3.67%-4.05	%
Expected term (years)			0.25–0.66
Expected volatility			135.39%-168.21	%
Underlying share price			5,820–35,848

 

Rodman
& Renshaw August warrants 31.12.25 – Monte Carlo on warrants

 

		December 31, 2025
Risk-free interest rate			3.52	%
Expected term (years)			2.66
Expected volatility			154.32	%
Exercise price			6,900–54,000
Underlying share price			5,820

 

The
following table presents the changes in the fair value of liabilities:

 

		Public Warrants				Private Warrants				Conversion Component				Convertible loan measured whole at fair value				Total
Fair value as of December 31, 2024		$	583			$	13,301			$	5,141				–			$	19,025
Issuance of conversion component related to the convertible loans			–				–			$	2,909				–			$	2,909
Issuance of warrants related to the convertible loans			–			$	17,717				–				–			$	17,717
Exercise of warrants			–			$	(5,561	)			–				–			$	(5,561	)
Classification of warrant liability to equity			–			$	(10,529	)			–				–			$	(10,529	)
Conversion of convertible loans into ordinary shares			–				–			$	(6,297	)		$	(14,572	)		$	(20,869	)
Issuance of Convertible loan measured whole at fair value			–				–				–			$	44,960			$	44,960
Change in fair value		$	(556	)		$	(13,311	)		$	(1,811	)		$	24,981			$	9,303
Adjustments arising from translating financial statements from functional currency to presentation currency			2			$	1,038			$	340			$	2,387			$	3,767
Balance as of December 31, 2025		$	29			$	2,655			$	282			$	57,756			$	60,722

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 18 –

FINANCIAL INSTRUMENTS

 

 

Financial
assets at amortized cost:

 

		December 31,
		2025				2024
		USD in thousands
Trade receivable and other assets			13,659				14,789
Restricted cash and bank deposit			681				388
Total current assets			14,340				15,177
Long-term deposit			216				165
Total non-current assets			216				165

 

b.

Other financial liabilities:

 

Other financial liabilities at amortized cost:
Short-term loans (1)			13,983				13,534
Convertible loans			1,626				24,763
Trade payables			9,825				8,200
Other accounts payable			43,168				39,474
Liabilities for government grants			557				442
Total other financial liabilities at amortized cost			69,159				86,413
Total current liabilities			68,890				86,240
Total non-current liabilities			269				173

 

 

c.

Financial risk management objectives and policies:

 

The
Company’s principal financial liabilities, other than derivatives, are comprised of loans and borrowings, receivables and financial
guarantee contracts. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees
to support its operations. The Company’s principal financial assets include cash and short-term deposits that derive directly from
financing rounds and convertible loans.

 

The
Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these
risks. All risk management activities are carried out by specialist teams that have the appropriate skills, experience and supervision.
It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken by its employees.

 

d.

Financial risks factors:

 

The
Group’s activities expose it to various financial risks such as market risks (foreign currency risk, interest risk and price risk),
credit risk and liquidity risk. The Group’s comprehensive risk management plan focuses on activities that reduce to a minimum any
possible adverse effects on the Group’s financial performance.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 18 –

FINANCIAL INSTRUMENTS (Cont.)

 

Risk
management is performed by the Company’s chief executive officer.

 

1)

Exchange rate risk:

 

Though
the Group operates internationally, its operations are primarily located in Israel and the majority of its expenses are denominated NIS.
It is therefore exposed to exchange rate risk arising from exposure to various foreign currencies, mainly the USD and the Euro. Exchange
rate risk arises from future commercial contracts, recognized assets and liabilities that are denominated in a foreign currency other
than the functional currency and net investments in foreign operations.

 

In
addition, the Company’s financial results are reported in USD, and changes in the exchange rate between the USD and local currencies
in those countries in which the Company operates (primarily the NIS) may affect the results of its operations. The USD cost of the Company’s
operations in countries other than the United States, is negatively influenced by revaluation of the USD against other currencies.

 

 

As
of December 31, 2025, cash and cash equivalents amounted to $1,763 thousand. The entire cash and cash equivalents are invested with high
quality financial institutions. The Company and its subsidiaries monitor customer debts on an ongoing basis and include specific allowances
for doubtful accounts which adequately reflect the loss inherent in debts whose collection is doubtful as per the estimate of the Company
and the subsidiaries.

 

 

The
Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of overdrafts and loans
(see also Note 1c).

 

4)

Interest rate risk:

 

Interest
rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates.

 

The
Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term liabilities
with floating interest. This risk is of primary focus to the Company given its current dependency on debt financing and the ability to
obtain future debt financing. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans
(see also note 1c).

 

 

The
carrying amount of cash and cash equivalent, trade receivables net, other accounts receivable, short-term bank loans, Trade payables
and other accounts payable approximates their fair value.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 19 –

NET EMPLOYEE DEFINED BENEFIT LIABILITIES

 

Employee
benefits consist of post-employment benefits and other long-term benefits.

 

Post-employment
benefits:

 

According
to the labor laws and Severance Pay Law in Israel, the Company is required to pay compensation to an employee upon dismissal or retirement
or to make current contributions in defined contribution plans pursuant to Section 14 to the Severance Pay Law, as specified below. The
Company’s liability is accounted for as a post-employment benefit. The computation of the Company’s employee benefit liability
is made according to the current employment contract based on the employee’s salary and employment term which establish the entitlement
to receive the compensation.

 

The
post-employment employee benefits are normally financed by contributions classified as defined benefit plan or as defined contribution
plan, as detailed below.

 

a.

Defined contribution plans:

 

Section
14 to the Severance Pay Law, 1963 applies to part of the compensation payments, pursuant to which the fixed contributions paid by the
Group into severance pay funds and/or policies of insurance companies release the Group from any additional liability to employees for
whom said contributions were made. These contributions and contributions for benefits represent defined contribution plans.

 

		Year ended December 31,
		2025				2024
		USD in thousands
Expenses in respect of defined contribution plans			1,641				1,632

 

b.

Defined benefit plans:

 

The
Group accounts for that part of the payment of compensation that is not covered by contributions in defined contribution plans, as above,
as a defined benefit plan for which an employee benefit liability is recognized and for which the Group deposits amount in central severance
pay funds or accrue for such provision (when the deposits are not made on time) in qualifying insurance policies.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 19 –

NET EMPLOYEE DEFINED BENEFIT LIABILITIES (Cont.)

 

c.

Changes in the defined benefit obligation and fair value of plan assets

 

2025

 

		Expenses recognized in profit or loss																												Gain (loss) from remeasurement in other comprehensive income																				Contributions
		Balance as of January 1, 2025				Current service cost				Net interest expense				Past service cost and effect of settlements				Total expense recognized in profit or loss for the period				Payments from the plan				Return on plan assets (excluding amounts included in net interest expenses)				Actuarial gain (loss) arising from changes in demographic assumptions				Actuarial gain (loss) arising from changes in financial assumptions				Actuarial gain (loss) arising from experience adjustments				Total effect on other comprehensive income for the period				Effect of changes in foreign exchange rates				by employer				by plan’s participants				Balance as of December 31, 2025
		USD in thousands
Defined benefit obligation			2,876				101				138				–				239				(899	)			–				–				27				(58	)			(32	)			(692	)			–				–				2,539
Fair value of plan assets			(2,225	)			–				(109	)			31				(79	)			623				(14	)			–				–				–				(14	)			(423	)			(107	)			–				(2,085	)
Net defined benefit liability (asset)			651				101				29				31				160				(277	)			(14	)			–				27				(58	)			(46	)			269				(107	)			–				454

 

2024

 

		Expenses recognized in profit or loss																												Gain (loss) from remeasurement in other comprehensive income																				Contributions
		Balance as of January 1, 2024				Current service cost				Net interest expense				Past service cost and effect of settlements				Total expense recognized in profit or loss for the period				Payments from the plan				Return on plan assets (excluding amounts included in net interest expenses)				Actuarial gain (loss) arising from changes in demographic assumptions				Actuarial gain (loss) arising from changes in financial assumptions				Actuarial gain (loss) arising from experience adjustments				Total effect on other comprehensive income for the period				Effect of changes in foreign exchange rates				by employer				by plan’s participants				Balance as of December 31, 2024
		USD in thousands
Defined benefit obligation			3,135				126				150				–				276				(537	)			–				–				(13	)			36				23				(21	)			–				–				2,876
Fair value of plan assets			(2,266	)			–				(108	)			28				(80	)			424				(191	)			–				–				–				(191	)			13				(125	)			–				(2,225	)
Net defined benefit liability (asset)			869				126				42				28				196				(113	)			(191	)			–				(13	)			36				(168	)			(8	)			(125	)			–				651

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 19 –

NET EMPLOYEE DEFINED BENEFIT LIABILITIES (Cont.)

 

d.

The principal assumptions underlying the defined benefit plans:

 

		2025				2024
		%
Discount rate (1)			4.75-4.8				5.32
Expected rate of salary increase			2.5				3.18

 

 

e.

Amount, timing and uncertainty of future cash flows:

 

		Change in defined benefit obligation
		USD in thousands
December 31, 2025
Sensitivity test for changes in the expected rate of salary increase:
The change as a result of:
1% salary increase			(175	)
1% salary decrease			138
Sensitivity test for changes in the discount rate of the plan assets and liability:
The change as a result of:
1% increase in discount rate			145
1% decrease in discount rate			(183	)

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

a.

Composition of share capital:

 

December 31, 2025

December 31, 2024

Authorized

Issued and outstanding

Authorized

Issued and outstanding

Number of shares in thousands

Ordinary shares with no par value

66,667

2

6,667

0.23

 

Effective
March 28, 2025, the Company’s shares were reverse split in a ratio of 1:10. Effective January 14, 2026, the Company’s shares
were reverse split in a ratio of 1:15. Effective March 31, 2026, the Company’s shares were reverse split in a ratio of 1:50. Effective
June 5, 2026, the Company’s shares were reverse split in a ratio of 1:20. As a result, all ordinary shares, options for shares,
warrants to purchase ordinary shares, exercise price and net loss per share amounts were adjusted retroactively for all periods presented
in these consolidated financial statements as if the stock split had been in effect as of the date of these consolidated financial statements. 

 

b.

Movement in share capital:

 

i.

Issued and outstanding share capital:

 

		Number of shares of no par value
		in thousands
Balance as of January 1, 2025			0.23
Issuance of shares			1.77
Exercise of options and warrants			–
Balance as of December 31, 2025			2

 

 

1.

AGP   During January and February 2025, AGP converted an aggregated amount of $500 thousand into 6 ordinary shares pursuant to the terms of the Amended Note described in Note 3(1).

 

	2.	2023-2024 Accredited Investor
		During March 2025, certain Accredit Investors converted an aggregated amount of $550 thousand into 3 ordinary shares, pursuant to the Accredit Investor Notes described in Note 3(2). In February 2025, the 2023–2024 accredited investor group received a benefit consisting of 17 warrants and 8 ordinary shares as a result of early conversions of their convertible loans.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 20 –

EQUITY (Cont.)

 

 

During
February 2025, Lind exercised Lind Warrants using the cashless exercise formula to purchase 24 ordinary shares at an exercise price of
$60,000, pursuant to the Lind SPA described in Note 3(b).

 

 

During 2025, Claymore investors converted
an aggregated amount of $10,524 thousand into 273 ordinary shares.

 

Pursuant to a settlement agreement
between the Company and two of its creditors, pursuant to which Claymore undertook to settle outstanding debt on behalf of the Company,
Claymore converted an aggregate amount of $13,414 thousand into 288 ordinary shares and converted prefunded warrants into 7 ordinary
shares.

 

5.

Creditor Settlement Agreement

 

Pursuant
to a debt settlement agreement with one of BlackSwan’s investors and creditors, a convertible loan in the principal amount of $1.54
million and 41 warrants were converted and exercised, respectively into 61 ordinary shares of the Company.

 

6.

Consulting Agreement   During 2025, consultants were issued an aggregate of 170 ordinary shares, pursuant to consulting agreements. Expenses in the aggregate amount of $2,877 thousand were recorded under sales and marketing expenses.

 

7.

Prefunded Warrants   As part of the Company’s debt settlements with two of its creditors, in which Claymore participated, and in connection with both convertible and non-convertible loans provided by Claymore during the first half of 2025, Claymore received 234 prefunded warrants, out of which 176 were exercised for ordinary shares.   During 2025, the March-November 2024 Investor converted 63 prefunded warrants into 63 ordinary shares.

 

8.

March-November 2024 Investor and Seven Knots   During 2025, the March-November 2024 Investor converted $1,500 thousand of convertible loan principal into 33 shares.

 

9.

Exchange note   During 2025, the exchange note investors converted $6,662 thousand of convertible loan principal into 361 shares.

 

10.

August 2025 SPA   During 2025, the August 2025 SPA investors converted $1,500 thousand of convertible loan principal into 100 shares.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 20 –

EQUITY (Cont.)

 

	11.	Share-based compensation to key management   During 2025, members of the Company’s key management received an aggregate of 33 ordinary shares, as part of their compensation. Expenses in the amount of $2,953 thousand were recorded under general and administrative and research and development expenses.
	12.	Conversion of loans
		During 2025, investor loans in the amount of $275 thousand was converted into ordinary shares.
	13.	Oozi Cats Subscription Agreement
		During 2025, Oozi Cats received 33 ordinary shares at a purchase price of $45,000 per share for a total consideration of $1,500 thousand, pursuant to the terms of the subscription agreement.
	14.	ELOC
		As of December 31, 2025, an amount of $1,600,000 under the ELOC loan was converted into 107 shares.
	15.	JJ Astor
		As of December 31, 2025, JJ Astor converted a principal amount of $2,165,497 under the December 2024 convertible note into 98 ordinary shares.

 

	16.	Reclassification of warrants from liability to equity
		In February 2025, the terms of the warrants previously issued to the March-November 2024 Investor in connection with four investment tranches completed during 2024 were amended. Pursuant to the amendment, the exercise price of all such warrants, which are exercisable for an aggregate of 86 ordinary shares, was modified to a unified exercise price of NIS 266,550 per share, and the cashless exercise feature was removed. As a result of the amendment, the warrants were reclassified from liabilities to equity. As of the date of reclassification, the fair value of the warrants was $10,529 thousand. For additional information, see Note 3.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 20 –

EQUITY (Cont.)

 

c.

Treasury shares – Company shares held by the Company:

 

The
interests of the Company in the Company’s shares are as follows:

 

		December 31,
		2025				2024
		%
% of issued and outstanding share capital			0.05				0.24

 

d.

Capital management in the Company:

 

The
Company’s capital management objectives are:

 

1.

To preserve the Group’s ability to ensure business continuity thereby creating a return for the shareholders, investors and other interested parties.

 

2.

To ensure adequate return for the shareholders by pricing of products and services that is adjusted to the level of risk in the Group’s business activity.

 

The
Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and risk characteristics
of its activity and its current and future liquidity constraints. To maintain or adjust the required capital structure, the Company may
apply various measures such as adjust the dividend payment to shareholders, raise capital by way of issue of shares, capital purchases
from shareholders and disposal of assets to reduce its debts.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS 

 

NOTE 21 –

SHARE-BASED PAYMENT

 

a.

Expenses recognized in the financial statements:

 

The
expense recognized in the financial statements for services received from employees and officers is shown in the following table:

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Equity-settled share-based payment plans			3,189				2,070				7,115

 

b.

Grants of options to employees and interested parties:

 

As part of the business combination
agreement described in Note 1b above, on June 21, 2021, the Company granted 11 share options to senior officers, employees and consultants
of the Company and to an investment bank assisting the transaction.

 

c.

2021 Employee Stock Option Plan:

 

The Company has authorized through
its 2021 Employee Stock Option Plan (the “Plan”), an available pool of ordinary shares of the Company from which to grant
options and RSUs to officers, directors, advisors, management and other key employees. As of December 31, 2025, there were 13,559 ordinary
shares reserved and available for issuance under the Plan (after adjustment for the 1:15 reverse split effected on January 15, 2026,
the 1:50 reverse split effected on April 20, 2026 and the 1:20 reverse split effected on June 5, 2026). The options granted generally
have a four-year vesting period and expire ten years after the date of the grant, subject to the terms set forth in the Plan. Options
granted under the Plan that are cancelled or forfeited before expiration become available for future grant.

 

d.

Movement of share options during the year:

 

The
following table presents the changes in the number of share options and the weighted average exercise prices of share options: 

 

2025

2024

Number of options

Weighted average exercise price

Number of options

Weighted average exercise price

Share options outstanding at beginning of year

–

426,000

2

1,506,000

Share options granted during the year

–

–

–

–

Share options exercised during the year

–

–

–

7,500

Share options forfeited during the year

–

–

–

6,000

Share options expired during the year

–

1,205,000

–

2,476,500

Share options outstanding at end of year

–

933,532

–

426,000

Share options exercisable at end of year

–

1

–

378,000

 

Each
option is exercisable into one ordinary share of no par value.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 21 –

SHARE-BASED PAYMENT (Cont.)

 

A
summary of the status of RSUs under the Plan as of December 31, 2025 and changes during the relevant period ended on that date is
presented below:

 

		Number of RSU
Outstanding at beginning of year*			1
Granted			451
Vested			(12	)
Forfeited and cancelled			(9	)
Outstanding at end of year			431

 

 

The
total equity-based compensation expense related to all of the Company’s equity-based awards recognized for the years ended December 31,
2025, 2024 and 2023, was comprised as follows:

 

		Year ended December 31,
		2025				2024				2023
Cost of revenues			–				–				35
Research and development expenses			163				(11	)			3,010
Sales and marketing expenses			85				(32	)			211
General and administrative expenses			2,941				2,113				3,859
Total share-based payment			3,189				2,070				7,115

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 22 –

COMMITMENTS, GUARANTEES, CHARGES AND CONTINGENT LIABILITIES

 

Legal
Proceedings

 

From
time to time, the Company is and may be subject to various legal proceedings, contingencies and claims that arise in the course of business,
including some claims from current or former employees and directors, as well as governmental and other regulatory investigations and
proceedings.

 

There
is no pending litigation or proceeding against any of the Company’s officers or directors as to which indemnification is currently
being sought, and, except as described below, the Company is not aware of any pending or threatened litigation, the outcome of which,
the Company believes, if determined adversely to the Company, would individually or taken together have a material adverse effect on
its business, operating results, cash flows or financial condition or may result in claims for indemnification by any office holder.
Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future
litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because
of defense and settlement costs, diversion of management resources and other factors.

 

Set
forth below is a brief summary of the material litigation and other proceedings the Company is currently facing:

 

1.

Insurance reimbursement claim – In May 2018, Rotem Amfert Negev Ltd. filed an insurance reimbursement claim against the Company and approximately 15 other defendants in the Tel Aviv District Court for damages caused by a fire at plaintiff’s factory. The plaintiff filed evidence on November 24, 2025 and the Company filed its evidence on June 30, 2026. A mediation procedure was approved by the parties and was scheduled for July 14, 2026 and July 30, 2026.

 

At
this stage, based on the assessment of legal counsel, no provision was recorded in respect of this claim.

 

2.

Contract Tender Litigation – In March 2022, a motion to certify a class action was filed against the Company in connection with the alleged delayed disclosure of the cancellation of a contract tender. Following various procedural developments, including mediation attempts that did not result in a settlement, on February 18, 2026, the court partially granted the motion for certification with respect to certain allegations while dismissing the majority of the claims. On April 19, 2026, the plaintiff filed an amended statement of claim seeking damages of approximately NIS 5.4 million (approximately $1.69 million). On May 28, 2026, the Company filed a motion seeking reconsideration of the partial class action certification and the plaintiff filed its response on July 1, 2026. A hearing on this motion is scheduled for November 4, 2026.

 

As
of the date of this Annual Report, a provision in the amount of $784 thousand was recorded by the Company.

 

3.

PIPE Financing Litigation – In March 2023, a motion for class action certification was filed against the Company and other respondents, alleging misleading disclosures regarding irrevocable investment commitments in connection with the PIPE Financing. The applicant seeks to represent shareholders who purchased the Company’s ordinary shares between March 2022 and February 23, 2023, claiming aggregate damages exceeding NIS 2.5 million. The proceedings remain at the class certification stage. During 2024, certain respondents and claims were dismissed or withdrawn following the Court’s recommendations. During 2025 and 2026, the parties continued with evidentiary and pre-trial proceedings, including discovery-related motions. As of the date of this Annual Report, the certification motion remains pending, and the litigation is ongoing.

 

At
this stage, it is not possible to assess the prospects of the certification motion being granted.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 22 –

COMMITMENTS, GUARANTEES, CHARGES AND CONTINGENT LIABILITIES (Cont.)

 

4.

Y.H. Lahav Financial Advisors – On June 4, 2024, Y.H. Lahav Financial Advisors filed claims with the Tel Aviv District Court against BlackSwan Technologies, Inc. and Cognitive Systems Ltd., which subsequently became subsidiaries of the Company, and directors thereof. The claims allege breaches of a loan agreement and seek damages totaling approximately $2 million. On July 3, 2025, the parties filed a joint motion to suspend proceedings in order to transfer the case to mediation. However, as the mediation failed, court proceedings resumed. On March 19, 2026, the plaintiff filed an ex parte motion to impose attachments against the individual defendants (not BlackSwan and the Company) and the motion was partially approved with regards to some individual defendants on May 19, 2026. On May 25, 2026, the court approved a motion by the plaintiff to amend the statement of claim and add the Company as a party to the proceedings. The Company is required to file its statement of defense by July 25, 2026.

 

Based
on the assessment of legal counsel, no provision was recognized in the financial statements in accordance with IAS 37, as a liability
was already recorded as a loan.

 

5.

Tufin – Tufin Software Technologies Ltd. (“Tufin”) filed a claim in the Tel Aviv Magistrates Court against Comsec Ltd. (a Company subsidiary) and the Company for NIS 1,891,799 in unpaid debt. While settlement discussions were ongoing, on September 4, 2024, Tufin filed a motion for judgment on grounds that the respondents had not submitted their defense. The Company is currently in discussions with Tufin to make a payment schedule and settle this matter outside of court.

 

6.

The Phoenix Insurance Company Ltd. v. Hub TLV – On February 20, 2025, a claim was filed against Hub Cyber Security TLV Ltd. (“HUB TLV”) for NIS 165,496 in unpaid social benefits for employees insured by the Phoenix Insurance Company Ltd. The payments were subsequently made, and the claim was dismissed on January 31, 2026.

 

7.

Fortinet – Fortinet Inc. (the “Seller”), which sold software products to a Company affiliate (the “Affiliate”), sued the Company in October 2025 to enforce a February 2023 guaranty. The Seller alleges that the Company unconditionally and irrevocably guaranteed full and prompt payment of all the Affiliate’s unpaid obligations and agreed to indemnify the Seller for enforcement costs. The Seller alleges the Affiliate is in default on more than $3 million in invoices due between February 13 and May 1, 2023, and that the Company is liable for these unpaid invoices. The parties have agreed to extend the deadline for the Company to answer the complaint while discussing potential settlement.

 

The full amount of the claim, including
the interest component, has been recorded in the Company’s financial statements under trade payables and other payables.

 

8.

Tandu – On November 27, 2025, Tandu Technologies and Security Systems Ltd. filed a claim against Hub TLV for NIS 3,957,254, alleging breach of contract by the Company. As the claim concerns the Company and not HUB TLV, Hub TLV filed a motion to dismiss on January 11, 2026. On January 19, 2026, the parties agreed that the claim would be amended with the Company reserving all rights under the motion to dismiss, and the court approved this understanding on January 21, 2026. On February 11, 2026, Tandu filed the amended claim. The Company filed its statement of defense on June 14, 2026, arguing that the claim should be dismissed in its entirety, as it directly contradicts the contractual understandings between the parties.

 

At
this preliminary stage, based on the assessment of legal counsel, no provision was recorded in respect of this claim.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 22 –

COMMITMENTS, GUARANTEES, CHARGES AND CONTINGENT LIABILITIES (Cont.)

 

9.

Class Action Suit – This case consolidates into one securities class action the complaints filed in the cases styled Efrat Investments LLC et al. v. Hub Cyber Security Ltd., and Green v. Hub Cyber Security Ltd. f/k/a Hub Cyber Security (Israel) Ltd., et al. This action names the Company and current and former officers and directors of the Company (including Eyal Moshe, Hugo Goldman, Uzi Moscovich, Zeev Zell, Moshe Raines, Manish Agarwal, and Moti Franko, “Individual Defendants”) as defendants (collectively, “Class Action Defendants”). Certain shareholders — individuals and entities that purchased or otherwise acquired Company securities pursuant to and/or traceable to the offering materials issued in connection with the Business Combination — have alleged that the Class Action Defendants made material misstatements and omissions in the offering materials issued in connection with the Business Combination. The shareholders have alleged that the offering materials incorrectly stated that Hub Cyber Security (Israel) Ltd. had secured a committed financing arrangement, contained material misstatements and omissions concerning the Company’s internal controls and misuse of Company funds, and contained materially misleading information concerning the Company’s product. The shareholders seek damages from the Class Action Defendants and/or tender their shares to Class Action Defendants for recovery of the consideration paid therefor. The Company is defending itself vigorously and has moved to dismiss the action on the grounds that the shareholders lack standing to sue and have failed to make a claim against the Company. The motion to dismiss was partially granted by the Court and while some claims were dismissed, the bulk of plaintiff’s allegations have survived and so the case has moved forward into discovery.

 

The
parties entered mediation on September 3, 2025. Following the mediation, the parties reached an agreement in principle to resolve the
class action in an amount of $11,000 thousand. The settlement represents a full and final resolution of the claims asserted in the class
action without any admission of liability by the Company or the Individual Defendants. The settlement remains subject to court approval
and related administrative processes, after which the funds will be distributed to eligible class members in accordance with a court-approved
plan of allocation. The parties signed a Term Sheet on October 9, 2025, and thereafter notified the court of the settlement.

 

On
December 9, 2025, the shareholders filed a motion for (i) preliminary approval of the class action settlement, (ii) certification of
the settlement class, and (iii) approval of notice to the settlement class, together with the Stipulation and Agreement of Settlement
(the “Settlement”). On December 10, 2025, the court granted the motion and preliminarily approved the Settlement as fair
and reasonable. At a hearing held on June 29, 2026, the court indicated that the settlement will be approved, but asked Plaintiffs’
counsel to provide supplemental information regarding the breakdown/division of fees between the Plaintiffs’ law firms. The Company
anticipates that the Court will formally approve the settlement thereafter. As of the date of this Annual Report, a provision in the
amount of $11,000 thousand was recorded by the Company.

 

10.	Former employees have filed the following claims:

 

(a)

On April 2, 2025, a former employee of Blackswan Germany filed a claim for protection against unfair dismissal before the Labor Court of Giessen, Germany, arguing that the termination notice is invalid, and claimed EUR 116,883 in damages for various employment matters. A default judgment was issued against BlackSwan Germany on June 30, 2025, following non-appearance, and the subsidiary filed a timely objection on August 12, 2025. On September 10, 2025, Blackswan issued another termination notice. On March 3, 2026, Blackswan Germany notified the court about the commencement of insolvency proceedings. By notice dated March 3, 2026, the court suspended proceedings without setting a new hearing date for the duration of insolvency proceedings. The plaintiff has sought provisional enforcement of the default judgment and obtained a garnishment and transfer order directed at one of the Company’s clients.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 22 –

COMMITMENTS, GUARANTEES, CHARGES AND CONTINGENT LIABILITIES (Cont.)

 

In
separate proceedings regarding the same former employee before the Labor Court of Giessen, a partial default judgment was issued on December
2, 2024, followed by a final default judgment on March 12, 2025, both final and binding. Blackswan was ordered to pay salary claims for
June 2023 through November 2024 in the amount of EUR 225,000, plus interest on EUR 12,500 per month from the respective due dates. The
plaintiff was also granted health insurance contributions for December 2022 through November 2024 in the amount of EUR 24,934, plus interest.
The plaintiff has enforced these claims by obtaining a garnishment and transfer order directed at one of the Company’s clients.
Blackswan is examining options to challenge or defend against the enforcement measures.

 

At this preliminary stage, based on the assessment of legal counsel,
the Company is unable to assess the chances of these lawsuits being successful or assess the actual exposure to the Company.

 

(b)

On April 19, 2025, another former employee of Blackswan Germany filed a claim for protection against unfair dismissal before the Labor Court of Mönchengladbach, Germany, arguing that the termination notice is invalid. A hearing took place on January 19, 2026. The court largely dismissed the claim; Blackswan was solely ordered to provide the claimant with a qualified interim reference covering the nature and duration of employment as well as performance and conduct, and to issue an electronic copy of the wage tax certificate for calendar year 2024. However, due to the opening of insolvency proceedings over Blackswan Germany’s assets, the judgment will not become final for the time being. Blackswan informed the court about the insolvency proceedings on March 23, 2026.

 

In
separate proceedings regarding the same employee before the Labor Court of Mönchengladbach, a partial default judgment was issued
on December 12, 2024, followed by a further partial default and final judgment on February 25, 2025, both final and binding. The former
employee asserted salary claims for June 2023 through November 2024 in the amount of EUR 280,857, plus interest on EUR 15,603 per month
from the respective due dates. The plaintiff was also awarded health insurance contributions for June 2023 through November 2024 in the
amount of EUR 8,097, plus interest on EUR 450 per month accruing from the respective due dates. The plaintiff has enforced these claims
by obtaining a garnishment and transfer order directed at one of the Company’s clients. Blackswan is examining options to challenge
or defend against the enforcement measures.

 

At this preliminary stage, based on the assessment of legal counsel,
the Company is unable to assess the chances of these lawsuits being successful or assess the actual exposure to the Company.

 

(c)

Two former employees of affiliates of the Company, QPoint Technologies Ltd (“QPoint”) and Sensecom Consulting and Projects Management Ltd. (“Sensecom”), filed a claim against QPoint, Sensecom and against the Company on May 18, 2026, in the total amount of NIS 1,105,978, alleging they are entitled to payments for bonuses and for redemption of vacation days. The Company is currently studying the claim. At this stage, it is not possible to assess the chances of success for this claim or the actual exposure to the Company.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 22 –

COMMITMENTS, GUARANTEES, CHARGES AND CONTINGENT LIABILITIES (Cont.)

 

11.	Following the findings of the internal investigation of the Company’s Special Committee in 2023, the Company filed claims against two former employees, which were settled in one agreement:

 

	(a)	In June 2023 and February 2024, the Company initiated legal proceedings in the Tel Aviv Labor Court against its former Chief of Staff and VP of Human Resources, Ms. Ayelet Bitan, seeking a declaratory judgment for the recovery of accrued severance funds. In July 2024, the defendant filed a counterclaim seeking approximately NIS 1.27 million, alleging unlawful termination, gender discrimination, and workplace bullying. The counterclaim includes demands for the release of severance funds, six months’ notice pay, and various compensatory damages for reputational harm and bad faith dismissal. The Company filed its statement of defense in November 2024, disputing the merits of all allegations.
	(b)	On November 11, 2023, the Company filed a claim in the Tel Aviv Labor Court against Mr. Eyal Moshe, a former CEO of the Company, seeking a declaratory judgment and an order to release severance pay funds accumulated in provident funds back to the employer. On February 18, 2024, the former employee filed his statement of defense. On June 4, 2024, the Company submitted a request to the Court to consolidate the claims against Mr. Moshe and Ms. Bitan.

 

On
September 7, 2025, the parties to both of the foregoing claims entered into a settlement agreement, which was approved by the Court.
According to the settlement, as consideration for each party’s release of all claims and without the Company admitting to any of
Ms. Bitan’s or Mr. Moshe’s allegations or agreeing to any of their demands, the Company (a) released all funds deposited
by the Company on behalf of the former employees, including but not limited to severance pay contributions and (b) paid Ms. Bitan, in
lieu of notice and as a supplement to severance pay, a retirement grant in the amount of NIS 250,000, payable in three equal monthly
installments commencing on November 10, 2025. The Company recorded a provision in the amount of the settlement.

 

12.

Israel Securities Authority and Israel Tax Authority Investigation – In September 2024, the Israel Securities Authority and Israel Tax Authority conducted a search of the Company’s office in the context of investigating former and current officers in connection with suspicions regarding violations of securities, penal and tax laws. To the Company’s best knowledge, the suspicions are related to the subject matter of the Internal Investigation. In addition, in April 2025, investigators from the Israeli Tax Authority visited the offices of the Company. To the Company’s best knowledge, said visit related to developments in the investigation related to the actions of a former Financial Controller of the Company, which were also addressed in the Internal Investigation conducted by the Company. According to a letter provided to the Company in January 2026 by the Israel Securities Authority, the investigation has been concluded and the investigation file has been transferred to the Tel Aviv District Attorney’s Office (Taxation and Economic Crimes) for resolution.

 

13.

The law firm of Amit Pollak Matalon filed a claim on April 23, 2025, for NIS 441,624 in unpaid legal fees for services to BlackSwan Technologies, Inc. On July 21, 2025, the court approved a settlement requiring the Company to pay NIS 461,624 (including expenses) to dismiss the claim, which has been paid. The Company has recognized a provision in its financial statements in respect of this matter.

 

14.

A claim was filed against BlackSwan Technologies, Inc. by 8 Allocate OU in a U.S. court on April 4, 2024, for $178,738. The case resulted in a default judgment of $148,348 on January 29, 2024. On November 10, 2025, the plaintiff sought court permission to file subpoenas and restraining notices against the Company and its affiliates to compel production of documents or assets belonging to BlackSwan, which would be used to satisfy the judgment. On November 28, 2025, a lien was placed on the bank account of a Company subsidiary. On December 10, 2025, the Company paid the judgment in full and the lien was released.

 

15.

Yuval Lev – On February 8, 2023, Mr. Yuval Lev filed a motion in the Tel Aviv District Court seeking discovery as a preliminary proceeding prior to submitting a motion to certify a derivative action. The motion focused on the release of Clover Wolf Capital from the PIPE investment that had been expected to close concurrently with the Business Combination Agreement in February 2023, and includes allegations regarding A-Labs, which held a significant stake in the Company and entered into a voting agreement with other shareholders (allegedly forming a control group), and that one investor acted as the Company’s investment banker, while one of its shareholders and managers serves as a director and chief executive officer of the Company. The motion alleged that these actions demonstrate a breach of the duties of care and loyalty imposed on the Company’s officers and directors, as well as an alleged basis for pursuing legal action against third parties. On January 26, 2026, a pre-trial hearing was held, and the court instructed the parties to confer regarding certain sections of the motion for discovery of documents and to update the court on their discussions. The deadline to update the court has been extended until August 2, 2026.

 

16.

On August 11, 2023, the Kaufbeuren Tax Office filed a petition to open insolvency proceedings against BlackSwan Technologies GmbH (“BlackSwan Germany”) on the grounds of outstanding tax arrears. On October 6, 2023, AOK Bayern, Kaufbeuren, filed a similar petition to commence insolvency proceedings against BlackSwan Germany on the grounds of outstanding social security contributions. By order dated November 17, 2025, the Local Court of Kempten rejected insolvency proceedings for insufficiency of assets and ordered the dissolution of BlackSwan Germany. This order was published in the Commercial Register in December 2025, and the Commercial Register notified the intended compulsory deletion of BlackSwan Germany by letter dated February 5, 2026. BlackSwan Germany appealed, and the appeal was approved by the insolvency court on February 24, 2026. The compulsory deletion of BlackSwan Germany was averted and regular insolvency proceedings were commenced, which can be concluded by settling outstanding liabilities, thereby restoring BlackSwan Germany to regular standing (option 1) or by all creditors registering their claims with the insolvency table and the company being liquidated after the completion of the insolvency proceedings (option 2). As no direct or indirect liquidity injection from the Company’s shareholders is expected, option 2 will be pursued.

 

 

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 23 –

INVESTMENTS IN SUBSIDIARIES

 

a.

Investment in ALD Software:

 

On
December 28, 2007, the Company entered into an agreement with ALD Software whereby on January 1, 2008, the Company transferred and sold
to ALD Software the software department operation. The Company holds 98.63% of ALD Software.

 

b.

Investment in QPoint:

 

On
July 1, 2010, the Company completed the acquisition of 46.52% of the issued and outstanding shares of QPoint. In April 2024, the Company
acquired the remaining shares of QPoint and now holds 100% of QPoint.

 

The
Company and QPoint are party to a services agreement, pursuant to which the Company provides QPoint with various services such as comprehensive
accounting, marketing, management, administration and office maintenance, in consideration for a management fee of 3% of QPoint’s
annual turnover. This agreement remains in effect as long as the Company holds 25% of QPoint’s share capital.

 

On
April 3, 2024 the Company acquired the shares of QPoint that it did not yet own at that time, constituting 53.5% of QPoint’s outstanding
shares for NIS 25,000,000 in cash. Following this acquisition, the Company holds 100% of QPoint.

 

d.

Comsec Vendor Settlement

 

In
2024, Comsec and the Company entered into a settlement agreement with a vendor, whose debt was also covered by a guarantee by the Company,
pursuant to which the vendor received an amount of NIS 13,656 thousand. 

 

 

On
January 27, 2025, the Company completed an Agreement and Plan of Merger with BST, pursuant to which BST merged with and into a wholly-owned
subsidiary of the Company.

 

As
of December 31, 2025, the Company completed the sale of four BST subsidiaries located in Sri Lanka, Poland, Israel, and the United Kingdom,
which were previously classified as held for sale in accordance with IFRS 5.

 

As
of December 31, 2025, the Company recorded a full impairment loss on the technology asset acquired in the BST acquisition. See Note 11.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 24 –

ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
a. Cost of revenue:
Salaries and related expenses			21,850				19,790				28,098
Subcontractors and consultants			2,942				3,879				8,359
Depreciation, amortization and impairment			–				–				4,757
Material			–				48				–
Impairment expenses			–				–				–
Other			1,580				798				693
			26,372				24,515				41,907
b. Research and development expenses, net:
Salaries and related expenses			2,329				1,994				6,879
Other			416				8				298
			2,745				2,002				7,177
Less – government grants			–								(1,291	)
			2,745				2,002				5,886
c. Sales and marketing expenses:
Salaries and related expenses			3,018				2,732				4,239
Advertising and public relations			6,132				54				236
Depreciation, amortization and impairment			919				1,030				6,026
Other			131				366				193
			10,200				4,182				10,694
d. General and administrative expenses:
Salaries and related expenses			8,950				6,369				8,409
Depreciation and amortization			1,224				1,111				1,463
Office Maintenance			715				1,600				1,392
Consulting			4,745				5,741				16,716
Professional services			1,879				5,799				3,486
Impairment expenses			43,554				572				10,643
Insurance			1,616				1,983				1,622
Other			4,041				1,730				5,441
			66,724				24,905				49,172

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 24 –

ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS (Cont.)

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
e. Other expenses, net:
Governmental grants income			–				(173	)			(1,159	)
Loss on disposal of assets			170				354				–
Gain from disposal of liabilities			(4,263	)
ELOC			–				–				1,570
RNER listing expenses			–				–				12,312
			(4,094	)			181				12,723
f. Finance income and expenses:
Finance income:
Gain from exchange rate differences			–				–				271
Changes in fair value of financial instruments			1,902				1,672				–
Interest income			325				548				213
			2,227				2,220				484
Finance expenses:
Loss from exchange rate differences			3,129				391				–
Bank fees			167				286				109
Changes in fair value of financial instruments			24,981				–				247
Interest expenses			20,971				11,909				6,838
			49,248				12,586				7,194

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS 

 

NOTE 25 –

TAXES ON INCOME

 

A.

Tax rates applicable to the Group companies:

 

The
Israeli corporate tax rate has been 23% since 2018.

 

A
Company is taxable on its real capital gains at the corporate income tax rate in the year of sale.

 

B.

Principal tax rates applicable to subsidiaries resident outside of Israel:

 

Company
incorporated in the United States – Federal tax rate of 21%.

 

Company
incorporated in the Netherland – The statutory corporate income tax rate in the Netherlands is 19% on annual taxable income of
up to EUR 200 thousand and 25% on annual taxable income exceeding EUR 200 thousand.

 

C.

Final tax assessments:

 

The
Company and its subsidiaries had tax assessments through the 2020 tax year, which are deemed final.

 

D.

Carry forward tax losses:

 

The
Company has business losses that can be carried forward totaling approximately $243,547 thousand. The Company did not create deferred
taxes in respect of these business losses and other temporary differences as it does not expect to generate taxable income in the foreseeable
future.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 25 –

TAXES ON INCOME (Cont.)

 

 

Composition
and movement in deferred taxes:

 

		In non-current liabilities (1)				In non-current assets (1)
		USD in thousands
Balance as of January 1, 2024			(1,575	)			1,459
Charged to profit or loss			404				(368	)
Adjustments arising from translating financial statements from functional currency to presentation currency			14				(13	)
Balance as of December 31, 2024			(1,157	)			1,078
Charged to profit or loss			1,170				(1,002	)
Adjustments arising from translating financial statements from functional currency to presentation currency			(71	)			75
Balance as of December 31, 2025			(60	)			151
As shown on balance sheet:			(60	)			151

 

  

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 25 –

TAXES ON INCOME (Cont.)

 

F.

Taxes on income included in profit or loss:

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Current taxes			195				276				210
Deferred taxes			(168	)			(37	)			(39	)
Tax previous years			715				318				–
			743				557				171

 

 

The
reconciliation between the tax expense, assuming that all the income and expenses, gains and losses in profit or loss were taxed at the
statutory tax rate and the taxes on income recorded in profit or loss, is as follows:

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Loss before taxes on income			(117,306	)			(36,589	)			(84,435	)*
Statutory tax rate			23	%			23	%			23	%
Tax computed at the statutory tax rate			(26,980	)			(8,415	)			(19,420	)
Increase (decrease) in taxes on income resulting from the following factors:
Adjustment of deferred tax balances relating to prior years			(54	)			(37	)			–
Different tax rate applicable to foreign subsidiary			(44	)			(4	)			(2	)
Utilization of carryforward losses for which no deferred taxes were computed in the past			–				(31	)			(98	)
Other losses and temporary differences for which no deferred taxes were computed			15,513				7,380				19,026
Non-deductible expenses for tax purposes			888				853				–
Non-deductible impairment of intangible			10,737				–				–
Tax previous years			702				318				–
Other, net			(19	)			493				665
Taxes on income			743				557				171

 

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 26 –

BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES

 

a.

Balances with interested and related parties:

 

December
31, 2025

 

For details see

Directors

Key management personnel

Note

USD in thousands

Other accounts payable

15

753

533

Loan

–

24

–

 

December
31, 2024

 

For details see

Directors

Key management personnel

Note

USD in thousands

Other accounts payable

15

725

33

Loan

–

66

–

 

BST
Loan

 

The
Company entered into a Loan and Security Agreement with BST, with an effective date of December 4, 2023 (the “BST Loan Agreement”),
pursuant to which the Company was entitled to make cash advances to BST, at its sole discretion, until June 30, 2024, in an aggregate
principal amount of up to $6,000,000.

 

The
principal under the BST Loan Agreement accrues interest at a fixed rate per annum equal to 15% and is repayable on January 1, 2025, provided
that BST has the right to prepay any outstanding loan amounts upon at least two days prior notice. Upon the occurrence of certain customary
events of default, any outstanding loan amounts are immediately repayable and overdue obligation will carry interest at a fixed rate
per annum equal to 18%.

 

As
security for BST’s obligations under the BST Loan Agreement, each of BST and its subsidiary, BlackSwan Technologies GmbH (“BST
Germany”), granted the Company a first ranking fixed charge and pledge in all of the rights and interests of BST, BST Germany and
their subsidiaries (i) under any agreements entered into by any of them following the effective date of the BST Loan Agreement and any
rights to receive proceeds thereunder and (ii) in any intellectual property.

 

On
January 27, 2025, BST became a wholly owned subsidiary of the Company. As a result, the loan is now an intercompany balance. While the
original repayment terms remain in place, the arrangement no longer affects our consolidated liquidity position in the same way as an
external loan would.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 26 –

BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES (Cont.)

 

b.

Salaries and benefits to interested and related parties: (4)

 

		Year ended December 31,
		2025				2024				2023
		USD in thousands
Cost of sales, research and development expenses, sales and marketing expenses and general and administrative expenses, net:
Salary and related benefits to CEO and director employed by the Company including cost of share-based payment (1)			1,247				592				132
Salary and related benefits of senior management and fees of directors not employed by the Company including cost of share-based payment			3,374				625				566
Salary and related benefits to former Interim CEO and former CEO including cost of share-based payment (2)			328				476				811
Salary and related benefits to the former Chief of Staff and Vice President of Human Resources including cost of share-based payment (3)			–				–				28
			4,949				1,693				1,537

 

 

 

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 26 –

BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES (Cont.)

 

c.

Transactions with interested and related parties:

 

Year
ended December 31, 2025

 

		Controlling shareholder				Key management personnel				Other interested and related parties				Total
		USD in thousands
General and administrative expenses			–				1,575				2,327				3,902
			–				1,575				2,327				3,902

 

Year
ended December 31, 2024

 

		Controlling shareholder				Key management personnel				Other interested and related parties				Total
		USD in thousands
General and administrative expenses			–				1,068				625				1,693
			–				1,068				625				1,693

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

a.

Business segments – chief reporting:

 

The
operating segments are identified on the basis of information that is reviewed by the chief operating decision maker (“CODM”)
to make decisions about resources to be allocated and assess its performance. Accordingly, for management purposes, the Group is organized
into two operating segments based on the products and services of the business units and has operating segments as follows.

 

1.

Product and Technology Segment – the Company develops and markets integrated cybersecurity hardware/software solutions that allow organizations to protect their RAM or confidential computing data to create a reliable work environment. The Company offers data and cybersecurity and system security and reliability solutions and related services such as consulting, planning, training, integrating and ongoing servicing of cybersecurity, risk management, system quality, reliability and security projects and fully managed corporate cybersecurity services. The Company recently expanded its data security services into Trust Rails, the framework that allows institutions to enforce control, auditability, and compliance across interactions between systems.

 

2.

Professional Services Segment – the Company offers data and cybersecurity and system security and reliability solutions and related services such as consulting, planning, training, integrating and ongoing servicing of cybersecurity, risk management, system quality, reliability and security projects and fully managed corporate cybersecurity services.

 

These
segments share unified product development, operations, and administrative resources.

 

Revenues
and part of the expenses are allocated directly to business segments whereas joint expenses are not allocated to segments. The assets
and liabilities that are not allocated consist of joint operational assets and liabilities that are shared by the various operating segments.
The Company deems it is impractical to separate them. Segment asset and liability performances and segment income (loss) are estimated
based on the operating income (loss) presented in the financial statements.

 

Below
is data relating to business segments:

 

		Year ended December 31, 2025
		Professional services				Products and technology				Unallocated				Total
		USD in thousands
Revenues from external customers			30,223				1,439				–				31,662
Total revenues			30,223				1,439				–				31,662
Segment results (operating loss)			(58,625	)			(11,660	)			–				(70,285	)
Finance expenses, net															(47,021	)
Loss before taxes on income															(117,306	)

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 27 –

SEGMENTS (Cont.)

 

		Year ended December 31, 2024
		Professional services				Products and technology				Unallocated				Total
		USD in thousands
Revenues from external customers			28,523				1,039				–				29,562
Total revenues			28,523				1,039				–				29,562
Segment results (operating loss)			(17,086	)			(9,137	)			–				(26,223	)
Finance expenses, net															(10,366	)
Loss before taxes on income															(36,589	)

 

		Year ended December 31, 2023
		Professional services				Products and technology				Unallocated				Total
		USD in thousands
Revenues from external customers			41,589				1,068				–				42,657
Total revenues			41,589				1,068				–				42,657
Segment results (operating loss)			(30,690	)			(33,153	)			(13,882	)			(77,725	)
Finance expenses, net															(6,710	)
Loss before taxes on income															(84,435	)

 

b.

Geographical segments:

 

Below
is revenue by country, based on customer location, geographical segments were not analyzed due to immateriality (most of the Company
revenues and the carrying amounts of non-current assets are in the Company’s country of domicile (Israel)):

 

Year
ended December 31, 2025

 

		Israel				America				Europe				Asia Pacific				Total
		USD in thousands
Revenues			28,141				234				2,855				432				31,662

 

Main
customers:

 

		Year ended December 31, 2025
		USD in thousands
Turnover with main customers (1):
Customer A			2,982
Customer B			2,189
			5,171

 

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 27 –

SEGMENTS (Cont.)

 

		% of total sales
Customer A			9.42	%
Customer B			6.91	%
			16.33	%

 

Year
ended December 31, 2024

 

Israel

America

Europe

Asia Pacific

Total

USD in thousands

Revenues

27,808

699

1,055

–

29,562

 

Main
customers:

 

		Year ended December 31, 2024
		USD in thousands
Turnover with main customers (1):
Customer A			2,373
Customer B			2,104
			4,477

 

(1)	Customers in the Professional Services segment.

 

		% of total sales
Customer A			8.02	%
Customer B			7.11	%
			15.13	%

 

Year
ended December 31, 2023

 

		Israel				America				Europe				Asia Pacific				Total
		USD in thousands
Revenues			40,364				334				1,669				290				42,657

 

Main
customers:

 

		Year ended December 31, 2024
		USD in thousands
Turnover with main customers (1):
Customer A			7,602
Customer B			4,726
			12,328

 

(1)

Customers in the Professional Services segment.

 

		% of total sales
Customer A			17.82	%
Customer B			11.08	%
			28.9	%

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 28 –

EVENTS AFTER THE REPORTING DATE

 

1.
Make-whole

 

Between
November 2025 and January 2026, certain convertible note holders converted a portion of their notes at a conversion price of $50, which
was higher than the applicable conversion price under the respective share purchase agreement, entitling those note holders to a cash
payment (the “Alternate Conversion Floor Amount”). The Alternate Conversion Floor Amount was calculated based on the difference
between the market value of the ordinary shares issuable pursuant to the applicable conversion price formula according to the terms of
the applicable convertible note, and the market value of the ordinary shares actually issued at the conversion price of $50.

 

The Company and the note holders entered into
exchange agreements in January and February 2026, pursuant to which, among other things, the Company and the note holders exchanged their
existing notes for a new note with a principal amount equals to the full Alternate Conversion Floor Amount (the “Make-Whole Notes”).
The Make-Whole Notes are substantially similar to their existing notes.

 

The
total amounts converted under the foregoing conversion price limitation were $3,325, $3,788 and $2,500 thousand and the aggregate principal
amounts issued under Make-Whole Notes were $771, $2,887 and $728 thousand under the Exchange Agreement, the August 2025 SPA and Commitment
Note, respectively. In addition, the following principal amounts to be issued are $775 thousand under the Exchange Agreement.

 

2.
ELOC

 

As
of January 2026, the full amount of the ELOC loan from March 2025 was converted into 60 shares.

 

3.
Exchange note

 

From
January 1, 2026 until May 15, 2026, additional notes in the aggregate principal amount of $6,800 thousand have been exchanged under the
Exchange Agreement for Amended Notes in the aggregate principal amount of $10,073 thousand.

 

On
June 4, 2026, the Company and the March-November 2024 Investor entered into a Sixth Amendment to the Securities Purchase Agreement. Pursuant
to this amendment, the Company issued a Secured Convertible Note (the “June 2026 Note”) in the original principal amount
of $5,556,000 in exchange for a cash investment in the same amount. This investment followed sales of notes in multiple installments
from the March-November 2024 Investor to Seven Knots, LLC pursuant to their Note Purchase and Assignment Agreement, dated August 20,
2025. Such agreement was amended on June 3, 2026 to accommodate additional note purchases from time to time up to an aggregate principal
amount of $8,000,000. The June 2026 Note bears interest at 20% per annum, computed on a 360-day basis and including interest on
interest. The Note is secured pari passu by the same Charged Assets that secure existing outstanding notes under the
Securities Purchase Agreement. The outstanding principal and accrued interest are due and payable on the earlier of (i) June 11, 2026,
or (ii) five business days following the closing of a sale by the Company of QPoint Technologies Ltd. Commencing June 11, 2026, the holder
is entitled to demand repayment of all or a portion of the June 2026 Note upon two business days’ notice. The holder may convert
any portion of the outstanding loan amount into Ordinary Shares at a price equal to the arithmetic average of the Closing Sale Prices
of the Ordinary Shares for the five Trading Days prior to the conversion date, subject to a floor price of $0.71 per share. Conversion
is subject to a beneficial ownership limitation of 4.99%. From June 3, 2026 to June 30, 2026, the Company raised aggregate proceeds of
$4,706,304 in private placements from accredited investors in exchange for convertible notes in the aggregate principal amount of $5,882,880,
representing a 20% original issue discount. The convertible notes were issued under the Exchange Agreement and have a maturity date of
two years from their respective dates of issuance.

 

4.
August 2025 Amended Note

 

In
January and February 2026, additional notes in the aggregate principal amount of $4,687 thousand have been issued and a total amount
of $3,750 thousand was received in cash during 2026. 

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 28 –

EVENTS AFTER THE REPORTING DATE (Cont.)

 

5.
Consulting Agreements

 

In
February 2026, the Company engaged a consultant to provide marketing and capital markets services and continued strategic support.
In consideration, the Company issued 33 pre-funded warrants as equity-based compensation in lieu of cash. As of the date of
this Annual Report, all pre-funded warrants were converted into ordinary shares.

 

In
February 2026, the Company engaged a consultant to provide advisory services relating to mining and resource transactions in support
of the Company’s strategic asset initiatives. Pursuant to the approved terms, the Company agreed to issue 100 ordinary shares upon
execution of the engagement and an additional 100 ordinary shares upon successful completion of an applicable asset transaction.

 

6.
Capital Markets and Strategic Advisory Agreement

 

In
January 2026, the Company issued a convertible promissory note to Hybrid Financial Ltd. (“Hybrid”) to formalize and satisfy
outstanding accounts payable obligations of $250,000 for prior investor relations and corporate marketing services rendered. The note,
dated January 21, 2026, carries a principal face value of approximately $305,000, which reflects a 7% original issue discount. The note
is non-interest bearing.

 

7.
Legal proceedings

 

On
February 27, 2026, DC Rainier SPV LLC, the former sponsor of Mount Rainier Acquisition Corp., commenced an action against the
Company and A-Labs Finance & Advisory Ltd. in the Supreme Court of the State of New York, County of New York, alleging fraud and
related claims in connection with the February 2023 de-SPAC merger between Mount Rainier Acquisition Corp. and the Company’s
predecessor entity. The plaintiff alleges, among other things, that (i) the Company and A-Labs misrepresented the existence of
approximately $50 million of purportedly “irrevocable” private investment in public equity (PIPE) financing commitments
(including approximately $10 million purportedly committed by A-Labs itself) prior to the closing of the de-SPAC merger, none of
which was funded, and (ii) the Company concealed misappropriation of Company funds by the Company’s former Chief Executive
Officer and the misuse of Company credit cards by a former controller, as well as the existence of material weaknesses in the
Company’s internal control over financial reporting for the years ended December 31, 2021, and 2022. The plaintiff seeks
damages of not less than $5,080,027, plus interest, attorneys’ fees and costs. Plaintiff has filed a motion for default
judgment, which the Company plans to oppose, asserting that service has not been properly made.

 

On May 26, 2026, a claim was filed against Hub
Cyber Security TLV Ltd for NIS 242,762 in unpaid social benefits for its employees insured by Meitav Provident Funds and Pension Ltd.
The Company has since paid these social benefits and is applying to the court to remove the claim.

 

On March 31, 2026, a claim was filed with the municipal court in Herzliya,
Israel, in the amount of NIS 173,379 by a former service provider for fees it is allegedly entitled to for its assistance to the Company
in human resources matters, At this stage, the Company is assessing the claim. There is a provision for the amount of this claim.

 

On June 30, 2026, a notice was received by the Company regarding a
claim by a former service provider, by means of a fixed-sum claim procedure before the Israeli Enforcement and Collection Authority, in
the amount of NIS 83,941. At this stage, the Company is assessing the claim. There is a provision for the amount of this claim.

 

8.
CEO and Management Changes

 

On
March 31, 2026, Noah Hershcoviz resigned from his position as Chief Executive Officer and a member of the Board of Directors, effective
immediately. Renah Persofsky, the Company’s Chairperson of the Board, has taken on a greater role in HUB’s management while
the Company seeks a replacement for Mr. Hershcoviz. During May and June of 2026, four more of the Company’s executive management
departed: Shai Schiller (Head of Strategy), Nachman Geva (Chief Technology Officer), Paul Parisi (Chief Revenue Officer) and John Rogers
(President of the Americas Region).

 

9.
Julestar

 

In
June 2026, the Company repaid $1.35 million to Julestar, in connection with the Julestar Loan Agreement dated February 4, 2025.

 

 

HUB
CYBER SECURITY LTD.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 28 –

EVENTS AFTER THE REPORTING DATE (Cont.)

 

10.
Acquisition of Evofem Convertible Notes and Purchase Rights; Issuance of Securities

 

On
June 26, 2026, the Company entered into securities purchase agreements (each, a “Purchase Agreement” and, collectively, the
“Purchase Agreements”) with certain holders (each, a “Seller” and, collectively, the “Sellers”) of
senior subordinated convertible notes (the “Evofem Notes”) of Evofem Biosciences, Inc., a Delaware corporation (“Evofem”),
and of certain purchase rights to acquire securities of Evofem (the “Purchase Rights”). Pursuant to the Purchase Agreements,
the Company agreed to purchase from the Sellers all of their respective Evofem Notes and Purchase Rights, free and clear of liens, in
exchange solely for the issuance of equity securities of the Company as described below.

 

The
Evofem Notes acquired by the Company consist of Evofem’s senior subordinated convertible notes governed by a common form of note
(the “SSN Notes” and the “Aditxt Notes”), comprising the exchanged senior subordinated convertible notes originally
issued between December 2022 and September 2023 and restructured effective December 1, 2023 (maturing December 1, 2026), together with
senior subordinated convertible notes issued in the same form maturing April 8, 2028 and June 26, 2028. The Evofem Notes are junior subordinated
obligations of Evofem (subordinated in right of cash payment to Evofem’s senior secured notes and other senior debt obligations
of Evofem), bear interest at 8% per annum compounding monthly (payable at maturity), and are convertible, at the holder’s election,
into shares of Evofem common stock at a conversion price of $0.0154 per share (subject to customary adjustment for stock splits, stock
dividends, recapitalizations and similar events), subject to a 4.99% or 9.99% beneficial ownership limitation. Based on the aggregate
outstanding balance of the Evofem Notes acquired by the Company (approximately $5,373,556), the Evofem Notes would be convertible into
approximately 348,932,233 shares of Evofem common stock, without factoring in the beneficial ownership limitation. The Purchase Rights
acquired by the Company are exercisable for Evofem common stock at the same $0.0154 per share price and, based on the aggregate amount
of the Purchase Rights acquired (approximately $10,153,890), would be exercisable into approximately 659,343,507 shares of Evofem common
stock. In the aggregate, the Evofem Notes and Purchase Rights acquired by the Company would be convertible into, and exercisable for,
approximately 1,008,275,740 shares of Evofem common stock (in each case before giving effect to any beneficial-ownership limitations
and Evofem’s available authorized common stock), which if fully converted and exercised, will give the Company an 88% ownership
of Evofem based on the current outstanding shares (or 14% on a fully diluted basis, assuming full issuance of all potential shares issuable
for all convertible instruments outstanding).

 

The
aggregate purchase price payable by the Company for the Evofem Notes and Purchase Rights was approximately $49,331,891 (the “Purchase
Price”), payable solely in ordinary shares of the Company, no par value, and/or pre-funded warrants to purchase ordinary shares
(the “Pre-Funded Warrants” and, together with the ordinary shares issued as consideration, the “Consideration Shares”),
and not in cash. The number of Consideration Shares issuable to each Seller is equal to such Seller’s portion of the Purchase Price
divided by $1.560 per share, the closing price of the Ordinary Shares on the Nasdaq Stock Market on June 24, 2026. As aggregate consideration
under the Purchase Agreements, the Company issued 31,623,000 Consideration Shares (including the ordinary shares issuable upon exercise
of the Pre-Funded Warrants).

 

Pursuant
to the Purchase Agreements, the Consideration Shares were issued as ordinary shares except to the extent that such issuance would cause
a Seller, together with its affiliates and any persons acting in concert with it, to beneficially own or hold in excess of 4.99% of the
Company’s outstanding ordinary shares after giving effect to the issuance (the “Beneficial Ownership Limitation”),
in which case the portion that would otherwise exceed the Beneficial Ownership Limitation was issued in the form of Pre-Funded Warrants.
Accordingly, at the closing the Company issued an aggregate of 1,794,901 Ordinary Shares and issued Pre-Funded Warrants exercisable for
an aggregate of 29,828,099 Ordinary Shares. The number of ordinary shares issued to any individual Seller was limited so that such Seller
would not exceed the Beneficial Ownership Limitation (a maximum of 225,417 Ordinary Shares per Seller, based on 4,291,960 Ordinary Shares
outstanding immediately prior to the issuance), with the balance of such Seller’s Consideration Shares issued in the form of Pre-Funded
Warrants. Certain Sellers whose existing beneficial ownership already equaled or exceeded 4.99% received all of their Consideration Shares
in the form of Pre-Funded Warrants.

 

Each
Pre-Funded Warrant has an exercise price of $0.001 per Ordinary Share, may be exercised on a cash or cashless basis, and is not exercisable
to the extent the holder would exceed the Beneficial Ownership Limitation.