20-F: XTL Biopharmaceuticals Expands into AI Data Collection with Social Proxy Acquisition; Reports FY24 Results

XTL Biopharmaceuticals diversifies its business by acquiring The Social Proxy, an AI web data company, while reporting a net loss for the fiscal year ended December 31, 2024.

Summary

• XTL Biopharmaceuticals has expanded its business into the AI web data collection industry through the acquisition of The Social Proxy in August 2024.
• The company reported a net loss of $1.027 million for the year ended December 31, 2024, with an accumulated deficit of $159.009 million.
• The Social Proxy generated revenue of $451,000 in 2024, while the company's cost of service expenses totaled $448,000.
• Research and development expenses increased to $98,000 in 2024, and sales and marketing expenses were $487,000.
• General and administrative expenses increased to $1.590 million in 2024.
• The company has entered into an Exclusive Sublicense Agreement with Biossil Inc. for its hCDR1 asset, receiving an upfront payment of $137,500 and potential milestone payments up to $11.5 million.
• Management has concluded that there is substantial doubt about the company's ability to continue as a going concern without additional funding.
• As of December 31, 2024, the company had $371,000 in cash and cash equivalents.
• The company is looking to identify additional assets to add to XTL's portfolio.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While the acquisition of The Social Proxy and the sublicense agreement with Biossil are positive developments, the company's financial losses and going concern uncertainty weigh heavily on the overall outlook.

Positives

• The acquisition of The Social Proxy provides XTL with a new revenue stream in the growing AI web data collection market.
• The Exclusive Sublicense Agreement with Biossil Inc. for the hCDR1 asset provides potential future revenue through milestone payments.
• The company has a new CEO, Noam Band, with experience in the technology sector.
• The company has net operating loss carryforwards of approximately $39 million and capital loss carryforwards of approximately $23 million for Israeli tax purposes.

Negatives

• The company reported a net loss of $1.027 million for the year ended December 31, 2024.
• Management has concluded that there is substantial doubt about the company's ability to continue as a going concern without additional funding.
• The company has incurred negative cash flow from operations each year since its inception and anticipates incurring negative cash flows from operating activities for the foreseeable future.
• The company's auditor has included a going concern explanatory paragraph in its report on the company's financial statements for the year ended December 31, 2024.

Risks

• The company's ability to continue as a going concern is dependent on obtaining additional funding.
• The company faces intense competition in the data collection service provider market.
• Increasing regulatory scrutiny of web data collection could adversely affect the company's business and financial results.
• Political, economic, and military instability in Israel and the Middle East could adversely affect the company's business.
• The company's stock price can be volatile, which increases the risk of litigation and may result in a significant decline in the value of your investment.
• The company may fail to remain in compliance with the continued listing standards of The Nasdaq Capital Market, and a delisting of its ADSs could make it more difficult for investors to sell their shares.

Future Outlook

The company expects to incur additional losses through the end of 2025 and beyond and will require additional funds over the next 12 months to continue operations. The company is looking to identify additional assets to add to XTL's portfolio.

Industry Context

The acquisition of The Social Proxy reflects a trend of pharmaceutical companies diversifying into technology sectors. The company is now operating in the data collection, web data scraping, and cybersecurity industries, offering ethical, secure, fast, reliable and cost-effective proxy services that enable businesses to access, collect, and analyze online data while ensuring compliance with privacy regulations.

Comparison to Industry Standards

• The document mentions competitors in the data collection service provider market, including Bright Data, Oxylabs, Smartproxy, and NetNut.
• These companies are well-established and have significant resources, indicating a competitive landscape.
• The document does not provide specific comparisons of XTL's financial performance to these competitors, but it highlights the need for XTL to maintain or improve its competitive position.

Management Changes

Related Party Transactions

• One of the company's related parties participated in the fund-raising that occurred in August 2024.
• The company pays an accounting firm, of which the company's CFO is a Partner, a monthly fee for controller and bookkeeping services.
• The company subleased an office from Canndoc Ltd., which is a subsidiary of InterCure Ltd., during 2023 and 2022.

Stakeholder Impact

• Shareholders face potential dilution from future equity offerings.
• Shareholders face the risk of losing their investment if the company is unable to continue as a going concern.
• Employees of The Social Proxy are now part of a larger organization.
• Customers of The Social Proxy may benefit from the company's increased resources and expertise.

Next Steps

• The company will seek additional funding through equity or debt financing.
• The company will focus on integrating The Social Proxy and expanding its AI web data collection business.
• The company will monitor the progress of Biossil's development of hCDR1 and potential milestone payments.

Key Dates

Keywords

Social Proxy, hCDR1, AI, data collection, Biossil, acquisition, biopharmaceutical, XTL Biopharmaceuticals, going concern, financial results