XTLB 20-F Report ended Dec. 31, 2024

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (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, 2024

OR

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

OR

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

For the transition period from ____________to ___________.

Commission file number: 001-36000

XTL BIOPHARMACEUTICALS LTD.

(Exact name of registrant as specified in its charter)

N/A

(Translation of Registrant’s Name into English)

Israel

(Jurisdiction of incorporation or organization)

26 Ben-Gurion St.

Ramat Gan,
5112001, Israel

(Address of principal executive offices)

Noam Band

Chief Executive Officer

26 Ben-Gurion St.

Ramat Gan,
5112001, Israel

Tel: +972-3-6116600

Fax: +972-3-611-6605

(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:

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 or common stock as of the close of the period covered by the annual report.

As of December 31, 2024, 881,385,176 Ordinary Shares were issued and outstanding. This number includes 9,861,521 American Depositary Shares and excludes 372,957,973 dormant ordinary shares.

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 ☒

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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 definition of “large accelerated filer”, “accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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:

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

Item 17 ☐    Item 18 ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐    No ☒

XTL BIOPHARMACEUTICALS LTD.

ANNUAL REPORT ON FORM 20-F

TABLE OF CONTENTS

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report, including matters discussed under the caption “Item 5. Operating and Financial Review and Prospects,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. In some instances, you can identify these forward-looking statements by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plan,” “potential,” “will,” “should,” “would,” or similar expressions, including their negatives. These forward-looking statements include, without limitation, statements relating to our expectations and beliefs regarding:

Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, those discussed under “Item 3. Key Information-Risk Factors,” “Item 4. Information on the Company,” “Item 5. Operating and Financial Review and Prospects,” and elsewhere in this report, as well as factors which may be identified from time to time in our other filings with the Securities and Exchange Commission, or the SEC, or in the documents where such forward-looking statements appear. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements.

Forward-looking statements contained in this report reflect our views and assumptions only as of the date this report is filed. Therefore, you should not place undue reliance on any forward-looking statement as a prediction of future results. Forward-looking statements made in this report and the documents incorporated by reference are made as of the date of the respective documents, and we undertake no obligation to update them in light of new information or future results. Except as required by law, we assume no responsibility for updating any forward-looking statements.

PART I

Unless the context requires otherwise, references in this report to “XTL,” the “Company,” “we,” “us” and “our” refer to XTL Biopharmaceuticals Ltd, an Israeli company and our consolidated subsidiaries. We have prepared our consolidated financial statements in United States, or US, dollars and in accordance with International Financial Reporting Standards, or IFRS. All references herein to “dollars” or “$” are to US dollars, and all references to “Shekels” or “NIS” are to New Israeli Shekels.

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 Offer And Use Of Proceeds

Not applicable.

D. Risk Factors

Before you invest in our ordinary shares or American Depositary Shares, you should understand the high degree of risk involved. You should carefully consider the risks described below and other information in this report, including our consolidated financial statements and related notes included elsewhere in this report, before you decide to purchase our ordinary shares or American Depositary Shares (“ADSs”). If any of the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result, the trading price of our ordinary shares or ADSs could decline and you could lose part or all of your investment. The risks described below are not the only risks we face. Additional risks and uncertainties, not presently known to us or that we currently deem immaterial, may also adversely affect our business.

Risk Factors Summary

Risks Related to Our Financial Position and Capital Requirements

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

We may seek additional capital through a combination of private and public equity offerings, debt financing, strategic partnerships and alliances, and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing shareholders will be diluted, and the terms may include liquidation or other preferences that adversely affect shareholder rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Management has concluded that there is substantial doubt about our ability to continue as a going concern which could prevent us from obtaining new financing on reasonable terms or at all.

We have incurred significant losses and negative cash flows from operations and have an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. Our audited consolidated financial statements for the year ended December 31, 2024 were prepared under the assumption that we would continue our operations as a going concern. Our independent registered public accounting firm has included a “going concern” explanatory paragraph in its report on our financial statements for the year ended December 31, 2024. If we are unable to improve our liquidity position, by, among other things, raising capital through public or private offerings or reducing our expenses, we may exhaust our cash resources and will be unable to continue our operations. If we cannot continue as a viable entity, our shareholders would likely lose most or all of their investment in us.

Risks Related to our Business and Industry

The Social Proxy’s limited operating history makes it difficult to evaluate its future prospects and the risks and challenges we may encounter. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.

The Social Proxy commenced its commercial operations only two years ago. Accordingly, The Social Proxy has a limited operating history in a rapidly evolving industry that may not develop in a manner favorable to its business. As a result of The Social Proxy’s limited operating history and ongoing changes in the evolving industry of data collection and proxy services, our ability to forecast The Social Proxy’s and our future results of operations is limited and subject to a number of uncertainties. For the year ended December 31, 2024, The Social Proxy has generated revenue of approximately $451 thousand.

We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, such as the risks and uncertainties described herein. Accordingly, we may be unable to prepare accurate internal financial forecasts or replace the anticipated revenue that we do not receive as a result of delays arising from these factors, and our results of operations in future reporting periods may be below the expectations of investors or analysts. If we do not address these risks successfully, our results of operations could differ materially from our estimates and forecasts or the expectations of investors or analysts, causing our business to suffer and the market price of our ADSs to decline.

Our expenses may continue to exceed revenues in the foreseeable future and we may not achieve profitability. If we fail to achieve profitability, or if the time required to achieve profitability is longer than we anticipate, we may not be able to expand or continue our business, and the value of our ADSs could be negatively impacted. Our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

Furthermore, our historical performance may not be indicative of our future growth or financial results. We cannot assure you that we will be able to grow at the same rate as we did in the past or avoid any decline in the future. Our growth may slow down or become negative, and revenues may decline for a number of possible reasons, some of which are beyond our control, including decreasing user spending, increasing competition, declining growth of our overall market or industry, the emergence of alternative business models, decreasing demand for online groceries, and changes in rules, regulations, government policies or general economic conditions. In addition, our growth pace may also be impacted by our strategic shift of focus on sustainable growth. It is difficult to evaluate our prospects as we may not have sufficient experience in addressing the risks to which companies operating in rapidly evolving markets may be exposed. If our growth rate declines, investors’ perceptions of our business and prospects may be materially and adversely affected, and the market price of our ADSs could decline. You should consider our prospects in light of the risks and uncertainties that companies with a limited operating history may encounter.

The data collection and proxy services markets are rapidly evolving within an increasingly challenging landscape. If the industry does not continue to develop as we anticipate, our sales will not grow as quickly as expected and our share price could decline.

We operate in a rapidly evolving industry focused on providing organizations data collection services. Data collection is the process of gathering and measuring information from various sources. The web data collection and proxy services markets are intensely competitive, with established players such as Bright Data, Oxylabs, Smartproxy, and NetNut and many other small players offering similar services. It is therefore difficult to predict how large the markets will be for our solutions. If solutions such as ours are not viewed by organizations as necessary, or if business or customers do not recognize the benefit of our solution, then our revenues may not grow as quickly as expected, or may decline, and our share price could suffer.

There is increasing regulatory scrutiny of web data collection and if we fail to ensure that our products and services are in compliance with such regulations or industry standards our business and financial results may be adversely affected.

The regulatory landscape governing web data collection is evolving rapidly, with authorities across multiple jurisdictions imposing stringent legal and compliance requirements. Laws such as the European Union’s General Data Protection Regulation, or the GDPR, the California Consumer Privacy Act, or the CCPA, and the Computer Fraud and Abuse Act, or the CFAA, in the United States set forth complex rules on how businesses may collect, store, and use publicly available and proprietary web data.

In addition, in recent years we have seen a few cases in which corporations have tried to claim that craping publicly accessible data is a violation of the CFAA or have filed lawsuits against parties accused of scraping their platform without consent. Data scraping and data collection from websites is the process of automatically extracting information from web pages, typically using software tools known as web scrapers. For example, LinkedIn Corporation has sued HiQ Labs, a data analytics company, for scraping publicly available information from LinkedIn. In 2019, the Ninth Circuit Court of Appeals initially ruled in favor of HiQ Labs, stating that scraping publicly accessible data does not constitute “accessing a computer without authorization” under the CFAA. The Supreme Court later vacated the Ninth Circuit’s decision and demanded the case for further review. In 2022, the Ninth Circuit affirmed its original decision, holding that scraping publicly available data is not unlawful.  However, as the web continues to evolve and there is an increasing reliance on the internet as a source of information, the debate between data accessibility and privacy is likely to intensify, especially concerning AI-powered software and evolving regulations that could affect solutions or the ability to provide such solutions.

Compliance with these evolving regulations demands significant investments in legal, operational, and technological controls. The cost of compliance may increase as new requirements emerge, including enhanced consent mechanisms (i.e., systems or processes for obtaining user consent to collect or use their data in compliance with privacy laws), stricter data access limitations, and cross-border data transfer restrictions. Any failure to comply with existing or future regulatory obligations could result in substantial fines, injunctions, reputational harm, and business disruptions. Additionally, if regulators or courts determine that our data collection practices infringe upon the rights of website operators or data subjects, we may be forced to modify or cease certain operations, adversely affecting our business, financial condition, and prospects.

In addition, governments may also adopt new laws or regulations, or make changes to existing laws or regulations, that could impact whether our solution enables our customers to maintain compliance with such laws or regulations. If we are unable to adapt our solution to changing government regulations and industry standards in a timely manner, or if our solution fails to expedite our customers’ compliance initiatives, our customers may lose confidence in our products and could switch to products offered by our competitors, and our sales and financial results would be affected. 

Data localization and sovereignty laws may restrict our access to web data and increase compliance costs.

In addition to privacy and cybersecurity regulations, data localization and sovereignty laws are increasingly affecting web data collection and processing. Many jurisdictions, including China, Russia, India, and the European Union, have enacted or proposed laws requiring that certain types of data be stored and processed within specific geographic boundaries. These laws aim to enhance national security and data protection but pose significant operational and legal challenges for companies engaged in global data collection.

Compliance with such regulations may require us to establish localized data centers, alter data routing and storage practices, or obtain specific regulatory approvals, all of which could increase costs and operational complexity. Additionally, localization mandates could restrict our ability to access and analyze publicly available data from key markets, potentially impairing our competitive position. Failure to comply with these laws could result in fines, restrictions on our services, or limitations on our ability to expand into certain jurisdictions.

As governments continue to introduce and enforce data sovereignty laws pursuant to their concept that information is subject to the laws of the country in which the data is generated or stored, our ability to collect, store, and transfer data across borders may be further constrained, which could adversely affect our business operations and financial performance.

Growing anti-scraping mechanisms and technological barriers may limit our operations web scraping and automated data collection techniques are essential to our business.

Many websites implement sophisticated anti-scraping mechanisms, i.e., technologies used by websites to prevent automated data extraction, such as bot detection, Completely Automated Public Turing test to tell Computers and Humans Apart (CAPTCHA) systems (a system used to determine whether the user is human), fingerprinting, and access blocking (i.e., restrictions on access to a network or service by denying traffic from specific Internet Protocol addresses). If these mechanisms become more advanced or widely adopted, our ability to collect publicly available data may be significantly restricted, affecting the effectiveness of our services and reducing demand from our customers.

In addition, increased demand for ethical data practices may impact our business model. As businesses and regulators emphasize data ethics and responsible AI, there is a growing expectation for web scraping and proxy services to ensure compliance with strict privacy frameworks. Customers may demand greater transparency, consent-based data collection, and anonymization practices. If we fail to meet evolving ethical and compliance standards, we could lose business to competitors with stronger data governance frameworks which allows such competitors to better manage data integrity and ensure availability and security of the data across an organization.

We are engaged in on-going development of our current and future products. Our research and development efforts may not produce successful products or enhancements to our solution that result in significant revenue or other benefits in the near future, if at all.

We operate in a fast-evolving industry that demands continuous technological advancements. We regularly update and enhance our offerings to remain competitive and expect to continue to dedicate significant financial and other resources to our research and development efforts in order to continuously evolve the development of our products and maintain our competitive position. As a result, our business is significantly dependent on our ability to successfully complete the development of our next- generation products. Investing in research and development personnel, developing new products, and enhancing existing products is expensive and time consuming, and there is no assurance that such activities will result in successful development of our products, significant new marketable products or enhancements to our products, design improvements, cost savings, revenues or other expected benefits. If we spend significant time and effort on research and development and are unable to generate an adequate return on our investment, our business and results of operations may be materially and adversely affected.

We plan to eventually introduce improved as well as new products and services as working capital and cash flow may permit, and our business will be harmed if we are not successful in selling these improved as well as new products and services to our existing customers and new customers.

While The Social Proxy plans to eventually introduce improved as well as new products and services as working capital and cash flow may permit, we do not yet know whether any improved or new products and services will be well received and broadly adopted by the market or whether sales will be sufficient for us to offset the costs of development, implementation, support, operation, sales and marketing. Broad-based implementation of any improved or new products and services may require more support than we anticipate, which would further increase our expenses. Additionally, new products and services may subject us to additional risks of product performance, customer complaints and litigation. If sales of any improved or new products and services are lower than we expect, or if we expend additional resources to correct unforeseen problems and develop modifications, our operating margins are likely to decrease.

Our business is dependent upon data companies adopting The Social Proxy’s platform and if we fail to obtain broad adoption, our business will be adversely affected.

Our success will depend on our ability to bring awareness to the Social Proxy’s brand and educate data companies regarding the benefits of the Social Proxy’s platform over existing products and services. We do not know if the Social Proxy’s platform will be successful over the short, mid, or long term and market acceptance may be hindered if they are not presented with compelling data demonstrating the efficacy of the Social Proxy’s platform compared to alternative proxies or other related technologies. If data companies do not adopt and prescribe our platform, our revenue stream and financial condition will suffer as a result.

If we are unable to acquire new customers, our future revenues and operating results will be harmed.

Our success depends on our ability to acquire new customers. The number of customers that we add in a given period impacts both our short-term and long-term revenues. If we are unable to attract a sufficient number of new customers, we may be unable to generate revenue growth at desired rates. The markets we operate in are competitive and many of our competitors have substantial financial, personnel, and other resources that they utilize to develop products and attract customers. As a result, it may be difficult for us to add new customers to our customer base. Competition in the marketplace may also lead us to win fewer new customers or result in us providing discounts and other commercial incentives. These factors may have a meaningful negative impact on future revenues and operating results.

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

Our revenues are generated from sales to new and existing customers. Our future success depends, in part, on our ability to obtain recurring sales to our existing customers. However, we face customer retention challenges due to fierce competition in the market. We devote significant efforts to developing, marketing and selling additional products to existing customers and rely on these efforts for a portion of our revenues. These efforts require a significant investment in building and maintaining customer relationships, as well as significant research and development efforts in order to provide product upgrades and launch new products. The rate at which our existing customers purchase additional products and services depends on a number of factors, including, but not limited to, the perceived need for additional access services, the fit and efficacy of our solutions and the utility of our new offerings, whether proven or perceived, our customers’ budgets, general economic conditions, our customers’ overall satisfaction with the professional services we provide and the continued growth and economic health of our customer base to require incremental users and servers to be covered. If our efforts to sell additional products and services to our customers are not successful, our future revenues and operating results will be harmed.

In addition, a significant portion of our customers rely on AI-powered analytics and big data strategies. Big data refers to extremely large datasets that require advanced methods and technologies to store, process, and analyze for insights.

Any slowdown in artificial intelligence, or AI adoption, budget constraints in data-intensive industries (finance, e-commerce, marketing), or shifts in AI regulatory policies could reduce demand for our services. If AI-driven industries face downturns, our business may experience slower growth or declining revenues.

We face intense competition from other data collection service providers, some of which are larger and better known than we are, and we may lack sufficient financial or other resources to maintain or improve our competitive position.

The markets in which we operate are characterized by intense competition, constant innovation and evolving security threats. We compete with companies that offer web data collection products. Our current and potential future competitors include providers of data collection, such as Bright Data Ltd., or Bright Data, Oxylabs, NetNut. and others. Some of our competitors are large companies that have the technical and financial resources and broad customer bases needed to bring competitive solutions to the market and already have existing relationships as a trusted vendor for other products. Such companies may use these advantages to offer products and services that are perceived to be as effective as ours at a lower price or for free as part of a larger product package or solely in consideration for maintenance and services fees. They may also develop different products to compete with our current solutions and respond more quickly and effectively than we do to new or changing opportunities, technologies, standards, or requirements. Additionally, from time to time we may compete with smaller regional vendors that offer products with a more limited range of capabilities that purport to perform functions similar to our solution. Such companies may enjoy stronger sales and service capabilities in their particular regions.

Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources. Current or potential competitors may be acquired by third parties with greater available resources. As a result of such acquisitions, our current or potential competitors might be able to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products and services, initiate or withstand substantial price competition, take advantage of other opportunities more readily or develop and expand their product and service offerings more quickly than we do. Larger competitors with more diverse product offerings may reduce the price of products that compete with ours in order to promote the sale of other products or may bundle them with other products, which would lead to increased pricing pressure on our products and could cause the average sales prices for our products to decline. 

We may not be able to successfully anticipate or adapt to changing technology or customer requirements on a timely basis, or at all. If we fail to keep up with technological changes or to convince our customers and potential customers of the value of our solution even in light of new technologies, our business, results of operations and financial condition could be materially and adversely affected.

Our dependence on third-party ISPs, data center proxy providers and mobile carriers, and proxy network providers exposes us to risks.

Our business model relies on agreements with internet service providers (ISPs), proxy network providers, data centers proxy providers, and mobile carriers for access to residential, mobile, and rotating proxies. ISP provides individuals and organizations with internet access. Proxy Network uses proxy servers to route network traffic between a device and the internet. Data centers proxy is a type of proxy server that routes internet traffic through Internet Protocol addresses located in data centers rather than residential or ISP connections. Proxy servers are intermediary devices (hardware and software) that sit between a device (smartphones, other servers, other devices) and the internet. This exposes us to risks over which we may have little or no control. If these third parties terminate agreements, restrict services, or face legal and regulatory challenges, our ability to provide proxy-based data collection services may be impacted. Furthermore, our costs may increase if alternative suppliers impose higher pricing or restrictive terms. Additionally, as regulatory frameworks governing internet access, proxy services, and data collection are evolving, any non-compliance with these regulations could lead to penalties, service limitations, and legal liabilities.

We and our planned manufacturers/suppliers will depend on third-party vendors to manufacture and supply some of our/their components, which could make us and them vulnerable to supply shortages and price fluctuations that could harm our business.

We rely on third-party vendors, some of whom themselves may be single source suppliers, for components used in our devices, such as modems. Our reliance on third-party vendors subjects us and them to a number of risks, including:

Any significant delay or interruption in the supply of components, or our suppliers’ inability to obtain substitute components, or materials from alternate sources, in the quantities we/they need at the quality we/they require at acceptable prices and in a timely manner could impair our ability to meet the demand for our platform and materially harm our business.

To the extent we experience management turnover, this will create uncertainties and could harm our business.

Changes to strategic or operating goals, which can often times occur with the appointment of new executives, can create uncertainty, may negatively impact our ability to execute quickly and effectively, and may ultimately be unsuccessful. In addition, executive leadership transition periods are often difficult as the new executives gain detailed knowledge of our operations, and friction can result from changes in strategy and management style. Management turnover inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution. If we do not integrate new executives successfully and in a timely manner, we may be unable to manage and grow our business, and our financial condition and profitability may suffer as a result. Competition for top management is high, and it may take months to find a candidate that meets our requirements. If we are unable to attract and retain qualified management personnel, our business could suffer.

If we lose our key personnel or are unable to attract and retain additional personnel, our business could be harmed.

We depend on the continuing services of our senior management team and other key personnel, and if we lose a member of our senior management or are unable to successfully retain, recruit and train key personnel, our ability to develop and market our products and services could be harmed. Our success depends upon the continuing services of members of our senior management team and various other key personnel. As of the date hereof, we have no employees and four service providers. Our subsidiaries have 10 full-time service providers and 2 full-time employees. To successfully develop our company and its products we need to be able to retain highly skilled personnel. The engagement and/or retention of their services cannot be guaranteed. Our failure to retain and/or recruit such professionals might impair our performance and materially affect our technological and product development capabilities and our product marketing ability.

Our Chief Financial Officer is not required to work exclusively for us, which could materially and adversely affect us and our business.

Itay Weinstein, our Chief Financial Officer, is not required to work exclusively for us and does not devote all of his time to our operations. Since serving as our Chief Financial Officer, he has devoted approximately 9 hours a week of his time to the operation of our business. He also serves as a Partner of the accounting firm Shimony C.P.A. It is possible that his pursuit of other activities may slow our operations and impact our ability to timely complete our financial statements.

If we do not effectively expand, train and retain our sales force, we may be unable to acquire new customers or sell additional products and services to existing customers, and our business will suffer.

We depend significantly on our sales force to attract new customers and expand sales to existing customers. As a result, our ability to increase our revenues depends in part on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our growth. We expect to continue to expand our sales personnel and face a number of challenges in achieving our hiring and integration goals. There is an intense competition for individuals with sales training and experience. In addition, the training and integration of a large number of sales personnel in a short time requires the allocation of internal resources. We invest significant time and resources in training new sales force personnel to understand our solutions and growth strategy. Based on our past experience, it takes an average of a few months before a new sales force member operates at target performance levels. However, we may be unable to achieve or maintain our target performance levels with large numbers of new sales personnel as quickly as we have done in the past. Our failure to hire a sufficient number of qualified sales force members and train them to operate at target performance levels may materially and adversely impact our projected growth rate.

Growth in our business could strain our personnel resources and infrastructure; if we are unable to manage the anticipated growth of our business, our future revenue and operating results may be harmed.

Any growth that we may experience in the future will provide challenges to our organization, requiring us to expand our general and administrative infrastructure. In addition to the need to scale our operational and service capacity, future growth will impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees. Rapid expansion in personnel could mean that less experienced persons market, sell and support our platform, which could result in inefficiencies and unanticipated costs, reduced quality in the products and services we provide, and disruptions to our platform operations. As we may seek to gain greater efficiencies in certain aspects of our operations, leading to productivity improvements in one or more areas, quality in one or more areas may be subject to compromise which could adversely affect the Company, its operations, and reputation. In addition, rapid and significant growth may strain our administrative and operational infrastructure. Our ability to manage our business and growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our business could be harmed.

If we are unable to support demand for our platform or any of our future products or services, our business could suffer.

As demand for The Social Proxy’s platform or any of its future products or services may increase, it will need to, among other things, scale its outsourced manufacturing capacity, vendor and supplier networks, expand customer service, billing and systems processes and enhance its internal quality assurance program. We cannot assure that with any increases in scale, required improvements will be successfully implemented, quality assurance will be maintained, or that appropriate personnel will be available to facilitate growth of our business. Failure to implement necessary procedures, transition to new processes or hire the necessary personnel could result in higher costs or inability to meet increased demand. If we encounter difficulty meeting market demand, quality standards or market expectations, our reputation could be harmed and our future prospects and business could suffer.

External and internal forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not increase at similar rates, if at all.

External and internal growth forecasts are subject to significant uncertainty, including the occurrence of future events and/or the timing of even foreseeable events not being readily foreseeable, and are based on assumptions and estimates that may not prove to be accurate. Any such external and internal forecasts relating to growth in our industry generally, and internal forecasts relating to growth in our business in particular may prove to be inaccurate, including materially inaccurate.

Our growth is subject to many factors, including the rate of market acceptance, or not, of The Social Proxy’s platform as compared to the products and services of our competitors, and our success in implementing our business strategies, each of which is subject to many risks and uncertainties. Accordingly, any of our forecasts of market opportunity should not be taken as indicative of our future growth.

Any acquisitions we make may dilute your equity or require a significant amount of our available cash and may not be scientifically or commercially successful. We may not realize the benefits of these acquisitions.

During 2024 we have acquired The Social Proxy, and as part of our business strategy, we may effect additional acquisitions to obtain additional businesses, products, technologies, capabilities and personnel. If we complete one or more such transactions in which the consideration includes our ordinary shares or other securities, your equity may be significantly diluted. If we complete one or more such transactions in which the consideration includes cash, we may be required to use a substantial portion of our available cash.

Acquisitions also involve a number of operational risks, including:

All of the foregoing risks may be magnified as the cost, size or complexity of an acquisition or acquired company increases, or where the acquired company’s products, market or business are materially different from ours, or where more than one integration is occurring simultaneously or within a concentrated period of time. We may also be required to pay third parties substantial transaction fees, in the form of cash or ordinary shares, in connection with such transactions. For those and other reasons, we may ultimately fail to consummate an acquisition, even if we announce the intended acquisition.

In addition, we may require significant financing to complete an acquisition or investment, whether through bank loans, raising equity or debt or otherwise. We cannot assure you that such financing options will be available to us on reasonable terms, or at all. If we are not able to obtain such necessary financing, it could have an impact on our ability to consummate a substantial acquisition or investment and execute a future growth strategy. Alternatively, we may issue a significant number of shares as consideration for an acquisition, which would have a dilutive effect on our existing shareholders. For example, in partial consideration for the acquisition of The Social Proxy, we agreed to issue to the shareholders of The Social Proxy 1,864,790 unregistered American Depositary Shares and 2,896,142 warrants, and as a result the Social Proxy’s previous shareholders own approximately 20% of our current issued and outstanding share capital on a non-diluted basis. Furthermore, if we undertake acquisitions, we may incur large one-time expenses and acquire intangible assets that could result in significant future amortization expenses.

A material breach in security relating to the Company’s information systems and regulation related to such breaches, cyber-attacks, or other disruptions could adversely affect the Company, expose us to liability and affect our business and reputation.

Information security risks have generally increased in recent years, in part because of the proliferation of new technologies and the use of the Internet, and the increased sophistication and activity of organized crime, hackers, terrorists, activists, cybercriminals and other external parties, some of which may be linked to terrorist organizations or hostile foreign governments. Cybersecurity attacks are becoming more sophisticated and include malicious software, ransomware, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data, substantially damaging the Company’s reputation. Any person who circumvents the security measures could steal proprietary or confidential customer information or cause interruptions in the Company’s operations.

We are increasingly dependent on our information technology systems and infrastructure for our business. As a company operating in the cybersecurity and data collection industry, we face significant risks from cyberattacks, data breaches, and fraudulent activities. Cybercriminals may attempt to compromise our proxy network, intercept sensitive customer data, or use our infrastructure for malicious purposes. We, our collaborators and our service providers collect, store, and transmit sensitive information including intellectual property, proprietary business information, and personal information in connection with our business operations. The secure maintenance of this information is critical to our operations and business strategy. Some of this information could be an attractive target of criminal attack by third parties with a wide range of motives and expertise, including organized criminal groups, “hacktivists,” disgruntled former employees, nation-state and nation-state supported actors, and others. Cyber-attacks are of ever-increasing levels of sophistication, and despite our security measures, our information technology and infrastructure may be vulnerable to such attacks or may be breached, including due to employee error or malfeasance.

We have implemented information security measures to protect our systems, proprietary information, and sensitive data against the risk of inappropriate and unauthorized external use and disclosure and other types of compromise. However, despite these measures, and due to the ever-changing information cyber-threat landscape, we cannot guarantee that these measures will be adequate to detect, prevent or mitigate security breaches and other incidents and we may be subject to data breaches through cyber-attacks, malicious code (such as viruses and worms), phishing attacks, social engineering schemes, and insider theft or misuse. Any such breach could compromise our networks and the information stored there could be accessed, modified, destroyed, publicly disclosed, lost or stolen. If our systems become compromised, we may not promptly discover the intrusion.

Any security breach or other incident, whether real or perceived, could cause us to suffer reputational damage. Such incidents could result in costs to respond to, investigate and remedy such incidents, notification obligations to affected individuals, government agencies, credit reporting agencies and other third parties, legal claims or proceedings, and liability under our contracts with other parties and federal and state laws that protect the privacy and security of personal information. The Company’s failure to prevent security breaches, or well-publicized security breaches affecting the Internet in general, could significantly harm the Company’s reputation and business and financial results.

Our business involves risks and uncertainties that may not be covered by our insurance.

We maintain or intend to obtain insurance policies to cover certain business risks, including cybersecurity threats, data breaches, regulatory compliance liabilities, and operational disruptions. However, our insurance coverage may not adequately protect us against all potential losses. Cybersecurity threats continue to evolve, and insurance providers are increasingly imposing exclusions, higher deductibles, and restrictive terms, making it challenging to secure comprehensive coverage at reasonable rates. If we experience a significant cyberattack, data breach, or regulatory enforcement action that is not sufficiently covered by our insurance policies, we may be required to bear substantial costs, which could materially affect our financial condition and results of operations. Furthermore, our reliance on third-party vendors for data collection and proxy network services introduces additional risks. If any of these vendors experience security breaches or fail to meet regulatory compliance obligations, we could be exposed to legal claims and liabilities that may not be fully covered by our insurance. In addition, the unpredictability of the cyber insurance market may result in coverage limitations, unexpected policy exclusions, or increased premiums, further impacting our ability to manage risk effectively. If we are unable to maintain sufficient insurance coverage or if insurers deny claims, our business, reputation, and financial position could be adversely affected.

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in credit and capital markets.

Additionally, Russia’s prior annexation of Crimea, recent recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic, including agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, payment system. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets. 

Furthermore, on April 2, 2025, President Trump announced that the United States would impose a 10% tariff on all countries, effective on April 5, 2025, and an individualized reciprocal higher tariff on countries with which the United States has the largest trade deficits. These policies have adversely affected the global economy and financial markets, such as significant declines in the global stock markets. We believe that such tariffs would not have a material imminent impact on our business operations, but as relevant policies are rapidly evolving, it may be difficult to evaluate their potential future impacts. Geopolitical conflicts like this may also lead to volatility in financial markets, fluctuations in currency exchange rates, increased procurement costs and declines in trading prices of the ADSs. In extreme cases, such conflicts could result in economic downturns that materially and adversely impact our operations.

Any of the abovementioned factors could affect our business, prospects, financial condition, and operating results. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this prospectus.

We are subject to governmental export and import controls that could subject us to liability in the event of non-compliance or impair our ability to compete in international markets.

We are subject to U.S. and Israeli export control and economic sanctions laws, which prohibit the delivery and sale of certain products to embargoed or sanctioned countries, governments, and persons. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could require export licenses or result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations or cessation of export or sale of our products in sanctioned countries or to sanctioned persons. Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, financial condition, and results of operations

Our relationships with business partners in existing and new international markets may subject us to an increased risk of litigation.

The Social Proxy operates internationally in a few countries and states. As of the date of this annual report, the Social Proxy operates in the United States (New York, Florida, and Texas), Europe (Germany, Austria, the United Kingdom) and Israel. If The Social Proxy cannot successfully manage the unique challenges presented by international markets and its relationships with existing and new business partners within those markets, our expansion activities may be adversely affected and we may become subject to an increased risk of litigation.

The Social Proxy may become involved in disputes relating to our products, services, contracts and business relationships. Such disputes could include, but not limited to, litigation against persons or entities whom The Social Proxy believe have infringed on its intellectual property, intellectual property infringement litigation filed against The Social Proxy, litigation against a competitor, litigation filed against The Social Proxy by a customers or litigation filed against The Social Proxy by websites claiming that The Social Proxy’s operations constitute illegal activities like web scraping, hacking, or violating terms of service. Any of these disputes may result in substantial costs to us, judgments, settlements, reputational damage and diversion of our management’s attention, which could adversely affect our business, financial condition or operating results. There is also a risk of adverse judgments, as the outcome of litigation in foreign jurisdictions or otherwise can be inherently uncertain.

Risks Related to Our Intellectual Property

If we are unable to adequately protect our intellectual property, third parties may be able to use our technology, which could adversely affect our ability to compete in the market.

Our commercial success might depend in part on our ability to obtain and maintain patent protection on our products and technologies and successfully defend these patents and technologies against third-party challenges. As part of our business strategy, our policy is to actively file patent applications in the U.S. and internationally.

Generally, patent applications in the U.S. are maintained in secrecy for a period of at least 18 months. Third parties or competitors may challenge or circumvent our patents or patent applications, if issued. If our competitors prepare and file patent applications in the U.S. that claim compounds or technology also claimed by us, we may be required to challenge competing patent rights, which could result in substantial cost, even if the eventual outcome is favorable to us.

We also rely on trade secrets to protect technology where we believe patent protection is not appropriate or obtainable. Trade secrets are difficult to protect. While we require our collaborators and consultants to enter into confidentiality agreements, this may not be sufficient to protect our trade secrets or other proprietary information adequately.

Litigation or third-party claims of intellectual property infringement could require us to spend substantial time, money and other resources defending such claims and adversely affect our ability to develop and commercialize our products.

Third parties may assert that we are using their proprietary technology without authorization. In addition, third parties may have or obtain patents in the future and claim that our products infringe their patents. If we are required to defend against patent suits brought by third parties, or if we sue third parties to protect our patent rights, we may be required to pay substantial litigation costs, and our management’s attention may be diverted from operating our business. In addition, any legal action against us that seeks damages or an injunction relating to the affected activities could subject us to monetary liability and/or require us to discontinue the affected technologies or obtain a license to continue use thereof.

In addition, there can be no assurance that our patents or patent applications will not become involved in opposition or revocation proceedings instituted by third parties. If such proceedings were initiated against one or more of our patents the defense of such rights could involve substantial costs and the outcome could not be predicted.

Competitors or potential competitors may have filed applications for, may have been granted patents for, or may obtain additional patents and proprietary rights that may relate to technologies competitive with ours. If patents are granted to other parties that contain claims having a scope that is interpreted to cover any of our products, there can be no assurance that we will be able to obtain licenses to such patents at reasonable cost, if at all, or be able to develop or obtain alternative technology.

If we are unable to protect the confidentiality of our trade secrets and other proprietary information, our business and competitive position may be harmed.

We will rely on trade secrets as well as invention assignments and confidentiality provisions in contracts with our employees, consultants, collaborators and others to protect The Social Proxy’s platform. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by consultants, vendors or former or current employees, despite the existence generally of these confidentiality agreements and other contractual restrictions. These agreements may not provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information. There can be no assurance that all employees, consultants, vendors and clients will have executed such agreements or that they have not breached or will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors. In addition, the laws of many foreign countries will not protect our intellectual property rights to the same extent as the laws of the United States. Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could affect our ability to expand to international markets or require costly efforts to protect our technology.

To the extent our intellectual property protection is incomplete, we are exposed to a greater risk of direct competition. A third party could, without authorization, copy or otherwise obtain and use The Social Proxy’s products or technology, or develop similar technology. The Social Proxy’s competitors could use The Social Proxy’s products and services and attempt to replicate some or all of the competitive advantages it derives from its development efforts or design around its protected technology. Our failure to secure, protect and enforce our intellectual property rights could substantially harm the value of our platform, brand and business.

It is possible that others will independently develop the same or similar technology or otherwise obtain access to the Social Proxy’s unpatented technology, and in such cases we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our trade secret rights and related confidentiality and nondisclosure provisions. If we fail to obtain or maintain trade secret protection, or if our competitors obtain our trade secrets or independently develop technology similar to ours or competing technologies, our competitive market position could be materially and adversely affected. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets, and agreement terms that address non-competition are difficult to enforce in many jurisdictions, and might not be enforceable in certain cases.

Risks Related to our ADSs

We will need additional capital in the future. If additional capital is not available, we may not be able to continue to operate our business pursuant to our business plan or we may have to discontinue our operations entirely.

Our net cash used in operating activities for the year ended December 31, 2024 was $1,618 thousand. If we continue to use cash at this rate we will need significant additional financing, which we may seek to raise through, among other things, public and private equity offerings and debt financing. Any equity financings will likely be dilutive to existing stockholders, and any debt financings will likely involve covenants restricting our business activities. Additional financing may not be available on acceptable terms, or at all.

The ADSs are traded in small volumes, limiting ability to sell ADSs that represent ordinary shares at a desirable price, if at all.

The trading volume of the ADSs has historically been low. Even if the trading volume of the ADSs increases, we can give no assurance that it will be maintained or will result in a desirable stock price. As a result of this low trading volume, it may be difficult to identify buyers to whom shareholders can sell ADSs in desirable volume and shareholders may be unable to sell your ADSs at an established market price, at a price that is favorable, or at all. A low volume market also limits shareholders’ ability to sell large blocks of the ADSs at a desirable or stable price at any one time. Shareholders should be prepared to own the ADSs indefinitely.

Our 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 trading price of the ADSs representing our ordinary shares is likely to be highly volatile and subject to wide fluctuations in price in response to various factors, many of which are beyond our control. These factors include:

In addition, equity markets have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies traded in those markets. These broad market and industry factors may materially affect the market price of the ADSs, regardless of our development and operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert management’s attention and resources even if we prevail in the litigation, all of which could seriously harm our business.

Future issuances or sales of the ADSs could depress the market for the ADSs.

Future issuances of a substantial number of the ADSs, or the perception by the market that those issuances could occur, could cause the market price of our ordinary shares or ADSs to decline or could make it more difficult for us to raise funds through the sale of equity in the future. Also, if we make one or more significant acquisitions in which the consideration includes ordinary shares or other securities, your portion of shareholders’ equity in us may be significantly diluted.

Concentration of ownership of our ordinary shares among our principal stockholders may prevent new investors from influencing significant corporate decisions.

There is one shareholder (Mr. Alexander Rabinovitch, a director), who in the aggregate beneficially holds approximately 29.99% of our ordinary shares, as of April 30, 2025). As a result, this person may have the ability to significantly influence the outcome of all matters submitted to our shareholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, such persons, acting alone or together, may have the ability to effectively control our management and affairs. Accordingly, this concentration of ownership may depress the market price of our ordinary shares or ADSs.

Our ordinary shares and ADSs trade on two different markets, and this may result in price variations and regulatory compliance issues.

ADSs representing our ordinary shares are listed for trading on The Nasdaq Capital Market and our ordinary shares are traded on the TASE. Trading in our securities on these markets is made in different currencies and at different times, including as a result of different time zones, different trading days and different public holidays in the U.S. and Israel. Consequently, the effective trading prices of our securities on these two markets may differ. Any decrease in the trading price of our securities on one of these markets could cause a decrease in the trading price of our securities on the other market.

Holders of our ordinary shares or ADSs who are U.S. citizens or residents may be required to pay additional income taxes.

There is a risk that we will be classified as a passive foreign investment company, or PFIC, for certain tax years. If we are classified as a PFIC, a U.S. holder of our ordinary shares or ADSs representing our ordinary shares will be subject to special federal income tax rules that determine the amount of federal income tax imposed on income derived with respect to the PFIC shares. We will be a PFIC if either 75% or more of our gross income in a tax year is passive income or the average percentage of our assets (by value) that produce or are held for the production of passive income in a tax year is at least 50%. The risk that we will be classified as a PFIC arises because cash balances, are generally considered to be assets that produce passive income. Therefore, any determination of PFIC status will depend upon the sources of our income and the relative values of passive and non-passive assets, including goodwill. A determination as to a corporation’s status as a PFIC must be made annually. We believe we may be a PFIC during 2024 and although we have not determined whether we will be a PFIC in 2025, or in any subsequent year, our operating results for any such years may cause us to be a PFIC. Although we may not be a PFIC in any one year, the PFIC taint remains with respect to those years in which we were or are a PFIC and the special PFIC taxation regime will continue to apply.

In view of the complexity of the issues regarding our treatment as a PFIC, U.S. shareholders are urged to consult their own tax advisors for guidance as to our status as a PFIC.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic issuers.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under Nasdaq for domestic issuers. For instance, we may follow home country practice in Israel with regard to, among other things, composition and function of the audit committee and other committees of our Board of Directors and certain general corporate governance matters. In addition, in certain instances we will follow our home country law, instead of Nasdaq, which requires that we obtain shareholder approval for certain dilutive events, such as an issuance 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 stock or assets of another company. We comply with the director independence requirements of Nasdaq, including the requirement that a majority of the Board of Directors be independent. Following our home country governance practices as opposed to the requirements that would otherwise apply to a United States company listed on Nasdaq may provide less protection than is accorded to investors under Nasdaq applicable to domestic issuers.

In addition, as a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act, related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and 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 annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as domestic companies whose securities are registered under the Exchange Act.

ADS holders are not shareholders and do not have shareholder rights.

The Bank of New York Mellon, as depositary, executes and delivers the ADSs on our behalf. Each ADS is a certificate evidencing a specific number of ADSs. The ADS holders will not be treated as shareholders and do not have the rights of shareholders. The depositary will be the holder of the shares underlying the ADSs. Holders of the ADSs will have ADS holder rights. A deposit agreement among us, the depositary and the ADS holders, and the beneficial owners of ADSs, sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs. Our shareholders have shareholder rights prescribed by Israeli law. Israeli law and our Articles of Association, or Articles, govern such shareholder rights. The ADS holders do not have the same voting rights as our shareholders. Shareholders are entitled to our notices of general meetings and to attend and vote at our general meetings of shareholders. At a general meeting, every shareholder present (in person or by proxy, attorney or representative) and entitled to vote has one vote on a show of hands. Every shareholder present (in person or by proxy, attorney or representative) and entitled to vote has one vote per fully paid ordinary share on a poll. This is subject to any other rights or restrictions which may be attached to any shares. The ADS holders may instruct the depositary to vote the ordinary shares underlying their ADSs, but only if we ask the depositary to ask for their instructions. If we do not ask the depositary to ask for their instructions, the ADS holders are not entitled to receive our notices of general meeting or instruct the depositary how to vote. The ADS holders will not be entitled to attend and vote at a general meeting unless they withdraw the ordinary shares from the depository. However, the ADS holders may not know about the meeting far enough in advance to withdraw the ordinary shares. If we ask for the ADS holders’ instructions, the depositary will notify the ADS holders of the upcoming vote and arrange to deliver our voting materials and form of notice to them. The depositary will try, as far as is practical, subject to the provisions of the deposit agreement, to vote the shares as the ADS holders instruct. The depositary will not vote or attempt to exercise the right to vote other than in accordance with the instructions of the ADS holders. We cannot assure the ADS holders that they will receive the voting materials in time to ensure that they can instruct the depositary to vote their shares. In addition, there may be other circumstances in which the ADS holders may not be able to exercise voting rights.

The ADS holders do not have the same rights to receive dividends or other distributions as our shareholders. Subject to any special rights or restrictions attached to a share, the directors may determine that a dividend will be payable on a share and fix the amount, the time for payment and the method for payment (although we have never declared or paid any cash dividends on our ordinary stock and we do not anticipate paying any cash dividends in the foreseeable future). Dividends and other distributions payable to our shareholders with respect to our ordinary shares generally will be payable directly to them. Any dividends or distributions payable with respect to ordinary shares will be paid to the depositary, which has agreed to pay to the ADS holders the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after deducting its fees and expenses. The ADS holders will receive these distributions in proportion to the number of shares their ADSs represent. In addition, there may be certain circumstances in which the depositary may not pay to the ADS holders amounts distributed by us as a dividend or distribution.

There are circumstances where it may be unlawful or impractical to make distributions to the holders of the ADSs.

The deposit agreement with the depositary allows the depositary to distribute foreign currency only to those ADS holders to whom it is possible to do so. If a distribution is payable by us in New Israeli Shekels, the depositary will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, the ADS holders may lose some of the value of the distribution.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. This means that the ADS holders may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for the depository to make such distributions available to them.

Shareholders’ percentage ownership in us may be diluted by future issuances of share capital, which could reduce their influence over matters on which shareholders vote.

Issuances of additional shares would reduce shareholders’ influence over matters on which our shareholders vote.

We may fail to remain in compliance with the continued listing standards of The Nasdaq Capital Market and a delisting of our ADSs could make it more difficult for investors to sell their shares

Our ADSs were approved for listing on The Nasdaq Capital Market in July 2013 where they continue to be listed. We are required to meet certain qualitative and financial tests (including having stockholders’ equity of at least $2.5 million, a market value of listed securities of $35 million or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the most recently completed fiscal years, to maintain the listing of our ADSs on The Nasdaq Capital Market as set forth in Nasdaq listing rule 5550(b)(1) the (“Stockholders’ Equity Requirement” or “Rule 5550(b)(1)”).

On October 18, 2023, the Company received a written notification (the “Notice”) from Nasdaq, notifying the Company that it was not in compliance with the minimum bid price requirement set forth in the Nasdaq Rules for continued listing on the Nasdaq.

Nasdaq Listing Rule 5550(a)(2) (the “Listing Rule”) requires listed securities to maintain a minimum bid price of US$1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of the Company’s ADSs for the 30 consecutive business days from September 6, 2023, to October 17, 2023, the Company failed to meet the minimum bid price requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days, or until April 15, 2024, to regain compliance.

On April 2, 2024, the Company received formal notice from Nasdaq stating that the Company regained compliance with the minimum bid price requirement set forth in the Listing Rule. To regain compliance with the Listing Rule, the Company’s ADSs were required to maintain a minimum closing bid price of $1.00 or more for at least 10 consecutive business days, which was achieved from March 18, 2024 through April 1, 2024. Nasdaq has stated that this matter is now closed.

If we do not maintain compliance with the continued listing requirements for Nasdaq within specified periods and subject to permitted extensions, our ADSs may be recommended for delisting (subject to any appeal we would file). If our ADSs were delisted, it could be more difficult to buy or sell our ADSs and to obtain accurate quotations, and the price of our stock could suffer a material decline. Delisting would also impair our ability to raise capital.

If we fail to maintain compliance with Nasdaq’s continued listing standards, we may be delisted and our ADSs will trade, if at all, only on the over-the-counter market, such as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply with quotation requirements. In addition, delisting of our ADSs could depress the price of our ADSs, substantially limit liquidity of our ADSs and materially adversely affect our ability to raise capital on terms acceptable to us, or at all. 

Finally, delisting of our ADSs would likely result in our ADSs becoming a “penny stock” under the Exchange Act. The principal result or effect of being designated a “penny stock” is that securities broker-dealers cannot recommend the shares but must trade it on an unsolicited basis. Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer and salesperson in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for shares that become subject to those penny stock rules. Under such circumstances, shareholders may find it more difficult to sell, or to obtain accurate quotations, for our ADSs, and our ADSs would become substantially less attractive to certain purchasers such as financial institutions, hedge funds and other similar investors.

Risks Relating to Operations in Israel

We conduct our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and its region.

Our headquarters are located in Israel and we conduct operations in Israel. Accordingly, political, economic and military conditions in the Middle East may affect our business directly. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, as well as terrorist acts committed within Israel by hostile elements.

In particular, in October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas and these terrorist organizations in parallel continued rocket and terror attacks. As a result of the events of October 7, 2023 whereby Hamas terrorists invaded southern Israel and launched thousands of rockets in a widespread terrorist attack on Israel, the Israeli government declared that the country was at war and the Israeli military began to call-up reservists for active duty. Military service call ups that result in absences of personnel from us for an extended period of time may materially and adversely affect our business, prospects, financial condition and results of operations. As of the date hereof, we have no employees, and our management which provides services through a consultant agreement weren’t called for duty. Our subsidiaries have 10 full-time service providers and 2 full-time employees, none of whom were called for duty.

In addition, since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and southern border (with the Houthi movement in Yemen). It is possible that that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other hostile countries, such as Iran, will join the hostilities. Such clashes may escalate in the future into a greater regional conflict. Further, in April and October 2024, Iran launched a direct attacks on Israel involving hundreds of drones, ballistic missiles and cruise missiles and may attack again. In addition, Iran is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. These situations may potentially escalate in the future to more violent events which may affect Israel and us. Any hostilities, armed conflicts, terrorist activities involving Israel or the interruption or curtailment of trade between Israel and its trading partners, or any political instability in the region could adversely affect business conditions and our results of operations and could make it more difficult for us to raise capital and could adversely affect the market price of our ordinary share. An escalation of tensions or violence might result in a significant downturn in the economic or financial condition of Israel, which could have a material adverse effect on our operations in Israel and our business. Parties with whom we do business have sometimes declined 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 claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.

Since the war broke out on October 7, 2023, our operations have not been adversely affected by this situation, and we have not experienced disruptions to our operations. If the war extends for a longer period of time or expands to other fronts, such as Lebanon, Syria and the West Bank, our operations may be adversely affected.

Our commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East. 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. 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.

Further, the State of Israel and Israeli companies have been subjected to an economic boycott. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition or the expansion of our business.

Finally, political conditions within Israel may affect our operations. Israel has held five general elections between 2019 and 2022, and prior to October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate and unrest. Some of these initiatives were brought up again by the Israeli government, which may spark the extensive political debate and unrest once again. Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, our business, financial condition, results of operations and growth prospects.

Our results of operations may be adversely affected by inflation and foreign currency fluctuations.

We hold most of our cash, cash equivalents and bank deposits in U.S. dollars. As we are located in Israel, a significant portion of our expenses are in New Israeli Shekels, or NIS, mainly due to payment to Israeli service providers and suppliers. Our investment in the shares of InterCure Ltd. is also in NIS. As a result, we could be exposed to the risk that the U.S. dollar will be devalued against the NIS or other currencies, and consequentially our financial results could be harmed. To protect against currency fluctuations, we may decide to hold a significant portion of our cash, cash equivalents, bank deposits and marketable securities in NIS, as well as to enter into currency hedging transactions. These measures, however, may not adequately protect us from the adverse effects of inflation in Israel. In addition, we are exposed to the risk that the rate of inflation in Israel will exceed the rate of devaluation of the New Israeli Shekel in relation to the U.S. dollar or that the timing of any devaluation may lag behind inflation in Israel.

Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.

As a company incorporated under the laws of the State of Israel, we are subject to Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions. For example, a merger may not be consummated unless at least 50 days have passed from the date that a merger proposal was filed by each merging company with the Israel Registrar of Companies and at least 30 days from the date that the shareholders of both merging companies approved the merger. In addition, the holder of a majority of each class of securities of the target company must approve a merger. Moreover, a full tender offer can only be completed if the acquirer receives at least 95% of the issued share capital (provided that a majority of the offerees that do not have a personal interest in such tender offer shall have approved the tender offer, except that if the total votes to reject the tender offer represent less than 2% of the company’s issued and outstanding share capital, in the aggregate, approval by a majority of the offerees that do not have a personal interest in such tender offer is not required to complete the tender offer), and the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, petition the court to alter the consideration for the acquisition (unless the acquirer stipulated in the tender offer that a shareholder that accepts the offer may not seek appraisal rights).

Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to those of our shareholders whose country of residence does not have a tax treaty with Israel exempting 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, including a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are restricted. 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 actual disposition of the shares has occurred. 

These and other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.

It may be difficult to enforce a U.S. judgment against us, our officers or our directors or to assert U.S. securities law claims in Israel.

Service of process upon us, since we are incorporated in Israel, and upon our directors and officers, who reside outside the U.S., may be difficult to obtain within the U.S. In addition, because substantially all of our assets and most of our directors and officers are located outside the U.S., any judgment obtained in the U.S. against us or any of our directors and officers may not be collectible within the U.S. There is a doubt as to the enforceability of civil liabilities under the Securities Act or the Exchange Act pursuant to original actions instituted in Israel. Subject to particular time limitations and provided certain conditions are met, executory judgments of a U.S. court for monetary damages in civil matters may be enforced by an Israeli court.

Under applicable U.S. and Israeli law, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees. In addition, employees may be entitled to seek compensation for their inventions irrespective of their agreements with us, which in turn could impact our future profitability.

We generally enter into non-competition agreements with our key consultants. These agreements prohibit our key consultants, if they cease working for us, from competing directly with us or working for our competitors or clients for a limited period of time. We may be unable to enforce these agreements under the laws of the jurisdictions in which our key consultants work and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants developed while working for us. For example, Israeli 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 which have been recognized by the courts, such as the secrecy of a company’s confidential commercial information or the protection of its intellectual property. If we cannot demonstrate that such interests will be harmed, we may be unable to prevent our competitors from benefiting from the expertise of our former employees or consultants and our ability to remain competitive may be diminished.

In addition, Chapter 8 to the Israeli Patents Law, 5727-1967, or the Patents Law, deals with inventions made in the course of an employee’s service and during his or her term of employment, whether or not the invention is patentable, or service inventions. Section 134 of the Patents Law, sets forth that if there is no agreement which explicitly determines whether the employee is entitled to compensation for the service inventions and the extent and terms of such compensation, such determination will be made by the Compensation and Rewards Committee, a statutory committee of the Israeli Patents Office. As a result, it is unclear if, and to what extent, our research and development employees may be able to claim compensation with respect to our future revenue. As a result, we may receive less revenue from future products if such claims are successful, which in turn could impact our future profitability.

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. companies.

We are incorporated under Israeli law. The rights and responsibilities of the holders of our ordinary shares and ADSs are governed by our Articles of Association and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions and interested party transactions requiring shareholder approval. In addition, a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the implications of these provisions that govern shareholders’ actions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares and ADSs that are not typically imposed on shareholders of U.S. corporations.

Risks Relating to Weaknesses in Internal Accounting Control

Our evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 excluded the internal control over financial reporting of The Social Proxy, because the acquisition of The Social Proxy was completed in August 2024, which was close to the year end. We are in the process of integrating this business into our overall internal controls over financial reporting and plan to include it in our scope for the year ended December 31, 2025. Please refer to “Item 15. Controls and Procedures” for details on our internal control over financial reporting. Any failure to maintain effective internal control over financial reporting could harm our business, erode investor confidence in our financial statements, and negatively impact the trading price of our ordinary shares and ADSs. Furthermore, we may need to incur additional costs and use additional management and other resources in order to comply with Section 404 of the Sarbanes-Oxley Act and other requirements going forward.

A. ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of XTL

We were established as a biopharmaceutical company engaged in the acquisition and development of pharmaceutical drugs for the treatment of autoimmune diseases. During 2024 we have expanded into the data collection industry after completing in August 2024 the acquisition of 100% of the share capital of The Social Proxy Ltd., or The Social Proxy, an innovating and leading AI web data company, which develops, operates and distributes a unique ethical, Internet Protocol based proxy data extraction platform for AI and for Business Intelligence, or BI, purposes, at scale.

Company Information and History

Our legal and commercial name is XTL Biopharmaceuticals Ltd. We were established as a private company limited by shares under the laws of the State of Israel on March 9, 1993, under the name Xenograft Technologies Ltd. We re-registered as a public company on June 7, 1993, in Israel, and changed our name to XTL Biopharmaceuticals Ltd. on July 3, 1995.

We commenced operations to use and commercialize technology developed at the Weizmann Institute, in Rehovot, Israel. Since 1993, we have pursued therapeutic and pharmaceutical development programs for the treatment of a variety of indications including hepatitis B, hepatitis C, diabetic neuropathic pain, schizophrenia, SLE, and multiple myeloma, most of which have terminated. We are looking at additional assets in complementary fields as well as other fields.

We currently have two subsidiaries, The Social Proxy Ltd., a private AI web data company limited by shares under the laws of the State of Israel, which develops, operates and distributes a unique ethical, Internet Protocol based proxy data extraction platform for AI and for Business Intelligence purposes at scale, and Xtepo Ltd., a private company limited by shares under the laws of the State of Israel, which holds a license for the exclusive use of rHuEPO for the treatment of multiple myeloma (The Social Proxy Ltd., Xtepo Ltd., and the Company, the “Group”). As of December 31, 2024, we held approximately 1.04% of the issued and outstanding share capital of InterCure Ltd., a related party and former subsidiary of ours (subsidiary between mid-2012 and the beginning of 2015).

The ADSs are listed for trading on The Nasdaq Capital Market under the symbol “XTLB.” Our ordinary shares are traded on the TASE under the symbol “XTLB.” We operate under the laws of the State of Israel under the Israeli Companies Law, and in the U.S. under the Securities Act and the Exchange Act.

Our principal offices are located at 26 Ben-Gurion St., Ramat Gan 5112001, Israel, and our telephone number is (972) 3-6116600. Our primary internet address is www.xtlbio.com. None of the information on our website is incorporated by reference herein.

In August 2024 we completed our previously announced acquisition of The Social Proxy for consideration consisting of (i) 5,292,153 unregistered ADSs, representing immediately after such issuance, 44.6% of the issued and outstanding share capital of the Company, (ii) the payment of $430,000 to the former shareholders of The Social Proxy and (iii) warrants to purchase ADSs which may only be exercised upon reaching certain financial measured milestones within a period of up to three (3) years from the closing. In November 2024 we and the former shareholders of the Social Proxy agreed to reduce the number of ADSs and warrants issued to 1,864,790 and 2,896,142, respectively, and that the former shareholders shall be entitled to appoint one representative to our Board of Directors instead of two representatives as originally agreed upon. As a result, the Social Proxy’s previous shareholders own approximately 20% of our current issued and outstanding share capital on a non-diluted basis.

In March 2025, we announced that we entered into an Exclusive Sublicense Agreement with Biossil Inc., a company incorporated under the laws of Canada (“Biossil”). Pursuant to this agreement we granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the product called Edratide, or the Product, trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Yeda was informed by us and by Biossil about the Exclusive Sublicense Agreement and has agreed to its execution. In consideration for granting the rights under this agreement the Company will be entitled to cumulative payments of up to approximately $11,500,000. At closing, Biossil paid us $137,500 as license issuing fee and up to an aggregate of $3,362,000 will be due upon the occurrence of certain regulatory milestones and up to an aggregate of $8,000,000 will be due upon the occurrence of certain commercial milestones.

B. Business Overview

Introduction

We are an intellectual property based company, focusing on the development, management, and commercialization of intellectual property, and are engaged in AI web data collection through our wholly owned subsidiary The Social Proxy and in the biopharmaceutical industry, in which we hold a license from Yeda Research and Development Company Ltd., or Yeda, for hCDR1, a potential treatment for (1) systemic lupus erythematosus, or SLE and (2) Sjogren’s syndrome, or SS.

In March 2025, we announced that we entered into an Exclusive Sublicense Agreement with Biossil Inc., a company incorporated under the laws of Canada (“Biossil”). Pursuant to this agreement we granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the product called Edratide, or the Product, trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Yeda was informed by us and by Biossil about the Exclusive Sublicense Agreement and has agreed to its execution.  Thus, from such date we are no longer actively involved with the development of hCDR1 or with the development of any other drug candidate.

In June 2024, we announced that we entered into a share purchase agreement with the shareholders of The Social Proxy, an Israeli-based technology company specializing in the development and provision of advanced web proxy solutions and data extraction platforms tailored for AI and BI applications. Pursuant to this purchase agreement, we acquired all of the issued and outstanding share capital of The Social Proxy. This transaction closed in August 2024 and The Social Proxy has been operating since then as a wholly owned subsidiary of the Company. In November 2024, we announced that we entered into a settlement agreement with the chief executive officer of The Social Proxy and the previous shareholders of The Social Proxy, according to which the share purchase agreement between the Company, The Social Proxy and The Social Proxy Previous Shareholders dated June 5, 2024 will be amended such that the number of ADSs of the Company and the additional warrants, which may only be exercised upon the reaching of certain financial milestones, issuable to The Social Proxy Previous Shareholders, will each be reduced by approximately two-thirds. As a result, The Social Proxy Previous Shareholders own approximately 20% of our current issued and outstanding share capital on a non-diluted basis.

The Social Proxy

The Social Proxy operates within the data collection, web data scraping (for AI, BI and other purposes), 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. Proxy servers are intermediary devices (hardware and software) that sit between a device (smartphones, other servers, other devices) and the internet. The Social Proxy is dedicated to promoting the ideals of an open web by leveraging cutting-edge technologies to enhance its proxy solutions. The Social Proxy’s mission is to deliver unparalleled performance, unlocking the potential for general data and AI data gathering at scale, thereby empowering businesses and organizations to harness the full potential of web data.

At the heart of The Social Proxy’s services are its proprietary 5G and 4G mobile private proxies, available as either dedicated or rotating solutions. These proxies, built on in-house hardware and proprietary software, provide businesses with an unlimited supply of Internet Protocol addresses (identical to those of real users) ensuring both anonymity and reliability during data extraction operations. Internet Protocol address is the unique numerical identifier assigned to each device connected to a network or the internet that allows information to be sent between devices on a network.

Data scraping and data collection from websites is the process of automatically extracting information from web pages, typically using software tools known as web scrapers. This process generally involves a device—such as a computer, server, or cloud-based virtual machine sending requests to a website to retrieve its content (or parts of its content). The scraper then parses this content and extracts specific data elements such as text, images, links, or tables. The online communication is between the device and the server hosting the website, as the website responds to the incoming requests and serves the page content.

As businesses operating in the data collection space navigate complex privacy frameworks such as the European Union’s General Data Protection Regulation, or GDPR, and the California Consumer Privacy Act, or CCPA, there is a growing demand for privacy-first, compliant proxy solutions. Market trends increasingly emphasize transparency, legal compliance, and cybersecurity resilience. Ethical proxy services have thus become essential in supporting secure, scalable, and regulation-compliant data access.

We believe that The Social Proxy is strategically positioned to support these needs, fostering ethical innovation through data-driven solutions.

The Social Proxy’s proprietary technology—encompassing both hardware and software—is engineered to ensure that no Internet Protocol addresses are sourced from end users. This unique approach reinforces the platform’s ethical foundation. By delivering an endless supply of Internet Protocol addresses and outperforming traditional solutions in speed and efficiency, The Social Proxy enhances data collection workflows significantly.

The Social Proxy maintains a robust and geographically diverse infrastructure, with proxy servers deployed across the United States (New York, Florida, and Texas), Europe (Germany, Austria, the United Kingdom) and Israel. A server is a computer system (hardware and software) that provides services, data, or resources to other computers, known as clients, over a network. A proxy server is a server that acts as a gateway between a user and the internet and in essence acts as an intermediary separating the end users from the websites they browse. This extensive network of proxy servers enables The Social Proxy to offer ethical, fast and reliable proxy services and data collection services to a diverse clientele across various regions and various needs. The Social Proxy aims to continue expanding its global footprint to serve a wide range of client requirements with speed, reliability, and regional relevance.

Web Data Collection and Proxy Services Background

In today’s business landscape, data is paramount, with data analysis driving decisions as companies increasingly prioritize evidence-based strategies for success.  As markets become increasingly competitive, the ability to analyze large amounts of data in real time is crucial for businesses to make informed decisions and gain a competitive edge. In order to achieve that, companies across various sectors have been collecting data from internet websites, using various techniques. 

In addition, the AI revolution that the world has experienced in recent years relies heavily on vast amounts of data to train AI models, enabling them to learn patterns, make predictions, and offer solutions. Companies that are involved with and develop AI applications and solutions need to collect a very large amount of data to do so. The growing demand for AI-driven analytics is fueling an unprecedented need for vast amounts of web data, as businesses and organizations strive to enhance decision-making, automation, and predictive capabilities. AI models, particularly in machine learning and deep learning, rely on extensive datasets to train algorithms, refine insights, and improve accuracy. Companies across industries, including finance, healthcare, e-commerce, and cybersecurity, are leveraging AI-driven analytics to detect patterns, forecast trends, and gain competitive advantages. As AI applications expand -ranging from personalized recommendations and fraud detection to real-time monitoring and sentiment analysis (the process of using natural language processing to determine the emotional tone behind words) - the volume, variety, and velocity of data required are escalating.

However, accessing the data at scale presents significant challenges, including technical barriers, anti-scraping mechanisms (which are technologies used by websites to prevent automated data extraction, such as rate-limiting, bot detection, or Completely Automated Public Turing test to tell Computers and Humans Apart (CAPTCHA) system (a system used to determine whether the user is human)), and regulatory restrictions. The surge in demand for data raises ethical and legal concerns regarding data privacy, compliance with regulations like GDPR and CCPA, and fair usage of publicly available information. Data collection is also becoming more complex and difficult due to, in part, leading companies such as Google, Meta and X not sharing the data that they are collecting with third parties, and internet websites that change their displayed information based on user Internet Protocol address, location, and demographic attributes. In addition, direct involvement with data collection, which means expanding digital presence on the web, may increase the exposure of businesses and organizations to cyber and fraud threats. Furthermore, high-profile lawsuits and legal precedents, such as LinkedIn vs. HiQ Labs, have highlighted the risks associated with web scraping, reinforcing the necessity of lawful and ethical data acquisition methods.

To answer the above needs and challenges the web data collection market has grown rapidly, with more and more service providers enabling businesses and organizations to gather data from various online sources like websites, social media, and e-commerce platforms, by using different types of Internet Protocol addresses (residential, mobile, data center and others) from various locations worldwide.

Market Size and Growth Drivers to the Proxy and Data Collection Market and Proxy Market

Although the practice of data collection and analysis has existed for ages, the advent of AI and advanced analytics tools has revolutionized the industry, fostering an unprecedented data-driven culture. As both traditional and online businesses become increasingly more competitive, so does their need for larger amounts of empirical, statistical, anecdotal, behavioral, and projected data to be analyzed in real time in order to compete. Furthermore, AI-powered predictive analytics (the use of data, statistical algorithms, and machine learning to identify the likelihood of future outcomes), sentiment analysis, and market forecasting rely on vast amounts of structured and unstructured web data, sourced from news sites, financial reports, regulatory filings, social media, online reviews, and industry publications. In addition, the AI revolution that the world is experiencing in recent years necessitates a constant influx of diverse, high-quality data to train and refine models, leading to increased data collection efforts across various sectors. This data is crucial for many purposes such as pattern recognition, predictive capabilities, and personalized AI applications.

Using proxies for data collection offers advantages such as data accuracy, privacy and anonymity, combating challenges such as access blocking (i.e., restrictions on access to a network or service by denying traffic from specific Internet Protocol addresses), enhancing scraping speed, enabling secure data transmission, and reducing exposure to cyber threats making it a valuable tool for various purposes.

We believe that existing and new customers seek an ethical and end-to-end solution that will provide them with:

According to Grand View Research, The global data collection and labeling market size was valued at USD 3.77 billion in 2024 and is expected to grow at a CAGR of 28.4% from 2025 to 2030 to reach $17.1 billion by 2030.¹

The Social Proxy Solution

Following our acquisition of The Social Proxy in June 2024, we are providing, through The Social Proxy, proprietary proxy services and data collection services.

The Social Proxy is dedicated to promoting the ideals of an open web by leveraging cutting-edge technologies to enhance our proxy solutions. Its mission is to deliver unparalleled performance, unlocking the potential for general data and AI data gathering at scale, thereby empowering businesses and organizations to harness the full potential of web data.

At the heart of The Social Proxy’s services are its proprietary 5G and 4G mobile private proxies, available as either dedicated or rotating solutions. These proxies, built on in-house hardware and proprietary software, provide businesses with an unlimited supply of Internet Protocol addresses (identical to those of real users) ensuring both anonymity and reliability during data extraction operations.

We believe that The Social Proxy’s main advantages over competitors include:

Competition in the Data Collection and Proxy Services Markets

The data collection, web scraping, and proxy services industry is highly competitive and rapidly evolving, driven by increasing demand for real-time data extraction, cybersecurity solutions, and AI-driven analytics. Our primary competitors include well-established companies such as Bright Data (formerly Luminati), Oxylabs, Smartproxy, and NetNut (a subsidiary of Alarum Technologies Ltd.). These companies have developed extensive proxy infrastructures, proprietary web scraping technologies, and strong market positions, enabling them to serve enterprise clients across various industries, including finance, e-commerce, and cybersecurity.

Competitors in this industry differentiate themselves based on the scale and quality of their proxy networks, scraping efficiency, and compliance with data privacy regulations. Bright Data, a market leader, operates one of the most extensive residential proxy networks, positioning itself as a trusted provider for large-scale data collection. Oxylabs has focused on AI-driven scraping solutions and legal compliance, actively engaging in court cases to validate the legitimacy of web scraping practices. Smartproxy offers cost-effective proxy solutions tailored for smaller businesses and individual users, making it a popular alternative in the market. NetNut, leveraging its direct partnerships with internet service providers (ISPs), provides a unique infrastructure with high-speed and stable connections, distinguishing itself in enterprise proxy services.

Regulatory challenges and legal considerations also shape the competitive landscape. As governments enforce stricter data protection laws, including GDPR and CCPA, companies in this sector must navigate complex compliance requirements. Several competitors, including Bright Data and Oxylabs, have been involved in legal disputes over web scraping rights and data usage, influencing industry practices. Additionally, regulatory developments, such as the UK’s proposed AI content scraping framework, could impose new compliance hurdles that impact how companies collect and utilize web data. Competitors that fail to adapt to evolving legal standards may face operational restrictions, while those that proactively align with compliance frameworks will gain a competitive advantage.

Despite the intense competition, we believe that our proprietary technologies, specialized expertise, and commitment to ethical and scalable data collection position us favorably in the industry. By continuously enhancing our infrastructure, expanding our proxy network, and developing innovative AI-driven data extraction solutions, we aim to strengthen our market share. As demand for compliant and high-quality data collection grows, we remain committed to providing highly efficient, secure, and legally compliant services that meet the evolving needs of businesses worldwide.

Regulation of the Data Collection Market

Regulation in the data collection market still stands as a pivotal point of discussion and contention. Governments and regulatory bodies worldwide are working to establish frameworks that balance innovation with consumer protection, data privacy, and market fairness. These regulations typically focus on transparency, user consent, and limitations on data usage to prevent abuse, fraud, and anti-competitive practices. In jurisdictions like the European Union, the GDPR imposes strict guidelines on data collection, requiring companies to obtain explicit user consent, provide clear disclosures, and ensure data minimization. Similarly, in the United States, regulations such as the CCPA grant consumers more control over their data, including the right to opt out of data sales and request deletion.

In the proxy industry, which involves rerouting internet traffic through intermediary servers to anonymize users or bypass restrictions, regulation is particularly complex. Proxies can be used for legitimate purposes such as cybersecurity, web scraping for competitive intelligence, and accessing geo-restricted content. However, they can also facilitate malicious activities like fraud, unauthorized data scraping, and circumvention of digital rights management. Some governments have moved to regulate proxy providers by requiring them to maintain records, restrict access, or comply with content moderation laws. For instance, Russia and China impose strict regulations on proxy and Virtual Private Network (VPN) services, which extend a private network across a public network to provide secure data transmission, often requiring government approval and data-sharing agreements.

Regulations aim to instill transparency, accountability, and consent-based practices among entities involved in collecting and handling data, thereby fostering a more ethical and privacy-centric approach within the data collection market. However, the evolving nature of technology and the global scope of data make it an ongoing challenge to create comprehensive and adaptable regulatory frameworks that balance consumer protection with innovation and business needs.

We believe that compliance with existing regulations is imperative for companies operating in the data collection market, necessitating robust data protection measures, clearer consent mechanisms, which are systems or processes for obtaining user consent to collect or use their data in compliance with privacy laws, and increased accountability to uphold consumer trust. Navigating the complex regulatory landscape of the data collection market is a priority we take seriously. Our approach hinges on proactive measures that ensure transparency, consent, and security. We outline data collection practices, ensuring clarity in our privacy policies and consent mechanisms. We maintain regular audits and assessments to keep us aligned with evolving regulatory standards, to ensure continuous compliance. We are committed to upholding the rights of individuals concerning their data, prioritizing their control and privacy while delivering top-tier data collection solutions in adherence to the evolving regulatory landscape.

Our Strategy

Our strategy is centered on creating long-term value by identifying, acquiring, and developing intellectual property and technology assets with high-impact potential in substantial and growing markets. Through strategic acquisitions, innovation, and operational excellence, we aim to enhance the scalability, efficiency, and market reach of our portfolio companies while driving sustainable growth and competitive differentiation.

The core pillars of our strategy are:

We actively seek out proprietary technologies and unique assets with transformative potential, particularly in industries characterized by high data demand, AI advancements, and BI applications. Our approach prioritizes:

We focus on optimizing, scaling, and expanding the capabilities of the assets we acquire. This involves:

We drive growth through strategic alliances, partnerships, and geographic expansion to maximize the commercial potential of our technologies. Key initiatives include:

We are committed to continuous technological advancement and value creation by:

By identifying, acquiring, and developing cutting-edge intellectual property and technology assets, we aim to unlock new business opportunities, maximize investment returns, and strengthen our leadership in the proxy, AI data extraction, and business intelligence markets along with other markets. Our scalable, secure, and high-performance solutions enable organizations to harness the power of the open web while ensuring compliance and ethical data usage. This approach positions us to capitalize on the growing demand for privacy-conscious, and scalable data solutions, driving sustained value creation for our stakeholders and long-term industry impact in this domain.

Recent Developments

On March 4, 2025, we announced that we have entered into an Exclusive Sublicense Agreement with Biossil. Pursuant to this agreement we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the product called Edratide (the “Product”), trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Thus, from such date, we are no longer actively involved with the development of hCDR1 or with the development of any other drug candidate.

On April 7, 2025, we announced that Mr. Noam Band was appointed the Chief Executive Officer of the Company, and that Mr. Band replaces Shlomo Shalev who will continue to serve as the Chairman of the Company’s Board of Directors. In accordance with the Israeli Companies Law, Mr. Band’s compensation is subject to shareholder approval.

Drug Candidates 

hCDR1 for the Treatment of Systemic Lupus Erythematosus

As mentioned above, in March 2025, we announced that we entered into an Exclusive Sublicense Agreement with Biossil, pursuant to which we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide hCDR1. Thus, from such date, we are no longer actively involved with the development of hCDR1.

rHuEPO for the Treatment of Multiple Myeloma

As our focus has changed, we do not anticipate conducting material research and development activities for rHuEPO.

Development of our Proxy and Data Extraction Technologies

As part of our commitment to delivering cutting-edge solutions, we continue to develop and enhance our proxy and data extraction technologies to better serve the evolving needs of AI, BI, and data-driven applications. Our proprietary 5G and 4G mobile proxy solutions remain at the core of our offering, providing users with highly secure, high-speed, and ethically sourced Internet Protocol addresses for seamless and efficient data collection. With a strong foundation in scalability, speed, and security, we are continuously refining our infrastructure to expand the geographic coverage, performance, and automation capabilities of our proxy network to meet growing global demand.

To further optimize our solutions, we are investing in advanced API integrations and automation features, ensuring seamless compatibility with AI and large-scale data collection workflows. Our AI-powered scrapers and data API feeds, including the Professional Data API, Social Scraper API, and SERP API, remain critical tools for seeking real-time, structured, and high-quality data for analysis. As part of our ongoing development efforts, we are focusing on enhancing the accuracy, efficiency, and compliance of our data extraction tools while ensuring continued adherence to ethical data practices.

Looking ahead, we are dedicated to expanding our product ecosystem by integrating emerging technologies that align with evolving regulatory frameworks and the increasing sophistication of AI-driven data applications. Our development roadmap includes, but not limited to, improvements in proxy rotation mechanisms, security enhancements, and expanded global reach, reinforcing our position as a leader in ethical, high-performance data collection solutions. By staying at the forefront of technological innovation, we aim to support businesses in navigating the ever-changing digital landscape while maximizing the value of web data for AI and business intelligence applications.

Intellectual Property

Patents

General

Patents and other proprietary rights may be very important to the development of our business. We will be able to protect our proprietary technologies from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. We intend to seek and maintain patent and trade secret protection for our drug candidates and our proprietary technologies. As part of our business strategy, our policy is to file patent applications in the U.S. and internationally. We also rely on trade secret information, technical know-how, innovation and agreements with third parties to continuously expand and protect our competitive position. At this stage The Social Proxy does not have registered patents, it relies on specific rare know-how, internal developments of hardware and software.

Generally, patent applications in the U.S. are maintained in secrecy for a period of at least 18 months. Third parties or competitors may challenge or circumvent our patents or patent applications, if issued. Granted patents can be challenged and ruled invalid at any time, therefore the grant of a patent is not of itself sufficient to demonstrate our entitlement to a proprietary right. The disallowance of a claim or invalidation of a patent in any one territory can have adverse commercial consequences in other territories.

If our competitors prepare and file patent applications in the U.S. that claim technology also claimed by us, we may choose to challenge competing patent rights, which could result in substantial cost, even if the eventual outcome is favorable to us. While we have the right to defend patent rights related to our licensed drug candidates and technologies, we are not obligated to do so. In the event that we decide to defend our licensed patent rights, we will be obligated to cover all of the expenses associated with that effort.

If a patent is issued to a third party containing one or more preclusive or conflicting claims, and those claims are ultimately determined to be valid and enforceable, we may be required to obtain a license under such patent or to develop or obtain alternative technology. In the event of a litigation involving a third party claim, an adverse outcome in the litigation could subject us to significant liabilities to such third party, require us to seek a license for the disputed rights from such third party, and/or require us to cease use of the technology. We also may need to commence litigation to enforce any patents issued to us or to determine the scope, validity and/or enforceability of third-party proprietary rights. Litigation would involve substantial costs.

hCDR1 for the Treatment of SLE and SS

We have exclusively licensed from Yeda, three families of patents relating to hCDR1. These three families of patents were sublicensed to Biossil pursuant to the Exclusive Sublicense Agreement that we have entered into with Biossili.

Licensing Agreements and Collaborations

hCDR1

On January 7, 2014, we entered into a license agreement with Yeda, as amended on September 6, 2015, which grants us the exclusive worldwide right to research, develop, and commercialize hCDR1 for all indications. Yeda is the commercial arm of the Weizmann Institute of Science.

In March 2025, we announced that we have entered into an Exclusive Sublicense Agreement with Biossil. Pursuant to this agreement we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the Product, trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Yeda was informed by us and by Biossil about the Exclusive Sublicense Agreement and has agreed to its execution.

Employees

As of the date hereof we have no employees and four service providers. Our subsidiaries have 10 full-time service providers and 2 full-time employees. We and Israeli employees who might be employed by us, are subject, by an extension order of the Israeli Ministry of Welfare, to certain provisions of collective bargaining agreements between the Histadrut, the General Federation of Labor Unions in Israel and the Coordination Bureau of Economic Organizations, including the Industrialists Associations. Our part-time service providers are not subject to these collective bargaining agreements. These provisions principally address cost of living increases, recreation pay, travel expenses, vacation pay and other conditions of employment. We provide our employees with benefits and working conditions equal to or above the required minimum. Other than those provisions, our employees are not represented by a labor union. 

Organizational structure

Our legal and commercial name is XTL Biopharmaceuticals Ltd. We were established as a private company limited by shares under the laws of the State of Israel on March 9, 1993, under the name Xenograft Technologies Ltd. We re-registered as a public company on June 7, 1993, in Israel, and changed our name to XTL Biopharmaceuticals Ltd. on July 3, 1995.

We commenced operations to use and commercialize technology developed at the Weizmann Institute, in Rehovot, Israel. Since 1993 we pursued therapeutic and pharmaceutical development programs for the treatment of a variety of indications including hepatitis B, hepatitis C, diabetic neuropathic pain, schizophrenia, SLE and multiple myeloma, most of which have terminated.

We currently have two subsidiaries, The Social Proxy Ltd. a private company and Xtepo Ltd., a private company limited by shares under the laws of the State of Israel. As of April 28, 2025, we hold approximately 0.51% of the issued and outstanding share capital of InterCure Ltd., a related party and former subsidiary of ours.

The ADSs are listed for trading on The Nasdaq Capital Market under the symbol “XTLB.” Our ordinary shares are traded on the TASE under the symbol “XTLB.” We operate under the laws of the State of Israel under the Israeli Companies Law, and in the U.S. under the Securities Act and the Exchange Act.

Our principal offices are located at 26 Ben-Gurion St., Ramat Gan 5112001, Israel, and our telephone number is (972) 3-6116600. Our primary internet address is www.xtlbio.com. None of the information on our website is incorporated by reference herein.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis in conjunction with our audited consolidated financial statements, including the related notes, prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting standards” or “IFRS”) for the years ended December 31, 2024, 2023 and 2022, and as of December 31, 2024 and 2023, contained in “Item 18. Consolidated Financial Statements” and with any other selected financial data included elsewhere in this annual report.

The tables below present selected financial data for the fiscal years ended as of December 31, 2024, 2023 and 2022. We have derived this selected financial data from our audited consolidated financial statements, included elsewhere in this report and prepared in accordance with IFRS. You should read the selected financial data in conjunction with “Item 3. Key Information” and “Item 8. Financial Information” and “Item 18. Consolidated Financial Statements.”

Consolidated Statements of Comprehensive Income (Loss):

Consolidated Statements of Financial Position Data:

Overview

We are an Intellectual Property based company engaged in proxy and data collection, through our wholly owned subsidiary, The Social Proxy, and in the biopharmaceutical industry, in which we hold a license from Yeda for hCDR1, a potential treatment for SLE and SS.

We were established as a corporation under the laws of Israel in 1993, and commenced operations to use and commercialize technology developed at the Weizmann Institute, in Rehovot, Israel. Since commencing operations, our activities have been primarily devoted to developing our technologies and drug candidates, acquiring pre-clinical and clinical-stage compounds, raising capital, purchasing assets for our facilities, and recruiting personnel. We have had no drug product sales to date. Our major sources of working capital have been proceeds from various private and public offerings of our securities and option and warrant exercises.

In March 2025, we announced that we have entered into an Exclusive Sublicense Agreement with Biossil Inc., a company incorporated under the laws of Canada (“Biossil”). Pursuant to this agreement we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the product called Edratide (the “Product”), trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Thus, from such date, we are no longer actively involved with the development of hCDR1 or with the development of any other drug candidate.

In June 2024, we announced that we have entered into a share purchase agreement with the shareholders of The Social Proxy, a web data company, developing and powering a unique ethical, internet protocol based, proxy and data extraction platform for AI and BI Applications at scale. Pursuant to this purchase agreement, we have acquired all of the issued and outstanding share capital of The Social Proxy. This transaction was closed in August 2024 and Social Proxy is operating as a wholly owned subsidiary of the Company.

The Company has incurred net loss of $1,027 thousands for the year ended December 31, 2024. As of December 31, 2024, the Company’s accumulated deficit was $159,009 thousands. We have incurred negative cash flow from operations each year since our inception and we anticipate incurring negative cash flows from operating activities for the foreseeable future.

We expect to incur additional losses through the end of 2025 and beyond arising from research and development activities, testing additional technologies and operating activities, which will be reflected in negative cash flows from operating activities. In order for us to continue our operations, we will require additional funds over the next 12 months. While we hope we will be able to generate funds necessary to maintain our operations, without additional funds there might not be enough resources to maintain our operations. Our ability to obtain such additional financing and to achieve our operating goals is uncertain. In the event that we do not obtain additional capital or are not able to increase cash flow through the increase in revenues, there is a substantial doubt about our being able to continue as a going concern.

The Company is constantly looking to identify additional assets to add to XTL’s portfolio.

Our revenues derive from The Social Proxy platform and consist of licensing cloud-enabled services subscriptions.

Our cost of service expenses consist primarily of hosting and carriers services, subcontractors and amortization of intangible assets.

Our sales and marketing derive from The Social Proxy and consist primarily of salaries, subcontractors, advertisement and from recording amortization of intangible assets.

Our general and administrative expenses consist primarily of management fees, consultant fees, and related expenses for executive, finance and other administrative personnel, professional fees, director fees and other corporate expenses, including investor relations, business development costs and facilities related expenses. We expense our general and administrative costs as incurred.

Our results of operations include non-cash compensation expense as a result of the grants of XTL stock options. Compensation expense for awards of options granted to key service providers and directors represents the fair value of the award (measured using the Black-Scholes valuation model) recorded over the respective vesting periods of the individual stock options (see details below.)

For awards of options to consultants and other third-parties, according to IFRS 2, the treatment of such options is the same as employee options compensation expense (see note 14 to the consolidated financial statements for the year ended December 31, 2024). We record compensation expense based on the fair value of the award at the grant date according to the Black-Scholes valuation model. According to IFRS 2, in non-performance-based options, we recognize options expenses using the graded vesting method (accelerated amortization). Graded vesting means that portions of a single option grant will vest on several dates, equal to the number of tranches. We treat each tranche as a separate share option grant; because each tranche has a different vesting period, and hence the fair value of each tranche is different. Therefore, under this method the compensation cost amortization is accelerated to earlier periods in the overall vesting period.

A. Results of Operations

Year ended December 31, 2024 compared to the year ended December 31, 2023

Revenues. Revenues in the years ended December 31, 2024 and 2023 totaled approximately $451 thousand and nil, respectively. Revenues in 2024 represent Company’s revenues which were generated by The Social Proxy.

Cost of Revenues. Cost of Revenues in the years ended December 31, 2024 and 2023 totaled approximately $448 thousand and nil, respectively. Cost of Revenues in 2024 represents expenses which were generated by Social Proxy and from recording amortization of intangible assets of technology which the Company recorded as part of The Social Proxy acquisition.

Research and Development Expenses. Research and development expenses in the years ended December 31, 2024 and 2023 totaled approximately $98 thousand and $31 thousand, respectively. In 2023 Research and development expenses were comprised mainly of expenses related to maintenance of our intangible assets. The increase in 2024 compared to 2023 is mainly from employees and service providers of The Social Proxy.

Sales and Marketing Expenses. Sales and marketing expenses in the years ended December 31, 2024, and 2023 totaled approximately $487 thousand and nil, respectively. Sales and marketing expenses derive from The Social Proxy and from recording amortization of intangible assets of brand which the Company recorded as part of The Social Proxy acquisition.

General and Administrative Expenses. General and administrative expenses for the years ended December 31, 2024 and 2023 totaled approximately $1,590 thousand and $734 thousand, respectively. The increase in 2024 compared to 2023 is mainly from the acquisition of The Social Proxy, increase in professional services and options granted to our directors and executives under its share option plan.

Impairment of intangible assets. The Company is required to determine, at least on an annual basis and as of year-end, whether the fair value of its unamortized intangible assets exceeds their book value. As of December 31, 2024 and 2023, the Company recognized no impairments. For further information, see also Note 9 of the consolidated financial statements for the year ended December 31, 2024.

Finance income (expenses), net. Finance income, net for the year ended December 31, 2024 totaled approximately $1,015 thousand compared to finance expenses, net in the amount of $1,017 thousand in 2023. The difference primarily derives from revaluation of marketable securities and warrants to purchase ADS’s which were issued in 2024.

Year ended December 31, 2023 compared to the year ended December 31, 2022

Refer to Form 20-F of December 31, 2023.

Material Accounting Policies

We describe our material accounting policies in Note 3 to our consolidated financial statements for the year ended December 31, 2024.

Impact of Inflation and Currency Fluctuations

While a substantial amount of our operating expenses are in US dollars, we incur a portion of our expenses in New Israeli Shekels. In addition, we also pay for some of our services and supplies in the local currencies of our suppliers. As a result, we are exposed to the risk that the US dollar will be devalued against the New Israeli Shekel or other currencies, and as result our financial results could be harmed if we are unable to protect against currency fluctuations in Israel or other countries in which services and supplies are obtained in the future. Accordingly, we may enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of currencies. The Company’s treasury’s risk management policy is to hold NIS-denominated cash and cash equivalents and short-term deposits in the amount of the anticipated NIS-denominated liabilities for six consecutive months from time to time in line with the directives of the Company’s Board. These measures, however, may not adequately protect us from the adverse effects of inflation in Israel. In addition, we are exposed to the risk that the rate of inflation in Israel will exceed the rate of devaluation of the New Israeli Shekel in relation to the US Dollar or that the timing of any devaluation may lag behind inflation in Israel.

As of December 31, 2024, had the Group’s functional currency strengthened by 10% against the NIS with all other variables remaining constant, loss for the year would have been $46 thousand lower (2023 loss would have been approximately $144 thousand lower; 2022 - loss approximately $152 thousand lower), mainly as a result of exchange rate changes on translation of other accounts receivable, net and exchange rate changes on NIS-denominated cash and cash equivalents and marketable securities – investment in InterCure Ltd.

Governmental Economic, Fiscal, Monetary or Political Policies that Materially Affected or Could Materially Affect Our Operations

Tax rates applicable to the Company:

As of December 31, 2024, XTL Biopharmaceuticals Ltd. did not have any taxable income. As of December 31, 2024, our net operating loss carries forwards for Israeli tax purposes registered on behalf of XTL Biopharmaceuticals Ltd. amounted to approximately $39 million and approximately $23 million capital loss carryforward which may be offset against future capital gain. Under Israeli law, these net-operating losses may be carried forward indefinitely and offset within XTL Biopharmaceuticals Ltd only, against future taxable income, including capital gains from the sale of assets used in the business, with no expiration date.

B. Liquidity and Capital Resources

The Company has incurred net loss of $1,027 thousands for the year ended December 31, 2024. As of December 31, 2024, the Company’s accumulated deficit was $159,009 thousands.

We expect to incur additional losses through the end of 2025 and beyond arising from research and development activities, testing additional technologies and operating activities, which will be reflected in negative cash flows from operating activities. In order for us to continue our operations, we will require additional funds over the next 12 months. While we hope we will be able to generate funds necessary to maintain our operations, without additional funds there might not be enough resources to maintain our operations. Our ability to obtain such additional financing and to achieve our operating goals is uncertain. In the event that we do not obtain additional capital or are not able to increase cash flow through the increase in revenues, there is a substantial doubt about our being able to continue as a going concern.

We have financed our operations from inception primarily through various proceeds from various private and public offerings of our securities and option and warrant exercises. As of December 31, 2024, we received net proceeds of approximately $87.4 million from various private placement transactions, public offerings and exercises of warrants.

As of December 31, 2024, we had approximately $371 thousand in cash and cash equivalents, compared to approximately $1,401 thousand on December 31, 2023. The decrease is mainly from the general and administrative expenses of 2024 and the acquisition of The Social Proxy.

Net cash used in operating activities for the year ended December 31, 2024 was $1,618 thousand, compared to net cash used in operating activities of $707 thousand for year ended December 31, 2023. The increase in net cash used in operating activities is mainly from the general and administrative expenses of 2024.

Net cash used in investing activities for the year ended December 31, 2024 was $844 thousand compared to net cash provided by investing activities of $41 thousand for the year ended December 31, 2023. The change is due to the acquisition of The Social Proxy and the loan granted to The Social Proxy prior to the acquisition.

Net cash provided by financing activities for the year ended December 31, 2024 was $1,447, mainly from the fund-raising event prior to The Social Proxy acquisition. No net cash provided by financing activities for the year ended December 31, 2023.

We have incurred continuing losses and depend on outside financing resources to continue our activities. We have decided to stop our research and development expenditures in connection with execution of our clinical trials. In parallel, we will look to identify additional assets to add to our portfolio.

C. Research and Development, Patents and Licenses

Research and development costs in 2024 substantially derives from costs following the acquisition of The Social Proxy. Research and development costs in 2023 and 2022 substantially derived from costs related to the hCDR1 and, to a lesser degree, development plans. In 2024 there are also expenses for employees and service providers of The Social Proxy and expenses related to the engagement of regulatory and clinical consultants for the hCDR1 development.

hCDR1 for the Treatment of SLE

In March 2025, we announced that we have entered into an Exclusive Sublicense Agreement with Biossil and that pursuant to this agreement we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1. Therefore, from such date, we are not actively involved with the development of hCDR1.

rHuEPO for the Treatment of Multiple Myeloma

We have decided to concentrate our efforts and resources on the development of hCDR1 and therefore do not expect to initiate any activities related to rHuEPO.

The following table sets forth the research and development costs for the years 2024, 2023 and 2022 including all costs related to the clinical-stage projects, our pre-clinical activities, and all other research and development. We in-licensed hCDR1 in January 2014 and started preparations for clinical development of this asset during the year. We started preparations for rHuEPO clinical development in the last quarter of 2010 (after the completion of the Bio-Gal transaction on August 2010). We in-licensed SAM-101 in November 2011 and in June 2015, the Company terminated the license agreement and all rights in and to the licensed technology reverted to MinoGuard. Whether or not and how quickly we commence and complete development of our clinical stage projects is dependent on a variety of factors, including the rate at which we are able to engage clinical trial sites and the rate of enrollment of patients. As such, the costs associated with the development of our drug candidates will probably increase significantly.

D. Trend Information

The trends impacting us are described elsewhere in this annual report on Form 20-F, including in Items 3.D., 4.B., and 5.A. and B.

E. Critical Accounting Estimates

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.

We allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed, based upon their estimated fair values at the acquisition date. These fair values are typically estimated with assistance from independent valuation specialists.

The purchase price allocation process requires us to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets, contractual support obligations assumed, contingent consideration arrangements, and pre-acquisition contingencies.

Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.

Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:

Refer to Note 5, Subsidiaries, to the consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 20-F

These assets are reviewed for impairment once a year and whenever there are indicators of a possible impairment, in accordance with the provisions of IAS 36, Impairment of Assets. The amortization of an asset on a straight-line basis over its useful life begins when the development procedure is completed, and the asset is available for use.

Non-financial assets that sustained impairment are reviewed for possible reversal of the impairment at each date of the statement of financial position. An impairment is tested at least every year. In addition, discretion is exercised as to whether there is an indication to examine impairment more frequently.

The exercise price of the warrants issued at the Social Proxy Transaction is in NIS (different than the functional currency) and therefore these warrants are classified as a liability. The warrants issued at the fund-raising have a cashless exercise mechanism and therefore, in accordance with International Accounting Standard 32: “Financial Instruments: Presentation”, are also a financial liability.

The Company has initially recognized them at fair value as of the date of issuance (measured through third-party appraiser, using a Black-Scholes model).

The warrants are carried at fair value. On each reporting period, the changes in their fair value are recognized in profit or loss.

F. Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

ITEM 6. DIRECTORS AND SENIOR MANAGEMENT

Directors and Senior Management

The following sets forth information with respect to our directors and executive officers as of the date hereof.

Noam Band was appointed to serve as Chief Executive Officer of the Company in April 2025. Most recently, Mr. Band has served as the Chief Executive Officer of Monitor2Heart. From 2020 through its acquisition in 2023 he served as a board advisor to 7digital Group plc (formerly AIM: 7DIG), contributing to its strategic direction and corporate governance. Mr. Band served as the Chairman and Chief Executive Officer of Gix Internet Ltd. (formerly Algomizer Ltd.) (TASE:GIX) from 2013 to 2020 and as a Chairman of Viewbix Inc. (OTCMKTS: VBIX) from 2018 to 2020. Additionally, Mr. Band has served as the Chief Executive Officer of Timest, Mobillion, and Dotomi (acquired by ValueClick). Mr. Band holds an MBA and a B.A. in Economics from The Hebrew University of Jerusalem, Israel.

Itay Weinstein was appointed our Chief Financial Officer in July, 2017. Mr. Itay Weinstein is a Partner at Shimony C.P.A. and has been employed there since 1999. Mr. Weinstein served as the Controller of Can-Fite BioPharma Ltd. since 2003 and as the Chief Financial Officer of Ophthalix Inc. from November 2011 through November 2017. Prior to joining Shimony C.P.A, Mr. Weinstein served as an auditor at Oren Horowitz. Mr. Weinstein is also a board member of Weinstein CPA company. Mr. Weinstein holds a B.A. in economics and accounting from the Tel Aviv University, Israel, and has been a licensed CPA since 1999.

Shlomo Shalev joined our Board of Directors in December 2014. In April 2025, Mr. Shalev was appointed to serve as Chairman, a position filled by him between August 2015, and June 2018 as well. From May 2020 through April 2025 Mr. Shalev served as the company’s CEO. Previosley he served as Executive Chairman of the Board of Intercure, a TASE and Nasdaq listed company. In addition to serving as a board member on a number of Nasdaq and TASE listed companies. Mr. Shalev was the Senior Vice President of Investments for Ampal. He has also worked on a number of transactions in mergers and acquisitions and initial public offerings. With an educational background in economics, Mr. Shalev was Israel’s Consul for Economic Affairs and the Economic Advisor to the Director General, Ministry of Industry and Trade. Mr. Shalev holds an MBA from the University of San Francisco and a B.A. degree in Economics from the University of Ben Gurion, Beer Sheva, Israel. We believe Mr. Shalev’s extensive company strategy and oversight experience, along with his board experience makes him well-qualified to serve as a Director of our Board of Directors.

Osnat Hillel Fain joined our Board of Directors in March 2015. Ms. Fain served as Founder, Director and Managing Partner of Newton Propulsion Technologies LTD from 2003 to 2016. Since 2017, Ms. Fain has served as Consultant, Strategy and Business Development at Adi Shefaram Management LTD where she locates, examines and screens economic feasibility for ventures in various fields and provides business development assistance among other duties. In addition, Ms. Fain serves as a board member on a number of TASE listed companies, including Tigi, Alrov Real Estate and Mehadrin and a former director of TASE listed companies such as DIC Discount Investment Corporation, Elron, PBC Group, ICB, Priortech LTD, E.T.VIEW, Aran R&D, Leumi Start LTD. Ms. Fain was the Business Development Manager at Giora Eiland Ltd., a representative of the Cheyne Capital Group in Israel, General Director of InterVision, Managing Partner at Aran Medical Ventures Hedge Fund, Marketing Manager at Datasphere Ltd. and a marketing consultant for TCB, Elgan Office Supplies, the Haifa Theatre, Adar (software house). Ms. Fain earned a BA in Humanities and Executive MBA from Tel Aviv University and completed a one year course in Management at the Tel Aviv campus of the College of Management. We believe Ms. Fain’s extensive management and board experience makes her well-qualified to serve as a member of our Board of Directors.

Iris Shapira Yalon was appointed a director on January 29, 2020. Ms. Yalon serves as External Director of Shufersal Ltd (The leading Israeli retail chain)., as well as Director of Rotem Industries Ltd. (Israeli government-owned company), Mei Avivim, (a water corporation of Tel Aviv) and in several associations for the benefit of the public and as a Lecturer of Director’s course. Prior to that, Ms. Yalon served as Board member on a number of TASE listed companies, including Electra real estate Ltd., Computer Direct Group Ltd. and on a dual listed company such as TAT Technologies Ltd., Ms. Yalon served as the Chief Financial Officer of multiple companies such as Kryon Systems Ltd., Haldor Advanced Technologies Ltd., Mofet Technology Fund Ltd., and Cloverleaf Media Ltd., which was acquired in 2010 by Dot Hill. Moreover, Ms. Yalon has served as Audit Team Manager at Ernest & Young. She earned a BA in Economics and Accounting (cum laude) at Tel Aviv University and she is licensed accountant. We believe Ms. Yalon’s extensive board experience makes her well-qualified to serve as a member of our Board of Directors.

Alexander Rabinovich joined our Board of Directors in April 2017. Mr. Rabinovich has served on the board of directors of Intercure Ltd. since October 2018, and as Chairman of Intercure’s Board since February 2025 and is also the Chief Executive Officer of InterCure. He has significant public company experience with both Nasdaq and TASE listed companies. Mr. Rabinovich is currently also the Chief Executive Officer and director of Green Fields Capital Ltd., a public company listed on the TASE, engaged in investments in renewable energies. Mr. Rabinovich also served until 2014, on the board of directors of Pilat Media Global PLC, a public company listed on TASE and on the Alternative Investment Market of the London Stock Exchange. Mr. Rabinovich holds a B.A. degree in economics and accounting from the University of Haifa, Israel.

Doron Turgeman joined our Board of Directors in December 2014 and was appointed Chief Executive Officer on January 29, 2020. On May 19, 2020, Mr. Turgeman resigned as Chief Executive Officer. Mr. Turgeman remains on the board following his resignation as Chief Executive Officer. He has served as Chairman of our Board of Directors from July 2018 until April 2025. Mr. Turgeman has significant public company experience with both Nasdaq and TASE listed companies. He has gained considerable experience in mergers and acquisitions involving both debt and equity. Mr. Turgeman holds a B.A. degree in Economics and Accounting from the Hebrew University of Jerusalem and is a certified public accountant in Israel. We believe Mr. Turgeman’s extensive company strategy experience and technical background makes him well-qualified to serve as a Director of our Board of Directors.

B. Compensation

The aggregate compensation paid by us to all persons who served as directors or officers for the year 2024 was approximately $605 thousand.

All members of our Board of Directors who are not our employees are reimbursed for their expenses for each meeting attended, save for Alexander Rabinovich, who is a significant shareholder of our Company. Our directors are eligible to receive stock options under our stock option plans. Non-executive directors do not receive any remuneration from us other than fees for their services as members of the board or committees of the board and expense reimbursement, save for one director who is eligible for fees for consulting services provided to the Company.

In 2017, we fixed the monetary compensation for non-executive directors as follows: annual consideration of NIS 29 thousand (to be paid in 4 equal quarterly payments), payments of NIS 1,460 for attendance at each board or committee meeting in person, NIS 876 for meetings held by teleconference, NIS 730 for unanimous written board resolutions and reimbursement of reasonable out-of-pocket expenses.

For further details regarding share options granted to our directors and service providers, see Note 14 to the consolidated financial statements for the year ended December 31, 2024.

Employment Agreements

Noam Band

 Our Chief Executive Officer, Noam Band, was appointed on April 7, 2025. Mr. Band will receive compensation as follows:

In the event of termination of this agreement: (i) The options shall stop vesting upon the termination notice (as defined in the agreement); and (ii) any options already vested may be exercisable within 90 days following the date of the termination notice.

In accordance with the Israeli Companies Law, Mr. Band’s compensation is subject to shareholder approval.

Shlomo Shalev

Our Chairman of the Board, Shlomo Shalev. Mr. Shalev, who served as our chief executive officer until April 2025 and who is now serving as our Chairman of the Board, will receive compensation as follows:

Itay Weinstein

In July 2017, we entered into a service agreement with Mr. Itay Weinstein pursuant to which he serves as our Chief Financial Officer on a part time basis. Mr. Weinstein is entitled to a monthly gross payment of NIS 15,000 (NIS 180,000 annually).

In addition, we pay Shimony C.P.A, the accounting firm of which Mr. Weinstein is a Partner, monthly fees of NIS 15,000 for controller and bookkeeping services.

In March 2024, Mr. Itay Weinstein was issued with 1,000,000 options to purchase, under the approved ESOP plan of the Company, 1,000,000 ordinary shares of the Company, at an exercise price of NIS 0.0438 (approximately USD 0.01) per Option. The options vest on a quarterly basis until March 2027.

Jonathan Schapiro

We entered into a consulting agreement dated January 1, 2015 with Dr. Jonathan Schapiro, a former director. Commencing on such date, Dr. Schapiro served as a consultant to us for a monthly fee of $2,000 increasing to $3,000 upon the successful completion of a cash fund raising of at least $3 million in a public offering or private placement of equity securities, including securities convertible or exercisable into equity by us or any entity in our control. In addition, under the consulting agreement, on December 30, 2014, Dr. Schapiro was granted options to purchase 150,000 ordinary shares at an exercise price of NIS 0.4915 per share (in addition to the options granted to him as a director on the same day as described below). One third of the options vested on the twelve-month anniversary of the grant date, and the remaining two thirds vested on a quarterly basis over the following two years. The options had a term of ten years and expired December 30, 2024.

Since August 2024, Dr. Schapiro is no longer serving as a director of the Company and is not receiving any compensation from the Company. His consulting agreement has been terminated.

In accordance with the requirements of Israeli Law, we determine our directors’ compensation in the following manner:

The approval of a majority of the shareholders voting at a duly convened shareholders’ meeting is required to implement any such compensation proposal.

C. Board Practices

Election of Directors and Terms of Office

Our Board of Directors currently consists of five members. The nomination of our directors is proposed by our Board of Directors or a designated nomination committee composed of three members of our Board of Directors, whose proposal is then approved by the board. Our board, following receipt of a proposal of the nomination committee, has the authority to add additional directors up to the maximum number of 12 directors allowed under our Articles. Such directors appointed by the board serve until the next annual general meeting of the shareholders. Unless they resign before the end of their term or are removed in accordance with our Articles, all of our directors, other than our external directors, will serve as directors until our next annual general meeting of shareholders.

None of our directors or officers has any family relationship with any other director or officer.

Our Articles permit us to maintain directors’ and officers’ liability insurance and to indemnify our directors and officers for actions performed on behalf of us, subject to specified limitations. We maintain a directors and officers insurance policy which covers the liability of our directors and officers as allowed under Israeli Companies Law.

There are no service contracts or similar arrangements with any director that provide for benefits upon termination of a directorship.

External and Independent Directors

The Israeli Companies Law requires Israeli companies with shares that have been offered to the public either in or outside of Israel to appoint two external directors. No person may be appointed as an external director if that person or that person’s relative, partner, employer or any entity under the person’s control, has or had, on or within the two years preceding the date of that person’s appointment to serve as an external director, any affiliation with the company or any entity controlling, controlled by or under common control with the company. The term affiliation includes:

No person may serve as an external director if that person’s position or business activities create, or may create, a conflict of interest with that person’s responsibilities as an external director or may otherwise interfere with his/her ability to serve as an external director. If, at the time external directors are to be appointed, all current members of the Board of Directors are of the same gender, then at least one external director must be of the other gender. A director in one company shall not be appointed as an external director in another company if at that time a director of the other company serves as an external director in the first company. In addition, no person may be appointed as an external director if he/she is a member or employee of the Israeli Security Authority, and also not if he/she is a member of the Board of Directors or an employee of a stock exchange in Israel.

External directors are to be elected by a majority vote at a shareholders’ meeting, provided that either:

The initial term of an external director is three years and may be extended for two additional three-year terms. Notwithstanding, pursuant applicable articles of the Companies Regulations (Reliefs for Israeli companies whose securities are listed for trading on a stock exchange outside of Israel), promulgated under the Companies Law and as amended from time to time, following the Audit Committee and the Board of Directors recommendation, the Company shareholders may re-elect an external director for additional terms. An external director may be removed only by the same percentage of shareholders as is required for their election, or by a court, and then only if such external director ceases to meet the statutory qualifications for their appointment or violates his or her duty of loyalty to the company. Both external directors must serve on every committee that is empowered to exercise one of the functions of the Board of Directors.

An external director is entitled to compensation as provided in regulations adopted under the Israeli Companies Law and is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with service provided as an external director.

Osnat Hillel Fain and Iris Shapira Yalon serve as external directors pursuant to the provisions of the Israeli Companies Law. They both serve on our audit committee, our committee for the approval of financial statements, our nomination committee and our compensation committee.

Audit Committee

The Israeli Companies Law requires public companies to appoint an audit committee. The responsibilities of the audit committee include identifying irregularities in the management of the company’s business and approving related party transactions as required by law. An audit committee must consist of at least three directors, including all of its external directors. The chairman of the Board of Directors, any director employed by or otherwise providing services to the company, and a controlling shareholder or any relative of a controlling shareholder, may not serve as members of the audit committee. An audit committee may not approve an action or a transaction with a controlling shareholder, or with an office holder, unless at the time of approval two external directors are serving as members of the audit committee and at least one of the external directors was present at the meeting in which an approval was granted.

Our audit committee is currently comprised of three independent non-executive directors. The audit committee is chaired by Osnat Hillel Fain, who serves as the audit committee financial expert, Iris Shapira Yalon and Doron Turgeman as members. The audit committee meets at least four times a year and monitors the adequacy of our internal controls, accounting policies and financial reporting. It regularly reviews the results of the ongoing risk self-assessment process, which we undertake, and our interim and annual reports prior to their submission for approval by the full Board of Directors. The audit committee oversees the activities of the internal auditor, sets its annual tasks and goals and reviews its reports. The audit committee reviews the objectivity and independence of the external auditors and also considers the scope of their work and fees.

We have adopted a written charter for our audit committee, setting forth its responsibilities as outlined by the regulations of the SEC. In addition, our audit committee has adopted procedures for the receipt, retention and treatment of complaints we may receive regarding accounting, internal accounting controls, or auditing matters and the submission by our key consultants of concerns regarding questionable accounting or auditing matters. In addition, SEC rules mandate that the audit committee of a listed issuer consist of at least three members, all of whom must be independent, as such term is defined by rules and regulations promulgated by the SEC. We are in compliance with the independence requirements of the SEC rules.

Financial Statement Examination Committee

According to regulations promulgated under the Companies law and since we are considered as a “Small Corporation” under the Israeli Securities law Regulation, we are not required to appoint a financial statement examination committee, therefore our financial statements are examined and approved by our board of directors.

Compensation Committee

Under the Companies Law, the board of directors of any public company must establish a compensation committee and to adopt a compensation policy with respect to its officers, or the Compensation Policy. In addition, the Companies Law sets forth the approval process required for a public company’s engagement with its officers (with specific reference to a director, a non-director officer, a chief executive officer and controlling shareholders and their relatives who are employed by the company).

The compensation committee shall be nominated by the board of directors and be comprised of its members. The compensation committee must consist of at least three members. All of the external directors must serve on the compensation committee and constitute a majority of its members. The remaining members of the compensation committee must be directors who qualify to serve as members of the audit committee (including the fact that they are independent) and their compensation should be identical to the compensation paid to the external directors of the company. The approval of the compensation committee is required in order to approve terms of office and/or employment of office holders. The Company’s Compensation Policy was duly approved on January 7, 2021.

Similar to the rules that apply to the audit committee, the compensation committee may not include the chairman of the board, or any director employed by the company, by a controlling shareholder or by any entity controlled by a controlling shareholder, or any director providing services to the company, to a controlling shareholder or to any entity controlled by a controlling shareholder on a regular basis, or any director whose primary income is dependent on a controlling shareholder, and may not include a controlling shareholder or any of its relatives. Individuals who are not permitted to be compensation committee members may not participate in the committee’s meetings other than to present a particular issue; provided, however, that an employee that is not a controlling shareholder or relative may participate in the committee’s discussions, but not in any vote, and the company’s legal counsel and corporate secretary may participate in the committee’s discussions and votes if requested by the committee.

The roles of the compensation committee are, among other things, to: (i) recommend to the board of directors the Compensation Policy for office holders and recommend to the board once every three years the extension of a Compensation Policy that had been approved for a period of more than three years; (ii) recommend to the directors any update of the Compensation Policy, from time to time, and examine its implementation; (iii) decide whether to approve the terms of office and of employment of office holders that require approval of the compensation committee; and (iv) decide, in certain circumstances, whether to exempt the approval of terms of office of a chief executive officer from the requirement of shareholder approval.

The Compensation Policy requires the approval of the general meeting of shareholders with a “Special Majority”, which requires a majority of the shareholders of the company who are not either a controlling shareholder or an “interested party” in the proposed resolution, or the shareholders holding less than 2% of the voting power in the company voted against the proposed resolution at such meeting. However, under special circumstances, the board of directors may approve the Compensation Policy without shareholder approval, if the compensation committee and thereafter the board of directors decided, based on substantiated reasons after they have reviewed the compensation policy again, that the Compensation Policy is in the best interest of the company.

The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of executive officers and directors, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The Compensation Policy must relate to certain factors, including advancement of the company’s objectives, the company’s business and its long-term strategy, and creation of appropriate incentives for executives. It must also consider, among other things, the company’s risk management, size and the nature of its operations. The Compensation Policy must furthermore consider the following additional factors:

The compensation policy must also include the following principles:

The compensation policy must also consider appropriate incentives from a long-term perspective and maximum limits for severance compensation.

Osnat Hillel Fain is the chairman of our compensation committee. Doron Turgeman and Iris Shapira Yalon serve as the other members of our compensation committee.

Approval of Compensation to Our Officers

The Israeli Companies Law prescribes that compensation to officers must be approved by a company’s board of directors.

The responsibilities of the compensation committee are to set our overall policy on executive remuneration and to decide the specific remuneration, benefits and terms of employment for directors, officers and the Chief Executive Officer.

The objectives of the compensation committee’s policies are that such individuals should receive compensation which is appropriate given their performance, level of responsibility and experience. Compensation packages should also allow us to attract and retain executives of the necessary caliber while, at the same time, motivating them to achieve the highest level of corporate performance in line with the best interests of shareholders. In order to determine the elements and level of remuneration appropriate to each executive director, the compensation committee reviews surveys on executive pay, obtains external professional advice and considers individual performance.

Internal Auditor

Under the Israeli Companies Law, the board of directors must appoint an internal auditor, nominated by the audit committee. Our internal auditor is Daniel Spira. The role of the internal auditor is to examine, among other matters, whether the company’s actions comply with the law and orderly business procedure. Under the Israeli Companies Law, an internal auditor may not be:

We comply with the requirement of the Israeli Companies Law relating to internal auditors. Our internal auditors examine whether our various activities comply with the law and orderly business procedure. Our internal auditor is not our employee, but the managing partner of a firm which specializes in internal auditing.

D. Employees

As of the date hereof, we have no employees and four service providers. Our subsidiaries have 10 full-time service providers and 2 full-time employees. We and Israeli employees who might be employed by us, are subject, by an extension order of the Israeli Ministry of Welfare, to certain provisions of collective bargaining agreements between the Histadrut, the General Federation of Labor Unions in Israel and the Coordination Bureau of Economic Organizations, including the Industrialists Associations. Our part-time service providers are not subject to these collective bargaining agreements. These provisions principally address cost of living increases, recreation pay, travel expenses, vacation pay and other conditions of employment. We provide our employees with benefits and working conditions equal to or above the required minimum. Other than those provisions, our employees are not represented by a labor union. 

E. Share Ownership

The following table sets forth information regarding the beneficial ownership of our outstanding ordinary shares as of April 30, 2025, by the members of our senior management, board of directors, individually and as a group, and each person who we know beneficially owns 5% or more of our outstanding ordinary shares. The beneficial ownership of ordinary shares is based on 881,385,176 ordinary shares outstanding as of April 30, 2025 and is determined in accordance with the rules of the SEC and generally includes any ordinary shares over which a person exercises sole or shared voting or investment power. For purposes of the table below, we deem shares subject to options or warrants that are currently exercisable or exercisable within 60 days of April 30, 2025, to be outstanding and to be beneficially owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.

Share Option Plans

We maintain the following share option plans for our and our subsidiary’s directors and consultants. In addition to the discussion below, see note 14 of our consolidated financial statements for the year ended December 31, 2024.

Our Board of Directors administers our share option plans and has the authority to designate all terms of the options granted under our plans including the grantees, exercise prices, grant dates, vesting schedules and expiration dates, which may be no more than ten years after the grant date. Options may not be granted with an exercise price of less than the fair market value of our ordinary shares on the date of grant, unless otherwise determined by our Board of Directors.

As of December 31, 2024, we have granted to directors and consultants options that are outstanding to purchase up to 27,100,000 ordinary shares under two share option plans.

2011 Share Option Plan

On August 29, 2011, our Board of Directors approved the adoption of an employee stock option scheme for the grant of options exercisable into shares of the Company according to section 102 to the Israeli Tax Ordinance, or the 2011 Plan, and to reserve up to 10 million ordinary shares in the framework of the 2011 Plan, for options allocation to employees, directors and consultants.

During 2020 it was decided to enlarge the reserve to 30 million options.

The 2011 Plan shall be subject to section 102 of the Israeli Tax Ordinance. According to the Capital Gain Track, which was adopted by us and the abovementioned section 102, we are not entitled to receive a tax deduction that relates to remuneration paid to employees, including amounts recorded as salary benefit for options granted to employees in the framework of the 2011 Plan, except the yield benefit component, if available, that was determined on the grant date. The terms of the options which will be granted according to the 2011 Plan, including option period, exercise price, vesting period and exercise period, shall be determined by our Board of Directors on the date of the actual allocation. On March 14, 2023, Company’s Board of Directors approved to extend retroactively the expiration date of the 2011 Plan by additional 5 years to August 29, 2026.

As of December 31, 2024, we have granted options to purchase 27,100,000 ordinary shares under the 2011 Plan at exercise prices between $0.01 and $0.17 per ordinary share.

For further details regarding share options granted to our directors and service providers, see note 14 to the consolidated financial statements for the year ended December 31, 2024.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major shareholders

As of April 28, 2025, there were 9,897,235 ADSs outstanding, held by approximately 15 DTC participants and a registered shareholder, whose holdings represented approximately 78.90% of the total outstanding ordinary shares.

The following table sets forth the number of our ordinary shares owned by any person known to us to be the beneficial owner of 5% or more of our ordinary shares as of the date hereof. The information in this table is based on 881,385,176 outstanding ordinary shares as of such date. The number of ordinary shares beneficially owned by a person includes ordinary shares subject to options held by that person that were currently exercisable. None of the holders of the ordinary shares listed in this table have voting rights different from other holders of the ordinary shares.

B. Related Party Transactions

The following is a description of the transactions with related parties to which we, or our subsidiaries, are party, and which were in effect within the past three fiscal years. The descriptions provided below are summaries of the terms of such agreements, do not purport to be complete and are qualified in their entirety by the complete agreements.

We believe that we have executed all of our transactions with related parties on terms no less favorable to us than those we could have obtained from unaffiliated third parties. We are required by Israeli law to ensure that all future transactions between us and our officers, directors and principal shareholders and their affiliates are approved by a majority of our board of directors, including a majority of the independent and disinterested members of our board of directors, and that they are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.

Employment and Consulting Agreements

We have or have had employment, consulting or related agreements with our senior management. See Item 6 - Compensation-Employment Agreements”.

Indemnification Agreements

Israeli law permits a company to insure an office holder in respect of liabilities incurred by him or her as a result of an act or omission in the capacity of an office holder for:

Moreover, a company can indemnify an office holder for any of the following obligations or expenses incurred in connection with the acts or omissions of such person in his or her capacity as an office holder:

Our Articles of Association allow for insurance, exculpation and indemnification of office holders to the fullest extent permitted by law. We have entered into indemnification, insurance and exculpation agreements with our directors and executive officers, following shareholder approval of these agreements. We have directors’ and officers’ liability insurance covering our officers and directors for a claim imposed upon them as a result of an action carried out while serving as an officer or director, for (a) the breach of duty of care towards us or towards another person, (b) the breach of fiduciary duty towards us, provided that the officer or director acted in good faith and had reasonable grounds to assume that the action would not harm our interests, and (c) a monetary liability imposed upon him in favor of a third party.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

Our audited consolidated financial statements appear in this annual report on Form 20-F. See “Item 18. Financial Statements.”

Significant Changes

None.

ITEM 9. THE OFFER AND LISTING

Markets and Share Price History

Our ordinary shares have been trading on the Tel Aviv Stock Exchange, or TASE, since July 2005. Our ordinary shares currently trade on the TASE under the symbol “XTLB”.

On June 1, 2012, the Company filed an application for relisting its ADSs on The Nasdaq Capital Market. On July 10, 2013, the Company received a notice from Nasdaq stating that the admission committee had approved the Company’s application to relist its ADSs for trading on The Nasdaq Capital Market. Accordingly, on July 15, 2013, the Company’s ADSs began trading on The Nasdaq Capital Market under the ticker symbol “XTLB”.

ITEM 10. ADDITIONAL INFORMATION

Memorandum and Articles of Association

Objects and Purposes of the Company

Pursuant to Part B, Section 3 of our Articles of Association, we may undertake any lawful activity.

Powers and Obligations of the Directors

Pursuant to the Israeli Companies Law and our Articles of Association, a director is not permitted to vote on a proposal, arrangement or contract in which he or she has a personal interest. Also, the directors may not vote on compensation to themselves or any members of their body, as that term is defined under Israeli law, without the approval of our audit committee and our shareholders at a general meeting. The power of our directors to enter into borrowing arrangements on our behalf is limited to the same extent as any other transaction by us.

The Israeli Companies Law codifies the fiduciary duties that office holders, including directors and executive officers, owe to a company. An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care generally requires an office holder to act with the same level of care as a reasonable office holder in the same position would employ under the same circumstances. The duty of loyalty includes avoiding any conflict of interest between the office holder’s position in the company and such person’s personal affairs, avoiding any competition with the company, avoiding exploiting any corporate opportunity of the company in order to receive personal advantage for such person or others, and revealing to the company any information or documents relating to the company’s affairs which the office holder has received due to his or her position as an office holder.

Indemnification of Directors and Officers; Limitations on Liability

Israeli law permits a company to insure an office holder in respect of liabilities incurred by him or her as a result of an act or omission in the capacity of an office holder for:

Moreover, a company can indemnify an office holder for any of the following obligations or expenses incurred in connection with the acts or omissions of such person in his or her capacity as an office holder:

Our Articles of Association allow for insurance, exculpation and indemnification of office holders to the fullest extent permitted by law. We have entered into indemnification, insurance and exculpation agreements with our directors and executive officers, following shareholder approval of these agreements. We have directors’ and officers’ liability insurance covering our officers and directors for a claim imposed upon them as a result of an action carried out while serving as an officer or director, for (a) the breach of duty of care towards us or towards another person, (b) the breach of fiduciary duty towards us, provided that the officer or director acted in good faith and had reasonable grounds to assume that the action would not harm our interests, and (c) a monetary liability imposed upon him in favor of a third party.

Approval of Related Party Transactions under the Israeli Companies Law

Fiduciary duties of the office holders

The Israeli Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company. The duty of care of an office holder is based on the duty of care set forth in connection with the tort of negligence under the Israeli Torts Ordinance (New Version) 5728-1968. This duty of care requires an office holder to act with the degree of proficiency with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of care includes a duty to use reasonable means, in light of the circumstances, to obtain:

The duty of loyalty requires an office holder to act in good faith and for the benefit of the company, and includes the duty to:

We may approve an act performed in breach of the duty of loyalty of an office holder provided that the office holder acted in good faith, the act or its approval does not harm the company, and the office holder discloses his or her personal interest, as described below.

Disclosure of personal interests of an office holder and approval of acts and transactions

The Israeli Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may have and all related material information or documents relating to any existing or proposed transaction by the company. An interested office holder’s disclosure must be made promptly and in any event no later than the first meeting of the board of directors at which the transaction is considered. An office holder is not obligated to disclose such information if the personal interest of the office holder derives solely from the personal interest of his or her relative in a transaction that is not considered as an extraordinary transaction.

The term personal interest is defined under the Israeli Companies Law to include the personal interest of a person in an action or in the business of a company, including the personal interest of such person’s relative or the interest of any corporation in which the person is an interested party, but excluding a personal interest stemming solely from the fact of holding shares in the company. A personal interest furthermore includes the personal interest of a person for whom the office holder holds a voting proxy or the interest of the office holder with respect to his or her vote on behalf of the shareholder for whom he or she holds a proxy even if such shareholder itself has no personal interest in the approval of the matter. An office holder is not, however, obligated to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction.

Under the Israeli Companies Law, an extraordinary transaction which requires approval is defined any of the following:

Under the Israeli Companies Law, once an office holder has complied with the disclosure requirement described above, a company may approve a transaction between the company and the office holder or a third party in which the office holder has a personal interest, or approve an action by the office holder that would otherwise be deemed a breach of duty of loyalty. However, a company may not approve a transaction or action that is adverse to the company’s interest or that is not performed by the office holder in good faith.

Under the Companies Law, unless the articles of association of a company provide otherwise, a transaction with an office holder, a transaction with a third party in which the office holder has a personal interest, and an action of an office holder that would otherwise be deemed a breach of duty of loyalty requires approval by the board of directors. Our Articles of Association do not provide otherwise. If the transaction or action considered is (i) an extraordinary transaction, (ii) an action of an office holder that would otherwise be deemed a breach of duty of loyalty and may have a material impact on a company’s profitability, assets or liabilities, (iii) an undertaking to indemnify or insure an office holder who is not a director, or (iv) for matters considered an undertaking concerning the terms of compensation of an office holder who is not a director, including, an undertaking to indemnify or insure such office holder, then approval by the audit committee is required prior to approval by the board of directors. Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the audit committee, board of directors and shareholders, in that order.

A director who has a personal interest in a matter that is considered at a meeting of the board of directors or the audit committee may generally not be present at the meeting or vote on the matter, unless a majority of the directors or members of the audit committee have a personal interest in the matter or the chairman of the audit committee or board of directors, as applicable, determines that he or she should be present to present the transaction that is subject to approval. If a majority of the directors have a personal interest in the matter, such matter would also require approval of the shareholders of the company.

Disclosure of personal interests of a controlling shareholder and approval of transactions

Under the Israeli Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company. Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services whether directly or indirectly by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, and transactions concerning the terms of engagement of a controlling shareholder or a controlling shareholder’s relative, whether as an office holder or an employee, require the approval of the audit committee, the board of directors and a majority of the shares voted by the shareholders of the company participating and voting on the matter in a shareholders’ meeting. In addition, such shareholder approval must fulfill one of the following requirements:

To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval is required once every three years, unless the audit committee determines that the duration of the transaction is reasonable given the circumstances related thereto.

Duties of shareholders

Under the Israeli Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an acceptable manner in exercising its rights and performing its obligations to the company and other shareholders, including, among other things, voting at general meetings of shareholders on the following matters:

A shareholder also has a general duty to refrain from discriminating against other shareholders.

The remedies generally available upon a breach of contract will also apply to a breach of the above mentioned duties, and in the event of discrimination against other shareholders, additional remedies are available to the injured shareholder.

In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or has another power with respect to a company, is under a duty to act with fairness towards the company. The Israeli Companies Law does not describe the substance of this duty 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 to act with fairness, taking the shareholder’s position in the company into account.

ORDINARY SHARES

Rights Attached to Ordinary Shares

Through March 18, 2009, our authorized share capital was NIS 10,000,000 consisting of 500,000,000 ordinary shares, par value NIS 0.02 per share. On March 18, 2009, pursuant to a shareholder’s meeting, the share capital of our company was consolidated and re-divided so that each five (5) shares of NIS 0.02 nominal value was consolidated into one (1) share of NIS 0.1 nominal value so that following such consolidation and re-division, our authorized share capital consisted of 100,000,000 ordinary shares, par value NIS 0.10 per share. In addition, the authorized share capital of our company was increased from NIS 10,000,000 to NIS 70,000,000 divided into 700,000,000 ordinary shares, NIS 0.10 nominal value. The share consolidation was effected on June 22, 2009. Effective August 3, 2017, the authorized share capital of the company increased from NIS 70,000,000 divided into 700,000,000 ordinary shares to NIS 145,000,000 divided into 1,450,000,000 ordinary shares.

Holders of ordinary shares have one vote per share, and are entitled to participate equally in the payment of dividends and share distributions and, in the event of our liquidation, in the distribution of assets after satisfaction of liabilities to creditors. No preferred shares are currently authorized. All outstanding ordinary shares are validly issued and fully paid.

Transfer of Shares

Fully paid ordinary shares are issued in registered form and may be freely transferred under our Articles of Association unless the transfer is restricted or prohibited by another instrument or applicable securities laws.

Dividend and Liquidation Rights

We may declare a dividend to be paid to the holders of ordinary shares according to their rights and interests in our profits. In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of ordinary shares in proportion to the nominal value of their holdings.

This right may be affected by the grant of preferential dividend or distribution rights, to the holders of a class of shares with preferential rights that may be authorized in the future. Under the Israeli Companies Law, the declaration of a dividend does not require the approval of the shareholders of the company, unless the company’s articles of association require otherwise. Our Articles provide that the Board of Directors may declare and distribute dividends without the approval of the shareholders.

Annual and Extraordinary General Meetings

We must hold our annual general meeting of shareholders each year and no later than 15 months from the last annual meeting, at a time and place determined by the Board of Directors, upon at least 21 days’ prior notice to our shareholders, to which we need to add an additional three days for notices sent outside of Israel. A special meeting may be convened by request of two directors, 25% of the directors then in office, one or more shareholders holding at least 5% of our issued share capital and at least 1% of our issued voting rights, or one or more shareholders holding at least 5% of our issued voting rights. Notice of a general meeting must set forth the date, time and place of the meeting. Such notice must be given at least 21 days but not more than 45 days prior to the general meeting. The quorum required for a meeting of shareholders consists of at least two shareholders present in person or by proxy who hold or represent between them at least one-third of the voting rights in the company. A meeting adjourned for lack of a quorum generally is adjourned to the same day in the following week at the same time and place (with no need for any notice to the shareholders) or until such other later time if such time is specified in the original notice convening the general meeting, or if we serve notice to the shareholders no less than seven days before the date fixed for the adjourned meeting. If at an adjourned meeting there is no quorum present half an hour after the time set for the meeting, any number participating in the meeting shall represent a quorum and shall be entitled to discuss the matters set down on the agenda for the original meeting. All shareholders who are registered in our registrar on the record date, or who will provide us with proof of ownership on that date as applicable to the relevant registered shareholder, are entitled to participate in a general meeting and may vote as described in “Voting Rights” and “Voting by Proxy and in Other Manners,” below.

Voting Rights

Our ordinary shares do not have cumulative voting rights in the election of directors. As a result, the holders of ordinary shares that represent more than 50% of the voting power represented at a shareholders meeting in which a quorum is present have the power to elect all of our directors, except the external directors whose election requires a special majority.

Holders of ordinary shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders. Shareholders may vote in person or by proxy. These voting rights may be affected by the grant of any special voting rights to the holders of a class of shares with preferential rights that may be authorized in the future.

Under the Israeli Companies Law, unless otherwise provided in the Articles of Association or by applicable law, all resolutions of the shareholders require a simple majority. Our Articles of Association provide that all decisions may be made by a simple majority. See “Approval of Related Party Transactions” above for certain duties of shareholders towards the company.

Voting by Proxy and in Other Manners

Our Articles of Association enable a shareholder to appoint a proxy, who need not be a shareholder, to vote at any shareholders meeting. We require that the appointment of a proxy be in writing signed by the person making the appointment or by an attorney authorized for this purpose, and if the person making the appointment is a corporation, by a person or persons authorized to bind the corporation. In the document appointing a proxy, each shareholder may specify how the proxy should vote on any matter presented at a shareholders meeting. The document appointing the proxy shall be deposited in our offices or at such other address as shall be specified in the notice of the meeting not less than 48 hours before the time of the meeting at which the person specified in the appointment is due to vote.

The Israeli Companies Law and our Articles of Association do not permit resolutions of the shareholders to be adopted by way of written consent, for as long as our ordinary shares are publicly traded.

Limitations on the Rights to Own Securities

The ownership or voting of ordinary shares by non-residents of Israel is not restricted in any way by our Articles of Association or the laws of the State of Israel, except that nationals of countries which are, or have been, in a state of war with Israel may not be recognized as owners of ordinary shares.

Anti-Takeover Provisions under Israeli Law

The Israeli Companies Law permits merger transactions with the approval of each party’s board of directors and shareholders. In accordance with the Israeli Companies Law, a merger may be approved at a shareholders meeting by a majority of the voting power represented at the meeting, in person or by proxy, and voting on that resolution. In determining whether the required majority has approved the merger, shares held by the other party to the merger, any person holding at least 25% of the outstanding voting shares or means of appointing the board of directors of the other party to the merger, or the relatives or companies controlled by these persons, are excluded from the vote.

Under the Israeli Companies Law, a merging company must inform its creditors of the proposed merger. Any creditor of a party to the merger may seek a court order blocking the merger, if there is a reasonable concern that the surviving company will not be able to satisfy all of the obligations of the parties to the merger. Moreover, a merger may not be completed until at least 30 days have passed from the time the merger was approved in a general meeting of each of the merging companies, and at least 50 days have passed from the time that a merger proposal was filed with the Israeli Registrar of Companies.

Israeli corporate law provides that an acquisition of shares in a public company must be made by means of a tender offer if, as a result of such acquisition, the purchaser would become a 25% or greater shareholder of the company. This rule does not apply if there is already another shareholder with 25% or greater shares in the company. Similarly, Israeli corporate law provides that an acquisition of shares in a public company must be made by means of a tender offer if, as a result of the acquisition, the purchaser’s shareholdings would entitle the purchaser to over 45% of the shares in the company, unless there is a shareholder with 45% or more of the shares in the company. These requirements do not apply if, in general, the acquisition (1) was made in a private placement that received the approval of the company’s shareholders; (2) was from a 25% or greater shareholder of the company which resulted in the purchaser becoming a 25% or greater shareholder of the company, or (3) was from a 45% or greater shareholder of the company which resulted in the acquirer becoming a 45% or greater shareholder of the company. These rules do not apply if the acquisition is made by way of a merger. Regulations promulgated under the Israeli Companies Law provide that these tender offer requirements do not apply to companies whose shares are listed for trading external of Israel if, according to the law in the country in which the shares are traded, including the rules and regulations of the stock exchange or which the shares are traded, either:

The Israeli Companies Law provides specific rules and procedures for the acquisition of shares held by minority shareholders, if the majority shareholder holds more than 90% of the outstanding shares. If, as a result of an acquisition of shares, the purchaser will hold more than 90% of a company’s outstanding shares, the acquisition must be made by means of a tender offer for all of the outstanding shares. If less than 5% of the outstanding shares are not tendered in the tender offer, all the shares that the purchaser offered to purchase will be transferred to it. The Israeli Companies Law provides for appraisal rights if any shareholder files a request in court within three months following the consummation of a full tender offer. If more than 5% of the outstanding shares are not tendered in the tender offer, then the purchaser may not acquire shares in the tender offer that will cause his shareholding to exceed 90% of the outstanding shares of the company. Israeli tax law treats specified acquisitions, including a stock-for-stock swap between an Israeli company and a foreign company, less favorably than does U.S. tax law. These laws may have the effect of delaying or deterring a change in control of us, thereby limiting the opportunity for shareholders to receive a premium for their shares and possibly affecting the price that some investors are willing to pay for our securities.

Rights of Shareholders

Under the Israeli Companies Law, our shareholders have the right to inspect certain documents and registers including the minutes of general meetings, the register of shareholders and the register of substantial shareholders, any document held by us that relates to an act or transaction requiring the consent of the general meeting as stated above under “Approval of Related Party Transactions” our Articles of Association and our financial statements, and any other document which we are required to file under the Israeli Companies Law or under any law with the Registrar of Companies or the Israeli Securities Authority, and is available for public inspection at the Registrar of Companies or the Securities Authority, as the case may be.

If the document required for inspection by one of our shareholders relates to an act or transaction requiring the consent of the general meeting as stated above, we may refuse the request of the shareholder if in our opinion the request was not made in good faith, the documents requested contain a commercial secret or a patent, or disclosure of the documents could prejudice our good in some other way.

The Israeli Companies Law provides that with the approval of the court any of our shareholders or directors may file a derivative action on our behalf if the court finds the action is a priori, to our benefit, and the person demanding the action is acting in good faith. The demand to take action can be filed with the court only after it is serviced to us, and we decline or omit to act in accordance to this demand.

Enforceability of Civil Liabilities

We are incorporated in Israel and most of our directors and officers named in this report reside outside the U.S. Service of process upon them may be difficult to effect within the U.S. Furthermore, because substantially all of our assets, and those of our non-U.S. directors and officers and the Israeli experts named herein, are located outside the U.S., any judgment obtained in the U.S. against us or any of these persons may not be collectible within the U.S.

We have been informed by our legal counsel in Israel, Doron Tikotsky Kantor Gutman & Amit Gross, that there is doubt as to the enforceability of civil liabilities under the Securities Act or the Exchange Act, pursuant to original actions instituted in Israel. However, subject to particular time limitations, executory judgments of a U.S. court for monetary damages in civil matters may be enforced by an Israeli court, provided that:

Foreign judgments enforced by Israeli courts generally will be payable in Israeli currency. The usual practice in an action before an Israeli court to recover an amount in a non-Israeli currency is for the Israeli court to render judgment for the equivalent amount in Israeli currency at the rate of exchange in force on the date of the judgment. Under existing Israeli law, a foreign judgment payable in foreign currency may be paid in Israeli currency at the rate of exchange for the foreign currency published on the day before date of payment. Current Israeli exchange control regulations also permit a judgment debtor to make payment in foreign currency. Pending collection, the amount of the judgment of an Israeli court stated in Israeli currency ordinarily may be linked to Israel’s consumer price index plus interest at the annual statutory rate set by Israeli regulations prevailing at that time. Judgment creditors must bear the risk of unfavorable exchange rates.

AMERICAN DEPOSITORY SHARES

We have issued and deposited ordinary shares with Bank Hapoalim B.M., The Bank of New York’s custodian in Tel Aviv, Israel. The Bank of New York in turn issued American Depositary Shares, or ADSs, representing American Depositary Shares, or ADSs. One ADS represents an ownership interest in one hundred of our ordinary shares. Each ADS also represents securities, cash or other property deposited with The Bank of New York but not distributed to ADS holders. The Bank of New York’s Corporate Trust Office is located at 101 Barclay Street, New York, NY 10286, U.S.A. Their principal executive office is located at One Wall Street, New York, NY 10286, U.S.A.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADS holder. This description assumes you hold your ADSs directly. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Because The Bank of New York will actually hold the ordinary shares, you must rely on it to exercise the rights of a shareholder. The obligations of The Bank of New York are set out in a deposit agreement among us, The Bank of New York and you, as an ADS holder. The agreement and the ADSs are generally governed by New York law.

The following is a summary of the agreement. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire agreement and the ADS. Directions on how to obtain copies of these are provided in the section entitled “Where You Can Find More Information.”

Share Dividends and Other Distributions

The Bank of New York has agreed to pay to you the cash dividends or other distributions it or the custodian receives on shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of shares your ADSs represent.

Cash. The Bank of New York will convert any cash dividend or other cash distribution we pay on the shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the U.S. If that is not possible or if any approval from any government or agency thereof is needed and cannot be obtained, the agreement allows The Bank of New York to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for the interest.

Before making a distribution, any withholding taxes that must be paid under U.S. law will be deducted. The Bank of New York will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when The Bank of New York cannot convert the foreign currency, you may lose some or all of the value of the distribution.

Shares. The Bank of New York may distribute new ADSs representing any shares we may distribute as a dividend or free distribution, if we furnish it promptly with satisfactory evidence that it is legal to do so. The Bank of New York will only distribute whole ADSs. It will sell shares which would require it to use a fractional ADS and distribute the net proceeds in the same way as it does with cash. If The Bank of New York does not distribute additional ADSs, each ADS will also represent the new shares.

Rights to receive additional shares. If we offer holders of our ordinary shares any rights to subscribe for additional shares or any other rights, The Bank of New York may make these rights available to you. We must first instruct The Bank of New York to do so and furnish it with satisfactory evidence that it is legal to do so. If we do not furnish this evidence and/or give these instructions, and The Bank of New York decides it is practical to sell the rights, The Bank of New York will sell the rights and distribute the proceeds, in the same way as it does with cash. The Bank of New York may allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them. If The Bank of New York makes rights available to you, upon instruction from you, it will exercise the rights and purchase the shares on your behalf. The Bank of New York will then deposit the shares and issue ADSs to you. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay.

U.S. securities laws may restrict the sale, deposit, cancellation and transfer of the ADSs issued after exercise of rights. For example, you may not be able to trade the ADSs freely in the U.S. In this case, The Bank of New York may issue the ADSs under a separate restricted deposit agreement, which will contain the same provisions as the agreement, except for the changes needed to put the restrictions in place.

Other Distributions. The Bank of New York will send to you anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, The Bank of New York has a choice. It may decide to sell what we distributed and distribute the net proceeds in the same way as it does with cash or it may decide to hold what we distributed, in which case the ADSs will also represent the newly distributed property.

The Bank of New York is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distribution we make on our shares or any value for them if it is illegal or impractical for us to make them available to you.

Deposit, Withdrawal and Cancellation

The Bank of New York will issue ADSs if you or your broker deposits shares or evidence of rights to receive shares with the custodian upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees. The Bank of New York will register the appropriate number of ADSs in the names you request and will deliver the ADSs at its office to the persons you request.

You may turn in your ADSs at The Bank of New York’s office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, The Bank of New York will deliver (1) the underlying shares to an account designated by you and (2) any other deposited securities underlying the ADS at the office of the custodian; or, at your request, risk and expense, The Bank of New York will deliver the deposited securities at its office.

Voting Rights

You may instruct The Bank of New York to vote the shares underlying your ADSs but only if we ask The Bank of New York to ask for your instructions. Otherwise, you will not be able to exercise your right to vote unless you withdraw the shares. However, you may not know about the meeting enough in advance to withdraw the shares.

If we ask for your instructions, The Bank of New York will notify you of the upcoming vote and arrange to deliver our voting materials to you. The materials will (1) describe the matters to be voted on and (2) explain how you, on a certain date, may instruct The Bank of New York to vote the shares or other deposited securities underlying your ADSs as you direct. For instructions to be valid, The Bank of New York must receive them on or before the date specified. The Bank of New York will try, as far as practical, subject to Israeli law and the provisions of our Articles of Association, to vote or to have its agents vote the shares or other deposited securities as you instruct. The Bank of New York will only vote or attempt to vote as you instruct. However, if The Bank of New York does not receive your voting instructions, it will deem you to have instructed it to give a discretionary proxy to vote the shares underlying your ADSs to a person designated by us provided that no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which we inform The Bank of New York that (x) we do not wish such proxy given, (y) substantial opposition exists, (z) such matter materially affects the rights of the holders of the shares underlying the ADSs.

We cannot assure you that you will receive the voting materials in time to ensure that you can instruct The Bank of New York to vote your shares. In addition, The Bank of New York and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there may be nothing you can do if your shares are not voted as you requested.

Rights of Non-Israeli Shareholders to Vote

The ADSs may be freely held and traded pursuant to the General Permit and the Currency Control Law. The ownership or voting of ADSs by non-residents of Israel is not restricted in any way by our Articles of Association or by the laws of the State of Israel.

Fees and Expenses

Payment of Taxes

You will be responsible for any taxes or other governmental charges payable on your ADSs or on the deposited securities underlying your ADSs. The Bank of New York may refuse to transfer your ADSs or allow you to withdraw the deposited securities underlying your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities underlying your ADSs to pay any taxes owed and you will remain liable for any deficiency. If it sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any proceeds, or send to you any property, remaining after it has paid the taxes.

Reclassifications, Recapitalizations and Mergers

Amendment and Termination

We may agree with The Bank of New York to amend the agreement and the ADSs without your consent for any reason. If the amendment adds or increases fees or charges, except for taxes and other governmental charges or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses, or prejudices an important right of ADS holders, it will only become effective thirty days after The Bank of New York notifies you of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADS, to agree to the amendment and to be bound by the ADSs and the agreement is amended.

The Bank of New York will terminate the agreement if we ask it to do so. The Bank of New York may also terminate the agreement if The Bank of New York has told us that it would like to resign and we have not appointed a new depositary bank within ninety days. In both cases, The Bank of New York must notify you at least ninety days before termination.

After termination, The Bank of New York and its agents will be required to do only the following under the agreement: (1) advise you that the agreement is terminated, and (2) collect distributions on the deposited securities and deliver shares and other deposited securities upon cancellation of ADSs. After termination, The Bank of New York will, if practical, sell any remaining deposited securities by public or private sale. After that, The Bank of New York will hold the proceeds of the sale, as well as any other cash it is holding under the agreement for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and will have no liability for interest. The Bank of New York’s only obligations will be to account for the proceeds of the sale and other cash. After termination our only obligations will be with respect to indemnification and to pay certain amounts to The Bank of New York.

Limitations on Obligations and Liability to ADS Holders

The agreement expressly limits our obligations and the obligations of The Bank of New York, and it limits our liability and the liability of The Bank of New York. We and The Bank of New York:

In the agreement, we and The Bank of New York agree to indemnify each other under certain circumstances.

Requirements for Depositary Actions

Before The Bank of New York will issue or register transfer of an ADS, make a distribution on an ADS, or make a withdrawal of shares, The Bank of New York may require payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the: