Xylo Technologies Ltd.(US:XYLO)2024-04-22 20:02Financial Performance - Total revenue for the year ended December 31, 2023, was $91,724, a slight decrease from $91,858 in 2022, with significant contributions from Gix Internet and Jeffs' Brands [269]. - Revenue from Jeffs' Brands increased to $10,008 in 2023 from $5,861 in 2022, reflecting a growth of approximately 70% [269]. - Revenue from Gix Internet was $79,613 in 2023, down from $83,532 in 2022, indicating a decrease of about 4% [269]. - Revenues for the year ended December 31, 2023, were $91,724 thousand, a decrease of $134 thousand or 0.1% compared to $91,858 thousand in 2022 [306]. - Gross profit for the year ended December 31, 2023, was $11,841 thousand, representing a decrease of $2,611 thousand compared to $14,452 thousand in 2022 [312]. - Operating loss for the year ended December 31, 2023, was $23,321 thousand, an increase of $9,537 thousand or 69.2% compared to $13,784 thousand in 2022 [321]. - Net loss for the year ended December 31, 2023, was $21,732 thousand, an increase of $11,524 thousand or 112.9% compared to $10,208 thousand in 2022 [326]. - For the year ended December 31, 2023, the company incurred a total comprehensive loss of approximately $21.8 million and a negative cash flow from operating activities of approximately $6.2 million [332]. - As of December 31, 2023, the company had an accumulated deficit of approximately $101.6 million [332]. Expenses - Research and development expenses for the year ended December 31, 2023, were $5,888 thousand, an increase of $667 thousand or 12.8% compared to $5,221 thousand in 2022 [314]. - Sales and marketing expenses for the year ended December 31, 2023, were $4,660 thousand, an increase of $288 thousand or 6.6% compared to $4,372 thousand in 2022 [315]. - Cost of revenues for the year ended December 31, 2023, was $79,883 thousand, an increase of $2,477 thousand or 3.2% compared to $77,406 thousand in 2022 [311]. - Equity losses for the year ended December 31, 2023, amounted to $4,107 thousand, an increase of $1,448 thousand or 54.5% compared to $2,659 thousand in 2022 [318]. Capital Expenditures - Capital expenditures for the years ended December 31, 2023, 2022, and 2021 were approximately $51,000, $74,000, and $141,000 respectively, primarily for network infrastructure and technology [241]. Share Capital and Investments - The company held 67% of Fuel Doctor's outstanding share capital as of December 31, 2023, with an option to increase holdings to 71% based on milestones [262]. - As of December 31, 2023, the company held 46.21% of Eventer's outstanding share capital, which focuses on online event management and ticketing [250]. - The company held 34.11% of Jeffs' Brands' outstanding share capital, which operates primarily on the Amazon platform [245]. - The company held 38.76% of Polyrizon's outstanding share capital, which specializes in protective biological gels [257]. - As of December 31, 2023, the company held 45.75% of Gix Internet's outstanding share capital, having increased its holdings through multiple investments [303]. Technology and Innovation - The company is pursuing opportunities to sell or license its MUSE technology, aiming for commercialization and organic growth [267]. - The company has terminated its MUSE technology distribution agreements to focus on securing licensing agreements, which may generate significant income in the short term [277]. - The company owns 13 U.S. patents and has two pending patent applications, along with 9 patents granted in other countries, including European patents [278][279]. - The company has engaged a contractor to identify and recommend business opportunities related to MUSE products and technology [277]. Market and Competitive Landscape - The competitive landscape includes major players such as Thrasio Holdings, Inc., Aterian, Inc., and Amazon in the consumer goods and e-commerce market [284][285]. - The healthcare industry is subject to extensive regulatory scrutiny, which may impact the company's operations and compliance efforts [288][290]. - Gix Internet's digital advertising industry shows a seasonal trend with higher activity in Q4 and lower activity in Q1, influenced by changes in large advertising budgets [275]. Compensation and Governance - Total compensation paid to the six highest compensated directors and officers for the year ended December 31, 2023, was approximately $1.3 million [367]. - Liron Carmel, the Chief Executive Officer, received a total compensation of $451,000, including a salary of $169,000, a bonus of $124,000, and equity-based compensation of $158,000 [364]. - Eliyahu Yoresh, the Chairman of the Board, received total compensation of $404,000, comprising a salary of $127,000, a bonus of $119,000, and equity-based compensation of $158,000 [364]. - The company reduced the compensation of Mr. Yoresh and Mr. Carmel by 20% effective June 2023 through December 2023 due to market conditions [373]. - The company has adopted a clawback policy as of September 28, 2023, in compliance with the SEC's proposed clawback listing standards [380]. - The company has entered into written agreements with executive officers that include provisions regarding non-competition and confidentiality [374]. - The company has adopted a new compensation policy for directors and officers, approved by shareholders on August 30, 2021, which must be reviewed every three years [405]. - The compensation policy aims to align the interests of directors and executive officers with long-term performance and includes measures to mitigate excessive risk-taking [413]. Audit and Compliance - The audit committee is comprised of three independent directors, all of whom meet the financial literacy requirements set by the SEC and Nasdaq [396]. - The audit committee is responsible for overseeing the accounting and financial reporting processes, including the effectiveness of internal controls [398]. - The company has opted out of the Companies Law requirements to appoint external directors, as long as it meets certain conditions, including not having a controlling shareholder [390]. - The compensation committee is tasked with recommending compensation policies and overseeing their implementation, ensuring compliance with the Companies Law [402]. - The company must maintain a minimum of one board member with financial and accounting expertise, as determined by the board of directors [388]. - The audit committee has the authority to demand any documents or information necessary to fulfill its responsibilities [399]. - The compensation committee is authorized to retain compensation consultants and advisors as deemed necessary [404]. - The internal auditor, Daniel Spira, is responsible for ensuring compliance with applicable laws and business procedures [423]. - Extraordinary transactions involving office holders require approval from the audit committee and the board of directors [435]. - Transactions with controlling shareholders require multiple levels of approval, including from the audit committee, board of directors, and shareholders [436].