XTL Biopharmaceuticals Faces Internal Power Struggle Over Social Proxy Acquisition

XTL Biopharmaceuticals Ltd. (NASDAQ: XTLB) is facing a dramatic internal struggle that could spell the collapse of Social Proxy, the AI data company it recently acquired. The acquisition, initially seen as a bold move to diversify XTL's portfolio, has led to a court battle, a special committee, and unsettling silence from the company's leadership. Investors are left wondering what's next for XTL and Social Proxy.

The company's pivot came in August 2024 when it acquired Social Proxy, an AI-based proxy technology and data extraction platform. In exchange for 5.29 million American Depositary Shares representing 44.6% of XTL's outstanding share capital and $430,000 in cash, XTL took control of Social Proxy. The plan appeared straightforward: leverage Social Proxy's scalable AI technology to diversify into high-growth sectors. However, almost immediately after the acquisition, internal conflict began to surface.

The first public sign of trouble came on October 9, 2024, when Tal Klinger and fellow XTL board member Yair Redl filed an emergency motion with the Tel Aviv Economic Court. They requested an immediate $200,000 cash injection into Social Proxy to prevent what they described as irreparable damage to the company. Klinger and Redl feared that Social Proxy, the company Klinger had built, was in danger without this urgent support. The court rejected their motion, ruling that it was up to the special committee formed after the acquisition to address the financial situation.

Alexander Rabinovich, a director and shareholder of XTL and seen by many as a key controlling figure, is known for his role in the corporate world. Most notably, he was involved in a high-profile takeover of InterCure (NASDAQ: INCR), a cannabis-focused company. Rabinovich's track record of successfully navigating corporate control has made him a figure of interest in XTL's current situation. Israeli media has often referred to the merger as a move orchestrated by Rabinovich himself, given his tendency to get personally involved in the companies he owns.

One of the most unsettling aspects of the ongoing conflict is XTL's lack of communication. Since the acquisition, XTL has remained silent, issuing no press releases to inform investors of the internal turmoil or the ongoing legal motion. The only public acknowledgment of any issues came on October 15, 2024, when XTL filed with the SEC, disclosing disputes over the financial data provided by Social Proxy during the acquisition. This absence of transparency has fueled speculation and raised concerns about XTL's leadership and intentions. Readers are encouraged to review XTL's full filing on the matter for complete details.

The Tel Aviv Economic Court's October 9 ruling dealt a blow to Klinger and Redl's attempt to secure immediate funding for Social Proxy. The court deferred to the special committee to handle the situation, reinforcing the idea that internal governance should decide Social Proxy's fate. This decision puts Social Proxy's future in the hands of a few powerful figures at XTL, with Rabinovich playing a central role in that decision-making process. With the fate of the company in the balance, the question remains whether the committee will act in time to save Social Proxy or if this marks the beginning of the end for the AI company.