1
Xhail AB (publ) under name change from IFOX Investments AB
(publ)
Investment Memorandum for
Rights Issue
May 2020
2
SUMMARY OF TERMS
Pre-emption rights: Shareholders who are registered as a shareholder in the
Company on the Record Date have preferential rights to,
for each one (1) share held, subscribe for three (3) new
shares. Subscription rights: Shareholders in the Company receive three (3)
subscription rights for each one (1) share held. One (1) subscription right is required to subscribe for one (1) new share.
Subscription price: SEK 0.12 per share. No commission is paid.
Record Date: 20 May 2020
Subscription by payment with pre-emption
rights: 25 May–8 June 2020
Trading in subscription rights: No trading in subscription rights is arranged
Payment date for subscription without
pre-emption rights: According to instructions on the contract note.
SHARE INFORMATION Ticker symbol: -
ISIN-code for the share: SE0001934480
ISIN-code for the subscription rights: SE0014402632
ISIN-code for the BTA: SE0014402640
DEFINITIONS IFOX Investments AB (publ), with Swedish corporate ID no 556112-6797 resolved to change its name from
IFOX Investments AB (publ) to Xhail AB (publ) at an extraordinary general meeting on May 13, 2020 (the
“EGM”). “Xhail”, "IFOX", "the Group" or "the Company" hereinafter refer to IFOX Investments AB (publ),
under name change to Xhail AB (publ), including its subsidiaries Score Music Interactive Ltd, Score Music
Productions Ltd and Xhail Inc (after closing of the Company´s acquisition of all shares in Score Music
Interactive Ltd).
"Euroclear" hereinafter refers to Euroclear Sweden AB, Swedish corporate ID no. 556112-8074.
The "Offer" or the "Rights Issue" refers to the offer for subscription of a maximum of 209 254 632 shares in
the Company as resolved by the EGM.
The "Investment memorandum" refers to the present document, which has been drawn up for the Offer.
“SMI” refers to Score Music Interactive Ltd.
FORWARD-LOOKING STATEMENTS The Investment memorandum contains forward-looking statements that reflect the Board of Directors of
Xhail’s current view of future events and financial developments. Such forward-looking statements can
primarily be found in the following sections: "Summary", "Risk factors", "Business Concept, Vision, Objectives
and Strategies" and "Business Description". The words "intend", "expect", "shall", "could", "believe",
"estimate", "anticipate", "plan" and similar expressions are indicative of forward-looking statements.
Even if the Company believes that the expectations reflected in the forward-looking statements are
reasonable, no warranty can be made as to whether these expectations will come true. Forward-looking
statements express nothing more than the Company's estimates and assumptions at the time of the
Investment memorandum. Readers are encouraged to look at overall presentation of information in the
Investment memorandum and simultaneously have in mind that future results, developments or successes
may vary significantly from the Company's expectations. The Company does not promise to publicly update
or revise forward-looking statements as a result of new information, future events or other things beyond
the extent required by law.
3
MARKET INFORMATION The Investment memorandum contains information about Xhail's industry, including historic market data
and industry forecasts. The Company has obtained this information from several sources, including trade
publications. The trade publications specify that the historic information has been obtained from various
sources deemed reputable, but no warranty is given that the information is correct or complete. The
Company cannot warrant that the information is correct. Industry forecasts are by nature subject to
significant uncertainty and no warranty can be made that such forecasts will come true.
Information from third parties has been reproduced exactly and, as far as the Company can know and
ensure by comparison with other information published by the third party in question, no information has
been omitted in a way that could make the reproduced information false or misleading. In addition to
information from third parties, Xhail also makes internal estimates and assumptions concerning the
Company's market. Said estimates and assumptions have not been verified by independent experts and the
Company cannot warrant that a third party or one of Xhail's competitors that uses other data collection
methods, analyses or calculations of market data will get or generate the same results. In light of this
background, we call the reader's attention to the fact that the Investment memorandum, particularly with
regard to market statistics, is subject to uncertainty and that no warranty can be given for its accuracy.
The Investment memorandum has been drawn up by the Board of Directors of Xhail for the Offer. The Investment memorandum has not been drawn up
in accordance with Commission Regulation (EU) No 2017/1129 (the Investment memorandum Regulation) as the rights issue is made to an amount less
than € 2.5 million and therefore is excluded from registration obligations. The Investment memorandum has therefore not been approved and registered
with the Swedish Financial Supervisory Authority (Finansinspektionen). The offer to purchase shares in Xhail in accordance with the Investment
memorandum is not intended for the general public in any other country besides Sweden. The Offer is intended for the Company's shareholders and the
degree of disclosure of the Investment memorandum is reasonable in proportion to the type of issue involved. The Offer is also not intended for people
whose participation in the Offer requires additional investment memorandums, registration steps or other actions besides those stipulated by Swedish
law. The Investment memorandum and other documents related to the Offer may not be distributed in a country where such distribution or the Offer
requires actions as mentioned above or violates regulations in said country. An application to purchase shares in breach of the above may be deemed
invalid and disregarded. The shares that are subject to the Offer have not and will not be registered under the United States Securities Act of 1933 in its
current wording, or according to applicable law in the United States, Australia, Japan, Canada, New Zealand or South Africa and may not be offered or
transferred, directly or indirectly, to people resident in one of these countries or on behalf of such a person except in exceptional cases that do not require
registration under the Securities Act or corresponding laws. Disputes arising from the Offer, the content of the Investment memorandum or associated
legal circumstances shall be settled exclusively in Swedish court. Exclusively Swedish law is applicable for the Investment memorandum and the Offer
made by the Investment memorandum. The Investment memorandum is made available electronically on the websites of Xhail (www.xhail.se) and Eminova
(www.Eminova.com), as well as in printed form at the offices of Xhail and Eminova. Paper copies of the Investment memorandum may be ordered free of
charge from Xhail and Eminova upon request.
4
TABLE OF CONTENTS
HOW THE RIGHTS ISSUE WORKS ........................................................................................................................... 5
IMPORTANT DATES ................................................................................................................................................. 6
BACKGROUND AND MOTIVE ................................................................................................................................... 8
RISK FACTORS ......................................................................................................................................................... 9
TERMS AND INSTRUCTIONS ................................................................................................................................. 12
INTERVIEW WITH PETER SWARTLING, CEO .......................................................................................................... 16
INTERVIEW WITH FOUNDER MICK KIELY .............................................................................................................. 17
MARKET OVERVIEW .............................................................................................................................................. 18
DIGITAL MEDIA ...................................................................................................................................................... 18
MUSIC MARKET OVERVIEW .................................................................................................................................. 19
MARKET DYNAMICS .............................................................................................................................................. 20
INTERNATIONAL COPYRIGHT SYSTEM AND THE DIGITAL MARKETPLACE .......................................................... 20
DIGITAL REVENUE ................................................................................................................................................. 20
PHYSICAL REVENUE .............................................................................................................................................. 21
PERFORMANCE RIGHTS REVENUE ........................................................................................................................ 21
SYNCHRONISATION REVENUE .............................................................................................................................. 21
SUMMARY ............................................................................................................................................................. 21
BUSINESS CONCEPT, MISSION, VISION, OBJECTIVES AND STRATEGIES ............................................................ 22
THE COMPANY ...................................................................................................................................................... 24
HOW XHAIL WORKS .............................................................................................................................................. 24
THE PRODUCT ....................................................................................................................................................... 24
COMPETITION ........................................................................................................................................................ 25
ORGANISATION ..................................................................................................................................................... 26
SUMMARY OF FINANCIAL DEVELOPMENT ........................................................................................................... 27
WORKING CAPITAL ................................................................................................................................................ 33
OPERATIONAL TRENDS ......................................................................................................................................... 33
SHARES, SHARE CAPITAL AND OWNERSHIP STRUCTURE ................................................................................... 34
SHARES AND SHARE CAPITAL .............................................................................................................................. 34
CHANGES IN EQUITY ............................................................................................................................................. 35
OWNERSHIP STRUCTURE ..................................................................................................................................... 37
BOARD OF DIRECTORS, SENIOR EXECUTIVES AND AUDITORS ............................................................................ 39
LEGAL ISSUES AND SUPPLEMENTARY INFORMATION ........................................................................................ 42
ARTICLES OF ASSOCIATION .................................................................................................................................. 44
5
HOW THE RIGHTS ISSUE WORKS
1. You are granted subscription rights ("SR"). You get three (3) SR for each one (1) share held in the
Company on the Record Date.
2. You can exercise your SR to subscribe for new shares in the Company. One (1) SR is required to
subscribe for one (1) new share.
If you exercise all your SR to subscribe for new
shares, use the pre-printed payment slip you
received from Euroclear. You do not need to fill
out and submit an application form in that case.
If you have purchased, sold or transferred SR
to/from your securities account, a special
application form must be used in support of
subscriptions. A special application form is used
to subscribe for shares by making a simultaneous
cash payment via a bank or securities institution
of your choice. A special application form has
been sent to the shareholders who were
registered as shareholders of Xhail on the record
date and it can be ordered from Eminova.
If you wish to exercise your SR to subscribe for
new shares, one (1) SR is required to be able to
subscribe for one (1) new share for SEK 0.12 per
share. For example, if you owned one share on
the Record Date, then you receive three (3) SR
and are entitled to subscribe for three (3) new
shares for a total of SEK 0.36.
3a. If you have Xhail (IFOX) shares in a securities
account with Euroclear, the number of SR you
have is displayed on the “issue statement” (Sw:
“emissionsredovisning”) from Euroclear.
3b. If you have Xhail (IFOX) shares in a custody
account with a bank or securities institution, you
will get information about the Offer from your
asset manager. Follow the instructions you get
from your asset manager.
If you only exercise a part of your SR to subscribe
for new shares, you can order your bank or your
securities institution to sell the SR you have not
exercised, if possible. No trading is arranged for
the SR as the Company’s shares are not listed. In
the event that not all SR are exercised, the shares
will be allotted within the scope of the Rights
Issue’s maximum amount as described in “Terms
and instructions”. To apply for subscription of this
type, fill in the special application form (II) to
subscribe for shares in Xhail without pre-emption
rights. This application form can be ordered from
Eminova at www.eminova.se.
1 share
Subscription
right
Subscription
right
Subscription
right
Subscription
right
0.12 SEK 1 Paid share
6
IMPORTANT DATES
2020-05-25
HERE'S WHAT TO DO
*Please note the rules for people resident in the US, Australia, Japan, Canada, New Zealand or South Africa in the section entitled
"Terms and Instructions".
SUBSCRIPTION FOR SHARES WITHOUT PRE-EMPTION
RIGHTS1
1 Allotment will occur as described in the section entitled "Terms and Instructions".
You have a securities
account i.e. are a directly
registered shareholder
You live in
Sweden
You live outside of Sweden*
Use the application form sent to you. Submit the application
form to the address listed on the application form and in the
section entitled "Terms and instructions".
You have a custody
account
i.e. are a directly
registered shareholder
If you have your Xhail (IFOX) shares in
one or more custody accounts with a
bank or a securities institution, you will
receive information from your asset
manager(s) about the number of
subscription rights you have received.
Follow the instructions you get from
your asset manager(s).
You have a securities
account i.e. are a directly registered
shareholder
You have a custody account i.e. a directly registered
shareholder
Fill out a special application form (II). Send the application form to the address listed in
the section entitled "Terms and instructions". The application form must be received by
Eminova by 8 June 2020.
Subscriptions and payments for shares must
be directed to your respective asset manager.
Follow the instructions you get
from your asset manager(s).
If you wish to exercise all of your subscription rights, use
the pre-printed payment slip from Euroclear that was sent to
you.
If you have purchased, sold or transferred subscription
rights to/from your securities account, fill in the special
application form attached to the mailing.
Subscription period
2020-06-08
7
OFFER FOR SUBSCRIPTION FOR SHARES
The EGM of Xhail resolved on 13 May 2020 to
pass a resolution on a new issue of shares with
preference for the Company's shareholders. The
resolution will result in an increase in the
Company's share capital by a maximum of SEK
2, 092,546.32, from SEK 697,515.44 to a
maximum of SEK 2, 790,061.76, via a new issue
of a maximum of 209,254,632 shares. The
number of shares will therefore increase from
69,751,544 shares to a maximum
of 279, 006,176 shares, which leads to a
maximum dilution of 75.0 percent of the capital
and of the votes. Shareholders that do not
participate in the Rights Issue will see their
holdings diluted but will get value from their
existing shares from a future listing.
In addition, the EGM resolved to authorise the
Board of Directors of the Company to, up until the
next annual general meeting, in order to,
amongst other things, accommodate an over-
subscription in the Rights Issue, pass a resolution
to issue an additional 200,000,000 shares worth
a maximum of SEK 24 million with deviation from
shareholders’ pre-emption rights on essentially
the same terms as the Rights Issue which at full
subscription would result in an increase of the
share capital with a maximum of SEK 2,000,000
(the “Over-subscription Option”). The Over-
Subscription Option will, if used, be directed
towards legal or nor legal persons who are not
qualified investors of no more than 149 in total.
The EGM further resolved to perform a directed
share issue, with deviation from the pre-emption
rights of the shareholders, of a maximum
of 250, 000,000 shares at a subscription price of
SEK 0.12 per share, which at full subscription
would result in an increase of the share capital
with a maximum of SEK 2,500,000 (the “Directed
Share Issue”). The Directed Share Issue is
directed at a number of previously contacted
investors, no more than 149 in total. The EGM
also resolved to perform a directed share issue
towards the shareholders of SMI of a maximum of
1,900,000,000 shares for the payment of the
acquisition of all shares in SMI (via set-off of loan
notes at a subscription price of SEK 0.12 per
share) which would result in an increase of the
share capital by a maximum of SEK 19, 000,000
(the “Set-Off Share Issue”).
The shareholders of Xhail are hereby invited to,
with pre-emption rights, subscribe for shares in
the Rights Issue in accordance with the terms and
conditions in the Investment memorandum.
Shareholders receive three (3) subscription rights
for each one (1) existing share held in the
Company as of the Record Date. One (1)
subscription right is required to subscribe for one
(1) new share in the Company at a subscription
price of SEK 0.12 per share. The Offer will bring
in approximately SEK 25.1 million before
deduction of issuing costs of approximately SEK
1.4 million added with underwriting fees of 10%,
corresponding to SEK 2.4 million. A cash
payment must be made during the period from 25
May 2020 to 8 June 2020 to subscribe for shares
using pre-emption rights. A special application
form must be used during the same period to
subscribe for shares without using pre-emption
rights. In the event that not all shares with pre-
emption rights are subscribed for, subscription
without pre-emption rights will be possible as
described in the section entitled "Terms and
instructions".
UNDERWRITING
GUARANTEE Under an underwriting guarantee, a consortium
has undertaken to subscribe for shares of the
Offer worth up to SEK 25.1 million if they have not
been subscribed for with or without the use of
subscription rights. The Directed Share Issue
stands, as of May 21st 2020, at approximately
SEK 8.7 million, including SEK 4 million from CEO
Peter Swartling and Ricard Constantinou. For
more information about the underwriting
commitment, see the section entitled "Legal
issues and supplementary information".
Besides this, please refer to this Investment
memorandum that was drawn up by the Board of
Directors of Xhail for the Offer. The Board of
Directors of Xhail is responsible for the content of
the Investment memorandum. Information about
the board members of Xhail can be found in the
section entitled "Board of directors, senior
executives and auditors". The Board of Directors
of Xhail hereby affirms that the board has taken
all reasonable pre-cautionary measures to ensure
that the information in the Investment
memorandum, as far as the board knows,
corresponds to the facts and that nothing has
been omitted that could affect the meaning of the
Investment memorandum.
Stockholm, May 25, 2020
Board of Directors
Xhail AB
8
BACKGROUND AND MOTIVE
The former IFOX Investments AB (publ) under
name change to Xhail AB (publ) has decided to
make sweeping changes to the Company's
operations. The Company's past operations
which included exploration for minerals in the
Nordic region was completely spun out through
distribution to the Company's shareholders. The
follow-on business of management of operations
in Russia and sales mandates for assets will now
be fully replaced with the business of SMI, an
acquisition that shall be completed after closing
of the Rights Issue.
The first Letter of Intent for the acquisition of all
shares in SMI was signed in December 2019, and
the process of Due Diligence, securing financing,
agreeing on the SPA and preparing the whole
group and the different companies for the new
future has been very active since.
SMI was started in 2013 by Mick Kiely, an Irish
musician, producer and composer. The
Company holds a number of important patents
relating to the method of creating a new music
composition. The first patent was granted in 2013
and further patents have been added along the
way.
The first part of the product, instrumental music,
is in an advanced beta-stage and has some
paying clients for some time, within production
music (commercials, presentation and TV
scoring). The product, which creates
instrumental music under the patented method,
is ideal for putting music to videos on YouTube,
Instagram, TikTok and social media, and with all
rights cleared. The user easily edits the music to
create a track that matches their video project.
Everyone can make great, rights-cleared music
for their videos. This is a large market and the
Company sees great potential in this application.
The upgrade of the product, to include a
revolutionizing method to wrap instantly-created
music around a vocal track or melody, is under
development, under joint command by the
existing teams in Los Angeles, Dublin and
Stockholm. With the finished product, anyone can
make a great song.
The financing for the market roll-out, further
development of the platform and so forth has
been secured by the Swedish team and thus the
Rights Issue is underwritten and committed to the
full amount of SEK 25.1 million and the Directed
Share Issue at the moment stands at SEK 8.7
million, including a commitment of SEK 4 million
from CEO Peter Swartling and Board Member
Ricard Constantinou. A listing on a relevant stock
exchange in Stockholm will be sought to be
completed after the summer 2020.
The business of the Company is truly global, and
thus the Company strategy is to first build a solid
business and then perform a second listing in
New York within a target period of five years.
The proceeds of the Rights Issue are expected to
be SEK 25.1 million before issuing costs2. In total,
with the Over-subscription option and the
Directed Share Issue, the total potential fund
raising at this time is SEK 79.1 million.
Stockholm, May 25, 2020
Board of Directors
IFOX Investments AB (publ) (under name
change to Xhail AB (publ))
2 Costs attributable to remuneration for the issuing house
and underwriting compensation as well as other estimated transaction costs incurred by the Rights Issue (issuing
costs) will be deducted from the issue amount of approximately SEK 25.1 million. These costs are estimated at approximately SEK 1.4 million, added with SEK 2.4 million for underwriting compensation.
9
RISK FACTORS
An investment in shares always involves a
certain degree of risk. A number of factors affect
and may come to affect the result and financial
position of IFOX Investments AB (publ) under
name change to Xhail AB (publ) and the value of
the shares in the Company (the “Shares”).
Below is a description of risk factors, which Xhail
considers to be the most relevant to an
assessment by a prospective investor of whether
to invest in the Shares. However, potential
investors should note that the below risk factors
are neither exhaustive nor ranked in order of
importance. The intention is to describe risks
that are linked to Xhail’s operations and to
describe the risks related to the investments in
the Shares. Before making a decision to invest in
the Shares, any potential investor should
carefully consider the risk factors outlined below,
as well as any other information provided (such
as any publicly available financial and other
information of Xhail).
In addition, an investor must, alone or together
with its financial and any other adviser it deems
appropriate, engage in an analysis of the global
market conditions and general information about
the relevant markets and companies from its
own perspective.
An investor should have adequate knowledge to
evaluate the risk factors as well as sufficient
financial strength to assume these risks. The risk
factors below are not exhaustive and additional
risk factors presently not known to the Company
may affect the Company’s future ability to pay
interest, principal or make any other payments in
respect of the Shares.
Risk factors can deviate from such assessments
and assumptions.
The valuation of a company like Xhail is heavily
affected by assessments and assumptions as
well as communications made by the
management. The Company is a holding
company and the Group’s operations are mainly
run through its subsidiaries. The Company is
hence dependent on its subsidiaries to fulfil its
obligations. The Group intends to provide the
Company with liquidity by way of intra-group
loans, dividends or other transfers of value in
order for the Company to fulfil its obligations.
However, if the subsidiaries do not provide
liquidity, or due to other circumstances,
conditions, laws or regulations are prevented
from providing liquidity to the Company, there is
a risk that the Company will not fulfil its
obligations.
Financing
Xhail is financed mainly through equity, but also
has an interest-bearing Loan Note (as defined
under the section “Legal Issues and
Supplementary Information”). There are certain
obligations under the Loan Note. This means
that the lenders could be entitled to demand
repayment in advance if the relevant Group
Companies do not fulfil such obligations. If such
demand is made it could adversely affect Xhail’s
financial position. Xhail and its subsidiaries are
dependent on their ability to refinance existing
financings as these fall due and to obtain
additional financing at market terms. In case
Xhail and its subsidiaries are unable to refinance
existing financings or obtain additional financing
at market terms, as a result of a deficiency in the
capital market or for any other reason, this could
adversely affect Xhail’s operations, result and
financial position.
Liquidity risk
Liquidity risk is defined as the risk of not having
access to sufficient liquidity or credit
commitments to cover its payment obligations,
including payments of interest. A lack of liquidity
to cover payments due could adversely affect
Xhail’s business and financial position. The
Rights Issue, together with the added Directed
Share Issue, is intended to secure the financing
for the Group for at least 12 months. Exchange
rate fluctuations may in the future affect Xhail's
result and financial position.
Organisational risks
Xhail has a relatively small organisation, which
leads to a dependence on key persons. Xhail’s
future development is to a large extent
dependent on the experience, knowledge and
commitment of management and other key
personnel and its ability to recruit, retain and
develop other qualified senior executives and
key employees. Xhail operations and results
could be adversely affected should one or
several of such key persons terminate their
employment.
Operational risks
Operational risk describes the risk of incurring
10
losses in the continued operations due to
insufficient routines. This among other things
could be the lack of internal control, appropriate
administrative systems and competence
development. If the routines prove to be
inadequate there is a risk that Xhail incurs losses
which could have an effect on Xhail's operations,
earnings and financial position.
Environmental risk
Xhail does not run any business that requires
permission under any environmental code
Taxes and changes in legislation
Changes in legislation related to corporate
income tax and other taxes could adversely
affect Xhail’s future result. The Group’s loss
carry forward as of 31 December 2019 totals to
an amount of SEK 69 million. Changes to the
ownership of the Company resulting in a change
of control of the Company can lead to limitations
(in whole or in part) of the possibility to use such
carry forwards. Changes in legislation or case
law can affect the possibility to use such carry-
forwards. The above described risks are
primarily relating to Swedish tax but there is also
similar legislation in Ireland and the USA, where
Xhail also operates and is subject to taxation.
Amended or new legislation relating to taxes in
one or more of such jurisdictions could have an
adverse effect on Xhail’s result and financial
position. Xhail has a tax process in the Swedish
court system, which in a negative outcome
would result in a tax payment of SEK 3.9 million.
The amount has been reserved in the books
since 2018.
Other disputes
Xhail could become involved in future disputes.
The results of any pending or future
investigation, proceeding, litigation or arbitration
brought by private parties, regulatory authorities
or governments could affect Xhail operations. In
addition, if an unfavourable decision were to be
given against Xhail, significant fines, damages
and/or negative publicity could adversely affect
Xhail’s result and financial position.
Competition
Xhail will operate in a competitive sector. Xhail’s
future competitive potential is dependent on,
amongst other things, Xhail’s ability to predict
future changes and its ability to quickly respond
to present and future market needs. Xhail
competes against a number of strong
companies, which could gain market shares at
the expense of Xhail. Consequently, it may
become necessary for Xhail to make costly
investments, restructurings or price reductions
in order to adapt to a new competitive situation,
which could adversely affect Xhail’s operations,
result and financial position.
RISKS RELATED TO THE SHARES
Equity investments can contain elements
resulting in particular risks for potential investors.
Xhail’s financial position is affected by numerous
risk factors, some of which have been outlined
above.
Liquidity risk
Xhail will apply for listing of the Shares on a
suitable exchange or multilateral trading facility.
However, there is a risk that the Shares will not
be admitted to trading. If Xhail fails to procure a
listing of the Shares in time, investors holding
Shares on an investment savings account (an
ISK or IS-account) will no longer be able to hold
the Shares on such account, thus affecting such
investor’s tax situation. Even if the Shares are
admitted to trading, there a risk that there is not
always active trading in the Shares. This can
result in shareholders not being able to sell their
Shares when they wish to or at a price
comparable to similar investments having an
existing and functioning secondary market. A
lack of liquidity in the market could have an
adverse effect on the market value of the
Shares.
Currency risk
The Shares will be denominated and payable in
SEK. If investors in the Shares measure their
investment returns by reference to a currency
other than SEK, an investment in the Shares will
entail foreign exchange-related risks due to,
among other factors, possible significant
changes in the value of the SEK relative to the
currency by reference to which investors
measure the return on their investments
because of economic, political and other factors
over which Xhail has no control. There is a risk
that depreciation of the SEK against the
currency by reference to which investors
measure the return on their investments could
cause a decrease in the effective price of the
Shares and could result in a loss to investors
when the return on the Shares is translated into
the currency by reference to which the investors
measure the return on their investments.
Government and monetary authorities may
impose (as some have done in the past)
exchange controls that could adversely affect an
applicable exchange rate or the ability of the
11
Company to make payments in respect of the
Shares. As a result, there is a risk that investors
may receive less dividend than expected, or no
dividend.
Clearing and settlement in Euroclear Sweden’s
account-based system
The Shares will be affiliated to and will continue
to be affiliated to Euroclear Sweden’s account-
based system. Consequently, no physical shares
have been or will be issued. Clearing and
settlement relating to the Shares, as well as
payment of any dividend, will be performed
within the account-based system. The
shareholders are therefore dependent on the
functionality of the account-based system.
General risks
Every potential investor should be aware that by
purchasing Shares, it risks losing the entire or
parts of its investment in the event of Xhail’s
liquidation, company reorganisation or
bankruptcy.
Changes in legislation
The Terms and Conditions for the Rights Issue
are based on Swedish legislation applicable at
the date hereof. The impact of potential future
change in legislation may result in risks which
are not possible to foresee. Changes in
legislation, case law or administrative practice
may have a negative effect on the value of the
Shares.
12
TERMS AND INSTRUCTIONS
PREFERENTIAL RIGHTS ISSUE IN IFOX
INVESTMENTS AB (PUBL) UNDER
NAME CHANGE TO XHAIL AB (PUBL) The EGM of IFOX Investments AB (publ) (org.nr 556658-6796) has on 13th of May 2020 resolved to perform a rights issue with preferential rights for current shareholders in agreement with the board’s proposal. The rights issue includes a maximum of 209 254 632 shares and can yield the company SEK 25 110 555,84 at full subscription. The rights issue is 100% covered by subscription commitments and underwriting agreements, i.e. to a figure amounting to SEK 25 110 55,84. These commitments and agreements are not covered by collateral, restriction of funds or similar arrangements.
RECORD DATE The record date at Euroclear Sweden AB (“Euroclear”) for identification of who shall receive subscription rights in the rights issue is the 20th of May 2020. Last day of trading of the Company’s share including rights to receive subscription rights is the 18th of May 2020. First day of trading of the Company’s share excluding rights to receive subscription rights is the 19th of May 2020.
SUBSCRIPTION PERIOD Subscription of shares shall take place during the period starting on the 25th of May 2020 up until and including the 8th of June 2020. The board of the Company has the right to prolong the subscription period. The Board of Directors of the Company does not have the right to cancel the rights issue once the subscription period has commenced.
SUBSCRIPTION PRICE The subscription price is 0,12 SEK per share. No
brokerage fees will be charged.
SUBSCRIPTION RIGHTS Shareholders of the Company obtains three (3) subscription rights for every one (1) held share. One (1) subscription right is required to subscribe for (1) new share. Subscription rights that are not used for subscription of new shares by the 8th of June 2020, will be removed from all depository accounts
without compensation. No notification of such removal will be published.
TRADING IN SUBSCRIPTION RIGHTS There will be no trading in subscription rights.
PAID AND SUBSCRIBED SHARES
(“BTA”) Subscription through payment is registered at Euroclear as soon as possible, which normally is a few business days after payment. Thereafter the subscriber will acquire a notification with confirmation of the booking of BTA on the depository account. Subscribed-and-paid shares are called BTA until the share issue has been registered at the Swedish Companies Registration Office (“SCRO”).
TRADING IN BTA AND CONVERSION
TO SHARES There is no trading in BTA’s. When the share issue is registered at the SCRO the BTA will be converted to shares. No notification will be sent out from Euroclear regarding the conversion.
SHARE TRADING There is no trading in the share.
PRE-EMPTION RIGHTS FOR
SUBSCRIPTION Those who on the record date of the 20th of May 2020 are registered as shareholders of the Company have pre-emptive rights to subscribe for three (3) new shares for every one (1) existing share.
DIRECTLY REGISTERED
SHAREHOLDERS, HOLDINGS IN
EUROCLEAR ACCOUNT The shareholders or shareholders’ representatives that on the record day are registered in the share register kept by Euroclear on behalf of the Company will receive a pre-printed share issue report with a payment slip, a special application for subscription form and an application form for subscribing without subscription rights (Sw “Teckning utan stöd av teckningsrätter”) attached. A Euroclear notice regarding registration of subscription rights on securities account will not be sent out.
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NOMINEE SHAREHOLDERS,
HOLDINGS IN DEPOSITARY
ACCOUNTS Shareholders which have their shares in the Company registered as nominee shares at banks or other nominees obtains no share issue notification. Subscription and payment shall instead be made in accordance with instructions from the nominee.
SUBSCRIPTION WITH SUBSCRIPTION
RIGHTS, DIRECTLY REGISTERED
SHAREHOLDERS Subscription shall take place through payment to the specified account (Sw. “bankgiro”) on the payment slip no later than the 8th of June 2020 and in accordance with one of two alternatives:
1) Pre-printed payment slip, share issue report This is used if all obtained subscription rights will be utilized. Subscription is done through payment in accordance with the pre-printed payment slip. Observe that no additional measures are required to subscribe and that the subscription cannot be cancelled.
2) Special application form If another amount of subscription rights, other than the number that is evident from the pre-printed share issue report shall be requested, for example if a number of subscription rights have been bought or sold, this special application form shall be used. Subscription occurs when the special application form as well as payment has been received by Eminova Fondkommission. The reference number when paying is the application form’s number. Incomplete or incorrect information in the application form can result in the application being voided. The application form shall be sent by regular mail (NOT registered post), e-mail, or fax. Please note that the subscription is binding and cannot be recalled. The special application form can be acquired from Eminova
Fondkommission AB, tel 08-684 211 00, fax 08-684 211 29, email [email protected].
SHAREHOLDERS NOT RESIDING IN
SWEDEN
DIRECTLY REGISTERED
SHAREHOLDERS ENTITLED TO PRE-
EMPTION SUBSCRIPTION NOT
RESIDING IN SWEDEN Directly registered shareholders entitled to pre-emption rights for subscription currently not residing in Sweden who cannot use the pre-printed payment slip (share issue report) can pay in SEK through SWIFT according to the instructions below. Subscription takes place when the special application form as well as payment have arrived to Eminova Fondkommission. Eminova Fondkommission AB Biblioteksgatan 3, 3 tr 111 46 Stockholm, Sverige BIC/SWIFT: NDEASESS IBAN: SE0730000000032731703067
SHAREHOLDERS RESIDING IN SOME
UNQUALIFIED JURISDICTIONS Shareholders residing in a country where involvement in the share issue is wholly or partially subject to legal restrictions have no rights to participate in the share issue (for example Australia, Hong Kong, Japan, Canada, New Zealand, Singapore, South Africa, USA, Switzerland). These shareholders will not obtain subscription rights, the share issue report or any other information regarding the share issue. Eminova has the right to deny subscribers residing in countries where Eminova does not conduct business.
SUBSCRIPTION WITHOUT PRE-
EMPTIVE SUBSCRIPTION RIGHTS AND
ALLOTMENT If not all shares are subscribed for with support from pre-emptive subscription rights, the Board of Directors shall, within the limits of the share issue’s highest monetary amount (25 110 555.84 SEK), decide on the allotment of the remaining shares. The application to subscribe for shares without pre-emptive subscription rights shall
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be done through the application form ”Teckning utan stöd av teckningsrätter” which is available to download on eminova.se. If more than one application form is received, the first received will be the only one considered. No form of payment shall be made in connection with the application! Note that the application is binding. (Important information about ISK, IPS and capital insurance accounts can be found under “Other”) If the application calls for the subscription of shares amounting to a value of EUR 15 000 or more, a filled-out KYC form and certified copy of valid identification shall be sent together with the application form. Additionally, if the application is made by a legal entity, a current (no older than 3 months) certificate of incorporation showing authorized signatories shall accompany the application form in addition to the KYC and identification documents. Notification of allotment of shares is given by transfer of a contract note. Payment shall be made according to instructions on the contract note; it is never charged from the advised depository or securities account. If the payment is not received in the stipulated time, the shares can be transferred or allotted to someone else. If the sales price at this time is lower than the price of the offer, the person originally allotted these shares can be wholly or partially responsible for the difference. No notification will be given to those who are not allotted shares. Allotment shall be given according to the following: Firstly, allotment of shares subscribed for without pre-emption rights to subscribe for shares shall be given to those who already have subscribed for shares with support of pre-emption rights. In case of over-subscription, in relation to the amount of subscription rights each applicant has used for subscription. In case this is partially or wholly unfulfillable, the remainder of the allotment will be conducted through a draw of lots. Secondly, allotment shall be given to others who have applied to subscribe for shares without support from pre-emption rights. In the case of over-subscription, allotment will follow pro rata in relation to the number of
requested shares and if this partially or wholly cannot be completed it will be finalized through a draw of lots. Lastly, remaining shares shall be allotted to those who have underwritten the share issue, in accordance to their underwriting agreements or similar agreements.
OTHER Subscription of shares, with or without pre-emption rights, is not recallable and the subscriber cannot cancel the subscription.
REGARDING SUBSCRIPTION TO ISK,
ISP OR CAPITAL INSURANCE In case the depository or securities account is connected to capital insurance, ISP or ISK (investment savings account), special rules apply regarding subscription. The subscriber must contact its bank and/or nominee and follow the instructions given by them regarding subscription/payment. If this is done incorrectly, shares will not be able to be delivered to these types of depositories or securities accounts. Subscription is binding and the application form cannot be recalled. It is the subscriber’s responsibility that the subscription is done in a correct way, such that delivery of shares to the given depository or securities account can be completed.
REGARDING DELIVERY OF
SUBSCRIBED SECURITIES Improper or incomplete information in the application form, registration processing at the SCRO, late payments from investors, routines at depository or nominee banks, or other factors that Eminova cannot control, can cause delays regarding the delivery of shares to depository or securities account. Eminova has no responsibilities for losses or other consequences that can arise due to the time of delivery of the subscribed shares.
PUBLICATION OF THE OUTCOME OF
THE SHARE ISSUE Publication of the outcome of the share issue will be published in a press release by the Company as soon as it is possible after the subscription period.
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RIGHT TO DIVIDENDS The new shares entails the right to receive dividend for the first time on the record date for the dividend that occurs closest in time after the new shares have been registered at the SCRO.
SHARE REGISTER The Company’s share register with information about the shareholders is kept and managed by Euroclear Sweden AB, Box 191, 101 23 Stockholm, Sweden.
APPLICABLE LEGISLATION The shares are issued under the Swedish
Companies’ Act (Aktiebolagslagen) (2005:551)
and is governed by Swedish law.
The rights of the shareholders regarding
dividends, voting rights, pre-emption rights, and
so on, are controlled partly by the Company’s
articles of association, which are available on the
Company’s website, and partly by the Swedish
Companies’ Act (Aktiebolagslagen) (2005:551).
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INTERVIEW WITH PETER SWARTLING, CEO You recently joined Xhail - can you tell us a bit
about your background and how you think it can
be useful in the development of the company?
I have been active at the highest levels of the
Music Industry for over 30 years, covering all
aspects of the business.
I’m no artist, instead my focus has always been
on the business and commercial side, as a
senior executive and producer. My main focus
has been to generate new business, build
brands, and to make sure stakeholders get paid.
That is the experience and contribution I will
bring to the already fierce Xhail crew. They have
created a truly unique and powerful product,
now is the time to bring this product to the
market and, after years of development, start
making money.
What was your reaction when you first were
introduced to the Xhail platform?
I was just blown away! I couldn’t believe how
clever and powerful the Xhail platform is when it
creates music and how great it sounds. Creating
and editing is effortless and demands no musical
experience or instrumental skills of the user yet
offers endless modifications. Xhail delivers world
class results.
What will be your major focus during the coming
year?
We have promised the shareholders a listing on
a Swedish stock exchange, so that will be my
first objective. In parallel, I intend to introduce
Xhail to people I know in the music and movie
business. We bring a totally new concept to the
market, so we need to demonstrate what Xhail
can do and let people hear the great music it
produces.
How do you think Xhail will change how music is
produced?
Xhail generates so many solutions to various
aspects of music creation. During the BETA test
period focus was on the B2B segment. Here
Xhail offers the opportunity for a vast number of
individuals in the commercial realm to create
music for their projects. Directors of movies, TV
series, commercials and trailers can now, by
way of simply clicking and selecting, create any
emotional setting they wish for their projects.
And it sounds just as great as the cumbersome
and expensive process of hiring outside
composers and producers. In truth, a game
changer.
Looking at the implementations and
opportunities within the B2C segments are mind
blowing, now that we are to bring Xhail to the
market.
“The opportunities within the B2C
segments are mind blowing.”
Peter Swartling, CEO
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INTERVIEW WITH FOUNDER MICK KIELY Can you tell us about your background
and how you came up with the idea to start Xhail?
I’ve been an active musician and composer for over
30 years, beginning my career in the band scene,
where I learnt music production skills old school. I
started with two-inch multitrack and a razor blade,
but then came Atari and Cubase 2.0 and my life was
set to change forever.
I started to compose for TV and moved along to the
high end of video games. This is when Xhail’s
concept began. A solution uniting composers and
musicians in a new and exciting way while producing
high quality “content”. In early 2013 we filed for
patents, incorporated our company and by the
summer we had opened our doors and began the
Xhail build.
How do you think Xhail will change how music is
produced?
The process of how music is created and produced
has not changed much in decades. It still takes the
same length of time and cost to create a two-minute
music track as it did ten or even twenty years ago.
While the demand for music continues to
exponentially increase.
The Xhail technology will greatly increase the speed
at which anyone can produce music, allowing
people to produce more music in a shorter time
frame. Being paid for a higher music output ratio
means a musician or composer can now earn more
by creating more music in the same time frame as
before, balancing the output quantity with a higher
revenue turnover.
At the same time non-musicians will now, for the
first time, be able to create music.
Musicians will passively gain revenue from this
usage in a way not ever received or even possible before.
“Xhail will greatly increase
the speed at which any
individual can produce
music.”
Mick Kiely, Founder
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MARKET OVERVIEW
DIGITAL MEDIA The digital market has entered a new phase of
development. The lines that once separated the
entertainment and media, technology and
telecoms industries are becoming more and
more blurred. Major content producers have
become vertically aligned and integrated with
distribution platforms that allow them to access
end customers more efficiently, and Internet and
telecoms giants are starting to create content
and build local integrated ecosystems.
The distinctions between segments are blurring,
such as the distinctions between print and
digital; video games and sports; terrestrial, cable
and online TV; and social and traditional media.
The worldwide explosion in mobile access is
seeing mobile devices become the primary
means of accessing content and services for
consumers across virtually all markets. That is
the reason why smartphones and tablets have
become not only a convenient way to access
information, but one of the most important
channels for brands too. Users of digital media,
games, video and music is estimated to grow
from 4.6b, 2019, to 5.7b 2024.
Today’s consumers are rejecting one-size-fits-all
content experiences. For years the media
industry delivered a few media products to a
wide audience in mass media formats, creating
a shared experience and a certain sense of
community. Nowadays, that huge community no
longer exists. The community created by a
media product is narrower, generating such a
personal experience that sometimes the
community consists of only one person. This
audience fragmentation in terms of age, location
and interests results in strong demand for media
content tailored to specific expectations. The
media industry cannot offer the same product for
everyone anymore: it must create content for
groups—groups so small that they require
absolutely personalized content to be included.
AI technologies for analysing and personalising
products and services are increasingly in
demand. Services are adapting to these
technologies and to customer behaviour. Thus,
large media firms face the tension of producing
content for everyone (global) but, at the same
time, for specific groups (local). Content needs
to be specific enough so that it moves
audiences, but loose enough so that it can
connect with more than one group. Adaptation
and localization are key.
Access to end customers
Social media and technology platforms are
outpacing traditional content creators in
capturing both the attention of consumers and,
thanks to consumer insights, a rising share of
Source: www.statista.com, Digital Media Report 2019
19
their spending.
Content creators are forced to compete and
build partnerships with existing platforms, and to
connect end customers through their own
distribution channels.
Content production is also becoming more
decentralized with the emergence of new
distribution channels. YouTube alone has more
than one billion views per day. Solopreneurs,
who are basically digital media entrepreneurs
that rely on social media for their business,
depend on sources of revenue that vary from
online advertising—as with many YouTubers—to
private sponsorship from a TV channel or
telecom industry, and e-commerce
opportunities.
Revenues in digital media are estimated to
increase by more than USD 24b with in the
coming five years, where digital music and video
on demand is forecast to grow by 27% and 22%
respectively.
MUSIC MARKET OVERVIEW The music industry is at the forefront of the
rapidly evolving digital marketplace. Music and
engagement with music is fuelling growth of the
digital economy, enabling different digital online
services to boost turnover, generate traffic and
gain scale. Music right holders have worked
hard to license their work to the hundreds of
digital services that serve customers globally.
Today consumers have easy access – legally –
to more music than ever before. In 2018, the
global recorded music market grew by 10%. It is
the fourth consecutive year of global growth.
The growth of the recorded music market was
predominantly powered by a sharp rise, 33%, in
paid streaming, that now accounts for 37% of
total market revenue.
Developments within the online digital music
marketplace are further evidence of the pace of
change within the industry. Digital music
markets have diversified and developed. The
popularity of download services, while still high,
is flat-lining and even declining while streaming
services such as Spotify are growing. Streaming
services have become an increasingly important
sales channel and source of revenue for record
labels and artists.
The exclusive rights recognized in the 1996
WIPO Internet Treaties (the WIPO Copyright
Treaty (WCT) and the WIPO Performances and
Phonograms Treaty (WPPT)) have enabled
these positive developments. Nevertheless, the
digital marketplace is not in balance. While the
broad availability of music is driving innovation
and the growth of new digital services, music
right holders are not benefitting fairly or
proportionally from the increased use of their
music. Restoring balance to the market is a high
priority for the creative industries.
Source: www.statista.com, Digital Media Report 2019
20
MARKET DYNAMICS Over the past 20 years the music industry has
changed radically. In most markets physical
product sales have declined sharply, while
revenues from digital services have grown
rapidly. However, although revenues paid by
digital services to record companies have
increased, they have not completely offset falling
CD sales.
The fastest growing geographical markets are in
Asia and Latin America (South Korea, Brazil)
with Asia becoming the second largest region for
physical and digital music combined.
The composition of revenue has changed
dramatically during the past two decades, where
the revenue from physical sales has dropped
from USD 23.3b to 4.7b. Digital music,
streaming and download, has in parallel grown
from zero to 11.2b in 2018, equivalent to 58.6%
of total recorded music revenue.
INTERNATIONAL COPYRIGHT SYSTEM
AND THE DIGITAL MARKETPLACE All the largest online services operate in multiple
territories, making it necessary for record
companies to review their artist agreements to
ensure they control all necessary rights in all
territories. In turn, the services have had to
secure licenses covering all territories in which
they operate. The emergence of so many new
services and new operating models
demonstrates both the efforts made by right
holders and digital services and the resilience of
the international copyright system.
Internationally harmonized rights – brought
about by the 1996 WIPO Internet Treaties –
have facilitated the global expansion of digital
music services. The legal and commercial
certainty they afford at the international level has
helped make it possible for digital services to
launch and reach consumers in new markets.
These treaties have made the process of
clearing and licensing rights in each of many
territories easier. In addition, these rights are
now universally recognized and right holders
now have greater confidence in licensing their
rights to digital services in new territories.
DIGITAL REVENUE Overall digital revenues grew by 21% to
US$11.2 billion in 2018, crossing the US$10
billion mark for the first time ever and now
accounting for 59% of total recorded music
revenues. Within this format, the picture was
varied with streaming pushing growth up
strongly (increasing by 34% to US$8.9 billion),
while downloads saw a decline of 21%, dropping
to 8% of the total market.
Paid audio streaming was again a key driver
(+33%), with almost all markets reporting growth
in this area. Digital now makes up more than
50% of revenue in 38 markets.
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PHYSICAL REVENUE Physical format revenue saw continued decline
in 2018, dropping by 10% and now accounting
for around a quarter of the total market (25%).
As in the previous year, the majority of markets
saw a decrease in physical format revenues, but
a small number of markets bucked the trend,
posting growth (India +21%; Japan +2%; South
Korea +29%), and physical revenues still
constitute a significant percentage of the market
in some countries (representing 71%, 47% and
35% of the market in Japan, Poland and
Germany respectively). Revenues from vinyl also
sustained their upward trajectory, posting
growth for the thirteenth consecutive year,
growing 6% and maintaining a 4% share of the
overall market.
PERFORMANCE RIGHTS REVENUE Revenues from performance rights - use of
recorded music by broadcasters and public
venues - climbed in 2018, seeing an increase of
10%. Totalling US$2.7 billion, performance
rights revenue represents 14.0% of total
recorded music industry revenues.
SYNCHRONISATION REVENUE Synchronisation - the revenue from the use of
music in advertising, film, games and TV -
posted growth of 5%, a more modest rate than
the previous year (15%) but maintaining a 2.3%
share of the total music market
SUMMARY The media landscape has fundamentally
changed during the last decade, when
consumers have adopted digital media and
services. Consumers of digital media is
constantly growing, especially of digital music
and video on demand. The music industry has
adapted and recovered from the downfall of
physical record sales and digital and streaming
services now constitute the largest share of
recorded music revenue, 59%. The international
copyright system is now universally recognized
and rights demand that artists’/creators’
property rights are respected.
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BUSINESS CONCEPT, MISSION, VISION, OBJECTIVES AND
STRATEGIES
BUSINESS CONCEPT The Company has identified a number of verticals
in both the B2C and B2B spaces.
B2C
The main use of the platform within B2C is
anticipated to be in two forms:
1. Instrumental music created by a user is
added to a video, viewed on YouTube,
Instagram, TikTok or similar social media
platform. The music is rights-cleared and
will thus not be taken down due to
breach of rights.
2. When development of the addition to the
platform (music/song creation around a
vocal track), it is anticipated that the
platform will be used to create songs,
that can be published in social media or
even on music platforms like Spotify,
Apple Music, Amazon Music and so
forth. Everyone can, in theory, be the
creator of a hit song.
The business model for B2C is currently
being researched and tested but will
generally consist of subscriptions and rights.
It is anticipated that there will be a free
version and different levels of subscription
models. In addition to subscription revenues,
when a generated track is used in either
broadcast or online, Xhail will generate
revenue from the rights associated with that
track. For example, YouTube pays a small
amount for the music rights for each view.
With an increasing number of views from
tracks generated, the revenue can be
substantial.
B2B
Within B2B, there are a number of current and
potential applications and revenue streams.
The revenue model broadly encompasses a
subscription income but can also be from the
rights. The platform is currently used by clients for
presentations, audio branding, ads, TV
soundtracks, trailer production, generally what
can be called production music.
The Company sees potential in bulk track
creation for production music libraries, a
significant global business, where you can buy a
ready track for use in your production. Further in
potential exists playlists in music platforms (where
a share of revenue from the playing of the tracks
are split with the music platform. Main focus
would initially be instrumental music, which is
used globally in restaurants, Spa’s, gyms, yoga
centres, etc.). Track generation for top-line
songwriters is also a high potential business
opportunity. The number of applications of the
technology is almost endless, the key is to focus.
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STRATEGY The strategy of the Company is to complete a
ready consumer product within less than 12
months and launch this on a broad scale. The
project to market launch is directed from Los
Angeles and encompass collaboration with some
of the World’s leading companies and individuals
in the field.
It is anticipated that the majority of the Company’s
revenue will come from the B2C market and
therefore this is the main focus of the Company
for the foreseeable future.
Within B2B, which is a more ready product, the
initial focus, which is currently worked on, is to
continue the same business as before and add
some business that is already possible with the
existing platform. When the B2C business has
launched, more resources will be allocated to
growing the B2B revenue.
OBJECTIVE The objective is to build a large and sustainable
business for the Company. It is also with the
Company’s current plan that a listing in New York
shall be executed within 5 years, provided that
the business has grown according to the
Company’s expectations. The business is global,
and the Company’s business will be initially
focussed on the US market. Sweden is
considered by the Company to be an excellent
starting place for a business within music and
tech.
.
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BUSINESS DESCRIPTION
THE COMPANY Xhail is the most advanced music Artificial
Intelligence-related platform in the world.
The technology uses musical mathematics to
select and combine stems (single instrument
performances) into fully finished songs of any
chosen style, mood and instrumental
alternatives.
Every new song or music track created is unique
and rights cleared. Xhail puts music creation in
the hands of non-musicians, it produces music
originating from material by real musicians. The
technology is cloud-based and is capable of
creating new music copyright of stunning quality
and proportion in real-time.
The technology is protected by several strong
patents, securing an important piece of the
industry for music creation.
HOW XHAIL WORKS Music is emotional storytelling that transcends
language, yet Xhail works in a very similar way to
writing a story in words. The English alphabet
has only 26 letters or characters, yet these
letters combine to create over 470,000 unique
words. Xhail also uses single characters (stems,
which is each a single element in a song, like a
guitar, a bass etc) to exponentially create music.
The Xhail platform presently has slightly less
than 100,000 stems (characters) created by
professional musicians. The database of stems,
already the World’s largest, will be heavily
expanded. Xhail’s technology uses musical
mathematics to select and combine comparable
characters to create a music track that makes
sense when it is heard. If we were to randomly
select letters of the English alphabet and put
them together in a purely random or uneducated
way, they will likely not make readable sense but
if we intelligently select letters in an educated
way, then they assemble into readable words
that make sense.
The Xhail platform selects several musical
characters from millions of individual characters
and assemble them into a new music creation.
The fact that every character is created by a real
musician and that these musicians do not know
each other is of no importance to how the
technology works.
Xhail is a musically intelligent software and the
music created is always pleasing to the user’s
ear and relevant to the user’s wishes, such as
style, mood or tempo. If you want a new pop
song you get a new pop song and if you want a
new orchestral film score, then that is exactly
what you get.
Xhail has successfully secured global patents
that not only protect the Xhail technology but
also potentially block others from entering the
music AI space entirely. Xhail is the only musical
AI-related platform being used commercially by
Hollywood entertainment corporations.
THE PRODUCT Each user, business or consumer, will be able to
create and host content on the platform to
arrange unique music using the Xhail technology
with either their own content or to collaborate
with others. As a cloud-based technology, Xhail
will facilitate its community of users to create,
share, collaborate, sell, buy and enjoy music, all
on a single platform.
Xhail is already in use and is becoming
increasingly more in demand as it continues to
be adopted by professional producers in
Hollywood. Xhail users already include a large
brokerage firm in the US, a TV network, Asylum
Entertainment and others.
Currently is worked on a further development of
the Xhail platform that allows singers,
songwriters, producers and DJ’s to create music
in any style or genre based on just acapella
vocals. The Beta version is estimated to be
launched during fall 2020.
The Power of Collaboration
Xhail Model:
Xhail operates a system whereby its contributors
(artists/musicians) produce stems and imports
them into the Xhail database. Contributors are
contracted in a way that Xhail owns all rights in
and to the Stems produced on the Xhail Platform,
including the copyrights which remain SMI’s sole
and exclusive property. Xhail has no further
liability to the artist in relation to money owed.
25
Xhail allows Composers, Producers and
Musicians to benefit from the placement of their
music on the Xhail platform to multiple
opportunities thus providing new and perpetual
revenue streams.
COMPETITION The potential amount of applications for Xhail’s technical platform gives a quite broad spectrum of competitors. The main competitors in the B2C space are divided into the following. For instrumental music, competitors are companies like Epidemic Sound, Killer Tracks and so forth but also music creation tools like Splice, Focusrite and so forth. In the upcoming platform version including music created around a vocal track or melody, competitors are mainly deemed to be apps like Smule, the Voice and other karaoke-type apps. The B2B competition is more fragmented and includes track libraries but also the traditional way to make production music.
Artists Xhail
Production Co.
Broadcaster PRO
26
ORGANISATION
EMPLOYEES Once closing of the Company’s acquisition of all
shares in SMI has taken place after the
completion of the Rights Issue, the Group will
(based on figures as of 13 May 2020) have 11
employees. Legal structure
The figure represents the legal structure of IFOX
Investments AB (publ) under name change to
Xhail AB (publ) after closing has taken place of
the Company´s acquisition of all shares in Score
Music Interactive Ltd. The acquisition and
disposal of the old operations were approved at
an extraordinary general meeting in the Company
on 13 May 2020.
The parent company, IFOX Investments AB
(publ) under name change to Xhail AB (publ)
(Swedish corporate ID no. 556658-6797), has its
registered office in Stockholm Municipality,
Stockholm County, Sweden.
.
27
SUMMARY OF FINANCIAL DEVELOPMENT
A summary of the financial trends for IFOX Investments AB is presented below for the period from 1 July
2019 to 31 March 2020. No information in the Investment memorandum has been reviewed or audited by
the Company's auditor. The auditor's reports have been incorporated into the annual reports for the
respective year and do not have any comments. The accounts shown below have been drawn up in
accordance with the Swedish Annual Accounts Act (Årsredovisningslagen) and the general advice of the
Swedish Accounting Standards Board (Bokföringsnämnden). Where there has not been any general advice
from the Swedish Accounting Standards Board, guidance has been received from the recommendations of
the Swedish Financial Accounting Standards Council (Bokföringsnämnden), and where applicable, from
statements made by FAR (Institute for the Accountancy Profession in Sweden). The interim report for the
period from July 1 to March 31, 2020 has not been reviewed or audited by the Company's auditors.
Since the Company is changing its operations via the acquisition, the historic numbers have a limited value
for analysing the Company. The Company’s financial year is between July 1 to June 30.
XHAIL AB (IFOX INVESTMENTS AB)
PROFIT AND LOSS STATEMENT, 9 MONTHS AND Q3
Amount in SEK 2020 Q3 2019 Q3 01-07-2019
31-03-2020
01-07-2018
31-03-2020
Net sales 50,000 50,000 450,001 450,000
Other operating income 0 0 0 0
Total operating income 50,000 50,000 450,001 450,000
Raw materials and consumables 0 0 0 0
Other external expense -145,371 -61,928 -645,425 -336,535
Costs of personnel -191,972 , -192,844 0
Depreciation/amortisation of tangible fixed assets 0 0 0 0
Other operating expenses 0 0 0 -13,472
Total expense -337,342 -61,928 -838,268 -350,007
Operating profit -287,342 -11,928 -388,268 99,993
Financial income 0 0 28,142 132,750
Financial cost 0 0 85,659 79,235
Financial items - net 0 0 113,801 211,985
Net income before tax -287,342 -11,928 -274,467 311,978
Tax 0 0 0 0
Profit/loss for the period -287,342 -11,928 -274,467 311,978
28
SUMMARY OF BALANCE SHEET ASSETS
Amount in SEK 31-03-2020 31-03-2019
Intangible fixed assets
Fixed assets 0 0
Total 0 0
Tangible fixed assets
Machinery and other technical assets 0 0
Total 0 0
Financial fixed assets
Shares in subsidiaries 0 0
Other long-term receivables 0 0
Total 0 0
Total fixed assets 0 0
Current assets
Inventories, etc. 0 0
Total 0 0
Current receivables
Current tax receivables 0
Other receivables 7,256,284 5,661,314
Prepaid expenses 17,638 18,888
Total 7,273,922 5,680,202
Cash and cash equivalents 220,587 49,775
Total current assets 7,494,509 5,729,977
TOTAL ASSETS 7,494,509 5,729,977
EQUITY AND LIABILITIES
Amount in SEK
Equity
Share capital -697,515 -697,515
Share premium reserve -79,818,715 -79,818,715
Other reserves
Retained earnings 78,648,798 79,381,579
Profit/loss for the period 274,467 -311,978
Total equity attributable to the parent company's shareholders -1,592,966 -1,446,629
Long-term liabilities
Loans 0 0
Lease liabilities 0 0
Other long-term loans 0 0
Total 0 0
Current liabilities
Prepayments from customers 0 0
Accounts payable -70,958 -63,111
Leasing liabilities 0 0
Other current liabilities -1,959,364 -350,000
Accrued expenses and deferred income -3,871,221 -3,870,236
Total -5,901,543 -4,283,347
TOTAL EQUITY AND LIABILITIES -7,494,509 -5,729,977
29
SCORE MUSIC INTERACTIVE LIMITED Irish Company law requires the directors to prepare financial statements for each financial year. Under the
law the directors have elected to prepare the financial statements in accordance with Companies Act 2014
and accounting standards issued by the Financial Reporting Council including FRS 102, the Financial
Reporting Standard applicable in the UK and Ireland (Generally Accepted Accounting Practice in Ireland).
Under company law, the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the assets, liabilities and financial position of the company as to the financial
year end and of the profit or loss of the company for the financial year and otherwise comply with the
Companies Act 2014.
CONSOLIDATED PROFIT AND LOSS STATEMENT FOR THE FINANCIAL YEAR 01-04-
2019 TO 31-03-2020
Amount in EUR 01-04-2019
31-03-2020
01-07-2018
31-03-2019
Net sales 72,835 76,181
Other operating income 12,236 21,822
Total operating income 85,071 98,003
Administrative expenses -1,603,428 -1,730,855
Total expense -1,603,428 -1,730,855
Operating profit -1,518,357 -1,632,852
Financial income 0 0
Financial cost -97,815 -27,991
Financial items – net -97,815 -27,991
Net income before tax -1,616,172 -1,660,843
Tax 0 0
Profit/loss for the period -1,616,172 -1,660,843
Other comprehensive income:
Items that may be classified to profit/loss for the period: 0 0
Exchange rate differences when translating foreign operations -6,800 -,210
Other comprehensive income for the period -6,800 -,210
Total comprehensive income for the period -1,622,972 -1,661,053
30
CONSOLIDATED BALANCE SHEET
ASSETS
Amount in EUR 31-03-2020 31-03-2019
Non-current Assets
Intangible assets 1 1
Tangible assets 14,181 29,019
Total 14,182 29,020
Long-term assets
Debtors 15,222 24,689
Total non-current assets 29,404 53,709
Current assets Debtors 50,081 97,639
Cash and cash equivalents 10,691 24,063
Total current assets 60,772 121,702
TOTAL ASSETS 90,176 175,411
EQUITY AND LIABILITIES
Amount in EUR
Equity
Called up share capital -263 -263
Share premium -4,887,406 -4,887,406
share option reserve -883,179 -692,267
Forex reserve 34,659 27,859
Profit/loss account 8,357,939 6,741,770
Total equity attributable to the parent company's shareholders 2,621,750 1,189,693
Long-term liabilities
Loans 0 0
Lease liabilities 0 0
Other long-term loans 0 0
Total 0 0
Current liabilities
Accrued expenses and deferred income
Short term loans
-806,499
-1,905,435
-307,893
-1,057,211
Total -2,711,934 -1,365,104
TOTAL EQUITY AND LIABILITIES -90,176 -175,411
31
INFORMATION
CONSOLIDATED ACCOUNTS On April 15, 2020, IFOX Investments AB (publ)
under name change to Xhail AB (publ)
announced that the Company had signed an
agreement to acquire all of the shares of Score
Music Interactive Ltd and dispose of previous
operations. IFOX Investments is in the process of
changing its name to Xhail AB (publ). The
acquisition and disposal of the old operations
were approved at an extraordinary general
meeting on 13 May 2020. As of July 1, 2020,
Score Music Interactive Ltd and all its subsidiaries
will be included in Xhail AB's consolidated
accounts.
INVESTMENTS Xhail made in previous fiscal years investments in
exploration for minerals and gas mainly in the
Nordic region via a now disposed subsidiary in the
2010-2017 period. After that, Xhail has made no
significant investment until the Company signed
an agreement to acquire all of the shares of Score
Music Interactive Ltd for a maximum of SEK 228
million from the current owners. This investment
will be financed by a non-cash issue executed
upon resolution of an extraordinary general
meeting on 13 May 2020 and will complete after
closing of the Rights Issue.
Xhail currently does not have any other ongoing
investments or commitments to make future
investments above and beyond the investments
being made as part of the Company's
development work. Apart from the above, Xhail
does not have any future investments which its
executive bodies have already made clear
commitments to.
REVENUES AND EXPENSES It is estimated that future revenues will come from
subscription revenue, license revenue, as well as
intellectual property rights.
The costs of establishing operations and project
development have historically been primarily
borne by the parent company. These costs
primarily consisted of personnel expenses. Since
the Company is changing its operations and
disposing of past operations, it is estimated that
costs will primarily transform in the coming years
into overhead costs for continuing development
of the software developed by Score Music
Interactive ltd and for keeping the parent
company and its subsidiaries up and running.
FIXED ASSETS Xhail's fixed assets had a carrying amount of SEK
5,213,000 as at 30 September 2019. The main
part of the Company's fixed assets consisted of
financial assets which involved interests in group
companies, other long-term securities holdings
and other long-term receivables. After the
disposal of the past operations, the Company's
fixed assets will consist of the acquired holding of
Score Music Interactive Ltd.
TANGIBLE FIXED ASSETS The Company's tangible fixed assets consist of
equipment. The equipment is valued at cost less
accumulated depreciation. Tangible fixed assets
are depreciated linearly over their expected
useful life, taking substantial residual values into
account. A depreciation period of three to ten
years is applicable for equipment. After the
disposal, the Company no longer has any tangible
fixed assets.
INTANGIBLE FIXED ASSETS
CURRENT ASSETS The Company's current assets totalled SEK
7,494,509 on March 31 2020, of which cash and
bank balances accounted for SEK 220,587.
FINANCIAL POSITION AS AT MARCH,
2020 Xhail's total assets equalled SEK 7,494,509 as at
31 March 2020. The Company’s cash and bank
balances were valued at SEK 220,587. The
Company’s equity totalled SEK 1,592,966. The
Company’s current liabilities amounted to SEK
2,711,930, of which SEK 2,711,930 was interest
bearing.
EQUITY AND DEBT Xhail' debt as at March 31, 2020 is reported
below.
32
NET DEBT Xhail AB’s net debt as at March 3, 2020 is reported below.
(TSEK) 31-03-2020
(A) Cash 220,587
(B) Cash equivalents 0
(C) Readily saleable securities 0
(D) Total liquidity (A)+(B)+(C) 220,587
(E) Current receivables 7,273,922
(F) Current bank debt 0
(G) Current component of non-current liabilities 0
(H) Other current liabilities 5,901,543
(I) Total current liabilities (F)+(G)+(H) 5,901,543
(J) Net short-term debt (I)-(E)-(D) -1,592,966
(K) Long-term bank loans 0
(L) Bonds issued 0
(M) Other non-current liabilities 0
(N) Long-term debt (K)+(L)+(M) 0
(O) Net debt (J)+(N) -1,592,966
33
WORKING CAPITAL The Board of Directors of Xhail estimates that the
existing working capital linked to the new
acquisition is not sufficient for the Company's
current needs in the coming twelve-month period,
since the Company's working capital needs for
the coming twelve-month period exceed the
Company's short-term and long-term financial
resources. The existing working capital, as of the
date of the present Investment memorandum, is
estimated to be sufficient for conducting the
Company's operations according to the
applicable business plan for about 1 month. The
working capital deficit for the coming twelve-
month period is estimated to be approx. SEK 20
million before investments in development,
stems, market launch and so forth. The Company
will adapt the plans based on the amount raised.
Development of the platform is expected to cost
another SEK 20 million, at least. Given that the
present Rights Issue is fully subscribed, the board
estimates that the Company's basic working
capital will be sufficient for the coming six-month
period. To be able to do additional works as per
above, the Company will have to be supplied with
further capital and therefore the option to raise
further capital through the Over-subscription
Option in the Rights Issue as well as completion
of the Directed Share Issue is essential. The
capital contributions are intended to be used
primarily for development of the technical
platform, market launch and other marketing and
branding events as well as operating capital. If the
Rights Issue is not completed, the Company may
be forced to seek other financing options in the
form of e.g. further share issues or opening a
credit facility. In addition, the Company may need
to revise its rate of expansion in its existing
business plan and review the Company's
organisation and cost structure.
OPERATIONAL TRENDS There are no key trends with regard to
production, sales and stocks, costs and sales
prices during the past fiscal year until the date of
the Investment memorandum. Since the
Company has changed its operations in
conjunction with the acquisition of Score Music
Interactive Ltd, comparisons between current
trends and future trends are rendered impossible.
The Company is not aware of any trends,
uncertainties, potential changes or other
requirements, commitments or events that can
be expected to have a significant effect on future
business prospects.
No key changes have affected the markets the
Company operates on since the end of the period
covered by the most recent public audited annual
report. Since the Company has changed its
operations in conjunction with the acquisition of
Score Music Interactive Ltd, comparisons
between current trends and future trends are
rendered impossible.
34
SHARES, SHARE CAPITAL AND OWNERSHIP STRUCTURE
SHARES AND SHARE CAPITAL The Articles of Association of the Company were
adopted at the extraordinary general meeting on
13 May 2020 but have not yet been registered
with the Swedish Companies Registration Office.
According to the articles of association applicable
at the time of the most recently communicated
historic financial information, the share capital is
to be in Swedish kronor and the share capital is
to be a minimum of SEK 690,000 and a
maximum of SEK 2, 760,000 divided up into a
minimum of 69,000,000 shares and a maximum
of 276, 000,000 shares. Each shareholder is
entitled to vote on the basis of the full amount of
shares owned and represented by said
shareholder at the general meeting. The share
capital of Xhail totals SEK 697,515.44 divided up
into a total of 69,751,544 shares. All shares have
a quota value (Sw. kvotvärde) of SEK 0.01 and
provide equal rights to a share in Xhail's votes,
assets and profit. The shares are issued in
Swedish kronor and have been issued in
accordance with the Swedish Companies Act.
Xhail is signed up for Euroclear's account-based
securities system, and therefore, no physical
share certificates will be issued. All rights linked
to the Company's shares are bestowed upon the
people registered in the share register maintained
by Euroclear.
Any decisions on dividends are made by the
general meeting (upon proposal by the board or
shareholders). Pay-outs are managed by
Euroclear. Dividend entitlements are bestowed
upon the people who were registered as owners
in the share register maintained by Euroclear as
of the record date set by the general meeting. If a
shareholder cannot be reached by Euroclear, the
shareholder's claim on the Company with respect
to the dividend amount remains and is only limited
by the statute of limitations. In the event of
expiration of the statute of limitations, the
dividend amount will be surrendered to Xhail.
There are not any special procedures or
restrictions for shareholders resident outside of
Sweden.
In the event of liquidation, shareholders are
entitled to a share of the surplus in proportion to
the number of shares held. In the event of a new
subscription of shares shareholders have
preference in proportion to the number of shares
held if nothing else is decided by the general
meeting.
The shares of Xhail are not subject to an offer
submitted as a result of mandatory bid rules, a
right of squeeze-out or a right of sell-out. No
public takeover bids have been submitted for the
shares of Xhail during the current or the previous
fiscal year. Xhail does not hold any of its own
shares.
There are not any post-sale purchase rights
clauses, rights of first refusal or other limitations
on the right to transfer shares of the Company by
law, the Company's articles of association or a
contract or other act the Company is a party to.
As far as the Company knows, there are not any
other contracts to which the Company is not a
party, such as contracts between shareholders,
which could result in limitations on the right to
transfer the Company's shares.
35
CHANGES IN EQUITYThe Company's share capital has changed
according to the table below since the Company
was founded:
ChangeAmount of
change (SEK)
Share cap ital
after change
(SEK)
Reg is tered
Current
Share Issue2 092 546,32 2 790 061,76
Decrease -69 054 028,56 697 515,44 2017-06-02
Share Issue 3 938 099,00 69 751 544,00 2017-05-17
Share Issue 3 483 333,00 65 813 445,00 2017-05-02
Share Issue 3 425 035,00 62 330 112,00 2017-04-27
Share Issue 3 784 000,00 58 905 077,00 2016-05-19
Share Issue 1 311 746,00 55 121 077,00 2016-05-19
Share Issue 2 446 693,00 53 809 331,00 2015-10-27
Share Issue 7 000 000,00 51 362 638,00 2015-09-17
Share Issue 4 945 467,00 44 362 638,00 2015-03-16
Share Issue 14 149 000,00 39 417 171,00 2015-02-16
Share Issue 3 670 040,50 25 268 171,00 2014-10-07
Share Issue 1 999,32 21 598 130,50 2014-10-07
Share Issue 10 500 000,00 21 596 131,18 2014-08-12
Share Issue 15 639,56 11 096 131,18 2014-07-03
Share Issue 36 666,67 11 080 491,62 2014-07-03
Share Issue 6 344 378,25 11 043 824,95 2014-03-20
Share Issue 666 666,66 4 699 446,70 2014-03-20
Share Issue 3 302 103,66 4 032 780,04 2014-03-20
Decrease -2 192 029,10 730 676,38 2014-03-20
Share Issue 1 453 952,40 2 922 705,48 2009-09-01
Share Issue 200 000,00 1 468 753,08 2009-06-30
Share Issue 58 333,32 1 268 753,08 2007-09-19
Share Issue 33 333,32 1 210 419,76 2007-09-14
Share Issue 553 086,44 1 177 086,44 2007-01-08
Share Issue 24 000,00 624 000,00 2006-03-29
Share Issue 360 000,00 600 000,00 2005-08-02
Share Issue 100 000,00 240 000,00 2005-08-02
Share Issue 40 000,00 140 000,00 2005-08-02
Formation 100 000,00 100 000,00 2004-03-30
36
AUTHORIZATIONS AND DILUTION As a result of the extraordinary general meeting
held on 13 May 2020 resolving to approve the
acquisition of all of the shares of Score Music
Interactive Ltd, the EGM also resolved on the Set-
Off Share Issue - a new share issue of a maximum
of 1,900,000,000 shares, directed towards the
shareholders of SMI, for the payment of the
acquisition of all shares in SMI (via set-off of loan
notes at a subscription price of SEK 0.12 per
share) which would result in an increase of the
share capital by a maximum of SEK 19,000,000.
The shares issued in the Set Off Share Issue will
be subscribed for on a separate subscription list
shortly after the closing of the Rights Issue. The
board believes that the proposed subscription
price is justified given that it is equal to the
subscription price for existing shareholders to
subscribe for shares in the Rights Issue. The
board will resolve on allotment of the newly issued
shares in the Set-Off Share Issue to shareholders
of SMI after the board has resolved on allotment
in the Rights Issue.
In addition, the EGM resolved on an Over-
subscription Option - authorising the Board of
Directors of the Company to, up until the next
annual general meeting, in order to, amongst
other things, accommodate of an over-
subscription in the Rights Issue, pass a resolution
to issue an additional 200 000 000 shares worth
a maximum of SEK 24 million with deviation from
shareholders' pre-emption rights on essentially
the same terms as the Rights Issue which at full
subscription would result in an increase of the
share capital with a maximum of SEK 2,000,000.
The Over-Subscription Option will, if used, be
directed towards legal or nor legal persons who
are not qualified investors of no more than 149 in
total.
The EGM further resolved to perform the
Directed Share Issue - a share issue with
deviation from the pre-emption rights of the
shareholders, of a maximum of 250,000,000
shares at a subscription price of SEK 0.12 per
share, which at full subscription would result in an
increase of the share capital with a maximum of
SEK 2,500,000.
The right to subscribe for shares in the Directed
Share Issue will be granted to a number of
beforehand identified non-qualified investors
(legal or no legal persons), of no more than 149
in total. The subscription price will be SEK 0.12
per share, which is equal to the subscription price
of the Rights Issue. The reason for the deviation
from the shareholders' pre-emption rights is that
the board of directors have, after contacts with
the main shareholders in the Company,
concluded that it was not possible to raise
additional capital through a rights issue in
addition to the Rights Issue and the Over-.
Subscription Option but noted that there was a
significant interest from external investors to
invest in Xhail. In addition, the Directed Share
Issue will result in a broadening of the shareholder
base and in the Company getting additional
shareholders as well as additional funds to
develop the Company's assets.
37
OWNERSHIP STRUCTURE The number of shareholders of Xhail totalled
approximately 6,800 as at 31 March 2020. The
following table displays information concerning
the Company's ownership structure. The table is
based on the Company's owners as of 31 March
2020.
THE OWNERSHIP IN SMI IS THE FOLLOWING AS PER 21 MAY 2020:
Score Music Interactive Ltd Ownership List, 21 May 2020 Shares %
MDMK Ltd (Mick & Moira Kiely) 10 031 35%
Bridge Brothers LLC 5 594 19%
Sigura Unlimited Company 2 075 7%
Amatano (no 2) Company 1 320 5%
Others 9 971 34%
Total 28 991 100%
Xhail AB Post Transaction (approx, based on SEK 55m raise) Shares %
MDMK Ltd (Mick & Moira Kiely) 520 968 726 21%
Bridge Brothers LLC 384 520 334 16%
FEPI International 250 000 000 10%
Sigura Unlimited Company 130 174 270 5%
Amatano (no 2) Company 68 555 350 3%
Other exisiting shareholders SMI 545 781 320 22%
Investors Rights Issue and Directed Issue 459 254 632 19%
Current Owners Swedish Company 69 751 544 3%
Total 2 429 006 176 100%
38
DIVIDEND POLICY The magnitude of future dividends depends on
the Company's future financial performance,
financial position, capital needs and cash flows.
The Company expects to be in an expansive
investment phase in the coming years, and any
distributable funds will therefore in all likelihood be
reinvested in the business. As a result, the Board
of Directors of Xhail estimates that no cash
dividends will be distributed to the shareholders
in the next two years. After that, the board will
conduct a review of the dividend policy. The
target is to give 50% of profits as dividend in the
long term.
OPTION PROGRAMME CEO Peter Swartling has subscribed for an option
programme (warrants with attendant subscription
for new shares) whereby he can subscribe for
80,000,000 shares in the Company at a price of
SEK 0.36 per share during the period 2022-07-
01 to 2023-06-30. He has paid an option
premium for the options. The option programme
will be registered at the Swedish Companies
Registration Office in connection with the
registration of the Rights Issue,
The Board of Directors will conduct a review of
the whole Group’s incentive and propose a new
incentive program for the key employees during
2020.
39
BOARD OF DIRECTORS, SENIOR EXECUTIVES AND AUDITORS
The Company has a current Board of directors, and has elected a new Board of Directors, to be registered
in connection with closing of the acquisition of SMI.
FUTURE BOARD OF DIRECTORS*
Name
Member
since Birth year Position
Number of
shares in
The Company
prior to Rights
Issue
Independent of
Company and
group
management
Independent
of major
shareholders
Michael Doron 2020 1961 Chairman of the
Board of
Directors
0 Yes Yes
Mick Kiely 2020 1964 Board Member 0 No No
Alexander H.
Dessauer
2020 1966 Board Member 0 Yes Yes
Ricard Constantinou 2020 1966 Board Member 0 Yes Yes
Anders Thorsell 2013 1973 Board Member 13 354 553 Yes Yes
*To be registered at the Swedish Companies registration authority in connection with closing of the
acquisition of SMI.
Michael Doron, Chairman. Extensive track record in financial services and part of numerous
successful IPOs in NY. Other achievements include several executive positions in Delta Airlines,
as well as starting several companies. He is based in Stockholm and USA
Mick Kiely, Director. Founder of Xhail in 2013 and its main owner. Background as businessman,
musician and composer for TV, film, advertising and video games. He is based in Los Angeles
and Dublin
Alexander H. Dessauer, Director. Investor and social entrepreneur. Early participant in
innovative technologies, both in the US and overseas. A Duke University graduate and 20-year
executive Board member of Best Buddies International, an IDD global NGO. He is based in
Miami.
Ricard Constantinou, Director. Entrepreneur, business developer and Investor. Founder of
Panini Internazionale, the K-Märkt Group, etc. He is based in Stockholm.
Anders Thorsell, Director. CEO of Nickel Mountain Resources AB (publ). Entrepreneur with
extensive background in corporate finance and management at investment banks. He is based
in Stockholm.
40
CURRENT BOARD OF DIRECTORS The Board of Directors of Xhail currently consist of three members including the chairman.
Name
Member
since Birth year Position
Number of
shares in
The Company
prior to Rights
Issue
Independent of
Company and
group
management
Independent
of major
shareholders
Per Weithz 2017 1972 Chairman of the
Board of
Directors
994 139 Yes Yes
Anders Thorsell 2013 1973 Board Member 13 354 553 No No
Thomas Häggkvist 2019 1974 Board Member 0 Yes Yes
SENIOR EXECUTIVES
Peter Swartling, Group CEO. Will be registered
as CEO after completion of the acquisition of
SMI. Mr. Swartling has been in leading positions
within the music industry in Sweden and New
York for 30 years, and has been the CEO of a
number of companies. He is based in
Stockholm.
Mick Kiely, Chief Creative Officer. He is based
in Los Angeles.
Jens Bruno, Acting Group CFO. Previously CFO
and CEO of a number of public and private
ventures. He is based in Stockholm.
Conor Tee, CTO SMI. He is based in Dublin.
Killian Magee, Head of Music Curation. He is
based in Dublin.
Tom FitzGerald, CFO SMI. He is based in
Dublin.
Crevan Higgins, Financial Controller SMI. He is
based in Dublin.
Andreas Carlsson, Business Development. One
of the world’s leading songwriters and
producers, as well as a successful businessman.
He is based in Los Angeles.
OTHER INFORMATION ABOUT THE
BOARD OF DIRECTORS AND THE
MANAGEMENT TEAM
All members of the Board of Directors and the
management team have their office address at
Xhail AB, Eriksbergsgatan 10, 114 30 Stockholm,
Sweden. No board posts are limited in time in any
other way besides what is stipulated in the
Swedish Companies Act (2005:551). There are
no family ties between board members, members
of management or the Company's auditors other
than that Killian Magee is the son of Mick Kiely.
There are no conflicts of interest between the
obligations of the above board members or senior
executives to Xhail and their private interests or
other obligations.
None of the board members or senior executives
have been convicted in fraud-related cases in the
past five years. None of them have been in
bankruptcy, liquidation or receivership either,
except for Jens Bruno, that was a board member
in Across Agri AB, which has been in bankruptcy
since 2018 and is now closed. There is no
information in laws or orders by authorising
authorities (including approved professional
societies) about charges and/or punishments
instituted against board members or senior
executives and they have not been banned by a
court from being a member of an issuer's
administrative, management or supervisory
bodies or from having leading or comprehensive
functions at an issuer during at least the past five
years.
The fact that certain people on the board and the
management team have financial interests in the
Company via shareholdings or option holdings is
shown by the list above.
AUDITORS At the 2019 annual general meeting, Authorised
Public Accountant Johan Erlandsson, birth year
1968 (from Revisorsgruppen i Malmö AB), was
elected to a term of office of four (4) years.
Erlandsson is a member of FAR SRS.
41
REMUNERATION FOR BOARD OF
DIRECTORS AND SENIOR
EXECUTIVES The managing director, Peter Swartling, is
employed by the Company and receives
remuneration according to contract, having a
salary of SEK 150,000 per month plus standard
pension benefits. 30 vacation days per year.
Swartling has signed up for an incentive program,
detailed above. The contracts stipulated a six-
month notice period for either party and a nine-
month severance pay, unless the board by a 75%
majority deem the CEO to be a “bad leaver”.
Remuneration for the board until the end of the
2021 annual meeting will be SEK 300,000 per
board member, with the exception that members
employed by the Company or having a
consultancy of at least 50% will not receive a
board fee.
The board remuneration is decided by resolution
of the annual general meeting. There is no
contract between the Company and a board
member or a senior executive that entitles
him/her to any benefits after their post has ended
above and beyond what is specified above with
respect to remuneration for managing directors in
the event of dismissal by the Company. The
Board member Anders Thorsell’s wholly-owned
company Connector Corporate Finance AB has
agreed to set-off a claim of SEK 1.5 million against
the Company, versus a SEK 1.0 million set-off
against shares in the Rights Issue at a
subscription price of SEK 0.12 per share.
There is no contract between the Company and
a board member or a senior executive that
entitles him/her to any benefits after their post
ends. Neither the Company nor its subsidiaries
have any provisioned or accrued amounts for
pensions and similar benefits after leaving the
Company.
BONUSES The Group does not have any contracts or
agreements concerning bonus compensation.
OTHER BENEFITS The Group does not have any contracts or
agreements concerning other benefits.
42
LEGAL ISSUES AND SUPPLEMENTARY INFORMATION
UNDERWRITING COMMITMENTS Xhail has received an underwriting commitment
from external investors who have committed to
ensure that the Rights Issue is subscribed by up
to SEK 24.1 million and a commitment for
subscription agreements amounting to SEK 1.0
million from Board Member Anders Thorsell’s
company Connector Corporate Finance AB.
Further, the Directed Share Issue is per May 21st
committed to an amount of no less than SEK 5
million.
The underwriting commitments are irrevocable.
As remuneration for their underwriting
commitment, the underwriter receives
compensation of 10 percent of the underwritten
amount. The underwriting compensation is paid
regardless of whether the underwriting guarantee
needs to be used or not. The Company has not
required the underwriter to furnish security for the
guarantee by depositing cash equivalents,
pledging securities, presenting bank guarantees
or in another manner. The underwriter is
nonetheless aware that the guarantee is a legally
binding obligation to the Company and
undertakes to keep the necessary funds available
in the event that the underwriting guarantee is to
be used. There is thus a risk that the underwriting
commitment is not met in full.
SPA In April 2020 a Share Purchase Agreement (the
“SPA”) was agreed between the main
shareholders of SMI and IFOX. IFOX commits to
pay SEK 228,000,000, for 100% of the shares of
SMI on a debt-free basis. However, under certain
conditions specified in the SPA, the purchase
price for the shares may be adjusted downwards.
The consideration is to be paid by the issuance of
debt notes corresponding to the final purchase
price for the shares in accordance with the SPA,
to immediately be converted/set-off to newly
issued shares in IFOX at a subscription price of
SEK 0.12 per share. The SPA includes standard
warranties for an SPA of this kind. IFOX further
commits to perform certain actions to enable the
acquisition and also commits to secure a net
financing of no less than SEK 24 million. After
completion of the Rights Issue, the acquisition
under the SPA shall be completed.
NMR AGREEMENTS The Company had a series of agreements with
Nickel Mountain Resources AB (publ) (“NMR”):
1. Share Purchase Agreement from 2017
regarding IFOX sale of all outstanding
shares in Mezhlisa Resources Cyprus
Ltd (“Mezhlisa”) (the “Tomsk SPA”);
2. Mandate Agreement 2017 regarding the
potential sale of NMRs subsidiary
Mezhlisa or the sale of Mezhlisa’s
shareholdings in its subsidiary OOO
Bakcharneftegaz;
3. Mandate Agreement regarding the
potential sale of NMRs subsidiary Nickel
Mountain AB or the sale of Nickel
Mountain AB’s nickel project in Sweden;
4. A management agreement, whereby the
Company was performing management
services for the management of a certain
asset within NMR.
Under the Tomsk SPA, NMR has claimed
compensation for damages from the Company
amounting to a total sum of SEK 1 700 000 due
to inaccuracy of a warranty representation in the
Tomsk SPA. As of the date of this Investment
memorandum a total amount of SEK 1 350 000
has been paid in compensation to NMR. The
remaining amount of SEK 350,000 is to be paid
after the completion of the Rights Issue. After
such payment has been made in full, NMR has
declared they have no further claims on the
Company. Agreements under 2, 3 and 4 above
have been terminated in May 2020 by the parties
to such agreements and there are no remaining
obligations for the Company under these
agreements.
LOAN NOTE SMI has a loan note of €1,230,000 (€1,332,822
including accrued interest per May 20, 2020)
that runs with an annual interest of 6% per
annum. The Loan Note has a pledge over the
Intellectual Property rights of SMI. The Company
can repay the loan at any time. The Loan Note is
currently in default since 30 April 2020, but the
principal holder Bridge Brothers LLC has
declared its intentions to prolong the Loan Note
for a certain period of time in order to facilitate
the transaction.
INTELLECTUAL PROPERTY RIGHTS
The Xhail mother patent has granted patents in
US, China, Russia, Ireland, Japan and India.
Examiner has indicated grants in Australia and
43
Europe with patents pending in all other territories
globally with a priority date of 9 April 2013 which
is the date against which the novelty and
inventiveness of the Xhail technology is assessed.
Other patents (new and continuations) have been
granted in the US. Based on the ongoing success
in securing global patent rights for the technology
it is clear that Xhail has a technology that is far
ahead of its time. The Xhail IP is regarded as a
critical building block for future development in
the music AI space generally. The Board believes
that all machine learning (or AI) solutions in the
future will require the unique tagging system
protected by the IP.
Patents are acknowledged and commended for
their broadness and strength making it
increasingly difficult for development by
competitors in a space of huge interest to the
entertainment industry. The Xhail patent for vocal
stem application of the platform was granted in
US in 2019. International Patent Application
lodged in 2019.
DISPUTES The Company is party to a tax process whereby
the Swedish Tax Authority has declared that they
would not accept VAT deductions during the
period January 2016 to May 2017 and wanted to
disallow deductions of in total SEK 3.9m.
Deduction before that was accepted, as was
deductions after that period, despite the business
being the same. The Company has since
reserved the full amount in the books. The case is
currently in the lower administrative court of
Stockholm. Proceedings have not yet taken
place.
Besides this, the Company is not a party in any
legal proceedings or arbitration proceedings
(including not yet settled cases or cases the
Company is aware can arise) in the past twelve
months and that recently had or could have
significant effects on the Company's financial
position or profitability.
TRANSACTIONS WITH ASSOCIATED
COMPANIES When group companies deliver products or
provide services to other companies in the
Group, the Company applies what it deems to be
market pricing and market terms. As far as the
board of directors knows, no transactions with
associated companies have taken place within
the Company during the past three-year period.
SHAREHOLDER'S AGREEMENTS As far as the Board of Directors knows, there are
not any shareholders' agreements concerning the
shares of the Company. As far as the Board of
Directors knows, there are not any other
agreements or equivalent transactions that could
lead to a change in control over the Company.
LOCK-UP AGREEMENTS As far as the Board of Directors knows, there are
not any lock-up agreements within the Company.
Such can be put in place for certain key
shareholders ahead of a listing.
OTHER COMPANY INFORMATION The Company's Swedish corporate ID no. is
556658-6797. The Company is public (publ) and
has its registered office in Stockholm
Municipality, Stockholm County, Sweden. The
Company was registered with the Swedish
Companies Registration Office on 30 March
2004. The Company's legal form is governed by
the Swedish Companies Act (2005:551).
Shareholder rights associated with the shares
may only be changed in accordance with this
regulatory framework. The Company is not listed
on any exchange, whereby it has no obligations
to follow the Code of Corporate Governance and
de facto does not do so.
DOCUMENTS KEPT AVAILABLE FOR
INFORMATION PURPOSES The Articles of Association of Xhail, as well as all
reports, historic financial information, valuations
and opinions prepared by an expert are available
at the Company's premises in paper form for
inspection during the term of validity of the
Investment memorandum. Information about
Xhail is also available on the Company's website,
www.xhail.seDocuments incorporated by
reference
Investors should read all information incorporated
in the Investment memorandum by reference and
the information to which the reference refers
should be read as part of this Investment
memorandum. The parts of the documents listed
below not incorporated by reference are not a
part of this Investment memorandum. The
information listed below shall be deemed
incorporated in the Investment memorandum by
reference. Copies of the Investment
memorandum and the documents incorporated
by reference can be obtained electronically from
Xhail via the Company's website: www.xhail.se
44
ARTICLES OF ASSOCIATION
On May 13 2020 the EGM decided on two new sets of Articles of Association. The first is implemented to
make room for the Rights Issue, the Directed Share Issue and the Over-Subscription Option, to change
the name of the Company, to change the object of the Company’s activities and the accounting year for
the Company to calendar year. The second set of Articles of Association, found below the first new set, is
to make room in the number of shares and share capital in the Set-Off Share Issue with regards to the
acquisition of all shares in SMI. At the date of this Investment memorandum neither of the below
mentioned articles of associations have been registered at the Swedish Companies Registration Authority.
Articles of Association of XHAIL Number 1.
BOLAGSORDNING FÖR XHAIL AB (PUBL)
556658-6797
ARTICLES OF ASSOCIATION OF XHAIL AB (PUBL)
556658-6797
§1 Företagsnamn
Name of the company
Bolagets företagsnamn är Xhail AB (publ).
The name of the company is Xhail AB (publ).
§2 Styrelsens säte
Registered office of the board of directors
Styrelsen skall ha sitt säte i Stockholm.
The board of directors shall have its registered office in Stockholm.
§3 Verksamhet
Object of the company’s activities
Bolaget skall ha till föremål för sin verksamhet att leverera affärsutvecklingstjänster,
bedriva förvaltning av aktier och andelar samt bedriva handel med finansiella instrument
såsom aktier och därtill relaterade värdepapper, obligationer och valutor, fast och lös
egendom och därmed förenlig verksamhet.
The object of the company’s activities is to deliver business development services,
administration of shares and conducting trading with financial instruments, such as shares
and associated securities, bonds and currencies, moveable and immoveable property and
other activities compatible therewith.
§4 Aktiekapital
Share capital
Aktiekapitalet skall vara lägst 3 000 000 kronor och högst 12 000 000 kronor.
The share capital shall be not less than SEK 3,000,000 and not more than SEK
12,000,000.
§5 Antal aktier m.m.
Number of shares
45
Antalet aktier skall vara lägst 300 000 000 och högst 1 200 000 000.
The number of shares shall be not less than 300,000,000 and not more than
1,200,000,000.
§6 Styrelse
Board of Directors
Styrelsen består av lägst tre och högst sju ledamöter med högst en suppleant.
The board of directors shall consist of not less than three and not more than seven
members with not more than one deputy member.
§7 Revisorer
Auditors
Bolaget skall ha en eller två revisorer med eller utan revisorssuppleanter eller en eller två
revisionsbolag. Uppdraget som revisor gäller till slutet av den årsstämma som hålls under
det fjärde räkenskapsåret efter det då revisorn utsågs.
The company shall have one or two auditors with or without deputy auditors or one or two
audit companies. The assignment as auditor applies until the annual general meeting held
during the fourth financial year after the year the auditor was elected.
§8 Kallelse
Notice of general meeting
Kallelse till årsstämma samt kallelse till extra bolagsstämma där fråga om ändring av
bolagsordningen kommer att behandlas skall ske tidigast sex och senast fyra veckor före
stämman. Kallelse till annan extra bolagsstämma skall utfärdas tidigast sex och senast två
veckor före stämman.
Notice of annual general meeting and notice of extraordinary general meeting where
amendment of the articles of association is addressed shall be made at earliest six weeks
and at latest four weeks prior to the general meeting. Notice of other extraordinary general
meeting shall be issued at earliest six weeks and at latest two weeks prior to the general
meeting.
Kallelse till bolagsstämma skall ske genom annonsering i Post- och Inrikes Tidningar och
genom att kallelsen hålls tillgänglig på bolagets webbplats. Samtidigt som kallelse sker
skall bolaget genom annonsering i Svenska Dagbladet upplysa om att kallelse skett.
Notices of general meetings shall be made by announcement in the Swedish Official
Gazette (Sw. Post- och Inrikes Tidningar) and by making the notice available on the
company’s website. At the same time as notice is given it shall be announced in Svenska
Dagbladet that a notice has been made.
För att få deltaga i bolagsstämma skall aktieägare anmäla sig hos bolaget senast den dag
som anges i kallelsen till stämman. Denna dag får inte vara söndag, annan allmän helgdag,
lördag, midsommarafton, julafton eller nyårsafton och inte infalla tidigare än femte
vardagen före stämman.
To participate in general meetings, the shareholder must notify the company no later than
the date specified in the notice of the general meeting. Such day may not be a Sunday,
other public holiday, Saturday, Midsummer’s Eve, Christmas Eve or New Year’s Eve and
46
may not occur earlier than the fifth weekday prior to the general meeting.
§9 Årsstämma
Annual general meeting
På årsstämma skall följande ärenden förekomma till behandling:
The following matters shall be addressed at the annual general meeting:
1. Val av ordförande vid stämman.
Election of chairman of the meeting.
2. Upprättande och godkännande av röstlängd.
Preparation and approval of the voting register.
3. Godkännande av dagordning.
Approval of the agenda.
4. Val av en eller två justeringsmän
Election of one or two persons to verify the minutes.
5. Prövning av om stämman blivit behörigen sammankallad.
Determination of whether the meeting has been duly convened.
6. Framläggande av årsredovisning och revisionsberättelse samt, i förekommande fall,
koncernredovisning och koncernrevisionsberättelse.
Presentation of the annual report and auditor's report and, where applicable, the
consolidated annual report and the consolidated audit report.
7. Beslut
Resolutions
a. om fastställelse av resultaträkning och balansräkning samt, i förekommande
fall, koncernresultaträkning och koncernbalansräkning,
on adoption of the balance sheet and income statement and, where
applicable, the consolidated balance sheet and the consolidated income
statement,
b. om dispositioner beträffande bolagets vinst eller förlust enligt den fastställda
balansräkningen,
on allocation of the company's profit or loss according to the adopted balance
sheet,
c. om ansvarsfrihet åt styrelseledamöter och verkställande direktören.
on discharge from liability for board members and the managing director.
8. Bestämmande av antalet styrelseledamöter och, i förekommande fall,
styrelsesuppleanter, revisorer och revisorssuppleanter som skall väljas på stämman.
Determination of the number of board members and, where applicable, deputy
47
members, and the number of auditors and deputy auditors to be elected at the
general meeting.
9. Fastställande av arvoden åt styrelsen, och i förekommande fall, revisorerna.
Determination of remuneration for the board of directors and, where applicable, the
auditors.
10. Val av styrelse och, i förekommande fall, styrelsesuppleanter, revisorer,
revisorssuppleant eller revisionsbolag.
Election of the board of directors and, where applicable, deputy board members,
auditors, deputy auditors or audit company.
11. Annat ärende som ankommer på stämman enligt aktiebolagslagen eller
bolagsordningen.
Any other business that are to be addressed on the meeting pursuant to the Swedish
Companies Act or the articles of association.
§10 Avstämningsförbehåll
CSD clause
Bolagets aktier skall vara registrerade i ett avstämningsregister enligt lagen (1998:1479)
om värdepapperscentraler och kontoföring av finansiella instrument.
The shares of the company shall be registered in a CSD register in accordance with the
Central Securities Depositaries and Financial Instruments Accounts Act (Sw. lagen
(1998:1479) om värdepapperscentraler och kontoföring av finansiella instrument).
§11 Räkenskapsår
Financial year
Bolagets räkenskapsår skall vara 0101-1231.
The company's financial year shall be 0101-1231.
48
ARTICLES OF ASSOCIATION OF XHAIL NUMBER 2. BOLAGSORDNING FÖR XHAIL AB (PUBL)
556658-6797
ARTICLES OF ASSOCIATION OF XHAIL AB (PUBL)
556658-6797
§1 Företagsnamn
Name of the company
Bolagets företagsnamn är Xhail AB (publ).
The name of the company is Xhail AB (publ).
§2 Styrelsens säte
Registered office of the board of directors
Styrelsen skall ha sitt säte i Stockholm.
The board of directors shall have its registered office in Stockholm.
§3 Verksamhet
Object of the company’s activities
Bolaget skall ha till föremål för sin verksamhet att leverera affärsutvecklingstjänster,
bedriva förvaltning av aktier och andelar samt bedriva handel med finansiella instrument
såsom aktier och därtill relaterade värdepapper, obligationer och valutor, fast och lös
egendom och därmed förenlig verksamhet.
The object of the company’s activities is to deliver business development services,
administration of shares and conducting trading with financial instruments, such as shares
and associated securities, bonds and currencies, moveable and immoveable property and
other activities compatible therewith.
§4 Aktiekapital
Share capital
Aktiekapitalet skall vara lägst 20 000 000 kronor och högst 80 000 000 kronor.
The share capital shall be not less than SEK 20,000,000 and not more than SEK
80,000,000.
§5 Antal aktier m.m.
Number of shares etc.
Antalet aktier skall vara lägst 2 000 000 000 och högst 8 000 000 000.
The number of shares shall be not less than 2,000,000,000 and not more than
8,000,000,000.
§6 Styrelse
Board of Directors
Styrelsen består av lägst tre och högst sju ledamöter med högst en suppleant.
The board of directors shall consist of not less than three and not more than seven
members with not more than one deputy member.
§7 Revisorer
49
Auditors
Bolaget skall ha en eller två revisorer med eller utan revisorssuppleanter eller en eller två
revisionsbolag. Uppdraget som revisor gäller till slutet av den årsstämma som hålls under
det fjärde räkenskapsåret efter det då revisorn utsågs.
The company shall have one or two auditors with or without deputy auditors or one or two
audit companies. The assignment as auditor applies until the annual general meeting held
during the fourth financial year after the year the auditor was elected.
§8 Kallelse
Notice of general meeting
Kallelse till årsstämma samt kallelse till extra bolagsstämma där fråga om ändring av
bolagsordningen kommer att behandlas skall ske tidigast sex och senast fyra veckor före
stämman. Kallelse till annan extra bolagsstämma skall utfärdas tidigast sex och senast två
veckor före stämman.
Notice of annual general meeting and notice to extraordinary general meeting where
amendment of the articles of association is addressed shall be made at earliest six weeks
and at latest four weeks prior to the general meeting. Notice of other extraordinary general
meeting shall be issued at earliest six weeks and at latest two weeks prior to the general
meeting.
Kallelse till bolagsstämma skall ske genom annonsering i Post- och Inrikes Tidningar och
genom att kallelsen hålls tillgänglig på bolagets webbplats. Samtidigt som kallelse sker
skall bolaget genom annonsering i Svenska Dagbladet upplysa om att kallelse skett.
Notices of general meetings shall be made by announcement in the Swedish Official
Gazette (Sw. Post- och Inrikes Tidningar) and by making the notice available on the
company’s website. At the same time as notice is given it shall be announced in Svenska
Dagbladet that a notice has been made.
För att få deltaga i bolagsstämma skall aktieägare anmäla sig hos bolaget senast den dag
som anges i kallelsen till stämman. Denna dag får inte vara söndag, annan allmän helgdag,
lördag, midsommarafton, julafton eller nyårsafton och inte infalla tidigare än femte
vardagen före stämman.
To participate in general meetings, the shareholder must notify the company no later than
the date specified in the notice of the general meeting. Such day may not be a Sunday,
other public holiday, Saturday, Midsummer’s Eve, Christmas Eve or New Year’s Eve and
may not occur earlier than the fifth weekday prior to the general meeting.
§9 Årsstämma
Annual general meeting
På årsstämma skall följande ärenden förekomma till behandling:
The following matters shall be addressed at the annual general meeting:
1. Val av ordförande vid stämman.
Election of chairman of the meeting.
50
2. Upprättande och godkännande av röstlängd.
Preparation and approval of the voting register.
3. Godkännande av dagordning.
Approval of the agenda.
4. Val av en eller två justeringsmän
Election of one or two persons to verify the minutes.
5. Prövning av om stämman blivit behörigen sammankallad.
Determination of whether the meeting has been duly convened.
6. Framläggande av årsredovisning och revisionsberättelse samt, i förekommande fall,
koncernredovisning och koncernrevisionsberättelse.
Presentation of the annual report and auditor's report and, where applicable, the
consolidated annual report and the consolidated audit report.
7. Beslut
Resolutions
a. om fastställelse av resultaträkning och balansräkning samt, i förekommande
fall, koncernresultaträkning och koncernbalansräkning,
on adoption of the balance sheet and income statement and, where
applicable, the consolidated balance sheet and the consolidated income
statement,
b. om dispositioner beträffande bolagets vinst eller förlust enligt den fastställda
balansräkningen,
on allocation of the company's profit or loss according to the adopted balance
sheet,
c. om ansvarsfrihet åt styrelseledamöter och verkställande direktören.
on discharge from liability for board members and the managing director.
8. Bestämmande av antalet styrelseledamöter och, i förekommande fall,
styrelsesuppleanter, revisorer och revisorssuppleanter som skall väljas på stämman.
Determination of the number of board members and, where applicable, deputy
members, and the number of auditors and deputy auditors to be elected at the
general meeting.
9. Fastställande av arvoden åt styrelsen, och i förekommande fall, revisorerna.
Determination of remuneration for the board of directors and, where applicable, the
auditors.
10. Val av styrelse och, i förekommande fall, styrelsesuppleanter, revisorer,
revisorssuppleant eller revisionsbolag.
Election of the board of directors and, where applicable, deputy board members,
auditors, deputy auditors or audit company.
51
11. Annat ärende som ankommer på stämman enligt aktiebolagslagen eller
bolagsordningen.
Any other business that are to be addressed on the meeting pursuant to the Swedish
Companies Act or the articles of association.
§10 Avstämningsförbehåll
CSD clause
Bolagets aktier skall vara registrerade i ett avstämningsregister enligt lagen (1998:1479)
om värdepapperscentraler och kontoföring av finansiella instrument.
The shares of the company shall be registered in a CSD register in accordance with the
Central Securities Depositaries and Financial Instruments Accounts Act (Sw. lagen
(1998:1479) om värdepapperscentraler och kontoföring av finansiella instrument).
§11 Räkenskapsår
Financial year
Bolagets räkenskapsår skall vara 0101-1231.
The company's financial year shall be 0101-1231.
52
ADDRESSES
HEAD OFFICE Xhail AB (publ)
Eriksbergsgatan 10
114 30 Stockholm
Sweden
ACCOUNT OPERATOR Euroclear Sweden AB
Box 7822
103 97 Stockholm
Sweden
Tel: +46 8 402 90 00
AUDITOR Johan Erlandsson
Revisorsgruppen i Malmö AB
Slottsgatan 20
211 33 Malmö
Sweden
Tel: +46 40 664 63 80