XTL BIOPHARMACEUTICALS LTD.

Liquidity and Capital Resources
We have financed our operations from inception primarily through various private placement transactions, our initial public offering, a placing
and open offer transaction, and option and warrant exercises. As of December 31, 2007, we had received net proceeds of approximately $76.4 million
from various private placement transactions, including the November 2007 private placement, net proceeds of $45.7 million from our initial public
offering, net proceeds of $15.4 million from the 2004 placing and open offer transaction, and proceeds of $2.1 million from the exercise of options and
warrants.
As of December 31, 2007, we had $13.0 million in cash, cash equivalents, and short-term bank deposits, a decrease of $12.3 million from
December 31, 2006. Cash used in operating activities for the year ended December 31, 2007, was $21.4 million, as compared to $12.6 million for the
year ended December 31, 2006. This increase in cash used in operating activities was due primarily to increased expenditures associated with the
execution of our business plan as well as the $7.5 million initial upfront license fee for Bicifadine. For the year ended December 31, 2007, the net cash
provided by investing activities of $10.6 million, as compared to net cash used in investing activities of $20.8 million for the year ended December 31,
2006, was primarily the result of the maturity of short-term bank deposits. For the year ended December 31, 2007, net cash provided by financing
activities of $8.8 million, as compared to $24.5 million for the year ended December 31, 2006, was the result of our $8.8 million private placement that
closed in November 2007.
Our cash and cash equivalents, as of December 31, 2007, were invested in highly liquid investments such as cash and short-term bank
deposits. As of December 31, 2007, we are unaware of any known trends or any known demands, commitments, events, or uncertainties that will, or
that are reasonably likely to, result in a material increase or decrease in our required liquidity. We expect that our liquidity needs during 2008 will
continue to be funded from existing cash, cash equivalents, and short-term bank deposits.
We believe that our cash, cash equivalents and bank deposits as of December 31, 2007 and the upfront payment by Presidio will be sufficient
to enable us to meet our planned operating needs and capital expenditures for approximately the next 12 months. We do believe, however, that we will
likely seek additional capital during the next 12 months through public or private equity offerings, debt financings and/or collaborative, strategic
alliance and licensing arrangements. We have made no determination at this time as to the amount, method or timing of any such financing. Such
additional financing may not be available when we need it.
Our forecast of the period of time through which our cash, cash equivalents and short-term investments will be adequate to support our
operations is a forward-looking statement that involves risks and uncertainties. The actual amount of funds we will need to operate is subject to many
factors, some of which are beyond our control. These factors include the following:
• the timing of expenses associated with product development and manufacturing of the proprietary drug candidates within our portfolio
and those that may be in-licensed, partnered or acquired, and specifically, the timing of completion and results from our clinical trials
for Bicifadine;
• our ability to achieve our milestones under licensing arrangements;
• the timing of the in-licensing, partnering and acquisition of new product opportunities; and
• the costs involved in prosecuting and enforcing patent claims and other intellectual property rights.
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