XTL BIOPHARMACEUTICALS LTD.

Pursuant to NASDAQ Marketplace Rule 4350(a)(i), foreign private issuers may elect to follow home country practices in lieu of certain
NASDAQ corporate governance requirements by submitting to NASDAQ a written statement from an independent counsel in the company's home
country, certifying that the company's practices are not prohibited by the home country's laws. This letter is only required once, at the time of listing.
We previously submitted to NASDAQ such a letter from our legal counsel in Israel in connection with the September 1, 2005, application for our
ADRs to trade on the NASDAQ Stock Market under the symbol “XTLB.”
On November 20, 2007, we completed a private placement of ordinary shares for an aggregate consideration of approximately $9.8 million in
gross proceeds. In connection with the private placement, we relied on the exemption afforded by NASDAQ Marketplace Rule 4350(a)(i) from the
requirements of NASDAQ Marketplace Rule 4350(i)(D), which requires that an issuer receive shareholder approval prior to an issuance of shares (or
securities convertible into or exercisable for shares) which together with any sales by officers, directors or substantial shareholders of the company
equals 20% or more of the shares or the voting power outstanding before the issuance.
Employees
As of February 29, 2008, we had 17 full-time equivalent employees. In January 2008, we terminated seven employees in the DOS program
concurrent with our plans to out-license the program in 2008.We and our Israeli employees are subject, by an extension order of the Israeli Ministry of
Welfare, to a few provisions of collective bargaining agreements between the Histadrut, the General Federation of Labor Unions in Israel and the
Coordination Bureau of Economic Organizations, including the Industrialists Associations. These provisions principally address cost of living
increases, recreation pay, travel expenses, vacation pay and other conditions of employment. We provide our employees with benefits and working
conditions equal to or above the required minimum. Other than those provisions, our employees are not represented by a labor union. We have written
employment contracts with our employees, and we believe that our relations with our employees are good.
For the years ended December 31, 2007, 2006 and 2005, the number of our employees engaged in the specified activities, by geographic
location, are presented in the table below.
Year ended December 31,
2007 2006 2005
Research and Development
Israel 2 8 22
US 16 18 19
18 26 41
Financial and general management
Israel 4 4 4
US 2 2 —
6 6 4
Business development
Israel — — —
US 1 1 1
1 1 1
Total 25 33 46
Average number of full-time employees 29 40 54
45