Edgar Filing: XTL BIOPHARMACEUTICALS LTD

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of August, 2013

Commission File Number: 000-51310

	XTL Biopharmaceuticals Ltd.
	(Translation of registrant’s name into English)

85 Medinat Hayehudim St., Herzliya

Pituach, PO Box 4033,

Herzliya 46140, Israel

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N/A

XTL Biopharmaceuticals Ltd. (the “Company”) Presents Its Translated From Hebrew Interim Financial Statements as of June 30, 2013

Attached hereto is an English translation (from Hebrew) of our interim financial statements and additional information as submitted on the Tel Aviv Stock Exchange.

The following documents are included:

A. Board of Directors' Report as of June 30, 2013.

B. Reviewed Condensed Consolidated Financial Statements as of June 30, 2013.

C. Separate Financial Information as of June 30, 2013 in accordance with Regulation 38d of the Israeli Securities Regulations (Periodic and Immediate Reports) - 1970.

D. Interim Report on the Effectiveness of Internal Control over Financial Reporting and Disclosure as of June 30, 2013, Pursuant to Regulation 38c(a) of the Israeli Securities Authority.

E. Condensed Pro Forma Interim Consolidated Financial Statements as of June 30, 2012, in accordance with Regulation 38b of the Israeli Securities Regulations (Periodical and Immediate Reports) – 1970.

Description: XTLbio Logo without conquering

XTL BIOPHARMACEUTICALS LTD.

DIRECTORS' REPORT ON THE CORPORATION'S STATE OF AFFAIRS

FOR THE SIX MONTHS ENDED JUNE 30, 2013

The Board of Directors (the “Board”) of XTL Biopharmaceuticals Ltd. (the “Company”) hereby presents the Company's interim consolidated financial statements as of June 30, 2013 and for the six months then ended (the “Reporting Period”), in conformity with the Israeli Securities Regulations (Periodic and Immediate Reports), 1970 (the “Reporting Regulations”).

The data presented in this report relate to the Company and its subsidiaries on a consolidated basis (the “Group”), unless explicitly stated otherwise.

The directors' report contains, among other things, a condensed description of the Company's business, its financial position, an analysis of operating results and the effect of events during the reporting period on the data in the consolidated financial statements of the Company as of June 30, 2013 (the “Financial Statements”). The material changes in the Company's business compared to the information presented in the Company's periodic report for 2012, in conformity with Regulation 39a to the Reporting Regulations, are specified in section 1.2 below.

The directors' report was prepared based on the assumption that the reader also has at its disposal the Company's directors' report for the year ended December 31, 2012.

PART 1 - THE BOARD OF DIRECTORS' EXPLANATIONS FOR THE STATE OF THE CORPORATION'S BUSINESS

1.1

A condensed description of the Company's business

The Company was incorporated under the Israeli Companies Law on March 9, 1993. The Company is engaged in the development of therapeutics for the treatment of unmet medical needs, improvement of existing medical treatment and business development in the medical realm.

A-1

In the reporting period, the Company's American Depository Receipts ("ADRs") were traded on the NASDAQ's Pink Sheets and as of the date of the approval of the financial statements, effective July 15, 2013, the Company's ADRs have been traded on the NASDAQ's main list (see details in section 4.1.1 below) and its securities are traded on the Tel-Aviv Stock Exchange ("TASE").

On July 25, 2012, the Company completed the acquisition of about 50.79% of the issued and outstanding share capital of InterCure Ltd. ("InterCure"), a public company whose shares are traded on the TASE and is engaged in the research, development, marketing and sale of home medical devices for the non-medicinal and non-invasive treatment of various diseases such as hypertension, congestive cardiac failure, insomnia and stress. On May 16, 2013, the Board approved the conversion of the loan which had been extended to InterCure into 7,620,695 Ordinary shares of InterCure as predetermined in the acquisition agreement. Following said conversion and as of the date of the financial statements, the Company holds about 54.72% of InterCure's issued and outstanding share capital.

On November 21, 2012, the Company acquired about 31.35% of the shares of Proteologics Ltd. ("Proteologics"), a public company whose shares are traded on the TASE. As of June 30, 2013, the Company holds about 30.82% of Proteologics' issued and outstanding share capital (see also Note 12 to the annual consolidated financial statements for 2012 and section 4.1.10 below).

As of the date of the financial statements, the Company is planning and preparing for the implementation of a phase 2 clinical trial of the recombinant EPO ("rHuEPO") drug for treating Multiple Myeloma patients. As part of said preparations, the Company is conducting a study which consists of collecting preliminary data on the existence of specific proteins in the blood of a group of Multiple Myeloma patients to assist in targeting the phase 2 clinical trial protocol. The Company has expanded the study to additional centers in order to collect additional data beyond the original study plan. The data collected in the preliminary study will be combined in the plans and preparations for the implementation of the phase 2 clinical trial, as needed, whose approval the Company expects to obtain during the first half of 2014. The study’s timetable has been extended due to expansion of the preliminary study, as well as an ongoing Company review of both data collected in the study and potential medical centers for conducting phase 2 experiments in the future, due to, inter alia, the Company's return to the NASDAQ main list.

On November 30, 2011, the Company completed the MinoGuard transaction according to which the Company acquired the activity of MinoGuard Ltd. ("MinoGuard"), founded by Mor Research Applications Ltd. ("Mor"), by obtaining an exclusive license to MinoGuard's entire technology, including the SAM-101 drug (combined drug to treat mental disorders focusing on schizophrenia) in return for royalties on sales and milestone payments to be provided throughout the clinical development process with no additional consideration. The drug is based on a combination of existing antipsychotic drugs and a known medicinal compound (Minocycline).

A-2

The Company has rights in patents and other assets in the field of treating Hepatitis C (the DOS program) which have been transferred to Presidio Pharmaceuticals Inc. ("Presidio") and returned to the Company by Presidio in August 2012 (see more details in Note 18a to the annual consolidated financial statements for 2012). The Company intends to examine the renewal of activity in the field of Hepatitis C and/or locate strategic partners for the continued development and marketing of drugs for treating Hepatitis C based on the DOS technology.

The following are the Company's subsidiaries as of June 30, 2013:

InterCure - a publicly traded company on the TASE. InterCure has two subsidiaries - InterCure Inc., incorporated in the U.S., and InterCure UK, incorporated in the UK (inactive).

Xtepo Ltd. ("Xtepo") - a private company incorporated in Israel in November 2009 which holds a license for the exclusive use of the patent for rHuEPO drug for treating Multiple Myeloma patients.

XTL Biopharmaceuticals Inc. ("XTL Inc.") - a U.S. company incorporated in 1999 under the laws of the State of Delaware, USA and was engaged in development of therapeutics and business development in the medical realm. XTL Inc. has a wholly-owned subsidiary (a sub-subsidiary of the Company) - XTL Development Inc. ("XTL Development"), which was incorporated in 2007 under the laws of the State of Delaware, USA. As of the date of the approval of the financial statements, XTL Inc. and XTL Development are inactive.

1.2

Significant events during the reporting period

1.2.1

On February 21, 2013, the Company's special general meeting of shareholders and the general meeting of holders of warrants (series 2) of the Company decided to extend the exercise period of said warrants from February 27, 2013 to December 31, 2013. On March 12, 2013, the decision was approved by the District Court pursuant to Section 350 to the Israeli Companies Law, 1999.

1.2.2

In keeping with the negotiations held between the Company and Kitov Pharmaceuticals Ltd. (see Note 18a to the annual consolidated financial statements for 2012), on March 5, 2013, the parties to the transaction decided to cease the negotiations as they failed to yield any binding agreement.

1.2.3

During the reporting period, holders of the Company's warrants (series 2) exercised 31,410 warrants (series 2) into 31,410 Ordinary shares of NIS 0.1 par value each for an average exercise increment of NIS 1.02 per warrant. The overall proceeds from the exercise of the warrants (series 2) totaled approximately US $9,000.

1.2.4

During the reporting period, 130,000 non-marketable stock options of the Company were exercised into 130,000 Ordinary shares of NIS 0.1 par value each for an average exercise increment of NIS 0.28 per stock option. The proceeds from the exercise of the stock options totaled approximately US $9,000.

A-3

1.2.5

InterCure

1.2.5.1

On January 21, 2013, InterCure announced that the examination conducted as part of the process of concluding the engagement with Mr. Erez Gavish, the former CEO ("Mr. Gavish"), revealed several issues which require inspection in connection with InterCure's actions during Mr. Gavish's term as CEO, including the legal validity granted to the license agreement of October 2011 signed between InterCure and a company controlled by Dr. Benjamin Gavish ("Dr. Gavish"). InterCure's Board appointed a committee which includes an external attorney hired for this purpose and another director in InterCure in order to investigate the issue and provide InterCure’s Board with conclusions. In addition, a notice was delivered to Mr. Gavish and Dr. Gavish on the establishment of said committee which summoned the two to provide explanations regarding the issues under inspection and requested that they inform any of their future potential partners or investors of the inspection and the legal validity of said license agreement. On April 7, 2013, InterCure announced that on April 4, 2013, an originating summons had been filed by Yazmonit Ltd., a company controlled by Dr. Gavish, against it with the Tel-Aviv-Jaffa District Court according to which the Court is asked to render a verdict which declares that the license agreement had been approved and signed and the rights therein had been conferred and transferred by the respondent to the petitioner as required by law. Moreover, on May 13, 2013, InterCure filed a petition with the Court for dismissing the originating summons in limine and assigning the motion to a standard legal procedure. See details in section 4.1.4 below.

1.2.5.2

On March 21, 2013, Prof. Reuven Zimlichman was appointed as InterCure's medical director. According to the consulting agreement with Prof. Zimlichman, he will provide InterCure with services consisting of R&D consulting, IP and medical regulation management. Prof. Zimlichman will be granted 130,000 stock options exercisable into 130,000 Ordinary shares of InterCure for an exercise increment of NIS 0.54 per stock option. The stock options vest in 12 equal portions each quarter over a period of three years from the grant date. Alternatively, if as a result of the signing of an agreement between InterCure and a medical institution (such as a sickness fund) for the sale of InterCure's products through the medical institution the total sales of InterCure's products exceed US$ 175,000, then 30% of the then unvested stock options will vest. The fair value of all the stock options using the Black and Scholes model in accordance with the provisions of IFRS 2 as of the date of InterCure's Board's approval approximates US $9,000. The exercise period of the stock options is a maximum of 10 years from the date of grant.

The value of each option is based on the following inputs: expected dividend of 0%, expected standard deviation of 92.21%, risk-free interest rates of 2.76%-3.21% and expected life of 5-6.5 years.

A-4

1.2.5.3

On June 26, 2013, InterCure's Board approved the appointment of Mr. Ofer Gilboa as the CEO of InterCure instead of Mr. Ronen Twito, the Company's CFO and Deputy CEO who terminated his tenure as temporary CEO of InterCure. The agreement provides for a letter of exemption and indemnification, and the inclusion of Mr. Gilboa in InterCure's directors' and officers' liability insurance policy. In addition, according to Mr. Gilboa's employment agreement, as approved by InterCure's Board, he will be granted 650,000 stock options which are exercisable into Ordinary shares of InterCure at an exercise price of NIS 0.23 per stock option. The stock options vest over a period of three years whereby 1/12 of stock options will vest at the end of each quarter. The fair value of the entire stock options using the Black and Scholes model pursuant to the provisions of IFRS 2 as of the date of InterCure's Board's approval was approximately US $9,000. The exercise period is for a maximum of ten years from the allocation date. The value of each option is based on the following inputs: expected dividend rate of 0%, expected standard deviation rate of 39.01%, risk-free interest rate of 1% and expected life of 5-6.5 years. Also according to the employment agreement, if InterCure's revenues exceed $ 5 million and the EBITDA is not less than $ 1 million, Mr. Gilboa will be entitled to a bonus of $25,000. It was also determined that Mr. Gilboa will be entitled to a bonus of 1% of any capital raising round in InterCure over a period of 36 months from commencing his tenure, provided that the investments are made by third parties that are unrelated to InterCure, and up to a maximum bonus of $100,000. Mr. Gilboa's employment terms were approved by the meeting of InterCure's shareholders of August 15, 2013, after the reporting date (see also section 4.1 regarding significant events after the reporting date).

A-5

1.3

The financial position, operating results, liquidity and financing resources

The Company has incurred continuing losses and its entire income at this stage originates from InterCure, a subsidiary in which control was acquired on July 25, 2012. The Company depends on outside financing resources to continue its activities. Based on existing business plans, the Company's management estimates that its outstanding cash and cash equivalent balances, including short-term deposits, will allow the Company to finance its activities at least until the fourth quarter of 2014 (independently of InterCure). However, the amount of cash which the Company will need in practice to finance its activities depends on numerous factors which include, but are not limited to, the timing, planning and execution of clinical trials of existing drugs and future projects which the Company might acquire or other business development activities such as acquiring new technologies and/or changes in circumstances which are liable to cause significant expenses to the Company in excess of management's current and known expectations as of the date of these financial statements and which will require the Company to reallocate funds against plans, also due to circumstances beyond its control.

The Company expects to incur additional losses in 2013 arising from research and development activities, testing additional technologies and operating activities. These losses will be reflected in negative cash flows from operating activities. Accordingly, in order to complete the clinical trials aimed at developing a product until obtaining its marketing approval, the Company will be forced to raise additional funds in the future by issuing securities. Should the Company fail to raise additional capital in the future under standard terms, it will be required to dispose of marketable securities held by it or minimize its activities, sell or grant a sublicense to third parties to use all or part of its technologies.

1.3.1

The financial position

Balance sheet highlights (U.S. dollars in thousands)

	June 30, 2013					December 31, 2012
Line item	Amount		% of total balance sheet			Amount		% of total balance sheet
	$000					$000

Total balance sheet		9,380		100	%		11,086		100	%
Equity attributable to equity holders of the Company		6,276		67	%		7,353		66	%
Non-controlling interests		1,722		18	%		2,071		19	%
Current assets		2,605		28	%		3,792		34	%
Investment in associate		1,965		21	%		2,336		21	%
Property, plant and equipment, net		70		1	%		72		1	%
Intangible assets, net		4,740		51	%		4,886		44	%
Current liabilities		1,369		15	%		1,649		15	%
Non-current liabilities		13		0	%		13		0	%

A-6

Explanations for the developments in items in the statement of financial position:

Equity

The Company's equity as of June 30, 2013 (including non-controlling interests) was approximately $7,998,000. Equity attributable to equity holders of the Company as of June 30, 2013 totaled $6,276,000, a decrease of approximately $1,077,000 from December 31, 2012, representing about 67% of total balance sheet compared to 66% of total balance sheet as of December 31, 2012. The decrease in equity attributable to equity holders of the Company is mainly a result of the loss for the period (offset by share-based payment expenses).

The balance of non-controlling interests as of June 30, 2013 was approximately $1,722,000, representing the other shareholdings in InterCure compared to $2,071,000 as of December 31, 2012. The decrease is mainly a result of the loss for the period (offset by share-based payment expenses) and the increase in the Company's stake in InterCure following the conversion of the loan that had been extended to InterCure according to the acquisition agreement. As of June 30, 2013, the Company holds about 54.72% of InterCure's issued and outstanding share capital (see more details in section 1.1 above).

Assets

The Group's total current assets as of June 30, 2013 amounted to approximately $2,605,000, a decrease of approximately $1,187,000, compared to approximately $3,792,000 as of December 31, 2012. The change is primarily a result of a decrease in the Group's balances of cash and short-term deposits which totaled approximately $2,053,000 as of June 30, 2013, a decrease of approximately $1,259,000 compared to the balances of cash and short-term deposits totaling approximately $3,312,000 as of December 31, 2012. This decrease is mainly a result of the Group's current operations. The balances of cash and short-term deposits as of June 30, 2013, excluding InterCure, totaled approximately $1,678,000, a decrease of approximately $668,000 compared to the balance as of December 31, 2012, which is mainly explained by the cash flows used in operating activities.

The carrying amount of trade receivables as of June 30, 2013 was approximately $97,000 compared to approximately $76,000 as of December 31, 2012. The balance arises from InterCure's trade receivables.

The balance of trade receivables mainly arises from sales to UK and U.S. chains. The Company's current standard payment terms for retail distribution channels are 30 credit days and 3-5 days for direct sale channels.

A-7

The carrying amount of inventories as of June 30, 2013 totaled approximately $265,000 compared to approximately $229,000 as of December 31, 2012. The increase in inventories is principally explained by the fact that until the date of completing InterCure's debt refinancing and the transaction with the Company and Medica Fund as described above, InterCure held minimal inventory levels based on its limited financial resources prior to the debt refinancing.

The carrying amount of other accounts receivable in the statement of financial position as of June 30, 2013 totaled approximately $168,000 (approximately $114,000 excluding InterCure) compared to approximately $153,000 as of December 31, 2012 (approximately $117,000 excluding InterCure) with no material change. The balance mainly includes Government authorities and prepaid expenses.

The investment in an associate includes the Company's investment in Proteologics. As of June 30, 2013, the investment totaled approximately $1,965,000 compared to approximately $2,336,000 as of December 31, 2012. The investment is recorded in the Company's books under the equity method. During the period, the Company recorded equity losses from the investment in an associate totaling approximately $449,000, offset by an increase in the investment from foreign currency translation differences of foreign operations of approximately $68,000.

Property, plant and equipment as of June 30, 2013 totaled approximately $70,000 (approximately $34,000 excluding InterCure) compared to approximately $72,000 as of December 31, 2012 (approximately $31,000 excluding InterCure) with no material change.

The carrying amount of intangible assets as of June 30, 2013 was approximately $4,740,000 compared to approximately $4,886,000 on December 31, 2012. The balance comprises the license for the exclusive use of the rHuEPO drug patent for treating Multiple Myeloma and the related knowhow and studies underlying the patent in a total of approximately $2,265,000, in addition to transaction costs of approximately $187,000. The balance also includes technology totaling approximately $1,711,000 and brand name totaling approximately $443,000 from the InterCure acquisition transaction of July 2012. The change in the carrying amount as of June 30, 2013 compared to December 31, 2012 arises mainly from the current amortization of said technology and brand name.

Current liabilities

The carrying amount of current liabilities as of June 30, 2013 totaled approximately $1,369,000 (approximately $594,000 excluding InterCure), compared to approximately $1,649,000 as of December 31, 2012 (approximately $757,000 excluding InterCure). The decrease is primarily a result of the repayment of liabilities to professional service providers and the payment of grants to officers for the capital raising of 2012.

A-8

1.3.2

Analysis of the operating results

Condensed statements of income (U.S. dollars in thousands)

In the first half of 2012, the Company did not include the results of InterCure whose results have only been consolidated in the Group's financial statements starting from the acquisition date, i.e. the third quarter of 2012.

	Six months ended June 30,						Three months ended June 30,						Year ended December 31,
	2013			2012			2013			2012			2012
	$000

Revenues		1,185			-			512			-			938
Cost of sales		(387	)		-			(188	)		-			(380	)

Gross profit		798			-			324			-			558

Research and development expenses		(43	)		(43	)		(25	)		(26	)		(99	)
Selling and marketing expenses		(1,294	)		-			(608	)		-			(848	)
General and administrative expenses		(1,394	)		(975	)		(694	)		(591	)		(2,769	)
Other gains, net		10			-			3			-			802

Operating loss		(1,923	)		(1,018	)		(1,000	)		(617	)		(2,356	)

Finance income (expenses), net		26			(26	)		15			(58	)		45

Earnings (losses) from investment in associate		(449	)		-			(259	)		-			569

Loss for the period		(2,346	)		(1,044	)		(1,244	)		(675	)		(1,742	)

Other comprehensive income:
Foreign currency translation differences		68			-			17			-			114

Total other comprehensive income		68			-			17			-			114

Total comprehensive loss for the period		(2,278	)		(1,044	)		(1,227	)		(675	)		(1,628	)

Loss for the period attributable to:
Equity holders of the Company		(1,875	)		(1,044	)		(1,003	)		(675	)		(1,390	)
Non-controlling interests		(471	)		-			(241	)		-			(352	)

Total loss for the period		(2,346	)		(1,044	)		(1,244	)		(675	)		(1,742	)

Total comprehensive loss for the period attributable to:
Equity holders of the Company		(1,807	)		(1,044	)		(986	)		(675	)		(1,276	)
Non-controlling interests		(471	)		-			(241	)		-			(352	)

Total comprehensive loss for the period		(2,278	)		(1,044	)		(1,227	)		(675	)		(1,628	)

A-9

Revenues

The Company's sales in the six and three months ended June 30, 2013 totaled approximately $ 1,185,000 and approximately $ 512,000, respectively. These sales originated from InterCure, whose majority of revenues are from sales to customers in the online markets. In the first quarter of 2013, sales in InterCure totaled approximately $ 673,000.

Gross profit

Gross profit in the six and three months ended June 30, 2013 totaled approximately $ 798,000 and approximately $ 324,000, respectively (approximately $ 903,000 and approximately $ 376,000 excluding amortization of excess cost in the transaction, respectively).

Cost of sales in the six and three months ended June 30, 2013 includes amortization of excess cost attributable to technology identified in the acquisition and totaled approximately $ 105,000 and approximately $ 53,000, respectively.

Research and development expenses

Research and development expenses in the six and three months ended June 30, 2013 totaled approximately $43,000 and approximately $25,000, respectively, similarly to the corresponding periods of previous year. Research and development expenses comprise mainly medical regulation costs, clinical insurance expenses and other medical consulting costs. Research and development expenses attributable to InterCure in the six and three months ended June 30, 2013 totaled approximately $19,000 and approximately $11,000, respectively.

A-10

Selling and marketing expenses

Selling and marketing expenses in the six and three months ended June 30, 2013 totaled approximately $1,294,000 and approximately $608,000, respectively, originating entirely from InterCure. Selling and marketing expenses include advertising expenses (mainly media expenses) of approximately $560,000 and approximately $239,000, respectively, in the six and three months ended June 30, 2013, compared to a gross profit of approximately $903,000 and approximately $376,000, respectively (less amortization of excess cost), which represents an average contribution (gross profit less direct/online advertising costs divided by direct/online advertising expenses) of about 61% and 57%, respectively. These expenses also include expenses in respect of share-based payments to InterCure's service providers of approximately $296,000 and approximately $159,000, respectively.

General and administrative expenses

General and administrative expenses in the six and three months ended June 30, 2013 totaled approximately $1,394,000 and approximately $694,000, respectively, compared to approximately $975,000 and approximately $591,000 in the corresponding periods of last year, respectively. General and administrative expenses in said periods excluding InterCure totaled $1,036,000 and approximately $510,000, respectively. The increase in general and administrative expenses (excluding expenses attributable to InterCure) in relation to the corresponding periods of last year is principally explained by the increase in share-based payments to employees and directors in respect of which the expenses in the period are recorded according to the Black and Scholes model and the staircase method so that the expense is higher in initial periods and offset by grants to employees in connection with the capital raising in the corresponding periods of last year. Moreover, general and administrative expenses attributable to InterCure in said periods totaled approximately $358,000 and approximately $184,000, respectively, and consist mainly of salaries, professional services, patent maintenance and share-based payment to directors and employees.

Other gains, net

In the six and three months ended June 30, 2013, other gains were recorded totaling approximately $10,000 and approximately $3,000, respectively. These gains arise from the exercise and expiration of stock options in Proteologics during the reporting period.

A-11

Finance income (expenses), net

Finance income, net in the six and three months ended June 30, 2013 totaled approximately $26,000 thousand and approximately $15,000, respectively, compared to finance expenses, net of approximately $26,000 and approximately $58,000, respectively, in the corresponding periods of last year. The increase in finance income derives mainly from exchange rate gains originating from the revaluation of the NIS in relation to the U.S. dollar in respect of balances of NIS financial assets, net.

Losses from investment in associate

In the six and three months ended June 30, 2013, the Company incurred losses from the investment in Proteologics, recorded under the equity method, totaling approximately $449,000 and approximately $259,000, respectively. As of June 30, 2013, the Company holds about 30.82% of Proteologics' issued and outstanding share capital. In said periods, Proteologics recorded losses totaling approximately NIS 4,928 thousand and approximately NIS 2,961 thousand (approximately $1,347,000 and approximately $816,000), respectively (excluding amortization of excess cost totaling approximately $103,000 and approximately $21,000, respectively).

Taxes on income

The Group did not record taxes on income or tax benefits in the reporting period or in the corresponding period of last year.

Loss and comprehensive loss for the period

The loss attributable to equity holders of the Company in the six and three months ended June 30, 2013 totaled approximately $1,875,000 and approximately $1,003,000, respectively, compared to approximately $1,044,000 and approximately $675,000 in the corresponding periods of last year, respectively. The increase in loss compared to the corresponding periods of last year is mainly explained by the loss from InterCure and equity losses from the investment in Proteologics which had both been acquired in the second half of 2012.

The comprehensive loss attributable to equity holders of the Company in the six and three months ended June 30, 2013 totaled approximately $1,807,000 and approximately $986,000, respectively, compared to approximately $1,044,000 and approximately $675,000 in the corresponding periods of last year, respectively. The Company's comprehensive loss includes the effect of foreign currency translation differences from the investment in Proteologics whose functional currency is the NIS.

A-12

Basic and diluted loss per share in the reporting period amounted to approximately $ 0.008 compared to $ 0.005 in the corresponding period of last year.

Cash flows

Cash flows used in operating activities in the six and three months ended June 30, 2013 totaled approximately $1,221,000 and approximately $668,000, respectively, compared to cash flows used in operating activities of approximately $627,000 and approximately $344,000 in the corresponding periods of last year, respectively. InterCure's share in the cash flows used in operating activities in said periods totaled approximately $516,000 and approximately $314,000, respectively. Cash flows used in the Group's operating activities in the reporting period excluding InterCure totaled approximately $705,000. The increase compared to the corresponding period of last year mainly arises from payments made in the period to professional service providers and the payment of grants to officers in connection with the capital raising round of 2012.

Cash flows provided by (used in) investing activities in the six and three months ended June 30, 2013 totaled approximately $499,000 and approximately $(3,000), respectively, compared to cash flows used in investing activities of approximately $640,000 and approximately $1,621,000 in the corresponding periods of last year, respectively. The changes between the periods mostly reflect the movement in short-term deposits in the periods.

Cash flows provided by financing activities in the six and three months ended June 30, 2013 totaled approximately $18,000 and approximately $9,000, respectively, originating from the exercise of warrants (series 2) and non-marketable options in said periods. Cash flows provided by financing activities in the corresponding periods of last year totaled approximately $3,806,000 and approximately $36,000, respectively, originating from the private placement of March 2012 and the exercise of warrants (series 2).

A-13

Financing resources

The Group's income from operations at this stage derives solely from InterCure, the subsidiary. The Group finances its R&D operations from raising capital, its own capital and from current credit from suppliers and service providers. As of June 30, 2013, the Group's balance of cash and cash equivalents and short-term deposits amounted to approximately $2,053,000 (approximately $1,678,000 excluding cash in InterCure). In the six months ended June 30, 2013, warrants (series 2) were exercised for an exercise increment of approximately $9,000 (see 1.2.3 above) and non-marketable stock options were exercised for an exercise increment of approximately $9,000 (see 1.2.4 above).

1.3.3

Pro forma financial statements

In conformity with the provisions of Regulation 38b to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970, the Company prepared pro forma financial statements. The pro forma financial statements have been presented in order to reflect the Group's operating results had the InterCure acquisition transaction been completed on January 1, 2012. See more details about pro forma data in the pro forma financial statements.

A-14

PART 2 - EXPOSURE TO MARKET RISKS AND THEIR MANAGEMENT

2.1

Exposure to market risks and their management

The person responsible for managing market risks in the Group according to Board policy is Ronen Twito, the Company's Deputy CEO and CFO.

Description of the market risks to which the Group is exposed - the Group's activities expose it to a variety of market risks including the changes in the exchange rates of the NIS in relation to the U.S. dollar (the Group's functional currency).

The policy of the Group in managing market risks - on March 29, 2012, the Board determined that the Company's management is authorized to act, from time to time, to hold NIS at an amount sufficient for the repayment of NIS-denominated liabilities on a timely basis, for a consecutive period of nine to twelve months each time. InterCure's Board decided to invest the majority of cash balances in InterCure in short-term dollar-linked deposits and the remaining cash balances in NIS deposits.

Supervision of risk management policy - the Group identifies and assesses the principal risks facing it. The financial risks management is performed by the Group subject to the policy approved by the Company's Board.

2.1.1

Exchange rate risk

Most of the Group's revenues and expenses are denominated in U.S. dollars and partly in British Pound against which the Group holds its available liquid resources in or linked to dollars. Nevertheless, in respect of some of the expenses which are denominated in NIS and create exposure to the changes in the exchange rate of the NIS in relation to the dollar, the Group holds part of its liquid resources in NIS, based on the decision of the Board as above, in order to minimize the currency risk.

As a hedge against economic exposure, which does not significantly contradict the accounting exposure, the Company holds the majority of its current assets in or linked to dollar.

A-15

2.1.2

Risks arising from changes in the economic environment and the global financial crisis

In recent years, the world has experienced several events both in the political-security realm and in the economic realm which have shaken the international markets in general and the Israeli market in particular. In the second quarter of 2013, the tensions in Israel's southern and northern borders persisted in the backdrop of the civil war in Syria, the coup in Egypt (which was also expressed by terrorist attacks out of the Sinai border) as well as the continuing tensions arising from Iran's pursuit of its nuclear plan. These factors are liable to harm growth and the market's activity and stability.

As for the global economic crisis which has been felt for the last few years, during the last two years, the European economy showed signs of deterioration as reflected, among others, by lowering the credit rating of several countries in the Eurozone by international rating agencies including France, Spain, Italy, Ireland, Greece, Portugal, Belgium, Cyprus and Slovenia. This credit downgrading has led to the resignation of prime ministers in some of those countries after having been asked to implement extensive budget cuts.

The Group's management estimates that since the Group's investment policy is to invest only in bank deposits in currencies that are used for its current needs (U.S. dollar, which is the Group's functional currency and NIS - based on its needs and the Board's decision), it is not directly exposed to changes in the market prices of quoted securities.

Also, since the Group is in development stages and has no revenues from operations at this stage (excluding InterCure) and its expense budget relies on several suppliers and service providers, the events described above have relatively low impact on its results, compared to product sales companies. Nevertheless, since the Group funds its operations mainly from its own equity, as above, the events described above could have a significant effect on the Group's ability to raise funds in the future in order to finance its plans and activity, which will require the Company to minimize its activities, sell or grant a sublicense to third parties to use all or part of its technologies in order to support its operations (see Note 1b to the annual consolidated financial statements).

As for InterCure, the financial crisis in the main markets of the U.S. and the UK continues to significantly affect InterCure. The developments and crises in the markets in general and particularly the economic slowdown, reduced consumer spending and decrease in the Consumer Confidence Index are all liable to adversely affect InterCure's business results, available cash flows, value of assets, business position, financial covenants, ability to distribute dividends and ability to raise financial resources, if needed, as well as the financing terms of such raising.

A-16

Report of linkage bases

Linkage basis of balance sheet items as of June 30, 2013

	U.S.$		NIS		Other currencies		Non-monetary		Total
	$000
Assets:
Cash and cash equivalents		645		322		28		-		995
Short-term deposits		503		555		-		-		1,058
Trade receivables		66		2		29		-		97
Other accounts receivable		-		116		-		52		168
Restricted deposits		-		22		-		-		22
Inventories		-		-		-		265		265

		1,214		1,017		57		317		2,605
Liabilities:
Trade payables		330		329		3		-		662
Other accounts payable		399		228		-		80		707
Employee benefit liabilities		-		-		-		13		13

		729		557		3		93		1,382

Monetary assets less monetary liabilities		485		460		54		224		1,223

Linkage basis of balance sheet items as of June 30, 2012

	U.S.$		NIS		Other currencies		Non-monetary		Total
	$000
Assets:
Cash and cash equivalents		1,232		1,393		1		-		2,626
Short-term deposits		2,004		-		-		-		2,004
Accounts receivable		37		51		-		21		109
Restricted deposits		-		20		-		-		20

		3,273		1,464		1		21		4,759
Liabilities:
Trade payables		119		19		1		-		139
Other accounts payable		296		306		-		-		602

		415		325		1		-		741

Monetary assets less monetary liabilities		2,858		1,139		-		21		4,018

A-17

2.2

Sensitivity analysis

Reporting on the exposure to financial risks

Sensitivity to changes in the exchange rate of the dollar in relation to the NIS

	Gain (loss) from changes									Gain (loss) from changes
	+10%			+5%			30.6.2013			-5%			-10%
	$000

Cash and cash equivalents		32			16			322			(16	)		(32	)
Short-term deposits		56			28			555			(28	)		(56	)
Trade receivables		-			-			2			-			-
Other accounts receivable		12			6			116			(6	)		(12	)
Short-term restricted deposits		2			1			22			(1	)		(2	)
Trade payables		(33	)		(16	)		(329	)		16			33
Other accounts payable		(23	)		(11	)		(228	)		11			23

Exposure in the linkage balance sheet		46			24			460			(24	)		(46	)

A-18

PART 3 - CORPORATE GOVERNANCE ASPECTS

3.1

Policy of granting donations

As of the reporting date, the Company did not determine a policy on granting donations and during the reporting period the Company did not make any donations.

3.2

The Company's internal auditor

There was no material modification to the data pertaining to the Company's internal auditor as it was shown in the Company's periodic report for the year ended December 31, 2012.

3.3

The Company's Board

3.3.1

In the reporting period, eight meetings of the Board were held and three meetings of the committee that examines the financial statements/the audit committee.

3.3.2

There was no material modification to the data pertaining to directors with accounting and financial qualifications as it was shown in the Company's periodic report for the year ended December 31, 2012.

3.3.3

The Company did not adopt in its articles a provision regarding the tenure of independent directors.

3.4

The Company's auditor

There was no material modification to the data pertaining to the Company's auditor as it was shown in the Company's periodic report for the year ended December 31, 2012.

3.5

Disclosure of the financial statements approval process

The Company's Board transferred the overall responsibility to the financial statements to the members of the audit committee as the committee that examines the financial statements. Below are the names and details of the members of the committee that examines the financial statements:

Chairman of the committee - Mr. Jaron Diament, external director, expert in accounting and financing.

Mrs. Dafna Cohen - external director, expert in accounting and financing.

Mr. Marc Allouche - director, expert in accounting and financing.

A-19

As for details of their qualifications, education, experience and knowledge, see chapter D, Regulation 26 to the periodic report of 2012.

After being nominated, the committee's members gave the Company a declaration pursuant to the provisions of article 3 to the Companies Regulations (Directives and Conditions for Approving Financial Statements), 2010 as to having accounting and financing qualifications in accordance with the Companies Regulations (Conditions and Tests of Director with Accounting and Financing Qualification and Director with Professional Qualification), 2005.

Several days before the meeting of the committee, the Company's draft consolidated financial statements, draft report on the description of the corporation's business, draft directors' report, draft report on separate financial information and draft report on the effectiveness of internal control over financial reporting and disclosure are delivered to the members of the committee.

The meeting of the committee that examines the financial statements, which was held on August 25, 2013, was also attended, besides the members of the committee, by the Company's CEO, Mr. David Grossman, the Deputy CEO and CFO, Mr. Ronen Twito, the Company's legal consultants, Attorney Ronen Kantor and Attorney Ron Soulema, and representatives of the Company's auditors (Kesselman & Kesselman, CPAs), CPA Ido Heller and CPA Tziona Edri.

At the meeting of the committee in which the financial statements are discussed, the Company's CEO and Deputy CEO and CFO review in a detailed manner the key points of the financial statements, the Company's financial results, financial position and cash flows. This presentation comprises an analytical analysis and it gives details of the composition of and movement in material items and a comparison is made to previous periods.

In the meeting, a discussion is held on the issue of estimates and judgments made in connection with the preparation of the financial statements as well as valuations used in the preparation of the financial statements and internal controls over financial reporting. In the framework of the discussion, the auditors give their reference to the audit procedure and to the data in the financial statements. Also, the Company's CEO and Deputy CEO and CFO review significant transactions that were carried out and any changes that occurred in the Company during the reporting period compared to corresponding periods presented. In this framework, a discussion is held during which the members of the committee raise questions regarding the financial statements.

In the framework of the discussion, the committee forms its recommendation to the Board about the estimates and judgments made in connection with the financial statements, internal controls over financial reporting, overall financial statements disclosures and appropriateness, accounting policies adopted and the accounting treatment applied to the Company's material issues, valuations and impairment losses of assets, including the assumptions and estimates used to support the data in the financial statements.

A-20

The committee that examines the financial statements transferred its recommendations to approve the financial statements to the Board's members. The members of the Company's Board believe that the recommendations of the committee that examines the financial statements have been transferred a reasonable amount of time before the discussion, considering the scope and complexity of the recommendations. The Company's Board stated that a two-day difference between the meeting of the committee in the issue of the Company's financial statements as of June 30, 2013 and the meeting of the Company's Board in the issue of their approval would be considered a reasonable amount of time.

On August 29, 2013, after it was made clear that the financial statements reflect properly the financial position of the Company and its operating results, the Company's Board approved the financial statements of the Company as of June 30, 2013 in the presence of the following directors: Amit Yonay (Chairman of the Board), Dafna Cohen, Jaron Diament, Marc Allouche and David Grossman.

A-21

PART 4 - THE CORPORATION'S FINANCIAL REPORTING

4.1

Significant events after the reporting date

4.1.1

Listing for trade on the NASDAQ - on July 10, 2013, the Company's management received a notice from the NASDAQ's representatives stating that the admission committee had approved the Company's application to relist its ADRs for trade on the NASDAQ. Accordingly, on July 15, 2013, the Company's ADRs began trading on the NASDAQ.

4.1.2

Appointing a CFO in InterCure - CPA Uri Ben-Or - on July 11, 2013, InterCure appointed CPA Uri Ben-Or as CFO.

4.1.3

On July 17, 2013, InterCure announced that it had reached a settlement with Mr. Gavish and Dr. Gavish in connection with the amendment of the license agreement. According to the amendment, Yazmonit will not be able to market its products under InterCure's RESPeRATE ™ brand name and trademark.

4.1.4

Blind trust agreement signed by InterCure for the sale of the Company's shares held by it - on July 22, 2013, InterCure announced that it had entered into a blind trust agreement with S.G.S. Trusts Ltd. for the gradual sale of the Company's shares over a period of two years and subject to the terms defined by the InterCure's Board. These shares had been allocated to InterCure in the debt refinancing agreement signed by InterCure with its creditors on July 25, 2012 pursuant to which the Company acquired control over InterCure.

4.1.5

Exercise of warrants - on July 31, 2013, holders of warrants (series 2) of the Company exercised 30,000 warrants (series 2) into 30,000 Ordinary shares of NIS 0.1 par value each in consideration of an average exercise increment of approximately NIS 0.99 per warrant. The proceeds from the exercise of the warrants (series 2) totaled approximately $8,000.

4.1.6

Exercise of warrants - on August 12, 2013, holders of the Company's warrants (series 2) exercised 24,889 warrants (series 2) into 24,889 Ordinary shares of NIS 0.1 par value each for an average exercise increment of NIS 0.98 per warrant. The overall proceeds from the exercise of the warrants (series 2) totaled approximately $7,000.

A-22

4.1.7

On August 15, 2013, the general meeting of InterCure's shareholders approved the following issues:

4.1.7.1

Approval of the remuneration offered to InterCure's new CEO, Mr. Ofer Gilboa, through a company that is wholly controlled by him, including the grant of a letter of exemption and indemnification and the inclusion of Mr. Gilboa in InterCure's officers' and directors' liability insurance policy.

4.1.7.2

Approval of a change in the exercise increment of non-marketable stock options that had been granted to employees and officers in InterCure, including directors in InterCure who act as officers (or directors) in the Company (see also 4.1.8 below).

4.1.7.3

Approval of a change in the terms of the options previously granted to InterCure's former CEO, Mr. Ronen Twito, who acts as the Company's CFO and Deputy CEO (see also 4.1.8 below).

4.1.8

Changing the terms of the stock options granted to employees and officers in InterCure and to InterCure's former CEO - on August 15, 2013, following the approval of the Board of June 26, 2013, the general meeting of InterCure's shareholders approved a change in the exercise increment of 1,238,333 non-marketable stock options granted to employees and officers in InterCure, including directors in InterCure who act as officers in the Company, from an amount of $ 0.15 (54 Agorot) per stock option to an amount equivalent to 10% above the average price of InterCure's share on the TASE in the three trading days that preceded the date of the Board's decision, namely $ 0.063 (22.73 Agorot). The general meeting also approved a change in the terms of the options previously granted to InterCure's former CEO, Mr. Ronen Twito, who acts as the Company's CFO and Deputy CEO. The total economic value of the change in the option terms as above according to the Black and Scholes model pursuant to the provisions of IFRS 2 as of the date of the Board's approval approximates $12,000.

4.1.9

On August 19, 2013, Dr. Ben-Zion Weiner resigned from the board of directors of the Company. Dr. Weiner did however notify the Company that he would favorably consider joining the Company's Scientific Advisory Board if so requested.

4.1.10

On August 22, 2013, Proteologics announced that following discussions on its development strategy, Proteologics' Board of Directors reached the following resolutions: 1. to seek out potential buyers for Proteologics' operations in the Ubiquitin field, being Proteologics' main operating field, in light of the fact that said Ubiquitin products are still in early development stages, and in light of the Board's estimate that current monetary resources are insufficient to bring these products to a significant milestone; 2. to immediately devise a plan of action under the Board's resolution. In addition, the Board has appointed a sub-committee to consider alternative operations for Proteologics. Upon realizing said resolutions, Proteologics shall remain without significant business operations, and accordingly, shall not continue to operate as a going concern. As of the date of approval of the financial statements, the Company estimates that the aforementioned resolutions will bear no material adverse effect on the value of the Company's investment in Proteologics.

Critical accounting estimates

There was no material modification to the critical accounting estimates as it was shown in the Company's periodic report for the year ended December 31, 2012.

August 29 2013
Date		Amit Yonay, Chairman of the Board		David Grossman, CEO and Director

A-23

XTL BIOPHARMACEUTICALS LTD.

INTERIM FINANCIAL INFORMATION

AS OF JUNE 30, 2013

UNAUDITED

INDEX

	Page

Auditors' Review Report	2

Condensed Consolidated Financial Statements - in U.S. dollars:

Condensed Consolidated Statements of Financial Position	3 - 4

Condensed Consolidated Statements of Comprehensive Loss	5

Condensed Consolidated Statements of Changes in Equity	6 - 10

Condensed Consolidated Statements of Cash Flows	11 - 13

Notes to Financial Statements	14 - 26

- - - - - - - - - - - -

Auditors' review Report to the shareholders of XTL Biopharmaceuticals Ltd.

Introduction

We have reviewed the accompanying financial information of XTL Biopharmaceuticals Ltd (hereafter - the company) and its subsidiaries, which includes the condensed consolidated statement of financial position as of June 30, 2013 and the related condensed consolidated statement of comprehensive loss, changes in shareholders' equity, and cash flows for the six and three month periods then ended. The Board of Directors and management are responsible for the preparation and fair presentation of this interim financial information in accordance with IAS 34 "Interim Financial Reporting", and they are also responsible to draw up interim financial information based on Chapter D to the Israel Securities Regulations (Periodic and Immediate Reports), 1970. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with Israeli Review Standard No. 1, issued by the Israeli Institute of Certified Public Accountants, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34.

In addition to what is said in the previous paragraph, based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not comply, in all material respects, with the disclosure provisions of Chapter D of the Israel Securities Regulations (Periodic and Immediate Reports), 1970.

Tel-Aviv, Israel
August 29, 2013

Kesselman & Kesselman
Certified Public Accountants (Isr.)
A member firm of PricewaterhouseCoopers International Limited

B-2

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	June 30,				December 31,
	2013		2012		2012
	Unaudited				Audited
	U.S. dollars in thousands

ASSETS

CURRENT ASSETS:
Cash and cash equivalents		995		2,626		1,696
Short-term deposits		1,058		2,004		1,616
Trade receivables		97		-		76
Other accounts receivable		168		109		153
Restricted deposits		22		20		22
Inventories		265		-		229

		2,605		4,759		3,792

NON-CURRENT ASSETS:
Investment in associate		1,965		-		2,336
Property, plant and equipment, net		70		31		72
Intangible assets, net		4,740		2,457		4,886

		6,775		2,488		7,294

Total assets		9,380		7,247		11,086

The accompanying notes are an integral part of the financial statements.

B-3

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	June 30,						December 31,
	2013			2012			2012
	Unaudited						Audited
	U.S. dollars in thousands

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Trade payables		662			139			743
Other accounts payable		707			602			906

		1,369			741			1,649

NON-CURRENT LIABILITIES:
Employee benefit liabilities		13			-			13

		13			-			13

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:
Ordinary share capital		6,001			5,777			5,997
Share premium and options		147,489			144,749			147,475
Accumulated deficit		(144,935	)		(144,020	)		(143,560	)
Treasury shares		(2,469	)		-			(2,469	)
Foreign currency translation adjustments of foreign operations		181			-			114
Reserve from transactions with non-controlling interests		9			-			(204	)

		6,276			6,506			7,353
Non-controlling interests		1,722			-			2,071

Total equity		7,998			6,506			9,424

Total liabilities and equity		9,380			7,247			11,086

The accompanying notes are an integral part of the financial statements.


Amit Yonay	David Grossman	Ronen Twito
Chairman of the Board	Director and CEO	Deputy CEO and CFO

Date of approval of the financial statements by the Company's Board: August 29, 2013.

B-4

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	Six months ended June 30,						Three months ended June 30,						Year ended December 31,
	2013			2012			2013			2012			2012
	Unaudited												Audited
	U.S. dollars in thousands (except per share data)

Revenues		1,185			-			512			-			938
Cost of sales		(387	)		-			(188	)		-			(380	)

Gross profit		798			-			324			-			558

Research and development expenses		(43	)		(43	)		(25	)		(26	)		(99	)
Selling and marketing expenses		(1,294	)		-			(608	)		-			(848	)
General and administrative expenses		(1,394	)		(975	)		(694	)		(591	)		(2,769	)
Other gains, net		10			-			3			-			802

Operating loss		(1,923	)		(1,018	)		(1,000	)		(617	)		(2,356	)

Finance income		39			16			18			(17	)		60
Finance expenses		(13	)		(42	)		(3	)		(41	)		(15	)

Finance income (expenses), net		26			(26	)		15			(58	)		45

Earnings (losses) from investment in associate		(449	)		-			(259	)		-			569

Loss for the period		(2,346	)		(1,044	)		(1,244	)		(675	)		(1,742	)

Other comprehensive income:
Item which can be classified to profit or loss:
Foreign currency translation differences		68			-			17			-			114

Total other comprehensive income		68			-			17			-			114

Total comprehensive loss for the period		(2,278	)		(1,044	)		(1,227	)		(675	)		(1,628	)

Loss for the period attributable to:
Equity holders of the Company		(1,875	)		(1,044	)		(1,003	)		(675	)		(1,390	)
Non-controlling interests		(471	)		-			(241	)		-			(352	)

		(2,346	)		(1,044	)		(1,244	)		(675	)		(1,742	)
Total comprehensive loss for the period attributable to:
Equity holders of the Company		(1,807	)		(1,044	)		(986	)		(675	)		(1,276	)
Non-controlling interests		(471	)		-			(241	)		-			(352	)

		(2,278	)		(1,044	)		(1,227	)		(675	)		(1,628	)

Basic and diluted loss per share (in U.S. dollars)		(0.008	)		(0.005	)		(0.004	)		(0.003	)		(0.006	)

The accompanying notes are an integral part of the financial statements.

B-5

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Six months ended June 30, 2013
	Attributable to equity holders of the Company
	Share capital		Share premium and options		Accumulated deficit			Treasury shares			Foreign currency translation adjustments of foreign operations			Reserve from transactions with non-controlling interests			Total			Non-controlling interests			Total equity
	U.S. dollars in thousands

Balance as of January 1, 2013 (audited)		5,997		147,475		(143,560	)		(2,469	)		114			(204	)		7,353			2,071			9,424

Loss for the period		-		-		(1,875	)		-			-			-			(1,875	)		(471	)		(2,346	)
Other comprehensive income		-		-		-			-			68			-			68						68

Total comprehensive loss		-		-		(1,875	)		-			68			-			(1,807	)		(471	)		(2,278	)

Share-based payment to employees and others		-		-		500			-			-			-			500			335			835
Conversion of convertible loan into capital in subsidiary		-		-		-			-			-			213			213			(213	)		-
Exercise and expiration of stock options in associate		-		-		-			-			(1	)		-			(1	)		-			(1	)
Exercise of warrants and stock options into shares		4		14		-			-			-			-			18			-			18

Balance as of June 30, 2013 (unaudited)		6,001		147,489		(144,935	)		(2,469	)		181			9			6,276			1,722			7,998

The accompanying notes are an integral part of the financial statements.

B-6

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Six months ended June 30, 2012
	Attributable to equity holders of the Company
	Share capital		Share premium and options		Accumulated deficit			Treasury shares		Foreign currency translation adjustments of foreign operations		Reserve from transactions with non-controlling interests		Total			Non-controlling interests		Total equity
	U.S. dollars in thousands

Balance as of January 1, 2012 (audited)		5,335		141,385		(143,276	)		-		-		-		3,444			-		3,444

Loss for the period		-		-		(1,044	)		-		-		-		(1,044	)		-		(1,044	)
Other comprehensive income		-		-		-			-		-		-		-			-		-

Total comprehensive loss		-		-		(1,044	)		-		-		-		(1,044	)		-		(1,044	)

Share-based payment to employees and others		-		-		300			-		-		-		300			-		300
Issuance of shares and options		309		2,109		-			-		-		-		2,418			-		2,418
Exercise of warrants and stock options into shares		133		1,255		-			-		-		-		1,388			-		1,388

Balance as of June 30, 2012 (unaudited)		5,777		144,749		(144,020	)		-		-		-		6,506			-		6,506

The accompanying notes are an integral part of the financial statements.

B-7

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Three months ended June 30, 2013
	Attributable to equity holders of the Company
	Share capital		Share premium and options		Accumulated deficit			Treasury shares			Foreign currency translation adjustments of foreign operations		Reserve from transactions with non-controlling interests			Total			Non-controlling interests			Total equity
	U.S. dollars in thousands

Balance as of April 1, 2013 (unaudited)		5,998		147,483		(144,146	)		(2,469	)		164		(204	)		6,826			2,001			8,827

Loss for the period		-		-		(1,003	)		-			-		-			(1,003	)		(241	)		(1,244	)
Other comprehensive income		-		-		-			-			17		-			17			-			17

Total comprehensive loss		-		-		(1,003	)		-			17		-			(986	)		(241	)		(1,227	)

Share-based payment to employees and others		-		-		214			-			-		-			214			175			389
Conversion of convertible loan into capital in subsidiary		-		-		-			-			-		213			213			(213	)		-
Exercise of warrants and stock options into shares		3		6		-			-			-		-			9			-			9

Balance as of June 30, 2013 (unaudited)		6,001		147,489		(144,935	)		(2,469	)		181		9			6,276			1,722			7,998

The accompanying notes are an integral part of the financial statements.

B-8

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Three months ended June 30, 2012
	Attributable to equity holders of the Company
	Share capital		Share premium and options		Accumulated deficit			Treasury shares		Foreign currency translation adjustments of foreign operations		Reserve from transactions with non-controlling interests		Total			Non-controlling interests		Total equity
	U.S. dollars in thousands

Balance as of April 1, 2012 (unaudited)		5,772		144,699		(143,609	)		-		-		-		6,862			-		6,862

Loss for the period		-		-		(675	)		-		-		-		(675	)		-		(675	)
Other comprehensive income		-		-		-			-		-		-		-			-		-

Total comprehensive loss		-		-		(675	)		-		-		-		(675	)		-		(675	)

Share-based payment to employees and others		-		-		264			-		-		-		264			-		264
Exercise of warrants and stock options into shares		5		50		-			-		-		-		55			-		55

Balance as of June 30, 2012 (unaudited)		5,777		144,749		(144,020	)		-		-		-		6,506			-		6,506

The accompanying notes are an integral part of the financial statements.

B-9

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Year ended December 31, 2012
	Attributable to equity holders of the Company
	Share capital		Share premium and options		Accumulated deficit			Treasury shares			Foreign currency translation adjustments of foreign operations		Reserve from transactions with non-controlling interests			Total			Non-controlling interests			Total equity
	U.S. dollars in thousands

Balance as of January 1, 2012 (audited)		5,335		141,385		(143,276	)		-			-		-			3,444			-			3,444

Loss for the year		-		-		(1,390	)		-			-		-			(1,390	)		(352	)		(1,742	)
Other comprehensive income		-		-		-			-			114		-			114			-			114

Total comprehensive loss		-		-		(1,390	)		-			114		-			(1,276	)		(352	)		(1,628	)

Share-based payment to employees and others		-		-		1,106			-			-		-			1,106			193			1,299
Issuance of shares for business combination		176		2,293		-			(2,469	)		-		-			-			1,858			1,858
Issuance of shares and options		309		2,109		-			-			-		-			2,418			-			2,418
Conversion of convertible loan into capital in subsidiary		-		-		-			-			-		(204	)		(204	)		372			168
Exercise of warrants and stock options into shares		177		1,688		-			-			-		-			1,865			-			1,865

Balance as of December 31, 2012 (audited)		5,997		147,475		(143,560	)		(2,469	)		114		(204	)		7,353			2,071			9,424

The accompanying notes are an integral part of the financial statements.

B-10

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months ended June 30,						Three months ended June 30,						Year ended December 31,
	2013			2012			2013			2012			2012
	Unaudited												Audited
	U.S. dollars in thousands
Cash flows from operating activities:

Loss for the period		(2,346	)		(1,044	)		(1,244	)		(675	)		(1,742	)
Adjustments to reconcile loss to net cash used in operating activities (a)		1,125			417			576			331			236

Net cash used in operating activities		(1,221	)		(627	)		(668	)		(344	)		(1,506	)

Cash flows from investing activities:

Acquisition of subsidiary, less cash received (d)		-			-			-			-			733
Investment in associate		-			-			-			-			(1,658	)
Decrease in restricted deposit		-			-			-			-			1
Decrease (increase) in short-term bank deposits		582			(617	)		(1	)		(1,599	)		(170	)
Purchase of property, plant and equipment		(10	)		(1	)		(2	)		-			(6	)
Loan granted					(22	)		-			(22	)
Purchase of intangible assets		(73	)		-			-			-			(80	)
Other investments		-			-			-			-			(29	)

Net cash provided by (used in) investing activities		499			(640	)		(3	)		(1,621	)		(1,209	)

Cash flows from financing activities:

Proceeds from issuance of shares and options		-			2,418			-			(19	)		2,418
Receipts from exercise of stock options into shares		18			1,388			9			55			1,865

Net cash provided by financing activities		18			3,806			9			36			4,283

Increase (decrease) in cash and cash equivalents		(704	)		2,539			(662	)		(1,929	)		1,568

Gains (losses) from exchange rate differences on cash and cash equivalents		3			(36	)		(12	)		(58	)		5

Cash and cash equivalents at the beginning of the period		1,696			123			1,669			4,613			123

Cash and cash equivalents at the end of the period		995			2,626			995			2,626			1,696

The accompanying notes are an integral part of the financial statements.

B-11

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six months ended June 30,						Three months ended June 30,						Year ended December 31,
		2013			2012			2013			2012			2012
		Unaudited												Audited
		U.S. dollars in thousands
(a)	Adjustments to reconcile loss to net cash used in operating activities:

	Income and expenses not involving cash flows:

	Depreciation and amortization		157			2			79			1			136
	Loss from disposal of property, plant and equipment		-			-			-			-			2
	Share-based payment transactions to employees and others		835			300			389			264			1,299
	Revaluation of short-term deposits		(24	)		(14	)		(6	)		(4	)		(75	)
	Exchange rate differences on operating activities		(3	)		36			12			58			(5	)
	Gain from bargain purchase		-			-			-			-			(795	)
	Change in employee benefit liabilities, net		-			-			-			-			2
	Loss (gain) from change in holding rate in associate		(10	)		-			(3	)		-			5
	Losses (earnings) from investment in associate		449			-			259			-			(569	)

			1,404			324			730			319			-
	Changes in operating asset and liability items:

	Decrease (increase) in trade receivables		(21	)		-			2			-			3
	Decrease (increase) in other accounts receivable		(15	)		(19	)		(2	)		3			(23	)
	Decrease (increase) in inventories		(36	)		-			58			-			(44	)
	Increase (decrease) in trade payables		(8	)		51			(141	)		32			199
	Increase (decrease) in other accounts payable		(199	)		61			(71	)		(23	)		101

			(279	)		93			(154	)		12			236

			1,125			417			576			331			236

(b)	Additional information on cash flows from operating activities:

	Interest received		18			22			2			6			40

The accompanying notes are an integral part of the financial statements.

B-12

XTL BIOPHARMACEUTICALS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six months ended June 30,				Three months ended June 30,				Year ended December 31,
		2013		2012		2013		2012		2012
		Unaudited								Audited
		U.S. dollars in thousands

(c)	Non-cash activities:

	Purchase of property, plant and equipment and intangible assets on suppliers' credit		-		-		-		-		73

	Issuance of treasury shares to subsidiary		-		-		-		-		2,469

	Conversion of convertible loan into capital in subsidiary		377		-		377		-		168

(d)	Acquisition of newly consolidated subsidiary:

	Working capital (excluding cash and cash equivalents)		-		-		-		-		517
	Property, plant and equipment		-		-		-		-		(51	)
	Intangible assets		-		-		-		-		(2,397	)
	Gain from bargain purchase		-		-		-		-		795
	Non-current liabilities		-		-		-		-		11
	Non-controlling interests		-		-		-		-		1,858

			-		-		-		-		733

The accompanying notes are an integral part of the financial statements.

B-13

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 1:- GENERAL

A general description of the Company and its activity:

XTL Biopharmaceuticals Ltd. ("the Company") is engaged in the development of therapeutics, among others, for the treatment of unmet medical needs, improvement of existing medical treatment and business development in the medical realm. The Company was incorporated under the Israeli Companies Law on March 9, 1993. The registered office of the Company is located at 85 Medinat Hayehudim Street, Herzliya 46766. The Company owns 100% of Xtepo Ltd. ("Xtepo") and owns 100% of a U.S. company, XTL Biopharmaceuticals Inc. ("XTL Inc."), which was incorporated in 1999 under the laws of the State of Delaware, USA.

In the reporting period, the Company's American Depository Receipts ("ADRs") were traded on the NASDAQ's Pink Sheets and as of the date of approval of the financial statements, effective from July 15, 2013, the Company's ADRs have been traded on the NASDAQ's main list (see also Note 6 regarding events after the reporting period) and its securities are traded on the Tel-Aviv Stock Exchange ("TASE").

On July 25, 2012, the Company completed the acquisition of about 50.79% of the issued and outstanding share capital of InterCure Ltd. (as of the date of acquisition) ("InterCure"), a public company whose shares are traded on the TASE and is engaged in the research, development, marketing and sale of home medical devices for the non-medicinal and non-invasive treatment of various diseases such as hypertension, congestive cardiac failure, insomnia and stress. Also in the context of the acquisition, the Company extended InterCure a loan convertible into shares of InterCure. On May 16, 2013, the Company informed InterCure of its decision to convert the entire convertible loan which had been extended by the Company in the context of the acquisition into 7,620,695 Ordinary shares of InterCure as predetermined in the acquisition agreement. Following said conversion and as of June 30, 2013, the Company holds about 54.72% of InterCure's issued and outstanding share capital.

On November 21, 2012, the Company acquired about 31.35% of the shares of Proteologics Ltd. ("Proteologics"), a public company whose shares are traded on the TASE, in consideration of approximately NIS 6.5 million (approximately $ 1.7 million) paid in cash. As of June 30, 2013, the Company holds about 30.82% of Proteologics' issued and outstanding share capital (see also Note 12 to the annual consolidated financial statements for 2012 and Note 6 events after the reporting period).

As of the date of the financial statements, the Company is in stages of planning and preparing for the implementation of a phase 2 clinical trial of the recombinant EPO ("rHuEPO") drug for treating Multiple Myeloma patients. As part of said preparations, the Company is conducting a study which consists of collecting preliminary data on the existence of specific proteins in the blood of a group of Multiple Myeloma patients to assist in targeting the phase 2 clinical trial protocol. The Company has expanded the study to additional centers in order to collect additional data beyond the original study plan. The data collected in the preliminary study will be combined in the plans and preparations for the implementation of the phase 2 clinical trial, as needed, which the Company expects to obtain during the first half of 2014. Schedule has extended due to expansion of the preliminary study, as well as an ongoing Company review of both data collected in the study and potential medical centers for conducting phase 2 experiment in the future, due to, inter alia, the Company's return to the NASDAQ main list.

B-14

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 1:- GENERAL (Cont.)

The following are the Company's subsidiaries as of June 30, 2013:

InterCure - a publicly traded company on the TASE. InterCure has two subsidiaries - InterCure Inc., incorporated in the U.S., and InterCure UK, incorporated in the UK (inactive).

Xtepo - a private company incorporated in Israel in November 2009 which holds a license for the exclusive use of the patent for rHuEPO drug for treating Multiple Myeloma patients.

XTL Inc. - was engaged in the development of therapeutics and business initiatives in the medical realm. XTL Inc. has a wholly-owned subsidiary, XTL Development Inc. ("XTL Development"), which was incorporated in 2007 under the laws of the State of Delaware, USA.

As of the date of the approval of the financial statements, XTL Inc. and XTL Development are inactive.

The interim financial information is reviewed and not audited.

The Company has incurred continuing losses and its entire income at this stage originates from InterCure, a subsidiary in which the control was acquired on July 25, 2012. The Company depends on outside financing resources to continue its activities. Based on existing business plans, the Company's management estimates that its outstanding cash and cash equivalent balances, including short-term deposits, will allow the Company to finance its activities at least until the fourth quarter of 2014. However, the amount of cash which the Company will need in practice to finance its activities depends on numerous factors which include, but are not limited to, the timing, planning and execution of clinical trials of existing drugs and future projects which the Company might acquire or other business development activities such as acquiring new technologies and/or changes in circumstances which are liable to cause significant expenses to the Company in excess of management's current and known expectations as of the date of these financial statements and which will require the Company to reallocate funds against plans, also due to circumstances beyond its control.

B-15

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 1:- GENERAL (Cont.)

The Company expects to incur additional losses in 2013 arising from research and development activities, testing additional technologies and operating activities, which will be reflected in negative cash flows from operating activities. Accordingly, in order to complete the clinical trials aimed at developing a product until obtaining its marketing approval, the Company will be forced to raise additional funds in the future by issuing securities. Should the Company fail to raise additional capital in the future under standard terms, it will be required to dispose of marketable securities held by it or minimize its activities, sell or grant a sublicense to third parties to use all or part of its technologies.

NOTE 2:- BASIS OF PREPARATION OF THE CONDENSED FINANCIAL STATEMENTS

The condensed consolidated financial information of the Group as of June 30, 2013 and for the interim periods of six and three months then ended ("interim financial information") has been prepared in accordance with IAS 34, "Interim Financial Reporting" ("IAS 34") and includes the additional disclosure requirements in accordance with Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970. This interim financial information does not contain all the information and disclosures that are required in the framework of the annual financial statements. This interim financial information should be read in conjunction with the annual financial statements for 2012 and the accompanying notes which have been prepared in accordance with International Financial Reporting Standards ("IFRS") and included the additional disclosure requirements in accordance with the Israeli Securities Regulations (Annual Financial Statements), 2010.

Estimates - the preparation of the interim financial statements requires the Group's management to make judgments and to use accounting estimates and assumptions that have an effect on the application of the Group's accounting policies and on the reported amounts of assets, liabilities and expenses. Actual results could differ from those estimates.

In the preparation of these condensed consolidated interim financial statements, the significant judgment exercised by management in applying the Group's accounting policies and the uncertainties involved in the key sources of the estimates were identical to those in the annual consolidated financial statements for the year ended December 31, 2012.

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES

The Group's significant accounting policies and methods of computation adopted in the preparation of the interim financial information are consistent with those followed in the preparation of the annual financial statements for 2012, except for standards, amendments or interpretations to existing standards that became effective and that are mandatory for the accounting periods beginning January 1, 2013 as described below:

IFRS 10, "Consolidated Financial Statements" ("IFRS 10"):

IFRS 10 supersedes all existing guidance on the control and consolidation of financial statements in IAS 27, "Consolidated and Separate Financial Statements" ("IAS 27") and SIC 12, "Consolidation - Special Purpose Entities". IFRS 10 redefines "control". The new definition focuses on the requirement that power and variable returns should exist in order for control to exist. "Power" is the current ability to direct the activities which significantly affect the returns. IFRS 10 contains, inter alia, guidance relating to differentiating between participating rights and protective rights as well as guidance relating to cases where an investor is acting on behalf of another party or on behalf of a group of parties (agent/principal relationships). The core principle whereby a consolidated entity presents the accounts of a parent company and its subsidiaries as a single entity remains unchanged as well as the mechanics of consolidation.

B-16

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Group has adopted IFRS 10 for the first time for the annual period commencing on January 1, 2013. The adoption of IFRS 10 did not have a material impact on the Group's consolidated financial statements.

IAS 27 (Revised), "Separate Financial Statements" ("IAS 27R"):

IAS 27R supersedes IAS 27 and only addresses separate financial statements. The existing guidance for separate financial statements has remained unchanged in IAS 27R.

The Group has adopted IAS 27R for the first time for the annual period commencing on January 1, 2013. Since IAS 27R does not address consolidated financial statements, its initial adoption did not have any effect on the Group's consolidated financial statements.

IAS 28 (Revised), "Investments in Associates" ("IAS 28R"):

IAS 28R replaces IAS 28 in its previous format. The key changes contained in IAS 28R compared to IAS 28 relate to adding explicit references to the application of the equity method when accounting for investments in joint ventures as a result of the new guidance prescribed by IFRS 11.

The Group has adopted IAS 28R for the first time for the annual period commencing on January 1, 2013. The adoption of IAS 28R did not have any effect on the Group's consolidated financial statements.

IFRS 12, "Disclosure of Interests in Other Entities" ("IFRS 12"):

IFRS 12 prescribes disclosure requirements addressing accounting issues prescribed in IFRS 10 and IFRS 11, "Joint Arrangements" ("IFRS 11") and supersedes the existing disclosure requirements in IAS 28. The disclosure requirements prescribed in IFRS 12 include: significant judgments and assumptions; rights in subsidiaries; rights in joint arrangements and in associates; and rights in structured entities not consolidated in the financial statements.

The Group has adopted IFRS 12 for the first time for the annual period commencing on January 1, 2013. The initial adoption of IFRS 12 is expected to expand certain disclosures in the Group's consolidated financial statements regarding its rights in other entities.

IFRS 13, "Fair Value Measurement" ("IFRS 13"):

IFRS 13 focuses on improving the consistency and minimizing the complexity of fair value measurements by providing an accurate definition of the term "fair value" and offering a single source of guidance for the measurement of fair value and for the disclosure requirements of fair value measurement to be used by all the various IFRS standards. The requirements prescribed in IFRS 13 do not expand the use of fair value accounting but do provide guidance as to its adoption in cases where its use is required or allowed by other IFRS standards.

B-17

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Group has adopted IFRS 13 for the first time for the annual period commencing on January 1, 2013. IFRS 13 was adopted prospectively from said annual period. The disclosure requirements of IFRS 13 need not be applied to comparative figures relating to periods before the date of its initial adoption. The initial adoption of IFRS 13 did not have a material effect on the Group's consolidated financial statements.

IAS 19 (Revised 2011), "Employee Benefits" ("IAS 19R"):

IAS 19R introduces significant changes in the manner of recognizing and measuring defined benefit plans and benefits in respect of employee dismissal and provides new disclosure requirements for all types of employees benefits within the scope of IAS 19 as follows:

The remeasurement of the net defined benefit liability (formerly - actuarial gains and losses) will be recognized in other comprehensive income and not in profit or loss.

The "corridor" approach which allowed the deferral of actuarial gains or losses has been eliminated.

Income from the plan assets is recognized in profit or loss based on the discount rate used to measure the employee benefit liabilities. The return on plan assets excluding the aforementioned income recognized in profit or loss is included in the remeasurement of the net defined benefit liability.

The distinction between short-term employee benefits and long-term employee benefits is based on the expected settlement date and not on the date on which the employee first becomes entitled to the benefits.

Past service cost arising from changes in the plan is recognized immediately.

The Group has retrospectively adopted IAS 19R commencing on January 1, 2013 for all reported periods. The initial adoption of IAS 19R did not have a material effect on the Group's consolidated financial statements.

IAS 1 (Revised), "Presentation of Financial Statements" ("IAS 1R"):

IAS 1R modifies the manner of disclosure of items of other comprehensive income in the statement of comprehensive income according to the following principles:

The items presented in other comprehensive income should be separated into two groups based on whether they can be reclassified in the future to profit or loss. Accordingly, items which cannot be reclassified in the future to profit or loss will be presented separately from the re-classifiable items.

B-18

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Entities that choose to present the items of other comprehensive income before the respective tax will be required to separately present the tax effect of each of the abovementioned groups.

The title of the statement of comprehensive income was changed to "statement of profit or loss and other comprehensive income"; however, IAS 1 allows entitie4s to use other titles.

The Group has adopted IAS 1R for the first time for the annual period commencing on January 1, 2013 retrospectively for all reported periods. Since all of the Group's items of other comprehensive income may be reclassified in the future to profit or loss, the initial adoption of IAS 1R did not have a material impact on the Group's consolidated financial statements.

IAS 34 (Revised), "Interim Financial Reporting" ("IAS 34R"):

IAS 34R, which forms part of the Annual Improvements document issued in May 2012, clarifies the disclosure requirements in interim financial reporting regarding segment assets and segment liabilities. According to IAS 34R, disclosure must be provided in the interim financial statements for the measure of total assets and total liabilities attributed to a certain reporting segment if these amounts are regularly provided to the Chief Operating Decision Maker ("CODM") and in the event of a material change in the measures already disclosed in respect of said reporting segment in the latest annual financial statements.

The Group has adopted IAS 34R for the first time for the annual period commencing on January 1, 2013. The initial adoption of IAS 34R did not have a material impact on the Group's consolidated financial statements.

B-19

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 4:- SIGNIFICANT EVENTS DURING THE PERIOD

On January 21, 2013, InterCure announced that the examination conducted as part of the process of concluding the engagement with Mr. Erez Gavish, the former CEO ("Mr. Gavish"), revealed several issues which require inspection in connection with InterCure's actions during Mr. Gavish's term as CEO, including the legal validity of the license agreement of October 2011 signed between InterCure and a company controlled by Dr. Benjamin Gavish ("Dr. Gavish"). InterCure's Board appointed a committee which includes an external attorney hired for this purpose and another director in InterCure in order to investigate the issue and provide the Board with conclusions. In addition, a notice was delivered to Mr. Gavish and Dr. Gavish on the establishment of said committee which summoned the two to provide explanations regarding the issues under inspection and requested that they inform any of their future potential partners or investors of the inspection of the legal validity of said license agreement. On April 7, 2013, InterCure announced that on April 4, 2013, an originating summons had been filed by Yazmonit Ltd., a company controlled by Dr. Gavish, against it with the Tel-Aviv-Jaffa District Court according to which the Court is asked to render a verdict which declares that the license agreement had been approved and signed and the rights therein had been conferred and transferred by the respondent to the petitioner as required by law. Moreover, on May 13, 2013, InterCure filed a petition with the Court for dismissing the originating summons in limine and assigning the motion to a standard legal procedure. See Note 6 events after the reporting period regarding a compromise agreement signed between the parties involved.

On March 21, 2013, Prof. Reuven Zimlichman was appointed as InterCure's medical director. According to the consulting agreement with Prof. Zimlichman, he will provide InterCure with services consisting of R&D consulting, IP and medical regulation management. Prof. Zimlichman will be granted 130,000 stock options exercisable into 130,000 Ordinary shares of InterCure for an exercise increment of NIS 0.54 per stock option. The stock options vest in 12 equal portions each quarter over a period of three years from the grant date. Alternatively, if as a result of the signing of an agreement between InterCure and a medical institution (such as a sickness fund) for the sale of InterCure's products through the medical institution the total sales of InterCure's products exceed US$ 175,000, then 30% of the then unvested stock options will vest. The fair value of all the stock options using the Black-Scholes model in accordance with the provisions of IFRS 2 as of the date of InterCure's Board's approval approximates $9,000. The exercise period of the stock options is a maximum of 10 years from the date of grant.

B-20

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 4:- SIGNIFICANT EVENTS DURING THE PERIOD (Cont.)

The value of each option is based on the following inputs: expected dividend of 0%, expected standard deviation of 92.21%, risk-free interest rates of 2.76%-3.21% and expected life of 5-6.5 years.

On June 26, 2013, Mr. Ofer Gilboa was appointed as CEO of InterCure. The agreement provides for a letter of exemption and indemnification, and the inclusion of Mr. Gilboa in InterCure's directors' and officers' liability insurance policy. In addition, according to Mr. Gilboa's employment agreement, he will be granted 650,000 stock options which are exercisable into Ordinary shares of InterCure at an exercise price of NIS 0.23 per stock option. The stock options vest over a period of three years whereby 1/12 of stock options will vest at the end of each quarter. The fair value of the entire stock options using the Black-Scholes model pursuant to the provisions of IFRS 2 as of the date of InterCure's Board's approval was approximately $19,000. The exercise period is for a maximum of ten years from the allocation date. The value of each option is based on the following inputs: expected dividend rate of 0%, expected standard deviation rate of 39.01%, risk-free interest rate of 1% and expected life of 5-6.5 years. Also according to the employment agreement, if InterCure's revenues exceed $ 5 million and the EBITDA is not less than $ 1 million, Mr. Gilboa will be entitled to a bonus of $25,000. It was also determined that Mr. Gilboa will be entitled to a bonus of 1% of any capital rising round in InterCure over a period of 36 months from commencing his tenure, provided that the investments are made by third parties that are unrelated to InterCure, and up to a maximum bonus of $100,000. See also Note 6 events after the reporting period.

B-21

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 5: SEGMENT REPORTING

The Group's management has established operating segments in accordance with reports reviewed by the Chief Operating Decision Maker ("CODM") and which are used to make strategic decisions. Until July 25, 2012, the Company had a single operating segment - drug development. Effective from said date, following the acquisition of InterCure, the CODM reviews the business activities both according to the nature of the activity and the geographical location of the activity. With respect to the nature of the activity, the CODM reviews the operating results of the drug development activity and of the medical device activity. From a geographical standpoint, the CODM reviews the performance of sales of medical devices in the U.S., the UK and the rest of the world.

Segment reporting data for the six and three months ended June 30, 2013 and for the year ended December 31, 2012:

	Six months ended June 30, 2013 (unaudited)
	Medical devices								Drug
	U.S.			UK			Other		development			Adjustments			Total
	U.S. dollars in thousands
Revenues:

External customers		1,010			164			11		-			-			1,185
Inter-segment revenues		-			-			483		-			(483	)		-

Total revenues		1,010			164			494		-			(483	)		1,185

Segment results before current amortization of intangible assets identified in acquisition		5			3			2		(151	)		-			(141	)

Current amortization of intangible assets identified in acquisition		(111	)		(17	)		-		-			-			(128	)

Segment results		(106	)		(14	)		2		(151	)		-			(269	)

Unallocated joint expenses																(1,664	)
Other income, net																10
Financial income, net																26
Losses from investment in associate																(449	)

Loss for the period																(2,346	)

B-22

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 5: SEGMENT REPORTING (Cont.)

	Three months ended June 30, 2013 (unaudited)
	Medical devices									Drug
	U.S.			UK			Other			development			Adjustments		Total
	U.S. dollars in thousands
Revenues:

External customers		436			73			3			-			-		512
Inter-segment revenues		-			-			(53	)		-			53		-

Total revenues		436			73			(50	)		-			53		512

Segment results before current amortization of intangible assets identified in acquisition		(11	)		(6	)		(3	)		(83	)		-		(103	)

Current amortization of intangible assets identified in acquisition		(55	)		(8	)		-			-			-		(63	)

Segment results		(66	)		(14	)		(3	)		(83	)		-		(166	)

Unallocated joint expenses																(837	)
Other income, net																3
Financial income, net																15
Losses from investment in associate																(259	)

Loss for the period																(1,244	)

B-23

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 5: SEGMENT REPORTING (Cont.)

	Year ended December 31, 2012 (audited)
	Medical devices									Drug
	U.S.			UK			Other			development			Adjustments			Total
	U.S. dollars in thousands
Revenues:

External customers		766			167			5			-			-			938
Inter-segment revenues		-			-			583			-			(583	)		-

Total revenues		766			167			588			-			(583	)		938

Segment results before current amortization of intangible assets identified in acquisition		28			(18	)		2			(388	)		-			(376	)

Current amortization of intangible assets identified in acquisition		(140	)		(35	)		(1	)		-			-			(176	)

Segment results		(112	)		(53	)		1			(388	)		-			(552	)

Unallocated joint expenses																	(2,606	)
Other income, net																	802
Financial income, net																	45
Losses from investment in associate																	569

Loss for the period																	(1,742	)

NOTE 6:- EVENTS AFTER THE REPORTING PERIOD

On July 10, 2013, the Company's management received a notice from the NASDAQ's representatives stating that the admission committee has approved the Company's application to relist its ADRs for trade on the NASDAQ. Accordingly, on July 15, 2013, the Company's ADRs began trading on the NASDAQ.

On July 17, 2013 InterCure announced that it had reached a compromise with Mr. Gavish and Dr. Gavish with regard to the amendment of said licensing agreement. According to the amendment, Yazmonit can no longer Market its products under InterCure's brand name and trademark – RESPeRATE^TM.

On July 22, 2013, InterCure announced that it had entered into a blind trust agreement with S.G.S. Trusts Ltd. ("the trustee") for the gradual sale of the 7,165,662 Company shares that had been allocated to InterCure in the acquisition agreement over a period of two years. According to the blind trust agreement, the Company's shares will be deposited with the trustee who will sell them during trade on the TASE in compliance with the mechanism and limitations prescribed in the blind trust agreement over a period of two years.

On July 31, 2013, holders of warrants (series 2) of the Company exercised 30,000 warrants (series 2) into 30,000 Ordinary shares of NIS 0.1 par value each in consideration of an average exercise increment of approximately NIS 0.99 per warrant.

B-24

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 6:- EVENTS AFTER THE REPORTING PERIOD (Cont.)

The proceeds from the exercise of the warrants (series 2) totaled approximately $8,000.

On August 5, 2013, the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013-2014), 2013 ("the Law") was issued in the official Government records, according to which the following changes were prescribed:

Effective from the 2014 tax year and thereafter, increasing the corporate tax rate to 26.5% (instead of 25%).

Effective from the 2014 and thereafter, increasing the tax rates applicable to income from preferred enterprises pursuant to the Law for the Encouragement of Capital Investments, 1959 ("the Encouragement Law") to 9% in development area A (instead of 7% in 2014 and 6% from 2015 and thereafter) and 16% in other areas (instead of 12.5% in 2014 and 12% from 2015 and thereafter). Moreover, the tax rate applicable to dividends originating from preferred income as defined in the Encouragement Law distributed from January 1, 2014 and thereafter will increase to 20% (instead of 15%).

When revaluation gains are distributed by a company to its shareholders, the asset underlying the revaluation gains that are recorded in the distributing company's financial statements will be viewed as an asset sold on the distribution date (notional sale) and therefore the revaluation gains will be taxable. Revaluation gains have been defined in the Law as retained earnings that are not corporate taxable within the scope determined by the Minister of Finance, with the Knesset's Finance Committee's approval, in an amount exceeding NIS 1 million and the tax thereon will be calculated on accumulative basis from the date of the asset's acquisition.

The Law is not expected to have an effect on the Company's financial statements.

On August 12, 2013, holders of warrants (series 2) of the Company exercised 24,889 warrants (series 2) into 24,889 Ordinary shares of NIS 0.1 par value each in consideration of an average exercise increment of approximately NIS 0.98 per warrant. The proceeds from the exercise of the warrants (series 2) totaled approximately $7,000.

On August 15, 2013, following InterCure's Board's approval, the general meeting of InterCure's shareholders approved the following:

Approval of remuneration offered to the new CEO, Mr. Ofer Gilboa, through a company wholly owned by him, including grant of an exemption and indemnification letter to him, and his incorporation in InterCure's directors and officers' liability insurance policy.

B-25

XTL BIOPHARMACEUTICALS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 (UNAUDITED)

NOTE 6:- EVENTS AFTER THE REPORTING PERIOD (Cont.)

Change in the exercise increment of 1,238,333 non-marketable stock options granted to employees and officers in InterCure, including directors in InterCure who act as officers in the Company, from an amount of $ 0.15 (54 Agorot) per stock option to an amount equivalent to 10% above the average price of InterCure's share on the TASE in the three trading days that preceded the date of the Board's decision, namely $ 0.063 (22.73 Agorot). The general meeting also approved a change in the terms of the options previously granted to InterCure's former CEO, Mr. Ronen Twito, who acts as the Company's CFO and Deputy CEO. The total economic value of the change in the option terms as above according to the Black-Scholes model pursuant to the provisions of IFRS 2 as of the date of the Board's approval approximates $12,000.

- - - - - - - - - - - -

B-26

XTL BIOPHARMACEUTICALS LTD.

INTERIM FINANCIAL REPORTING

AS OF JUNE 30, 2013

SEPARATE FINANCIAL INFORMATION DISCLOSED IN ACCORDANCE WITH REGULATION 38D TO THE ISRAELI SECURITIES REGULATIONS (PERIODIC AND IMMEDIATE REPORTS), 1970

UNAUDITED

INDEX

	Page

Auditors' Review Report	2

Financial Data - in U.S. dollars:

Assets and Liabilities Included in the Consolidated Financial Statements Attributable to the Company Itself as a Parent	3

Income and Expenses Included in the Consolidated Financial Statements Attributable to the Company Itself as a Parent	4

Cash Flows Included in the Statements Attributable to the Company Itself as a Parent	5 - 6

Notes and Additional Information to the Financial Data	7 - 9

To the shareholders of

XTL Biopharmaceuticals Ltd.

Re:

Special report of for the review of the separate interim financial information according to regulation 38(d) to the Israel Securities Regulations (Periodic and Immediate Reports) - 1970

Introduction

We have reviewed the accompanied separate interim financial information according to regulation 38(d) to the Israel Securities Regulations (Periodic and Immediate Reports) - 1970 of XTL Biopharmaceuticals Ltd (hereafter - the Company), as of June 30, 2013 and for the six and three month periods then ended. The Board of Directors and management are responsible for the preparation and fair presentation of this interim financial information. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim separate financial information is not prepared, in all material respects, in accordance with regulation 38d' of the Israeli Securities Regulations (Periodic and Immediate Reports) - 1970.

Tel-Aviv, Israel
August 29, 2013

Kesselman & Kesselman
Certified Public Accountants (Isr.)
A member firm of PricewaterhouseCoopers International Limited

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 68125, Israel, P.O Box 452 Tel-Aviv 61003

Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.co.il

C-2

XTL BIOPHARMACEUTICALS LTD.

Separate Interim Financial Information disclosed in accordance with Regulation 38d

to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Assets and Liabilities Included in the Consolidated Financial Statements

Attributable to the Company Itself as a Parent

	June 30,						December 31,
	2013			2012			2012
	Unaudited						Audited
	U.S. dollars in thousands
ASSETS

CURRENT ASSETS:
Cash and cash equivalents		494			1,419			241
Short-term deposits		503			2,004			1,008
Accounts receivable		98			96			109
Convertible loan extended to investee		-			-			352
Receivables for investees		55			78			94
Restricted deposits		22			20			22

		1,172			3,617			1,826
NON-CURRENT ASSETS:
Property, plant and equipment		34			31			31
Intangible assets		5			5			5

		39			36			36

Net amount attributable to equity holders of the parent of total assets less total liabilities reflecting in the consolidated financial statements financial information of investees		6,408			3,685			6,541

Total assets attributable to the Company itself as a parent		7,619			7,338			8,403

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Trade payables		98			84			97
Payables for investees		821			177			365
Other accounts payable		424			571			588

		1,343			832			1,050
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:
Ordinary share capital		6,001			5,777			5,997
Share premium		147,489			144,749			147,475
Accumulated deficit		(144,935	)		(144,020	)		(143,560	)
Treasury shares		(2,469	)		-			(2,469	)
Foreign currency translation adjustments of foreign operations		181			-			114
Reserve from transactions with non-controlling interests		9			-			(204	)

Total equity		6,276			6,506			7,353

Total liabilities and equity		7,619			7,338			8,403

The accompanying notes and additional information are an integral part of the financial data.


Amit Yonay	David Grossman	Ronen Twito
Chairman of the Board	Director and CEO	Deputy CEO and CFO

Date of approval of the financial statements by the Company's Board: August 29, 2013.

C-3

XTL BIOPHARMACEUTICALS LTD.

Separate Interim Financial Information disclosed in accordance with Regulation 38d

to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Income and Expenses Included in the Consolidated Financial Statements

Attributable to the Company Itself as a Parent

	Six months ended June 30,						Three months ended June 30,						Year ended December 31,
	2013			2012			2013			2012			2012
	Unaudited												Audited
	U.S. dollars in thousands

Research and development expenses		(24	)		(43	)		(14	)		(26	)		(92	)
General and administrative expenses		(1,005	)		(936	)		(491	)		(571	)		(2,379	)
Other gains, net		10			-			3			-			787

Operating loss		(1,019	)		(979	)		(502	)		(597	)		(1,684	)

Finance income		30			8			11			(4	)		51
Finance expenses		(33	)		(29	)		(14	)		(26	)		(57	)

Finance expenses, net		(3	)		(21	)		(3	)		(30	)		(6	)

Loss after financing		(1,022	)		(1,000	)		(505	)		(627	)		(1,690	)

Net amount attributable to equity holders of the parent of total income less total expenses reflecting in the condensed consolidated financial statements operating results of investees		(853	)		(44	)		(498	)		(48	)		300

Loss for the period attributable to the Company itself as a parent		(1,875	)		(1,044	)		(1,003	)		(675	)		(1,390	)

Other comprehensive income:
Item which can be classified to profit or loss:
Foreign currency translation differences		68			-			17			-			114

Total other comprehensive income		68			-			17			-			114

Total comprehensive loss for the period attributable to equity holders of the parent		(1,807	)		(1,044	)		(986	)		(675	)		(1,276	)

The accompanying notes and additional information are an integral part of the financial data.

C-4

XTL BIOPHARMACEUTICALS LTD.

Separate Interim Financial Information disclosed in accordance with Regulation 38d

to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Cash Flows Included in the Consolidated Financial Statements

Attributable to the Company itself as a Parent

	Six months ended June 30,						Three months ended June 30,						Year ended December 31,
	2013			2012			2013			2012			2012
	Unaudited												Audited
	U.S. dollars in thousands

Cash flows from operating activities:

Loss for the period		(1,875	)		(1,044	)		(1,003	)		(675	)		(1,390	)
Adjustments to reconcile loss to net cash used in operating activities (a)		1,171			466			624			362			139
Net cash flows from operating activities relating to transactions with investees		415			(20	)		292			(172	)		125

Net cash used in operating activities		(289	)		(598	)		(87	)		(485	)		(1,126	)

Cash flows from investing activities:

Acquisition of subsidiary		-			-			-			-			(149	)
Investment in associate		-			-			-			-			(1,658	)
Decrease (increase) in short-term bank deposits		529			(1,808	)		20			(2,000	)		(798	)
Purchase of property, plant and equipment		(7	)		(1	)		(2	)		-			(6	)
Loan granted		-			(22	)		-			(22	)		-
Other investments		-			-			-			-			(29	)
Net cash used in investing activities relating to transactions with investees		-						-						(330	)

Net cash provided by (used in) investing activities		522			(1,831	)		18			(2,022	)		(2,970	)

Cash flows from financing activities:

Proceeds from issuance of shares and options		-			2,418			-			(19	)		2,418
Receipts from exercise of stock options into shares		18			1,388			9			55			1,865

Net cash provided by financing activities		18			3,806			9			36			4,283

Increase (decrease) in cash and cash equivalents		251			1,377			(60	)		(2,471	)		187

Gains (losses) from exchange rate differences on cash and cash equivalents		2			(23	)		-			(44	)		(11	)

Cash and cash equivalents at the beginning of the period		241			65			554			3,934			65

Cash and cash equivalents at the end of the period		494			1,419			494			1,419			241

The accompanying notes and additional information are an integral part of the financial data.

C-5

XTL BIOPHARMACEUTICALS LTD.

Separate Interim Financial Information disclosed in accordance with Regulation 38d

to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Cash Flows Included in the Consolidated Financial Statements

Attributable to the Company itself as a Parent

		Six months ended June 30,						Three months ended June 30,						Year ended December 31,
		2013			2012			2013			2012			2012
		Unaudited												Audited
		U.S. dollars in thousands

(a)	Adjustments to reconcile loss to net cash used in operating activities:

	Income and expenses not involving cash flows:

	Depreciation and amortization		4			2			2			1			5
	Loss from disposal of property, plant and equipment		-			-			-			-			2
	Share-based payment transactions to employees and others		500			300			214			264			1,106
	Gains from exchange rate differences on operating activities		-			-			2			-			11
	Gain from bargain purchase		-			-			-			-			(795	)
	Revaluation of short-term deposits		(24	)		(3	)		(21	)		(3	)		(19	)
	Loss (gain) from change in holding rate in associate		(10	)		-			(3	)		-			5
	Exchange rate differences on operating activities		-			23			-			44			-
	Net amount attributable to equity holders of the parent of total income less total expenses reflecting in the condensed consolidated financial statements operating results of investees		853			44			498			48			(300	)

			1,323			366			692			354			15
	Changes in operating asset and liability items:

	Decrease (increase) in accounts receivable		11			(13	)		(5	)		(2	)		(48	)
	Increase (decrease) in trade payables		1			51			(5	)		32			64
	Increase (decrease) in other accounts payable		(164	)		62			(58	)		(22	)		108

			(152	)		100			(68	)		8			124

			1,171			466			624			362			139
(b)	Non-cash activities:

	Deferred charges in connection with the acquisition of Kitov recorded under "other investments"		-			-			-			-			12

	Issuance of treasury shares to subsidiary		-			-			-			-			2,469

The accompanying notes and additional information are an integral part of the financial data.

C-6

XTL BIOPHARMACEUTICALS LTD.

Separate Interim Financial Information disclosed in accordance with Regulation 38d

to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Note 1:-

Basis of Preparation of the Separate Financial Information Disclosed in accordance with Regulation 38D to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Definitions:

The Company	-	XTL Biopharmaceuticals Ltd.

The separate interim financial information	-	separate interim financial information disclosed in accordance with Regulation 38d to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Unless stated otherwise, all the terms used within the scope of the separate interim financial information are as these terms are defined in the condensed consolidated financial statements of the Company as of June 30, 2013 and for the six and three-month periods then ended ("condensed interim consolidated statements").

Investee	-	subsidiary

Intragroup transaction	-	transactions of the Company and subsidiaries

Intragroup balances, income and expenses and cash flows	-	balances, income and expenses and cash flows, as the case may be, resulting from intragroup transactions that have been eliminated in the consolidated financial statements

The principles of preparation of the separate financial information:

The separate interim financial information has been prepared in conformity with Regulation 38d to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970 ("Periodic Report Regulations"). Accordingly, financial data of the interim consolidated statements of the corporation as stated in Regulation 9c to the Periodic Report Regulations ("Regulation 9c"), with the obligated changes, will be disclosed in the interim statement along with the auditors' review report.

Accordingly, the separate interim financial information comprises financial data of the condensed consolidated financial statements of the Company as of June 30, 2013 and for the six and three-month periods then ended ("condensed interim consolidated financial statements") attributable to the Company itself as the parent.

C-7

XTL BIOPHARMACEUTICALS LTD.

Separate Interim Financial Information disclosed in accordance with Regulation 38d

to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Note 1:-

Basis of Preparation of the Separate Financial Information Disclosed in accordance with Regulation 38D to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970 (Cont.)

This separate interim financial information should be read in conjunction with the condensed interim consolidated financial statements and with the separate financial information of the Company as of December 31, 2012 and for each of the three years in the period then ended ("the Company's separate financial information for 2012") and the accompanying notes which have been prepared in accordance with Regulation 9c to the Periodic Report Regulations, as well as particulars specified in the Tenth Addendum to these Regulations and subject to the clarifications specified in the "Clarification Regarding the Separate Financial Statement of the Corporation" which was published on the website of the Israeli Securities Authority on January 24, 2010 and which address how to apply said Regulation and Addendum ("IAS Staff Clarification").

The significant accounting policies and methods of computation adopted in the preparation of the separate interim financial information are consistent with those followed in the preparation of the Company's separate financial information for 2012 as elaborated therein.

The interim financial information is reviewed and not audited.

The separate interim financial information does not constitute financial statements, including separate financial statements, which are prepared and presented in accordance with International Financial Reporting Standards ("IFRS") in general, and the provisions of International Accounting Standard 27, "Consolidated and Separate Financial Statements" in particular and it does not constitute interim financial information prepared in accordance with IAS 34, "Interim Financial Reporting".

Nonetheless, the accounting policy specified in Note 3 to the condensed interim consolidated financial statements regarding the significant accounting policies and the method by which the financial data were classified in the condensed interim consolidated financial statements were applied for the purpose of presenting the separate interim financial information and this with the obligated changes resulting from the above regarding the significant accounting policies and methods of computation adopted in the preparation of the separate interim financial information.

Note 2:-

Relations, Engagements, Loans, Material Investments and Transactions between the Company and Its Investees

In January 2013, the Company converted a current intragroup balance with a wholly-owned subsidiary, XTL Biopharmaceuticals Inc., of approximately $54,000 into an equity investment.

C-8

XTL BIOPHARMACEUTICALS LTD.

Separate Interim Financial Information disclosed in accordance with Regulation 38d

to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970

Note 2:-

Relations, Engagements, Loans, Material Investments and Transactions between the Company and Its Investees (Cont.)

On May 16, 2013, the Company informed an investee, InterCure Ltd. ("InterCure"), of its decision to convert the entire convertible loan which had been extended by the Company in the context of the acquisition of July 25, 2012 into 7,620,695 Ordinary shares of InterCure. Prior to said decision, the Company held about 45.41% of InterCure's issued and outstanding share capital. Following said conversion and as of June 30, 2013, the Company holds about 54.72% of InterCure's issued and outstanding share capital.

C-9

APPENDIX A

Interim report on the effectiveness of internal control over financial reporting

and disclosure pursuant to the Israeli Regulation 38c(a)

Management, under the supervision of the board of directors of XTL Biopharmaceuticals Ltd. ("the Company"), is responsible for planning and maintaining adequate internal control over financial reporting and disclosure in the Company. The executive officers in charge are:

1. Mr. David Grossman, CEO.

2. Mr. Ronen Twito, Deputy CEO and CFO.

3. Mr. Omer Morashti, Controller.

Internal control over financial reporting and disclosure consists of the Company's existing controls and procedures that have been planned by the CEO and the most senior financial officer or under their supervision, or by the equivalent acting officers, under the governance of the Company's board of directors, designed to provide reasonable assurance about the reliability of financial reporting and the preparation of the financial statements in compliance with applicable laws, and guarantee that all information that the Company is required to disclose in the financial statements issued by law is collected, processed, summarized and reported in a timely manner and according to the format prescribed by law.

Among other things, internal control includes controls and procedures planned to guarantee that all information that the Company is required to disclose as above is gathered and transferred to the Company's management, including the CEO and the most senior financial officer, or the equivalent acting officers, in order to allow decision making on a timely basis with respect to the disclosure requirement.

Because of its inherent limitations, internal control over financial reporting and disclosure is not designed to provide absolute assurance that misstatements or omissions of information in the financial statements will be prevented or detected.

In the annual report on the effectiveness of internal control over financial reporting and disclosure which is attached to the periodic report for the period ended December 31, 2012 ("the last annual report on internal control"), management and the board of directors have assessed the Company's internal control; based on this assessment, the Company's board of directors and management have concluded that the Company's internal control as above as of December 31, 2012 is effective.

Through the date of this report, no events or circumstances have been brought to the knowledge of the board of directors and management that are liable to change the assessment of the effectiveness of internal control, as found in the last quarterly report on internal control.

As of the date of this report, based on the assessment of the effectiveness of internal control in the last annual report on internal control, and based on information brought to the knowledge of management and the board of directors, as above, internal control is effective.

It is indicated that on July 25, 2012, the Company completed an acquisition of 50.79% of the shares of InterCure Ltd. ("InterCure") following which the Company obtained control over InterCure for the first time. As of June 30, 2013, the Company holds about 54.72% of InterCure's share capital. InterCure is not part of the scope of this report.

Chief Executive Officer's Statement pursuant to Regulation 38c(d)(1):

Letter of Representation

Chief Executive Officer's Statement

I, David Grossman, hereby declare that:

(1)

I have reviewed the quarterly report of XTL Biopharmaceuticals Ltd. ("the Company") for the second quarter of 2013 ("the reports").

(2)

To my knowledge, the reports do not contain any misrepresentation of any material facts and do not omit any representation of any material facts that are needed in order for the representations included therein, in view of the circumstances under which such representations were included, not to be misleading with reference to the period of the reports.

(3)

To my knowledge, the financial statements and any other financial information included in the reports adequately reflect, in all material respects, the financial position, operating results and cash flows of the Company for the dates and periods addressed in the reports.

(4)

I have disclosed to the Company's auditor, to the Company's board of directors and audit committee, based on my last evaluation of internal control over financial reporting and disclosure:

(a)

All the significant deficiencies and the material weaknesses in the establishment or operation of internal control over financial reporting and disclosure that are liable to reasonably adversely affect the Company's ability to record, process, summarize or report financial information in a manner that is to impair the reliability of financial reporting and the preparation of the financial statements in accordance with applicable law; and

(b)

Any fraud, whether material or not, that involves the CEO or direct subordinates thereto or that involves other employees with a significant role in internal control over financial reporting and disclosure.

(5)

I, alone or along with others in the Company:

(a)

Have established controls and procedures, or have secured the establishment and existence of such controls and procedures under my supervision, designed to guarantee that material information relating to the Company, including its consolidated companies as they are defined in the Israeli Securities Regulations (Annual Financial Statements), 2010, is brought to my knowledge by others in the Company and in the consolidated companies, particularly during the period of the preparation of the reports; and

(b)

Have established controls and procedures, or have secured the establishment and existence of such controls and procedures under my supervision, designed to reasonably guarantee the reliability of financial reporting and the preparation of the financial statements in accordance with applicable law, including according to generally accepted accounting principles.

D-2

(c)

Have not been made aware of any event or circumstance that occurred in the period from the date of the last report through the date of this report, that is to modify the conclusion of the management and the board of directors regarding the effectiveness of the Company's internal control over financial reporting and disclosure.

There is nothing in the aforesaid to derogate from my responsibility or the responsibility of anyone else, pursuant to any law.

August 29, 2013
Date		David Grossman, CEO

D-3

Chief Financial Officer's Statement pursuant to Regulation 38c(d)(2):

Letter of Representation

Chief Financial Officer's Statement

I, Ronen Twito, hereby declare that:

(1)

I have reviewed the interim financial statements and the other financial information included in the interim reports of XTL Biopharmaceuticals Ltd. ("the Company") for the second quarter of 2013 ("the reports" or "the interim reports").

(2)

To my knowledge, the interim financial statements and any other financial information included in the reports do not contain any misrepresentation of any material facts and do not omit any representation of any material facts that are needed in order for the representations included therein, in view of the circumstances under which such representations were included, not to be misleading with reference to the period of the reports.

(3)

To my knowledge, the interim financial statements and any other financial information included in the reports adequately reflect, in all material respects, the financial position, operating results and cash flows of the Company for the dates and periods addressed in the reports.

(4)

I have disclosed to the Company's auditor, to the Company's board of directors and audit committee, based on my last evaluation of internal control over financial reporting and disclosure:

(a)

All the significant deficiencies and the material weaknesses in the establishment or operation of internal control over financial reporting and disclosure, to the extent that it refers to the interim financial statements and any other financial information included in the interim reports, that are liable to reasonably adversely affect the Company's ability to record, process, summarize or report financial information in a manner that is to impair the reliability of financial reporting and the preparation of the financial statements in accordance with applicable law; and

(b)

(5)

I, alone or along with others in the Company:

(a)

(b)

D-4

(c)

Have not been made aware of any event or circumstance that occurred in the period from the date of the last report through the date of this report, that relates to the interim financial statements and to any other financial information included in the interim reports that is to modify, in my evaluation, the conclusion of management and the board of directors regarding the effectiveness of the Company's internal control over financial reporting and disclosure.

There is nothing in the aforesaid to derogate from my responsibility or the responsibility of anyone else, pursuant to any law.

August 29, 2013
Date		Ronen Twito, Deputy CEO and CFO

D-5

XTL BIOPHARMACEUTICALS LTD.

CONDENSED PRO FORMA INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2012

UNAUDITED

INDEX

	Page

Auditors' Special Review Report	2

Condensed Pro forma Interim Consolidated Statements of Comprehensive Loss	3

Notes to Pro forma Interim Consolidated Financial Statements	4 - 7

- - - - - - - - - - - -

Special auditors' review Report to the shareholders of XTL Biopharmaceuticals Ltd.

Introduction

We have reviewed the accompanied financial information of XTL Biopharmaceuticals Ltd (hereafter - the company) and its subsidiaries, which includes the proforma consolidated condensed statement of the comprehensive loss for the six and three month periods ended June 30, 2012. The Board of directors and management are responsible for the preparation and fair presentation of this interim proforma financial information in accordance with IAS 34 "Interim Financial Reporting", subject to regulation 38(b) to the Israel Securities Regulations (Periodic and Immediate Reports), 1970 and to the proforma assumptions detailed in this proforma financial information, and are responsible to the preparation of the interim proforma financial information for this period according to chapter D to the Israel Securities Regulations (Periodic and Immediate Reports), 1970. Our responsibility is to express a conclusion on this interim financial information based on our review.

We have not reviewed the condensed interim financial information of a consolidated company, which its income included in the proforma consolidation are 100% of the total proforma consolidated income for the six and three month periods then ended. The interim condensed financial information of this consolidated company was reviewed by other independent auditors, whose review report have been presented to us, and our conclusion, insofar as it relates to financial information for this company, is based on the review report of the other auditors.

Scope of Review

Conclusion

Based on our review and the report of other auditors, nothing has come to our attention that causes us to believe that the proforma accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34 subject to regulation 38(b) to the Israel Securities Regulations (Periodic and Immediate Reports), 1970 and to the proforma assumptions detailed in this proforma financial information

In addition to what is said in the previous paragraph, based on our review and the report of other auditors, nothing has come to our attention that causes us to believe that the proforma accompanying interim financial information does not comply, in all material respects, with the disclosure provisions of Chapter D of the Israel Securities Regulations (Periodic and Immediate Reports), 1970.

Tel-Aviv, Israel	Kesselman & Kesselman
August 29, 2013	Certified Public Accountants (Isr.) A member firm of PricewaterhouseCoopers International Limited

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 68125, Israel, P.O Box 452 Tel-Aviv 61003 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.co.il

E-2

XTL BIOPHARMACEUTICALS LTD.

Condensed Pro forma Interim Consolidated Statements of Comprehensive Loss

U.S. dollars in thousands (except per share data)	Six months ended June 30,			Three months ended June 30,			Year ended December 31,
	2012			2012			2012
	Unaudited						Audited
	U.S. dollars in thousands (except per share data)

Revenues from sales		1,204			559			2,267
Cost of sales		451			201			808

Gross profit		753			358			1,459
Research and development expenses		117			62			186
Selling and marketing expenses		715			287			1,595
General and administrative expenses		1,309			783			3,064
Other gains, net		795			-			802

Operating loss		(593	)		(774	)		(2,584	)

Finance income		36			3			145
Finance expenses		(66	)		(54	)		(49	)

Finance income (expenses), net		(30	)		(51	)		96

Earnings from investment in associate		-			-			569

Loss before taxes on income		(623	)		(825	)		(1,919	)
Tax benefits (tax expenses)		7			(3	)		-

Net loss for the period		(616	)		(828	)		(1,919	)

Other comprehensive income:
Item which can be classified to profit or loss:
Foreign currency translation adjustments of foreign operations		-			-			114

Total other comprehensive income		-			-			114

Total comprehensive loss for the period		(616	)		(828	)		(1,805	)

Loss for the period attributable to:
Equity holders of the parent company		(431	)		(746	)		(1,502	)
Non-controlling interests		(185	)		(82	)		(417	)

Net loss for the period		(616	)		(828	)		(1,919	)

Comprehensive loss for the period attributable to:
Equity holders of the parent company		(431	)		(746	)		(1,388	)
Non-controlling interests		(185	)		(82	)		(417	)

		(616	)		(828	)		(1,805	)

Basic and diluted loss per share (in U.S. dollars)		(0.003	)		(0.004	)		(0.007	)

The accompanying notes are an integral part of the financial statements.


Amit Yonay	David Grossman	Ronen Twito
Chairman of the Board	Director and CEO	Deputy CEO and CFO

Date of approval of the pro forma financial statements by the Company's Board: August 29, 2013.

E-3

XTL BIOPHARMACEUTICALS LTD.

Notes to Condensed Pro forma Interim Consolidated Financial Statements as of June 30, 2012 (Unaudited)

NOTE 1:- A DESCRIPTION OF THE PRO FORMA EVENT

On June 13, 2012, the Company entered into a master agreement with InterCure whereby, subject to the execution of the debt refinancing pursuant to Section 350 to the Israeli Companies Law, 1999 ("the debt refinancing") before the completion of the transaction in which InterCure will convert its entire debts into Ordinary shares of InterCure based on a distribution mechanism as agreed upon with all its creditors (including its employees), the Company will acquire the control over InterCure in return for a cumulative investment of approximately $ 2.7 million, partly paid in cash and partly by the allocation of Company shares. In addition to the Company's investment in InterCure, a third party ("Medica Fund") will invest a total of $630,000 in InterCure.

As part of the prerequisites underlying the agreement, InterCure committed that on the date of completion of the transaction, it shall be free of any debts and/or monetary liabilities, net and of all contingent liabilities, excluding an amount of up to $150,000 in net liabilities.

On July 25, 2012, the transaction was completed following the fulfillment of the prerequisites and the Company acquired 16,839,532 Ordinary shares of InterCure with no par value in return for the allocation, by private placement, of 7,165,662 Ordinary shares of NIS 0.1 par value each of the Company whose value as of the date of signing the agreement based on the quoted market price of the Company's shares on the TASE totaled approximately $ 2.2 million, representing a value of InterCure of $ 1.75 million before the money but after the conversion of InterCure's entire debts as described above ("InterCure's adjusted value"). The fair value of the Company's shares as of the date of completion of the transaction approximated $2,469,000. In addition, the Company transferred to InterCure an amount of approximately $150,000 in cash based on InterCure's adjusted value. Following said allocation, the Company held about 50.79% of InterCure's issued and outstanding share capital. The investment by Medica Fund as of the date of completion of the transaction based on InterCure's adjusted value totaled approximately $460,000.

Furthermore, the Company and Medica Fund extended InterCure a loan convertible into shares in the amount of $500,000 (the Company's share is $330,000) for a period of up to ten months bearing an overall interest rate of 15%. The Company and Medica Fund have the right to convert the loan into an additional 11,546,507 shares of InterCure (the Company's share is 7,620,695 shares) which will represent, upon conversion of the loan and assuming full dilution, about 24.47% of InterCure's issued and outstanding share capital as of the date of completion of the transaction (the Company's share in the convertible loan will be 16.15% of InterCure's issued and outstanding share capital). On August 6, 2012, Medica Fund converted the loan extended to InterCure into shares. On May 16, 2013, the Company also converted the loan extended to InterCure into shares, bringing its stake in InterCure's issued and outstanding share capital to 54.72%.

If all the stock options granted to employees, service providers and directors in InterCure that have not yet expired or been forfeited are exercised, the Company's stake in InterCure will reach about 52.91%.

E-4

XTL BIOPHARMACEUTICALS LTD.

Notes to Condensed Pro forma Interim Consolidated Financial Statements as of June 30, 2012 (Unaudited)

NOTE 1:- A DESCRIPTION OF THE PRO FORMA EVENT (Cont.)

On October 28, 2012, InterCure allocated 20,185,184 performance-based stock options that are exercisable into 20,185,184 Ordinary shares with no par value to Gibuv Ltd. ("Gibuv"). If all the performance-based stock options granted to Gibuv are exercised and assuming all the stock options granted to employees, service providers and directors in InterCure that have not yet expired or been forfeited are exercised, the Company's stake in InterCure will be about 36.83% of InterCure's issued and outstanding share capital. As of the date of signing these financial statements, the stock options granted to Gibuv have not yet vested.

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

The condensed pro forma interim consolidated financial statements ("pro forma statements") have been prepared in conformity with Regulation 38b to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970. The significant accounting policies adopted in the preparation of the pro forma statements are consistent with those followed in the preparation of the interim consolidated financial statements of the Company, except as described in Note 3 below.

NOTE 3:- ASSUMPTIONS USED IN THE PREPARATION OF THE PRO FORMA INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The pro forma consolidated statements of comprehensive loss were presented in order to reflect the Group's operating results had the InterCure acquisition transaction been completed on January 1, 2012.

Since the date of the pro forma investment (January 1, 2012), the Company's stake in InterCure is 50.79% of the issued and outstanding share capital of InterCure.

InterCure completed the debt refinancing prior to the closing of the transaction, namely on December 31, 2011. Accordingly, finance expenses recognized by InterCure on its interest-bearing financial liabilities that were converted as part of InterCure's debt settlement have been deducted from finance expenses. However, finance expenses have been adjusted to reflect the interest on the loan that Medica Fund provided InterCure.

NOTE 4:- SEGMENT REPORTING

The Group's management has determined the business segments based on reports that are reviewed by the chief operating decision maker to make strategic decisions.

Until July 25, 2012, the Company had a single operating segment - drug development. Effective from said date, following the acquisition of InterCure, the Chief Operating Decision Maker ("CODM") reviews the business activities both according to the nature of the activity and the geographical location of the activity. With respect to the nature of the activity, the CODM reviews the operating results of the drug development activity and of the medical device activity. From a geographical standpoint, the CODM reviews the performance of sales of medical devices in the U.S., the UK and the rest of the world.

E-5

XTL BIOPHARMACEUTICALS LTD.

Notes to Condensed Pro forma Interim Consolidated Financial Statements as of June 30, 2012 (Unaudited)

NOTE 4:- SEGMENT REPORTING (Cont.)

Segment reporting data disclosed below assumes that InterCure acquisition was completed on January 1, 2012:

	Six months ended June 30, 2012 (unaudited)
	Medical devices								Drug
	U.S.			UK			Other		development			Adjustments			Total
	U.S. dollars in thousands
Revenues:

External customers		1,008			190			6		-			-			1,204
Inter-segment revenues		-			-			172		-			(172	)		-

Total revenues		1,008			190			178		-			(172	)		1,204

Segment results		(75	)		(22	)		2		(196	)		-			(291	)

Unallocated joint expenses																1,097
Other income, net																795
Finance income, net																30

Loss before taxes on income																(623	)

	Three months ended June 30, 2012 (unaudited)
	Medical devices								Drug
	U.S.			UK		Other			development		Adjustments			Total
	U.S. dollars in thousands
Revenues:

External customers		457			102		-			-		-			559
Inter-segment revenues		-			-		17			-		(17	)		-

Total revenues		457			102		17			-		(17	)		559

Segment results		(16	)		19		(2	)		-		(91	)		(90	)

Unallocated joint expenses															684
Finance income, net															51

Loss before taxes on income															(825	)

E-6

XTL BIOPHARMACEUTICALS LTD.

Notes to Condensed Pro forma Interim Consolidated Financial Statements as of June 30, 2012 (Unaudited)

NOTE 4:- SEGMENT REPORTING (Cont.)

	Year ended December 31, 2012 (audited)
	Medical devices								Drug
	U.S.			UK			Other		development			Adjustments			Total
	U.S. dollars in thousands
Revenues:

External customers		1,872			383			12		-			-			2,267
Inter-segment revenues		-			-			755		-			(755	)		-

Total revenues		1,872			383			767		-			(755	)		2,267

Segment results		(138	)		(67	)		3		(388	)		-			(590	)

Unallocated joint expenses																2,796
Other income, net																802
Finance income, net																96
Earnings from investment in associate																569

Loss before taxes on income																(1,919	)

- - - - - - - - - - - -

E-7

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	XTL BIOPHARMACEUTICALS LTD.


Date: August 29, 2013	By:	/s/ David Grossman
		Name: David Grossman
		Title: Chief Executive Officer