**Exhibit
      99.1**




**Report
      of Management on Internal Control Over Financial Reporting**





**Financial
      Statements**





XTL
      Biopharmaceuticals Ltd. (the “Company”) is responsible for the preparation,
      integrity and fair presentation of its published consolidated financial
      statements as of December 31, 2007, and for the year then ended. The
      consolidated financial statements of the Company have been prepared in
      accordance with accounting principles generally accepted in the United States.





**Internal
      Control Over Financial Reporting**





The
      management of the Company is responsible for establishing and maintaining
      effective internal control over financial reporting and for its assessment
      of
      the effectiveness of internal control over financial reporting.





The
      Company’s internal control over financial reporting is a process designed by, or
      under the supervision of, the Company’s Audit Committee, principal executive and
      principal financial officers, and effected by the Company’s board of directors,
      management, and other personnel to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with generally accepted accounting
      principles. The Company’s internal control over financial reporting includes
      those policies and procedures that (1) pertain to the maintenance of records
      that, in reasonable detail, accurately and fairly reflect the transactions
      and
      dispositions of the assets of the Company; (2) provide reasonable assurance
      that
      transactions are recorded as necessary to permit preparation of financial
      statements in accordance with generally accepted accounting principles, and
      that
      receipts and expenditures of the Company are being made only in accordance
      with
      authorizations of management and directors of the Company; and (3) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use, or disposition of the Company’s assets that could have a
      material effect on the consolidated financial statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect material misstatements on a timely basis. Therefore even
      those
      systems determined to be effective can provide only reasonable assurance with
      respect to financial statement preparation and presentation. Also, projections
      of any evaluation of effectiveness to future periods are subject to the risk
      that controls may become inadequate because of changes in conditions, or that
      the degree of compliance with the policies or procedures may
      deteriorate.





Management
      assessed the effectiveness of the Company’s internal control over financial
      reporting as of December 31, 2007, based on the criteria established in Internal
      Control - Integrated Framework issued by the Committee of Sponsoring
      Organizations - COSO - of the Treadway Commission. Based on that assessment,
      management has concluded that as of December 31, 2007 the Company’s internal
      control over financial reporting is effective.





The
      Company's independent auditors, Kesselman & Kesselman, a member of
      PricewaterhouseCoopers International Limited, have audited the consolidated
      financial statements prepared by the Company and independently assessed the
      effectiveness of the Company’s internal control over financial
      reporting.






/s/
                Ron Bentsur
            
            /s/
                Bill KesslerRon
                Bentsur
            
            Bill
                KesslerChief
                Executive Officer
            
            Director
                of FinanceMarch
                27, 2008
            
            March
                27, 2008