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XL TechGroup, Inc. (XLT)

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Tuesday 26 June, 2007

XL TechGroup, Inc.

Final Results

XL TechGroup, Inc.
26 June 2007


Press Release                                                       26 June 2007


                               XL TechGroup, Inc.
                ('XL TechGroup' or 'the Company' or 'the Group')


               Final results for the year ended 31 December 2006



XL TechGroup (AIM: XLT), the systematic architect and builder of an ongoing
stream of high value new companies, today announces its final results for the
year ended 31 December 2006.


2006 Financial Highlights
•    Year-end cash on hand of US$19 million
•    Year-end tradeable quoted securities and cash of US$146.7 million


2006 Operational Highlights
•    TyraTech signs option agreement with Scotts and co-development agreements 
     with Arysta, Syngenta and Kraft Foods
•    GenXL launched to add value over and above XL TechGroup core business
•    Fourth company PetroAlgae started in September 2006
•    Fifth company QuoNova started in December 2006
•    DxTech thyroid panel tests confirm gold standard performance


Post Year End Highlights
•    Additional US$20 million raised from new Laurus borrowing facility
•    TyraTech raises £25 million via AIM IPO and repays US$11.9 million of loans 
     from XL TechGroup
•    PetroAlgae completes optimisation site
•    GenXL makes first company investment in EnGen
•    AgCert announces improved strategy and raises additional funds
•    Scotts extends option with TyraTech to broaden scope of licensing 
     negotiations


Commenting on XL TechGroup's 2006 results, Dr John Scott, CEO said: '2006 saw a
number of significant, positive developments at XL TechGroup and at our
portfolio companies.  TyraTech signed a range of agreements with leading global
companies such as Syngenta and Kraft Foods, we launched our fourth (PetroAlgae)
and fifth (QuoNova) companies, DxTech demonstrated the ability of its sensor
technology to match reference lab gold standards, and GenXL was established to
deliver even more value to our shareholders, above and beyond our core business
model.

This momentum has continued into 2007, including the recent successful listing
of TyraTech on AIM.  We anticipate a number of developments at DxTech and
PetroAlgae over the next 12 months which should provide much greater visibility
to their exciting prospects, and we should also have launched the next of our
new companies within this timeframe.  In addition, we look forward to news from
TyraTech of its progress across the various markets it is targeting, and we will
update shareholders on all important developments at QuoNova and GenXL.  We have
also reaffirmed our support for AgCert's improved strategy by our agreement to
convert loans to equity as part of their recent additional fund raising.

Given the further progress that we anticipate across the Group during the next
12 months, we believe that we are now reaching a clear inflexion point in the
potential valuation profile of XL TechGroup when our first companies are
approaching the exit end of our value creation pipeline while we continue to
establish one-to-two new companies each year.  It has always been a key part of
XL TechGroup's continuing strategy to create an ongoing series of significant
cash distributions for its shareholders, and I would anticipate that the first
of these will occur during 2008.'


                                    - Ends -



XL TechGroup's 2006 annual report and accounts will be posted on the website
(www.xltechgroup.com) at 5.00pm UK time on Friday 29 June 2007 and will be
mailed to shareholders on the same day.



For further information:
XL TechGroup Inc.
John Scott / Harold Gubnitsky                               Tel: +1 321 409 7403
[email protected]
Chris Munden, Director of Investor Relations           Tel: +44 (0) 20 7398 7720
[email protected]                                             www.xltechgroup.com


Nomura Code Securities
Richard Potts, Corporate Finance                       Tel: +44 (0) 20 7776 1200
                                                          www.codesecurities.com



XL TechGroup media enquiries:
Abchurch Communications
Heather Salmond / Gareth Mead                          Tel: +44 (0) 20 7398 7700
[email protected]                        www.abchurch-group.com




CHAIRMAN'S STATEMENT

2006 was an exciting year for XL TechGroup ('the Group' or 'the Company') when
significant achievements were made across our portfolio of companies.  We have
also reached an inflexion point in the development of the Group when our earlier
companies are approaching the exit end of our value creation pipeline while the
portfolio continues to grow through the establishment of one-to-two new
companies each year.  Following the recent IPO and placing by TyraTech, XL
TechGroup's total cash and quoted securities at market was approximately
US$158.7 million as at 15 June 2007, compared to US$146.7 million as at 31
December 2006 and US$186.8 million as at 30 June 2006.  Our portfolio now
consists of:

                                                         Date started                   % owned*

AgCert International plc (listed)                          May 2002                       19.3
TyraTech Inc. (listed)                                     May 2004                       47.9
DxTech LLC                                                July 2005                       82.5
PetroAlgae LLC                                            Sept 2006                       94.4
QuoNova LLC                                                Dec 2006                       90.0

GenXL LLC                                                 June 2006                       42.7
* as at 15 June 2007


AgCert made good progress throughout 2006, including an exciting long-term
strategic partnership with global power company AES, and this progress has
continued into 2007.  AgCert has achieved clear improvements in relation to:
     
o    previously announced operating issues

o    success in registering the required number of credits in the fourth
     quarter of 2006

o    delivery of the expected number of credits in the first quarter of 2007

o    clear improvements in the efficiency of its existing biodigesters

o    successful placing which provides funds needed to implement the
     improved portfolio diversification strategy

However, a changing regulatory environment and some continuing operational
challenges prompted a thorough re-examination of its longer term business plan,
including the focus of technology improvements.  This has resulted in an
improved strategy that focuses on AgCert's market leading expertise and
experience in creating emission reductions.  More importantly, it also results
in at least the same emission reduction delivery programme as previously
anticipated, but with a significantly reduced capital funding requirement.  Our
continuing belief in AgCert and our firm endorsement of this improved strategy
is clearly demonstrated by our conversion of loans to equity and by the
additional credit facility that we are providing.  We continue to believe that
AgCert will be able to deliver at least the same value that we anticipated when
the company was started.

Following the appointment of TyraTech's CEO, CFO and advisors earlier in 2007,
we are delighted that TyraTech has recently completed its IPO on the Alternative
Investment Market ('AIM'), the market owned and operated by the London Stock
Exchange plc, successfully raising £25 million.  TyraTech is commercialising its
plant oil derived pesticide products, and has signed licensing and
co-development agreements with multinational companies The Scotts Company LLC,
Syngenta Crop Protection AG and Arysta LifeScience North America Corporation.
In December 2006, TyraTech also signed an exclusive, global co-development
agreement with Kraft Foods Holdings, Inc. in relation to human parasite
treatments in food products.  The Kraft agreement represents a novel technology
approach to human parasites, one of the most damaging unseen conditions in the
world, and the use of the food channel as a delivery mechanism makes this a
potentially ground breaking business approach.

DxTech also made excellent progress during 2006.  Working with technology
partners in the USA, UK and Germany, systems have been developed which is now
allowing DxTech to move efficiently from R&D to initial products.  Preliminary
performance data have already produced results which compare favourably with the
gold standard systems currently used in reference laboratories.  DxTech is in
negotiations with a number of leading potential partners in Asian markets which
is their first target geographic area for commercialisation.

PetroAlgae has developed even more rapidly than we had anticipated.  Since it
was established only nine months ago, a four acre optimisation site has been
completed and the company is actively working with a number of potential
commercial partners on maximising oil yields.  The next steps in scaling
PetroAlgae towards significant production levels have already started and
important developments are anticipated by the end of 2007.

We launched our fifth company, QuoNova at the end of 2006 and we are very
excited about its potential as a new approach to controlling the effects of
bacteria without the use of environmentally damaging biocides.  This conclusion
is further evidenced by discussions with a number of potential commercial
partners which are already well advanced.  QuoNova's business plan addresses a
wide range of large markets within the healthcare, medical device, industrial
and consumer sectors.

After reviewing a significant number of opportunities since it was established
in mid 2006, our joint venture company GenXL has already announced its first
investment (EnGen) and we now look forward to a steady flow of news, leading
towards the creation of even greater value for our shareholders over and above
our core business.

XL TechGroup's own pipeline of potential new company opportunities continues to
grow and is as strong as ever.  In line with our business model, we expect to
continue launching one-to-two new companies each year.  By the end of 2007, we
also expect to be achieving much greater visibility on the potential value of
those companies that have already been established, starting with the recent IPO
of TyraTech and including important developments that we anticipate at DxTech
and PetroAlgae in particular.  In short, we believe that XL TechGroup is now at
an inflexion point in our plan to create significant value for shareholders.

We ended 2006 with US$19 million of cash in the bank and we have since added to
this with an additional US$20 million in loans from Laurus, plus US$11.9 million
from the repayment of loans made to TyraTech.  Combined with our receivables,
tradable securities and our ability to leverage the value of our individual
companies, we anticipate that we have sufficient liquid resources at our
disposal to fund our portfolio companies for the foreseeable future.

The Board of XL TechGroup has elected to change an accounting policy under US
GAAP, a change that is intended to provide greater year-on-year consistency and
transparency to XL TechGroup's reporting of equity transactions involving our
portfolio companies.  This change principally relates to the Board's view that
gains relative to its portfolio companies equity transactions should be
reflected in the balance sheet.  We have also restated our 2005 and 2004
accounts relative to how the Company recorded complex accounting entries related
to its holdings in non-consolidated portfolio companies.  These changes do not
involve any cash movements and we feel that they will significantly improve
investors' understanding of our financial reporting.

Finally, I would like to thank all our shareholders, as well as our discovery
and technology partners for their continued support and it would be remiss of me
not to also recognise the efforts and hard work of all our own people.  XL
TechGroup now has 47 employees, there are more than 60 working at our portfolio
companies, excluding AgCert and GenXL, and we would not be looking forward to
such an exciting future without their expertise and focus.


DR GEOFFREY VERNON
Non-Executive Chairman
25 June 2007



OPERATIONAL & FINANCIAL REVIEW


AgCert International plc ('AgCert') - 19.3% owned by XL TechGroup*
* as at 15June 2007


At the time of its IPO in May 2005, AgCert's business model was focused on the
construction of modified animal waste management systems using biodigesters to
capture and combust methane on animal farms.  While this strategy resulted in
AgCert being entitled to receive the majority of the resulting offsets, it also
means that the company incurred all or most of the financial and regulatory
risk.  Since then, there have been some regulatory factors that have challenged
AgCert's ability to implement its original business model.  These include a
change to the method of calculating offset production which has significantly
reduced achievable biodigester yields, as well as delays in the issuance of
credits caused by the continually evolving regulatory framework that governs
this still young industry.

AgCert has also faced a number of other challenges to its original business
model, the main ones being higher than anticipated raw material and operating
costs, substandard construction work in some instances, and varying biodigester
efficiency levels.  The combined effect of these operational and regulatory
problems was an increasing likelihood of a shortfall against credit delivery
obligations, particularly in 2007, as a result of which AgCert successfully
renegotiated a number of contracts, producing a much improved profitability and
risk profile for the business.

Despite the challenges mentioned above, AgCert still made considerable progress
in 2006 and this has continued into 2007.


                                                       IPO (May 2005)               31 March 2007

Sites completed (gen. offsets)                               26                          661
Forward sales                                               €74m                        > €160m
CERs issued                                                  No                          Yes
LOAs                                                         1                            84
Registered projects                                          0                            63
Accredited DOEs                                              No                          Yes
Verticals entered                                          Swine               Swine, dairy, palm, oil,
                                                                                    fuel switching
Joint ventures                                               No                          Yes


Nevertheless, in light of increased costs and reduced yield expectations,
AgCert's board and management have conducted a comprehensive review of its
business and have announced an improved strategy that will achieve at least the
same emission reduction delivery programme as previously anticipated but with a
significantly reduced capital funding requirement.


The key elements of AgCert's improved strategy are:
     
(1)  to complete to the highest standard all biodigesters that have been
     already started

(2)  to continue improving the efficiency levels of existing biodigesters

(3)  to reduce operating expenses by over 35% by the end of 2007

(4)  to develop a dedicated project consultancy offering based on AgCert's
     extensive experience of the complex regulatory environment that surrounds 
     the industry

(5)  to pursue additional joint venture opportunities like the AES Agriverde
     partnership which leverages the partner's capital alongside AgCert's 
     existing biodigester technology

(6)  to introduce new lower cost animal waste management technologies

(7)  expand into other agricultural sectors such as forestry

AgCert has already made progress on a number of its improved strategic
initiatives, including negotiations with a number of large industrial emitters
to design and register projects to generate credits.  AgCert is targeting
projects capable of generating 5-20 million credits per annum, and will receive
without charge a fixed proportion of the credits as compensation.  AgCert has
also agreed a number of letters of intent in relation to new consultancy and
other projects in keeping with the improved strategy outlined above.

To fund the implementation of the improved strategy, AgCert has recently raised
£20.5 million (£18.7 million after expenses) via a placing of 51.18 million new
ordinary shares at 40 pence per share which was fully underwritten by Nomura
Code Securities and Hoare Govett.  AgCert has also capitalised approximately
€14.6 million of debt owed to three major shareholders, including £2.73 million
owed to XL TechGroup.  The capitalisation at 40 pence per share resulted in the
issue of an additional 24.95 million new ordinary shares, including 6,822,429 to
XL TechGroup which now owns 46,043,394 AgCert shares, representing 19.33% of the
issued share capital.

XL TechGroup has also agreed to provide AgCert with a credit facility of up to
€5 million, to be available in the second quarter of 2008 for certain, defined
working capital needs and convertible into new ordinary shares of AgCert.  The
improved strategy will enable AgCert to deliver at least the same emission
reduction delivery programme as previously anticipated, but with a significantly
reduced capital funding requirement and will provide the company with financing
through to self sufficiency.

As a result of the improved strategy, and without allowing for any additional
credits from forestry related projects, AgCert expects to create 2.3 million
credits in 2007, 6.8 million in 2008, and 9.8 million in 2009.  These levels
significantly exceed the contractual delivery requirements of AgCert during
these years, which total 12.6 million credits, and the excess credits will be
sold at considerably higher prevailing market prices.

During 2006, AgCert also announced the establishment of AES Agriverde, an
important joint venture with AES Corporation, the global power company.  This
agreement is a clear validation of AgCert's technology, as demonstrated by AES's
plans to invest US$300 million over a five year period, as well as their
investment of approximately €40 million for a 10% stake.  AgCert receives 20% of
the credits generated by AES Agriverde without having to contribute any capital,
and has an option to purchase a further 30% of the credits generated by
contributing capital to the joint venture.

In March 2007, AgCert announced that it had received an approach from an unnamed
party in relation to a possible offer for the entire issued share capital.
AgCert subsequently advised that the discussions had been terminated.  As
founder and one of the leading shareholders, XL TechGroup is pleased with this
conclusion because, despite the challenges that the company has faced over the
last year, we continue to have confidence that AgCert will deliver the value
that we anticipated when it was started.


TyraTech Inc. ('TyraTech') - 47.9% owned by XL TechGroup*
* as at 15 June 2007


TyraTech was founded by XL TechGroup in May 2004 as a product of our business
model to create and grow new, innovative businesses in response to unmet market
needs.  TyraTech develops and commercialises efficacious proprietary insecticide
and parasiticide products which incorporate unique blends of natural, plant oil
derived active ingredients.  TyraTech's product pipeline addresses a diversity
of pesticide market opportunities in human and animal treatments; domestic,
commercial and hospitality facilities, as well as farms and fields.

TyraTech's proprietary development platform enables rapid characterisation of
potent mixtures of plant oil derived pesticides (insecticides and
parasiticides).  Natural plant oils are already known to have various degrees of
pesticidal activity, but historically have not been as effective as
synthetic-chemical based products.  The TyraTech development platform overcomes
this performance limitation with its proprietary blends of individual oil
compounds that are specifically selected for their synergistic ability to
simultaneously activate multiple insect neurological and olfactory receptors
that are not found in vertebrates.  TyraTech is developing natural pesticide
products to be directly used in, on and around humans and animals, as well as in
the food chain.  TyraTech has filed numerous patent applications, to protect
both its development platform and the blends of plant oils generated by that
platform.

TyraTech plans to produce proprietary products that will target certain
insecticide and parasite markets that currently generate over US$23 billion in
annual worldwide sales, including agricultural and horticultural applications,
consumer applications, professional pest control applications, governmental
uses, and human and animal healthcare applications.  We also believe there is
approximately US$8 billion in additional, new market opportunities that can be
addressed by TyraTech solutions, for example via a prophylactic solution to
treat animal parasites, as well as multiple fungicidal and other applications.
TyraTech's products are intended to address increasing consumer, industry and
governmental demand for naturally derived insecticide and parasite products that
are safer but work as effectively as many of the toxic chemicals that have been
historically used in this industry.

TyraTech intends to generate revenue via its own product sales, partnership
milestone payments, fees and royalties, and through the sales of proprietary
active ingredients to its partners.  During 2006, TyraTech received
approximately US$2.2 million in fees although, under US GAAP, only US$0.23
million was recorded in 2006 revenues.  However, offsetting this was an
accounting charge of US$0.5 million for the fair value of warrants issued to a
commercial partner of TyraTech and treated as a sales incentive, resulting in
negative revenues of US$0.27 million being recorded in 2006.  Along with
milestone payments, fee income is expected to continue in 2007 and beyond.

TyraTech has over 24 products in active development and plans to launch, or make
available to its partners for launch, 6 of these within approximately the next
12 months.  With the breadth of market segments, TyraTech has developed multiple
routes to market for its products, including major multi-national partners, its
own direct sales and regional distributors.

Partnership agreements, which include commercial distribution and co-development
relationships, have so far been signed with The Scotts Company LLC ('Scotts'),
Arysta LifeScience North America Corp. ('Arysta'), Syngenta Crop Protection AG
('Syngenta'), and Kraft Foods Holdings, Inc. ('Kraft Foods').  These
multi-national partners are well positioned in the areas of consumer products,
agriculture, professional pest control and food products and, through them,
TyraTech gains access to high quality resources in product development,
regulatory affairs, marketing planning and logistics.


Scotts

In March 2006 TyraTech signed an option agreement with Scotts, a US$3.1 billion
multinational company, for exclusive rights to negotiate a license for a
selected consumer product application, with rights of first refusal for other
pesticide applications.  The agreement included an upfront option fee, option
extension fees, and product sales royalties paid to TyraTech for licensed
products.  Scotts has recently extended its option in order to broaden the scope
of negotiations for a license.  This agreement supports Scotts' goal to create a
naturally derived product line.


Arysta

TyraTech signed a global licensing and co-development agreement in June 2006
with the North American subsidiary of Arysta LifeScience Corporation, a
Tokyo-based agrichemical and life sciences company, whereby Arysta has an
exclusive license to market certain TyraTech products for specific horticultural
markets.  The agreement provides for exclusivity fees, milestone payments and
royalties paid to TyraTech.  Field testing for the lead product has been
underway since late 2006, when the first exclusivity payment was received from
Arysta, with trials continuing into 2007.  The first milestone is expected from
Arysta in 2007.


Syngenta

In July 2006 TyraTech signed a multi-territory agreement with Syngenta, a global
agricultural chemical and seed company based in Basel, Switzerland which
includes exclusive and non-exclusive rights in the professional pest control
operator and the vector control market segments.  The agreement provides for
exclusivity fees, milestone payments and royalties.  TyraTech received the first
exclusivity fee and the initial milestone payment from Syngenta in the first
half of 2007, with first revenues expected as early as 2008.


Kraft Foods

In December 2006, TyraTech signed a worldwide exclusive co-development agreement
with Kraft Foods, a US$34 billion leader in the consumer food products sector.
The agreement covers human parasitic prevention applications of TyraTech
technology to be delivered in food products.  With an active development program
in place, involving over 50 Kraft people around the world, Kraft and TyraTech
are moving to advance both the technical validation and lead market
qualification process.  Together with TyraTech and XL TechGroup personnel, Kraft
has already had government level meetings in five leading emerging market
countries to start gathering the information needed to determine market entry
priorities.

The agreement includes exclusivity fees, milestone payments, and royalties.  The
first exclusivity payment was received in 2006 and represented a significant
commitment by Kraft.  Completion of the activities for the receipt of the first
milestone payment is expected in late 2007, with subsequent milestones to be
determined at that time.  This partnership represents not only a novel
technological solution to the vast problem of human parasitic infestation (over
2 billion people infested), but also utilises a unique business channel (i.e.
food) that can reach the affected populations.

While therapeutic options for treatment of intestinal parasites exist, many of
them have major problems due to the toxicity of the treatments and they
therefore cannot be used frequently enough to prevent re-infestation.  The
TyraTech prophylactic approach however, is designed to be safe enough to use in
food every day.  This not only opens a distribution channel (food) more readily
available to the developing world customer, but also great expands the size of
the market.


Direct Sales and Distributors

TyraTech also intends to sell products and active ingredients via its direct
sales force and agreements with distributors.  The strategy for direct sales
will target opportunities for near term revenue, particularly targeted at the
food and hospitality industries as well as through government-led programs, and
territories and applications that are not covered through partners.  TyraTech
has an initial sales and marketing group that is actively establishing the lead
customers for its institutional products, and is expecting niche market revenues
as early as late 2007.


Institutional Direct Sales

TyraTech's natural insecticidal products will be aimed at hotels and motels,
food service organisations (including restaurants and food processors), cruise
ships, prisons, schools and hospitals, and any other establishments which do not
use professional pest control companies on a regular basis.  By virtue of their
improved safety profile, TyraTech's products are designed to be used by all
employees without special training or licensing, and can be used in and around
food preparation areas.  Several of TyraTech's leading products are available in
EPA exempt formulations (25B 4A) which only require registration with local
state authorities.  These US registrations take between approximately two weeks
and six months to be completed and represent nominal registration costs.


TyraTech India

This wholly owned subsidiary has entered into a non-exclusive distribution
agreement with a local Indian company to distribute mosquito repellent and
insecticide, and market these products to the government sector in India.
TyraTech India is working closely with the National Institute for Malaria
Research in India to carry out efficacy studies and obtain full registrations
for active ingredients and vector (disease bearing insects and parasites)
control products.  TyraTech has successfully completed early studies conducted
by the Indian Armed Forces and the State Government of Assam.  TyraTech is
exploring the potential sale of its products for mosquito repellent and vector
control through Indian state and local governments, military and health
departments.


Terra Quest

TyraTech is actively pursuing sales through the Mexican government for head lice
treatments, as well as insect control and vector control, through a supply and
distribution agreement with Terra Quest.  TyraTech intends to generate revenue
through sales of product to Terra Quest for local formulation and participation
in government head-lice eradication programs and vector control programs.


Subsequent Events

Since the start of 2007, TyraTech has appointed Dr. Douglas Armstrong, Ph.D. as
CEO and Keith Bigsby as CFO, and retained Nomura Code Securities Limited ('
Nomura Code') as Nominated Adviser and both Nomura Code and Jefferies
International Limited ('Jefferies') as joint brokers in relation to a successful
IPO on AIM.  This IPO raised £25 million before expenses at a placing price of
500p per share, including £2.5 million from XL TechGroup as part of its stated
goal of maintaining a controlling interest in all its companies after AgCert
International, and to also affirm its commitment to TyraTech.  XL TechGroup has
not sold any TyraTech shares and the Company now holds a 47.92% interest in
TyraTech, implying a market valuation for this stake of approximately £52.7
million at the IPO price.

The proceeds of the placing by TyraTech will be used to build operations that
facilitate the development and commercialisation of TyraTech's product
portfolio, in particular: the launch of new products; the enhancement of
TyraTech's product support operations; and additional research to develop higher
margins and even more targeted products.  Some of the funds raised by TyraTech
were used to repay approximately US$11.9 million owed to XL TechGroup.


DxTech LLC ('DxTech') - 82.5% owned by XL TechGroup*
* as at 15 June 2007


DxTech was created by XL TechGroup in July 2005 to address the unmet need for
real time distributed diagnostics.  DxTech is developing a unique diagnostics
platform that replaces the most common blood-based diagnostics that include
clinical chemistry and immunochemistry, haematology and coagulation tests
currently performed at reference laboratories.

The basic elements of the system are a disposable sample transfer device, a
closed disposable cartridge containing all the necessary materials to perform a
panel of assays, a low cost reader with embedded firmware and a central server
that monitors system quality control and collects and stores data from remote
readers.  The reader is networked through the DxTech V-Lab and ultimately
integrated with electronic health records and claims processing.  In addition to
direct revenue from individual tests, the powerful V-Lab server also offers the
added benefits of a range of reporting options, data mining, and automatic
reimbursement capabilities that save time and improve accuracy.

Importantly, the DxTech reader and disposable tests are intended for use
primarily at the physician's office.  The total US diagnostic testing market was
worth approximately US$48 billion in 2006, while sales of tests in the DxTech
routine testing segment eligible for distributed diagnostics approached US$30
billion. (Source: Washington G2 Report, Laboratory Industry 2006)

Clinical diagnostics play a crucial role in the majority of diagnostic decisions
made by the doctor.  However, the centralisation of laboratories has removed the
doctor's ability to have the critical test results to aid and confirm patient
diagnosis on a real time basis.  Even today, with the best central laboratory
technology available, a doctor practicing outside of the hospital setting can
wait several days or longer for important test information, while anxious
patients wait.  The DxTech solution produces accurate results while the patient
is in the doctor's office, significantly reducing the need and cost of follow up
visits.  Therefore, in a major market shift aimed at driving adoption in the
USA, testing revenue will shift from central laboratories to physician sites,
creating an entirely new revenue stream for the doctors and, more importantly,
increasing the efficiency of patient management.

The distributed diagnostic technology is also important for developing world
markets.  In these geographies, central reference laboratory infrastructures are
often non-existent outside major cities.  DxTech's distributed diagnostics
approach eliminates the requirements for physical infrastructure, highly skilled
labour and large capital investments needed in central laboratories.  The DxTech
system, therefore, is deployable virtually anywhere, with results viewable and
interpretable by health care providers at remote locations in real time.  Due to
the significant opportunities within large sized markets, DxTech has decided to
make wider Asia its first target area for commercialisation, and discussions are
underway with a number of potential partners.

The DxTech fully-integrated, POC ('point-of-care') device is based on
proprietary electrochemical sensor technology that has unparalleled sensitivity
and dynamic range.  The DxTech platform is designed to meet or exceed
performance as established by US reference laboratories, provide a complete
solution from sample collection through claims processing, be CLIA ('Clinical
Laboratory Improvement Amendments') waived, and hit a price point that is
expected to provide strong gross margin in the US market and be appropriate in
developing countries.

The DxTech R&D team, in conjunction with technology partners in the USA, UK and
Germany, has made substantial progress during 2006.  Several integrated fluidics
breadboard systems have been developed which is allowing DxTech to move
efficiently from R&D to final product.  Sensor and assay development has
progressed to a disposable flow cell that mimics the anticipated performance of
the system.  Preliminary assay performance data using the automated breadboard /
quality control system and a modular fluidics cartridge for the challenging,
sensitive TSH and Free T4 assays have already produced results which match or
beat the gold standard test results of reference laboratories.  DxTech now
expects to develop cartridges and assays for more routine tests which will open
up additional markets, both globally and in application areas such as
pharmaceutical testing, care homes and storefront.


PetroAlgae LLC ('PetroAlgae') - 94.4% owned by XL TechGroup*
* as at 15 June 2007

Each year the United States and the European Union together consume over 100
billion gallons of diesel and home heating fuel.  Large, rapidly growing
economies in China and India will soon rival their Western counterparts.  The
petroleum oil needed to produce this fuel is largely imported, with supply and
pricing dictated by global events.  As worldwide consumption increases at a rate
exceeding the growth of production, upward pricing pressure will continue.
Beyond the economic issues associated with petroleum, there are also significant
environmental challenges.  Petroleum fuels are non-renewable, produce many
pollutants, and release large quantities of additional carbon dioxide into the
atmosphere when burned.  The need for an alternative to petroleum oil is a huge
unmet market need.

To meet this need, PetroAlgae is commercialising proprietary,
environmentally-friendly algae developed by a world-class research team at
Arizona State University (ASU).  PetroAlgae has global exclusivity in all fields
of use for the ASU algal library.  The algae are not genetically modified, but
have been selectively bred over 10 years for specific traits like rapid growth
and extremely high oil yields.  Algae oil is similar to vegetable oil and is
suitable for many applications including biodiesel production.  Biodiesel
produced from algae oil is essentially carbon-neutral because the algae consume
carbon dioxide through their life cycle process.

The algae grow in modular bioreactor systems which can be built and operated
cost-effectively on a massive commercial scale.  The systems can be harvested
daily, producing 200 times more oil per acre than traditional biofuel crops like
soybeans.  This is the equivalent of being able to grow enough feedstock oil to
meet the entire US and EU needs for diesel fuel on less than 2% of the arable
land in those regions.  However, algae farms do not need to be sited on arable
land, so there is no competition with food crops as with soybeans and corn which
are feedstocks for ethanol.  Also, algae farms can be constructed and be
operating at capacity in a matter of months compared to palm or jatropha
plantations that can take years to reach full production.

A four acre optimisation site in Florida was completed in February 2007 and
algae are currently growing in situ.  This site is now being used to enable
PetroAlgae to test multiple growing and processing variables in order to
characterise growing parameters and maximise the oil yield, whilst also
validating engineering processes and the commercial, scaleable nature of the
modular production technology.  Given the lack of large quantities of low cost
suppliers of biofuel feedstock, the demand for algal oil is both large and
immediate.

While this work is going on, the next stage has already started, namely the
identification of a number of sites where initial pilot manufacturing will be
located.  There are ongoing discussions with a number of potential partners, in
the USA with biodiesel refiners which have production capacities of at least 500
million gallons per annum, and elsewhere with leading local industrial groups in
Asia, South & Central America.

PetroAlgae's business development plan addresses multiple markets, with the
initial thrust aimed at global commodity markets such as biodiesel.  A second,
more disruptive part of the business development plan is aimed at smaller, but
still significant and potentially higher margin areas where there is strong
demand for more specialised, high performance oils in applications such as
medicines, cosmetics and food products.  PetroAlgae is actively building
relationships with potential regional acquirers, licensees, strategic joint
venture partners, and customers.


QuoNova LLC ('QuoNova') - 90.0% owned by XL TechGroup*
* as at 15 June 2007

QuoNova was established in December 2006 and is commercialising a novel Quorum
Sensing Blocker ('QSB') technology which affects signalling between bacteria and
thereby reduces bacterial growth and colonisation (biofilm) without the use of
environmentally damaging biocides.  QuoNova's breakthrough technology offers
approaches to bacterial control which will avoid resistance development and
toxicity, and in addition opens completely new application avenues in a broad
range of high value markets.

There are multiple unmet needs in different applications where bacterial biofilm
is a problem.  QuoNova's business plan addresses multiple markets, such as
treatments for lung infections, medical device coatings, oral and
ophthalmological care products, domestic or industrial cleaners, anti-fouling
paints, agrochemicals and large scale industrial applications in the water and
petroleum industries.  Estimates of market sizes generated from multiple
industrial sources are currently at least US$16.5 billion for therapeutic and
medical device applications, and about US$11 billion for consumer and industrial
applications.

Quorum sensing is a communication system used by bacteria to signal to each
other when to settle, colonise and produce the products needed to create
biofilms.  The same signalling mechanism also influences the release of toxins
and virulence factors which together protect bacteria from the body's defence
systems or antibiotics.  Also, biofilms cause deposits ranging from invisibles
to slimes and sludges in consumer and industrial environments, which act to
attract colonisation by further organisms, and cause further infection,
disruption of operating processes or corrosion.
  
QuoNova acquired its intellectual property relating to proprietary QSB compounds
from 4SC AG, a drug discovery and development company based in Germany.  In
addition to this broad patent and patent application portfolio, QuoNova has
obtained an exclusive license from 4SC to software and related intellectual
property useful for the creation and development of additional compounds in the
field of quorum sensing or biofilm inhibitors and activators.  In return, 4SC
has received a 10% equity interest in QuoNova and will receive payments
totalling US$2 million spread over a four year period.  4SC will additionally
receive funding under agreements whereby 4SC will continue to provide research
and development activities on behalf of QuoNova directed towards compound
optimisation and support.

Proof-of-concept for the technology has already been established, and
commercialisation is envisaged within two years for the most advanced
applications.  Discussions with a number of potential development partners and
end users are already well advanced.


GenXL LLC ('GenXL') - 42.7% owned by XL TechGroup*
* as at 15 June 2007

Since it was formed in June 2006, GenXL has made significant progress.  This
joint venture now has 10 staff and total available funding of US$4.0 million,
which has been committed equally by its founders, XL TechGroup and GEN3 Partners
Inc.  The founders' original equity stakes of 50% each have been reduced to
42.7% each following the allocation of shares to GenXL management and staff.

GenXL was created to capture the value of those prospects that do not fully meet
XL TechGroup's company building criteria but still demonstrate considerable
potential worth.  Over and above XL TechGroup's core business model, GenXL
reviews a significant flow of opportunities from both XL TechGroup and GEN3 in
order to generate new companies, standalone product lines and technology
licensing opportunities or an appropriate mix of these.  GenXL is also able to
introduce external funding to its opportunities, including venture capital and
private equity.

GenXL announced its first company development agreement in March 2007.  EnGen
LLC, which is 45% owned by GenXL, is exploiting a unique platform technology
that has a range of potential supercapacitor battery applications across various
sectors where there are clear unmet market needs.  For example, the
transportation market requires a cost-effective combination of the energy
density of a rechargeable battery, with the power density and cycle life of
supercapacitors.  The consumer electronics market needs to extend lithium-ion
battery life, either by changing their chemical composition or by coupling them
with a supercapacitor, while supercapacitors in industrial applications could
increase a lead acid battery's life and power reliability by working in
conjunction.

GenXL has a number of opportunities currently going through the review process
which may lead to selection for investment.  Outlines of some of the
opportunities or technologies in the current pipeline are as follows:
     
o    use of slow release implant for the kinetic re-profiling of pharmaceuticals 
     providing patentable new drug combinations

o    a nano-coated carbon polymer technology that can be utilised in wound
     healing by allowing for the elimination / minimisation of surface scars on 
     skin

o    a therapeutic and diagnostic medical device system for the treatment of
     neuro-muscular disease and injury

o    ionic liquid technology which provides a versatile and creative alternative 
     to many industrial chemicals, from solvents to lubricants to gas and
     energy storage

o    the tactile identification of pathologies of biological tissues, including 
     in colon cancer detection where it may increase the accuracy of endoscopic 
     inspection and allow express cytodiagnosis

o    a portable device and a method for diagnostics of cardiovascular diseases 
     based on endothelial function examination.

o    a device intended for defining the ovulation moment in a menstrual cycle by 
     the analysis of the cationic structure of a woman's saliva


Corporate & Technology Partners

XL TechGroup's ever strengthening relationships with current corporate discovery
partners (such as Procter & Gamble and AES) continue to offer the Company an
exciting pipeline of possible opportunities.  Additionally, these partners can
ultimately become very significant end-users to the solutions we create.  It is
core to XL TechGroup's business methodology to focus on an unmet market need in
the first instance, and these partnerships provide an ongoing stream of well
defined market needs.

In addition, XL TechGroup has strong working relationships with numerous
technology focused institutions, including some of the leading academic
institutions around the world.  Our business model however, allows us to go to
any potential partner with a technological specification to identify the optimal
solution. Again, we continue to scour the globe for the best collaborations.


Pipeline of Possible Opportunities

XL TechGroup's pipeline includes technologies that have been matched with unmet
needs to create potential opportunities, from which our next new companies might
be selected.  However, it is very important to note that, while XL TechGroup has
exclusive rights to most of the technologies described, the nature of our
rigorous selection process means that only a few of these opportunities will
ever be chosen for development and scaling as new companies by XL TechGroup.
Some of the opportunities that do not meet all of XL TechGroup's selection
criteria may be transferred to GenXL for commercialisation.

The pipeline is continuously evolving as new opportunities are added, and as
previous opportunities are eliminated.  The following list represents a snapshot
of the current possibilities.
     
o    an economical catalytic process to split low-cost methane into high-value, 
     high-purity graphitised carbon and pure hydrogen

o    a designer micro-organism that efficiently produces isoprene, a direct
     replacement for gasoline and propane

o    a group of antiviral compounds active against viral diseases such as HIV, 
     bird flu, and SARS that are derived from natural sources (fungus, seaweed,
     animal mucus)

o    a novel approach to the use of human collagen as a scaffold for the
     growth of tissues such as muscle

o    a technology that provides a repair scaffold for bone trauma that is
     displaced by the patient's own new bone tissue

o    a water-based, non-toxic 'green' paint base that contains no organic
     solvents, and yet adheres strongly to plastics, metals, etc.

o    a novel technology for non-invasively imaging, for the first time, of
     unstable vulnerable plaque in the coronary arteries

o    a new approach to causing existing cancer therapeutics to 'stick' highly 
     preferentially to certain tumour types, thereby enhancing the specificity
     of the relevant drugs

o    an offshoot of a novel cancer vaccine technology which is adapted as a
     peripheral blood diagnostic to screen for early cancer detection

o    a moisture barrier technology which provides controlled separation of
     wet and dry food products

o    a unique proprietary platform which enables rapid screening of molecules 
     which target AMP kinase for treatment of metabolic diseases such as
     obesity and type 2 diabetes


Financial Review


Materiality of Revenues

By design, XL TechGroup does not directly produce and sell products, but rather
creates companies that do.  Therefore, except for the sale of shares in its
companies, it is likely that the only turnover that will be reported by XL
TechGroup will be the result of consolidation of our early stage new companies
and their resulting turnover, which may not be material, consistent or a
meaningful measurement of success for the Company.


Summary

XL TechGroup's financial results continue to be in line with the Board's
expectations.  During the period, the Company has significantly expanded its
resources to address the increasing throughput of opportunities and new
portfolio companies.  For the period under review, the Company met its cash
objectives; ending cash was US$19.0 million, which does not include proceeds
from the US$20 million debt financing that closed in January, plus US$11.9
million from the repayment of loans made to TyraTech following the latter's IPO.
  To finance future operational needs, the Company liquidates equities in our
previously created affiliates, or temporarily leverages these same equities
(prior to a sale or listing) through debt.

At year end 31 December 2006, our holdings in AgCert were valued at US$127.7
million whilst, as at 15 June 2007, the value was US$32.7 million.  On 29 May
2007, XL TechGroup's portfolio company TyraTech completed its IPO, and the value
of our 47.9% equity holding in TyraTech was approximately £52.7 million at the
IPO price of 500p per share.  As at 15 June 2007, the value of our combined
holdings in AgCert and TyraTech was approximately £70.3 million (US$138.6
million).  In the period, XL TechGroup reported initial revenues from the
consolidation of TyraTech of US$0.23 million, but this was offset by a charge of
US$0.5 million for the fair value of warrants issued as sales incentives to a
commercial partner.


Results of operations

The Group reported a net loss of US$39.9 million in 2006.  This loss includes
operating expenses of consolidated companies (TyraTech, DxTech, PetroAlgae and
QuoNova) of US$16.0 million, including minority interest, and recorded losses on
investments in non-consolidated companies (AgCert, AgCert related entities and
GenXL) of US$8.8 million.  The Group incurred US$5.8 million in interest
expense, offset by other income from the exercise and fair valuing of warrants
of US$4.6 million, and interest income of US$1.9 million.  The Group reported
net negative revenues of US$0.27 million due to complex US GAAP accounting
treatments for warrants issued in connection with commercial partner
co-development agreements.


Revenues

The Group reported net revenues in 2006 in relation to the US$2.2 million in
fees received by TyraTech.  Under US GAAP, only US$0.23 million was recorded in
2006 revenues, and an offsetting sales incentive charge of US$0.5 million was
recorded for the fair value of warrants issued to a commercial partner,
resulting in negative recorded revenues in 2006 of US$0.27 million.  Whilst XL
TechGroup owns and controls a majority ownership in its companies, and as these
companies begin to execute their business models, varying amounts of revenue
will be reported.


Operating expenses

For the twelve months ended 31 December 2006, operating expenses for the Group
were US$32.9 million (2005: US$17.2 million and 2004: US$6.0 million): US$9.8
million for general and administration and US$23.0 million for business and
technical development, including a US$1.5 million one-time in-process research
and development charge related to QuoNova.  Of the US$32.9 million total in
2006, US$16.9 million were costs related to XL TechGroup portfolio companies
(TyraTech: US$7.1 million, DxTech: US$6.3 million, PetroAlgae: US$1.4 million
and QuoNova: US$2.1 million).  XL TechGroup allocates a portion of its operating
expenses to its group companies for individuals servicing the growth and
development of these companies.  The net operating expenses of the Company,
after allocations of services, were US$16.0 million (2005: US$11.1 million and
2004: US$5.5 million).  The future growth of the Company's operating expenses is
expected to be governed by the number of group companies managed at any time
and, as such, are expected to increase marginally.


Funding of XL TechGroup companies

In the period XL TechGroup advanced US$18.9 million (2005: US$3.4 million and
2004: US$3.2 million) to its portfolio companies.  Funding the operations of our
pipeline opportunities and new companies is a planned aspect of our business and
is expected to increase in the future as their number and size grows.  These
fundings will take the form of either equity contributions or debt, with the
latter expected to be repaid upon certain events, including in relation to
exits.  As at 31 December 2006, XL TechGroup had outstanding receivables with
its portfolio companies of US$14.0 million (2005: US$0.9 million and 2004:
US$1.8 million).  Subsequent to the year end, XL TechGroup received US$11.9
million repayment of debt from TyraTech, with US$7.0 million of this related to
the US$14.0 million total receivables at year end.

XL TechGroup's accumulated cash investments in its portfolio of companies as at
15 June 2007 consisted of:

                                                     Cash Investment*              Market Value
                                                          (US$m)                      (US$m)

AgCert International plc (listed)                           8.0                        32.7
TyraTech Inc. (listed)                                      7.0                        106.0
DxTech LLC                                                 14.5                         n/a
PetroAlgae LLC                                              4.9                         n/a
QuoNova LLC                                                 2.4                         n/a
GenXL LLC                                                   1.0                         n/a

* Represents cash equity contributions and debt (net of any repayments).  See 
footnotes in Annual Report.


Debt Financing

In 2006, XL TechGroup met terms under the 2005 US$35 million debt financing with
Laurus Master Fund Ltd ('Laurus'), providing access to US$10 million that was
restricted.  This facility is due for repayment on 30 December 2008 and has a
variable interest rate, which is currently 10.75 per cent per annum, being 2.5
per cent over the US Prime Rate.

Laurus has a seven year option to invest up to a total of US$7 million (being 20
per cent of the total borrowing facility) in buying shares held by XL TechGroup
in any of its portfolio companies.  In this regard, Laurus has the option to
acquire AgCert shares held by XL TechGroup at a premium to the AgCert share
price as at 30 December 2005, or the option to acquire shares in any XL
TechGroup portfolio company that seeks a stock market listing, at a discount to
the then IPO price.  From 30 June 2006, Laurus is also entitled on an annual
basis to receive either cash or additional AgCert shares from XL TechGroup with
a value equivalent to six per cent of the outstanding principal under this
facility, calculated in relation to the AgCert share price at that time.

In January 2007, the Company entered into a US$20 million note agreement with
Laurus due 30 December, 2009, with interest determined and payable under terms
including a 'cash' interest portion (payable at the prime rate) and an 
'advanced' interest portion (payable in Company or affiliate Company-owned 
equities at 13%).

There are no conditions that would require XL TechGroup to provide additional
security in the event of a fall in the AgCert share price, or to surrender any
AgCert shares, save for a loan default.


Liquidity and cash

As at 31 December 2006, the Group had cash balances of US$19.0 million (2005:
US$49.4 million and 2004: US$ 28.8 million).  In January 2007, XL TechGroup
completed a second secured debt financing from Laurus for US$20 million.  In
June 2007, XL TechGroup received US$11.9 million from TyraTech from the
repayment of loans following TyraTech's IPO, which was partially offset by £2.5m
of additional equity investment by XL TechGroup in TyraTech.

The net outflow of cash from operating activities is principally due to the
Group's operating loss generated from its continuing development activities.
The level of these operating losses is driven in part by the pace of new company
development.  The outflow from investment activities is due to early funding of
new companies in the group.  XL TechGroup expects to continue to fund the
activities of the Group for the foreseeable future from a mixture of its own
cash, receivables and tradable securities and by leveraging the value of its new
companies through debt funding partners.  At appropriate times, these will be
more than offset via the proceeds of cash inflows from final exits, out of which
distributions will be made to shareholders.


Change in accounting policy

XL TechGroup's various companies engage in a variety of equity issuing
transactions that pose complex, interpretational accounting issues at the Group
level.  Under the previous accounting policy used by XL TechGroup, these
transactions led to accounting treatments that required considerable judgement,
particularly as they related to accounting impacts to the statement of
operations as a result of equity issuing transactions.  It is important to note
that these various technical interpretations are not a reflection of the
underlying XL TechGroup business; management and the Board continue to stress
that the fundamental measure of our success is best reflected in the sum of
created tradable securities, net cash and the present value of future portfolio
companies in progress.  Accordingly, in an effort to provide greater consistency
and transparency in year-on-year reporting, and following discussions with our
auditors KPMG Audit plc, the Board of XL TechGroup has elected to change its
policy for accounting for equity transactions of portfolio company investees.
Under this new policy, all transactions involving portfolio companies accounted
for under the equity method will now show XL TechGroup's proportionate share of
equity issuing transactions in the statement of stockholders' equity section of
the balance sheet.

To retrospectively apply this new policy, the Company has adjusted its 2005
accounts.  This adjustment results in US$30.2 million in 2005 that is now
recorded in the balance sheet equity section, as opposed to a 'gain on initial
pubic offering of affiliate' in the consolidated statement of operations where
it was previously recorded.  Full details are provided in the notes to the
financial statements in the annual report.


Correction to financials

Again, due to the variety of equity issuing transactions that pose complex,
interpretational accounting issues at the Group level, and also following
discussions with our auditors KPMG Audit plc, the Company has revisited its
interpretation of the Financial Accounting Standards Board rules relating to its
investments in AgCert International PLC, ANX and AgCert Canada, resulting in a
restatement of XL TechGroup's reported consolidated results for prior periods.
The restatement included correction of XL TechGroup's recorded proportionate
share of investee equity transactions and resulted in increasing the Company's
assets by US$3.9 million (with no movement of cash), decreasing liabilities by
US$20.6 million, increasing shareholders' equity by US$24.5 million and
increasing net losses by US$4.8 million for 2005.  Further details of the
restatements can be found in the notes to the financial statements in the annual
report.


Treasury Policies

XL TechGroup continually reviews its cash management and control over treasury
management which is reported to the Board.  XL TechGroup does not engage in
speculative transactions or derivative trading with respect to cash balances
held, and the policy is to optimise interest return while maintaining
flexibility to undertake ongoing activities and safeguarding of assets.


Reporting Format

The financial statements of XL TechGroup have historically been prepared in
accordance with accounting principles generally accepted in the United States
(US GAAP).  In January 2007 the UK Listing Authority determined that listed
companies outside the European Union may continue to prepare and report
financial results in accordance with certain other accounting principles than
the International Financial Reporting Standards (IFRS).  Due to the strong
similarities of US GAAP verses IFRS, the Group has determined to continue
preparation of its financial statements utilising US GAAP.


Summary & Outlook

Our strategy continues to be to launch one-to-two new companies each year which
we believe in each case will achieve realisable valuations of at least US$400
million within four years of being started.  We may decide to list a company
sooner in this process, as we have done with TyraTech, but we will always seek
to retain a controlling stake in all our companies after AgCert until such time
as we feel it is appropriate to exit.  When we do decide to exit, we will retain
some of the proceeds to continue funding our ever growing portfolio of companies
and we intend to distribute the balance in each case to our shareholders.

In line with this strategy, the following significant developments occurred
since the beginning of 2006:
     
o    AgCert has raised new money, has put an improved portfolio diversification 
     strategy in place, and we firmly believe it is able to deliver at least the 
     same value that we anticipated when the company was started

o    TyraTech has signed co-development and other agreements with a number of 
     leading global companies, from some of which it has already received fees 
     and will continue to receive fees, is preparing for the release of its lead 
     products through its partners and its own direct sales activity, and has 
     successfully listed on AIM

o    PetroAlgae has initiated the first steps towards demonstrating significant 
     scale capability, and is already building relationships with potential 
     regional acquirers, licensees, strategic joint venture partners, and
     customers

o    DxTech is beating reference laboratory gold standards on some of the most 
     sensitive tests, and is in advanced discussions with a number of potential
     commercialisation partners in Asia

o    QuoNova, our newest company, has started discussions with a number of
     potential development partners and end users, and commercialisation is 
     envisaged within two years for its most advanced applications

o    GenXL has announced its first company investment deal, and we look forward 
     to a steady flow of news, leading towards the creation of additional value 
     beyond our core business

o    Thanks to our growing network of discovery and technology partners, our
     pipeline of opportunities is as strong as ever and includes several that 
     could be particularly exciting if they meet all our stringent selection 
     criteria

As a result of all these developments, as well as the further progress that we
anticipate at all our companies during the next 12 months, we believe that XL
TechGroup is now reaching a clear inflexion point in the potential valuation
profile of the Group.  We anticipate a number of developments at DxTech and
PetroAlgae over the next 12 months, which should provide much greater visibility
to their prospects.  We should also have launched the next of our new companies
within this timeframe.  In addition, we look forward to news from TyraTech of
its progress across the various markets it is targeting, and we will update
shareholders on all important developments at QuoNova and GenXL.


DR JOHN SCOTT                                        DAVID SZOSTAK
Chief Executive Officer                              Chief Financial Officer
25 June 2007



XL TechGroup, Inc. and subsidiaries
Consolidated Balance Sheets - December 31, 2006 and 2005


US$                                                                       December 31
                          Assets                                  2006               As restated
                                                                                        2005
Current assets:
    Cash                                                          18,952,957             39,411,658
    Cash (restricted)                                                      -             10,000,000
    Receivables                                                      391,759                103,386
    Notes receivable                                               5,000,000              1,587,000
    Prepaid expenses                                                 272,391                137,505
    Prepaid interest                                                       -              2,088,333
    Due from affiliate                                                62,093                174,720
    Other current assets                                             219,180                      -

                Total current assets                              24,898,380             53,502,602
    Investment in AgCert International plc (FMV of $128            9,978,099             22,408,776
    million and $143 million as of December 31, 2006 and
    2005, respectively)
    Investment in ANX, LLC                                         3,014,455              2,743,294
    Investment in GenXL, LLC                                         451,266                      -
    Property and equipment, net of accumulated depreciation        2,272,311                263,956
    Deferred loan costs, net                                       4,394,848              6,597,917
    Other assets                                                     461,734                103,129

                Total assets                                      45,471,093             85,619,674

      Liabilities and stockholders' equity/(deficit)
Current liabilities:
    Accounts payable                                                 406,543                532,656
    Accrued liabilities                                            4,788,384              2,751,448
    Liability for warrants and purchase options                    4,152,110              8,060,058
    Deferred liabilities                                           2,349,224                      -
    Current instalment of obligations under capital lease             16,758                      -

                Total current liabilities                         11,713,019             11,344,162

Notes payable, excluding current instalments                      34,880,000             35,000,000
Other liabilities                                                    720,368                      -

                Total liabilities                                 47,313,387             46,344,162

Minority interest                                                    186,302                824,476

Stockholders' equity / (deficit):
    Common stock, par value $0.001. Authorised 100,000,000            49,405                 49,351
    shares issued and outstanding 49,404,993 shares in 2006
    and 49,351,025 shares in 2005
    Additional paid in capital                                    98,307,104             80,380,941
    Accumulated deficit                                        (105,777,573)           (65,852,907)
    Accumulated other comprehensive income                         5,392,468             23,873,651

                Stockholders' equity / (deficit)                 (2,028,596)             38,451,036

                Total liabilities and stockholders' equity        45,471,093             85,619,674
                / (deficit)


XL TechGroup's 2006 annual report and accounts will be posted on the website
(www.xltechgroup.com) at 5.00pm UK time on Friday 29 June 2007 and will be
mailed to shareholders on the same day.


XL TechGroup, Inc. and subsidiaries
Consolidated Statements of Operations
Years ended December 31, 2006, 2005 and 2004


US$                                                        Years ended December 31
                                                 2006                2005                2004
                                                                  As restated         As restated
Revenues
   Revenues of subsidiary                         (265,055)                   -                   -

              Total revenues                      (265,055)                   -                   -

Operating expenses:
   General and administrative                   (9,837,505)         (5,685,025)         (3,543,505)
   Business and technical development          (23,035,070)        (11,479,109)         (2,479,913)

              Total operating expenses         (32,872,575)        (17,164,134)         (6,023,418)

Other income/(expense):
   Gain on exercise of warrants                   3,125,544                   -                   -
   Interest income                                1,858,882             821,693             121,737
   Interest expense                             (5,799,357)            (31,353)           (790,913)
   Equity in losses of affiliates               (8,837,544)        (30,371,359)         (2,165,718)
   Change in fair value of warrants and           1,513,874         (2,842,597)                   -
   purchase options
   Support fee from affiliate                       380,059             334,397                   -
   Other income                                           -             (1,018)                   -

              Total other income/(expense)      (7,758,542)        (32,090,237)         (2,834,894)

(Loss) before income taxes and minority        (40,896,172)        (49,254,371)         (8,858,312)
interest
Income taxes                                              -                   -                   -

              (Loss) before minority           (40,896,172)        (49,254,371)         (8,858,312)
              interest
Minority interest                                   971,506           1,198,251                   -

Net (loss)                                     (39,924,666)        (48,056,120)         (8,858,312)

(Loss) per share                                     (0.81)              (0.97)              (0.25)

Weighted average number of common shares         49,369,212          49,320,258          35,014,348


XL TechGroup's 2006 annual report and accounts will be posted on the website
(www.xltechgroup.com) at 5.00pm UK time on Friday 29 June 2007 and will be
mailed to shareholders on the same day.


XL TechGroup, Inc. and subsidiaries
Consolidated Statements of Cash Flows
Years ended December 31, 2006, 2005 and 2004


US$                                                                      Years ended December 31
                                                               2006               2005                2004
                                                                               As restated         As restated
Cash flows from operating activities:
    Net loss                                                (39,924,666)        (48,056,120)         (8,858,312)
    Adjustments to reconcile net loss to net cash used in
    operating activities
            Depreciation and amortisation                      2,363,063              50,548             574,067
            Reserve on note receivable                         3,094,000                   -                   -
            Exclusivity fees                                    (70,834)                   -                   -
            License fees                                         116,363             280,000             105,417
            Fair value of warrants issued                        495,889
            Gain on exercise of warrants                     (3,125,544)                   -                   -
            Loss/(gain) on disposal of assets                          -               1,018                   -
            Equity in losses of affiliate                      8,837,544          30,371,359           2,165,718
            Change in fair value of warrants and purchase    (1,513,874)           2,842,597
            options
            In-process research and development                1,498,299           2,022,727                   -
            Compensation costs related to stock awards         2,829,744           1,117,554             372,515
            and unit grants
            Amortisation of loan costs received on AgCert       (37,838)                   -                   -
            International plc loan
            Minority interest contribution to losses           (971,506)         (1,198,251)                   -
        Changes in operating assets and liabilities
            Accounts receivable                                (317,478)              20,773           (117,690)
            Prepaid expenses and other assets                  1,375,393         (2,213,460)            (17,101)
            Due from affiliate                                   112,627           (160,536)             (6,288)
            Accounts payable and accrued liabilities           1,332,168           1,966,197             629,838
            Deferred liabilities                               2,100,000                   -                   -

                    Net cash used for operating             (21,806,650)        (12,955,594)         (5,151,836)
                    activities

Cash flows from investing activities:
    Payments for note receivables made                       (1,320,000)         (1,287,000)           (300,000)
    Purchases of property and equipment                      (2,091,977)           (152,388)           (122,845)
    Investment in and advances with affiliates               (5,650,253)           1,403,435         (2,980,000)
    Loan costs received on loan to AgCert International          200,000                   -                   -
    plc

                    Net cash (used for)/provided by          (8,862,230)            (35,953)         (3,402,845)
                    investing activities

Cash flows from financing activities:
    Payment of loan costs                                              -         (1,396,000)                   -
    Net repayments on line of credit                                   -                   -         (2,740,999)
    Borrowings on notes payable                                        -          35,000,000           3,685,198
    Repayments on notes payable                                (120,000)                   -           (675,000)
    Payments made under capital lease                            (3,941)                   -                   -
    Change in cash restricted for use                         10,000,000        (10,000,000)                   -
    Sale of shares                                               300,000                   -             250,000
    Proceeds from exercise of warrants                            34,120              25,000           (472,754)
    Proceeds from initial public offering                              -                   -          40,725,000
    Costs from initial public offering                                 -                   -         (4,642,033)
    Acquisition of shares                                              -                   -             (1,875)

                    Net cash provided by  financing           10,210,179          23,629,000          36,127,537
                    activities

                    Net increase/(decrease) in cash         (20,458,701)          10,637,453          27,572,856
Cash, beginning of period                                     39,411,658          28,774,205           1,201,349

Cash, end of period                                           18,952,957          39,411,658          28,774,205


XL TechGroup's 2006 annual report and accounts will be posted on the website
(www.xltechgroup.com) at 5.00pm UK time on Friday 29 June 2007 and will be
mailed to shareholders on the same day.




                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                          

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