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XL TechGroup, Inc. (XLT)

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Tuesday 18 April, 2006

XL TechGroup, Inc.

2005 Preliminary Results

XL TechGroup, Inc.
18 April 2006




Press Release                                                      18 April 2006



                               XL TechGroup, Inc.



                       ('XL TechGroup' or 'the Company')



        Preliminary results for the twelve months ended 31 December 2005



XL TechGroup, Inc. (AIM: XLT), the systematic architect and builder of an
ongoing stream of high value new companies, today announces its preliminary
results for the twelve months ended 31 December 2005.



Highlights
•   AgCert International, the first company created by XL TechGroup, completed 
    its listing on the main market of the London Stock Exchange in June 2005 and 
    was valued at greater than US$687 million as at 13 April 2006
•   TyraTech's technology has been validated by multiple potential customers and 
    independent labs; a distributor agreement and a co-development agreement are 
    currently in place, with the prospect of concluding further larger
    commercial agreements with a number of leading global companies within the 
    next few months
•   DxTech, XL TechGroup's third company, was started in July 2005 and has 
    already made considerable progress on developing a technology platform that 
    meets a number of different market needs
•   announced key relationships for the development of new business 
    opportunities with Procter & Gamble Company and The AES Corporation
•   operations and strategy on track to create one-to-two high value businesses 
    per year with a liquidity event valuation of greater than US$400 million in 
    four years or less for each
•   total cash and quoted securities at market (net of debt) as at 31 December 
    2005 of approximately US$158million, compared to US$28 million as at 31 
    December 2004
•   obtained US$35 million debt financing from Laurus Capital in December 2005



Commenting on the results, John Scott, Chief Executive Officer of XL TechGroup,
said:  '2005 was a significant year for XL TechGroup, as we demonstrated our
ability to create exciting, high value businesses.  Our first company, AgCert
International, was successfully listed on the main market of the London Stock
Exchange; TyraTech is in advanced negotiations with a number of leading global
players that are extremely interested in its natural pesticide technology; and
our third company DxTech was created during 2005.  These developments validate
our plans to create a limited number of high value opportunities each year, with
each one aiming at an exit valuation of at least US$400 million.



'We have also continued to develop and strengthen our strategic relationships
with technology and corporate partners, such as Procter & Gamble, AES,
Vanderbilt University and Arizona State University.  Moreover, we have concluded
numerous individual technology partnerships on four continents.  Collectively,
these relationships ensure the continuous flow of new companies and successful
exits, and we already have a promising pipeline of new business opportunities.'



'XL TechGroup today is well positioned both financially and strategically to
take on the many exciting opportunities we have before us.  We anticipate
significant progress at both TyraTech and DxTech this year, and we would also
expect to announce the launch of our fourth company within the next few months.
All of this is expected to translate into added value for our shareholders.'



                                    - ends -



For further information:
XL TechGroup Inc.
John Scott / Harold Gubnitsky                               Tel: +1 321 409 7403
[email protected]                                          www.xltechgroup.com



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





Chairman and CEO's Statement



Operational Review



AgCert International plc

AgCert was the first company created by XL TechGroup, and has become a global
leader in the production and sale of agriculturally derived greenhouse gas
emission reductions, with business in Europe, Asia, North America and South
America.  AgCert completed an Initial Public Offering (IPO) in June 2005 at a
share price of 140p.  XL TechGroup currently retains a 27.2% stake in AgCert.
As at 13 April 2006, the closing mid price of AgCert was 257p per share,
representing a valuation of XL TechGroup's stake of approximately £107 million
(US$187 million).  This IPO represented the first major validation of XL
TechGroup's model for value creation.



AgCert has experienced rapid growth and has established a significant presence
in Brazil and Mexico, where the first CERs (Certified Emission Reductions) have
already been issued.  AgCert has also reported significant operational progress
since the appointment of Bill Haskell in September 2005.  This followed the
departure of the previous CEO after a number of operational issues were
identified which resulted in delays in AgCert achieving its original inventory
and sales targets for 2005 and 2006.  However, the ongoing rate of build is now
on track, and there are now over 400 operational sites in place which are
expected to generate over 20 million CERs during the ten year contract terms.
AgCert has also secured advance sales contracts for CERs with future cash flows
of up to €154 million.



AgCert has recently announced an important long term strategic partnership with
The AES Corporation, a global power company, including the proposed placing of
new AgCert shares with AES that would raise approximately €40 million and give
AES a stake in AgCert of 9.9%.  While this placement will dilute XL TechGroup's
stake in AgCert to approximately 24.5%, we are pleased with the significant
progress made by AgCert in recent months and we remain committed shareholders.



TyraTech LLC

TyraTech has powerful pest control solutions that address a US$30 billion global
insecticide and pesticide market via natural active ingredients that are
designed to be entirely safe choices for people, animals and the environment
that in most cases are even more effective than synthetic chemical insecticides.
Other natural products in the market have been shown to be ineffective
compared to TyraTech's solutions.  The company's products are developed through
a proprietary scientific screening process that accurately predicts efficacy and
fosters extremely fast prototype development.  The resulting natural active
ingredient compounds are highly effective (in most cases more effective than
synthetic chemical insecticides) in killing and repelling insects as well as
treating and preventing parasites.  TyraTech's natural solutions also enable the
company to address additional markets where even higher safety margins are
needed e.g. dust mites, bed bugs and stored food.



TyraTech's business plan is on track - the three phase strategy is showing solid
market traction, particularly with potential major multinational partners, as it
has moved from the customer validation stage to the customer agreement and
commercialization stage.  TyraTech achieved its first small revenues in March
2006, and strong overall revenue growth is anticipated over the next 12 months.



TyraTech's technology, which has been validated by multiple potential customers
and independent laboratories, has attracted interest from a larger number of
leading global and other companies than we had anticipated.  This has created
potential product and geographic overlaps or conflicts among the various
parties.  The management team has therefore been focused on managing the
multiple opportunities as well as the potential channel conflicts in order to
maximise the long-term benefit for XL TechGroup and its shareholders, which has
inevitably resulted in longer negotiations than originally anticipated.
However, the end result should be more and higher value partnerships.  A
distributor agreement and a co-development agreement are in place, several
negotiations are at an advanced stage, and we look forward to making
announcements about additional, larger commercial relationships at the
appropriate time.



TyraTech is targeting consumer products and services, vector disease, and
horticulture and agriculture in a three-phase strategy which is outlined below,
together with scientific advancements.



Phase I - Consumer Products & Services



Strategy

TyraTech is targeting partnerships with leading worldwide consumer product
companies to provide natural, proprietary active ingredient compounds which
address the unmet needs for highly effective natural products, operating in a
US$3-4 billion worldwide market.



Progress

TyraTech signed its first option agreement in March 2006 with a subsidiary of
The Scotts Miracle-Gro Company.  Under the terms of the agreement, Scotts and
TyraTech will work together to conduct product development and technical
evaluation of TyraTech's natural pesticide technologies relating to a number of
specific insects in certain consumer applications.  The agreement gives Scotts
an option to pursue consumer products based on the results of the development
phase.  With more than US$2 billion in worldwide sales and more than 6,000
associates, The Scotts Miracle-Gro Company, through its wholly-owned subsidiary,
The Scotts Company LLC, is the world's largest marketer of branded consumer
products for lawn and garden care, with products for professional horticulture
as well.  In Europe, the Company's brands include Weedol(R), Pathclear(R),
Evergreen(R), Levington(R), Miracle-Gro(R), KB(R), Fertiligene(R) and Substral
(R).



The following list reflects Phase 1 deals under discussion:
Company            Type               Category                                        Joint Opportunity Size
Company A          Large MNC          Dust mites, crawling insects, snails and slugs* US$300m
Company B          Large MNC          Crawling insects                                US$750m
Company C          N American company Head lice                                       US$100m
Company D          Asian company      Mosquito products                               US$200m

* provided as a commercial service, rather than a retail product



Phase II - Vector disease



Strategy

TyraTech plans to access wide, geographic distribution with exclusive
partnerships to address urgent needs in both insect borne disease control and
human and animal parasite treatment and prevention.  These affect two billion
people worldwide and represent a total addressable market of US$5-10 billion.



Progress

As announced today, the first distributor agreement has been signed for Mexico,
and is designed to provide immediate access to governmental and commercial local
opportunities.  TyraTech is optimistic that this will lead to additional,
significant orders.  There are also ongoing tests in India for wide area
mosquito control, and initial discussions are underway to extend this programme
into a number of Asian and Latin American countries.



The following list reflects Phase 2 deals under discussion:
Company            Type               Category                                        Joint Opportunity Size
4 targets          Global MNCs        Functional food - parasitic control             US$500m+
7 targets          National           Mosquito larvacide                              US$200m
                   governments



Phase III - Horticulture & Agriculture



Strategy

TyraTech aims to partner with leading global specialty chemical and agribusiness
insecticide providers to meet the need for natural active compounds that
demonstrate safety and high efficacy against a broad range of insects, providing
the basis for increased organic food supply and reduced insect resistance
development.



The following highlights the initial Phase 3 deal under discussion:
Company            Type               Category                                        Joint Opportunity Size
Company E          MNC                Crop protection, horticulture                   US$250-500m



TyraTech technical update



The TyraTech science team has made considerable progress, with significant
strides in virtually every product segment and strategy area.  The technology
has been extensively tested by a wide range of independent laboratories as well
as by potential customers.  Key highlights include:



• Crawling insect product achieves 100% mortality in less than 30
  seconds, better than virtually every other consumer product on the market.

• Mosquito repellent delivers efficacy equal to DEET, the synthetic
  category standard.

• Head lice treatment product kills 100% of head lice in under five
  minutes, better than the leading consumer brand.

• 100% immediate dust mite kill and 90% one week residual, significantly
  outperforming the US market leader.

• 100% bed bug mortality in less than two hours, superior to standard
  synthetics which are failing due to bed bugs developing resistance to 
  synthetic insecticides.

• 100% mosquito larvacide kill in less than 30 minutes, without harming
  fish and other aquatic life.  Expanded tests in India are showing excellent
  efficacy in real world, muddy water environments, with additional outdoor
  testing planned for Mexico and the US within the next 60 days.

• 100% intestinal parasitic kill in five minutes compared to 40 minutes
  for the synthetic gold standard in laboratory testing.  Strong parasitic
  efficacy has been demonstrated in test rodents, with 100% efficacy in five 
  days of treatment for the majority of test subjects.

• Strong initial agricultural insect results, with 100% kill rate for
  two of the most devastating pests, fungus gnats and army worms, equal to or
  superior to the leading synthetic product.



DxTech LLC

DxTech was created in July 2005 to address a US$42.8 billion global market
opportunity and is developing a unique micro-fluidic platform that replaces
essentially all blood and other biological tests currently performed at
reference laboratories with a fully-automated, point-of-need device.  This
technology has applications in significantly lowering costs and increasing
efficiency for major pharmaceutical companies in their clinical trials, the
provision of diagnostics in developing countries and delivering a new revenue
stream for doctors in the USA.  As of 31 December 2005, XL TechGroup's ownership
in DxTech was approximately 88%.



The DxTech Distributed Diagnostics solution is intended to produce a wholesale
transition away from central testing laboratories by providing both real-time,
near-patient diagnostic testing and near-provider result reporting.  This
approach eliminates physical infrastructure requirements and large capital
investments.  Revenue from tests will shift from central laboratories to
physician sites, and treatment can be initiated without waiting hours or days
for laboratory results.  The DxTech proprietary biosensor technology, which
involves a state-of-the-art micro fluidic disposable cartridge with a low cost
reader and remote processing, is significantly differentiated from existing
limited menu technology.  This combination provides DxTech with a broad platform
that significantly differentiates us from competitive systems.



DxTech's small sample volume requirement allows unprocessed biological samples
including whole blood, cervical swabs, throat swabs, eye swabs, urine or sputum
to be applied directly to a self-contained, disposable cartridge.  The system
assures ease-of-use and installation, with high quality of results.  Raw
electronic test and quality control data is automatically transmitted from the
controller/reader device at the point-of-care to a centralised analysis/
information system where it is analysed, system performance is confirmed and
results are transmitted back in minutes, via the reader, fax, email or PDA.



Product development strategy

It is currently anticipated that the DxTech technology will be ready for
clinical trials with the initial blood based test panel in the first quarter of
2007.  Progress to date includes:



• an exclusive worldwide license agreement has been signed with UK
  company Sensortec Limited which secures proprietary sensor technology for the
  micro fluidic cartridge that forms an integral part of the DxTech diagnostic
  platform

• a fluidics development partner is in place with expertise in injection
  moulded manufacturing of disposable cartridges

• an experienced medical device development company, with expertise
  ranging from concept through to manufacturing, will lead the reader 
  development



Physician office laboratory (POL) strategy

DxTech will shift US$6 billion of a US$40 billon US diagnostic testing market
from central reference laboratories to the Point-of-Care ('POC') by improving
quality of care and increasing patient satisfaction through an almost immediate
connection between the patient visit and laboratory test results.  Through the
establishment of a platform for comprehensive routine diagnostics that can be
performed in the physician's office, physician revenue will increase via the
direct receipt of test reimbursements that were previously performed at a
central laboratory.  Progress to date includes:



• the US POC business model has been validated by over 100 physician
  interviews across single and multi specialty groups and with key physician
  practice types including integrated health systems, managed care networks and
  independent physician organizations

• the product requirements to meet the US POC business model have been
  defined for the key physician and payer segments

• initial indications are that each physician would receive an increase
  in annual revenue stream in excess of US$50,000



Pharmaceutical clinical trial monitoring strategy

The DxTech technology will significantly reduce the cost of the US$7.7 billion
US clinical trial monitoring market by establishing the platform for real time
pharmacokinetic testing and bio markers for paired diagnostics, and by
eliminating a significant barrier to clinical trial recruiting through home
monitoring.  Progress to date includes:



• the business model has been validated through interviews and
  discussions with 17 of the leading global pharmaceutical companies and with
  three of the world leading CROs (Contract Research Organizations) that support
  the pharmaceutical industry

• the initial product requirement to meet the clinical trial monitoring
  business model has been defined for safety panel, bio-marker and
  pharmacokinetics



Rest of the world (ROW) strategy

DxTech intends to establish its distributed diagnostic infrastructure that
addresses the estimated US$40 billion ROW diagnostic market by bypassing the
need for and cost of a reference laboratory infrastructure.  Initial market
assessment studies have been carried out for India, Eastern Europe and Mexico,
and preliminary joint venture discussions have started in India and Eastern
Europe.



Nursing home and Long term care strategy

DxTech plans to provide immediate point-of-care testing in nursing home and
long-term care facilities, resulting in timely decision making by physicians,
reducing emergency room visits and hospitalizations.  The development of this
strategy is at an early stage, with initial work being undertaken on the
business model and value propositions.



Partnerships

XL TechGroup's partnerships fall into two major categories.  The first are
corporate discovery partners such as Procter & Gamble and AES while the second
represent technology partners including Arizona State University and Vanderbilt
University.



We typically focus our corporate partner relationships on the early part of our
company building methodology where we discover or validate disruptive unmet
market needs.  We consider Procter & Gamble and AES to be strategic
relationships and we are currently working with three additional Fortune 500
companies representing different industries.  We expect that over time we will
be adding two to three additional large multinational corporations to our list
of strategic corporate relationships.



Arizona State University and Vanderbilt University represent only two of over
twenty five different technology relationships which include universities,
government laboratories and other scientific institutions.  XL TechGroup
leverages these relationships to match a technology solution with an unmet
market need.  Although XL TechGroup is developing strong working relationships
with several technology focused institutions, our business model allows us to go
to any potential partner across the globe with a technological specification to
identify the optimal solution.



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.  The pipeline is
continuously evolving as new opportunities are added, and as existing
opportunities are eliminated.  The following list represents a snapshot of the
current possibilities.



• a polymer technology for reprofiling existing drug kinetics through
  long term subcutaneous drug release; appropriate to hypertensives,
  anti-depressives, statins, etc.

• a bio-inert, injectable, adjustable phase (liquid, plastic, solid)
  reconstructive polymer with wide uses from replacing vitreous fluid to 
  creating artificial cartilage

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

• large scale farming of genetically enhanced algae that produce fatty
  oils and lipids of commercial value

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

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

• a molecular structure that co-valently bonds active groups to skin,
  hair, mucosa and other organic structures, creating multiple applications in
  wound and burn healing, insect repellents, cosmetics, and drug delivery

• a molecular level encapsulation technology that can be used for the
  capture or timed / triggered release of specific substances such as food
  additives, fungicides and biocides, and pharmaceuticals

• a technology that inhibits the formation of bacterial films without
  killing individual organisms, providing an effective new anti-bacterial 
  approach that does not promote resistance to drugs

• a novel physical therapy system for enhancing neuro-muscular response,
  used for the treatment of strokes, multiple sclerosis, accidents, and other
  victims of neurological dysfunction, as well as in sports medicine for the
  enhancement of athletic performance



XL TechGroup anticipates announcing the creation of one-to-two more new
companies before the end of 2006.



Strategic review

In broad terms, the XL TechGroup strategy is described below.  The management
team strives to maintain these criteria as an average across all opportunities;
however it is not a prerequisite that every criterion is met by every new
company that we create.  The key strategic elements are:



• to employ our proven systematic methodology to create one-to-two new
  companies annually in the Biotech, Ecotech and Medtech sectors;

• to select only those opportunities which can potentially achieve a
  liquidity value of at least US$400 million;

• to retain at least a 50% equity stake (fully diluted) in all future
  subsidiaries (including TyraTech and DxTech);

• to develop and scale each subsidiary to a liquidity event (either IPO
  or trade sale) within four years of inception, thereby continually growing the
  XL TechGroup asset base;

• upon final sale of any asset, to distribute the proceeds to
  shareholders, retaining only enough cash to continue the Company's operations;
  and finally,

• to continue broadening the corporate and university relationships
  which lead to an evolving, robust pipeline of future opportunities.



By definition, XL TechGroup's rigorous evaluation processes and strict selection
criteria eliminate the majority of potential opportunities from being chosen for
further development and scaling as individual businesses.  However, this does
not mean that the eliminated opportunities have no value; indeed a good number
of them could have considerable value at levels below the XL TechGroup US$400
million threshold or over time frames longer than four years.  With the aim of
adding even greater value for XL TechGroup shareholders in addition to our core
business model, we have therefore been exploring potential ways to maximise the
value from these other opportunities and we anticipate making an announcement
about this in the near future.



Outlook



XL TechGroup has made significant progress this year.  We are delighted by the
speed of quality growth both TyraTech and DxTech have demonstrated.  The
pipeline of opportunities has exceeded our expectations both with the quality of
technologies sourced and the markets they operate in.



We are on target to accomplish our strategy of building one to two companies per
year at a value of at least US$400 million within four years.   Our cash and
quoted securities have increased substantially in 2005 and we look for this to
continue.



We continue to attract talented individuals with management and technology
backgrounds and have expanded the Group with a further 25 people.  We would like
to thank the whole team for their continued energy and dedication.



We look forward to the launch of our next new company, planned to take place
within six months.



Geoffrey Vernon                                     John Scott
Chairman                                            Chief Executive Officer





Financial Review



Summary

XL TechGroup's financial results are 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 exceeded its cash objectives; ending
cash was US$49.4 million, which includes proceeds from the US$35 million debt
financing.  The latter has provided a way to finance future operational needs of
the Company through leveraging our AgCert shares whilst preserving the upside in
the AgCert shares that we remain confident about.  At year end 31 December 2005,
our holdings in AgCert were valued at US$143 million (whilst as at 13 April 2006
it was US$187 million.).



By design, the Company does not directly produce and sell products, but rather
creates companies that do.  Therefore, except for the sale of affiliate shares,
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.



Results of operations

For the reported period, XL TechGroup reported a loss of US$13.0 million.  This
loss includes a net gain of US$2.2 million for the Company's portion of net
losses and investment gains in its non-consolidated AgCert related affiliates;
and net consolidated losses for TyraTech and DxTech of US$3.6 million, including
minority interest.



Operating expenses

For the twelve months ended 31 December 2005, operating expenses were US$17.2
million: US$5.7 million for general and administration; US$11.5 million for
business and technical, development, including a US$2.0 million one time
in-process research and development charge related to TyraTech and DxTech.



Funding of XL TechGroup companies

In the period XL TechGroup advanced US$3.4 million (2004: US$3.0 million - 2003:
US$1.0 million) to its affiliates, independent of US$1.4 million that the
Company received in repayment of previous advances to AgCert.  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.



Debt Financing

In December 2005, XL TechGroup completed a US$35 million debt financing with
Laurus Master Fund Ltd ('Laurus').  Under the terms of the arrangement, XL
TechGroup has unrestricted access to US$25 million to fund its working capital
requirements, with a further US$10 million available when XL TechGroup portfolio
companies, TyraTech LLC and DxTech LLC, achieve certain financial milestones.
The facility is due for repayment in three years and has a variable interest
rate, which is currently 10.25 per cent per annum, being 2.5 per cent over the
US Prime Rate.



Laurus has been granted a seven year option to invest up to a total of US$7
million (being 20 per cent of the 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.

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 2005, XL TechGroup had cash balances (including short and long
term investments) of US$49.4 million (2004: US$ 28.8 million and 2003: US$1.2
million).  The net outflow of cash from operating activities is principally due
to the Company's operating loss generated from its continuing development
activities.  The Company expects its current cash and receivables to satisfy
both operating expenses and the funding of new companies well into the second
quarter of 2007 without having to realise on any other assets.



Treasury Policies

XL TechGroup continually reviews its cash management and control over treasury
management which is reported to the Board.  The Company 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.



David Szostak

Chief Financial Officer







XL TECHGROUP, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

31 December 2005 and 2004

Unaudited


US$                                                              Note        31 December           31 December
                                                                                    2005                  2004
Assets
Current assets:
Cash                                                                          49,411,658            28,774,205
Receivables                                                                      103,386               124,159
Note receivable                                                                1,587,000               300,000
Prepaid expenses                                                                 137,505                23,087
Prepaid interest                                                  5            2,088,333                     -
Due from affiliate                                                               174,720                14,184
Total current assets                                                          53,502,602            29,235,635
Investment in AgCert International, plc.                          2           21,202,630                     -
(fair market value of $143,389,171 as of December 31, 2005)
Property and equipment, net of accumulated depreciation                          263,956               151,277
Deferred loan costs, net                                         4, 5          6,597,917                     -
Other assets                                                                     103,129                92,420
Total assets                                                                  81,670,234            29,479,332
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                                                                 532,656                48,983
Accrued liabilities                                                            2,751,448               790,231
Liability for warrants to purchase AgCert International, plc.     4            8,060,058               202,380
shares
Total current liabilities                                                     11,344,162             1,041,594
Investment in ANX, LLC.                                           3           20,598,482             2,658,798
Notes payable, excluding current  instalments                     5           35,000,000                     -
Total liabilities                                                             66,942,644             3,700,392

Minority interest                                                                824,476                     -

Stockholders' equity
Common stock, par value $0.001. Authorized 100,000,000 shares                     49,351                49,311
issued and outstanding 49,351,025 shares in 2005 and
49,311,482 in 2004
Additional paid in capital                                                    45,895,526            45,010,106
Accumulated deficit                                                         (32,041,763)          (17,590,582)
Unearned compensation                                                                  -           (1,689,895)
Stockholders' equity                                                          13,903,114            25,778,940
Total liabilities and stockholders' equity                                    81,670,234            29,479,332







XL TECHGROUP, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Operations

Years ended 31 December 2005 and 2004

Unaudited


US$                                                              Note         Year Ended            Year Ended
                                                                             31 December           31 December
                                                                                    2005                  2004
Operating expenses:
General and administrative                                                   (5,685,025)           (3,543,505)
Business and technical development                                          (11,479,109)           (2,479,913)
Total operating expenses                                                    (17,164,134)           (6,023,418)
Other income (expense):
Interest income                                                                  821,693               121,737
Interest expense                                                                (31,353)             (790,913)
Gain on initial public offering of AgCert International, plc.     2           30,227,019                     -
Equity in losses of affiliates                                              (25,560,638)           (1,991,673)
Change in fair value of warrants to purchase                      4          (2,842,597)                     -

AgCert International, plc. shares
Support service fee from affiliate                                               334,397                     -
Other                                                                            (1,018)                     -
Total other income(expense)                                                    2,947,503           (2,660,849)
(Loss) before income taxes and minority interest                            (14,216,631)           (8,684,267)

Income taxes                                                                           -                     -
Loss before minority interest                                               (14,216,631)           (8,684,267)
Minority interest                                                              1,198,251                     -
Net (loss)                                                                  (13,018,380)           (8,684,267)
(Loss) per share                                                  6

                                                                                  (0.26)                (0.25)
Weighted average number of common shares                                      49,320,258            35,014,348




See accompanying notes to consolidated financial statements.







XL TECHGROUP, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows

Years ended 31 December 2005 and 2004

Unaudited


US$                                                                           Year Ended            Year Ended
                                                                             31 December           31 December
                                                                                    2005                  2004
Cash flows from operating activities:
Net loss                                                                    (13,018,380)           (8,684,267)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization                                                     50,548               574,067
Loss on disposal of assets                                                         1,018                     -
Equity in losses of affiliate                                                 25,560,638             1,991,673
Change in fair value of warrants to purchase                                   2,842,597                     -

AgCert International, plc. shares
Gain on initial public offering of AgCert International, plc.               (30,227,019)                     -
In-process research and development                                            2,022,727                     -
Amortization of stock awards                                                   1,117,554               372,515
Minority interest                                                            (1,198,251)                     -
Changes in operating assets and liabilities:
Accounts receivable                                                               20,773             (117,690)
Prepaid expenses and other assets                                            (2,213,460)              (17,101)
Accounts payable and accrued liabilities                                       2,246,197               735,255
Due from affiliate                                                             (160,536)               (6,288)
Net cash used for operating activities                                      (12,955,594)           (5,151,836)
Cash flows from investing activities:
Note receivable                                                              (1,287,000)             (300,000)
Purchases of property and equipment                                            (152,388)             (122,845)
Investment in and advances from / (to) affiliate                               1,403,435           (2,980,000)
Net cash used for provided by investing activities                              (35,953)           (3,402,845)
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                                                            -             (675,000)
Sale of shares                                                                         -               250,000
Exercise / (Redemption) of warrants                                               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 activities                                    33,629,000            36,127,537
Net increase in cash                                                          20,637,453            27,572,856
Cash, beginning of period                                                     28,774,205             1,201,349
Cash, end of period                                                           49,411,658            28,774,205








Notes to the Accounts:



1. Basis of Presentation



The consolidated condensed financial statements of XL TechGroup, Inc. (the
Company) have been prepared in accordance with accounting principles generally
accepted in the United States of America (US GAAP).  Certain information and
note disclosures, which are normally included in annual financial statements
prepared in accordance with US GAAP, have been omitted.  The consolidated
financial statements reflect all adjustments which are, in the opinion of
management, necessary to present fairly the Company's financial position and the
results of operations.  The consolidated financial statements for the year ended
31 December 2005 and 31 December 2004 include the accounts of XL TechGroup,
Inc., TyraTech, LLC, a Delaware limited liability company, and DxTech, LLC, a
Delaware limited liability company.  All significant intercompany balances and
transactions have been eliminated.



On 12 October 2004, the Company was recapitalized from a limited liability
company to a corporation in preparation for an initial public offering (IPO) on
the London Stock Exchange's Alternative Investment Market.  The equity section
of the consolidated condensed balance sheets has been presented as if the
recapitalization occurred prior to 2004.



2. Investment in AgCert International, plc.



During 2005, AgCert acquired the assets and liabilities related to the carbon
trading business of ANX, LLC (formerly known as AgCert International, LLC)
(ANX).  Also in 2005, AgCert indirectly acquired 100% of AgCert Canada Co.
Certain of the Company's equity investment balances in ANX and AgCert Canada Co.
were transferred to the Company's equity investment balance in AgCert Plc upon
the respective effective dates of said restructuring transactions.



Effective 6 June 2005, AgCert completed an IPO under the symbol AGC on the
London Stock Exchange.  The Company owned 41.71% of AgCert just prior to the
IPO, and 27.17% upon completion of the IPO.  The Company continues to account
for its investment in AgCert under the equity method post IPO, and upon the
AgCert IPO, the Company recognized a gain of $30.2 million.



As of 31 December 2005, the fair market value of the Company's investment in
AgCert totalled $143.4 million.  Due to lock-up agreements in place, the Company
is restricted from selling its shares in AgCert until twelve months following
the AgCert IPO.



3. Investment in ANX, LLC



The assets and liabilities of ANX remaining after the sale of its carbon trading
business to AgCert (note 2) consisted primarily of a 10.8% ownership of AgCert
common stock and a corresponding put liability for such stock.  As a result of
the AgCert IPO, the ANX put liability for AgCert shares converted to a
derivative instrument, which requires fair value accounting.  Changes in the
fair value of the put liability are included in the statement of operations of
ANX.  As of 31 December 2005, the put liability was fair valued at $54.4 million
and included in ANX net losses for the year ended 31 December 2005.  The Company
owned 41.85% of ANX as of 31 December 2005 and continues to account for its
investment in ANX under the equity method.



4. Liability for Warrants to Purchase AgCert International, plc Shares



In connection with financing the Company arranged with private investors in
2003, the Company granted warrants to purchase an equivalent of 973,056 shares
of AgCert, at $0.3083 per share.  As a result of the AgCert IPO, the warrant
liability converted to a derivative instrument, which requires fair value
accounting.  Changes in the fair value of the warrant liability are included in
the accompanying statement of operations.  As of 31 December 2005, the warrant
liability was fair valued at $3.0 million and $2.8 million was included in net
losses for the year ended 31 December 2005.



In connection with the $35 million of financing obtained by the Company in 2005
(note 5), the lender was granted an option to purchase equity in any subsidiary
of the Company or Company owned AgCert common shares, up to an exercise amount
not to exceed $7 million for a period of 7 years.  The fair value of the
purchase option was determined using the Black-Sholes option-pricing model at $5
million and was included in deferred loan costs, to be amortized over the life
of the loan.



5. Note Payable



In December 2005, XL TechGroup completed a US$35 million debt financing with
Laurus Master Fund Ltd ('Laurus').  Under the terms of the arrangement, XL
TechGroup has unrestricted access to US$25 million to fund its working capital
requirements, with a further US$10 million available when XL TechGroup portfolio
companies, TyraTech LLC and DxTech LLC, achieve certain financial milestones.
The facility is due for repayment in three years and has a variable interest
rate, which is currently 10.25 per cent per annum, being 2.5 per cent over the
US Prime Rate.



Laurus has been granted a seven year option to invest up to a total of US$7
million (being 20 per cent of the 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.



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.



6. Loss per Share



The loss per share was calculated based on a weighted average number of shares
outstanding during the year ended 31 December 2005, namely 49,320,258 (2004:
35,014,348) and a loss of $13,018,379 (2004:  $8,684,267).  By comparison, the
number of shares outstanding at 31 December 2005 was 49,351,025 (2004:
49,311,482).



This statement was approved by the Directors and agreed with the Group's
auditors on 14 April 2006.  A copy can be obtained from the Secretary at the
Company's Head Office, 1901 S. Harbor City Blvd, Suite 300, Melbourne, Florida
U.S.A. 32901.  The accounting policies adopted for the Preliminary Results are
consistent with the published accounts for year ended 31 December 2004 in the
Company's annual report.



END






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