Xenos Reports 5 cents per Share Profit in First Quarter



    TORONTO, Feb. 12 /CNW/ - Xenos Group Inc. (TSX:XNS), today reported net
income of $528,000 or 5 cents per share for the first quarter of its fiscal
2008 year, compared to net income of $15,800 for the same period last year.
    Xenos revenues for the period ended December 31, 2007 rose to $4,149,000
as compared to revenues of $3,931,000 for the same quarter last year.
    Xenos reported a significantly improved EBITDA of $724,000 for its first
quarter, up 220% from EBITDA of $226,000 for the first quarter ended
December 31, 2006.
    The first quarter of 2008 represents the sixth consecutive quarter of
year-over-year revenue growth and the seventh consecutive quarterly
improvement in EBITDA. This in part reflects the corporate right sizing
undertaken in the second quarter of last year that was designed to put Xenos
on a solid footing for profitable growth.
    Total expenses were reduced by 13% to $2,847,000, from $3,258,000 in the
first quarter of fiscal 2007. Year over year sales and marketing expenses were
reduced by 23% to $1,192,000 from $1,542,000 as a result of the completion of
a significant marketing campaign last year.
    The company achieved revenue of $200,000 per employee on an annualized
basis, compared to revenue of $172,000 per employee achieved for fiscal 2007.
    "Demand for Xenos products and services remains buoyant," said Stuart
Butts, Chairman and CEO of Xenos. "During the quarter we re-signed our largest
customer to a new three year contract that represents a 30% annual revenue
increase to Xenos commencing in the second quarter." License and services
revenues both grew during the first quarter.
    Development of the "Xenos Enterprise Information Server(TM)" is on target
for completion this fiscal year, and is expected to make a significant
contribution to results in fiscal 2009.
    At December 31, 2007, Xenos reported no significant long-term debt and
held cash and cash equivalents of $7,314,000, or $0.73 per common share.

    
    Financial Highlights - (complete statements are attached):

    -------------------------------------------------------------------------
                                                       Three Months
    -------------------------------------------------------------------------
    Period Ended December 31,                          2007             2006
    (in CDN$000s except per share amounts)
    Sales                                             4,149            3,931
    Gross profit                                      3,287            3,182
    EBITDA                                              724              226
    Net income                                          528               16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income per share                               0.05            0.002
    Cash & cash equivalents                           7,314            6,555
    Cash per Share                                    $0.73            $0.66
    Common Shares Outstanding                         9,999            9,937
    -------------------------------------------------------------------------

    See discussion of non-GAAP financial measures below.
    

    Annual General Meeting Notice

    Xenos will hold its Annual General Meeting of shareholders at 10:00 a.m.
Eastern Time on February 15th, 2008 at the Toronto Stock Exchange Media
Centre. Shareholders and prospective investors are encouraged to attend to
discuss the first quarter financial results, and meet with management and
members of the Board of Directors. A review of fiscal 2007 and the outlook for
2008 will be presented at the meeting. An audio recording of the meeting will
be available through the Company's website at www.Xenos.com.

    Conference Call Notice

    A conference call for shareholders, analysts and other members of the
investment community has been scheduled for February 13 at 10:00 a.m. Eastern
Time. Stuart Butts, Chairman, President and Chief Executive Officer, and
George Kypreos, Chief Financial Officer, will discuss the financial results
and provide updates on operations. To participate, please dial 416-644-3422,
or 1-800-594-3790 approximately 10 minutes before the conference call.
    The conference can also be heard over the Internet at the company's
website. www.xenos.com
    A recording of the conference call will be available through February 20.
Please dial 416-640-1917 or 1-877-289-8525 and enter the reservation number
21262889, followed by the number sign, to listen to the rebroadcast. The call
will also be archived for 30 days on the Xenos website.

    About Xenos

    Xenos (TSX:XNS) high-performance software solutions streamline enterprise
information supply chains. We enable our customers to process, transform,
repurpose, personalize and deliver their data and documents when they need it,
where they need it and how they need it. Xenos extends the value of existing
IT investments, enabling organizations to increase efficiency, agility and
accountability.
    By streamlining, standardizing and automating the handling of information
on demand, our customers reduce costs while increasing a powerful competitive
advantage-adaptability. Xenos has customers worldwide in financial services,
insurance, healthcare, telecommunications, manufacturing, logistics,
transportation, retail and government sectors. Xenos sells and supports its
solutions directly from offices in Canada, the United States, the United
Kingdom and France and through a global partner network.
    Xenos trades on the Toronto Stock Exchange under the trading symbol
'XNS.'
    For more information, visit www.xenos.com

    Certain statements made in this press release are forward-looking within
the meaning of certain securities laws. Such forward-looking statements are
based on a number of assumptions and involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company or developments in the Company's business or
its industry to differ materially from the anticipated results, performance,
achievements or developments expressed or implied by such forward-looking
statements. The Company urges you not to place undue reliance on these
estimates, opinions and projections. The Company assumes no obligation to
update forward-looking statements if assumptions or these plans, estimates,
opinions or projections should change.
    The Company uses financial measures including, but not limited to,
"EBITDA" to supplement its consolidated financial statements, which are
presented in accordance with GAAP. EBITDA is not a recognized measure under
GAAP and should not be construed as an alternative to net income (loss).
Xenos' method of calculating EBITDA may differ from other companies and
accordingly may not be comparable to measures used by other companies.
    Cash per share is a non-GAAP measure and is calculated by dividing the
cash and short term investments by the number of common shares outstanding.
    For further information, visit www.xenos.com

    (C) 2008 Xenos Group Inc. All rights reserved.

    
    Xenos Group Inc.
    Consolidated Statements of Operations
    (Unaudited)
                                                    Three Months Ended
                                                         December 31
                                                    2007             2006
                                            ---------------------------------
    Sales                                        $4,149,334   $    3,931,213
    Cost of sales                                   861,912          749,643
                                            ---------------- ----------------
    Gross profit                                  3,287,422        3,181,570
                                            ---------------- ----------------
    Expenses
      Sales and marketing                         1,191,539        1,542,414
      Research and development                      778,950          812,588
      Administration and general                    572,812          574,469
      Amortization                                  271,411          288,708
      Stock based compensation                       20,567           26,051
      Interest and bank charges                      11,541           13,792
                                            ---------------- ----------------
                                                  2,846,820        3,258,022
                                            ---------------- ----------------

    Income (loss) before undernoted items           440,602          (76,452)

    Interest and other                               73,440           31,952
    Foreign exchange gain                            47,088           71,025
                                            ---------------- ----------------
                                                    120,528          102,977
                                            ---------------- ----------------

    Income before income taxes                      561,130           26,525

    Provision for income taxes                       33,298           10,678
                                            ---------------- ----------------

    Net income                               $      527,832   $       15,847
                                            ---------------- ----------------

    Net income per common share
       - Basic                               $         0.05   $            -
       - Diluted                             $         0.05   $            -

    Weighted average number of shares
      - Basic                                     9,969,809        9,936,944
      - Diluted                                  10,057,606        9,937,053

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

    Deficit, beginning of year               $  (37,206,488)  $  (36,573,188)

    Net income                                      527,832           15,847
                                            ---------------- ----------------

    Deficit, end of period                   $  (36,678,656)  $  (36,557,341)
                                            ---------------- ----------------



    Xenos Group Inc.
    Consolidated Balance Sheets
    (Unaudited)
                                                           As at
                                                December 31     September 30
                                                    2007             2007
                                            ---------------------------------
    ASSETS
      CURRENT
        Cash and cash equivalents            $    7,314,064   $    7,356,808
        Trade receivables                         2,306,072        1,727,224
        Other receivables                             2,723            5,823
        Prepaids                                    588,600          735,873
        Income taxes recoverable                      3,665              561
                                            ---------------- ----------------
                                                 10,215,124        9,826,289
      LONG TERM
        Future income taxes                       1,156,396        1,157,857
        Capital assets                            1,070,656        1,133,965
        Intangibles and other assets              1,747,572        1,869,673
                                            ---------------- ----------------
                                                  3,974,624        4,161,495
                                            ---------------- ----------------

    TOTAL ASSETS                             $   14,189,748   $   13,987,784
                                            ---------------- ----------------

    LIABILITIES
       CURRENT
        Payables and accruals                $    2,218,304   $    2,082,228
        Income taxes payable                          9,606           15,678
        Deferred revenue                          2,893,036        3,420,736
        Current portion - capital lease              79,082           87,277
                                            ---------------- ----------------
                                                  5,200,028        5,605,919
       LONG TERM
        Capital lease obligations                    48,967           63,713
        Deferred revenue                              7,622           10,284
        Deferred lease inducements                  142,028          147,994
                                            ---------------- ----------------
                                                    198,617          221,991

    TOTAL LIABILITIES                             5,398,645        5,827,910

    SHAREHOLDERS' EQUITY
        Capital stock                            45,111,179       44,997,009
        Contributed surplus                         358,580          369,353
        Deficit                                 (36,678,656)     (37,206,488)

                                            ---------------- ----------------
    TOTAL SHAREHOLDERS' EQUITY                    8,791,103        8,159,874
                                            ---------------- ----------------

    TOTAL LIABILITIES & EQUITY               $   14,189,748   $   13,987,784
                                            ---------------- ----------------


    Xenos Group Inc.
    Consolidated Statements of Cash Flows
    (Unaudited)

                                                    Three Months Ended
                                                         December 31
                                                    2007             2006
                                            ---------------------------------
    Operating activities
      Net income                             $      527,832   $       15,847
      Amortization                                  271,411          288,708
      Unrealized foreign exchange loss (gain)        27,791          (81,193)
      Loss on disposal of capital assets                  -           21,658
      Future income taxes                             1,461          (10,095)
      Stock based compensation                       20,567           26,051
      Change in non-cash working capital           (837,903)        (938,150)
                                            ---------------- ----------------
                                                     11,159         (677,174)
                                            ---------------- ----------------
    Financing Activities
      Capital lease payments                        (22,941)         (19,198)
      Proceeds on issue of shares                    82,830                -
                                                     59,889          (19,198)
                                            ---------------- ----------------
    Investing activities
      Purchase of capital assets                    (14,558)         (34,325)
      Development costs incurred                    (71,443)        (103,744)
                                            ---------------- ----------------
                                                    (86,001)        (138,069)
                                            ---------------- ----------------

    Effect of foreign exchange rate fluctuations
     on cash and cash equivalents                   (27,791)          81,193
                                            ---------------- ----------------

    Net decrease in cash and cash equivalents       (42,744)        (753,248)

    Cash and cash equivalents
      Beginning of period                         7,356,808        7,308,177
                                            ---------------- ----------------
      End of period                          $    7,314,064   $    6,554,929
                                            ---------------- ----------------

    




For further information:

For further information: Cory Pala, Investor Relations, Tel: (416)
657-2400, Fax: (416) 657-2300, E-mail: cpala@xenos.com; George Kypreos, Chief
Financial Officer, Tel: (905) 709-1020, Fax: (905) 709-1023, E-mail:
gkypreos@xenos.com

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XENOS GROUP INC.

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