Xenos Reports Third Quarter Results



    TORONTO, Aug. 11 /CNW/ - Xenos Group Inc. (TSX:XNS), today reported net
income of $242,000 or $0.02 per share for the fiscal third quarter ended
June 30, 2008 compared with a net loss of $378,000 or ($0.04) per share for
the third quarter of fiscal 2007. Net income for the nine months was
$1,017,000 or $0.10 per share compared with a net loss of $702,000 or ($0.07)
per share for the same period last year.
    Third quarter revenues rose to $4,152,000 as compared to revenues of
$3,803,000 for the same quarter last year. Revenues for the nine months ended
June 30, 2008 were $12,106,000 compared to $11,454,000 for the same period of
fiscal 2007.
    Xenos reported EBITDA of $490,000 for the quarter and $1,469,000 for the
nine months, as compared to $385,000 and $845,000 for the same period last
year.
    The company continued its record of consecutive quarterly improvement in
both year over year revenue growth (8 quarters) and EBITDA (7 quarters)
despite difficult conditions in the important financial services sector. "We
are aggressively growing our opportunities pipeline, despite the challenges of
longer sales cycles," said Stuart Butts, Chairman and CEO. "Our products and
services deliver consolidation, rationalization and cost reduction solutions,
all resonant with current market drivers and our Global 2000 customers'
requirements worldwide. Innovative new products scheduled for release early in
FY09 will increase Xenos' footprint into our current customer base, as well as
open doors into new accounts."
    At June 30, 2008, Xenos reported no significant long term debt and held
cash of $8,493,000 or $0.85 per common share, an increase from $7,357,000, or
$0.74 per common share at September 30, 2007.

    
    Financial Highlights - (complete statements are attached):

    -------------------------------------------------------------------------
                                          Three Months        Nine Months
    -------------------------------------------------------------------------
    Period Ended June 30,                 2008      2007      2008      2007
    (in CDN$000s except per share
     amounts)

    Sales                                4,152     3,803    12,106    11,454
    Gross profit                         3,268     3,105     9,448     9,280
    EBITDA                                 490       385     1,469       845
    Net income (loss)                      242      (378)    1,017      (702)
    Net income (loss) per share           0.02     (0.04)     0.10     (0.07)
    Cash & cash equivalents              8,493     7,594
    Cash per Share                       $0.85     $0.76
    Common Shares Outstanding           10,005     9,937
    -------------------------------------------------------------------------

    See discussion of non-GAAP financial measures below.
    

    Conference Call Notice

    A conference call for shareholders, analysts and other members of the
investment community has been scheduled for Monday, August 11 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
416-644-3425, or 1-800-594-3615 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 August 18.
Please dial 416-640-1917 or 1-877-289-8525 and enter the reservation number
21279911, 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, while supporting Green IT initiatives.
    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 cash equivalents by the number of common shares outstanding.

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


    
    Xenos Group Inc.
    Consolidated Statements of Operations
    (Unaudited)

                          Three Months Ended           Nine Months Ended
                                June 30                     June 30
                          2008          2007          2008          2007
                      --------------------------- ---------------------------

    Sales             $  4,151,593  $  3,802,513  $ 12,105,546  $ 11,453,762
    Cost of sales          883,589       697,680     2,657,511     2,173,738
                      ------------- ------------- ------------- -------------
    Gross profit         3,268,004     3,104,833     9,448,035     9,280,024
                      ------------- ------------- ------------- -------------
    Expenses
      Sales and
       marketing         1,296,695     1,512,019     3,715,480     4,441,831
      Research and
       development         878,689       689,854     2,479,719     2,256,725
      Administration
       and general         575,242       496,187     1,714,241     1,654,965
      Reorganization
       costs                     -             -             -       206,016
      Amortization         227,699       292,070       720,819       872,184
      Stock based
       compensation         27,195        21,536        69,633        81,656
      Interest and
       bank charges          9,444        12,780        32,379        41,370
                      ------------- ------------- ------------- -------------
                         3,014,964     3,024,446     8,732,271     9,554,747
                      ------------- ------------- ------------- -------------

    Income (loss)
     before undernoted
     items                 253,040        80,387       715,764      (274,723)

    Interest and other      36,130        71,668       177,743       151,664
    Foreign exchange
     (loss) gain           (23,243)     (523,220)      188,455      (550,430)
                      ------------- ------------- ------------- -------------
                            12,887      (451,552)      366,198      (398,766)
                      ------------- ------------- ------------- -------------

    Income (loss)
     before income
     taxes                 265,927      (371,165)    1,081,962      (673,489)

    Provision for
     income taxes           23,689         6,724        64,896        28,480
                      ------------- ------------- ------------- -------------

    Net income (loss) $    242,238  $   (377,889) $  1,017,066  $   (701,969)
                      ------------- ------------- ------------- -------------

    Net income (loss)
     per common share
      - Basic         $       0.02  $      (0.04) $       0.10  $      (0.07)
      - Diluted       $       0.02  $      (0.04) $       0.10  $      (0.07)

    Weighted average
     number of shares
      - Basic                                        9,992,267     9,936,944
      - Diluted                                     10,131,355     9,936,944

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

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

    Net income (loss)                                1,017,066      (701,969)

    Deficit, end of period                         (36,189,422)  (37,275,157)



    Xenos Group Inc.
    Consolidated Balance Sheets
    (Unaudited)

                                                             As at
                                                     June 30    September 30
                                                      2008          2007
                                                  ---------------------------
    ASSETS
      CURRENT
        Cash and cash
         equivalents                              $  8,493,281  $  7,356,808
        Trade receivables                            2,475,045     1,727,224
        Other receivables                               24,610         5,823
        Prepaids                                       667,706       735,873
        Income taxes recoverable                         3,745           561
                                                  ------------- -------------
                                                    11,664,387     9,826,289
      LONG TERM
        Future income taxes                          1,162,328     1,157,857
        Capital assets                               1,072,176     1,133,965
        Intangibles and other assets                 1,861,431     1,869,673
                                                  ------------- -------------
                                                     4,095,935     4,161,495
                                                  ------------- -------------

    TOTAL ASSETS                                  $ 15,760,322  $ 13,987,784
                                                  ------------- -------------

    LIABILITIES
      CURRENT
        Payables and accruals                     $  2,328,146  $  2,082,228
        Income taxes payable                            29,478        15,678
        Deferred revenue                             3,828,729     3,420,736
        Current portion - capital lease
         obligations                                    65,979        87,277
                                                  ------------- -------------
                                                     6,252,332     5,605,919
      LONG TERM
        Capital lease obligations                       18,392        63,713
        Deferred revenue                                19,037        10,284
        Deferred lease inducements                     130,508       147,994
                                                  ------------- -------------
                                                       167,937       221,991

    TOTAL LIABILITIES                                6,420,269     5,827,910

    SHAREHOLDERS' EQUITY
        Capital stock                               45,125,209    44,997,009
        Contributed surplus                            404,266       369,353
        Deficit                                    (36,189,422)  (37,206,488)

                                                  ------------- -------------
    TOTAL SHAREHOLDERS' EQUITY                       9,340,053     8,159,874
                                                  ------------- -------------

    TOTAL LIABILITIES & EQUITY                    $ 15,760,322  $ 13,987,784
                                                  ------------- -------------



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

                          Three Months Ended           Nine Months Ended
                                June 30                     June 30
                          2008          2007          2008          2007
                      --------------------------- ---------------------------
    Operating
     activities
      Net income
       (loss)         $    242,238  $   (377,889) $  1,017,066  $   (701,969)
      Amortization         227,699       292,070       720,819       872,184
      Unrealized
       foreign
       exchange loss
       (gain)                3,322       413,482       (61,422)      370,560
      Loss on disposal
       of capital
       assets               14,871           238        14,871        68,075
      Future income
       taxes                 1,258        16,036        (4,471)        7,209
      Stock based
       compensation         27,195        21,536        69,633        81,656
      Change in
       non-cash
       working
       capital             (33,108)      198,408       (42,647)      285,974
                      ------------- ------------- ------------- -------------
                           483,475       563,881     1,713,849       983,689
                      ------------- ------------- ------------- -------------
    Financing activities
      Capital lease
       payments            (20,192)      (21,892)      (66,619)      (62,479)
      Proceeds on
       issue of shares           -             -        93,480             -
                      ------------- ------------- ------------- -------------
                           (20,192)      (21,892)       26,861       (62,479)
                      ------------- ------------- ------------- -------------
    Investing
     activities
      Purchase of
       capital assets      (29,470)      (48,581)     (210,454)     (104,563)
      Proceeds on
       disposal of
       capital assets          499           873           499           873
      Development
       costs incurred     (185,565)      (20,402)     (455,704)     (161,261)
                      ------------- ------------- ------------- -------------
                          (214,536)      (68,110)     (665,659)     (264,951)
                      ------------- ------------- ------------- -------------
    Effect of foreign
     exchange rate
     fluctuations on
     cash and cash
     equivalents            (3,322)     (413,482)       61,422      (370,560)
                      ------------- ------------- ------------- -------------

    Net increase in
     cash and cash
     equivalents           245,425        60,397     1,136,473       285,699

    Cash and cash
     equivalents
      Beginning of
       period            8,247,856     7,533,479     7,356,808     7,308,177
                      ------------- ------------- ------------- -------------
      End of period   $  8,493,281  $  7,593,876  $  8,493,281  $  7,593,876
                      ------------- ------------- ------------- -------------
    





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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