Xenos Reports Q1 F09 Results

    TORONTO, Feb. 12 /CNW/ - Xenos Group Inc. (TSX: XNS) reported revenues of
$4,159,000 for the period ended December 31, 2008 compared to revenues of
$4,149,000 for the fiscal first quarter of last year.
    EBITDA for the period was $449,000 compared to $724,600, a decline of 38%
from the same period last year. The decline in EBITDA can largely be
attributed to increased investment in sales and marketing activities
associated with the launch of the Xenos Enterprise Server(TM) (Xenos ES(TM))
on October 1, 2008. Employment levels increased by 6.0% in the first quarter
of fiscal 2009 as compared to last year mainly in the sales and marketing and
product development teams.
    Xenos ES is a timely offering as it addresses IT challenges typically
associated with divestures and mergers and acquisitions, all features of the
current economic crisis affecting many of Xenos' customers and potential
customers. Xenos ES implementations enhance the value of business information
by rationalizing disparate and/or legacy technologies, systems and data to
improve enterprise operational efficiency, enhance business processes and
reduce risk for compliance management.
    The company recognized a net foreign exchange loss of $624,000 at the end
of the quarter compared with a gain of $47,000 in the corresponding prior
period. At the end of December an unrealized loss of approximately $694,000
was booked as a mark to market loss on forward contracts to sell $4,500,000
U.S. at 1.076 CAD over the next three quarters. Any fluctuation of the
exchange rate from the December 31st rate of 1.2180 will result in an
adjustment to this loss during the course of the fiscal year.
    As a result of the foreign exchange loss the Company recorded a net loss
of $377,000 ($0.04) per share for the first quarter compared to net income of
$528,000 or $0.05 per share for the same quarter last year.
    During the quarter the company developed a series of powerful
go-to-market solutions based on Xenos Enterprise Server(TM). These include
Xenos Loader(TM) for IBM FileNet P8, and Xenos DSR(TM), Document Storage
Reduction for ECM. Go-to-market solutions are designed to promote the adoption
of the Xenos Enterprise Server platform within organizations. They address
specific business or technical challenges through the packaged application of
Xenos proprietary technology.
    Xenos has established a Software as a Service (SaaS) model and recently
began marketing a variety of these offerings. The SaaS model complements
traditional Xenos on-premise license sales by providing core Xenos technology
and Solutions on an on-demand basis. The Xenos SaaS solution integrates
seamlessly with existing corporate back office applications and web presences
providing document transformation, data mapping and translation, hosted
archive and multi-channel eDelivery functionality to meet a variety of unique
business requirements including: customer support representative enablement;
online statement presentment for B2B and B2C; content repurposing and straight
through processing. Xenos SaaS promotes Green IT initiatives by providing
corporations of all sizes the opportunity to address the capital, operational
and environmental costs associated with the exploding digital landfill through
shared infrastructure.
    Strategic alliance and industry partnership programs continue to be a
focus of the company.
    "Despite the challenging economic environment, we are making good
progress on many fronts," said Stuart Butts, Chairman & CEO, Xenos Group Inc.
"We have recently been recognized by two of our alliance partners for our
significant contributions. In December, Xenos was honoured with the
prestigious EMC Document Sciences Partner of the Year Award for 2008. This
week, Xenos Group was honoured with the IBM Software ValueNet Technology
Partner of the Year Award for 2008, selected from over 50 partners worldwide."
    In addition Xenos was named a medalist at the 2008 British Computer
Society (BCS) IT Industry Awards held in January. Xenos was recognized for its
work providing the secure transfer of data over public networks between 3,000
doctors, pharmacies, hospitals and the Norwegian Labour and Welfare
Organization (NAV).

    Financial Highlights - (complete statements are attached):

                                                  Three Months
    Period Ended December 31,                  2008       2007
    (in CDN$000s except per share
    Sales                                     4,159      4,149
    Gross profit                              3,301      3,287
    EBITDA                                      449        724
    Net (loss) income                          (377)       528
    Net (loss) income per share               (0.04)      0.05
    Cash & cash equivalents                   8,330      7,314
    Cash per Share                            $0.83      $0.73
    Common Shares Outstanding                10,005      9,999

    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 17th, 2009 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 2008 and the outlook for
2009 will be presented at the meeting. An audio recording of the meeting will
be available through the Company's website at www.Xenos.com.

    About Xenos Group Inc.

    Xenos (TSX:XNS) is the market-leading provider of high-performance
software solutions that deliver a superior Return on Information(TM) by
Streamlining Enterprise Information Supply Chains(TM). The company's
solutions, based on the scalable Xenos Enterprise Server(TM) and its
components, process, extract, transform, repurpose and personalize high
volumes of data and documents for storage, real-time access, ePresentment,
printing and delivery in numerous formats across multiple channels. By readily
repurposing, integrating with and extending the business value of existing
technology, infrastructure and business applications, Xenos solutions empower
organizations to adapt to changing market demands. They also improve
operational efficiency, enhance business processes, reduce risk for compliance
management and increase employee productivity with lowered total cost of
ownership both for the enterprise and for its customers. Xenos supports Green
IT initiatives by empowering organizations to "Reduce Reuse Recycle"
information resources.
    Xenos customers are among the largest organizations worldwide, spanning
numerous industries including financial services and insurance. Xenos has
offices in Canada, the United States, the United Kingdom and France and a
global partner network. 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)2009 All rights reserved. Xenos, the Xenos logo, Xenos Enterprise
    Server, Xenos ES, Xenos Loader, Xenos DSR, Xenos Integrated Document
    Solution, Xenos IDS, Streamlining Enterprise Information Supply Chains,
    and Return on Information are either registered Trademarks or Trademarks
    of Xenos Group Inc. All other trademarks and trade names are the property
    of their respective owners.

    Xenos Group Inc.
    Consolidated Statements of Operations and Deficit

                                                      Three Months Ended
                                                          December 31
                                               2008               2007
    Sales                                  $    4,158,651     $    4,149,334
    Cost of sales                                 857,644            861,912
                                          ----------------   ----------------
    Gross profit                                3,301,007          3,287,422
                                          ----------------   ----------------
      Sales and marketing                       1,421,654          1,191,539
      Research and development                    897,485            778,950
      Administration and general                  505,691            572,812
      Amortization                                219,332            271,411
      Stock based compensation                     27,195             20,567
      Interest and bank charges                     8,233             11,541
                                          ----------------   ----------------
                                                3,079,590          2,846,820
                                          ----------------   ----------------

    Income before undernoted items                221,417            440,602

    Interest and other                             46,017             73,440
    Foreign exchange (loss) gain                 (623,546)            47,088
                                          ----------------   ----------------
                                                 (577,529)           120,528
                                          ----------------   ----------------

    (Loss) income before income taxes            (356,112)           561,130

    Provision for income taxes                     20,689             33,298
                                          ----------------   ----------------
    Net (loss) income                      $     (376,801)    $      527,832
                                          ----------------   ----------------

    Net (loss) income per common share
      - Basic                              $        (0.04)    $         0.05
      - Diluted                            $        (0.04)    $         0.05

    Weighted average number of shares
      - Basic                                  10,005,444          9,969,809
      - Diluted                                10,005,444         10,057,606


    Deficit, beginning of year             $  (35,710,117)    $  (37,206,488)

    Net (loss) income                            (376,801)           527,832
                                          ----------------   ----------------

    Deficit, end of period                 $  (36,086,918)    $  (36,678,656)
                                          ----------------   ----------------

    Xenos Group Inc.
    Consolidated Balance Sheets

                                            December 31       September 30
                                               2008               2008
        Cash and cash equivalents          $    8,329,729     $    8,115,259
        Trade receivables                       2,283,708          2,471,700
        Other receivables                          22,970             23,767
        Non-hedging financial derivatives               -             82,524
        Prepaids                                  646,465            597,052
        Income taxes recoverable                   32,711             26,766
                                          ----------------   ----------------
                                               11,315,583         11,317,068
        Future income taxes                     1,211,941          1,193,086
        Capital assets                            986,943            998,436
        Intangibles and other assets            2,046,854          1,999,370
                                          ----------------   ----------------
                                                4,245,738          4,190,892
                                          ----------------   ----------------
    TOTAL ASSETS                           $   15,561,321     $   15,507,960
                                          ----------------   ----------------

        Payables and accruals              $    1,979,236     $    2,259,583
        Income taxes payable                       95,570             97,921
        Deferred revenue                        3,176,500          3,099,644
        Non-hedging financial derivatives         632,555                  -
        Current portion - capital lease            48,966             61,170
                                          ----------------   ----------------
                                                5,932,827          5,518,318
        Capital lease obligations                       -              2,543
        Deferred revenue                           10,588             14,812
        Deferred lease inducements                120,959            125,734
                                          ----------------   ----------------
                                                  131,547            143,089

    TOTAL LIABILITIES                           6,064,374          5,661,407

        Capital stock                          45,125,209         45,125,209
        Contributed surplus                       458,656            431,461
        Deficit                               (36,086,918)       (35,710,117)

                                          ----------------   ----------------
    TOTAL SHAREHOLDERS' EQUITY                  9,496,947          9,846,553
                                          ----------------   ----------------

    TOTAL LIABILITIES & EQUITY             $   15,561,321     $   15,507,960
                                          ----------------   ----------------

    Xenos Group Inc.
    Consolidated Statements of Cash Flows

                                                       Three Months Ended
                                                           December 31
                                                     2008               2007

    Operating activities
      Net (loss) income                    $     (376,801)    $      527,832
      Amortization                                219,332            271,411
      Unrealized foreign
       exchange (gain) loss                       (56,327)            27,791
      Unrealized loss on non-hedging
       financial derivatives                      715,079                  -
      Future income taxes                         (18,855)             1,461
      Stock based compensation                     27,195             20,567
      Change in non-cash working capital          (81,410)          (837,903)
                                          ----------------   ----------------
                                                  428,213             11,159
                                          ----------------   ----------------
    Financing Activities
      Capital lease payments                      (14,747)           (22,941)
      Proceeds on issue of shares                       -             82,830
                                          ----------------   ----------------
                                                  (14,747)            59,889
                                          ----------------   ----------------
    Investing activities
      Purchase of capital assets                  (64,384)           (14,558)
      Development costs incurred                 (190,939)           (71,443)
                                          ----------------   ----------------
                                                 (255,323)           (86,001)
                                          ----------------   ----------------

    Effect of foreign exchange rate
     fluctuations on cash
     and cash equivalents                          56,327            (27,791)
                                          ----------------   ----------------

    Net increase (decrease) in cash
     and cash equivalents                         214,470            (42,744)

    Cash and cash equivalents
      Beginning of period                       8,115,259          7,356,808
                                          ----------------   ----------------
        End of period                      $    8,329,729     $    7,314,064
                                          ----------------   ----------------

For further information:

For further information: Editorial Contact: George Kypreos, Xenos Group
Inc., (905) 709-1020, gkypreos@xenos.com; Investor Relations Contact: Cory
Pala, Xenos Group Inc., (416) 657-2400, cpala@xenos.com

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