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Xenos Reports Fiscal Fourth Quarter and Year-End Results

TORONTO, Ontario, December 6, 2004 - Xenos Group Inc. (TSX:XNS), the data to e-content company™, today reported financial results for its fourth quarter and fiscal year ended September 30, 2004.

For the fiscal fourth quarter ended September 30, 2004, Xenos reported revenues of $4,110,000 compared to revenues of $4,484,000 for the same quarter last year. The Company reported EBITDA of $538,000 for the fourth quarter, compared to EBITDA of $1,022,000 for the same period last year. The Company reported fourth quarter net earnings of $70,000, or $0.01 per share, compared with net earnings of $988,000, or $0.12 per share for the fourth quarter of fiscal 2003.

For the fiscal 2004 year, Xenos reported revenues of $16,204,000 and net earnings of $479,000, or $0.05 per share. This compares to revenues of $16,851,000 and net earnings of $1,633,000, or $0.19 per share, for the same period last year.

"A broad slowdown in technology markets and the strengthening of the Canadian dollar, which appreciated by 6.5 % against the US dollar during the year, were the major factors in 2004," stated Stuart Butts, CEO of Xenos. "While revenues were below our corporate targets, by maintaining a careful focus on costs we remained profitable for the year. We also ended our year with a strong balance sheet, reporting a cash position of $12.6 million, or $1.28 per common share and no long-term debt."

Xenos continues to expand its vertical market focus by developing new solutions for new markets. Year-over-year sales and marketing expenses increased from approximately 30% of revenues to 39% of revenues for the three and twelve months ended September 30, 2004. Xenos initiated sales and marketing programs to address new opportunities in the government and healthcare sectors. The large scale market initiative involving egovernment gained momentum and is proving Xenos solutions to be a natural fit in this sector.

Xenos demonstrated the natural fit of its infoWEB product within the government sector by automating and streamlining paper-intensive processes with a highly successful and visible implementation for the county government of Santa Cruz County in California. Monterey County has subsequently adopted the same solution based on the success of Santa Cruz. Xenos' early success in the county government market in California is being followed up by focused campaigns in California, Texas, New York and Florida with other markets being targeted as resources permit.

The healthcare market represents a significant new opportunity for Xenos. The response to Xenos' healthcare initiative in the fiscal fourth quarter has been encouraging. The Company is currently engaged in five new healthcare projects in a single metropolitan region and has recently recruited a US sales team of health care specialists to pursue the US market.

Exemplifying the healthcare opportunity is the Company's previously announced implementation at Grey-Bruce County, which went live in November. Xenos' solution delivers electronic reports from a Cerner patient care system directly to the physician's office, eliminating the wait time and inconvenience associated with paper-based delivery. This solution has broad applicability in the healthcare market.

Xenos experienced increased pre-sales activity and customer prospect generation, during the fourth quarter as a result of marketing activities in several new and traditional markets.

"Looking ahead for our fiscal 2005, we are targeting continued growth and increased profitability by deepening our relationships with our existing customers, expanding our presence in both traditional and new vertical markets and, with a strong professional services group, introducing new solutions that deliver exceptional value to our customers," added Mr. Butts.

The financial results stated in this release for the current and comparative periods reflect the retroactive application of a change in accounting policy relating to new CICA publications EIC 141 "Revenue Recognition", EIC 142 "Revenue Arrangements with Multiple Deliverables" and EIC 143 "Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts". For fiscal 2004 and fiscal 2003, the adoption of the new standards resulted in a reduction in revenues of $68,000 and $98,000 respectively and a reduction in net income of $67,000 and $22,000 respectively. Further details will be available in the Company's year end filings.

Annual Report and Annual General Meeting:
Xenos intends to distribute its fiscal 2004 annual report to shareholders during the last week of December. The Company also notifies shareholders and members of the investment community that it will hold its Annual General Meeting of Shareholders in Toronto at 11:00 am on Monday, Feb 7th, 2005 in The Gallery Room of The Toronto Stock Exchange Broadcast and Conference Centre, 2 First Canadian Place, 130 King Street West. Following the formal business of the meeting management will provide a presentation on the Company's operations and the outlook for Xenos for 2005 and beyond.

Conference Call - December 6, 2004 - 11:00 a.m.:
A conference call for shareholders, analysts and other members of the investment community has been scheduled at 11:00am (Eastern Time) on Monday December 6. Stuart Butts, Chairman and CEO, Jim Farmer, President and Rob Kunihiro, Chief Financial Officer will discuss the financial results and provide updates on operations. To participate, please dial 800-814-4860, or locally 416-640-4127, approximately 10 minutes before the conference call.

The conference can also be heard over the Internet at www.xenos.com. A recording of the conference call will be available from 1:00 pm ET, Monday December 6, until 11:59 pm ET Monday December 13. Please dial 877-289-8525 and enter the reservation number 21102980#to listen to the rebroadcast. The call will also be archived for 30 days on the Xenos web site at www.xenos.com.

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About Xenos

Xenos (www.xenos.com) delivers data and document solutions across the customer enterprise without changing existing applications. d2e is a document enhancement solution that enables the transformation, repurposing, archival, retrieval, printing and Web viewing of documents across the enterprise. GoXML™ is an integration and transaction processing solution for structured data such as EDI, EDIFACT, AL3, X12, HL7, XML, FIX/SWIFT and many other industry standards. GoXML is a Registered Trademark and proprietary technology of Xenos. infoWEB™ is a report and document distribution solution that consolidates information from incompatible systems for end user Web viewing. Xenos partners with industry-leading software companies to provide end-to-end solutions to customers. Xenos products are deployed at organizations worldwide, in industries including banking, brokerage, government, healthcare, hospital, insurance, manufacturing, service bureau and telecommunications. Xenos is headquartered in Toronto, Canada, with offices in Dallas, London and Vancouver. Xenos trades on The Toronto Stock Exchange under the trading symbol "XNS", with approximately 10 million shares outstanding.

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Contact:
Robert Kunihiro
Chief Financial Officer
Xenos Group, Inc.
(905) 709-1020
rkunihiro@xenos.com

Investor Relations Contact:
Corbet Pala
Xenos Group, Inc.
Tel: (416) 657-2400
Fax: (416) 657-2300
cpala@xenos.com

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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 Canadian Generally Accepted Accounting Principles (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. For further information, visit www.xenos.com

© 2004 Xenos Group Inc. All rights reserved.