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Xenos Reports Fiscal 2005 First Quarter Results

TORONTO, Ontario, February 10, 2005 -Xenos Group Inc. (TSX:XNS), the data to econtent company™, today reported its first quarter financial results.

For the fiscal first quarter ended December 31, 2004, Xenos reported revenues of $3,525,000 compared to revenues of $4,464,000 for the same quarter last year. The Company reported negative EBITDA of $239,000, compared to positive EBITDA of $857,000 for the same period last year and a first quarter net loss of $508,000, or ($0.05) per share, compared with net earnings of $493,000, or $0.05 per share for the first quarter of fiscal 2004. Xenos maintains a strong balance sheet, with a cash position of $12.4 million, or $1.25 per common share and no long-term debt.

"While the first quarter results were not what we had hoped for, we anticipate another year of growth and profitability," stated Stuart Butts, CEO of Xenos. "We are working on many sales opportunities in markets including healthcare, government and financial services. We expect our second quarter revenues to be substantially higher than Q1."

Xenos has been enhancing its capabilities in marketing and sales with the addition of new sales people and marketing resources. New hires include Lee Garrison, recently appointed Vice President of Marketing. Mr Garrison joined Xenos on February 1.

Management believes that increased industry awareness will result in increased sales. Xenos has built its technological competencies by following a horizontal vision of moving information throughout the enterprise and beyond. Xenos is marketing its technology in market verticals by identifying and propagating industry specific messaging as to what the technology means to a particular vertical. "Generally this means documenting Xenos' successful implementations and identifying the business drivers and the reasons for the perceived success," commented Mr. Butts.

With global marketing and product management, the Company is focused on offering established solutions that fit the specific requirements of identified market segments or niches. Xenos also partners with customers wishing to develop a specific new solution incorporating one or more of Xenos' core technology competencies. Through these initiatives Xenos intends to increase the volume of high value sales thereby driving top line growth and profitability.

The Company's new e-government initiative gained momentum during the quarter with the success of its infoWEB electronic report distribution product. infoWEB takes enormous amounts of information that are typically printed from diverse information systems and distributes the information electronically to multiple government and public recipients, thereby eliminating printing and distribution costs and making the information more readily available. The Company has significantly enhanced the product recently by incorporating workflow components that add significant value to the selling proposition, particularly for the "approvals rich" public sector.

The Company's new healthcare initiative progressed during the quarter. "We are responding to a lot of requests for proposals from healthcare systems in different jurisdictions," said Mr. Butts, "including individual hospitals and networks of hospitals."

Jim Farmer, President and COO added, "We have invested for over 10 years in building a technology that puts a wrapper around the history of the current technology install base and allows it all to work together in harmony. Xenos products are applicable to nearly any market sector, reducing costs and increasing efficiencies. In single applications, Xenos has typically saved customers hundreds of thousands of dollars annually, and in some cases millions of dollars." For example, a spokesman for Fireman's Fund Insurance Co. was recently quoted in Insurance & Risk Management magazine, "Since implementing d2e in April 2003, Fireman's Fund has saved more than $640,000 in printing and associated costs, with the potential to cut as much as $2.3 million."

In an era of integration, rationalization and "return on investment" driven technology purchases, Xenos is very well positioned and intends to take full advantage of that positioning.

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. GoXMLÒ 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.

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

Investor Relations Contact:
Cory Pala
Xenos Group, Inc.
416-657-2400
cpala@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's external auditors, Grant Thornton LLP, have not performed a review of these interim consolidated financial statements. These statements have been prepared by management and include the selection of appropriate accounting principles, judgments and estimates necessary to prepare these financial statements in accordance with Canadian generally accepted accounting principles

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.

© 2005 Xenos Group Inc. All rights reserved.