Xten Reports Record Sales Performance in Fourth Quarter and Fiscal Year 2005 Results SANTA CLARA, CA, July 29 /PRNewswire-FirstCall/ -- Xten Networks, Inc. (OTCBB: XNWK), a provider of VoIP (Voice over Internet Protocol), Video over IP, Instant Messaging (IM), and Presence SIP softphones, today announced results for its fourth fiscal quarter and fiscal year ended April 30, 2005. Total revenues for the fiscal year ended April 30, 2005 climbed to a record $3,122,877, compared to $565,277 for the fiscal year ended April 30, 2004, an increase of 452 percent year-over-year. Total revenues for the quarter climbed to a record $1,029,754, compared to $928,608 for the quarter ended January 31, 2005, an increase of 11 percent quarter-over-quarter. This compared to $219,404 in the quarter ended April 30, 2004, an increase of 369 percent compared to the same quarter in the previous year. "February 1st represented a significant change in our business model with the company moving away from selling unlimited licenses. Consistent with management expectations, we believed that one-time revenue would be impacted as the company moved to a per-seat license model with a deliberate focus on annuity revenue. I am personally pleased with our growth of 11% quarter-over- quarter and 452% year-over-year," stated Mark Bruk, chairman of Xten Networks. "We expect that the per-seat license model will take hold in the coming quarters(x) and we have made significant changes to our management team, which will allow us to better take advantage of the market opportunities presented by VoIP(x)." Financial Highlights for Fiscal 2005 - Increase of revenue by 452% to $3,122,877 (FY 2004: $565,277) - Net loss of $780,408 (FY 2004: $174,318) As a percentage of revenue our net loss has decreased from 31% in fiscal 2004 to 25% in fiscal 2005. Financial Highlights for the Fourth Quarter 2005 - Increase of revenue by 369% to $1,029,754 (3M 2004: $219,404) - Net loss of $302,173 (3M 2004: $30,357) "I am impressed by the entire Xten team and believe that the financial growth reflected in today's announcement reflects positively Xten's already prominent position in the VoIP endpoint market," said Larry Timlick, president of Xten Networks. "The changes we have made to the management team, the strategy, product focus and customer segmentation will allow Xten to continue its strong growth trajectory and revenue quality(x). We significantly grew our customer base through per-seat licensing agreements with service providers such as Portugal Telecom and Telio; while validation of our technology continues as demonstrated by the licensing of our voice engine to leading global internet companies like Yahoo!. Xten is very happy with the addition of these new customers, including; Yak Communications Inc., and Phonzo Communications AS. I look forward to the execution of the company's business plan in the coming quarters as we continue to expand our active customers beyond the current 120 plus." The Company's Annual Report on Form 10-KSB including consolidated balance sheet and statement of operations for the fiscal year ended April 30, 2005 was filed and is available for viewing at http://www.sec.gov/. About Xten Networks, Inc. Xten Networks is a developer of award-winning, high-quality, carrier- grade VoIP (Voice over IP) and Video over IP SIP softphones for service providers, cable operators, Internet telephony service providers, IP PBX manufacturers and OEMs. Xten's SIP softphones are available either pre-configured or as a software development kit (SDK), and provide VoIP (Voice over IP), Video over IP, IM (Instant Messaging), and Presence functionality. eyeBeam - Xten's feature-rich SIP Video over IP softphone with IM and Presence - recently received both Communications Solutions(R) Magazine's and INTERNET TELEPHONY(R) Magazine's "Product of the Year" Award for 2004. Xten's Pocket PC SIP Softphone was recently named a 2005 Innovation Award winner from INTERNET TELEPHONY(R) magazine. With over 120 customers in more than 30 countries, Xten technology is deployed in more than 5,400,000 IP endpoints worldwide. For more information please visit http://www.xten.com/. Legal Note on Forward-Looking Statements Statements in this news release, which are not purely historical, are forward-looking statements, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward-looking statements in this news release are marked by an asterisk (x) and include statements regarding management's belief that: Xten will increase sales and capture opportunities in the VoIP market and Xten will continue its strong growth trajectory and revenue quality for long-term growth. It is important to note that actual outcomes and Xten's actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include risks and uncertainties such as Xten's ability to remain competitive as other parties develop and release competitive products, Xten's ability to retain the employees necessary to continue research and development of Xten's software products, the success by Xten of the sales of its products, the impact of competitive products on the sales of Xten's products, the impact of technology changes on Xten's software products and on the VoIP industry, the compatibility of Xten's software products with new computer operating systems, the rate of adoption by service providers and the general public of VoIP as a replacement for regular and cellular phone service, general economic conditions as they affect Xten's prospective customers, the ability of Xten's to control costs operating, general administrative and other expenses, and insufficient investor interest in Xten's securities which may impact on Xten's ability to raise additional financing as required. Readers should also refer to the risk disclosures outlined in Xten's quarterly reports on Form 10-QSB, annual reports on Form 10-KSB and Xten's other disclosure documents filed from time-to-time with the Securities and Exchange Commission. For more information on Xten, please contact Investor Relations - KCSA Worldwide: Todd Fromer +1.212.896.1215 Michael Cimini +1.212.896.1233 For more information on Xten products, please contact Media Relations: Tiffany Zinck +1.604.628.2127 DATASOURCE: Xten Networks Inc. CONTACT: Investor Relations - KCSA Worldwide: Todd Fromer, (212) 896-1215, ; Michael Cimini, (212) 896-1233, ; For more information on Xten products, please contact Media Relations: Tiffany Zinck, (604) 628-2127,

Copyright