Xten Networks Announces Record Third Quarter Results

Vancouver, BC, Canada — March 18, 2005 —

Xten Networks, Inc. (OTCBB: XNWK), a provider of award-winning VoIP (Voice over Internet Protocol), Video over IP, Instant Messaging (IM), and Presence SIP softphones, today reported financial results for the third quarter ended January 31, 2005.

Total revenue for the quarter climbed to a record $928,608, compared to $677,364 for the quarter ended October 31, 2004, an increase of 37% quarter-over-quarter. This compared to $10,874 in the year-earlier period ended January 31, 2004.

Net loss for the quarter was $88,827, or ($0.00) per diluted share, compared to a net loss of $198,275, or ($0.01) per diluted share, in the previous quarter. This compared to $102,500, or ($0.02) per diluted share, in the year-earlier period. The diluted weighted average common shares outstanding for the three months ended January 31, 2005 were 37,638,462 shares compared to 6,226,484 shares in the year-earlier period.

For the first nine months of fiscal 2005, total revenue climbed to $2,093,123, compared to $345,873 (+505%) in the corresponding period in fiscal 2004. Net loss for the first nine months of fiscal 2005 was $478,235, or ($0.01) per diluted share, compared to a net loss of $143,961, or ($0.03) per diluted share, in the corresponding period in fiscal 2004.

Software sales for the quarter totaled $838,163 compared to $653,618 for the quarter ended October 31, 2004, a 28% increase quarter-over-quarter. This compared to $6,820 in the year-earlier period ended January 31, 2004. For the nine-month period, software sales were $1,958,432 compared to $228,281 in the year-earlier period.

Mark Bruk, chief executive officer of Xten Networks, said, "Our record performance in the third quarter reflects strong growth in software sales. We significantly strengthened our customer base in the quarter with new agreements from industry leaders such as Belkin Corporation, Yak Communications, and others. Our latest software product, eyeBeam, continues to receive strong acceptance in the rapidly growing global VoIP marketplace and we expect to build on our record sales going forward."*

"With customers in approximately 30 countries and more than 1,000,000 IP endpoints deployed worldwide, Xten Networks remains well positioned for long-term growth and we expect to continue to improve our operating margins based on growing sales."*



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Q3 Fiscal 2004 Results - Image 1

Q3 Fiscal 2004 Results - Image 2

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 (*) and include statements regarding management's belief that: Xten will increase sales revenues; Xten remains well positioned for long-term growth; and, Xten expects to continue to improve its operating margins based on growing sales. 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, the compatibility of Xten's software products with new computer operating systems, 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.

About Xten Networks, Inc.

Xten is a developer of award-winning, high-quality, carrier-grade 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. Xten has a feature-rich FREE SIP softphone dubbed X-Lite, in addition to the fully featured X-PRO commercial softphone and eyeBeam, a SIP Video over IP softphone with IM and Presence. Through its deployments with leading service providers, Xten has more than 700,000 IP endpoints deployed worldwide.

For more information please visit www.xten.com.