SOURCE: Orsus Xelent Technologies, Inc.

April 11, 2006 07:00 ET

Orsus Xelent Technologies Reports 2005 Year-End Results

Company Earns $0.12 Per Share While Successfully Transitioning to New Cellular Phone Platform, Introducing New Model Line, and Expanding Market Scope

NEW YORK, NY -- (MARKET WIRE) -- April 11, 2006 -- Orsus Xelent Technologies, Inc. (OTC BB: ORXT), an innovative designer and manufacturer of mobile phones, today reported the company's financial results for its fiscal year ended December 31, 2005.

For 2005, company recorded net income of $3.5 million, or $0.12 per basic and diluted share, on revenues of $28.7 million. This compared to a net income of $8.7 million on revenues of $71.0 million reported for 2004. The decrease in revenue is primary attributable to changing market demands while the company transitioned to a new platform to meet this demand during the second half of 2005.

The success of this transition was evident in the results for the second half of 2005, when more than 88% of the company's 2005 revenues were recorded. This dramatic rebound in revenue was primarily due to introduction of a series of new handsets with innovative functions like MP3, MPEG4, FM radio, and large memory capacity. These new products, consisting of models 70A, 62+, 8205, 60+, M72 and M36, also generated higher margins than previous models.

Additionally, during the second half of 2005, Orsus Xelent initiated a program to expand beyond its line of GSM-based phones and introduce products based on CDMA technology. The company partnered with a telecommunication operator and other cellular phone manufacturers, resulting in the successful introduction of the Model C100, a CDMA-based handset. During the fourth quarter of 2005, sales of the C100 exceeded $5.0 million, representing 17.5% of the year's total revenues.

Also during the fourth quarter, Orsus Xelent expanded beyond its traditional Peoples Republic of China (PRC) domestic market, selling 10,000 M18+ to Hong Kong. In 2006, the company is looking to expand its market reach to Southeast Asia, the Middle East, and other select regions.

"During 2005, we successfully adopted to rapidly changing market demands, introducing a powerful new model line," said Wang Xin, president and CEO of Orsus Xelent Technologies. "This demonstrated our proficiency in designing high-quality, high-margin handsets with the latest features desired by Asian consumers and bringing them to market rapidly. Additionally, management is implementing several strategic initiatives that will diversify our service offerings, broaden both our domestic and international distribution channels, and expand and improve our design efforts -- all setting the stage for strong growth 2006."

About Orsus Xelent Technologies

Orsus Xelent Technologies, Inc. is a designer of feature-rich mobile phones in the People's Republic of China. These features include 1.8-inch to 2.2-inch TFT dual-color display, 1 to 120 minutes video recording, 300K to 2.0 Mega pixels photography, MP3, MPEG4 and U disk support, dual stereo speakers, multimedia messaging, 40 to 64 polyphonic ring tones, flip-phone technology and innovative lightweight design.

Information Regarding Forward-Looking Statements: Except for historical information contained herein, the statements in this Press Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the Securities and Exchange Commission.

                     Orsus Xelent Technologies, Inc.

                 Consolidated Statements of Operations
                Years ended December 31, 2005 and 2004



                                                     2005           2004
                                                   USD'000        USD'000



Operating revenues - Net sales                      28,705         70,822
                                               -----------    -----------
Operating expenses:
  Cost of sales                                     22,370         56,231
  Sales and marketing                                1,554          3,314
  General and administrative                         1,064          1,435
  Research and development                             413            586
  Depreciation                                         310            598
                                               -----------    -----------

  Total operating expenses                          25,711         62,164
                                               -----------    -----------
Operating income                                     2,994          8,658

Interest expense                                       (25)          (143)
Other income, net                                      544             64
                                               -----------    -----------

Income before income taxes and minority
 interest                                            3,513          8,579
Income taxes                                           (21)            --
                                               -----------    -----------

Income before minority interest                      3,492          8,579

Minority interest                                       --            120
                                               -----------    -----------


Net income                                           3,492          8,699

Other comprehensive income
Foreign currency translation adjustment                349             --
                                               -----------    -----------

Comprehensive Income                                 3,841          8,699
                                               ===========    ===========

Earnings per share
  Basic and diluted                                   0.12           0.29
                                               ===========    ===========

Weighted average number of common shares
 outstanding                                    29,756,000     29,756,000
                                               ===========    ===========


                      Orsus Xelent Technologies, Inc.

                        Consolidated Balance Sheets
                     As of December 31, 2005 and 2004

                                                      2005           2004
                                                   US$'000        US$'000
ASSETS
Current assets
  Cash and cash equivalents                          2,974            224
  Restricted cash                                       --          2,333
  Accounts receivable - Trade                       12,034          8,250
  Due from related company                              --          3,319
  Inventories                                        4,460          5,781
  Trade deposits paid                               10,580          8,126
  Other current assets                                 182            210
                                               -----------    -----------

    Total current assets                            30,230         28,243

Property, plant and equipment, net                     781            778
                                               -----------    -----------

Total assets                                        31,011         29,021
                                               ===========    ===========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable - Trade                           7,939         13,840
  Accrued expenses and other accrued liabilities     2,259          1,103
  Trade deposits received                            5,432          2,487
  Due to directors                                     320            311
  Provision for warranty                               122            182
                                               -----------    -----------


Total current liabilities                           16,072         17,923
                                               -----------    -----------

Commitments and contingencies

Stockholders' equity Preferred stock,
 US$0.001 par value:
  Authorized: 100,000,000 shares,
   no shares issued                                     --             --
                                               -----------    -----------

Common stock and paid-in capital,
 US$0.001 par value:
  Authorized: 100,000,000 shares
Issued and outstanding: 29,756,000
 shares as of December 31, 2005 and
 as of December 31, 2004                                30             30
Additional paid-in capital                           2,484          2,484
Dedicated reserves                                   1,042          1,042
Other comprehensive income                             349             --
Retained earnings                                   11,034          7,542
                                               -----------    -----------



Total stockholders' equity                          14,939         11,098
                                               -----------    -----------



Total liabilities and stockholders' equity          31,011         29,021
                                               ===========    ===========

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