May 25, 1999

Contact:
Dr. Mervyn Jacobson, President/CEO, XY Inc.
970-491-4764

XY Inc. TO RELEASE ITS FIRST SEX-SELECTED PRODUCTS FOR CATTLE IN 1999

FORT COLLINS, CO--American bio-technology firm XY Inc. expects to bring its first products for sex selection in cattle to market in late 1999--due to a British corporation's multimillion dollar investment in XY Inc.'s world-class research program.
      Cogent, a British membership-based breeding program launched in 1995 by the Duke of Westminster to genetically improve the United Kingdom's dairy herds, has invested $1.5 million in XY Inc. to support cutting-edge research into sperm-sorting techniques.
     " Clearly, having the ability to select whether a calf will be female or male before it's conceived will revolutionize herd management by improving genetics and breeding efficiency. The waste from unwanted sexes is enormous," said Tim Heywood, managing director of Cogent.
      Basically, XY Inc. researchers have perfected a technique to separate sperm that carry the X chromosome and produce females from sperm that carry the Y chromosome and produce males. The technique has a 90-percent accuracy rate. Whereas, left to nature, the sex of mammals, including calves, is typically 50-50.
     " After evaluating various research projects around the world, we chose XY Inc. because of its esteemed reputation in international scientific and breeding circles," said Heywood.
     " XY Inc. is known for being highly professional, reliable, careful and responsible in the research and development of its breeding techniques and sex-selection products," he added.
      Industry experts predict sex-selection techniques will revolutionize the cattle-breeding industry worldwide. Applications of sperm sorting in the United States cattle industry alone could exceed $ 300 million a year. The market outside the U.S. could more than double those projections, XY Inc. officials believe.
      In addition to financial support, the research agreement between XY Inc. and Cogent includes access to Cogent's U.K. facilities and 1,200-head cattle herd.
      As well, XY Inc. will collaborate with Cogent's noted animal-reproduction researchers to develop the first XY Inc. product--sexed frozen semen for in-vitro fertilization in cattle--by the end of 1999.
     " We are delighted to name Cogent as XY Inc.'s first international research partner and largest international investor to date," said Dr. Mervyn Jacobson, chief executive officer and president of XY Inc.
     " Cogent's support of XY Inc. provides critical funding to expand our research and our efforts to bring sperm-sorting products for cattle to market as quickly as possible."
      Cogent has the option to increase its investment in XY Inc. to 20 percent, become XY=s first commercial partner and hold the license for XY Inc.'s sex-selection technology in Britain and Ireland. Cogent is the world's fastest-growing dairy-breeding program and the largest in the U.K. More than 3,500 U.K. dairy farmers are Cogent members.
     " By investing in XY Inc., Cogent is honoring its pledge to U.K. dairy farmers to put the U.K. dairy industry back on top," said Cogent's Heywood, a newly appointed member of the XY Inc. board of directors.
      XY Inc., which holds exclusive global rights to the sperm-sorting license in non-human mammals, was formed as a joint venture of the Colorado State University Research Foundation and Cytomation Inc. of Fort Collins, Colo.
      Founded in May 1996, XY Inc.'s original mission was to provide sex-selection services to the U.S. dairy industry. With the appointment of Jacobson in January 1997, XY Inc.'s mission expanded also to include horses, pigs and endangered species, specifically, and all non-human mammals, potentially.
      XY Inc. scientists have refined the breakthrough science of sperm sorting via flow cytometry in conjunction with three other respected research teams at Colorado State, the U.S. Department of Agriculture and Cytomation.
      USDA researchers developed and patented the technology that allows sperm to be sorted by flow cytometry. Cytomation built the computerized device--MoFlo--to speed the sorting process. Colorado State researchers discovered how to make female animals pregnant with unusually low doses of sperm.
      XY Inc. also is collaborating informally with U.S. bull-stud operations, and the company anticipates signing formal research agreements with other large international and American cattle operations by the end of 1999.
      Jacobson pointed out XY Inc.'s sperm-sorting technology has the potential to annually reduce the wholesale slaughter of millions of young animals within food and companion species throughout the world.
      In addition, Jacobson said interest exists for sperm sorting to help increase the number of females among the world's endangered species.