Nstein Increases Sales Force and Product Offering in U.S. Target Market

2002-08-14

Montreal, August 14th, 2002 - During the second quarter ended June 30, 2002, Nstein Technologies Inc. "Nstein" (TSX Venture Exchange: EIN) expanded its Sales team in the United States, broadening its coverage in its key target market and positioning the company for accelerated revenue growth. New products were introduced during the quarter tailored specifically to Nstein's target customers, increasing the company's earnings potential and shortening its sales cycle.

Product-Market Leader

The News Nserver automated indexing product suite which Nstein launched at the end of the current quarter is significant in that it is designed to meet the standard practices of the news publishing industry-one of Nstein's major markets. News Nserver provides a "total indexing solution" to news e-publishers by incorporating the publishing industry's standard index taxonomy set by the International Press Telecommunications Council (IPTC). This marks the first in a series of sector-targeted products that the company will launch over the coming months and furthers Nstein's leadership position in the marketplace.

Late in the quarter the company released its new Taxonomy Builder product and a strategic Nserver ASP (Application Service Provider) licensing option, opening Nstein's addressable market to small and medium enterprises, and significantly increasing the company's earnings potential.

Financial Results

During the second quarter Nstein earned revenues of $277,771, compared to $345,651 for the same period last year. Losses for the second quarter reached $1.56 million, or $0.015 per share, compared to $1.04 million, or $0.012 per share for the corresponding quarter last year. Income recorded for the second quarter is mainly attributable to the sale of an Nserver ASP license. Income was also earned from installation and maintenance services to current customers.

Nstein's operating, sales, and administration expenses reached $1.21 million in the second quarter, compared to $0.77 million for the same quarter last year, mainly due to expanded commercial activity in the United States. Research and development expenses were $611,639, an increase from the same quarter last year when the total was $415,769.

As of June 30, 2002, total short-term assets were $7.5 million, compared to $5.7 million as at December 31, 2001. Cash and cash equivalents reached $5.4 million at the end of the second quarter of 2002, compared to $3.6 million as at December 31, 2001. Nstein's total interest'bearing debt stood at $1.7 million on June 30, 2002, compared to $2.4 million on December 31, 2001, reflecting a decrease of 29%.



Sales Focus

"The technology industry is facing a challenging economic situation and Nstein's experience this quarter is no exception", notes Mario Girard, Chairman and Chief Executive Officer of Nstein. "However our investment in our sales force for the period reflects our commitment to continue to aggressively push forward into the U.S. e'publishing space. We have already earned strong credibility with our customers and our immediate focus is to widen the adoption of our products in the marketplace."

The appointment of Leslie Lees to the position of Vice President Sales in May 2002 and the expansion of the U.S. Sales organization have already accelerated the company's sales program with contract negotiations underway with several customers.

"We intend that through our recognized products and our aggressive sales strategy we will continue to respond successfully to clear requirements in the marketplace for our indexing solutions. We remain confident that we will reach our objectives," states Girard.

About Nstein

Nstein Technologies is an industry leader in providing innovative content management software solutions to the e-publishing industry. Nstein's products automate complex tasks such as document indexing, XML tagging and summarizing-enabling a significant leap in productivity and cost reduction for our customers. The company's patented Linguistic DNA technology, which combines the advantages of linguistic and statistical analysis with artificial intelligence has earned it top analyst ratings internationally. Nstein is a public company listed on the TSX Canadian Venture Exchange. For further information on Nstein Technologies Inc., please visit www.nstein.com.

• The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
• Any statement that appears prospective shall not be interpreted as such.

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