Nstein Technologies Inc. Announces the Closing of $4.1 Million Financing

2005-10-12

Proceeds to be used for Repayment of Certain Debts and General Corporate Purposes

Montreal, Quebec, October 12, 2005 - Nstein Technologies Inc. "Nstein" (TSX-V: EIN), a leader in advanced linguistic-based Business Intelligence solutions, announced today that it has signed a securities purchase agreement which provides for a private placement of $4.1 million of senior secured convertible notes with certain institutional investors. The closing of the financing occurred today. The Company will use the net proceeds from the financing to repay certain debts and for general corporate purposes.

"This investment provides us additional capital resources to execute our business plan which is focused on accelerated growth and corporate development in the global unstructured data analysis market," said Robert Barakett, Executive Vice-President and Chief Financial Officer of Nstein. The senior secured notes are convertible into common stock at a conversion price of $0.14 per share. The conversion price is subject to adjustment in certain circumstances. However, in no circumstances shall the Company issue more than 35,450,775 common shares under the convertible notes. The senior secured convertible notes are repayable in monthly payments in either cash or common stock over a period of up to two years, or a combination of cash and common stock. The face value of the senior secured convertible notes is $5.1 million and the notes are being issued at a 20% discount, bearing a 0% coupon. They will begin to be repayable four months from closing and will be amortized over a period of twenty months. In certain circumstances the holders will have the right to require conversion of the senior secured convertible notes to common stock. The convertible notes are secured by substantially all of the assets of the Company and of its subsidiaries. As additional consideration, Nstein will issue to the holders of the notes warrants to purchase up to 11.67 million of its common shares at a price of $0.18 per share, for a term of five years, exercisable beginning four months after the closing date. The exercise price and the number of shares to be purchased upon exercise of the warrants are subject to adjustment in circumstances similar to the conversion price of the senior secured convertible notes. However, in no circumstances shall the number of common shares issuable under the warrants exceed 35,450,775.

"Recognizing the need to maximize our cash position as we execute our strategy, this financing gives us the appropriate financial support to intensify the marketing of our solutions in our three markets - e-publishing, corporate intelligence and homeland security & intelligence - while remaining on the lookout for growth opportunities," said Mario Girard, President and Chief Executive Officer of Nstein.

The senior secured convertible notes, the warrants sold in the private placement and the shares of common stock issuable in connection with the financing, have not been registered under the Securities Act of 1933, or state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission ("SEC") or an applicable exemption from the registration requirements, in compliance with all applicable laws. No prospectus has been filed in Canada with respect to any of the securities. The senior secured convertible notes and warrants were offered and sold only to qualified institutional buyers and institutional accredited investors. This announcement is not an offer to sell or the solicitation of an offer to buy the senior secured convertible notes, the warrants or shares of common stock of the Company. This announcement is only a description of the terms of the senior secured convertible notes and warrants. Information concerning the financing will be included in a Material Change Report. The senior secured convertible notes, the warrants or the shares of common stock of the Company may not be re-sold or transferred prior to the expiration of a 4-month hold period, as required under the policies of the TSX Venture Exchange.
Kaufman Bros, L.P., an investment banking firm specializing in the sectors of communication, media and technology acted as sole placement agent to the Company for the transaction. They will receive in compensation a cash commission of 7% of the net proceeds and 2,041,900 agent's warrants to exercise at a price of $0.16 per share. The warrants are valid for a two-year period.

About Nstein Technologies

Nstein Technologies (TSX-V: EIN) develops and markets leading edge software solutions for analyzing vast amounts of unstructured data in virtually all languages. Nstein's linguistic based platform collects, organizes, analyzes, cross examines, shares and translates data from any sources, in real time. Nstein's solutions transform reactive decision making into a high impact proactive and even predictive process, and solve mission critical problems. Nstein has developed tailored solutions for clients in homeland security & intelligence and e publishing markets, as well as for large enterprises and government organizations. The Company is headquartered in Montreal, Canada, with offices in the United States and Europe. More information is available at www.nstein.com

Forward-looking Statements

The statements regarding the Company's future operating results, performance and business prospects contained in this press release, and any other statements not constituting historical information, are forward-looking statements. These forward-looking statements reflect the Company's current opinions and assumptions with respect to future business decisions and results, and are based on the information currently available to the Company. Accordingly, these statements are subject to risks, uncertainties and contingencies which could cause the Company's future operating results, performance or business prospects to differ from those expressed in, or implied by, these statements.

• 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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For more information:

Nstein Technologies Inc.:
Investor Relations

Robert Barakett
Executive Vice-President and Chief Financial Officer
Nstein Technologies Inc.
Tel: 514 908-5406
robert.barakett@nstein.com