Nstein announces results for fiscal 2005

2006-04-28

The Company practically doubled sales with revenues of $9.1M, an increase of 88% from the preceding fiscal year

Montreal, Quebec, April 28, 2006 - Nstein Technologies Inc, "Nstein" (TSX-V: EIN), today announced its results for the fiscal year ended December 31, 2005.

Revenues amounted to $9.1M compared to $4.8M in 2004. This represents growth of 88% in spite of the effect of the Canadian dollar's rise in value. Loss before financial expenses, income tax, depreciation, amortization and impairment of intangible assets (EBITDA) stood at $3.1M compared to $2.3M for the previous year. The increase was due primarily to a rise in operating expenses following integration of businesses acquired during fiscal 2004 and investments made in 2005 to accelerate the Company's growth.

Net losses totalled $6.8M or $0.036 per share in 2005, against $3.2M or $0.021 in 2004. The increase in net losses was mainly the result of amortization charges and impairment of intangible assets that had no effect on cash flow. Financial charges also increased, rising from $0.2M in 2004 to $1.0M in 2005, reflecting the debt contracted in 2005.

The results for the fourth quarter provide a good reflection of the challenges the Company is facing. Nstein operates in an emerging market, and must make substantial investments to compete with players with more resources. Moreover, Nstein's typical licensing contract has a high dollar value per unit; this situation can substantially impact the Company's results when the sales cycle extends into a later quarter. For Q4 2005, revenues totalled $1.5M compared to $2.3M one year earlier. The Company posted a loss before financial expenses, income tax, depreciation, amortization and impairment of intangible assets (EBITDA) of $1.8M as opposed to $0.5M for the previous year. Net losses totalled $3.9M, or $0.021 per share, against $1.0M or $0.005 for the same period in 2004. The loss recorded for the fourth quarter of 2005 includes a charge of $1.5M related to amortizations of intangible assets as well as the impairment of intangible assets of the businesses acquired in 2004.

At December 31, 2005, short-term assets amounted to $5.3M, including $1.9M in cash. Short-term liabilities totalled $5.0M.

"During 2005, Nstein reaffirmed its strategic position among its clients in the field of e-publishing, as witnessed by the contracts signed with well-known businesses in the sector. This same technology from Nstein, capable of analyzing all data sources to extract the meaning, the relationships and the latent information they contain, served as a springboard for building search solutions designed for businesses and government agencies," stated Mario Girard, Nstein Technologies" Chairman and Chief Executive Officer. "Our technology holds a distinctive position in the field of information access technologies. It's based on software applications that combine three technology sectors which, taken individually, are only part of the answer to information access difficulties: text mining, business intelligence and search engines. Launched in the fall of 2005, Nstein's Ntelligent Enterprise Search is designed to be the point where these technologies converge."

Mr. Girard added, "Among the initiatives realized in 2005, I'd like to mention the link we established with IBM* in August and the launch of a first solution in November. This solution, Public Image Monitoring (PIM), is a search driven business intelligence tool based on IBM WebSphere* Information Integrator OmniFind* edition that uses the semantic search and text analytics modules developed by Nstein. The content available on the Internet generated by blogs, opinion forums and news articles is increasing exponentially. The explosion of this data on the Web is creating a phenomenon where the public's opinion of an enterprise or organization is being disseminated in real time throughout the world. Naturally, these sources contain a significant mass of indicators about consumers, competitors and expert opinions which, if known to companies, can inform their decision processes and guide their business strategies. So, the agility, growth and success of these businesses are dependent on intelligent solutions for accessing these information sources'solutions like the PIM and Nstein's Ntelligent Enterprise Search."

Outlook

"The signing of new contracts, technological integration with IBM and the different awards Nstein has won in the industry (including the OCTAS for excellence and innovation in technology from the Fédération Informatique du Québec) are significant events that we're counting on in 2006 to increase our market share in the area of information access technologies. In rising to this challenge, Nstein can rely on a seasoned management team and the excellence and drive of its employees," concluded Mr. Girard.

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 source, in real time. Nstein's text mining and multilingual information access 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 e-publishing and homeland security & intelligence 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.

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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