Nstein Secures $4.25 Million in Financing

Dec 02, 2003

Nstein Technologies Inc., a provider of software solutions for managing and retrieving unstructured information, has announced the closing of a previously announced $2 million private placement of common shares with the Solidarity Fund QFL and a $2.25 million secured loan facility with Bank of Montreal. Concurrently with these transactions, the company entered into an agreement with La Financière du Québec providing for a partial guarantee of the bank loan. In consideration for the loan guarantee, Nstein granted to La Financière du Québec 2,649,429 equity warrants, each warrant entitling La Financière du Québec to acquire one common share of Nstein at a price of $0.13 per share. The equity warrants are exercisable for a period of five years and may be exercised in whole or in part, at any time, before their expiry date. The bank loan and loan guarantee provide for an initial disbursement of $1 million, with subsequent disbursements up to the total amount of the loan to be made subject to certain conditions in favor of the lender and guarantor. These conditions include achievement by Nstein of certain financial milestones relating to its income and profits for the fiscal year ending December 31, 2004 and for each of the three month periods ending March 31, 2004 and June 30, 2004. Following these transactions, Nstein will immediately have available $3 million that will be used for commercialization of the company's products.

As a result of these transactions, the Solidarity Fund QFL now owns 48,571,429 common shares of Nstein, representing 37% of the total 132.8 million of Nstein's issued and outstanding common shares, or 38% upon exercise of the 2,000,000 equity warrants granted to the Fund in connection with the private placement. In addition, upon exercise in full of the equity warrants granted to it in connection with the loan guarantee, La Financière du Québec will be entitled to acquire 2,649,429 of Nstein's common shares, representing 2% of Nstein's issued and outstanding common shares. In connection with the transactions, approximately 6.7 million equity warrants previously issued to the Fund have been cancelled. The common shares and warrants issued in connection with these transactions are subject to a 12 month hold period and certain restrictions on resale.

(http://www.fondsftq.com), (http://www.nstein.com)