Grey Island Systems International Inc.
TSX VENTURE : GIS

Grey Island Systems International Inc.

June 23, 2005 17:34 ET

Grey Island to Acquire NextBus Business

TORONTO, ONTARIO--(CCNMatthews - June 23, 2005) - Grey Island Systems International Inc. (TSX VENTURE:GIS), a leader in the Government Fleet Tracking and Telematics industry, announces the signing of a definitive agreement to acquire the business of NextBus Information Systems Inc., a private company based in Alameda, California. The acquisition will be conducted through Grey Islands wholly owned subsidiary NextBus Inc., in an asset purchase transaction.

NextBus is a leading provider of real-time transit passenger information systems with contracted future revenues in excess of $7,000,000 (USD). According to un-audited management prepared financial statements prepared in accordance with US GAAP annualized revenue for calendar 2004 was approximately $2,900,000 (USD).

The patented technology uses GPS and wireless communications to predict arrival times of transit vehicles, allowing transit riders to know when vehicles will arrive. The information is then distributed to the transit riders via digital wireless signs located at transit stops, and at home via the internet, and automated telephone systems. The information is also used by management to enhance stop locations, routing, scheduling, and real-time schedule adherence.

"The two companies have very similar and compatible business models and system architectures. The integration of the Interfleet hardware and data centre with the NextBus application is already complete and being installed in a number of customer locations" said Andrew Moore, CEO Grey Island Systems International Inc. "The acquisition of the NextBus business underlies our strategy to focus on the government AVL and fleet management market, to expand our offerings to additional agencies within our respective client base, and to grow organically and through acquisitions."

"NextBus technology is fundamentally improving public transit by eliminating unpredictable wait time. Grey Island has the unique combination of skills and products to implement our vision throughout the transit community." Said Ken Schmier, Founder and CEO of NextBus Information Systems Inc.

The asset purchase transaction is expected to close within 2 weeks. In consideration for the assets NextBus will be paid $700,000 (USD), 1,000,000 Warrants exercisable into common shares, on a one for one basis, at a price of $0.50 per share expiring 2 years from the closing date, and a subordinate non-interest bearing convertible promissory note in the amount of $2,250,000 (CDN), convertible into shares at $0.325 per share. The note matures in four years and automatically converts into shares at the end of the term. The holders of the note have the right to convert any portion of the note into shares prior to the 4 year term; such shares would be subject to hold periods. The company can choose to pay any portion of the note prior to the four year term by providing 60 days notice at which time the holder has a right to convert that portion into shares prior to the sixty day notice period.

The closing of the transaction is conditional upon customary closing conditions including completion of due diligence, regulatory approval, director approval, and NextBus shareholder approval. A finder's fee of $8,000 (USD) is due to Mr. Michael Kushner on completion of the transaction.

NextBus Inc intends to retain the staff and facilities of NextBus Information Systems Inc. With the addition of the NextBus staff, Grey Island Systems International Inc., through its 3 wholly owned subsidiaries, Grey Island Systems Inc., Interfleet Inc., and NexBus Inc., will employ approximately 50 people in 3 facilities located in Toronto, New York and the San Francisco Bay Area.

About Grey Island Systems International Inc.

Grey Island Systems develops markets and hosts Internet-based Automated Vehicle Location and Telematic systems for public and private organizations with customers in Canada and the United States. InterFleet® has been used continuously since 1998 to track Public Works and other fleets. To find out more about Grey Island Systems International Inc. (TSX-V: GIS), visit our website at www.interfleet.com.

About NextBus

NextBus Information Systems Inc. is dedicated to the public transportation industry. Its mission is to enhance the experience of using public transportation by providing high value information to both passengers and managers of public transit. Bus locations are tracked via an automatic vehicle location (AVL) system. NextBus processes the information, calculates predicted arrival times and transmits arrival time predictions to the wired and wireless Internet. NextBus empowers the individual and decreases the anxiety associated with mass transit. NextBus provides management tools that help transit agencies improve performance and reduce costs. Further information is available at www.NextBus.com.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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