Bioscrypt Reports Record Revenue for the Fourth Quarter and Year Ended December 31, 2006



    Sales Growth Continues with 12% Annual Increase

    TORONTO, March 1 /CNW/ - Bioscrypt Inc. (TSX: BYT), a leading provider of
enterprise access control technology, today announced its financial results
for the fourth quarter and year ended December 31, 2006.
    Bioscrypt's fourth quarter revenue of US$5.0 million increased by 9% from
the US$4.5 million reported during the same period in the previous year.
Overall gross margins were 47%, a 3 percent increase over 44% in the same
period a year ago. Gross margin for the combined VeriSeries and MVSeries
products was 44%, approximately three percentage points higher than the same
quarter in 2005.
    "The solid revenue growth we achieved in the fourth quarter and the
investments we have made in research and development to support our government
programs, give me confidence that we will continue to lead the industry in
enterprise access control," said Robert L. Williams, President and CEO,
Bioscrypt. "Recent events, including our announced intent to purchase
A4 Vision, demonstrate that Bioscrypt continues to advance on its strategy of
providing technologies supporting strong multi-factor authentication for both
physical and logical access. 2006 was a year of transition, where Bioscrypt
enhanced its product offerings to support the demands of the EU directives and
US government markets, all of which we look to benefit from in 2007."
    Expenses before amortization and other for the quarter were
US$2.8 million compared to US$2.9 million in the third quarter of 2006.
    Bioscrypt's loss before interest, tax, foreign exchange, depreciation and
amortization ("EBITDA")(1) of US$0.5 million or $0.01 per share in the fourth
quarter is slightly narrower than the EBITDA loss of US$0.6 million or $0.01
per share for the same period in 2005.
    The fourth quarter net loss was US$1.0 million or $0.02 per share versus
a net loss of US$1.1 million in 2005, or $0.02 per share.
    For the quarter product sales represented 94% of total sales or
US$4.7 million on 14,150 units sold, in line with the 14,200 units sold in the
fourth quarter a year ago. Sales of the MVSeries products represented
approximately 63% of total shipments or US$1.7 million while sales of
VeriSeries(TM) products represented approximately 27% of shipments or
US$3.0 million. Licensing of software represented 6% of total sales.
    Bioscrypt's revenue for the year ended December 31, 2006 of
US$17.6 million increased by 12% from the US$15.7 million reported during the
same period of the previous year. EBITDA loss for the year ended December 31,
2006 of US$3.4 million or $0.06 per share is slightly narrower than the loss
of US$3.5 million reported the previous year.
    "With an operating loss for the period of approximately $500,000,
following a difficult third quarter, we will continue our efforts to
streamline the organization and further improve our bottom line results," said
Bruce MacInnis, CFO of Bioscrypt Inc. "Bioscrypt has already begun progressive
steps to consolidate our operations, reducing our California offices from 2 to
1, and realign our resources to deliver continued sales growth at less cost."
    Net loss for the year ended December 31, 2006 was US$5.6 million or $0.09
per share, consistent with the same period of the previous year of
US$5.4 million or $0.09 per share.
    For the year, product sales represented 94% of total sales or
US$16.7 million on 50,300 units sold, an 8 percent increase over the 46,500
units or US$14.7 million sold a year ago. Sales of the MVSeries products
represented approximately 64% of total shipments or US$6.3 million, while
sales of VeriSeries(TM) products represented approximately 26% of shipments or
US$10.2 million. The total number of units the company has sold to date is now
beyond 210,000. Licensing of software represented 6% of total sales.

    Select Q4 Highlights
    --------------------

    
    -   The largest courthouse system in Latin America, the Superior Tribunal
        of Justice of Mexico City selected Bioscrypt's V-Station Biometric
        Reader.

    -   Bioscrypt announced a new reader is being designed to address the
        requirements of the U.S. government's Personal Identity Verification
        program.

    -   Bioscrypt's Minutiae Algorithm paired with UPEK's silicon fingerprint
        sensor met the International Labour Organization Requirements for Use
        in Seafarers' Identity Documents and qualified as Biometric Service
        Provider for Seafarers' Identification Credential.

    -   The Artemis Solutions Group partnered with Bioscrypt to enhance
        PC security and deliver Multi-Factor authentication, Single Sign-On
        and Encryption Software marketed through ASG's BioCert Brand.

    -   Bioscrypt's VeriSoft Access Manager was chosen by Cherry Electrical
        Products to support Cherry's FingerTIP ID biometric USB keyboards.

    Select 2006 Highlights
    ----------------------

    -   Bioscrypt was recognized as one of only six initial certified vendors
        of finger matching technology to the US Government and was placed on
        the Personal Identity Verification (PIV) Interoperable Matcher
        Products list following NIST performance testing.

    -   Bioscrypt's fingerprint biometric algorithms receive GSA
        qualification for use in FIPS 201 PIV Program qualifying both for use
        as a generator in PIV issuance system and as a matcher for physical
        and logical verification systems.

    -   New features added to Bioscrypt's VeriSoft Access Manager(TM) were
        developed to support logical access control for the US Government's
        PIV Program, allowing federal government employees to log-on to their
        computer using a PIV Card with fingerprint biometric templates, as
        mandated by the US government.

    -   Lenel Integrates Bioscrypt VeriSoft Access Manager(TM) Into
        IdentityDefender(R) and OnGuard(R) 2006 so that Lenel can offer a
        totally converged physical and logical security solution.

    -   A major U.S. International Port selected Bioscrypt and AMAG to
        provide Multi-Factor authentication solution for key security
        initiative.

    -   ASUSTeK Computer Inc. selected Bioscrypt's VeriSoft Application for
        biometric-enabled Notebook Computers.
    

    Conference Call
    ---------------

    The Corporation will be hosting an earnings report conference call today
at 8:00 a.m. Eastern Standard Time. The call can be accessed by phone by
dialing 1-877-407-8035 or at www.vcall.com/IC/CEPage.asp?ID=113220.
    If you are unable to attend the original call, you may subsequently
listen to the playback at 1-877-660-6853, account number 286, conference ID
number 228449, for one week after the call or by going to
www.vcall.com/IC/CEPage.asp?ID=113220 for three months after the call.

    (1) - EBITDA is defined as operating revenues less operating expenses and
    therefore reflects earnings before interest, foreign exchange, taxes,
    depreciation and amortization. Bioscrypt uses EBITDA, amongst other
    measures, to assess the operating performance of its on-going business,
    and applies the use of such measure consistently from quarter to quarter.
    The term EBITDA does not have a standardized meaning prescribed by
    Canadian generally accepted accounting principles and therefore may not
    be comparable to similarly titled measures presented by other companies.
    EBITDA should not be construed as the equivalent of net cash flows from
    operating activities.

    Financial Statements Attached

    About Bioscrypt Inc.

    Bioscrypt Inc. is a leader in enterprise access control, providing
solutions for converged physical and logical access, enabling unified
authentication from Door to Desktop(R). Bioscrypt's offerings simplify the
task of implementing secure access to facilities, equipment and IT networks.
The company develops and sells biometric embedded solutions, access control
readers and identity and access management software to protect the physical
and network assets of international government agencies and leading
organizations in the financial services, healthcare, and manufacturing
sectors. More information is available at www.bioscrypt.com.

    Forward-looking (safe harbour) statement

    Statements made in this news release that relate to future plans, events
or performances are forward-looking statements. Any statement containing words
such as "believes", "plans", "expects" or "intends" and other statements which
are not historical facts contained in this release are forward-looking, and
these statements involve risks and uncertainties and are based on current
expectations. Consequently, actual results could differ materially from the
expectations expressed in these forward-looking statements.

    Bioscrypt Inc. and Bioscrypt, are trademarks of Bioscrypt Inc. All other
    trademarks or registered trademarks referenced herein are properties of
    their respective owners.

    
    BIOSCRYPT INC.
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)                                        Dec. 31,      Dec. 31,
    (in U.S. dollars)                                     2006          2005
    -------------------------------------------------------------------------

    ASSETS
    Current Assets
      Cash                                        $  4,706,046  $  7,124,305
      Accounts receivable                            3,890,855     3,974,418
      Inventory                                      2,548,263     2,132,833
      Prepaid expenses and deposits                    363,487       232,063
    -------------------------------------------------------------------------
                                                    11,508,651    13,463,619

    Fixed Assets                                       987,132     1,109,434
    Intangible Assets                                5,133,274     6,930,069
    Goodwill                                         6,978,742     6,978,742
    -------------------------------------------------------------------------
                                                  $ 24,607,799  $ 28,481,864
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities
      Accounts payable and accrued liabilities    $  3,188,077  $  2,407,182
      Deferred revenue                                  50,584         3,676
      Current portion of deferred tenant
       inducement                                       57,312        57,312
    -------------------------------------------------------------------------
                                                     3,295,973     2,468,170

    Deferred Tenant Inducement                         167,161       224,473
    -------------------------------------------------------------------------
                                                     3,463,134     2,692,643
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share Capital                                   66,125,742    66,026,367
    Warrants                                            59,420        59,420
    Contributed Surplus                              2,990,209     2,177,352
    Deficit                                        (48,030,706)  (42,473,918)
    -------------------------------------------------------------------------
                                                    21,144,665    25,789,221
    -------------------------------------------------------------------------
                                                  $ 24,607,799  $ 28,481,864
    -------------------------------------------------------------------------


    BIOSCRYPT INC.
    CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT
    (Unaudited)
    (in U.S. dollars)
                              Three months ended         Twelve months ended
                                         Dec. 31,                    Dec. 31,
                      --------------------------- ---------------------------
                              2006          2005          2006          2005
                      --------------------------- ---------------------------

    Revenue
      Product sales   $  4,693,401  $  4,133,319  $ 16,653,615  $ 14,696,522
      License,
       royalties and
       services            276,755       411,376       950,065       996,052
    --------------------------------------------- ---------------------------
                         4,970,156     4,544,695    17,603,680    15,692,574
    --------------------------------------------- ---------------------------

    Cost of Revenue
      Product sales      2,613,350     2,560,879     9,313,388     8,886,005
      License,
       royalties and
       services             24,524         1,487        77,129         1,960
    --------------------------------------------- ---------------------------
                         2,637,874     2,562,366     9,390,517     8,887,965
    --------------------------------------------- ---------------------------

    Gross Margin         2,332,282     1,982,329     8,213,163     6,804,609
    --------------------------------------------- ---------------------------

    Expenses
      Research and
       development       1,115,319       600,176     4,142,384     3,063,593
      Selling,
       general and
       administration    1,575,445     1,816,794     6,769,147     6,441,134
      Stock
       compensation        149,417       192,600       741,007       805,656
    --------------------------------------------- ---------------------------
                         2,840,181     2,609,570    11,652,538    10,310,383
    --------------------------------------------- ---------------------------

    Loss Before
     Amortization
     and Other            (507,899)     (627,241)   (3,439,375)   (3,505,774)
    --------------------------------------------- ---------------------------

    Amortization
      Fixed assets          82,550       104,131       337,294       311,271
      Intangible
       assets              525,962       511,794     2,028,917     1,664,205
    --------------------------------------------- ---------------------------
                           608,512       615,925     2,366,211     1,975,476
    --------------------------------------------- ---------------------------

    Loss Before
     Other              (1,116,411)   (1,243,166)   (5,805,586)   (5,481,250)
    --------------------------------------------- ---------------------------

    Other
      Interest income       40,571        64,541       250,498       241,801
      Interest
       expense             (11,030)       (6,193)      (30,945)       (9,526)
      Foreign
       exchange gain
       (loss)               38,943        41,907        29,245      (107,709)
    --------------------------------------------- ---------------------------
                            68,484       100,255       248,798       124,566
    --------------------------------------------- ---------------------------

    Net Loss            (1,047,927)   (1,142,911)   (5,556,788)   (5,356,684)

    Deficit
     Beginning of
     Period            (46,982,779)  (41,331,007)  (42,508,213)  (37,149,734)
    Change in
     accounting
     policy                      -             -        34,295        32,500
    --------------------------------------------- ---------------------------
    Deficit End
     of Period        $(48,030,706) $(42,473,918) $(48,030,706) $(42,473,918)
    --------------------------------------------- ---------------------------
    --------------------------------------------- ---------------------------

    Loss Per Share
    Basic and
     diluted          $      (0.02) $      (0.02) $      (0.09) $      (0.09)

    Basic and
     diluted
     weighted
     average number
     of shares          59,009,833    58,931,158    58,930,013    58,623,469


    BIOSCRYPT INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
    (in U.S. dollars)         Three months ended         Twelve months ended
                                         Dec. 31,                    Dec. 31,
                      --------------------------- ---------------------------
                              2006          2005          2006          2005
    --------------------------------------------- ---------------------------

    Net Inflow (Outflow) of Cash
    Related to the Following Activities:

    Operating
    Net loss          $ (1,047,927) $ (1,142,911) $ (5,556,788) $ (5,356,684)
    Items not
     affecting cash:
    Amortization:
      Fixed assets          82,550       104,131       337,294       311,271
      Intangible
       assets              525,962       511,794     2,028,917     1,664,205
      Deferred tenant
       inducement          (14,328)       72,646       (57,312)       85,322
    Write off of
     previous
     leasehold
     improvements                -             -             -        37,634
    Write off of
     previous
     deferred tenant
     inducement                  -             -             -       (18,979)
    Stock
     compensation          149,417       192,600       741,007       805,656
    Loss on
     disposal of
     fixed assets            4,797         1,891        11,942         1,996
    -------------------------------------------------------------------------
                          (299,529)     (259,849)   (2,494,940)   (2,469,579)

    Changes in
     non-cash
     operating working
     capital items:
      Accounts
       receivable       (1,030,123)   (1,052,304)       83,563      (832,677)
      Inventory           (257,341)      581,734      (415,430)     (256,698)
      Prepaid
       expenses and
       deposits            (23,842)       98,233      (131,424)       38,466
      Accounts
       payable and
       accrued
       liabilities         418,550       (89,277)      780,895       503,577
      Deferred
       revenue              45,331       (42,521)       46,908      (222,143)
    -------------------------------------------------------------------------
                        (1,146,954)     (763,984)   (2,130,428)   (3,239,054)
    -------------------------------------------------------------------------

    Investing
      Purchase of
       fixed assets       (103,644)     (116,145)     (226,934)     (698,591)
      Purchase of
       intangible
       assets               (6,892)      (20,149)      (61,248)     (223,297)
      Acquisition
       net of cash
       acquired                  -       (75,000)            -      (793,705)
    -------------------------------------------------------------------------
                          (110,536)     (211,294)     (288,182)   (1,715,593)
    -------------------------------------------------------------------------

    Financing
      Issuance of
       common shares             -         7,428           351        21,971
    -------------------------------------------------------------------------

    Net decrease
     in cash            (1,257,490)     (967,850)   (2,418,259)   (4,932,676)
    Cash at Beginning
     of Period           5,963,536     8,092,155     7,124,305    12,056,981
    -------------------------------------------------------------------------
    Cash at End
     of Period        $  4,706,046  $  7,124,305  $  4,706,046  $  7,124,305
    -------------------------------------------------------------------------

    Supplementary
     Information
    Interest paid
     during the
     period           $     11,030  $      6,193  $     30,945  $      9,526
    Interest received
     during the
     period           $     40,571  $     64,541  $    250,498  $    241,801
    Fixed assets
     acquired through
     tenant
     inducement       $          -  $          -  $          -  $    182,910
    Tenant inducement $          -  $          -  $          -  $    132,316
    Issuance of
     additional
     common shares on
     Cognizance
     acquisition      $    170,874  $          -  $    170,874  $          -
    -------------------------------------------------------------------------
    

    %SEDAR: 00002471E




For further information:

For further information: Bruce MacInnis, CFO, Bioscrypt Inc., (905)
940-7752, bruce.macinnis@bioscrypt.com

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