Bioscrypt Reports Results for the Third Quarter Ended September 30, 2007



    Revenue up 36% from same period previous year;
    highest quarterly revenue in history

    TORONTO, Nov. 12 /CNW/ - Bioscrypt Inc. (TSX: BYT), a leading provider of
identity and access management solutions, today announced its financial
results for the third quarter ended September 30, 2007.
    Bioscrypt's third quarter revenue of US$5.2 million increased by 36% from
the US$3.8 million reported during the same period in the previous year.
Product gross margin for the quarter was 43%, two percentage points greater
than the 41% in the prior quarter and two percent greater than the same
quarter in 2006. Overall gross margins were 47%.
    Loss before interest, tax, foreign exchange, depreciation and
amortization ("EBITDA")(1) for the three months ended September 30, 2007 of
US$2.3 million or $0.04 per share is approximately US$1.0 million greater than
the same period the previous year. The third quarter net loss was
US$3.5 million or $0.04 per share versus a net loss of US$1.8 million in 2006,
or $0.03 per share.
    Bioscrypt revenue for the nine months ended September 30, 2007 of
US$13.7 million increased by 8% from the US$12.6 million reported during the
same period of the previous year. Product gross margin for the nine months was
43%, one percentage point less than the 44% in the prior year. Overall gross
margins were 48% for the nine months ended September 30, 2007, a one
percentage point increase over the same period in the prior year.
    EBITDA loss for the nine months ended September 30, 2007 of
US$7.0 million or $0.09 per share is approximately US$4.1 million greater than
the same period the previous year. The net loss for the nine month period was
US$10.1 million or $0.14 per share versus a net loss of US$4.5 million in
2006, or $0.08 per share.
    "The return to revenue growth in the third quarter of 2007 has given us
early indications the transformation of Bioscrypt is taking hold" said Robert
M. Douglas, president and CEO of Bioscrypt Inc. "Having now had the
opportunity to properly review the operations of the organization, the new
management team and I are refocusing the Company to better leverage our core
capabilities and execute specific initiatives to materially reduce our
expenses. Given we are the No. 1 market leader in the growing biometric
physical access control market coupled with our relentless focus on reducing
costs, we are confident we will drive tangible value back to the
organization."
    "While the third quarter is not reflective of ordinary course of cash
utilization, we have put in place a program for expense containment," said
Stephen McDonald, CFO of Bioscrypt Inc. "Our cash position is such that we can
continue to fund operations and drive revenue growth, however, we do recognize
the need for a capital infusion and are actively pursuing various financing
options."
    Product sales represented 91% of total revenue or US$4.7 million on
approximately 14,575 units sold. Sales of the MV Series units represented
approximately 68% of total unit shipments and 39% of product revenue; sales of
Veri-Series(TM) products represented approximately 31% of unit shipments and
57% of product revenue and there were 41 3D Vision face readers sold
representing approximately 4% of product revenue. Licensing, royalties and
services represented 9% of total revenue.
    The total number of units the Company has sold to date is now beyond
245,000. Currently, the Company maintains the leading 9% share in the
biometric physical access control market.

    
    Q3 Corporate Announcements
    --------------------------
    -  Bioscrypt announced that Mark Duato Senior Vice President, Americas
       Sales to further cement Bioscrypt's position as the market leader in
       identity and access management solutions marketplace.
    -  Bioscrypt's VeriSoft access manager received the Best Buy award in SC
       Magazine's Biometrics Tools 2007 review and its V-Station fingerprint
       reader and VisionAccess 3D Face Reader also received five out of a
       possible five stars in all categories.

    Q3 New Client Announcements
    ---------------------------
    -  A leading multinational biopharmaceutical company chose Bioscrypt's 3D
       Facial recognition solution to secure its new international
       administration and production centers.
    -  Mexico City International Airport uses Bioscrypt's Identity and Access
       Management Solution in new state-of-the-art terminal.

    Q3 New Product Developments
    ---------------------------
    -  Bioscrypt introduced a new biometric reader, the PIV-Station, to
       address the evolving needs of the U.S. federal market.
    -  Bioscrypt's V-Station MIFARE was placed on the Transportation Security
       Administration's Qualified Products List.
    


    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 1-866-334-4934 or at www.vcall.com/IC/CEPage.asp?ID=121726. If you are
unable to attend the original call, you may subsequently listen to the
playback at 1-866-245-6755, passcode 933747, for one week after the call or by
going to www.vcall.com/IC/CEPage.asp?ID=121726 for one year after the call.

    About Bioscrypt Inc.

    Bioscrypt is an enterprise access control solution provider, enabling the
unification of physical and logical access with its Door to Desktop(R)
products. Bioscrypt's hardware and software solutions deliver strong
authentication processes to facilities, equipment, IT networks and computer
applications and allow organizations to administer unified identities across
the enterprise.
    Building on its proven expertise in biometric technology and its unique
multi-factor authentication platform, Bioscrypt integrates all major secure
authentication standards, transforming how organizations are bridging the gap
between physical and logical access to create secure working environments.
More information is available at www.bioscrypt.com.
    -------------------------------------------------------------------------
    1 - EBITDA is defined by the company 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.

    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 and Door to Desktop(R) are registered trademarks and
    Veri-Series and VeriSoft are trademarks of Bioscrypt Inc. All other
    product and company names mentioned are the property of their respective
    owners and are mentioned for identification purposes only.


    
    BIOSCRYPT INC.
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)                                   September 30,  December 31,
    (in U.S. dollars)                                     2007          2006
    -------------------------------------------------------------------------

    ASSETS
    Current Assets
      Cash                                        $  2,850,235  $  4,706,046
      Restricted cash                                   46,370             -
      Accounts receivable                            4,036,379     3,890,855
      Inventory                                      2,035,387     2,548,263
      Prepaid expenses and deposits                    617,589       363,487
    -------------------------------------------------------------------------
                                                     9,585,960    11,508,651

    Fixed assets                                     1,088,365       987,132
    Intangible assets                                9,690,837     5,133,274
    Goodwill                                         6,978,742     6,978,742
    -------------------------------------------------------------------------
                                                  $ 27,343,904  $ 24,607,799
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities
      Accounts payable and accrued liabilities    $  3,174,907  $  3,188,077
      Deferred revenue                                 130,104        50,584
      Current portion of deferred tenant
       inducement                                       57,312        57,312
    -------------------------------------------------------------------------
                                                     3,362,323     3,295,973

    Deferred tenant inducement                         124,177       167,161
    -------------------------------------------------------------------------
                                                     3,486,500     3,463,134
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital                                   76,714,203    66,125,742
    Warrants                                         1,475,622        59,420
    Contributed surplus                              3,794,926     2,990,209
    Deficit                                        (58,127,347)  (48,030,706)
    -------------------------------------------------------------------------
                                                    23,857,404    21,144,665
    -------------------------------------------------------------------------
                                                  $ 27,343,904  $ 24,607,799
    -------------------------------------------------------------------------



    BIOSCRYPT INC.
    CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND DEFICIT
    (Unaudited)
    (in U.S. dollars)        Three months ended           Nine months ended
                                September 30,               September 30,
                      --------------------------- ---------------------------
                              2007          2006          2007          2006
    --------------------------------------------- ---------------------------

    Revenue
      Product sales   $  4,705,322  $  3,700,530  $ 12,257,091  $ 11,960,214
      License,
       royalties and
       services            477,255       115,888     1,420,458       673,310
    --------------------------------------------- ---------------------------
                         5,182,577     3,816,418    13,677,549    12,633,524
    --------------------------------------------- ---------------------------

    Cost of Revenue
      Product sales      2,702,585     2,185,815     7,018,140     6,700,038
      License,
       royalties and
       services             28,679        22,226        82,976        52,605
    --------------------------------------------- ---------------------------
                         2,731,264     2,208,041     7,101,116     6,752,643
    --------------------------------------------- ---------------------------

    Gross Margin         2,451,313     1,608,377     6,576,433     5,880,881
    --------------------------------------------- ---------------------------

    Expenses
      Research and
       development       1,748,730     1,067,143     4,896,248     3,027,065
      Selling,
       general and
       administration    2,242,224     1,646,973     6,544,508     5,193,702
      Stock compensation   202,380       222,383       704,841       591,590
      Restructuring        549,298             -     1,464,831             -
    --------------------------------------------- ---------------------------
                         4,742,632     2,936,499    13,610,428     8,812,357
    --------------------------------------------- ---------------------------

    Loss Before
     Amortization
     and Other          (2,291,319)   (1,328,122)   (7,033,995)   (2,931,476)
    --------------------------------------------- ---------------------------

    Amortization
      Fixed assets         137,240        83,265       382,910       254,744
      Intangible assets    974,640       502,636     2,606,813     1,502,955
    --------------------------------------------- ---------------------------
                         1,111,880       585,901     2,989,723     1,757,699
    --------------------------------------------- ---------------------------

    Loss Before Other   (3,403,199)   (1,914,023)  (10,023,718)   (4,689,175)
    --------------------------------------------- ---------------------------

    Other
      Interest income       23,497        77,206       133,261       209,927
      Interest expense      (3,012)       (2,397)       (6,020)      (19,915)
      Foreign
       exchange loss      (112,128)       (7,879)     (200,164)       (9,698)
    --------------------------------------------- ---------------------------
                           (91,643)       66,930       (72,923)      180,314
    --------------------------------------------- ---------------------------

    Net Loss and
     Comprehensive
     Income             (3,494,842)   (1,847,093)  (10,096,641)   (4,508,861)

    Deficit Beginning
     of Period         (54,632,505)  (45,135,686)  (48,030,706)  (42,473,918)
    --------------------------------------------- ---------------------------
    Deficit End
     of Period        $(58,127,347) $(46,982,779) $(58,127,347) $(46,982,779)
    --------------------------------------------- ---------------------------
    --------------------------------------------- ---------------------------

    Loss Per Share
    Basic and diluted $      (0.04) $      (0.03) $      (0.14) $      (0.08)

    Basic and diluted
     weighted average
     number of shares   80,211,781    58,868,341    74,500,151    58,903,630



    BIOSCRYPT INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
    (in U.S. dollars)        Three months ended           Nine months ended
                                September 30,               September 30,
                      --------------------------- ---------------------------
                              2007          2006          2007          2006
    -------------------------------------------------------------------------

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

    Operating
    Net loss          $ (3,494,842) $ (1,847,093) $(10,096,641) $ (4,508,861)
    Items not
     affecting cash:
    Amortization:
      Fixed assets         137,240        83,265       382,910       254,744
      Intangible assets    974,640       502,636     2,606,813     1,502,955
      Deferred tenant
       inducement          (10,965)      (14,328)      (42,984)      (42,984)
    Non-cash draw-downs
     included in
     restructuring          26,895             -       112,444             -
    Stock compensation     202,380       222,383       704,841       591,590
    Loss on disposal
     of fixed assets             -          (749)            -         7,145
    -------------------------------------------------------------------------
                        (2,164,652)   (1,053,886)   (6,332,617)   (2,195,411)

    Changes in non-cash
     operating working
     capital items:
      Accounts
       receivable         (307,052)      587,293       279,592     1,113,686
      Inventory          1,120,070      (448,772)    1,028,893      (158,089)
      Prepaid expenses
       and deposits         69,008         1,281        30,469      (107,582)
      Accounts payable
       and accrued
       liabilities        (188,696)      398,897    (2,182,533)      362,345
      Deferred revenue      28,482         5,253        17,539         1,577
    -------------------------------------------------------------------------
                        (1,442,840)     (509,934)   (7,158,657)     (983,474)
    -------------------------------------------------------------------------

    Investing
      Increase in
       restricted cash      (2,154)            -        (2,154)            -
      Purchase of
       fixed assets        (62,621)      (53,594)     (168,260)     (123,290)
      Purchase of
       intangible assets         -       (19,680)       (9,529)      (54,356)
      Acquisition net
       of cash acquired    (77,184)            -      (928,456)            -
    -------------------------------------------------------------------------
                          (141,959)      (73,274)   (1,108,399)     (177,646)
    -------------------------------------------------------------------------

    Financing
      Issuance of
       common shares             -           351     6,481,826           351
      Issuance cost
       of common shares          -             -       (70,581)            -
    -------------------------------------------------------------------------
                                 -           351     6,411,245           351
    -------------------------------------------------------------------------

    Net decrease
     in cash            (1,584,799)     (582,857)   (1,855,811)   (1,160,769)
    Cash at Beginning
     of Period           4,435,034     6,546,393     4,706,046     7,124,305
    -------------------------------------------------------------------------
    Cash at End
     of Period        $  2,850,235  $  5,963,536  $  2,850,235  $  5,963,536
    -------------------------------------------------------------------------

    Supplementary
     Information
    Interest paid
     during the
     period           $      2,958  $      2,397  $      5,966  $     19,915
    Interest
     received
     during the
     period           $     19,053  $     77,206  $    128,817  $    209,927

    

    %SEDAR: 00002471E




For further information:

For further information: Laura Slater, High Road Communications, (613)
688-1192, lslater@highroad.com; Stephen McDonald, Bioscrypt Inc., (905)
940-7774, stephen.mcdonald@bioscrypt.com

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BIOSCRYPT INC.

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