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Bioscrypt Reports Record Results for the Fourth Quarter and Year Ended December 31, 2005

Toronto, ON -- March 1, 2006

Bioscrypt Reports Record Results for the Fourth Quarter and Year Ended December 31, 2005
Strong Financial Performance Continues with 26% Revenue Increase
Toronto , ON (March 1, 2006) - Bioscrypt Inc. (TSX: BYT), a leading provider of identity verification technology, today announced its financial results for the fourth quarter and year ended December 31, 2005.

Bioscrypt’s fourth quarter revenue of US$4.54 million increased by 15% from the US$3.94 million reported during the same period in the previous year. Due primarily to strong growth in high margin software revenue, overall gross margins were 46%, a 3 percent increase over the same period a year ago. Gross margin for the combined Veri-Series and MV Series products was 41%, approximately two percentage points lower than both the prior quarter, and the same quarter in 2004. This decrease is a one-time event due to a significant sale in the quarter of a discontinued product line at substantially reduced prices and an increase to the inventory obsolescence reserve. Without these adjustments, product margins would have been approximately 45%.

“We are pleased to see that the licensing of both our VeriSoft Credential Manager to PC manufacturers, and our VeriSoft Access Manager to a number of organizations, has contributed almost 10 percent of our revenue for the quarter,” said Robert L. Williams, president and CEO of Bioscrypt Inc. “We are also encouraged by the progress we continue to make in terms of developing technology and establishing standards for government programs, which we believe will help accelerate our position in 2006.”

Expenses before amortization and other for the quarter were US$2.71 million compared to US$2.12 million in the previous quarter.

Bioscrypt’s loss before interest, tax, foreign exchange, depreciation and amortization (“EBITDA”) 1 of US$0.63 million or $0.01 per share in the fourth quarter is a difference of US$0.2 million relative to an EBITDA loss of US$0.42 million or $0.00 per share for the same period in 2004.

The fourth quarter net loss was US$1.14 million or $0.02 per share versus a net loss of US$0.07 million in 2004, or $0.00 per share.

Product sales represented 91% of total sales or US$4.13 million on 14,200 units sold, an increase of 32% from the 10,757 units sold in the fourth quarter a year ago. Sales of the embedded solution represented approximately 72% of total shipments valued at US$1.86 million while sales of Veri-Series™ products represented approximately 28% of shipments valued at US$2.26 million. The total number of units the company has sold to date is now beyond 150,000. Licensing of software represented 9% of total sales.

Bioscrypt’s revenue for the year ended December 31, 2005 of US$15.69 million increased by 26% from the US$12.45 million reported during the same period of the previous year. EBITDA loss for the year ended December 31, 2005 of US$3.51 million or $0.06 per share is greater than the loss of US$2.53 million reported during the same period of the previous year.

“At US$15.69 million, a 26 percent increase over last year’s sales, we have delivered revenue within the guidance we had put forward earlier in the year,” said Bruce MacInnis, CFO of Bioscrypt Inc. “In spite of our strong sales performance, this level is still below our original goal. Continued expansion of the top line is a goal for 2006 but will be measured by the assurance of generating positive cash flow.”

Net loss for the year ended December 31, 2005 was US$5.36 million or $0.09 per share, compared to US$2.37 million or $0.05 per share reported during the same period of the previous year.

 Q4 Corporate Highlights

  • Bioscrypt ranked North America’s 53rd fastest growing company in the 2005 Deloitte Technology Fast 500.
  • Bioscrypt teamed with HID and OMNIKEY to develop a Door to Desktop® Card Solution
    with VeriSoft Access Manager as the platform to enable HID iCLASS® and Prox cards, in combination with OMNIKEY CardMan® readers, to be the authentication tool for access to facilities and computers.

Q4 Product Announcements

Bioscrypt is committed to ensuring its products are compliant with industry standards.

  • Bioscrypt introduced VeriSoft Secure Drive, a software application that addresses the need for increased convenience and security for access to information technology. This technology is designed to be installed and distributed on USB flash drive devices for users to store information, applications and credentials on a removable and secure portable device.
  • Bioscrypt continued to evolve its MV Series line of embedded solutions with the introduction of the 1210 and 1510 modules.

Select 2005 Corporate Highlights

  • Bioscrypt ranked Canada’s fifth fastest growing company in the 2005 Deloitte Canadian Technology Fast 50 Program.
  • Bioscrypt Received the 2005 Frost & Sullivan Application Market Penetration Leadership Award.
  • Axalto, the world’s leading provider of microprocessor cards to provide a smart card-based solution for physical and logical biometric access control. The new solution integrates Axalto’s Cyberflex Access smart cards with Bioscrypt’s VeriSoft Access Manager.
  • Datastrip and Synercard to develop a card solution for Federal Information Processing Standard (FIPS) 201 and other Federal and Commercial Systems.
  • Bioscrypt teamed with Datastrip to enable mobile identity verification for corporate access control, government and other ID systems. The combined Bioscrypt/Datastrip solution can support the verification of a wide variety of identity documents ranging from employee ID badges to cards used for federal security initiatives such as US-Visit, Transportation Worker ID Card (TWIC) and Canadian Air Transport Security Authority (CATSA) programs.
  • Borden Rosiak was appointed to the Board of Directors and named Chair of the Audit Committee. Mr. Rosiak has served in senior financial positions with major companies for twenty-five years. Previously Chief Financial Officer at Crystallex International Corporation, Mr. Rosiak has held numerous other Chief Financial Officer positions, including Dorset Partners, a private investment firm, and Newcourt Credit Group, a C$25 billion global financial services company.
  • On March 3, 2005, Bioscrypt completed the acquisition of Cognizance to further the Door to Desktop® strategy, as Cognizance provided the required desktop credential management software application. This acquisition also solidifies the software licensing revenue stream.

Select 2005 New Client Announcements

  • HP to sell and support authentication solutions as Bioscrypt delivers an enterprise management solution for HP Credential Manager for Protect Tools.
  • A major U.S. international airport purchased 500 V-Station readers for restricted area access control.
  • The Belize Immigration and Nationality Department and the International Organisation for Migration selected Bioscrypt finger scan technology for use with Belizean Machine-Readable Passport System.
  • Niagara Falls Bridge Commission selected the V-Prox for biometric access control to help ensure safe movement of people and goods in both directions across the border of United States and Canada.
  • DDS chose Bioscrypt hardware and software for access control solutions for integration with their Amadeus 5 access control software.
  • The Arab National Bank in the Kingdom of Saudi Arabia selected the V-Prox finger scan reader.
  • Bioscrypt’s MV 1200 Finger Scan Module was selected for clinician identification at Inova Fair Oaks Hospital as a component of eko system’s Frontiers Perioperative Clinical Information Management System.

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 877-407-8035 or at www.vcall.com/IC/CEPage.asp?ID=101406.

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 number 192894, for one week after the call or by going to www.vcall.com/IC/CEPage.asp?ID=101406.

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.

Click here to view Financial Statement

About Bioscrypt Inc.

Bioscrypt Inc. is a leader in identity verification technologies, providing solutions for converged physical and logical access, enabling unified authentication from Door to Desktop™.  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.

For more information, contact:

Bruce MacInnis , CFO
Bioscrypt Inc.
905-940-7752