Bioscrypt Inc. to Acquire 3D Facial Recognition Technology Company and Receive Substantial New Investment Capital

Toronto, ON (January 23, 2007)

Bioscrypt Inc. (TSX: BYT), a leading provider of enterprise access control technologies, today announced that it has entered into an agreement to acquire A4Vision, Inc., a leading provider of advanced identification systems using innovative three-dimensional (3D) facial imaging and recognition technology. Bioscrypt intends to add A4’s 3D facial imaging and recognition technology to its portfolio of biometric access control products. Bioscrypt will also integrate the 3D facial technology with VeriSoft, its Identity and Access Management solution, to extend the authentication factors supported for both physical and logical access control and broaden its suite of Door to Desktop® identity verification technologies.

The acquisition of A4 will position Bioscrypt as the only organization capable of offering a converged physical and logical solution that supports both finger and 3D face biometrics as authentication techniques for access control. In addition, adding A4’s award-winning technology would enable Bioscrypt to become the first company to offer off-the-shelf finished readers for both finger and 3D face biometrics for use in physical access control. This unique position will allow Bioscrypt to further establish itself as the leading vendor of access control technologies to the enterprise.

The acquisition will enhance Bioscrypt’s revenue growth opportunities by addressing additional markets. In a publication dated January 2007, the International Biometrics Group projected that the facial recognition market will represent more than US$1.4 billion or 19 percent of the US$7.4 billion total Non-AFIS market in 2012. Fingerprint matching is predicted to be 25 percent or a US$1.85 billion market in 2012 for a combined market size of more than US$3 billion in five years time.

Frost & Sullivan, an independent market analyst firm, stated in a July 2006 study that the compounded annual growth rate for facial biometric technology will be 27.5 percent and that one of the two primary markets by application for face recognition technology is physical access control/time and attendance. Bioscrypt intends to use its existing sales channel, an indirect partnership model that was instrumental in the company being recognized by Frost & Sullivan as the 2005 Application Market Penetration Leader for the world non-AFIS fingerprint physical access control/time and attendance market, to sell the 3D facial technology to this considerable market.

"The acquisition of A4 further strengthens and underscores our commitment to deliver the market-leading solution for identity-based access control," said Robert L. Williams, President and Chief Executive Officer of Bioscrypt. "Bioscrypt and A4 share a strategic view of the opportunity; in enterprise access control, further penetration of our existing positions in government and financial services markets, and our respective commitments to customer satisfaction."

A4 is the leading 3D facial imaging and recognition technology company. By focusing on developing a 3D facial system from the outset, A4 has overcome inherent limitations associated with facial recognition, such as lighting and provides far superior matching rates than traditional 2D systems. Like Bioscrypt, in addition to biometric verification, A4 has also built their system to support multiple authentication technologies including cards and PINs. Incorporated in 2001, A4 has been delivering dedicated products and solutions to organizations in government and financial services such as the US Department of Defense, the US Department of Homeland Security, Pictet bank of Switzerland, New Jersey Transit, and Denver Regional Transit District. Together, Bioscrypt and A4 will fully support all of their current customers and products and will offer a comprehensive upgrade path to a converged physical and logical access control solution.

"A4’s current customers and employees will significantly benefit from the combined resources and technologies brought to the table by both parties," said Grant Evans, Chief Executive Officer of A4. "We believe that during a time of industry consolidation, establishing a worldwide market leader and platform will accelerate the realization of a significant market for multi-factor access control and for the merged entity to be a global leader of comprehensive and broad identification solutions."

The acquisition will be completed through the merger of A4 with Bioscrypt’s wholly owned US subsidiary, with the merged company to continue as Bioscrypt, Inc. Pursuant to the merger, certain noteholders and stockholders of A4 will receive an aggregate of up to 9.0 million Bioscrypt common shares and warrants to purchase up to an additional 4.6 million Bioscrypt common shares. 

Concurrent with the completion of the merger, institutional investors associated with A4 have agreed to invest between US$6 million and US$8 million in newly issued Bioscrypt common shares and warrants to purchase Bioscrypt common shares. Following completion the acquisition and financing, new and existing A4 investors, including EuroQube SA, In-Q-Tel, Logitech, Menlo Ventures, Motorola Ventures, NTT Leasing Co. Ltd., TAKO Ventures, and Wedge International, will own, on a fully diluted basis, up to approximately 32% of the pro forma company.

Bioscrypt’s Board of Directors will be expanded, with two members from A4Vision’s Board of Directors: Grant Evans, A4’s Chief Executive Officer, and Douglas C. Carlisle, a general partner of Menlo Ventures.

The completion of the transactions are subject to required regulatory and shareholder approval, as well as the satisfaction of certain customary closing conditions.  It is anticipated that closing will occur immediately following the special meeting of shareholders of Bioscrypt relating to the transactions scheduled to be held in early March.

"With the capital infusion and the acquisition of A4 and its 3D facial technology, Bioscrypt has the balance sheet and suite of product offerings to become the de facto standard for biometric access control" said Pierre Donaldson, Chairman of Bioscrypt. "Bioscrypt has been executing on its strategy of providing Door to Desktop access control technologies to the market and we look forward continuing our accelerating momentum with these transactions."

Janney Montgomery Scott LLC advised Bioscrypt on this transaction and provided a fairness opinion to the Bioscrypt Board of Directors in support of the merger.

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.

A4Vision, Inc. (Applications for Vision) develops and licenses advanced identification systems and tracking solutions using 3D facial imaging and recognition technology. 4Vision is headquartered in California (USA) with offices in Geneva (Switzerland) and Moscow (Russia). More information is available at www.a4vision.com.

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