Bioscrypt Reports Results for the First Quarter Ended March 31, 2005

Toronto, ON -- April 27, 2005

Bioscrypt Reports Results for the First Quarter Ended March 31, 2005
Strong Growth Continues with 50% Revenue Increase

Toronto , ON (April 27, 2005) - Bioscrypt Inc. (TSX: BYT), a leading provider of identity verification technology, today announced its financial results for the first quarter ended March 31, 2005.

Bioscrypt’s first quarter revenue of US$3.5 million increased 50% from the US$2.34 million reported during the same period in the previous year. Product gross margin for the quarter was 42.4%, slightly lower than 43% in the prior quarter and the same quarter in 2004. Overall gross margins were 44%, in line with the year ago period.

“Our strong first quarter sales carry forward the momentum of the second half of 2004 and reflect the improving strength of the biometric industry and our ability to leverage our position within it. With these results we have reached a new benchmark in that for the first time in our history first quarter revenue is greater than our third quarter prior year results. We believe this indicates a new level of maturity of the commercial biometrics industry, a market we are confident will show continuous sequential growth in time,” said Robert L. Williams, president and CEO of Bioscrypt Inc. “Further, we remain confident that our guidance of between 40 and 50 percent revenue growth for the year will be attained.”

The financial results include the operations of Cognizance Corporation from March 3, 2005, the date upon which Bioscrypt acquired the company. In addition to the licensing revenue recognized in the quarter, a further US$0.15 million of deferred licensing revenue was generated. This is a very early indication of future revenue from this business.

Expenses before amortization, stock compensation expense and other for the quarter were US$2.46 million compared to US$1.79 million in the previous quarter. This increase reflects higher headcount as well as the incurrence of several non-recurring charges in the quarter and integration costs associated with the Cognizance acquisition.

Bioscrypt’s loss before interest, tax, foreign exchange, depreciation and amortization (“EBITDA”) 1 of US$1.12 million or $0.02 per share in the first quarter is a difference of US$0.29 million relative to an EBITDA loss of US$0.83 million or $0.01 per share for the same period in 2004.

The first quarter net loss was US$1.22 million or $0.02 per share versus a net loss of US$1.32 million in 2004, or $0.03 per share.

“Expenses in the quarter were higher than initially planned due to costs related to our acquisition of Cognizance and certain development costs associated with the completion of our VeriSoft offering,” said Bruce MacInnis, CFO of Bioscrypt Inc. “We anticipate a reduction in expenses relative to these non-recurring items, however, we believe our expenses will remain in the US$2.3 to US$2.5 million range per quarter with the inclusion of Cognizance expenses for the remaining three quarters of 2005.”

Product sales represented 98% of total sales or US$3.43 million on 10,041 units sold, an increase of 74% from the 5,778 units sold in the first quarter a year ago. Sales of the embedded solution represented approximately 66% of total shipments valued at US$1.43 million while sales of Veri-Series™ products represented approximately 34% of shipments valued at US$2.00 million. The total number of units the company has sold to date is now beyond 115,000. Licensing of software represented 2% of total sales.

 

Q1 Corporate Highlights

 

Bioscrypt continues to make strategic moves to address emerging markets:

 

  • 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.

 

Q1 New Client Announcements

 

As with every quarter, Bioscrypt’s revenue was generated by multiple sales through our team of more than 140 partners. Of note in the quarter were the following initiatives:

 

  • 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 1-877-407-8035 or at http://www.vcall.com/CEPage.asp?ID=91503 .

 

If you are unable to attend the original call, you may subsequently listen to the playback at 1-877-660-6853, account number 1628, conference number 99856, for one week after the call or by going to http://www.vcall.com/CEPage.asp?ID=91503.

 

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.

For more information, contact:

Bruce MacInnis, CFO
Bioscrypt Inc.
905-624-7709

About Bioscrypt Inc.

Bioscrypt Inc. is a leading provider of identity verification technology. The Company's solutions combine the convenience of touch with the high security of fingerprint-based biometrics for simple and secure access to facilities, equipment and information. Using the "bioscrypt on board™" brand, the Company offers packaged products, OEM components and software licensing to leading security solution manufacturers and integrators worldwide for physical, wireless and network security applications. Among the many leading edge companies and partners using Bioscrypt technology are the U.S. Army, NASA, American Express, the New York Police Department, Kronos, NATO, Continental Airlines, Intel, Atmel, HID Corporation, Honeywell and Northern Computers. Bioscrypt's patented technology is interoperable with leading fingerprint sensors and is both platform and operating system independent. Bioscrypt is traded on the Toronto Stock Exchange under the symbol BYT. For more information, visit the Bioscrypt Web site 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:

Matthew Bogart
Bioscrypt Inc.
905-624-7717