Bioscrypt Reports Record Financial Results for the Third Quarter Ended September 30, 2005

Toronto, ON -- October 27, 2005

Bioscrypt Reports Record Financial Results for the Third Quarter Ended September 30, 2005
Increased Sales of VeriSoft Access Manager Licenses Supports 31 Percent Revenue Growth Year-to-Date

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

Bioscrypt’s third quarter revenue of US$4.1 million increased by 25% from the US$3.3 million reported during the same period of the previous year. Gross margin for the combined Veri-Series and MV Series products for the quarter was 42.4%, which is in line with the 42.6% reported in the prior quarter and 3 percentage points narrower than the 45% for the same quarter in 2004. Overall gross margins were 47.2%, approximately 3 percentage points narrower than the year ago period.

“The area of our business that demonstrated the greatest progress in recent months is clearly our VeriSoft Access Manager solution. In working with HP, and others, we have sold more than 1 million licenses in the first seven months of its availability, thereby seeding the market with the desktop version of this solution. In the recently completed quarter we made our first sale of the enterprise version, at a price in line with application software, and see demand for this offering continuing to build,” said Robert Williams, president and CEO of Bioscrypt Inc. “Going in to 2005 Bioscrypt was focused on delivering strong growth in all our business units. With a 32 percent increase in MV Series sales, a 32 percent increase in Veri-Series sales and a 25 percent increase in licensing sales over the first nine months of the year, we are pleased to say we are executing on our plan.”

Bioscrypt reported an earnings before interest, tax, foreign exchange, depreciation and amortization (“EBITDA”)1 loss of US$0.54 million or $0.01 cent per share in the third quarter, compared to an EBITDA loss of US$0.44 million or US$0.00 cents per share for the same period in 2004. Bioscrypt remains steadfastly focused on bringing advanced technologies to market. With the acquisition of Cognizance in the current year and the introduction of VeriSoft Access Manager, our investment in research and development was greater than the same period a year ago and is the reason for the difference in EBITDA results.

The third quarter net loss was US$0.98 million or 2 cents per share versus net earnings of US$0.10 million in 2004, or US$0.00 cents per share.

Revenue for the quarter is the result of unit sales of 12,209, an increase of 33% from the 9,161 in the third quarter a year ago. Sales of the MV Series units represented approximately 72% of total shipments valued at US$1.74 million, while sales of Veri-Series™ products represented approximately 28% valued at US$2.05 million. Licensing of software made up the remaining US$0.34 million.

The total number of units the company has sold to date is now beyond 135,000.

Bioscrypt revenue for the nine months ended September 30, 2005 of US$11.1 million increased by 31% from the US$8.5 million reported during the same period of the previous year. EBITDA loss for the nine months ended September 30, 2005 of US$2.88 million or US$0.05 per share is 36% greater than the US$2.11 million loss reported during the same period of the previous year.

“In reporting year-to-date revenue greater than US$11 million, an increase of 31% over the same period last year, we are extremely well positioned to deliver on the annual guidance previously provided,” said Bruce MacInnis, CFO of Bioscrypt Inc. “Based on our anticipated top line revenue growth, we are confident we will report positive operating results excluding non-cash stock compensation in the fourth quarter.”

Net loss for the nine months ended September 30, 2005 was US$4.21 million or US$0.07 cents per share, compared to US$2.3 million or US$0.04 cents per share reported during the same period of the previous year.

Q3 Awards and Recognition

Bioscrypt is recognized not only as a leader in its field but also among its peer group of Canadian technology companies:

• 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.

Q3 Corporate Highlights

To further expand the market potential of its offerings, Bioscrypt has formed partnerships with world leading organizations. In the third quarter, Bioscrypt entered in to agreements with:  

• HP to sell and support authentication solutions as Bioscrypt delivers an enterprise management solution for HP Credential Manager for Protect Tools.

• 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.

Q3 New Client Announcements

In leveraging its extensive sales channel Bioscrypt reported record revenue for the quarter. New clients disclosed in the quarter are:

• Niagara Falls Bridge Commission who 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.

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.investorcalendar.com/IC/CEPage.asp?ID=96120 .

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 173402, for one week after the call or by going to www.investorcalendar.com/IC/CEPage.asp?ID=96120

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.

For more information, contact:
Bruce MacInnis, CFO
Bioscrypt Inc.
905-940-7752

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., Bioscrypt and V-Smart, 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

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