Bioscrypt Reports Record Revenues for the Second Quarter 2006

Toronto, ON -- August 3, 2006

Bioscrypt Reports Record Revenues for the Second Quarter 2006
Revenue increases 37 percent from same period previous year with continued growth in licensing revenues and reduction in cash utilization

Toronto , ON (August 3, 2006) - Bioscrypt Inc. (TSX: BYT), a leading provider of identity verification technology, today announced its financial results for the second quarter ended June 30, 2006.

Bioscrypt’s second quarter revenue of US$4.80 million increased 37% from the US$3.51 million reported during the same period of the previous year. Product gross margin for the quarter was 44%, four percentage points higher than the 40% achieved in the same quarter of 2005 and three percentage points narrower than the 47% reported in the prior quarter. Overall gross margins were 48%, again higher than the 43% reported in the year ago period.

“We are pleased to be reporting on another quarter where our results came in ahead of the expectations we had put forward to our stakeholders from both a revenue and cash flow perspective. Having executed a strong first half we remain confident in our ability to deliver growth of 20-30 percent for the year as we had previously projected,” said Robert L. Williams, president and CEO of Bioscrypt Inc. “As a vendor selling in to an emerging market we believe that success goes beyond the financial results we report and therefore consider the second quarter to be among the strongest in the history of the organization when considering the increased demand we are seeing for our products and the numerous opportunities that are being presented to us.”

“We are particularly encouraged by the very strong advances made with respect to our software licensing initiatives,” added Williams. “In the quarter we sold the enterprise version of VeriSoft Access Manager to a significant blue chip customer and integrated the application into the solutions of a leading access control company which will drive to future sales of our Door to Desktop® solution. With these successes we have demonstrated that our three pronged software sales strategy is firmly in place having won enterprise sales, Door to Desktop integration and partnerships with PC manufacturers who are shipping our product on millions of computers. Our move to augment our value proposition and diversify our revenue stream with high margin software sales is moving forward with great momentum and we look forward to capitalizing on the traction we are gaining.”

Expenses before amortization, stock compensation expense and other for the quarter were US$2.86 million compared to US$2.64 million in the previous quarter. The increase in expenses is due primarily to additional costs associated with the introduction of ROHS compliant hardware for the EU market.

Bioscrypt’s loss before interest, tax, foreign exchange, depreciation and amortization (“EBITDA”) 1 of US$0.77 million or $0.01 per share in the second quarter is a difference of US$0.39 million relative to an EBITDA loss of US$1.17 million or $0.02 per share for the same period in 2005.

The second quarter net loss was US$1.29 million or $0.02 per share versus a net loss of US$1.97 million in 2005, or $0.03 per share.

Product sales represented 93% of total sales or US$4.44 million on 13,620 units sold representing an increase of 33% from the 10,245 units sold in the second quarter a year ago. Sales of the MV-Series products represented approximately 64% of total shipments valued at US$1.67 million while sales of Veri-Series™ products represented approximately 36% of shipments valued at US$2.77 million. The total number of units the company has sold to date is now beyond 175,000. Licensing of software represented 7% of total sales. Bioscrypt revenue for the six months ended June 30, 2005 of US$8.82 million increased by 26% from the US$7.02 million reported during the same period of the previous year. EBITDA loss for the six months ended June 30, 2006 of US$1.6 million or $0.03 per share is US$0.73 million less than the loss of US$2.34 million reported during the same period of the previous year.

Net loss for the six months ended June 30, 2006 is US$2.66 million or $0.05 per share, compared to US$3.24 million or $0.06 cents per share reported during the same period of the previous year .

“We are delighted by the strength of this year’s second quarter, a period that represents four consecutive quarters of meeting or exceeding expectations,” said Bruce MacInnis, CFO of Bioscrypt Inc. “Having utilized approximately US$575,000 of cash to strengthen the organization in the first half of the year we are in line with our objectives and remain confident in our ability to generate positive cash flow by the end of the fiscal year. With more than US$6.5 million in the bank and positive cash flow on the near horizon our financial position is very strong.”

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/IC/CEPage.asp?ID=107028 .

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 209134, for one week after the call or by going to http://www.vcall.com/IC/CEPage.asp?ID=107028 .

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.

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