Bioscrypt Announcement Regarding Restatement of Financial Statements for Revenue Recognition

Toronto, ON (January 29, 2008) – Bioscrypt Inc. (TSX: BYT), a leading provider of identity and access management solutions, today announced that it will restate certain of its financial statements. This restatement does not impact the cash flow or cash position of the Company. 

In connection with the preparation of a management information circular for a meeting of the Company’s securityholders called to approve the plan of arrangement pursuant to which L-1 Identity Solutions, Inc. will acquire all of the Company’s outstanding shares, management reviewed the historical financial statements of the Company for the purposes of reconciling such statements with Accounting Principles Generally Accepted in the United States of America (U.S. GAAP). In the course of such review and reconciliation, management identified certain otherwise bona fide transactions in the historical financial statements of the Company with respect to which revenues should have been deferred in accordance with the relevant standards. These transactions involved Veri-Series product sales  for which the Company provided unspecified firmware upgrades and enhancements on a when and if available basis.  Management believes that revenues on these transactions are required to be deferred and recognized over a four year period [to conform to the relevant standards].  The fiscal periods affected are years 2001 through 2007 and interim periods within such years. Previously issued financial statements for such years should not be relied upon.  Financial statements for all affected periods will be restated and refiled. 

The estimated net impact of the restatement on reported revenue for the nine months ended September 30, 2007 and fiscal 2006 is anticipated to be a reduction of approximately $1.7 million and $3.3 million, respectively.  Reported deferred revenue is also estimated to increase by $12.3 million and $16.7 million at September 30, 2007 and fiscal 2006, respectively.  The estimated net impact on reported net loss for the nine months ended September 30, 2007 and fiscal 2006 is estimated to be an increase of $0.9 million and $2.1 million, respectively. 

Management and the board of directors believe, in consultation with Deloitte & Touche LLP, the Company’s external auditors, that Bioscrypt should initially restate and refile its audited annual and unaudited quarterly consolidated financial statements as of and for the fiscal years ended December 31, 2005 and 2006, and its unaudited consolidated financial statements for each of the quarters ended March 31, June 30, and September 30, 2006 and 2007.  The cumulative impact on years before 2005 will be reflected in an adjustment to opening deficit as of January 1, 2005.

The Company takes its obligation to provide accurate financial information seriously and its internal controls remain strong overall.
 
It is anticipated that the balance of consolidated financial statements will be filed with the securities regulatory authority in each province of Canada and filed on SEDAR as soon as practicable.  The special meeting of Bioscrypt securityholders called for approval of the arrangement with L-1 Identity Solutions is expected to be held on February 29th, 2008.

About Bioscrypt Inc.
Bioscrypt is an enterprise access control solution provider, enabling the unification of physical and logical access with its Door to Desktop® products. Bioscrypt’s hardware and software solutions deliver strong authentication processes to facilities, equipment, IT networks and computer applications and allow organizations to administer unified identities across the enterprise.

Building on its proven expertise in biometric technology and its unique multi-factor authentication platform, Bioscrypt integrates all major secure authentication standards, transforming how organizations are bridging the gap between physical and logical access to create secure working environments. More information is available at http://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 and Door to Desktop® are registered trademarks and Veri-Series and VeriSoft are trademarks of Bioscrypt Inc. All other product and company names mentioned are the property of their respective owners and are mentioned for identification purposes only.

For more information, contact:
Stephen McDonald
Bioscrypt Inc.
905-940-7774
stephen.mcdonald@bioscrypt.com