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Microcap.com December 31, 2006

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All the best to you and your families. May you have a healthy and prosperous 2007.


Triple Digit Gains to Close off 2006
We were fortunate to finish the year off with strong gains on two top picks that have been featured several times to our readers over the past few months, plus a 200% gain on our blog pick a couple weeks ago. We're also featuring Bioscrypt ($0.60) this week.

1) Sabina Silver (SBB/TSX $2.19)
www.sabinasilver.com

First featured October 19th near $1.20, the stock has now gained 80%. We will continue to follow them in Q1 as the underlying commodity value is worth a lot more than this and Silver Wheaton's decision to invest $12 million is a strong endorsement of the economic viability of their project in northern Canada. There is an obvious large iscount being applied to this property because of its remoteness, but its nice to see others recognizing the value we saw back in October. Just remember it is important to take money off the table in stages with microcaps.

2) Bioniche (BNC $1.50)
www.bioniche.com

Featured late September mid $0.60's and then again mid November while trading in that same price range, Bioniche has now gained over 100%. Over Christmas they received received authorization from the Canadian Food Inspection Agency to distribute its E. coli O157:H7 cattle vaccine to Canadian veterinarians under special permit - equates to what is referred to as a “conditional license” in the U.S.

This is the first vaccine technology for control of E. coli O157:H7 to be authorized for field use "globally". More data is required to get full blown approval which should hopefully come in early 2007, but regardless this was huge news for Bioniche and one of the key developments we have been speculating on. Although the stock has done exceptionally well for us, we're waiting to see if similar approval comes from the U.S. government in Q1. On top of this, their late stage bladder cancer trials could provide another big kick in 2007 if they are as successful as everyone hopes.

3) Railpower (P:TSX $1.51) - Blog Pick Gains 200% in 10 days

Just before Christmas I posted brief information on Railpower under the Microcap Collective section on our new Stockhouse Blog. The stock at the time was $0.60 and hit $1.88 last week on positive approval from the EPA in the states.

I'm mentioning it this week as a reminder to check our blog occasionally. Contributions from others has been slow so I threw in my own pick but the intention of this blog is to allow our readers to share their own research, rumours, etc. Monday to Thursday evening I post a summary of the most noteable Cdn microcap news for the day but in 2007 I'm hoping people see more benefit from other investors.



Bioscrypt (BYT/TSX $0.60)
www.bioscrypt.com

2006 Revenue Approx. $15 million
Losses of approx. $1 to $1.5 million per quarter
Approx. $6 million in the bank
Shares Outstanding: 60 million

I hope I am not wrong here but I still think 2007 is going to be a big year for biometrics and industry leaders like Bioscrypt. I've presented BYT already, but its worth featuring again this week.

Mid December Bioscrypt started an aggresive run to $0.60 with no news. I believe this was associated with news from one of their technology partners (Imageware) and I'll explain why this was an important development.
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ImageWare Systems, Inc. (AMEX: IW), today announced that Computer Sciences Corporation (NYSE: CSC) has selected the IWS Biometric Engine to be a part of CSC’s Border and Immigration Solutions (BIS) Center of Excellence. The IWS Biometric Engine will be among the platforms CSC deploys for developing biometric identity management systems and border security solutions that will enable government agencies to achieve safer borders and immigration goals. We are pleased to be working with CSC, a worldwide leader in deploying large-scale identity management projects,” said Jim Miller, ImageWare’s chairman and CEO.

“The goal of the BIS Center of Excellence is to help border and immigration management agencies create safer borders and facilitate efficient movement of people, while simultaneously enhancing measures to detect and prevent unauthorized or illegitimate activities,” said Timothy Ruggles, director of the CSC BIS Center of Excellence. “ImageWare’s Biometric Engine provides a strong foundation for developing comprehensive and integrated identity management solutions.”
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In September Imageware announced they would use Bioscrypt's ANSI 378 minutiae algorithm in their products and technology. Computer Sciences Corporation (a huge company with 78,000 employees) is in effect providing a significant 3rd party endorsement of Bioscrypt's technology and advanced security. This is particularly important because Computer Sciences Corp. are working on a major U.S. government project involving Customs and Immigration.

BYT already works with numerous well known corporations but this is the first significant endorsement since announcing this summer that their fingerprint algorithms have been qualified by the General Services Administration (GSA) for use in the United States government's personal identity verification (PIV) program (see BYT's August 31st news release).

Everyone has been ignoring investments in the biometric industry because it has been slow to make major announcements. However, I believe the first industry to use this on a large scale will be national (homeland) security in the United States. CSC's announcement "may" be a key indicator of what we'll see (or so I am hoping) in 2007. Bioscrypt technology is already in use at major banks and airports but licensing revenue has been relatively slow.

I noticed this same type of pattern with Certicom (CIC) years ago. Certicom during the tech boom of 99/2000 went from $8 to $220/share and currently trades near $5 Even today it's licensing revenue is only in the range of $20 million annually yet its market cap. is over $200 million. For reference sake, BYT 2006 revenue should be in the range of $18 million with a current market cap. of $40 million.

This doesn't mean to say BYT should currently be worth $200 million, but with techs like this, you often need to fight a downtrend and buy when others are selling if you truly believe the technology has potential.

For Bioscrypt, strong growth in 2007 could come from several catalysts including the Homeland Security Presidential Directive 12's Personal Identity Verification program, the Registered Traveller program and the Transportation Workers Identification Credential program.

About Bioscrypt

Bioscrypt Inc. is a leading provider of advanced finger scan technology, offering their customers a wide range of biometric options for secure access to facilities, equipment and information. Markets include Physical Access Control, Logical Access Control, Time and Attendance, Cash Handling and Loss Prevention. Industries include Transportation, Government, Airport and Airline, Banking and Finance, Healthcare.

Banks are eager to halt theft of personal information and airlines need to cut down security waiting time. Frost & Sullivan analyst Rob Allen predicts the market for this technology will top US$1.4-billion by 2008. In 2004, the market was only US$527-million. Biometric technology identifies people by physical traits, such as fingerprints or voice. The Canadian Air Transport Security Authority has already adopted fingerprint- based biometric identification. Banks are experimenting with biometric technology to cut down credit card fraud, which amounted to US$2-billion in 2005

Products:
www.bioscrypt.com/products/products.shtml

A Few Strategic partners and customers:

U.S. Army, American Express, BellSouth, NASA, NATO, Continental Airlines, Intel, Atmel, HID Corporation, Honeywell, Mexico City International Airport, Madrid International Airport, Cairo Airport, the Kuwait Stock Exchange the Bahrain Ministry of Interior, South African Police, California City Hall, Superior Tribunal of Justice of Mexico City (the largest courthouse system in Latin America).


Blog Link


The Microcap Blog is updated Monday to Thursday evening with a summary of noteable microcap news for the day. Also send me your stock tips, rumours, etc. and I will post them for others to read. Direct link is available from the home page of www.microcap.com or by clicking on the Link Above.



Danny Deadlock
Microcap.com

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