2005 Year End Results: ORTHOsoft Increases Direct Sales to Hospitals, and Reduces Operating Expenses

April 21 2006

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Year ended Year ended

December 31, December 31,

2005 2004

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$ $

Revenue 10,221,072 9,493,366

Cost of sales 3,478,552 3,545,640

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6,742,520 5,947,726

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Research and development expenses, net 3,777,688 4,434,947

Sales and marketing expenses 2,843,264 2,561,164

General and administrative expenses 2,710,644 3,243,148

Amortization 691,398 700,145

Financial expenses (income) (85,432) 732,569

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9,937,562 11,671,973

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Loss before income taxes (3,195,042) (5,724,247)

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Income taxes recovery

Current - (1,461,954)

Future - (30,200)

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- (1,492,154)

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Net loss (3,195,042) (4,232,093)

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Net loss per share - basic and fully diluted (0.08) (0.14)

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Weighted average number of common shares

outstanding 41,360,532 30,840,422

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Consolidated statements of retained earnings (deficit)

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Year ended Year ended

December 31, December 31,

2005 2004

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$ $

(Deficit) retained earnings, beginning of year (8,007,337) 1,496,397

Increase in stated account of common shares - (999,959)

Excess of purchase price over book value of

Class A common shares acquired - (1,649,829)

Share issue and reverse takeover costs - (2,621,853)

Net loss (3,195,042) (4,232,093)

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Deficit, end of year (11,202,379) (8,007,337)

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Consolidated balance sheets

as at December 31, 2005

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2005 2004

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$ $

Assets

Current assets

Cash and cash equivalents 4,344,957 4,378,221

Short-term deposits 167,400 167,400

Accounts and other receivable, net of

allowance for doubtful accounts 2,387,089 3,976,450

Current income taxes receivable - 1,255,619

Tax credits receivable 939,674 1,534,569

Inventory 986,154 899,170

Prepaid expenses 124,000 420,220

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8,949,274 12,631,649

Capital assets 1,253,534 1,223,636

Patents, net 933,237 811,444

Future income taxes 353,184 430,000

Deferred development costs - 6,012

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11,489,229 15,102,741

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Liabilities

Current liabilities

Accounts payable and accrued liabilities 1,980,102 2,375,821

Future income taxes 25,314 157,000

Deferred revenues 99,373 794,990

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2,104,789 3,327,811

Future income taxes 327,870 273,000

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2,432,659 3,600,811

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Shareholders' equity

Common shares 18,679,340 18,679,340

Contributed surplus 1,579,609 829,927

Deficit (11,202,379) (8,007,337)

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9,056,570 11,501,930

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11,489,229 15,102,741

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Consolidated statements of cash flows

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Year ended Year ended

December 31, December 31,

2005 2004

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$ $

Operating activities

Net loss (3,195,042) (4,232,093)

Items not affecting cash

Inventory write-down 119,882 100,000

Stock-based compensation 749,682 846,170

Amortization 691,398 700,145

Write-off of patent costs 97,097 -

Write-down of deferred charges - 177,095

Deferred foreign exchange - (3,189)

Future income taxes - (30,200)

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(1,536,983) (2,442,072)

Change in non-cash operating working

capital items 2,437,893 (2,463,453)

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900,910 (4,905,525)

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Investing activities

Acquisition of capital assets (705,568) (453,199)

Patents (228,606) (322,134)

Deferred development costs - (8,090)

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(934,174) (783,423)

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Financing activities

Cash included in North Hatley as of the

date of the reverse takeover - 1,598,377

Restricted cash - 2,000,000

Class A common shares repurchased - (2,000,000)

Repayment of long-term debt - (4,934,791)

Issuance of share capital and warrants, net

of share issue and reverse takeover costs - 12,696,168

Settlement of stock options - (150,000)

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- 9,209,754

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Cash and cash equivalents (outflow) inflow (33,264) 3,520,806

Cash and cash equivalents, beginning of year 4,378,221 857,415

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Cash and cash equivalents, end of year 4,344,957 4,378,221

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For more information, please contact:

ORTHOsoft Inc.

John F. Feilders, PhD.

President and Co-CEO

ORTHOsoft Inc.

(514) 861-4074 ext.222

john.feilders@orthosoft.ca

Echoes Financial Network Inc.

Investors and Media

Dominic Sicotte

1 (866) 633-9551

dsicotte@roadshows.tv

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