SOURCE: Pacific Biometrics, Inc.

November 14, 2008 08:55 ET

Pacific Biometrics, Inc. Reports First Quarter Operating Results

Net Loss Improved 96% Over First Quarter FY2008

SEATTLE, WA--(Marketwire - November 14, 2008) - Pacific Biometrics, Inc. (OTCBB: PBME) ("PBI" or "the Company"), a leading provider of specialty central laboratory and contract research services, today announced its operating results for the first quarter of FY2009.

For the three months ended September 30, 2008, revenues totaled $1,805,000, compared with $2,082,000 in the first quarter of the previous fiscal year. The Company posted an operating loss of $213,000 in the most recent quarter, versus an operating loss of $55,000 in the prior-year period. The net loss in the first quarter of FY2009 was reduced by 96% to $6,000, or $0.00 per share, when compared with a net loss of $149,000, or $0.01 per share, in the corresponding period of the previous fiscal year.

"While our first quarter revenues were 13% below first quarter levels from last year, this was not unexpected and primarily reflects the timing of work performed under contracts, which can fluctuate significantly from quarter to quarter," commented Ron Helm, Chairman and Chief Executive Officer of Pacific Biometrics, Inc. "We have noted some softness in the general laboratory services market in recent months, which may reflect cost reduction announcements by a number of pharmaceutical companies and a continuing consolidation in the pharmaceutical market, and we expect this trend to continue into the early part of calendar 2009.

"Nevertheless, although some uncertainty remains regarding future levels of drug development activity in the lipid / cholesterol market, we have entered into clinical study contracts with some of the biggest pharmaceutical and biotech companies in the world during the past year that involve all of PBI's core areas of technological expertise, including cardiovascular disease, diabetes, metabolic syndrome, musculoskeletal disease and inflammatory conditions, arthritis, oncology and anti-drug antibody assay development. The timing of work in our current order backlog suggests that revenues should strengthen in the second quarter, and we remain confident that full-year revenues will exceed the $8.3 million in revenues that we reported for the fiscal year ended June 30, 2008 (FY2008).

"Despite the decline in first quarter revenues, I am pleased to report that PBI generated $372,000 in positive cash flow from operating activities during the three months ended September 30, 2008, which represented a 175% improvement when compared with the prior-year quarter ($135,000)," continued Helm. "Also, our net loss during the most recent quarter, at $6,000, improved 96% over last year's first quarter net loss of $149,000, primarily due to a reduction in interest expense paid on the Laurus convertible notes and a decrease in the amortization of deferred financial costs related to, and adjustments to the value of, the embedded derivative for such notes. We expect to fully retire the balance on our outstanding note to Laurus by January 31, 2009.

"We are encouraged with the substantial upswing in requests for proposals that were forthcoming from new and existing customers during the fourth quarter of fiscal 2008, and I am confident that PBI's scientific, technical and operational capabilities, combined with a more aggressive business development strategy, will allow us to capture our fair share of these new contract opportunities. Also, our new Pacific Biomarkers subsidiary, which was formed in February 2008, is beginning to gain traction in a market that is experiencing significant growth in outsourced lab services and in which there are as yet no dominant industry leaders. We look forward to the growth opportunities available to PBI during the balance of fiscal 2009 and in future years, as we continue to focus on growing our revenues through increased business development efforts and a broadening in our therapeutic areas of expertise."

For additional information, see Pacific Biometrics' Annual Report filed with the SEC on Form 10-K for the fiscal year ended June 30, 2008 and the Quarterly Report filed with the SEC on Form 10-Q for the three months ended September 30, 2008.

About Pacific Biometrics, Inc. (PBI)

Established in 1989, PBI provides specialized central laboratory and contract research services to support pharmaceutical and diagnostic manufacturers conducting human clinical trial research. The Company provides expert services in the areas of cardiovascular disease, diabetes, osteoporosis, arthritis, and nutrition. The PBI laboratory is accredited by the College of American Pathologists, New York State, and the Lipid Standardization Program. PBI's clients include many of the world's largest pharmaceutical, biotech, and diagnostic companies.

Pacific Biomarkers, Inc., incorporated February 1, 2008 as a wholly-owned subsidiary of PBI, focuses specifically on the emerging field of biomarker assay development and testing. Services include validating and performing ligand-binding assays for novel clinical biomarkers, immunogenicity testing, and multiplex testing.

PBI is headquartered in Seattle, Washington, and its common stock trades on the OTC Bulletin Board under the symbol "PBME." For more information about PBI, visit the company's web site at

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release includes forward-looking statements including, but not limited to, the growth in revenues and backlog that may result from established and new services, including our biomarker services, our strategic planning and business development plans, impacts on our financial results, our future growth, and the viability and acceptance of our products and services in the market. These forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those described in the forward-looking statements. These risks include, but are not limited to, our ability to bid on and win laboratory services contracts, client changes or early terminations of studies, variability in backlog, the success of our marketing and business development efforts, competition in the industry, and our ability to manage growth, as well as the risks and other factors set forth in our periodic filings with the U.S. Securities and Exchange Commission (including our Form 10-K for the year ended June 30, 2008).

                         PACIFIC BIOMETRICS, INC.
                        CONSOLIDATED BALANCE SHEETS

                                                  September 30,  June 30,
                          ASSETS                      2008         2008
                                                  (unaudited)   (audited)
                                                  -----------  -----------
Current assets:
   Cash and cash equivalents                      $   943,933  $ 1,196,310
   Accounts receivable, net                         1,503,977    2,146,080
   Other receivable, net                                    -      451,291
   Inventory                                          278,272      197,456
   Prepaid expenses and other assets                  159,725      100,869
   Deferred financing cost on secured convertible
    note - current portion                                  -       18,447
                                                  -----------  -----------
      Total current assets                          2,885,907    4,110,453

Property and equipment, net                           874,420      884,521

      Total assets                                $ 3,760,327  $ 4,994,974
                                                  ===========  ===========


Current liabilities:
   Accounts payable                               $   429,801  $   818,224
   Accrued liabilities                                323,401      450,788
   Advances from customers                            765,204      643,291
   Capital lease obligation - current portion          36,078       32,530
   Secured convertible note, net of unaccreted
    fair value assigned to conversion feature and
    warrants of $19,091 and $214,771,
    respectively                                      180,909      678,535
   Embedded derivative liability                      318,892      642,470
   Freestanding derivative liability                  402,553      411,545
   Other notes payable - current portion               70,894      102,467
                                                  -----------  -----------
      Total current liabilities                     2,527,732    3,779,850

Capital lease obligations - long - term portion       105,161       91,109
                                                  -----------  -----------
      Total liabilities                             2,632,893    3,870,959
                                                  -----------  -----------

Commitments and contingencies                               -            -

Stockholders' equity:
   Preferred stock, Series A convertible $0.01
    par value, 5,000,000 shares authorized, 0
    shares issued and outstanding for 2009 and
    2008                                                    -            -
   Common stock, $0.01 par value, 30,000,000
    shares authorized, 18,920,147 and 18,720,147
    shares issued and outstanding, respectively       362,803      362,803
   Additional paid-in capital                      28,474,832   28,465,676
   Accumulated deficit                            (27,710,201) (27,704,464)
                                                  -----------  -----------
      Total stockholders' equity                    1,127,434    1,124,015

      Total liabilities and stockholders' equity  $ 3,760,327  $ 4,994,974
                                                  ===========  ===========

The accompanying notes are an integral part of these consolidated financial

                        PACIFIC BIOMETRICS, INC.

                                                     Three Months Ended
                                                        September 30,
                                                      2008         2007
                                                  -----------  -----------

Revenues                                          $ 1,805,042  $ 2,081,662
                                                  -----------  -----------

  Laboratory expenses and cost of sales             1,103,369    1,222,680
                                                  -----------  -----------
      Gross profit                                    701,673      858,982
                                                  -----------  -----------

Operating expenses:
    Selling, general and administrative               915,045      914,435
                                                  -----------  -----------

Operating loss                                       (213,372)     (55,453)
                                                  -----------  -----------

Other income (expense):
  Interest expense                                    (42,014)     (76,534)
  Interest expense from accretion of conversion
   feature and warrants - secured convertible
   debt                                               (69,044)    (202,983)
  Gain on adjustment of embedded and freestanding
   derivatives to fair value                          332,570      181,228
  Amortization of deferred financing costs -
   secured convertible debt                           (18,447)     (26,793)
  Other income                                          4,570       31,970
                                                  -----------  -----------
      Total other income (expense)                    207,635      (93,112)

Net loss before tax expense                            (5,737)    (148,565)
                                                  -----------  -----------

Tax expense                                                 -            -

Net loss                                          $    (5,737) $  (148,565)
                                                  ===========  ===========

Net loss per share:                               $     (0.00) $     (0.01)
                                                  ===========  ===========

Weighted average common shares outstanding, basic
 and diluted:                                      18,920,147   18,720,147
                                                  ===========  ===========

The accompanying notes are an integral part of these consolidated financial

                         PACIFIC BIOMETRICS, INC.

                                                     Three Months Ended
                                                        September 30,
                                                      2008         2007
                                                  -----------  -----------
Cash flows from operating activities:
   Net loss                                       $    (5,737) $  (148,565)
   Reconciliation of net loss to net cash
    provided by operating activities:
      Depreciation and amortization                    53,469       73,619
      Accretion of fair value assigned to
       conversion feature and warrants                 69,044      202,983
      Amortization of deferred financing costs on
       secured convertible note                        18,447       26,793
      Gain from embedded and freestanding
       derivative liabilities relating to secured
       convertible note                              (332,570)    (181,228)
      Warrant expense for equipment lease and
       financing                                        2,956        2,955
      Compensation expense  from restricted
       shares and options                               6,201        6,201
      Changes in assets and liabilities:
         Accounts receivable                          642,103      364,028
         Other receivable                             451,291     (107,000)
         Inventory                                    (80,816)      (1,471)
         Prepaid expenses and other assets            (58,856)      15,265
         Advances from customers                      121,913      (80,874)
         Accounts payable                            (388,423)     (49,264)
         Accrued liabilities                         (127,387)      11,847
                                                  -----------  -----------
           Net cash  provided by operating
            activities                                371,635      135,288
                                                  -----------  -----------
Cash flows from investing activities:
   Purchases of capital equipment                     (14,352)     (10,883)
                                                  -----------  -----------
           Net cash used in investing activities      (14,352)     (10,883)
                                                  -----------  -----------
Cash flows from financing activities:
   Payments on notes payable                         (598,244)    (426,502)
   Payments on capital lease obligations              (11,416)     (17,936)
                                                  -----------  -----------
           Net cash used in financing activities     (609,660)    (444,438)
                                                  -----------  -----------
Net decrease in cash and cash equivalents            (252,377)    (320,033)
Cash and cash equivalents, beginning of period      1,196,310    4,219,926
                                                  -----------  -----------
Cash and cash equivalents, end of period          $   943,933  $ 3,899,893
                                                  ===========  ===========
Supplemental Information:
Cash paid during the period for interest          $    42,833  $    77,284

Non-cash investing and financing activities:
   Capital expenditures funded by capital lease
    borrowings                                    $    29,016            -

The accompanying notes are an integral part of these consolidated financial

Contact Information

  • For additional information, please contact:
    Ron Helm
    (206) 298-0068
    RJ Falkner & Company, Inc.
    Investor Relations Counsel
    (800) 377-9893
    Email Contact