SOURCE: Pacific Biometrics, Inc.

Pacific Biometrics, Inc.

February 17, 2009 09:00 ET

Second Quarter Revenue Increases 96% to $3.2 Million at Pacific Biometrics Inc.

Net Income of $976,671 in Most Recent Quarter Compares With Prior-Year Net Loss of $818,219

SEATTLE, WA--(Marketwire - February 17, 2009) - Pacific Biometrics, Inc. (OTCBB: PBME), a leading provider of specialized central laboratory and contract research services, today announced significant improvements in its operating results for the second quarter and first half of FY2009.

For the three months ended December 31, 2008 (the second quarter of FY2009), revenue increased 96% to $3,230,913, compared with $1,647,535 in the second quarter of FY2008, and increased 79% when compared with $1,805,042 in the first quarter of FY2009. Operating income improved to $554,505 in the second quarter of FY2009, versus an operating loss of $729,183 in the prior-year period. The Company reported net income of $976,671, or $0.05 per share for the three months ended December 31, 2008, compared with a net loss of $818,219, or $0.04 per share, in the three months ended December 31, 2007.

Revenue for the six months ended December 31, 2008 increased 35% to $5,035,955, compared with $3,729,197 during the corresponding period of the previous fiscal year. Operating income improved to $341,133 in the first half of FY2009, versus an operating loss of $784,636 in the same period last year. Net income for the six months ended December 31, 2008 totaled $970,934, or $0.05 per share, compared with a net loss of $966,784, or $0.05 per share, for the comparable six-month period in FY2008.

"We are very pleased to report one of the strongest quarters in the Company's history for the three months ended December 31, 2008, with revenue almost doubling that of the prior-year period," commented Ron Helm, Chief Executive Officer of Pacific Biometrics. Characterizing the present as "an exciting time" for Pacific Biometrics, Mr. Helm continued, "The Company recorded an exceptional 176% improvement in operating income, when compared with last year's second fiscal quarter, and a 143% increase for the comparable six-month periods. Additionally, we repaid all principal and interest due under our Laurus Master Fund note during December 2008 and ended the quarter with a strong balance sheet. Cash and cash equivalents totaled $1,279,633 as of December 31, 2008, and we are essentially debt-free, aside from a few equipment leases. This better positions the Company to execute its strategic plan for continued growth in the specialty laboratory business and to allocate increased resources to support the growth of our Pacific Biomarkers subsidiary."

"Our significantly improved operating performance was primarily due to an increase in the volume of clinical-trial testing services we performed during the second quarter. The success of our business development activities over the past few years has expanded and diversified our client base and has increased requests for our services, translating into improved revenues. Supported by the $987,868 in net cash generated by operating activities during the first half of Fiscal 2009, we plan to continue our on-going business development activities for our services."

"We believe PBI's financial performance for the second half of Fiscal 2009 will continue to show improvement compared with the second half of Fiscal 2008, despite the vagaries in the clinical trials testing market. During the past several quarters, we have signed large clinical study contracts with some of the biggest pharmaceutical and biotech companies in the world. These contracts, which have added to our backlog, involve our core areas of technological expertise, including cardiovascular disease, diabetes, metabolic syndrome, osteoporosis, and arthritis. Further, with our entry into the biomarker services business, we have added a growth driver in a market segment where demand is strong and there are presently no dominant players," concluded Helm.

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 fiscal quarter ended December 31, 2008.

Investor Conference Call

Pacific Biometrics, Inc. has scheduled an investor conference call to discuss its operating results for the second quarter and first half of FY2009, along with other relevant subjects.

Shareholders and other interested parties may listen to the conference call by dialing 800-860-2442 (international/local participants dial 412-858-4600) and requesting the "Pacific Biometrics, Inc. Conference Call" a few minutes before 11:00 a.m. EST on February 18, 2009. A replay of the conference call will be available one hour after the call through February 25, 2009 at 5:00 p.m. EST by dialing 877-344-7529 (international/local participants dial 412-317-0088) and entering the Conference ID 427864.

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, including 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, 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 www.pacbio.com.

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 following: growth in revenues and backlog; results of business development activities; financial results; future growth; and the viability and acceptance of its established and new services, including the Company's biomarker services. 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, the following: the Company's ability to enter into contracts for its laboratory testing or biomarker services; client changes or early terminations of studies; variability in backlog; the success of marketing and business development efforts, and competitive factors; the Company's ability to manage growth; and other risks and uncertainties set forth in periodic filings with the U.S. Securities and Exchange Commission (including Form 10-K for the year ended June 30, 2008).

                         PACIFIC BIOMETRICS, INC.
                        CONSOLIDATED BALANCE SHEETS

                                                    December    June 30,
                    ASSETS                         31, 2008       2008
                                                  (unaudited)   (audited)
                                                  -----------  -----------
Current assets:
  Cash and cash equivalents                       $ 1,279,633  $ 1,196,310
  Accounts receivable, net                          2,022,388    2,146,080
  Other receivable, net                                     -      451,291
  Inventory                                           246,049      197,456
  Prepaid expenses and other assets                   174,770      100,869
  Deferred financing cost on secured
   convertible note - current portion                       -       18,447
                                                  -----------  -----------
    Total current assets                            3,722,840    4,110,453

Property and equipment, net                           885,681      884,521

    Total assets                                  $ 4,608,521  $ 4,994,974
                                                  ===========  ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                $   713,292  $   818,224
  Accrued liabilities                                 392,484      450,788
  Advances from customers                             723,717      643,291
  Capital lease obligation - current portion           47,204       32,530
  Secured convertible note, net of unaccreted
   fair value assigned to conversion feature
   and warrants of $0 and $214,771,
   respectively                                             -      678,535
  Embedded derivative liability                             -      642,470
  Freestanding derivative liability                         -      411,545
  Other notes payable - current portion                     -      102,467
                                                  -----------  -----------
    Total current liabilities                       1,876,697    3,779,850

Capital lease obligations - long-term portion         164,126       91,109
                                                  -----------  -----------
    Total liabilities                               2,040,823    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, 19,099,539 and 18,720,147  shares
 issued and outstanding, respectively                 190,995      187,201
Additional paid-in capital                         29,110,233   28,641,278
Accumulated deficit                               (26,733,530) (27,704,464)
                                                  -----------  -----------
  Total stockholders' equity                        2,567,698    1,124,015

  Total liabilities and stockholders' equity      $ 4,608,521  $ 4,994,974
                                                  ===========  ===========

The accompanying notes are an integral part of these consolidated financial
statements.


                         PACIFIC BIOMETRICS, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                (unaudited)

                              Three Months Ended      Six Months Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------
Revenues                    $3,230,913  $1,647,535  $5,035,955  $3,729,197
                            ----------  ----------  ----------  ----------

Laboratory expenses and
 cost of sales               1,570,235   1,145,003   2,673,604   2,367,683
                            ----------  ----------  ----------  ----------
    Gross profit             1,660,678     502,532   2,362,351   1,361,514
                            ----------  ----------  ----------  ----------

Operating expenses:
  Selling, general and
   administrative            1,106,173   1,231,715   2,021,218   2,146,150
                            ----------  ----------  ----------  ----------

Operating income (loss)        554,505    (729,183)    341,133    (784,636)
                            ----------  ----------  ----------  ----------

Other income (expense):
  Interest expense              (8,868)    (59,843)    (50,882)   (136,377)
  Interest expense from
   accretion of conversion
   feature and warrants -
   secured convertible debt    (19,760)   (183,952)    (88,804)   (386,935)
  Gain on adjustment of
   embedded and freestanding
   derivatives to fair value   343,121     151,632     675,691     332,860
  Amortization of deferred
   financing costs -
   secured convertible debt          -     (26,792)    (18,447)    (53,585)
  Other income                 107,673      29,919     112,243      61,889
                            ----------  ----------  ----------  ----------
    Total other income
     (expense)                 422,166     (89,036)    629,801    (182,148)

Net income (loss) before tax
 expense                       976,671    (818,219)    970,934    (966,784)
                            ----------  ----------  ----------  ----------

Tax expense                          -           -           -           -

Net income (loss)           $  976,671  $ (818,219) $ 970,934   $ (966,784)
                            ==========  ==========  ==========  ==========

Net income (loss) per
 share                      $     0.05   $   (0.04)  $    0.05   $   (0.05)
                            ==========  ==========  ==========  ==========

Weighted average common
 shares outstanding, basic
 and diluted:               19,039,524  18,920,147  18,964,873  18,713,240
                            ==========  ==========  ==========  ==========

The accompanying notes are an integral part of these consolidated financial
statements.



                         PACIFIC BIOMETRICS, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (unaudited)

                                                      Six Months Ended
                                                        December 31,
                                                  ------------------------
                                                      2008        2007
                                                  -----------  -----------
Cash flows from operating activities:
  Net income (loss)                               $   970,934  $  (966,784)

  Reconciliation of net loss to net cash provided
   by operating activities:
    Depreciation and amortization                     121,940      137,345
    Accretion of fair value assigned to conversion
     feature and warrants                              88,134      386,935
    Amortization of deferred financing costs on
     secured convertible note                          18,447       53,585
    Gain from embedded and freestanding derivative
     liabilities relating to secured  convertible
     note                                            (675,691)    (332,860)
    Warrant expense for equipment lease and
     financing                                          3,943        5,911
    Compensation expense from restricted shares
     and options                                       90,485      158,402
    Changes in assets and liabilities:
      Accounts receivable                             123,692      331,173
      Other receivable                                451,291            -
      Inventory                                       (48,593)     (38,586)
      Prepaid expenses and other assets               (73,901)    (105,248)
      Advances from customers                          80,425      (74,382)
      Accounts payable                               (104,933)      48,119
      Accrued liabilities                             (58,305)     (41,406)
                                                  -----------  -----------
        Net cash  provided by (used in)
         operating activities                         987,868     (437,796)
                                                  -----------  -----------

Cash flows from investing activities:
  Purchases of capital equipment                      (14,783)     (20,609)
                                                  -----------  -----------
        Net cash used in investing activities         (14,783)     (20,609)
                                                  -----------  -----------

Cash flows from financing activities:
  Payments on notes payable                          (869,136)    (854,190)
  Payments on capital lease obligations               (20,626)     (38,655)
                                                  -----------  -----------
        Net cash used in financing activities        (889,762)    (892,845)
                                                  -----------  -----------

Net increase (decrease) in cash and cash
 equivalents                                           83,323   (1,351,251)
Cash and cash equivalents, beginning of period      1,196,310    4,219,926
                                                  -----------  -----------
Cash and cash equivalents, end of period          $ 1,279,633  $ 2,868,675
                                                  ===========  ===========

Supplemental Information:
Cash paid during the period for interest          $    59,505  $   116,659

Non-cash investing and financing activities:
  Capital expenditures funded by capital lease
   borrowings                                     $   108,316  $         -

The accompanying notes are an integral part of these consolidated financial
statements.

Contact Information

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