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Pacific Biometrics Inc. Reports First Quarter Operating Results

Tuesday, November 17, 2009 General News J E 4
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SEATTLE, Nov. 16 Pacific Biometrics, Inc. (OTC Bulletin Board: PBME) ("PBI" or "the Company"), a leading provider of specialty central laboratory and clinical biomarker services, today announced its operating results for the first quarter of FY2010. The Company will host an investor conference call to discuss its FY2010 first quarter operating results at 4:15 p.m. EST today (see details below).

For the three months ended September 30, 2009, revenues increased 27% to $2,301,375, compared with $1,805,042 in the first quarter of the previous fiscal year. The Company posted an operating loss of $213,708 in the most recent quarter, versus an operating loss of $213,372 in the prior-year period. The Company reported a net loss of $273,150, or $0.01 per share, in the most recent quarter, versus a net loss of $5,737, or $0.00 per share, in the corresponding period of the previous fiscal year. The increase in net loss was primarily due to the fact that in the first quarter of FY2009 the Company recorded a significant non-cash gain related to convertible debt that was then outstanding.

"We are pleased that our first quarter revenues were 27% above last year's levels," commented Ron Helm, Chairman and Chief Executive Officer of Pacific Biometrics, Inc. "Having said that, we did not reach our internal revenue goal, in part because of the early termination of several clinical studies for reasons unrelated to our performance. Unfortunately, studies are sometimes terminated unexpectedly by clinical trial sponsors, for a variety of reasons, prior to the completion of our work under the terms of the original contracts. This is simply a feature of our business. We also cannot ignore the ongoing economic difficulties that continue to impact the clinical trials industry, combined with the impact of tight credit markets on spending and investment in all sectors of our markets."

"Although our gross profit margins improved and our SG&A expense ratio declined relative to the prior-year period, we still recorded an operating loss in this year's first quarter. This reflects, in large part, the significant and ongoing investments we are making in our clinical biomarker services business, which we continue to see as a major growth opportunity going forward. Despite the decline in first quarter net income, I am pleased to report that PBI continued to generate positive cash flow from operating activities during the three months ended September 30, 2009."

"Based on our internal financial metrics, we are optimistic that our revenues for fiscal 2010 will exceed the record revenues achieved in fiscal 2009," Mr. Helm continued. "We are encouraged by the substantial requests for proposals received from new and existing customers in recent months, 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 continued focus on biomarkers is gaining traction in a market that is experiencing significant growth in outsourced lab services and in which there are as yet no dominant industry leaders. To further capitalize on these trends, we are investing in new instrument platforms that will allow us to broaden our therapeutic areas of expertise and open up additional growth opportunities."

For additional information, see Pacific Biometrics' Annual Report on Form 10K for the fiscal year ended June 30, 2009 and the Quarterly Report on Form 10-Q for the three months ended September 30, 2009, available on the SEC's website at www.sec.gov.

Investor Conference Call

Pacific Biometrics, Inc. will host an investor conference call to discuss its first quarter FY2010 operating results, along with other relevant subjects at 4:15 p.m. EST (1:15 p.m. PST) today -- Monday, November 16, 2009.

Stockholders 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 4:15 p.m. EST on November 16, 2009. A replay of the conference call will be available one hour after the call through Monday, November 23, 2009 at 5:00 p.m. EDT by dialing 877-344-7529 (international/local participants dial 412-317-0088) and entering the Conference ID 435436.

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. PBI also provides clinical biomarker services focusing 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 growth in revenues that may result from established and new services, including our biomarker services, our strategic planning and business development efforts, 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, general economic factors 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, 2009).

PACIFIC BIOMETRICS, INC. CONSOLIDATED BALANCE SHEETS September 30, June 30, ASSETS 2009 2009 (unaudited) --------- --------- Current assets: Cash and cash equivalents $3,233,788 $1,365,406 Short-term investments 504,320 - Accounts receivable, net 1,688,386 2,238,912 Other receivable, net 6,500 9,000 Inventory 127,679 171,885 Prepaid expenses and other assets 183,313 230,974 ------- ------- Total current assets 5,743,986 4,016,177 Property and equipment, net 814,625 813,258 Total assets $6,558,611 $4,829,435 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $511,082 $678,818 Accrued liabilities 421,524 660,284 Advances from customers - current portion 174,779 155,471 Capital lease obligation - current portion 64,896 62,709 Secured note - current portion, net discount of $26,257 391,117 - ------- --- Total current liabilities 1,563,398 1,557,282 Advances from customers - long - term portion 272,032 272,032 Capital lease obligations - long - term portion 139,239 156,309 Secured note - long - term portion, net discount of $173,510 3,409,116 - --------- --- Total liabilities 5,383,785 1,985,623 --------- --------- Commitments and contingencies - - Stockholders' equity: Preferred stock, Series A convertible $0.01 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2009 and June 30, 2009 - - Common stock, $0.01 par value, 30,000,000 shares authorized, 19,099,539 shares issued and 16,813,133 outstanding at September 30, 2009, 19,099,539 shares issued and outstanding at June 30, 2009 192,050 190,995 Additional paid-in capital 29,193,052 29,121,334 Accumulated deficit (26,741,667) (26,468,517) Treasury stock (1,468,609) - ---------- --- Total stockholders' equity 1,174,826 2,843,812 Total liabilities and stockholders' equity $6,558,611 $4,829,435 ========== ========== The accompanying condensed notes are an integral part of these consolidated financial statements. PACIFIC BIOMETRICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended September 30, ------------- 2009 2008 ---- ---- Revenues $2,301,375 $1,805,042 ---------- ---------- Laboratory expenses and cost of sales 1,393,700 1,103,369 --------- --------- Gross profit 907,675 701,673 ------- ------- Operating expenses: Selling, general and administrative 1,121,383 915,045 --------- ------- Operating loss (213,708) (213,372) ------- ------- Other income (expense): Interest expense (53,100) (111,058) Gain on adjustment of embedded and freestanding derivatives to fair value - 332,570 Amortization of deferred financing costs - secured convertible debt - (18,447) Amortization of discount on debt (5,958) - Other income (expense) (384) 4,570 --- ----- Total other income (expense) (59,442) 207,635 Net loss before tax expense (273,150) (5,737) ------- ----- Tax expense - - Net loss $(273,150) $(5,737) ========= ======= Net loss per share: $(0.01) $(0.00) ====== ====== Weighted average common shares outstanding, basic and diluted: 18,832,061 18,920,147 ========== ========== The accompanying condensed notes are an integral part of these consolidated financial statements. PACIFIC BIOMETRICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended September 30, ------------- 2009 2008 ---- ---- Cash flows from operating activities: Net loss $(273,150) $(5,737) Reconciliation of net loss to net cash provided by operating activities: Depreciation and amortization 75,609 53,469 Accretion of fair value assigned to conversion feature and warrants - 69,044 Amortization of deferred financing costs on secured convertible note - 18,447 Gain from embedded and freestanding derivative liabilities relating to secured convertible note - (332,570) Amortization of fair value assigned to repurchased shares of common stock 5,958 - Net losses (gains) on investments 1,713 - Warrant expense for equipment lease and financing - 2,956 Compensation expense from restricted shares and options 72,774 6,201 Changes in assets and liabilities: Accounts receivable 550,526 642,103 Other receivable 2,500 451,291 Inventory 44,206 (80,816) Prepaid expenses and other assets 47,661 (58,856) Advances from customers 19,308 121,913 Accounts payable (167,736) (388,423) Accrued liabilities (238,760) (127,387) ------- ------- Net cash provided by operating activities 140,609 371,635 ------- ------- Cash flows from investing activities: Purchases of capital equipment (76,977) (14,352) Purchases of investments (506,033) - ------- --- Net cash used in investing activities (583,010) (14,352) Cash flows from financing activities: Payments on notes payable - (598,244) Proceeds from loan 4,000,000 - Repurchases of common stock (1,674,334) - Payments on capital lease obligations (14,883) (11,416) ------ ------ Net cash provided by (used in) financing activities 2,310,783 (609,660) --------- ------- Net increase (decrease) in cash and cash equivalents 1,868,382 (252,377) Cash and cash equivalents, beginning of period 1,365,406 1,196,310 --------- --------- Cash and cash equivalents, end of period $3,233,788 $943,933 ========= ======= Supplemental Information: Cash paid during the period for interest $85,846 $42,833 Cash paid during the period for income taxes $- $- The accompanying condensed notes are an integral part of these consolidated financial statements.

SOURCE Pacific Biometrics, Inc.
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