SEATTLE, Sept. 2 /PRNewswire-FirstCall/ -- Pacific Biometrics, Inc. (OTC Bulletin Board: PBME), a leading provider of specialized reference laboratory and contract research services, today announced the Company's entry into a Loan and Security Agreement with Terry M. Giles, providing for a $4 million loan (the "Loan") to the Company. In connection with, and as required by the Loan, on August 31, 2009, the Company also repurchased 2,391,906 shares of common stock from certain stockholders at a price of $0.70 per share. These shares will be retired to the Company's treasury. The Company received net Loan proceeds of approximately $2,325,666, after payment for the stock repurchase but excluding legal and other expenses for the transaction. Also effective August 31, 2009, Mr. Giles resigned from the Company's Board of Directors.
"We are very pleased that Terry Giles, who has served on our Board of Directors since September 2003, has agreed to provide financing for the Company to fund our working capital and growth needs, in particular our development efforts involving the biomarker services business," stated Ron Helm, Chief Executive Officer of Pacific Biometrics, Inc. "We believe the terms of the Loan are more favorable than we could have obtained from other sources, and the financing allowed us to avoid the dilution to stockholders that would have resulted from an equity-based financing at the current price of our stock. In light of the Director conflict of interest created by this Loan agreement, Mr. Giles agreed to resign from our Board. On behalf of management and the Board of Directors, I would like to thank Mr. Giles for his long-standing service as a Director and for his continuing support of the Company and its growth potential."
The four-year Loan, which bears interest at a fixed rate of 12% per annum, provides for eight monthly interest-only payments, followed by 40 monthly payments comprised of interest plus the amortization of principal. The Company is also obligated to pay a quarterly finance fee of $12,000 to Mr. Giles during the term of the Loan. The Company has the right, at its sole discretion, to obtain an additional $500,000 loan from Mr. Giles during the first 12 months of the Loan.
The Loan and Security Agreement required that the Company use a portion of the Loan proceeds to repurchase up to a maximum of 2.4 million shares of common stock held by certain stockholders, as designated by Mr. Giles, at a repurchase price of $0.70 per share. Accordingly, on August 31, 2009, the Company repurchased a total of 2,391,906 shares of common stock, of which 382,870 were owned by Mr. Giles and the remaining 2,009,036 shares were held by five other stockholders. To facilitate the stock repurchase, Mr. Giles purchased the shares from the other stockholders at a price of $0.70 per share, and then sold all of the shares to the Company at the same price of $0.70 per share.
"We believe this debt financing is in the best interest of our stockholders when compared with equity-based financing, for a number of reasons," continued Helm. "The Loan results in no dilution of our current stockholders, we issued no warrants to Mr. Giles, loan fees were modest, and there is no prepayment penalty. In addition, we were able to repurchase approximately 13% of our outstanding common stock at $0.70 per share, thereby improving the percentage ownership position of our remaining stockholders by approximately 14%. The reduction in number of shares outstanding also has the potential to increase the Company's future earnings per share."
"As noted previously in our news releases, we believe PBI is well-positioned to expand its role in the biomarker services industry, which represents a rapidly growing market that offers the potential for higher profit margins and the development of proprietary assays that can benefit future earnings and enhance stockholder value. We have developed business strategies to achieve these objectives, and the funds provided by this Loan will allow us to more aggressively execute these strategies in Fiscal 2010 and future years."
The Company also announced that Mario Ehlers, M.D., Ph.D., has been appointed to PBI's Board of Directors to fill the vacancy created by Mr. Giles' resignation. Dr. Ehlers previously served as the Company's Chief Medical Officer (September 2002 to August 2008). Dr. Ehlers is currently Deputy Director of the Clinical Trials Group at the Immune Tolerance Network (ITN), a federally funded research organization affiliated with the University of California, San Francisco. ITN's drug development projects rely heavily on the discovery and implementation of novel biomarkers.
"Dr. Mario Ehlers played a key role in the development of our biomarker business initiatives, and we are very pleased that he has agreed to serve on the Board of Directors. We believe his counsel will prove invaluable as we build upon the earnings turnaround currently underway and target new market opportunities by expanding the capabilities of our specialty laboratory infrastructure," concluded Helm.
About Pacific Biometrics, Inc. (PBI)
Established in 1989, PBI provides specialized reference 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: results of business development activities; execution of the Company's business strategies; earnings per share and other financial results; growth in the biomarkers industry; and the growth, viability and acceptance of the Company's biomarker and other 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 the Company's periodic filings with the U.S. Securities and Exchange Commission.
For additional information, please contact: Ron Helm, CEO at (206) 298-0068 or RJ Falkner & Company, Inc., Investor Relations Counsel at (800) 377-9893 or via email at firstname.lastname@example.org
|SOURCE Pacific Biometrics, Inc.|
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