Pacific Biomarkers, Inc. Reports Third Quarter Operating Results

SEATTLE, WA--(Marketwire - May 16, 2011) - Pacific Biomarkers, Inc. (OTCBB: PBMC) (“PBI”), a leading provider of biomarker laboratory services and contract research services, today announced its operating results for the third quarter and first nine months of FY2011.

For the three months ended March 31, 2011 (the third quarter of FY2011), revenue decreased 3% to $2,159,014, compared with $2,233,698 for the third quarter of FY2010. Operating loss totaled $381,538 in the third quarter of FY2011, versus operating loss of $238,047 in the prior-year period. The Company reported a net loss of $430,575, or $0.03 per share, for the three months ended March 31, 2011, compared with a net loss of $393,259, or $0.02 per share, for the three months ended March 31, 2010.

Revenue for the nine months ended March 31, 2011 increased 13% to $7,544,616, compared with $6,648,868 during the corresponding period of the previous fiscal year. An operating loss of $631,790 was recorded in the first nine months of FY2011, versus an operating loss of $758,792 in the same period last year. Net loss for the nine months ended March 31, 2011 totaled $982,156, or $0.06 per share, compared with a net loss of $1,124,038, or $0.06 per share, for the year-earlier period.

For additional information, see Pacific Biomarkers’ quarterly report filed with the SEC on Form 10-Q for the fiscal quarter ended March 31, 2011 and its annual report filed with the SEC on Form 10-K for the fiscal year ended June 30, 2010.

About Pacific Biomarkers, Inc. (PBI)

Established in 1989, PBI provides biomarker laboratory services 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 and musculoskeletal diseases, diabetes, obesity, 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 custom assays for novel clinical biomarkers, immunogenicity testing, cell-based assays, mass spectrometry, and multiplex testing.

PBI is headquartered in Seattle, Washington, and its common stock trades on the OTC Bulletin Board under the symbol “PBMC”. 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, 2010).

 PACIFIC BIOMARKERS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, June 30, ASSETS 2011 2010 (unaudited) ------------ ------------ Current assets: Cash and cash equivalents $ 1,276,418 $ 1,861,155 Short-term bank deposits 200,479 468,619 Accounts receivable, net 1,182,177 1,852,987 Other receivable, net 6,500 6,500 Inventory 231,985 239,863 Prepaid expenses and other assets 378,773 229,802 ------------ ------------ Total current assets 3,276,332 4,658,926 Property and equipment, net 1,134,168 1,309,764 Restricted cash 150,172 - ------------ ------------ Total non-current assets 1,284,340 1,309,764 Total assets $ 4,560,672 $ 5,968,690 ============ ============ LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 404,578 $ 605,944 Accrued liabilities 410,816 632,429 Advances from customers 647,715 408,455 Capital lease obligations - current portion 348,906 200,806 Secured note - current portion, net of discount 889,428 1,015,603 ------------ ------------ Total current liabilities 2,701,443 2,863,237 Capital lease obligations - long-term portion 353,970 389,820 Secured note - long-term portion, net of discount 2,262,698 2,676,969 ------------ ------------ Total liabilities 5,318,111 5,930,026 ------------ ------------ Commitments and contingencies - - Stockholders’ equity: Common stock, $0.01 par value, 30,000,000 shares authorized, 16,909,501 shares issued and outstanding at March 31, 2011, 16,669,856 shares issued and outstanding at June 30, 2010 169,095 166,699 Additional paid-in-capital 27,906,681 27,723,024 Accumulated deficit (28,833,215) (27,851,059) ------------ ------------ Total stockholders’ equity (deficit) (757,439) 38,664 ------------ ------------ Total liabilities and stockholders’ equity $ 4,560,672 $ 5,968,690 ============ ============ PACIFIC BIOMARKERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended Nine Months Ended March 31, March 31, ------------------------ ------------------------ 2011 2010 2011 2010 ----------- ----------- ----------- ----------- Revenues $ 2,159,014 $ 2,233,698 $ 7,544,616 $ 6,648,868 ----------- ----------- ----------- ----------- Laboratory expenses and cost of sales 1,460,284 1,381,248 4,654,667 4,155,405 ----------- ----------- ----------- ----------- Gross profit 698,730 852,450 2,889,949 2,493,463 ----------- ----------- ----------- ----------- Operating expenses: Selling, general and administrative 1,080,268 1,090,497 3,521,739 3,252,255 ----------- ----------- ----------- ----------- Operating loss (381,538) (238,047) (631,790) (758,792) ----------- ----------- ----------- ----------- Other expense: Interest expense (136,655) (146,204) (410,877) (338,155) Amortization of discount on debt (13,806) (18,756) (46,371) (36,846) Other income 101,424 9,748 106,882 9,755 ----------- ----------- ----------- ----------- Total other expense (49,037) (155,212) (350,366) (365,246) ----------- ----------- ----------- ----------- Net loss before tax expense (430,575) (393,259) (982,156) (1,124,038) Tax expense - - - - ----------- ----------- ----------- ----------- Net loss $ (430,575) $ (393,259) $ (982,156) $(1,124,038) =========== =========== =========== =========== Net loss per share $ (0.03) $ (0.02) $ (0.06) $ (0.06) =========== =========== =========== =========== Weighted average common shares outstanding, basic and diluted: 16,909,501 16,628,576 16,909,501 17,742,801 =========== =========== =========== =========== PACIFIC BIOMARKERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended March 31 ------------------------ 2011 2010 ----------- ----------- Cash flows from operating activities: Net income (loss) $(1,124,038) $ 1,168,742 Reconciliation of net income (loss) to net cash provided by operating activities: Depreciation and amortization 243,447 192,000 Accretion of fair value assigned to conversion feature and warrants - 88,134 Amortization of deferred financing costs on secured convertible note - 18,447 Gain from embedded and freestanding derivative liabilities relating to secured convertible note - (675,691) Amortization of fair value assigned to repurchased shares of common stock 36,846 - Discount accretion and premium amortization of held-to-maturity securities 6,710 - Warrant expense for equipment lease and financing - 3,940 Compensation expense from restricted shares and options 73,694 101,218 Changes in assets and liabilities: Accounts receivable 1,035,860 363,064 Other receivable 2,500 444,791 Inventory (107,346) 34,418 Prepaid expenses and other assets (19,975) (35,134) Advances from customers 46,490 (72,380) Accounts payable (14,662) (221,355) Accrued liabilities (273,207) (61,060) ----------- ----------- Net cash provided by (used in) operating activities (93,681) 1,349,134 ----------- ----------- Cash flows from investing activities: Purchases of capital equipment (95,103) (42,159) Purchases of investments (506,710) - Maturities of investments 500,000 - ----------- ----------- Net cash used in investing activities (101,813) (42,159) ----------- ----------- Cash flows from financing activities: Payments on notes payable - (869,136) Proceeds from loan 4,000,000 - Repurchases of common stock (1,674,335) - Restricted stock transferred for employee withholding tax liability (65,614) - Payments on capital lease obligations (119,002) (32,291) ----------- ----------- Net cash provided by (used in) financing activities 2,141,049 (901,427) ----------- ----------- Net increase in cash and cash equivalents 1,945,555 405,548 Cash and cash equivalents, beginning of period 1,365,406 1,196,310 ----------- ----------- Cash and cash equivalents, end of period $ 3,310,961 $ 1,601,858 =========== =========== Supplemental Information: Cash paid during the period for interest $ 264,850 $ 61,993 =========== =========== Non-cash investing and financing activities: Capital expenditures funded by capital lease borrowings $ 470,458 $ 142,058 =========== ===========