Company Profile

Pacific Biometrics Inc. Reports First Quarter Operating Results

Net Loss Improved 96% Over First Quarter FY 2008

Seattle, Washington, 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)
Pacific Biometrics primarily provides specialty reference laboratory services to support pharmaceutical and laboratory diagnostic manufacturers in the conduct of human clinical research, for use in their drug and diagnostic product development efforts. Pacific Biometrics, Inc. is well-recognized for its specialization in cardiovascular disease (dyslipidemia, atherosclerosis, and coronary heart disease); diabetes, obesity and metabolic syndrome; and bone/joint diseases (osteoporosis, osteo- and rheumatoid arthritis). Coupled with its specialty testing, the Company also provides central laboratory support for multi-center clinical trials. Additional information on the Company is available on its website at http://www.pacbio.com.

Pacific Biometrics, Inc. is headquartered in Seattle, Washington. The Company’s ordinary (common) shares are traded on the OTC: BB under the symbol “PBME”. Additional information on the Company is available on its website at http://www.pacbio.com.

Contact:

Pacific Biometrics, Inc.
Ron Helm, Chairman and CEO
(206) 298-0068

R. Jerry Falkner CFA
RJ Falkner & Company, Inc.
Investor Relations Counsel
(800) 377-9893
email at info@rjfalkner.com

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PACIFIC BIOMETRICS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS	30-Sep-08	30-Jun-08
	(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

LIABILITIES AND STOCKHOLDERS' EQUITY
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 statements.

PACIFIC BIOMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	Three Months Ended
	30-Sep-08	30-Sep-07
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 statements.

PACIFIC BIOMETRICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
	Three Months Ended
	30-Sep-08	30-Sep-07
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 statements.