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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 26, 1999 0-21537
Date of Report (Date of earliest event reported) Commission File Number
PACIFIC BIOMETRICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-1211114
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
23120 Alica Parkway, Suite 200
Mission Viejo, CA 92692
(Address of Principal Executive Offices) (Zip Code)
(949) 455-9724
(Registrant's telephone number, including area code)
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Item 5. Other Events.
On August 30, 1999, Pacific Biometrics, Inc. (the "Company") announced by press
release that the Company entered into a Letter of Intent with Saigene
Corporation ("Saigene"), signed on August 26, 1999, to sell to Saigene the
assets, properties, and business of the Company' subsidiary in Seattle,
Washington ("PBIW"), which consists primarily of the Company's laboratory
operations. The Letter of Intent specifies that Saigene will assume certain
liabilities of PBIW and acquire and deliver to the Company all of the
outstanding Series A Convertible Preferred Stock. The total obligations assumed
or acquired by Saigene will not exceed $4.0 million. This transaction
specifically excludes the Osteopatch(Trademark) and SalivaSac(Registered)
technologies of the Company. In the year ended June 30, 1999, the Company
generated revenue of approximately $1.4 million from PBIW and approximately $0.1
million from the Osteopatch and SalivaSac technologies.
The Company sold the Series A Convertible Preferred Stock in 1998 in two
transactions totaling $3.1 million. This stock, which has an 8% dividend, is
convertible into 1,550,000 shares of Common Stock. As of August 30th, the
Company is in arrears on dividend payments totaling $208,000. If the transaction
with Saigene is completed, the Company will have no further obligations to the
preferred shareholders including dividends and conversion rights.
The Saigene Letter of Intent provides exclusivity to Saigene for 45 days and
Saigene has a right of first refusal regarding any other offers for PBIW for an
additional period of 45 days. The offer to purchase PBIW assets, properties and
business is subject to a number of contingencies including: (1) the successful
negotiation of a mutually acceptable agreement between Saigene and the Preferred
Shareholders for the acquisition of their stock; (2) the approval of certain
creditors of the Company; (3) completion of due diligence by Saigene to their
satisfaction; and (4) Saigene successfully obtaining financing sufficient, in
the sole opinion of Saigene's management, to adequately fund the combined
operations of Saigene and PBIW, but in no event less than $2.0 million. There
can be no assurance that these contingencies will be satisfied as they are not
under the control of the Company. In addition, this transaction will require
shareholder approval.
The Company does not currently have sufficient financial resources to initiate
and complete the process of shareholder approval and such resources may not be
obtainable in a timely manner or at all. Furthermore, the Company may have to
cease operations due to insufficient cash resources. While the Company is
attempting to negotiate a management contract with Saigene in order to avoid a
potential shut-down of PBIW, there can be no assurance that Saigene will be in a
position to assume financial responsibility for PBIW and that the Company and
Saigene will agree to terms.
If the transaction with Saigene is successfully completed, the remainder of the
Company is not viable as currently structured. Accordingly, the Company is
seeking to sell technology and/or merge the Company with another entity that
would be financially viable. There can be no assurance that the Company will be
able to sell any of its technology or find another company for a merger. Failure
to sucessfully consumate the transaction with Saigene or to sell additional
assets or merge, would likely lead to a ceasing of all operations of the
Company.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) not applicable
(b) not applicable
(c) Exhibits
99 Press Release dated August 30, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 30, 1999 PACIFIC BIOMETRICS, INC.
By: /s/Paul G. Kanan
-----------------------------
Name: Paul G. Kanan
Title: President and Chief Executive Officer
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EXHIBIT 99
Press Release
For Release Immediately
Contact: Peter Ludlum
Pacific Biometrics, Inc.
949-455-9724
www.pacbio.com
PACIFIC BIOMETRICS ANNOUNCES LETTER OF INTENT TO SELL ASSETS
Mission Viejo, CA (August 30, 1999) .......... Pacific Biometrics, Inc. (OTC
Bulletin Board: PBMI), announced today that the Company has entered into a
Letter of Intent with Saigene Corporation ("Saigene") to sell to Saigene the
assets, properties, and business of the Company's subsidiary in Seattle,
Washington (PBIW), which consists primarily of the Company's laboratory
operations. The Letter of Intent specifies that Saigene will assume certain
liabilities of PBIW and acquire and deliver to the Company all of the
outstanding Series A Convertible Preferred Stock. The total obligations assumed
or acquired by Saigene will not exceed $4.0 million. This transaction
specifically excludes the Osteopatch(Trademark) and SalivaSac(Registered)
technologies of the Company. In the year ended June 30, 1999, the Company
generated revenue of approximately $1.4 million from PBIW and approximately $0.1
million from the Osteopatch and SalivaSac technologies.
The Company sold the Series A Convertible Preferred Stock in 1998 in two
transactions totaling $3.1 million. This stock, which has an 8% dividend, is
convertible into 1,550,000 shares of Common Stock. As of August 30th, the
Company is in arrears on dividend payments totaling $208,000. If the transaction
with Saigene is completed, the Company will have no further obligations to the
preferred shareholders including dividends and conversion rights.
Saigene is a development stage, privately held diagnostics company located in
Redmond, Washington. The company is developing diagnostic tests for many
applications using proprietary DNA probe technology. Ronald R. Helm, Saigene's
Chief Executive Officer, commented, "The PBI laboratory will be an important
asset for Saigene in that it will allow us to accelerate our business plan. We
intend to maintain the very high quality standards of the PBI laboratory, expand
their current business and introduce DNA probe technology tests through this
laboratory. We believe that PBI customers will benefit as well as Saigene
shareholders."
The Saigene Letter of Intent provides exclusivity to Saigene for 45 days and
Saigene has a right of first refusal regarding any other offers for PBIW for an
additional period of 45 days. The offer to purchase PBIW assets, properties and
business is subject to a number of contingencies including: (1) the successful
negotiation of a mutually acceptable agreement between Saigene and the Preferred
Shareholders for the acquisition of their stock; (2) the approval of certain
creditors of the Company; (3) completion of due diligence by Saigene to their
satisfaction; and (4) Saigene successfully obtaining financing sufficient, in
the sole opinion of Saigene's management, to adequately fund the combined
operations of Saigene and PBIW, but in no event less than $2.0
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million. There can be no assurance that these contingencies will be satisfied as
they are not under the control of the Company. In addition, this transaction
will require shareholder approval.
If the transaction with Saigene is successfully completed, the remainder of the
Company is not viable as currently structured. Accordingly, the Company is
seeking to sell technology and/or merge the Company with another entity that
would be financially viable. There can be no assurance that the Company will be
able to sell any of its technology or find another company for a merger. Failure
to sell additional assets or merge, would likely lead to a ceasing of all
operations of the Company. Additional information about this proposed
transaction is contained in the Company's Form 8-K, to be filed with the SEC.
Pacific Biometrics, Inc. is an early stage company engaged in the development of
non-invasive diagnostics and laboratory services to improve the detection and
management of chronic diseases. The Company has been developing applications in
diabetes and osteoporosis based on two proprietary technology platforms, the
SalivaSac(Registered) saliva collection device and the SweatPatch(Trademark)
sweat collection device.
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