-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 C3LXFy+DruAzsemQh8FFWiIDzXB4aAJSkLTiz4PcyL6pxXbYsURyVIaq+hmNUdWs
 0coLSZNzbSq7DlpR2piTSw==

<SEC-DOCUMENT>/in/edgar/work/0000897101-00-001097/0000897101-00-001097.txt : 20001115
<SEC-HEADER>0000897101-00-001097.hdr.sgml : 20001115
ACCESSION NUMBER:		0000897101-00-001097
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20000930
FILED AS OF DATE:		20001114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			APPLIED BIOMETRICS INC
		CENTRAL INDEX KEY:			0000816568
		STANDARD INDUSTRIAL CLASSIFICATION:	 [3845
]		IRS NUMBER:				411508112
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		10-Q
			SEC ACT:		
			SEC FILE NUMBER:	000-22146
			FILM NUMBER:		763802
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		501 E HGWY 13 STE 108
				CITY:			BURNSVILLE
				STATE:			MN
				ZIP:			55337
				BUSINESS PHONE:		6128901123
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		501 EAST HWY 13
					CITY:			BURNSVILLE
					STATE:			MN
					ZIP:			55337
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>



- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 -------------------------------------------------------------------------------


                                      FORM 10-Q

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                  For quarterly period ended September 30, 2000
                                       OR
     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                   For the transition period from ____ to ____

                         Commission File Number 0-22146


               ---------------------------------------------------


                            APPLIED BIOMETRICS, INC.
             (Exact name of Registrant as specified in its charter)

                        State of Incorporation: Minnesota
                 I.R.S. Employer Identification No.: 41-1508112

                   Principal Executive Offices: P.O. Box 3170
                           Burnsville, Minnesota 55337
                        Telephone Number: (952) 890-1123


               ---------------------------------------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ___X___ No ______

On October 31, 2000, there were 5,883,404 shares of the Registrant's common
stock, par value $.01 per share, outstanding.

<PAGE>


ITEM 1. FINANCIAL STATEMENTS

APPLIED BIOMETRICS, INC.
STATEMENT OF NET ASSETS IN LIQUIDATION
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                           September
                                                                              30,
                                                                             2000
                                                                             ----
                                                                          (Unaudited)
<S>                                                                      <C>
ASSETS
Cash and cash equivalents ...........................................    $    978,696
Prepaid expenses and other current assets ...........................          78,766
Equipment, machinery and furniture, net .............................         242,430
Patents and other intangibles, net ..................................          23,000
                                                                         ------------
  Total assets ......................................................    $  1,322,892
                                                                         ============

LIABILITIES
Accounts payable ....................................................    $    104,225
Other current liabilities ...........................................          43,226
Reserve for estimated costs during period of liquidation ............         347,250
                                                                         ------------
  Total liabilities .................................................         494,701
                                                                         ------------

  Net assets ........................................................    $    828,191
                                                                         ============
</TABLE>


The accompanying notes are an integral part of the unaudited financial
statements.


                                       2
<PAGE>


APPLIED BIOMETRICS, INC.
CONDENSED BALANCE SHEET
(GOING CONCERN BASIS)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                             December 31,
                                                                                 1999
                                                                                 ----
<S>                                                                          <C>
ASSETS
Current assets:
Cash and cash equivalents ...............................................    $  1,910,356
Inventories, net ........................................................         167,109
Prepaid expenses and other current assets ...............................          90,577
                                                                             ------------
  Total current assets ..................................................       2,168,042

Equipment and leasehold improvements, net ...............................         550,675
Patents and other intangibles, net ......................................          99,437
Other assets ............................................................           9,585
                                                                             ------------
  Total assets ..........................................................    $  2,827,739
                                                                             ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................    $     95,255
Accrued expenses and short-term debt obligations ........................         195,849
Current maturities of capital lease obligations .........................           8,333
                                                                             ------------
  Total current liabilities .............................................         299,437

Non-current liabilities:
Capital lease obligation ................................................          11,677
                                                                             ------------
  Total liabilities .....................................................         311,114
                                                                             ------------

Shareholders' equity:
Undesignated stock: authorized 5,000,000 shares of $.01 par value;
  None issued or outstanding at June 30, 2000 and December 31, 1999 .....              --
Common stock: authorized 20,000,000 shares of $.01 par value;
  5,883,404 issued and outstanding at June 30, 2000 and 5,229,004 at
  December 31, 1999 .....................................................          52,990
Additional paid-in capital ..............................................      23,362,233
Accumulated deficit .....................................................     (20,898,598)
                                                                             ------------
  Total shareholders' equity ............................................       2,516,625
                                                                             ------------
  Total liabilities and shareholders' equity ............................    $  2,827,739
                                                                             ============
</TABLE>


The accompanying notes are an integral part of the unaudited financial
statements.


                                       3
<PAGE>


APPLIED BIOMETRICS, INC.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
SEPTEMBER 1, 2000 THROUGH SEPTEMBER 30, 2000
- --------------------------------------------------------------------------------

Net assets in liquidation as of September 1, 2000................      $925,557


Change in net assets.............................................       (97,366)
                                                                      ---------

Net assets in liquidation as of September 30, 2000...............     $ 828,191
                                                                      =========


The accompanying notes are an integral part of the unaudited financial
statements.


                                       4
<PAGE>


APPLIED BIOMETRICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           Eight Months      Nine Months
                                                              Ended             Ended
                                                            August 31,      September 30,
                                                               2000             1999
                                                               ----             ----
<S>                                                        <C>              <C>
Operating expenses:

Selling, general and administrative ...................    $    911,766     $    778,949

Research and development ..............................       1,500,337          972,210
                                                           ------------     ------------

Operating loss ........................................      (2,412,103)      (1,751,159)


Other income, net .....................................          57,227           56,711
                                                           ------------     ------------

Net loss ..............................................    $ (2,354,876)    $  1,694,448)
                                                           ============     ============

Basic and diluted net loss per share ..................    $      (0.42)    $      (0.38)
                                                           ============     ============


Weighted-average common shares outstanding ............       5,655,380        4,443,723
                                                           ============     ============
</TABLE>


The accompanying notes are an integral part of the unaudited financial
statements.


                                        5
<PAGE>

APPLIED BIOMETRICS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(GOING CONCERN BASIS)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       Additional
                                              Common Stock              Paid in      Accumulated
                                         Shares          Amount         Capital        Deficit
                                     --------------------------------------------------------------
<S>                                     <C>          <C>             <C>              <C>
December 31, 1997 ...............       4,276,117    $     42,761    $ 20,278,959     $(15,050,518)

Exercise of stock options .......          61,000             610         281,890

1998 Net loss ...................                                                       (3,402,138)
                                     --------------------------------------------------------------
December 31, 1998 ...............       4,337,117          43,371      20,560,849      (18,452,656)

Exercise of stock options .......         146,887           1,469       1,076,143

Issuance of stock, net of
  offering costs ................         815,000           8,150       2,059,412

Distribution of the net assets of
  Cardia, Inc. ..................                                        (334,171)

1999 Net loss ...................                                                       (2,445,942)
                                     --------------------------------------------------------------
December 31, 1999 ...............       5,299,004    $     52,990    $ 23,362,233     $(20,898,598)

Stock option activity ...........           9,400              94          33,440

Non-employee stock awards .......          50,000             500         152,650

Warrant issued in capital lease
  transaction ...................                                           4,506

Issuance of stock, net of
  offering costs ................         525,000           5,250       1,485,590

Net loss for the eight-month
  period ended August 31, 2000 ..                                                       (2,354,876)
                                     --------------------------------------------------------------
August 31, 2000 (unaudited) .....       5,883,404    $     58,834    $ 25,038,419     $(23,253,474)
                                     ==============================================================
</TABLE>


The accompanying notes are an integral part of the unaudited financial
statements.


                                       6
<PAGE>


APPLIED BIOMETRICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                      One Month       Eight Months      Nine Months
                                                                         Ended           Ended            Ended
                                                                     September 30,     August 31,      September 30,
                                                                         2000             2000             1999
                                                                     ------------     ------------     ------------
                                                                     (Liquidation    (Going Concern   (Going Concern
                                                                         Basis)           Basis)           Basis)
<S>                                                                  <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Decrease in net assets in liquidation ...........................    $    (97,366)
Net loss ........................................................              --     $ (2,354,875)    $ (1,694,448)

Adjustments to reconcile net loss from continuing operations
  to net cash used by operating activities:
Depreciation and amortization of capital leases .................              --          152,428          145,585
Amortization of patents and other intangible assets .............              --           27,467           10,848
Value of common stock issued in lieu of cash compensation .......              --          153,150               --
Value of stock options and warrants issued in lieu of cash ......              --           11,901               --
Gain on disposal of assets ......................................              --           (1,857)              --

Changes in operating assets and liabilities:
Inventories .....................................................                          167,109            5,704
Prepaid expenses, other current assets and other assets .........          (4,977)          57,851          (10,187)
Accounts payable and accrued expenses ...........................        (385,142)        (103,795)         193,016)
                                                                     ------------     ------------     ------------
Net cash used in continuing operations ..........................        (487,485)      (1,890,621)      (1,349,482)
Net cash used in discontinued operations ........................              --               --         (120,548)
                                                                     ------------     ------------     ------------
Net cash used in operating activities ...........................        (487,485)      (1,890,621)      (1,470,030)
                                                                     ------------     ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity of marketable securities ...............................              --               --          500,000
Purchase of equipment and improvements ..........................              --          (25,647)        (303,824)
Investments in patents and trademarks ...........................              --          (19,763)          (6,323)
Discontinued operations, net ....................................              --               --          (10,981)
                                                                     ------------     ------------     ------------
Net cash provided by (used in) investing activities .............              --          (45,410)         178,872
                                                                     ------------     ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock, net of ..............                        1,490,840        2,057,941
Proceeds from exercise of stock options .........................                           26,139           75,001
Proceeds from capital lease obligations, net of repayments ......         (20,413)          (4,710)          (1,479)
                                                                     ------------     ------------     ------------
Net cash provided by financing activities .......................         (20,413)       1,512,269        2,131,463
                                                                     ------------     ------------     ------------

Net decrease in cash and cash equivalents .......................        (507,898)        (423,762)        (840,305)
Cash and cash equivalents at beginning of year ..................       1,486,594        1,910,356        1,869,413
                                                                     ------------     ------------     ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................    $    978,696     $  1,486,594     $  2,709,718
                                                                     ============     ============     ============
</TABLE>


The accompanying notes are an integral part of the unaudited financial
statements.


                                       7
<PAGE>


APPLIED BIOMETRICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

(1) BASIS OF PRESENTATION AND LIQUIDATION BASIS OF ACCOUNTING:

The accompanying unaudited condensed financial statements of Applied Biometrics,
Inc. ("Applied Biometrics" or the "Company") have been prepared by the Company
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.

The Company adopted the liquidation basis of accounting as of September 1, 2000.
This basis of accounting is considered when the liquidation of a company appears
imminent and the net realizable value of its assets is reasonably determinable.
Under this basis of accounting, assets and liabilities are stated at their net
realizable value and estimated costs through the liquidation date are provided
to the extent reasonably determinable.


                                       8
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS CONTAINED IN THIS FORM 10-Q INCLUDE "FORWARD LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. ALL FORWARD-LOOKING STATEMENTS IN THIS REPORT ARE BASED ON INFORMATION
AVAILABLE TO THE COMPANY AS OF THE DATE HEREOF AND THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT. SUCH STATEMENTS INVOLVE
KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE
ACTUAL RESULT TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESS OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THESE
FACTORS INCLUDE, AMOUNT OTHERS, THE COMPANY'S ABILITY TO IDENTIFY, NEGOTIATE AND
COMPLETE THE SALE OR DISPOSITION OF ITS CORPORATE ASSETS AND ACHIEVE VALUE FOR
ITS SHAREHOLDERS.

Applied Biometrics, Inc. ("Applied Biometrics" or the "Company") ceased
operations August 22, 2000 due to continuing technical difficulties facing its
cardiac output monitor development and its limited financial capabilities. The
Company engaged Manchester Companies, Inc. ("Manchester"), a Minneapolis-based
advisory and investment-banking firm, to sell the Company's remaining corporate
assets and to perform the final termination of its operations. In concert with
the decision to engage Manchester, two of the Company's four directors resigned
their Board positions and a representative of Manchester was elected as interim
Chief Executive Officer. The Company's former Chief Executive Officer continues
as a Director. The Company will attempt to sell its intellectual property and
corporate shell and conduct a final liquidation of its assets.

The Company has adopted the liquidation basis of accounting as of September 1,
2000. This basis of accounting is considered appropriate when the liquidation of
a company appears imminent and the net realizable value of its assets is
reasonably determinable. Under this basis of accounting, assets and liabilities
are stated at their net realizable value and estimated costs through the
liquidation date are provided to the extent reasonably determinable.

Selling, general and administrative expenses for the eight months ended August
31, 2000 were $912,000 as compared to $779,000 in the nine-month period ended
September 30, 1999. In conjunction with the termination of the Company's
operations, $100,000 of employee termination costs was incurred during the
eight-month period. During the second quarter, the Company incurred a non-cash
compensation charge of $153,000 related to stock granted to the Company's three
non-employee directors for prior and current board service. Non-employee
directors of the Company served without cash compensation.

Research and development expenses were $1,500,000 for the 2000 eight-month
period as compared to $972,000 in the 1999 nine-month period. In conjunction
with the termination of the Company's operations, $100,000 of employee
termination costs was incurred during the eight-month period. Additionally, in
the second quarter the Company wrote-off $210,000 of its monitor and probe
component inventory.

Other income, primarily interest income, in the 2000 eight-month period was
$57,000 as compared to $56,000 in the 1999 nine-month period.

On a going concern basis, the net loss for the 2000 eight-month period was
$2,355,000, or $0.42 per share, compared to a net loss of $1,694,000, or $0.38
per share in 1999 nine-month period.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $979,000 at September 30, 2000 as compared to
$1,910,000 of cash and cash equivalents at December 31, 1999, a decrease of
$931,000. Operating activities during the period used cash of $2,378,000,
consisting primarily of the decrease in net assets and the net loss for the
eight-month period and $489,000 decrease in current liabilities offset by
approximately $345,000 of non-cash expenses. Cash was provided to operations by
decreases in inventory of $167,000 and $53,000 of prepaid expenses. Investing
activities used $45,000 for the purchase of equipment and legal costs related to
the preparation of patent applications. Financing activities provided $1,492,000
of cash primarily from two private equity financings in April, 2000 offset by
$25,000 of net capital lease obligation repayments.


                                       9
<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- CONTINUED
- --------------------------------------------------------------------------------

The Company believes based on its current estimates that it will have sufficient
cash to settle its remaining liabilities and obligations.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


                                       10
<PAGE>


APPLIED BIOMETRICS, INC.
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits. The exhibits to this quarterly report on Form 10-Q are listed in
      the exhibit index beginning on page 13.

(b)   Form 8-K. On August 23, 2000 the Company filed a report on Form 8-K
      reporting that its Board of Directors had reached a final decision to
      terminate business operations and to dispose of its remaining corporate
      assets and on September 4, 2000 the Company file a report Form 8-K
      reporting that its Board of Directors had engaged Manchester Companies,
      Inc., a Minneapolis-based advisory and investment banking firm, to sell
      the remaining corporate assets and to perform the final termination of its
      operations.


                                       11
<PAGE>


SIGNATURES
- --------------------------------------------------------------------------------



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report signed on its behalf by the undersigned
hereunto duly authorized.


                                      APPLIED BIOMETRICS, INC.



Dated: November 14, 2000
                                      /s/ James D. Bonneville
                                      ----------------------------------------
                                      James D. Bonneville
                                      Interim Chief Executive Officer
                                      (Principal Financial Officer)


                                       12
<PAGE>

APPLIED BIOMETRICS, INC.
INDEX TO EXHIBITS
- --------------------------------------------------------------------------------

10.1  Confidential Separation Agreement dated August 15, 2000 between Applied
      Biometrics and Andrew M. Weiss (filed herewith electronically).

27.1  Financial Data Schedule for the eight-month period ended August 31, 2000
      (filed herewith electronically).


                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>CONFIDENTIAL SEPARATION AGREEMENT
<TEXT>


                                                                    EXHIBIT 10.1


                          CONFIDENTIAL SEPARATION AGREEMENT


This Confidential Separation Agreement ("Agreement") is made and entered into
this 15 day of August 2000 by and among Applied Biometrics, Inc. all of its
subsidiaries, affiliates, members and related entities (collectively: "Company"
or "Applied Biometrics"), and Andrew M. Weiss ("Mr. Weiss") as follows:

Applied Biometrics and Mr. Weiss wish to provide for the termination of their
employment relationship and all agreements that may have existed between them,
and fully and finally to settle any and all disputes Mr. Weiss may have arising
out of his employment by Applied Biometrics or the termination of that
employment, without any admission of any kind by either party.

All remaining employees of Applied Biometrics are eligible to participate in
this group exit incentive. The offer to participate will remain open until
October 15, 2000. Attached to this Agreement, as Exhibit 1 is a listing of the
job titles and ages of all individuals eligible for this incentive. There are no
remaining employees who are not eligible for this incentive.

THEREFORE, in consideration of the promises and agreements set forth in this
Agreement, Applied Biometrics and Mr. Weiss agree as follows:

                                       RELEASE

1.    Employment Separation:

      a.    Separation: Effective on October 31, 2000, or on an earlier date
            mutually agreed upon by Mr. Weiss and Applied Biometrics, Mr. Weiss
            shall have no duties and no authority to make any representations or
            commitments on behalf of Applied Biometrics as an employee or in any
            capacity whatsoever. Thereafter, Mr. Weiss shall have no further
            rights deriving from his employment by Applied Biometrics, and shall
            not be entitled to any further compensation or non-vested benefits,
            except as provided in this Agreement.


      b.    Consideration: In exchange for the promises and release of claims
            contained in this Agreement, and subject to its terms, Applied
            Biometrics agrees to provide Mr. Weiss the following benefits as
            consideration. If Mr. Weiss elects not to sign the Agreement, Mr.
            Weiss shall receive only those benefits and payments required by
            law.

            1)    SEVERANCE PAYMENTS.

                  (a)   Applied Biometrics will pay Mr. Weiss as severance a
                        gross amount equal to twelve months ("Severance Period")
                        salary and car allowance. This severance payment will be
                        payable as a lump sum payment, to be paid on the next
                        regularly scheduled payday following the expiration of
                        the rescission period described in


                                       1
<PAGE>

                        Paragraph 8 of the Agreement, or the last date actually
                        worked by Mr. Weiss, whichever is later. This payment
                        will be subject to all applicable deductions, including
                        federal, state, FICA and other taxes. Mr. Weiss will not
                        be eligible for bonus or bonus payments after his last
                        day of work at the Company. Applied Biometrics will
                        issue an IRS Form W-2 for this payment.

                  (b)   BENEFITS PAYMENTS. Applied Biometrics will pay Mr. Weiss
                        a lump sum payment in the amount of $8,200, which equals
                        the cost of maintaining COBRA benefits for Mr. Weiss
                        during the severance period. This payment will be made
                        on the next regularly scheduled payday following the
                        expiration of the rescission period described in
                        Paragraph 8 of the Agreement, or the last date actually
                        worked by Mr. Weiss, whichever is later. To the extent
                        such payments constitute taxable income to Mr. Weiss,
                        Mr. Weiss will pay all associated taxes.

2.    Mr. Weiss has the option to assume as primary lessee the Company's lease
      with Audi Financial Service, account #715119308, ("lease"), associated
      with a 1999 Audi A6 VIN WAUDA34B7XN076028 ("vehicle") or purchase the
      vehicle from the Company for $31,480.

      If Mr. Weiss elects to become the primary lessee of the lease, Mr. Weiss
      agrees to lease the vehicle in an "as is" condition. Mr. Weiss agrees to
      comply fully with the terms of the lease, including maintaining the
      vehicle and making all payments required under the lease. Mr. Weiss agrees
      to defend and indemnify Applied Biometrics against any and all claims and
      complaints arising from his use of the vehicle, failure to properly
      maintain the vehicle and/or failure to fully comply with the terms of the
      lease. Mr. Weiss agrees to maintain insurance on the vehicle as is
      required by the lease, naming Applied Biometrics as an additional insured.

      Mr. Weiss has until September 15, 2000 to elect either to assume the lease
      or purchase the vehicle from the Company. If Mr. Weiss does not choose
      either of the above options, Mr. Weiss agrees to return the vehicle to
      Carousel Automobiles on or before September 30, 2000.

3.    Mr. Weiss certifies that he has reviewed the Agreement provided by Applied
      Biometrics, given to him on or before August 15, 2000.

      Mr. Weiss has forty-five (45) days to consider whether to accept this
      Agreement and enter into this Release, and he has been advised to consult
      with legal counsel of his choice. If he chooses to sign before forty-five
      (45) days have passed, he understands that it is his decision to execute
      the Agreement early and that Applied Biometrics has made the full
      forty-five (45) day period available for his to consider the Agreement.

4.    Mr. Weiss understands that the offer to accept the Agreement remains in
      effect for forty-five (45) days after August 15, 2000. After forty-five
      (45) days have passed, this offer


                                       2

<PAGE>


      expires and Applied Biometrics will be under no obligation to accept the
      release or to provide any benefits under the Agreement.

5.    After considering the Agreement and other relevant matters, Mr. Weiss
      voluntarily agrees to waive any claims he (or anyone acting in his name or
      on his behalf) may have against Applied Biometrics relating to his
      employment with or separation from Applied Biometrics in exchange for the
      consideration described in Paragraph 1. Mr. Weiss understands that this is
      a full and complete release and waiver of all claims, complaints, causes
      of action or demands relating to his employment with and separation from
      Applied Biometrics that she/he may have against Applied Biometrics, its
      successors, affiliates or related companies, all directors, officers,
      employees and agents of Applied Biometrics, as of the date of his signing
      the Release (the "Claims") based on events occurring up to the date he
      signs this Agreement.

      Mr. Weiss understands that this Release extends to, but is not limited to,
      any Claims which he may have for age discrimination or any other form of
      employment discrimination prohibited under Title VII of the Civil Rights
      Act of 1964, the Age Discrimination in Employment Act, the Older Workers
      Benefit Protection Act, the American with Disabilities Act, ERISA, the
      Rehabilitation Act of 1973, the Minnesota Human Rights Act, the Minnesota
      Human Rights Act, and any other local state or federal anti-discrimination
      law or ordinance, any applicable wage and hour laws, and for wrongful
      discharge, breach of contract, breach of any express or implied promise,
      retaliation, breach of public policy, defamation, negligence or other
      tortious conduct, or any other theory, whether legal or equitable and
      including any Claims which could have been asserted to date. Mr. Weiss
      acknowledges that he has been provided a full opportunity to review and
      reflect on the terms of this Agreement and to seek legal counsel of his
      choice, and any and all releases and waivers have been made with advice of
      counsel. Notwithstanding the provisions of this Paragraph, nothing in this
      Agreement shall be construed as a waiver by Mr. Weiss or Applied
      Biometrics of any claim either may have for insurance coverage for defense
      costs and/or indemnity based on actions performed by Mr. Weiss during his
      employment at Applied Biometrics. Nothing in this agreement shall be
      construed as waiving Mr. Weiss's coverage or rights under the Company's
      Director and Officers Insurance Policy.

6.    Mr. Weiss agrees to keep the terms of the Agreement strictly confidential,
      except that he may disclose the terms of the Agreement to his spouse, his
      attorney and tax advisor, or as required by law, provided each party to
      whom disclosure occurs is advised and agrees not to disclose the
      information further. Mr. Weiss understands and agrees that except as set
      forth in this paragraph, disclosure in any fashion of the existence of
      this Agreement or any or all of its terms or conditions shall be a
      material breach of the Agreement. Mr. Weiss agrees that any breach of this
      confidentiality provision shall be specifically enforceable by a court of
      law or equity, and further agrees to indemnify and hold Applied Biometrics
      harmless for any costs, including reasonable attorneys' fees, incurred in
      the enforcement of this confidentiality provision.


                                       3
<PAGE>


7.    Mr. Weiss agrees to refrain from making, or encouraging others to make,
      any disparaging remarks about Applied Biometrics, including Applied
      Biometrics' divisions, subsidiaries, affiliates, officers, directors,
      employees, agents, and locations worldwide.

8.    Mr. Weiss acknowledges that he has been provided a full opportunity to
      review and reflect on the terms of the Agreement and to seek the legal
      counsel of his choice. Mr. Weiss further acknowledges that he fully
      understands and accepts the terms of the Agreement, and that he has
      voluntarily and knowingly given it to Applied Biometrics.

9.    Mr. Weiss realizes that he may cancel the Agreement at any time on or
      before the fifteenth (15th) day following the date on which he signs this
      Agreement. He understands that if he cancels the Agreement, the Agreement
      shall not become effective or enforceable and he further understands that
      Applied Biometrics shall not pay his the consideration set forth in
      Paragraph 1. To be effective, the decision to cancel must be in writing
      and delivered to Applied Biometrics personally or by certified mail, to
      the attention of:

                              Board of Directors
                              Applied Biometrics, Inc.
                              501 East Highway 13, Suite 108
                              Burnsville, MN 55357

10.   Proprietary Information. Nothing in this Agreement shall be interpreted as
      releasing Mr. Weiss from compliance with any Applied Biometrics
      Confidentiality Agreement (or similar titled agreement) that Mr. Weiss may
      have executed. Mr. Weiss agrees not to disclose, in any manner to any
      person, any Applied Biometrics Confidential Information. Mr. Weiss agrees
      to return all originals and copies of documents containing Confidential
      Information as well as all documents generated by Mr. Weiss on behalf of
      Applied Biometrics and all documents relating to the business of Applied
      Biometrics from any source whatsoever. For purposes of this Agreement,
      "Applied Biometrics Confidential Information" means any information that
      Mr. Weiss learned or developed during the course of employment with
      Applied Biometrics that derives independent economic value from not being
      generally known, or not being readily ascertainable by proper means, by
      other persons who can obtain economic value from the disclosure or use of
      such information. Such information includes, but is not limited to Applied
      Biometrics' sales information, information about new or future products,
      Applied Biometrics' marketing plans and goals, lists of Applied
      Biometrics' customers and the identities of preferred customers,
      information about customer purchases and preferences, information
      regarding research and development, information regarding management
      systems and any other confidential information which provides Applied
      Biometrics with a competitive advantage.

11.   Miscellaneous. Except for agreements described in Paragraph 9, this
      Agreement constitutes the entire agreement among the parties hereto as to
      the subject matter hereof and supersedes all other previous written or
      oral agreements or understandings as to such subject matter. This
      Agreement may be modified, and the performance of it may be waived only by
      a writing signed by each of the parties hereto. No parol or other evidence
      may be offered to add to, contradict or otherwise interpret this
      Agreement, which all


                                       4
<PAGE>


      parties agree is clear and concise as to its meaning. This Agreement may
      be signed in any number of counterparts with the same effect as if the
      signatures and all such counterparts were on the same instrument. This
      Agreement shall be construed and enforced in accordance with, and the laws
      of the State of Minnesota shall govern all questions concerning the
      construction, validity, interpretation and performance of this Agreement
      without giving effect to provisions thereof regarding conflict of laws.




        IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of this 15 day of August 2000.


Date:   August 24, 2000                  Date:   August 24, 2000
       -------------------------------          -------------------------------
        /s/ Andrew M. Weiss              By:     /s/ Jeffrey Green
       -------------------------------          -------------------------------
        Mr. Andrew M. Weiss                      Director
                                                -------------------------------
                                                 Applied Biometrics, Inc.


                                        5
<PAGE>


LISTING OF JOB TITLES AND AGES OF ALL EMPLOYEES THAT ARE ELIGIBLE FOR THIS
INCENTIVE

                         JOB TITLE                         AGE
      ----------------------------------------------------------------
        President & Chief Executive Officer                43


                                        6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>


<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION FROM FINANCIAL STATEMENTS AND
RELATED NOTES FOR THE PERIOD ENDED SEPTEMBER 30, 2000.
</LEGEND>

<S>                             <C>
<PERIOD-TYPE>                   8-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               AUG-31-2000
<CASH>                                         978,696
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                             1,322,892
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                       0
<CURRENT-LIABILITIES>                          494,701
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             0
<OTHER-SE>                                     828,191
<TOTAL-LIABILITY-AND-EQUITY>                         0
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                2,412,103
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                      0
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                         (2,354,876)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                         0
<EPS-BASIC>                                       (.42)
<EPS-DILUTED>                                     (.42)



</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
