Delaware | 20-0653570 | |
Incorporation or Organization) | (IRS Employer Identification No.) |
Pharma-Bio Serv Building, #6 Road 696 Dorado, Puerto Rico | 00646 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | o | Smaller reporting company | þ |
Page | ||||||
PART I | ||||||
ITEM 1 | BUSINESS | 1 | ||||
ITEM 1A | RISK FACTORS | 5 | ||||
ITEM 1B | UNRESOLVED STAFF COMMENTS | 11 | ||||
ITEM 2 | PROPERTIES | 11 | ||||
ITEM 3 | LEGAL PROCEEDINGS | 11 | ||||
ITEM 4 | MINE SAFETY DISCLOSURES | 11 | ||||
PART II | ||||||
ITEM 5 | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 12 | ||||
ITEM 6 | SELECTED FINANCIAL DATA | 12 | ||||
ITEM 7 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 12 | ||||
ITEM 7A | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 19 | ||||
ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (See F-1) | 19 | ||||
ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 19 | ||||
ITEM 9A | CONTROLS AND PROCEDURES | 20 | ||||
ITEM 9B | OTHER INFORMATION | 20 | ||||
PART III | ||||||
ITEM 10 | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 21 | ||||
ITEM 11 | EXECUTIVE COMPENSATION | 21 | ||||
ITEM 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 21 | ||||
ITEM 13 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 21 | ||||
ITEM 14 | PRINCIPAL ACCOUNTING FEES AND SERVICES | 21 | ||||
PART IV | ||||||
ITEM 15 | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | 22 | ||||
SIGNATURES | 25 | |||||
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | F-1 |
● | Training Programs - including a Current Good Manufacturing Practices exam prior to recruitment and periodic refreshers; |
● | Recruitment Full Training Program - including employee manual, dress code, time sheets and good project management and control procedures, job descriptions, and firm operating and administration procedures; |
● | Safety Program - including OSHA, Environmental Health and Safety; and |
● | Code of Ethics and Business Conduct - a code of ethics and business conduct is used and enforced as one of the most significant company controls on personal behavior. |
● | Continue growth in consulting services in each technical service, quality assurance, regulatory compliance, technology transfer, validation, engineering, laboratory testing and manufacturing departments by achieving greater market penetration from our marketing and sales efforts; |
● | Continue to enhance our technical consulting services through internal growth and acquisitions that provide solutions to our customers’ needs; |
● | Motivate our professionals and support staff by implementing a compensation program which includes both individual performance and overall company performance as elements of compensation; |
● | Create a pleasant corporate culture and emphasize operational quality safety and timely service; |
● | Continue to maintain our reputation as a trustworthy and highly ethical partner; and |
● | Efficiently manage our operating and financial costs and expenses. |
Name | Age | Position | |||
Nélida Plaza | 45 | Acting President and Chief Executive Officer, President of Puerto Rico Operations and Secretary | |||
Pedro J. Lasanta | 53 | Chief Financial Officer and Vice President - Finance and Administration |
● | Our clients’ perception of our ability to add value through our services; |
● | Our ability to complete projects on time; |
● | Pricing policies of competitors; |
● | Our ability to accurately estimate, attain and sustain engagement revenues, margins and cash flows over increasingly longer contract periods; and |
● | General economic and political conditions. |
● | Our ability to move employees and contractors from completed projects to new engagements; and |
● | Our ability to manage attrition of our employees and contractors. |
● | the difficulty of integrating acquired products, services or operations; |
● | the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies; |
● | the potential loss of contracts from clients of acquired companies; |
● | the difficulty of maintaining profitability due to increased labor and expenses from acquired |
● | difficulties in complying with regulations in other countries that relate to both the pharmaceutical or other industries to which we provide services as well as our own operations; |
● | difficulties in maintaining uniform standards, controls, procedures and policies; |
● | the potential impairment of relationships with employees and customers as a result of any integration of new management personnel; |
● | the potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers; |
● | the effect of any government regulations which relate to the business acquired; |
● | potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the marketing and sales of acquired products or the defense of any litigation, whether of not successful, resulting from actions of the acquired company prior to our acquisition; |
● | difficulties in disposing of the excess or idle facilities of an acquired company or business and expenses in maintaining such facilities; and |
● | potential expenses under the labor, environmental and other laws of other countries. |
● | Seasonality, including number of workdays and holiday and summer vacations; |
● | The business decisions of clients regarding the use of our services; |
● | Periodic differences between clients’ estimated and actual levels of business activity associated with ongoing engagements, including the delay, reduction in scope and cancellation of projects; |
● | The stage of completion of existing projects and their termination; |
● | Our ability to move employees quickly from completed projects to new engagements and our ability to replace completed contracts with new contracts with the same clients or other clients; |
● | The introduction of new services by us or our competitors; |
● | Changes in pricing policies by us or our competitors; |
● | Our ability to manage costs, including personnel compensation, support-services and severance costs; |
● | Acquisition and integration costs related to possible acquisitions of other businesses; |
● | Changes in estimates, accruals and payments of variable compensation to our employees or contractors; and |
● | Global economic and political conditions and related risks, including acts of terrorism. |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Quarter Ending | High Bid | Low Bid | ||||||
January 31, 2009 | $ | 0.59 | $ | 0.27 | ||||
April 30, 2009 | 0.55 | 0.16 | ||||||
July 31, 2009 | 0.40 | 0.30 | ||||||
October 31, 2009 | 0.65 | 0.31 | ||||||
January 31, 2010 | 0.48 | 0.16 | ||||||
April 30, 2010 | 0.35 | 0.10 | ||||||
July 31, 2010 | 0.37 | 0.22 | ||||||
October 31, 2010 | 0.32 | 0.23 |
Quarter Ending | High Bid | Low Bid | ||||||
January 31, 2011 | $ | 0.35 | $ | 0.26 | ||||
April 30, 2011 | 0.40 | 0.30 | ||||||
July 31, 2011 | 0.43 | 0.20 | ||||||
October 31, 2011 | 0.78 | 0.37 | ||||||
January 31, 2012 | 0.78 | 0.65 | ||||||
April 30, 2012 | 0.90 | 0.64 | ||||||
July 31, 2012 | 0.89 | 0.65 | ||||||
October 31, 2012 | 0.93 | 0.76 |
Plan Category | Number of securities to be issued upon exercise of outstanding options and warrants | Weighted-average exercise price per share of outstanding options and warrants | Number of securities remaining available for future issuance under equity compensation plans | |||||||||
Equity compensation plans approvedby security holders | 1,267,882 | $ | 0.6942 | 1,232,118 | ||||||||
Equity compensation plans not approved by security holders | 1,830,991 | $ | 0.0600 | 16,500 |
Plan Category | Number of securities to be issued upon exercise of outstanding options and warrants | Weighted-average exercise price per share of outstanding options and warrants | Number of securities remaining available for future issuance under equity compensation plans | |||||||||
Equity compensation plans approved by security holders | 1,740,000 | $ | 0.6965 | 760,000 | ||||||||
E Equity compensation plans not approved by security holders | 1,830,991 | $ | 0.0600 | 16,500 |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND |
Year ended October 31, | Year ended October 31, | |||||||||||||||||||||||||||||||
Revenues by Region | 2010 | 2009 | 2012 | 2011 | ||||||||||||||||||||||||||||
Puerto Rico | $ | 7,532 | 66.4 | % | $ | 8,359 | 72.8 | % | $ | 16,856 | 57.7 | % | $ | 10,743 | 53.9 | % | ||||||||||||||||
United States | 1,423 | 12.5 | % | 1,972 | 17.2 | % | 9,159 | 31.3 | % | 5,868 | 29.4 | % | ||||||||||||||||||||
Ireland | 2,391 | 21.1 | % | 1,148 | 10.0 | % | ||||||||||||||||||||||||||
Europe | 3,212 | 11.0 | % | 3,322 | 16.7 | % | ||||||||||||||||||||||||||
$ | 11,346 | 100.0 | % | $ | 11,479 | 100.0 | % | $ | 29,227 | 100.0 | % | $ | 19,933 | 100.0 | % |
Year ended October 31, | Year ended October 31, | |||||||||||||||||||||||||||||||
2010 | 2009 | 2012 | 2011 | |||||||||||||||||||||||||||||
Revenues | $ | 11,346 | 100.0 | % | $ | 11,479 | 100.0 | % | $ | 29,227 | 100.0 | % | $ | 19,933 | 100.0 | % | ||||||||||||||||
Cost of services | 7,953 | 70.1 | % | 7,640 | 66.6 | % | 19,355 | 66.2 | % | 13,072 | 65.6 | % | ||||||||||||||||||||
Gross profit | 3,393 | 29.9 | % | 3,839 | 33.4 | % | 9,872 | 33.8 | % | 6,861 | 34.4 | % | ||||||||||||||||||||
Selling, general and administrative costs | 2,783 | 24.5 | % | 2,923 | 25.5 | % | ||||||||||||||||||||||||||
Interest expense | 6 | 0.1 | % | 52 | 0.4 | % | ||||||||||||||||||||||||||
Interest income | 15 | -0.1 | % | 26 | -0.2 | % | ||||||||||||||||||||||||||
Gain on disposition of property | 2 | -0.1 | % | 6 | -0.1 | % | ||||||||||||||||||||||||||
Selling, general and administrative expenses | 4,138 | 14.2 | % | 3,409 | 17.1 | % | ||||||||||||||||||||||||||
Other income, net | 22 | 0.1 | % | 12 | 0.0 | % | ||||||||||||||||||||||||||
Income before income taxes | 621 | 5.5 | % | 896 | 7.8 | % | 5,756 | 19.7 | % | 3,464 | 17.3 | % | ||||||||||||||||||||
Income tax expense | 249 | 2.2 | % | 361 | 3.1 | % | 1,069 | 3.7 | % | 305 | 1.5 | % | ||||||||||||||||||||
Net income | 372 | 3.3 | % | 535 | 4.7 | % | 4,687 | 16.0 | % | 3,159 | 15.8 | % |
Level 1: | Quoted prices in active markets for identical assets and liabilities. | |
Level 2: | Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
● | Because our business is concentrated in the pharmaceutical industry |
● | Puerto Rico government enacted ACT |
● | Changes in tax benefits may affect the willingness of companies to continue or expand their operations in Puerto Rico. |
● | Puerto Rico’s economy, including its governmental financial crisis, may affect the willingness of businesses to commence or expand operations in Puerto Rico. |
● | Other factors, including economic factors, may affect the decision of businesses to continue or expand their operations in |
● | Because our business is dependent upon a small number of clients, the loss of a major client could impair our ability to operate profitably. |
● | Customer procurement and sourcing practices intended to reduce costs could have an adverse affect on our margins and profitability. |
● | Since our business is dependent upon the development and enhancement of patented pharmaceutical products or processes by our clients, the failure of our clients to obtain and maintain patents could impair our ability to operate profitably. |
● | We may be unable to pass on increased labor costs to our clients. |
● | Consolidation in the pharmaceutical industry may have a harmful effect on our business. |
● | Because the pharmaceutical industry is subject to government regulations, changes in government regulations relating to this industry may affect the need for our services. |
● | Our reputation and divisions may be impacted by regulatory standards impacting our customer products. |
● | If we are unable to protect our clients’ intellectual property, our ability to generate business will be impaired. |
● | We may be subject to liability if our services or solutions for our clients infringe upon the intellectual property rights of others. |
● | We may be held liable for the actions of our employees or contractors when on assignment. |
● | To the extent that we perform services pursuant to fixed-price or incentive-based contracts, our cost of services may exceed our revenue on the contract. |
● | Because most of our contracts may be terminated on little or no advance notice, our failure to generate new business could impair our ability to operate profitably. |
● | Because we are dependent upon our management, our ability to develop our business may be impaired if we are not able to engage skilled personnel. |
● | We may not be able to continue to grow unless we consummate acquisitions or enter markets outside of Puerto |
● | If we identify a proposed acquisition, we may require substantial cash to fund the cost of the acquisition. |
● | If we make any acquisitions, they may disrupt or have a negative impact on our business. |
● | Because there is a limited market in our common stock, stockholders may have difficulty in selling our common stock and our common stock may be subject to significant price swings. |
● | Our |
● | The issuance of securities, whether in connection with an acquisition or otherwise, may result in significant dilution to our stockholders. |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
ITEM 9A. | CONTROLS AND PROCEDURES. |
● | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; |
● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
ITEM 9B. | OTHER INFORMATION. |
ITEM 11. | EXECUTIVE COMPENSATION. |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
1. | All Financial Statements: Consolidated Financial Statements are included herein immediately following the signature page of this report. See Index to Consolidated Financial Statements on page F-1. |
2. | Financial Statement Schedules: None. |
3. | Exhibits: The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Commission, as indicated in the description of each. |
Incorporated By Reference | |||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date |
3.1 | Restated Certificate of Incorporation | 8-K | 000-50956 | 99.1 | 5/1/2006 |
3.2 | By-laws | 10-SB12G | 000-50956 | 3.2 | 9/24/2004 |
3.3 | Amendment No. 1 to the By-laws | 8-K | 000-50956 | 3.1 | 6/6/2008 |
4.1 | Form of warrant issued to Investors in January 2006 private placement | 8-K | 000-50956 | 4.2 | 1/31/2006 |
4.2 | Form of warrant held by initial warrant holders | 8-K | 000-50956 | 4.3 | 1/31/2006 |
4.3 | Form of warrant held by San Juan Holdings | 8-K | 000-50956 | 4.4 | 1/31/2006 |
4.4 | Form of warrants issued to broker-dealers in January 2006 private placement | 8-K | 000-50956 | 4.5 | 1/31/2006 |
4.5 | Form of First Amendment to Series C Common Stock Purchase Warrant. | 8-K | 000-50956 | 4.1 | 1/29/2009 |
10.1 | Form of subscription agreement for January 2006 private placement | 8-K | 000-50956 | 99.1 | 1/31/2006 |
10.2 | Registration rights provisions for the subscription agreement relating to January 2006 private placement | 8-K | 000-50956 | 99.2 | 1/31/2006 |
10.3 | Registration rights provisions for Elizabeth Plaza and San Juan Holdings, Inc. | 8-K | 000-50956 | 99.3 | 1/31/2006 |
10.4 | Employment Agreement dated January 2, 2008 between the Registrant and Elizabeth Plaza | 10-KSB | 000-50956 | 10.5 | 1/31/2008 |
10.5 | Amendment to Employment Agreement dated June 9, 2008 between the Registrant and Elizabeth Plaza | 10-K | 000-50956 | 10.5 | 1/29/2009 |
10.6 | Second Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Elizabeth Plaza. | 8-K | 000-50956 | 10.1 | 3/17/2009 |
10.7 | Third Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Elizabeth Plaza. | 8-K | 000-50956 | 10.2 | 3/17/2009 |
Incorporated By Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | |||||
3.1 | Restated Certificate of Incorporation | 8-K | 000-50956 | 99.1 | 5/1/2006 | |||||
3.2 | By-laws | 10-SB12G | 000-50956 | 3.2 | 9/24/2004 | |||||
3.3 | Amendment No. 1 to the By-laws | 8-K | 000-50956 | 3.1 | 6/6/2008 | |||||
4.1 | Form of warrant issued to Investors in January 2006 private placement | 8-K | 000-50956 | 4.2 | 1/31/2006 | |||||
4.2 | Form of warrant held by initial warrant holders | 8-K | 000-50956 | 4.3 | 1/31/2006 | |||||
4.3 | Form of warrant held by San Juan Holdings | 8-K | 000-50956 | 4.4 | 1/31/2006 | |||||
4.4 | Form of warrants issued to broker-dealers in January 2006 private placement | 8-K | 000-50956 | 4.5 | 1/31/2006 | |||||
4.5 | Form of First Amendment to Series C Common Stock Purchase Warrant. | 8-K | 000-50956 | 4.1 | 1/29/2009 | |||||
10.1 | Form of subscription agreement for January 2006 private placement | 8-K | 000-50956 | 99.1 | 1/31/2006 | |||||
10.2 | Registration rights provisions for the subscription agreement relating to January 2006 private placement | 8-K | 000-50956 | 99.2 | 1/31/2006 | |||||
10.3 | Registration rights provisions for Elizabeth Plaza and San Juan Holdings, Inc. | 8-K | 000-50956 | 99.3 | 1/31/2006 | |||||
10.4 | Employment Agreement dated January 2, 2008 between the Registrant and Elizabeth Plaza | 10-KSB | 000-50956 | 10.5 | 1/31/2008 | |||||
10.5 | Amendment to Employment Agreement dated June 9, 2008 between the Registrant and Elizabeth Plaza | 10-K | 000-50956 | 10.5 | 1/29/2009 | |||||
10.6 | Second Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Elizabeth Plaza. | 8-K | 000-50956 | 10.1 | 3/17/2009 | |||||
10.7 | Third Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Elizabeth Plaza. | 8-K | 000-50956 | 10.2 | 3/17/2009 | |||||
10.8 | Employment Agreement Amendment, effective as of January 1, 2010, by and between the Company and Elizabeth Plaza. | 8-K | 000-50956 | 10.1 | 1/07/2010 | |||||
10.9 | Employment Agreement Amendment, effective as of July 1, 2010, by and between the Company and Elizabeth Plaza | 8-K | 000-50956 | 10.1 | 7/8/2010 | |||||
10.10 | Sixth Employment Agreement Amendment, effective as of August 23, 2010, by and between the Company and Elizabeth Plaza | 8-K | 000-50956 | 10.1 | 8/27/10 | |||||
10.11 | Employment Agreement dated January 25, 2006 between the Registrant and Nélida Plaza | 8-K | 000-50956 | 99.5 | 1/31/2006 | |||||
10.12 | Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Nelida Plaza. | 8-K | 000-50956 | 10.4 | 3/17/2009 | |||||
10.13 | Employment Agreement, dated as of December 31, 2009, by and between Pharma-Bio Serv PR, Inc. and Nelida Plaza. | 8-K | 000-50956 | 10.3 | 1/07/2010 | |||||
10.14 | Employment Agreement dated November 5, 2007 between the Registrant and Pedro Lasanta | 10-K | 000-50956 | 10.8 | 1/29/2009 | |||||
10.15 | Amendment to Employment Agreement dated December 17, 2008 between the Registrant and Pedro Lasanta | 8-K | 000-50956 | 99.1 | 12/23/2008 | |||||
10.16 | Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Pedro Lasanta. | 8-K | 000-50956 | 10.3 | 3/17/2009 | |||||
10.17 | Employment Agreement Amendment, effective as of January 1, 2010, by and between the Company and Pedro Lasanta. | 8-K | 000-50956 | 10.2 | 1/07/2010 | |||||
10.18 | 2005 Long-term incentive plan, as amended | DEF 14A | 000-50956 | Appendix C | 3/26/2007 | |||||
10.19 | Lease dated March 16, 2004 between Plaza Professional Center, Inc. and the Registrant | SB-2 | 333-132847 | 10.9 | 3/30/2006 | |||||
10.20 | Lease dated November 1, 2004 between Plaza Professional Center, Inc. and the Registrant | SB-2 | 333-132847 | 10.10 | 3/30/2006 | |||||
10.21 | Vendor Agreement dated May 4, 2006 between the Registrant and Schering-Plough Products, L.L.C. | SB-2/A | 333-132847 | 10.12 | 11/8/2006 | |||||
10.22 | Agreement dated January 17, 2006 between Lilly del Caribe, Inc. and Plaza Consulting Group, Inc. | SB-2/A | 333-132847 | 10.13 | 11/8/2006 | |||||
10.23 | Agreement effective as of November 1, 2005 between SB Pharmco Puerto Rico Inc. d/b/a GlaxoSmithKline | SB-2/A | 333-132847 | 10.14 | 10/27/2006 | |||||
14.1 | Code of business conduct and ethics for senior management | 10-KSB | 000-50956 | 14.1 | 2/2/2007 | |||||
21.1* | List of Subsidiaries | |||||||||
31.1* | Certification of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||
31.2* | Certification of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||
32.1** | Certification of chief executive officer and chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
10.8 | Employment Agreement Amendment, effective as of January 1, 2010, by and between the Company and Elizabeth Plaza. | 8-K | 000-50956 | 10.1 | 1/07/2010 |
10.9 | Employment Agreement Amendment, effective as of July 1, 2010, by and between the Company and Elizabeth Plaza | 8-K | 000-50956 | 10.1 | 7/8/2010 |
10.10 | Sixth Employment Agreement Amendment, effective as of August 23, 2010, by and between the Company and Elizabeth Plaza | 8-K | 000-50956 | 10.1 | 8/27/10 |
10.11 | Employment Agreement dated January 25, 2006 between the Registrant and Nélida Plaza | 8-K | 000-50956 | 99.5 | 1/31/2006 |
10.12 | Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Nelida Plaza. | 8-K | 000-50956 | 10.4 | 3/17/2009 |
10.13 | Employment Agreement, dated as of December 31, 2009, by and between Pharma-Bio Serv PR, Inc. and Nelida Plaza. | 8-K | 000-50956 | 10.3 | 1/07/2010 |
10.14 | Employment Agreement dated November 5, 2007 between the Registrant and Pedro Lasanta | 10-K | 000-50956 | 10.8 | 1/29/2009 |
10.15 | Amendment to Employment Agreement dated December 17, 2008 between the Registrant and Pedro Lasanta | 8-K | 000-50956 | 99.1 | 12/23/2008 |
10.16 | Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Pedro Lasanta. | 8-K | 000-50956 | 10.3 | 3/17/2009 |
10.17 | Employment Agreement Amendment, effective as of January 1, 2010, by and between the Company and Pedro Lasanta. | 8-K | 000-50956 | 10.2 | 1/07/2010 |
10.18 | 2005 Long-term incentive plan, as amended | DEF 14A | 000-50956 | Appendix C | 3/26/2007 |
10.19 | Lease dated March 16, 2004 between Plaza Professional Center, Inc. and the Registrant | SB-2 | 333-132847 | 10.9 | 3/30/2006 |
10.20 | Lease dated November 1, 2004 between Plaza Professional Center, Inc. and the Registrant | SB-2 | 333-132847 | 10.10 | 3/30/2006 |
10.21 | Vendor Agreement dated May 4, 2006 between the Registrant and Schering-Plough Products, L.L.C. | SB-2/A | 333-132847 | 10.12 | 11/8/2006 |
10.22 | Agreement dated January 17, 2006 between Lilly del Caribe, Inc. and Plaza Consulting Group, Inc. | SB-2/A | 333-132847 | 10.13 | 11/8/2006 |
10.23 | Agreement effective as of November 1, 2005 between SB Pharmco Puerto Rico Inc. d/b/a GlaxoSmithKline | SB-2/A | 333-132847 | 10.14 | 10/27/2006 |
10.24 | Seventh Employment Agreement Amendment, dated January 23, 2012 and effective as of January 1, 2012, by and between the Company and Elizabeth Plaza | 8-K | 000-50956 | 99.1 | 1/23/2012 |
10.25 | Employment Agreement Amendment, dated January 31, 2012, by and between the Company and Pedro J. Lasanta | 8-K | 000-50956 | 10.1 | 2/2/2012 |
10.26 | Employment Agreement Amendment, dated December 31, 2012, by and between the Company and Pedro J. Lasanta | 8-K | 000-50956 | 10.1 | 1/7/2013 |
10.27 | Consulting Agreement, dated January 7, 2013, by and between Pharma-Bio Serv, Inc. and Elizabeth Plaza | 8-K | 000-50956 | 10.1 | 1/11/2013 |
10.28 | Employment Agreement Amendment, dated January 7, 2013, by and among Pharma-Bio Serv, Inc., Pharma-Bio Serv PR, Inc. and Nelida Plaza | 8-K | 000-50956 | 10.2 | 1/11/2013 |
14.1 | Code of business conduct and ethics for senior management | 10-KSB | 000-50956 | 14.1 | 2/2/2007 |
21.1* | List of Subsidiaries | ||||
31.1* | Certification of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2* | Certification of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
32.1** | Certification of chief executive officer and chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||
101.INS*** | XBRL Instance Document | ||||
101.SCH*** | XBRL Taxonomy Extension Schema | ||||
101.CAL*** | XBRL Taxonomy Extension Calculation Linkbase | ||||
101.DEF*** | XBRL Taxonomy Extension Definition Linkbase | ||||
101.LAB*** | XBRL Taxonomy Extension Label Linkbase | ||||
101.PRE*** | XBRL Taxonomy Extension Presentation Linkbase |
* Filed herewith |
PHARMA-BIO SERV, INC. | |||
Dated : January | /s/ | ||
Name: | |||
Title: Acting President and CEO, and President of Puerto Rico Operations and Secretary |
Signature | Title | Date | ||
/s/ | Acting President and Chief Executive Officer, and | January | ||
(Principal Executive Officer) | ||||
/s/ Pedro J. Lasanta | Chief Financial Officer | January | ||
Pedro J. Lasanta | (Principal Financial and Accounting Officer) | |||
/s/ Elizabeth Plaza | Chairman | January 29, 2013 | ||
Elizabeth Plaza | ||||
/s/ Kirk Michel | Director | January | ||
Kirk Michel | ||||
/s/ Howard Spindel | Director | January | ||
Howard Spindel | ||||
/s/ Dov Perlysky | Director | January | ||
Dov Perlysky | ||||
/s/ Irving Wiesen | Director | January | ||
Irving Wiesen |
Page | |||
Report of Independent Registered Public Accounting Firm | F-2 | ||
Consolidated Balance Sheets as of October 31, | F-3 | ||
Consolidated Statements of Income for the Years Ended October 31, | F-4 | ||
Consolidated Statements of Comprehensive Income for the Years Ended October 31, 2012 and 2011 | F-5 | ||
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended October 31, | F-6 | ||
Consolidated Statements of Cash Flows for the Years Ended October 31, | F-7 | ||
Notes to Consolidated Financial Statements | F-8 |
October 31, | October 31, | |||||||||||||||
2010 | 2009 | 2012 | 2011 | |||||||||||||
ASSETS: | ASSETS: | |||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | $ | 2,317,168 | $ | 2,051,874 | $ | 6,538,113 | $ | 4,316,725 | ||||||||
Marketable securities | 95,000 | - | 95,000 | 95,000 | ||||||||||||
Accounts receivable | 2,520,407 | 2,034,963 | 7,580,167 | 4,864,616 | ||||||||||||
Other | 270,827 | 298,830 | 382,773 | 331,441 | ||||||||||||
Total current assets | 5,203,402 | 4,385,667 | 14,596,053 | 9,607,782 | ||||||||||||
Property and equipment | 1,321,258 | 1,567,145 | 1,113,371 | 1,216,111 | ||||||||||||
Other assets | 33,364 | 69,469 | 25,592 | 28,306 | ||||||||||||
Total assets | $ | 6,558,024 | $ | 6,022,281 | $ | 15,735,016 | $ | 10,852,199 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY: | LIABILITIES AND STOCKHOLDERS’ EQUITY: | |||||||||||||||
Current liabilities | ||||||||||||||||
Current portion-obligations under capital leases | $ | 18,227 | $ | 43,737 | $ | 39,436 | $ | 31,142 | ||||||||
Accounts payable and accrued expenses | 1,205,576 | 1,112,739 | 2,562,462 | 1,941,658 | ||||||||||||
Income taxes payable | 210,911 | 140,443 | 173,620 | 550,837 | ||||||||||||
Total current liabilities | 1,434,714 | 1,296,919 | 2,775,518 | 2,523,637 | ||||||||||||
Obligations under capital leases | 53,839 | 62,385 | 83,912 | 92,237 | ||||||||||||
Total liabilities | 1,488,553 | 1,359,304 | 2,859,430 | 2,615,874 | ||||||||||||
Stockholders' equity: | ||||||||||||||||
Preferred Stock, $0.0001 par value; authorized 10,000,000 shares; none outstanding | - | - | - | - | ||||||||||||
Common Stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding 20,751,215 shares in 2010 and 2009 | 2,075 | 2,075 | ||||||||||||||
Common Stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding 20,758,695 | 2,076 | 2,076 | ||||||||||||||
Additional paid-in capital | 645,886 | 602,508 | 678,214 | 654,550 | ||||||||||||
Retained earnings | 4,440,728 | 4,068,817 | 12,286,714 | 7,599,708 | ||||||||||||
Accumulated other comprehensive loss | (19,218 | ) | (10,423 | ) | (91,418 | ) | (20,009 | ) | ||||||||
Total stockholders' equity | 5,069,471 | 4,662,977 | 12,875,586 | 8,236,325 | ||||||||||||
Total liabilities and stockholders' equity | $ | 6,558,024 | $ | 6,022,281 | $ | 15,735,016 | $ | 10,852,199 |
Years ended October 31, | ||||||||
2012 | 2011 | |||||||
REVENUES | $ | 29,227,167 | $ | 19,933,182 | ||||
COST OF SERVICES | 19,355,440 | 13,072,231 | ||||||
GROSS PROFIT | 9,871,727 | 6,860,951 | ||||||
SELLING, GENERAL AND | ||||||||
ADMINISTRATIVE EXPENSES | 4,138,111 | 3,408,953 | ||||||
INCOME FROM OPERATIONS | 5,733,616 | 3,451,998 | ||||||
OTHER INCOME (EXPENSES): | ||||||||
Interest expense | (7,425 | ) | (6,605 | ) | ||||
Interest income | 11,076 | 19,709 | ||||||
Gain (loss) on disposition of property and equipment | 18,345 | (1,324 | ) | |||||
21,996 | 11,780 | |||||||
INCOME BEFORE INCOME TAXES | 5,755,612 | 3,463,778 | ||||||
INCOME TAXES | 1,068,606 | 304,797 | ||||||
NET INCOME | $ | 4,687,006 | $ | 3,158,981 | ||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.226 | $ | 0.152 | ||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.204 | $ | 0.140 | ||||
WEIGHTED AVERAGE NUMBER OF COMMON | ||||||||
SHARES OUTSTANDING – BASIC | 20,758,695 | 20,754,043 | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON | ||||||||
SHARES OUTSTANDING – DILUTED | 22,939,701 | 22,554,036 |
Years ended October 31, | ||||||||
2010 | 2009 | |||||||
REVENUES | $ | 11,346,453 | $ | 11,479,083 | ||||
COST OF SERVICES | 7,953,647 | 7,640,333 | ||||||
GROSS PROFIT | 3,392,806 | 3,838,750 | ||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 2,782,916 | 2,923,295 | ||||||
INCOME FROM OPERATIONS | 609,890 | 915,455 | ||||||
OTHER INCOME (EXPENSE): | ||||||||
Interest expense | (5,605 | ) | (52,394 | ) | ||||
Interest income | 14,982 | 26,961 | ||||||
Gain on disposition of property and equipment | 1,920 | 6,081 | ||||||
11,297 | (19,352 | ) | ||||||
INCOME BEFORE INCOME TAXES | 621,187 | 896,103 | ||||||
INCOME TAXES | 249,276 | 361,346 | ||||||
NET INCOME | $ | 371,911 | $ | 534,757 | ||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.018 | $ | 0.026 | ||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.017 | $ | 0.024 | ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC | 20,751,215 | 20,751,215 | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – DILUTED | 22,377,734 | 22,324,996 |
Years ended October 31, | ||||||||
2012 | 2011 | |||||||
NET INCOME | $ | 4,687,006 | $ | 3,158,981 | ||||
OTHER COMPREHENSIVE LOSS: | ||||||||
Foreign currency translation adjustment, net of tax | (71,409 | ) | (791 | ) | ||||
TOTAL OTHER COMPREHENSIVE LOSS | (71,409 | ) | (791 | ) | ||||
COMPREHENSIVE INCOME | $ | 4,615,597 | $ | 3,158,190 |
Accumulated | ||||||||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | Paid-in | Retained | Comprehensive | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income (Loss) | Total | |||||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2008 | 20,751,215 | $ | 2,075 | - | $ | - | $ | 540,337 | $ | 3,534,060 | $ | (24,692 | ) | $ | 4,051,780 | |||||||||||||||||
STOCK-BASED COMPENSATION | - | - | - | - | 62,171 | - | - | 62,171 | ||||||||||||||||||||||||
COMPREHENSIVE INCOME: | ||||||||||||||||||||||||||||||||
NET INCOME | - | - | - | - | - | 534,757 | - | 534,757 | ||||||||||||||||||||||||
OTHER COMPREHENSIVE INCOME: | ||||||||||||||||||||||||||||||||
FOREIGN CURRENCY TRANSLATION ADJUSTMENT | - | - | - | - | - | - | 14,269 | 14,269 | ||||||||||||||||||||||||
OTHER COMPREHENSIVE INCOME | 14,269 | |||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME | 549,026 | |||||||||||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2009 | 20,751,215 | 2,075 | - | - | 602,508 | 4,068,817 | (10,423 | ) | 4,662,977 | |||||||||||||||||||||||
STOCK-BASED COMPENSATION | - | - | - | - | 43,378 | - | - | 43,378 | ||||||||||||||||||||||||
COMPREHENSIVE INCOME: | ||||||||||||||||||||||||||||||||
NET INCOME | - | - | - | - | - | 371,911 | - | 371,911 | ||||||||||||||||||||||||
OTHER COMPREHENSIVE LOSS: | ||||||||||||||||||||||||||||||||
FOREIGN CURRENCY TRANSLATION ADJUSTMENT | - | - | - | - | - | - | (8,795 | ) | (8,795 | ) | ||||||||||||||||||||||
OTHER COMPREHENSIVE LOSS | (8,795 | ) | ||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME | 363,116 | |||||||||||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2010 | 20,751,215 | $ | 2,075 | - | $ | - | $ | 645,886 | $ | 4,440,728 | $ | (19,218 | ) | $ | 5,069,471 |
Accumulated | ||||||||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | Paid-in | Retained | Comprehensive | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | (Loss) | Total | |||||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2010 | 20,751,215 | $ | 2,075 | - | $ | - | $ | 645,886 | $ | 4,440,728 | $ | (19,218 | ) | $ | 5,069,471 | |||||||||||||||||
STOCK-BASED COMPENSATION | - | - | - | - | 8,664 | - | - | 8,664 | ||||||||||||||||||||||||
CASHLESS CONVERSION OF WARRANTS | ||||||||||||||||||||||||||||||||
TO SHARES OF COMMON STOCK | 7,480 | 1 | - | - | - | (1 | ) | - | - | |||||||||||||||||||||||
NET INCOME | - | - | - | - | - | 3,158,981 | - | 3,158,981 | ||||||||||||||||||||||||
FOREIGN CURRENCY TRANSLATION ADJUSTMENT | - | - | - | - | - | - | (791 | ) | (791 | ) | ||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2011 | 20,758,695 | 2,076 | - | - | 654,550 | 7,599,708 | (20,009 | ) | 8,236,325 | |||||||||||||||||||||||
STOCK-BASED COMPENSATION | - | - | - | - | 23,664 | - | - | 23,664 | ||||||||||||||||||||||||
NET INCOME | - | - | - | - | - | 4,687,006 | - | 4,687,006 | ||||||||||||||||||||||||
FOREIGN CURRENCY TRANSLATION ADJUSTMENT | - | - | - | - | - | - | (71,409 | ) | (71,409 | ) | ||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2012 | 20,758,695 | $ | 2,076 | - | $ | - | $ | 678,214 | $ | 12,286,714 | $ | (91,418 | ) | $ | 12,875,586 |
Years ended October 31, | ||||||||
2012 | 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 4,687,006 | $ | 3,158,981 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
(Gain) loss on disposition of property and equipment | (18,345 | ) | 1,324 | |||||
Stock-based compensation | 23,664 | 8,664 | ||||||
Depreciation and amortization | 321,732 | 320,861 | ||||||
Increase in accounts receivable | (2,735,046 | ) | (2,274,869 | ) | ||||
(Increase) decrease in other assets | (50,486 | ) | (78,713 | ) | ||||
Increase in liabilities | 230,541 | 1,004,025 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,459,066 | 2,140,273 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of property and equipment | (187,362 | ) | (123,511 | ) | ||||
Proceeds from sale of property and equipment | 18,836 | 400 | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (168,526 | ) | (123,111 | ) | ||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
Payments on obligations under capital lease | (32,826 | ) | (25,162 | ) | ||||
NET CASH USED IN FINANCING ACTIVITIES | (32,826 | ) | (25,162 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 36,326 | 7,557 | ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,221,388 | 1,999,557 | ||||||
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 4,316,725 | 2,317,168 | ||||||
CASH AND CASH EQUIVALENTS – END OF YEAR | $ | 6,538,113 | $ | 4,316,725 | ||||
SUPPLEMENTAL DISCLOSURES OF | ||||||||
CASH FLOW INFORMATION: | ||||||||
Cash paid during the period for: | ||||||||
Income taxes | $ | 1,543,021 | $ | 6,025 | ||||
Interest | $ | 7,425 | $ | 6,605 | ||||
SUPPLEMENTARY SCHEDULES OF NON-CASH | ||||||||
INVESTING AND FINANCING ACTIVITIES: | ||||||||
Property and equipment with accumulated depreciation of $32,122 and $1,887 disposed during the years ended October 31, 2012 and 2011, respectively. | $ | 32,613 | $ | 3,611 | ||||
Income tax withheld by clients to be used as a credit in the Company’s income tax returns | $ | 39,120 | $ | 73,671 | ||||
Obligations under capital lease incurred for the acquisition of a vehicle | $ | 32,795 | $ | 76,475 |
Years ended October 31, | ||||||||
2010 | 2009 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 371,911 | $ | 534,757 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Gain on disposition of property and equipment | (1,920 | ) | (6,081 | ) | ||||
Stock-based compensation | 43,378 | 62,171 | ||||||
Depreciation and amortization | 321,713 | 307,332 | ||||||
Imputed interest expense | - | 43,108 | ||||||
(Increase) decrease in accounts receivable | (407,868 | ) | 1,301,996 | |||||
Decrease (increase) in other assets | 41,809 | (44,494 | ) | |||||
Increase (decrease) in liabilities | 97,326 | (26,258 | ) | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 466,349 | 2,172,531 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of marketable securities | (95,000 | ) | - | |||||
Acquisition of property and equipment | (45,429 | ) | (290,137 | ) | ||||
Payments for business assets acquisition | - | (150,394 | ) | |||||
Proceeds from sale of property and equipment | - | 12,400 | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (140,429 | ) | (428,131 | ) | ||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
Payments on obligations under capital lease | (42,714 | ) | (34,573 | ) | ||||
Payments to affiliate | - | (2,750,000 | ) | |||||
NET CASH USED IN FINANCING ACTIVITIES | (42,714 | ) | (2,784,573 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (17,912 | ) | 4,057 | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 265,294 | (1,036,116 | ) | |||||
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 2,051,874 | 3,087,990 | ||||||
CASH AND CASH EQUIVALENTS – END OF YEAR | $ | 2,317,168 | $ | 2,051,874 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the period for: | ||||||||
Income taxes | $ | 157,668 | $ | 289,904 | ||||
Interest | $ | 5,605 | $ | 510,799 | ||||
SUPPLEMENTARY SCHEDULES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Property and equipment with accumulated depreciation of $12,355 and $98,334 disposed during the years ended October 31, 2010 and 2009, respectively. | $ | 33,695 | $ | 138,180 | ||||
Income tax withheld by clients to be used as a credit in the Company’s income tax returns | $ | 71,489 | $ | 18,924 | ||||
Obligations under capital lease incurred for the acquisition of a vehicle | $ | 31,918 | $ | 58,970 |
Level 1: | Quoted prices in active markets for identical assets and liabilities. |
Level 2: | Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
October 31, | ||||||||||||
Useful life (years) | 2010 | 2009 | ||||||||||
Vehicles under capital leases | 5 | $ | 174,142 | $ | 175,919 | |||||||
Leasehold improvements | 5-8 | 588,358 | 566,851 | |||||||||
Computers | 3 | 386,148 | 302,560 | |||||||||
Equipment | 3-7 | 987,172 | 754,675 | |||||||||
Furniture and fixtures | 10 | 120,216 | 119,349 | |||||||||
Projects in progress | - | 15,329 | 308,541 | |||||||||
Total | 2,271,365 | 2,227,895 | ||||||||||
Less: Accumulated depreciation and amortization | (950,107 | ) | (660,750 | ) | ||||||||
Property and equipment, net | $ | 1,321,258 | $ | 1,567,145 |
October 31, | ||||||||
2010 | 2009 | |||||||
Intangible assets: | ||||||||
Covenant not to compete (Pharma-PR acquisition), net of accumulated amortization of $98,334 and $78,333 in October 31, 2010 and 2009, respectively | $ | 1,666 | $ | 21,667 | ||||
Covenant not to compete (Integratek acquisition), net of accumulated amortization of $31,944 and $15,278 in October 31, 2010 and 2009, respectively | 18,056 | 34,722 | ||||||
Total intangible assets net of amortization | 19,722 | 56,389 | ||||||
Other assets | 13,642 | 13,080 | ||||||
Total non-current other assets | $ | 33,364 | $ | 69,469 |
October 31, | |||||||||||
Useful life (years) | 2012 | 2011 | |||||||||
Vehicles | 5 | $ | 269,267 | $ | 250,617 | ||||||
Leasehold improvements | 5-8 | 598,040 | 598,040 | ||||||||
Computers | 3 | 522,792 | 420,482 | ||||||||
Equipment | 3-7 | 1,126,415 | 1,036,981 | ||||||||
Furniture and fixtures | 10 | 137,215 | 137,215 | ||||||||
Projects in progress | - | - | 23,524 | ||||||||
Total | 2,653,729 | 2,466,859 | |||||||||
Less: Accumulated depreciation and amortization | (1,540,358 | ) | (1,250,748 | ) | |||||||
Property and equipment, net | $ | 1,113,371 | $ | 1,216,111 |
October 31, | ||||||||
2012 | 2011 | |||||||
United States federal statutory rate | 35.0 | % | 35.0 | % | ||||
Non United States earnings invested indefinitely, and | (17.0 | )% | (18.6 | )% | ||||
Puerto Rico Act 73 Tax Grant effect | ||||||||
Puerto Rico Act 73 Tax Grant effective date backdating | - | % | (5.9 | )% | ||||
for the year ended October 31, 2010 | ||||||||
Other, net | 0.6 | % | ( 1.7 | )% | ||||
Effective tax rate | 18.6 | % | 8.8 | % |
Year ended October 31, | ||||||||
2010 | 2009 | |||||||
Theoretical income tax expense by application of statutory rates to the book pre-tax income | $ | 236,162 | $ | 361,302 | ||||
Benefit of tax grant | - | (1,464 | ) | |||||
Permanent differences, net | 13,114 | 1,508 | ||||||
$ | 249,276 | $ | 361,346 |
Twelve months ending October 31, | Amount | |||
2013 | $ | 46,647 | ||
2014 | 36,402 | |||
2015 | 24,293 | |||
2016 | 24,242 | |||
2017 | 6,266 | |||
Total future minimum lease payments | 137,850 | |||
Less: Amount of imputed interest | ( 14,502 | ) | ||
Present value of future minimum lease payments | 123,348 | |||
Current portion of obligation under capital leases | (39,436 | ) | ||
Long-term portion | $ | 83,912 |
Twelve months ending October 31, | Amount | |||
2011 | $ | 22,992 | ||
2012 | 22,992 | |||
2013 | 22,992 | |||
2014 | 12,745 | |||
2015 | 636 | |||
Total future minimum lease payments | 82,357 | |||
Less: Amount of imputed interest | ( 10,291 | ) | ||
Present value of future minimum lease payments | 72,066 | |||
Current portion of obligation under capital leases | (18,227 | ) | ||
Long-term portion | $ | 53,839 |
Amount | Amount | |||||||
2011 | $ | 295,433 | ||||||
2012 | 93,572 | |||||||
2013 | 8,400 | $ | 373,314 | |||||
2014 | 388,211 | |||||||
2015 | 406,867 | |||||||
2016 | 426,427 | |||||||
2017 | 87,262 | |||||||
Total minimum lease payments | $ | 397,405 | $ | 1,682,081 |
Exercise Price | Expiration Date | Outstanding Warrants | |||||||
Original Warrants A | $ | 0.06 | January 16, 2014 | 240,800 | |||||
Broker Warrants B | $ | 0.06 | January 24, 2014 | 1,830,991 | |||||
Warrants Total | 2,071,791 |
Years ended October 31, | ||||||||
2012 | 2011 | |||||||
Net income available to common equity holders - used to compute basic and diluted earnings per share | $ | 4,687,006 | $ | 3,158,981 | ||||
Weighted average number of common shares - used to compute basic earnings per share | 20,758,695 | 20,754,043 | ||||||
Effect of warrants to purchase common stock | 1,919,849 | 1,777,681 | ||||||
Effect of options to purchase common stock | 261,157 | 22,312 | ||||||
Weighted average number of shares - used to compute diluted earnings per share | 22,939,701 | 22,554,036 |
Year ended October 31, | ||||||||||||||||
2012 | 2011 | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Number of | Average Option | Number of | Average Option | |||||||||||||
Shares | Exercise Price | Shares | Exercise Price | |||||||||||||
Outstanding at beginning of year | 454,585 | $ | 0.5804 | 1,267,882 | $ | 0.6942 | ||||||||||
Granted | 1,355,000 | $ | 0.7372 | 40,000 | $ | 0.2600 | ||||||||||
Exercised | - | - | ||||||||||||||
Expired and/or forfeited | (69,585 | ) | $ | 0.7317 | (853,297 | ) | $ | 0.7344 | ||||||||
Total outstanding at end of year | 1,740,000 | $ | 0.6965 | 454,585 | $ | 0.5804 | ||||||||||
Outstanding exercisable stock options at end of year | 430,000 | $ | 0.5702 | 424,585 | $ | 0.5974 |
Year ended October 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Number of | Average Option | Number of | Average Option | |||||||||||||
Shares | Exercise Price | Shares | Exercise Price | |||||||||||||
Outstanding at beginning of year | 1,342,913 | $ | 0.6833 | 1,356,772 | $ | 0.7213 | ||||||||||
Granted | 40,000 | $ | 0.3400 | 220,000 | $ | 0.4545 | ||||||||||
Exercised | - | - | ||||||||||||||
Forfeited | (115,031 | ) | $ | 0.4437 | (233,859 | ) | $ | 0.6886 | ||||||||
Total outstanding at end of year | 1,267,882 | $ | 0.6942 | 1,342,913 | $ | 0.6833 | ||||||||||
Outstanding exercisable stock options at end of year | 1,154,547 | $ | 0.7065 | 759,016 | $ | 0.7197 |
October 31, 2012 | October 31, 2011 | |||||||
Weighted average remaining years in contractual life for: | ||||||||
Total outstanding options | 3.4 years | 1.7 years | ||||||
Outstanding exercisable options | 1.0 years | 1.5 years | ||||||
Shares of common stock available for issuance pursuant to future stock option grants | 760,000 | 2,045,415 |
October 31, 2010 | October 31, 2009 | |||||||||||||||
Weighted average remaining years in contractual life for: | ||||||||||||||||
Total outstanding options | 1.0 years | 2.1 years | ||||||||||||||
Outstanding exercisable options | 0.8 years | 1.7 years | ||||||||||||||
Shares of common stock available for issuance pursuant to future stock option grants | 1,232,118 | 1,157,087 |
Year ended October 31, | Year ended October 31, | |||||||||||||||
2010 | 2009 | 2012 | 2011 | |||||||||||||
Stock-based compensation expense: | ||||||||||||||||
Cost of services | $ | 1,846 | $ | 22,386 | $ | 10,000 | $ | - | ||||||||
Selling, general and administrative | 41,532 | 39,785 | 13,664 | 8,664 | ||||||||||||
Stock-based compensation before tax | 43,378 | 62,171 | 23,664 | 8,664 | ||||||||||||
Income tax benefit | - | - | - | - | ||||||||||||
Net stock-based compensation expense | $ | 43,378 | $ | 62,171 | $ | 23,664 | $ | 8,664 | ||||||||
Effect on earnings per share: | ||||||||||||||||
Basic earnings per share | $ | (0.002 | ) | $ | (0.003 | ) | $ | (0.001 | ) | $ | (0.001 | ) | ||||
Diluted earnings per share | $ | (0.002 | ) | $ | (0.003 | ) | $ | (0.001 | ) | $ | (0.001 | ) |
Year ended October 31, | Year ended October 31, | |||||||||||||||
2010 | 2009 | 2012 | 2011 | |||||||||||||
Expected dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Expected stock price volatility | 135.2 | % | 111.6 | % | 40.9 | % | 74.3 | % | ||||||||
Risk free interest rate | 1.5 | % | 1.3 | % | 0.3 | % | 1.0 | % | ||||||||
Expected life of options | 3.2 years | 3.4 years | 3.5 years | 3.2 years | ||||||||||||
Weighted average fair value of options granted | $ | 0.2552 | $ | 0.3205 | $ | 0.2227 | $ | 0.1299 |
October 31, | |||||||||||||
Exercise Price | Expire Date | 2010 | 2009 | ||||||||||
Investor Warrants A | $ | 1.1000 | January 25, 2011 | 3,999,700 | 3,999,700 | ||||||||
Investor Warrants B | $ | 1.6500 | January 25, 2011 | 3,999,700 | 3,999,700 | ||||||||
Broker Warrants | $ | 0.7344 | January 25, 2010 | - | 973,225 | ||||||||
Other Warrants A | $ | 0.0600 | January 16, 2014 | 249,600 | 249,600 | ||||||||
Other Warrants B | $ | 0.0600 | January 24, 2014 | 1,830,991 | 1,830,991 | ||||||||
Warrants Total | 10,079,991 | 11,053,216 |
Years ended October 31, | ||||||||
2010 | 2009 | |||||||
Net income available to common equity holders - used to compute basic and diluted earnings per share | $ | 371,911 | $ | 534,757 | ||||
Weighted average number of common shares - used to compute basic earnings per share | 20,751,215 | 20,751,215 | ||||||
Effect of warrants to purchase common stock | 1,626,519 | 1,573,781 | ||||||
Effect of options to purchase common stock | - | - | ||||||
Weighted average number of shares - used to compute diluted earnings per share | 22,377,734 | 22,324,996 |
Year ended October 31, | Year ended October 31, | |||||||||||||||
2010 | 2009 | 2012 | 2011 | |||||||||||||
REVENUES: | ||||||||||||||||
Puerto Rico and United States consulting | $ | 7,892,622 | $ | 9,182,572 | ||||||||||||
Puerto Rico consulting | $ | 15,213,662 | $ | 9,050,694 | ||||||||||||
United States consulting | 9,159,539 | 5,868,049 | ||||||||||||||
Ireland consulting | 2,391,080 | 1,147,642 | 3,211,758 | 3,322,126 | ||||||||||||
Lab (microbiological and chemical testing) | 740,499 | 812,371 | 857,948 | 754,814 | ||||||||||||
Other segments¹ | 322,252 | 336,498 | 784,260 | 937,499 | ||||||||||||
Total consolidated revenues | $ | 11,346,453 | $ | 11,479,083 | $ | 29,227,167 | $ | 19,933,182 | ||||||||
INCOME (LOSS) BEFORE TAXES: | ||||||||||||||||
Puerto Rico and United States consulting | $ | 854,002 | $ | 1,031,324 | ||||||||||||
Puerto Rico consulting | $ | 3,664,238 | $ | 2,040,994 | ||||||||||||
United States consulting | 2,407,190 | 1,258,077 | ||||||||||||||
Ireland consulting | 22,094 | (39,332 | ) | (245,431 | ) | (71,049 | ) | |||||||||
Lab (microbiological and chemical testing) | (272,063 | ) | (7,923 | ) | (381,406 | ) | (299,348 | ) | ||||||||
Other segments¹ | 17,154 | (87,966 | ) | 311,021 | 535,104 | |||||||||||
Total consolidated income before taxes | $ | 621,187 | $ | 896,103 | $ | 5,755,612 | $ | 3,463,778 |
¹ | Other segments represent activities that fall below the reportable threshold and are carried out in Puerto and United States. These activities include a technical seminars/training division, an information technology services and consulting division, and corporate headquarters, as applicable. |