Delaware | 20-0653570 | |
(State or Other Jurisdiction of Incorporation or Organization) |
Pharma-Bio Serv Building, #6 Road 696 Dorado, Puerto Rico | 00646 | |
(Address | (Zip Code) |
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | þ |
PART III | |||||
ITEM | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 4 | |||
ITEM 11. | EXECUTIVE COMPENSATION | 7 | |||
ITEM | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 11 | |||
ITEM | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 13 | |||
ITEM | PRINCIPAL ACCOUNTING FEES AND SERVICES | 13 | |||
PART IV | |||||
ITEM | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | ||||
14 |
Name | Age | Positions with the Company | Director Since | |||
Elizabeth Plaza(3) | 51 | Chairman of the Board | 2006 | |||
Kirk Michel(1),(2) | 59 | Director | 2006 | |||
Dov Perlysky(2),(3) | 52 | Director | 2004 | |||
Howard Spindel(1) | 69 | Director | 2006 | |||
Irving Wiesen(1),(2),(3) | 60 | Director | 2006 |
(1) | Member of the Audit Committee and Compensation Committee. |
(2) | Member of the Mergers and Acquisition Committee. |
(3) | Member of the Nominating Committee. |
Name | Age | Position | |||
Victor Sanchez | 44 | Chief Executive Officer, President and President of European Operations | |||
Pedro J. Lasanta | 55 | Chief Financial Officer, Vice President - Finance and Administration and Secretary |
Name and Principal Position | Fiscal Year | Salary | Bonus | Option Awards ($)(3) | All Other Compensation | Total | ||||||||||||||||
Elizabeth Plaza, | 2014 | $ | - | $ | - | $ | - | $ | 550,754 | (7) | $ | 550,754 | ||||||||||
Chairman and Former Principal Executive Officer(1) | 2013 | 105,525 | - | - | 347,067 | (8) | 452,592 | |||||||||||||||
Nélida Plaza, | 2014 | $ | 225,600 | $ | 45,000 | (4) | $ | 10,879 | $ | 5,204 | (9) | $ | 286,683 | |||||||||
Former Chief Operating Officer and Secretary(2) | 2013 | 215,023 | 112,500 | (5) | 10,879 | 15,612 | (9) | 354,014 | ||||||||||||||
Pedro Lasanta, | 2014 | $ | 158,407 | $ | - | (6) | $ | 10,879 | - | $ | 169,286 | |||||||||||
Chief Financial Officer, Vice President –Finance and Administration and Secretary | 2013 | 145,313 | 50,000 | (5) | 10,879 | - | 206,192 |
(1) | Elizabeth Plaza served as the Principal Executive Officer of the Company from January 1, 2014 to December 31, 2014. Ms. E. Plaza previously served as the President and Chief Executive Officer of the Company from January 2006 to December 31, 2012. |
(2) | Effective November 28, 2014, Nélida Plaza resigned as the Chief Operating Officer and Secretary of the Company. Ms. N. Plaza previously served as the Acting President and Chief Executive Officer of the Company from January 2013 until December 31, 2013, Vice President of Operations of Pharma-Bio Serv PR, Inc. from January 2004 until December 31, 2013, and the President of Puerto Rico Operations of the Company from December 2009 until December 31, 2013. |
(3) | Amounts shown do not reflect compensation received by the officers. Instead, the amounts shown are the compensation costs recognized by us in fiscal year 2014 and 2013 for option grants that were made to officers as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of option awards are set forth under Note I – Stock Options and Stock Based Compensation in our audited financial statements for the fiscal year ended October 31, 2014, included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014. |
(4) | Represents bonus for services in fiscal 2014, which were paid in December 2014. |
(5) | Represents bonus for services in fiscal 2013, which were paid in January 2014. |
(6) | The Compensation Committee of the Board of Directors is continuing to evaluate performance for services during the year ended October 31, 2014. |
(7) | Represents consulting fees and company lease payments for the vehicle under Elizabeth Plaza’s use in the amount of $532,883 and $17,871, respectively. For additional information regarding these consulting fees, see Employment Agreements – Elizabeth Plaza – Consulting Agreement below. |
(8) | Represents consulting fees and company lease payments for the vehicle under Elizabeth Plaza’s use in the amount of $330,687 and $16,380, respectively. For additional information regarding these consulting fees, see Employment Agreements – Elizabeth Plaza – Consulting Agreement below. |
(9) | Represents lease payments for the vehicle under the use of Nélida Plaza. |
Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | |||||
Elizabeth Plaza | - | - | - | - | |||||
Nélida Plaza(1)(2) | 133,400 | 66,600 | $ | $0.7200 | Jan. 30, 2017 | ||||
Pedro Lasanta(1) | 133,400 | 66,600 | $ | $0.7200 | Jan. 30, 2017 |
(1) |
(1) |
On December 31, 2013, the Company entered into a Consulting Agreement with Strategic Consultants International, LLC (the “Consultant”) and Ms. E. Plaza, effective as of January 1, 2014. On January 1, 2015, the consulting agreement was amended to extend the term of the Consulting Agreement for an additional year to December 31, 2015. Pursuant to the consulting agreement, the Consultant will consult with the Board regarding the Company’s strategic initiatives, company services, management, operations and other matters as may be requested from time to time by the Board. Pursuant to the consulting agreement, the Consultant will receive a monthly fee of $42,000 during the term of the consulting agreement. Additionally, Ms. E. Plaza will receive a company automobile and such insurance as she was provided by the Company during her last year of employment with the Company. The consulting agreement also included standard provisions relating to non-competition, confidentiality, and nondisparagement. |
Name | Fees Earned or Paid in Cash(1) | Option Awards (2)(3) | Total | |||||||||
Kirk Michel | $ | 34,833 | $ | 9,137 | $ | 43,970 | ||||||
Dov Perlysky | $ | 34,333 | $ | 9,137 | $ | 43,470 | ||||||
Howard Spindel | $ | 34,833 | $ | 9.137 | $ | 43,970 | ||||||
Irving Wiesen | $ | 34,833 | $ | 9,137 | $ | 43,970 |
(1) | All amounts were earned and paid during fiscal 2014. |
(2) | Amounts shown do not reflect compensation actually received by the directors. Instead, the amounts shown are the compensation costs recognized by us in fiscal year 2014 for option grants that were made to directors as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of option awards are set forth under Note I – Stock Options and Stock Based Compensation in our audited financial statements for the fiscal year ended October 31, 2014, included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014. |
(3) | The options grants have a term of five years from the grant date and an exercise price equal to the fair market value on the date of grant. The options are exercisable as to 50% of the shares six months from the date of grant and as to the remaining 50% 18 months from the date of grant. |
Messrs. Perlysky, Spindel, and Wiesen | Kirk Michel | ||||||||||||||||
Grant Date | Options | Exercise Price | Grant Date | Options | Exercise Price | ||||||||||||
1/04/2010 | 10,000 | $ | 0.34 | 1/03/2012 | 10,000 | $ | 0.70 | ||||||||||
1/03/2011 | 10,000 | $ | 0.26 | 1/02/2013 | 10,000 | $ | 0.75 | ||||||||||
1/03/2012 | 10,000 | $ | 0.70 | 1/10/2014 | 20,000 | $ | 2.05 | ||||||||||
1/02/2013 | 10,000 | $ | 0.75 | ||||||||||||||
1/10/2014 | 20,000 | $ | 2.05 |
● | each director; |
● | each officer named in the summary compensation table (“Named Executive Officers”); |
● | each person owning of record or known by us, based on information provided to us by the persons named below, to own beneficially at least 5% of our common stock; and |
● | all directors and Named Executive Officers as a group. |
Name | Shares of Common Stock Beneficially Owned at February 23, 2015 | Percentage | ||||||
Directors and Executive Officers | ||||||||
Elizabeth Plaza(1) | 9,169,518 | 39.9 | % | |||||
Dov Perlysky(2) | 1,992,326 | 8.6 | % | |||||
Kirk Michel(3) | 386,247 | 1.7 | % | |||||
Howard Spindel(4) | 54,981 | * | ||||||
Irving Wiesen(5) | 54,876 | * | ||||||
Victor Sanchez(6) | 108,325 | * | ||||||
Pedro Lasanta(7) | 222,146 | * | ||||||
Nélida Plaza(8) | 87,500 | * | ||||||
All Directors and Executive Officers as a group | ||||||||
(seven persons)(9) | 11,988,419 | 51.1 | % | |||||
5% or Greater Stockholders | ||||||||
Venturetek, L.P.(10) | 3,132,932 | 13.6 | % | |||||
Ramon Luis Dominguez Thomas (11) | 2,060,060 | 9.0 | % | |||||
Addison McKinley Levi III (12) | 2,050,059 | 8.9 | % |
(1) | Includes 4,099,241 shares owned by Ms. Plaza directly and 5,070,277 shares subject to a voting proxy in favor of Ms. Plaza. In conjunction with certification as a minority controlled business, Ms. Plaza received irrevocable proxies (“Voting Proxies”) to vote an aggregate of 5,070,277 shares of the Company’s common stock from Venturetek LP, Krovim, LLC and LDP Family Partnership. These Voting Proxies are effective until September 26, 2015, unless the business certification expires sooner. |
(2) | The shares of common stock beneficially owned by Mr. Perlysky include (i) 14,981 shares directly owned, (ii) 1,164,554 shares of common stock owned by Krovim, LLC, (iii) 772,791 shares owned by LDP Family Partnership and (iv) options issued to Mr. Perlysky to purchase 40,000 shares of common stock, which are vested as of February 23, 2015. Elizabeth Plaza exercises voting power over the shares owned by Krovim pursuant to a Voting Proxy and Mr. Perlysky as the manager of Nesher, LLC, which is the manager of Krovim, may be deemed to exercise dispositive power over these shares. Mr. Perlysky disclaims beneficial interest in the shares owned by Krovim. Elizabeth Plaza exercises voting power over the shares owned by the LDP Family Partnership pursuant to a Voting Proxy and Mr. Perlysky’s wife, the general partner of LDP Family Partnership, is deemed to exercise dispositive power over these shares. Mr. Perlysky disclaims beneficial ownership in the securities owned by his wife. |
(3) | The shares of common stock beneficially owned by Mr. Michel consist of (i) 15,541 shares directly owned, (ii) 30,000 shares of common stock issuable upon exercise of options, which are vested as of February 23, 2015, and (iii) 340,706 shares of common stock owned by KEMA Advisors, of which Mr. Michel is managing director. |
(4) | The shares of common stock owned by Mr. Spindel represent 14,981 shares owned by his spouse, and 40,000 shares issuable upon exercise of options, which are vested as of February 23, 2015. Mr. Spindel disclaims beneficial ownership of the shares held by his spouse. |
(5) | The shares of common stock owned by Mr. Wiesen, represent 14,876 shares directly owned, and 40,000 shares issuable upon exercise of options, which are vested as of February 23, 2015. |
(6) | The shares of common stock owned by Mr. Sanchez represent 8,325 shares directly owned, and 100,000 shares issuable upon exercise of options, which are vested as of February 23, 2015. |
(7) | The shares of common stock owned by Mr. Lasanta, represent 22,146 shares directly owned, and 200,000 shares issuable upon exercise of options, which are vested as of February 23, 2015. |
(8) | Effective November 28, 2014, Nélida Plaza resigned as Chief Operating Officer and Secretary of the Company. The number of shares held by Nélida Plaza is based on a Form 4 filed on December 17, 2014. |
(9) | Includes 450,000 shares issuable upon the exercise of options, which are vested as of February 23, 2015. |
(10) | This information was obtained from Amendment No. 4 to Schedule 13 D/A filed by Venturetek, L.P. ("Venturetek") on September 6, 2011. Does not include 1,565,058 shares underlying warrants, which warrants expired in January 2011, listed in the Schedule 13 D/A filed on January 5, 2011. Mr. David Selengut, the manager of TaurusMax LLC, which is the general partner of Venturetek has sole dispositive power and Elizabeth Plaza has sole voting power over these shares pursuant to a Voting Proxy. The mailing address for Venturetek, L.P. is 150 East 42nd Street, New York, NY 10017. |
(11) | This information was obtained from a Schedule 13D filed by Ramon Luis Dominguez Thomas on March 27, 2014. The business address for this person is c/o San Juan Holdings, Inc., MCS Plaza, Suite #305, 255 Ponce de Leon Avenue, San Juan, PR, 00917. |
(12) | This information was obtained from a Schedule 13D filed by Addison McKinley Levi III on March 27, 2014. The business address for this person is c/o San Juan Holdings, Inc., MCS Plaza, Suite #305, 255 Ponce de Leon Avenue, San Juan, PR, 00917. |
Plan Category | Number of securities to be issued upon exercise of outstanding options | 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: | ||||||||||||
2014 Long-Term Incentive Plan (1) | - | $ | - | 2,300,000 | ||||||||
2005 Long-Term Incentive Plan (2) | 1,100,000 | $ | 0.7985 | 1,300,000 |
(1) | The 2014 Long-Term Incentive Plan was approved by stockholders in April 2014. |
(2) | The 2005 Long-Term Incentive Plan was approved by stockholders in April 2006, and amended by stockholder approval in April 2007. |
Quarter Ending | High Bid | Low Bid | ||||||
October 31, 2014 | $ | 1.39 | $ | 1.07 | ||||
July 31, 2014 | 1.90 | 0.80 | ||||||
April 30, 2014 | 2.12 | 1.60 | ||||||
January 31, 2014 | 2.50 | 1.54 | ||||||
October 31, 2013 | 1.65 | 1.30 | ||||||
July 31, 2013 | 1.35 | 0.96 | ||||||
April 30, 2013 | 1.38 | 0.85 | ||||||
January 31, 2013 | 0.90 | 0.70 |
Description of services: | Fiscal 2014 | Fiscal 2013 | ||||||
Audit | $ | 49,395 | $ | 47,600 | ||||
Audit-Related | 27,825 | 27,825 | ||||||
Tax and other services | 22,601 | 19,232 | ||||||
Total Fees | $ | 99,821 | $ | 94,657 |
Plan Category | Number of securities to be issued upon exercise of outstanding options | 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: | �� | |||||||||||
2014 Long-Term Incentive Plan (1) | - | $ | - | 2,300,000 | ||||||||
2005 Long-Term Incentive Plan (2) | 1,100,000 | $ | 0.7985 | 1,300,000 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||
August 1, 2014 through August 31, 2014 | 900 | $ | 1.10 | 900 | 1,997,100 | |||||||||||
September 1, 2014 through September 30, 2014 | - | $ | - | - | 1,997,100 | |||||||||||
October 1, 2014 through October 31, 2014 | 12,650 | $ | 1.17 | 12,650 | 1,984,450 | |||||||||||
Total | 13,550 | 13,550 |
Year ended October 31, | ||||||||||||||||
Revenues by Region | 2014 | 2013 | ||||||||||||||
Puerto Rico | $ | 17,609 | 63.9 | % | $ | 17,973 | 54.4 | % | ||||||||
United States | 7,761 | 28.2 | % | 11,492 | 34.7 | % | ||||||||||
Europe | 2,185 | 7.9 | % | 3,597 | 10.9 | % | ||||||||||
$ | 27,555 | 100.0 | % | $ | 33,062 | 100.0 | % |
Year ended October 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Revenues | $ | 27,555 | 100.0 | % | $ | 33,062 | 100.0 | % | ||||||||
Cost of services | 18,582 | 67.4 | % | 21,229 | 64.2 | % | ||||||||||
Gross profit | 8,973 | 32.6 | % | 11,833 | 35.8 | % | ||||||||||
Selling, general and administrative expenses | 6,109 | 22.2 | % | 5,761 | 17.4 | % | ||||||||||
Other income, net | 15 | 0.1 | % | 4 | 0.0 | % | ||||||||||
Income before income taxes | 2,879 | 10.5 | % | 6,076 | 18.4 | % | ||||||||||
Income tax expense | 465 | 1.7 | % | 1,170 | 3.6 | % | ||||||||||
Net income | 2,414 | 8.8 | % | 4,906 | 14.8 | % |
1. | All Financial Statements: Consolidated Financial Statements are included |
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 | Certificate of Amendment to the Certificate of Incorporation | 8-K | 000-50956 | 3.1 | 4/12/13 | ||||||
3.3 | By-laws | 10-SB12G | 000-50956 | 3.2 | 9/24/2004 | ||||||
3.4 | Amendment No. 1 to the By-laws | 8-K | 000-50956 | 3.1 | 6/6/2008 | ||||||
3.5 | Amendment No. 2 to the By-laws | 8-K | 000-50956 | 3.2 | 4/12/13 | ||||||
10.1 | 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 | ||||||
10.2 | Approval of Compensation Committee, dated July 17, 2013, to increase the hours of service pursuant to the Consulting Agreement between the Company and Elizabeth Plaza (a description of such approval was included in the Company’s Current Report on Form 8-K, filed with the SEC on July 23, 2013, and incorporated herein by reference). | 8-K | 000-50956 | - | 7/23/13 | ||||||
10.3 | Consulting Agreement, effective January 1, 2014, between Pharma-Bio Serv Inc., Strategic Consultants International, LLC and Elizabeth Plaza. | 8-K | 000-50956 | 10.1 | 12/31/13 | ||||||
10.4 | Consulting Agreement, effective January 1, 2015, between Pharma-Bio Serv Inc., Strategic Consultants International, LLC and Elizabeth Plaza. | 8-K | 000-50956 | 10.1 | 1/5/2015 | ||||||
10.5 | Employment Agreement, effective January 1, 2015, between Pharma-Bio Serv, Inc. and Victor Sanchez | 8-K | 000-50956 | 10.2 | 1/5/2015 | ||||||
10.6 | Employment Agreement dated November 5, 2007 between the Pharma-Bio Serv, Inc. and Pedro Lasanta | 10-K | 000-50956 | 10.8 | 1/29/2009 | ||||||
10.7 | Amendment to Employment Agreement dated December 17, 2008 between the Registrant and Pedro Lasanta | 8-K | 000-50956 | 99.1 | 12/23/2008 |
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 | |||||
3.1 | Certificate of Amendment to the Certificate of Incorporation | 8-K | 000-50956 | 3.1 | 4/12/13 | |||||
3.3 | By-laws | 10-SB12G | 000-50956 | 3.2 | 9/24/2004 | |||||
3.4 | Amendment No. 1 to the By-laws | 8-K | 000-50956 | 3.1 | 6/6/2008 | |||||
3.5 | Amendment No. 2 to the By-laws | 8-K | 000-50956 | 3.2 | 4/12/13 | |||||
10.1 | 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 | |||||
10.2 | Approval of Compensation Committee, dated July 17, 2013, to increase the hours of service pursuant to the Consulting Agreement between the Company and Elizabeth Plaza (a description of such approval was included in the Company’s Current Report on Form 8-K, filed with the SEC on July 23, 2013, and incorporated herein by reference). | 8-K | 000-50956 | - | 7/23/13 | |||||
10.3 | Consulting Agreement, effective January 1, 2014, between Pharma-Bio Serv Inc., Strategic Consultants International, LLC and Elizabeth Plaza. | 8-K | 000-50956 | 10.1 | 12/31/13 | |||||
10.4 | Consulting Agreement, effective January 1, 2015, between Pharma-Bio Serv Inc., Strategic Consultants International, LLC and Elizabeth Plaza. | 8-K | 000-50956 | 10.1 | 1/5/2015 | |||||
10.5 | Employment Agreement, effective January 1, 2015, between Pharma-Bio Serv, Inc. and Victor Sanchez | 8-K | 000-50956 | 10.2 | 1/5/2015 | |||||
10.6 | Employment Agreement dated November 5, 2007 between the Pharma-Bio Serv, Inc. and Pedro Lasanta | 10-K | 000-50956 | 10.8 | 1/29/2009 | |||||
10.7 | Amendment to Employment Agreement dated December 17, 2008 between the Registrant and Pedro Lasanta | 8-K | 000-50956 | 99.1 | 12/23/2008 | |||||
10.8 | 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 | |||||
10.9 | 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 | |||||
10.10 | 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 | |||||
10.11 | 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 | |||||
10.12 | Employment Agreement Amendment between Pharma-Bio Serv, Inc. and Pedro Lasanta, effective January 1, 2014. | 8-K | 000-50956 | 10.1 | 2/21/2014 | |||||
10.13 | Employment Agreement, dated as of December 31, 2009, by and between Pharma-Bio Serv PR, Inc. and Nélida Plaza. | 8-K | 000-50956 | 10.3 | 1/07/2010 | |||||
10.14 | Employment Agreement Amendment, dated January 7, 2013, by and among Pharma-Bio Serv, Inc., Pharma-Bio Serv PR, Inc. and Nélida Plaza | 8-K | 000-50956 | 10.2 | 1/11/2013 | |||||
10.15 | Employment Agreement Amendment, dated January 7, 2013, by and among the Company, Pharma-Bio Serv PR, Inc. and Nelida Plaza | 8-K | 000-50956 | 10.2 | 1/11/13 | |||||
10.16 | Employment Agreement Amendment among Pharma-Bio Serv, Inc., Pharma-Bio Serv PR, Inc. and Nélida Plaza, effective January 1, 2014. | 8-K | 000-50956 | 10.1 | 2/21/2014 | |||||
10.17 | 2005 Long-term incentive plan, as amended | DEF 14A | 000-50956 | Appendix C | 3/26/2007 | |||||
10.18 | Amendment to 2005 Long-Term Incentive Plan | 10-Q | 000-50956 | 10.4 | 3/17/2014 | |||||
10.19 | Pharma-Bio Serv, Inc. 2014 Long-Term Incentive Plan | 8-K | 000-50956 | 10.1 | 5/2/2014 | |||||
10.20 | Lease dated March 16, 2004 between Plaza Professional Center, Inc. and the Registrant | SB-2 | 333-132847 | 10.9 | 3/30/2006 | |||||
10.21 | Lease dated November 1, 2004 between Plaza Professional Center, Inc. and the Registrant | SB-2 | 333-132847 | 10.10 | 3/30/2006 |
10.8 | 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 | ||||||
10.9 | 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 | ||||||
10.10 | 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 | ||||||
10.11 | 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 | ||||||
10.12 | Employment Agreement Amendment between Pharma-Bio Serv, Inc. and Pedro Lasanta, effective January 1, 2014. | 8-K | 000-50956 | 10.1 | 2/21/2014 | ||||||
10.13 | Employment Agreement, dated as of December 31, 2009, by and between Pharma-Bio Serv PR, Inc. and Nélida Plaza. | 8-K | 000-50956 | 10.3 | 1/07/2010 | ||||||
10.14 | Employment Agreement Amendment, dated January 7, 2013, by and among Pharma-Bio Serv, Inc., Pharma-Bio Serv PR, Inc. and Nélida Plaza | 8-K | 000-50956 | 10.2 | 1/11/2013 | ||||||
10.15 | Employment Agreement Amendment, dated January 7, 2013, by and among the Company, Pharma-Bio Serv PR, Inc. and Nelida Plaza | 8-K | 000-50956 | 10.2 | 1/11/13 | ||||||
10.16 | Employment Agreement Amendment among Pharma-Bio Serv, Inc., Pharma-Bio Serv PR, Inc. and Nélida Plaza, effective January 1, 2014. | 8-K | 000-50956 | 10.1 | 2/21/2014 | ||||||
10.17 | 2005 Long-term incentive plan, as amended | DEF 14A | 000-50956 | Appendix C | 3/26/2007 | ||||||
10.18 | Amendment to 2005 Long-Term Incentive Plan | 10-Q | 000-50956 | 10.4 | 3/17/2014 | ||||||
10.19 | Pharma-Bio Serv, Inc. 2014 Long-Term Incentive Plan | 8-K | 000-50956 | 10.1 | 5/2/2014 | ||||||
10.20 | Lease dated March 16, 2004 between Plaza Professional Center, Inc. and the Registrant | SB-2 | 333-132847 | 10.9 | 3/30/2006 | ||||||
10.21 | Lease dated November 1, 2004 between Plaza Professional Center, Inc. and the Registrant | SB-2 | 333-132847 | 10.10 | 3/30/2006 | ||||||
14.1 | Code of business conduct and ethics for senior management | 10-KSB | 000-50956 | 14.1 | 2/2/2007 |
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 | 10-K | 000-50956 | 21.1 | 1/29/2015 | |||||
23.1 | Consent of Horwath Vélez & Co, PSC | 10-K | 000-50956 | 23.1 | 1/29/2015 | |||||
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 | 10-K | 000-50956 | 101.INS | 1/29/2015 | |||||
101.SCH | XBRL Taxonomy Extension Schema | 10-K | 000-50956 | 101.SCH | 1/29/2015 | |||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | 10-K | 000-50956 | 101.CAL | 1/29/2015 | |||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | 10-K | 000-50956 | 101.DEF | 1/29/2015 | |||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | 10-K | 000-50956 | 101.LAB | 1/29/2015 | |||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | 10-K | 000-50956 | 101.PRE | 1/29/2015 |
* Filed herewith |
PHARMA-BIO SERV, INC. | ||||
By: | /s/ | |||
Name: Pedro J. Lasanta | ||||
Title: Chief Financial Officer, Vice President | ||||
(Principal Financial and Accounting Officer) | ||||
Exhibit No. | Description | ||
Certification of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
Certification of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
2002). |
October 31, | ||||||||
2014 | 2013 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 15,088,070 | $ | 12,045,923 | ||||
Marketable securities | 67,877 | 71,260 | ||||||
Accounts receivable | 6,385,575 | 7,403,987 | ||||||
Other | 783,466 | 767,452 | ||||||
Total current assets | 22,324,988 | 20,288,622 | ||||||
Property and equipment | 869,041 | 976,423 | ||||||
Other assets | 17,055 | 16,891 | ||||||
Total assets | $ | 23,211,084 | $ | 21,281,936 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Current portion-obligations under capital leases | $ | 21,994 | $ | 32,188 | ||||
Accounts payable and accrued expenses | 2,355,034 | 2,825,532 | ||||||
Income taxes payable | 248,559 | 322,731 | ||||||
Total current liabilities | 2,625,587 | 3,180,451 | ||||||
Obligations under capital leases | 74,736 | 51,724 | ||||||
Total liabilities | 2,700,323 | 3,232,175 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, $0.0001 par value; authorized 10,000,000 shares; none issued or outstanding | - | - | ||||||
Common stock, $0.0001 par value; authorized 50,000,000 shares; 23,049,462 and 22,702,186 shares issued, and 23,033,912 and 22,702,186 shares outstanding at October 31, 2014 and 2013, respectively | 2,305 | 2,271 | ||||||
Additional paid-in capital | 1,055,436 | 931,039 | ||||||
Retained earnings | 19,606,817 | 17,193,203 | ||||||
Accumulated other comprehensive loss | (135,708 | ) | (76,752 | ) | ||||
20,528,850 | 18,049,761 | |||||||
Treasury stock, at cost; 15,550 common shares held at October 31, 2014 | (18,089 | ) | - | |||||
Total stockholders' equity | 20,510,761 | 18,049,761 | ||||||
Total liabilities and stockholders' equity | $ | 23,211,084 | $ | 21,281,936 |
Years ended October 31, | ||||||||
2014 | 2013 | |||||||
REVENUES | $ | 27,555,039 | $ | 33,062,010 | ||||
COST OF SERVICES | 18,581,829 | 21,228,554 | ||||||
GROSS PROFIT | 8,973,210 | 11,833,456 | ||||||
SELLING, GENERAL AND | ||||||||
ADMINISTRATIVE EXPENSES | 6,109,061 | 5,761,742 | ||||||
INCOME FROM OPERATIONS | 2,864,149 | 6,071,714 | ||||||
OTHER INCOME (EXPENSE): | ||||||||
Interest expense | (7,186 | ) | (7,213 | ) | ||||
Interest income | 5,352 | 10,326 | ||||||
Gain on disposition of property and equipment | 15,857 | 1,483 | ||||||
14,023 | 4,596 | |||||||
INCOME BEFORE INCOME TAXES | 2,878,172 | 6,076,310 | ||||||
INCOME TAXES | 464,527 | 1,169,821 | ||||||
NET INCOME | $ | 2,413,645 | $ | 4,906,489 | ||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.105 | $ | 0.221 | ||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.102 | $ | 0.207 | ||||
WEIGHTED AVERAGE NUMBER OF COMMON | ||||||||
SHARES OUTSTANDING – BASIC | 22,979,290 | 22,201,514 | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON | ||||||||
SHARES OUTSTANDING – DILUTED | 23,694,211 | 23,660,362 |
Years ended October 31, | ||||||||
2014 | 2013 | |||||||
NET INCOME | $ | 2,413,645 | $ | 4,906,489 | ||||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF RECLASSIFICATION ADJUSTMENTS AND TAXES: | ||||||||
Foreign currency translation gain (loss) | (55,573 | ) | 38,406 | |||||
Net unrealized losses on available-for-sale securities | (3,383 | ) | (23,740 | ) | ||||
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | (58,956 | ) | 14,666 | |||||
COMPREHENSIVE INCOME | $ | 2,354,689 | $ | 4,921,155 |
Accumulated | ||||||||||||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | Paid-in | Retained | Comprehensive | Treasury | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income (Loss) | Stock | Total | ||||||||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2012 | 20,758,695 | $ | 2,076 | - | $ | - | $ | 678,214 | $ | 12,286,714 | $ | (91,418 | ) | $ | - | $ | 12,875,586 | |||||||||||||||||||
STOCK-BASED COMPENSATION | - | - | - | - | 53,161 | - | - | 53,161 | ||||||||||||||||||||||||||||
CONVERSION OF WARRANTS TO SHARES OF COMMON STOCK | 1,830,991 | 183 | - | - | 109,676 | - | - | 109,859 | ||||||||||||||||||||||||||||
ISSUANCE OF COMMON STOCK PURSUANT TO AGREEMENT WITH INVESTOR RELATIONS FIRM | 112,500 | 12 | - | - | 89,988 | - | - | 90,000 | ||||||||||||||||||||||||||||
NET INCOME | - | - | - | - | - | 4,906,489 | - | 4,906,489 | ||||||||||||||||||||||||||||
OTHER COMPREHENSIVE INCOME, NET OF TAX | - | - | - | - | - | - | 14,666 | - | 14,666 | |||||||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2013 | 22,702,186 | 2,271 | - | - | 931,039 | 17,193,203 | (76,752 | ) | - | 18,049,761 | ||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | - | - | - | - | 94,400 | - | - | - | 94,400 | |||||||||||||||||||||||||||
CASHLESS CONVERSION OF WARRANTS TO SHARES OF COMMON STOCK | 233,763 | 23 | (23 | ) | - | - | - | |||||||||||||||||||||||||||||
ISSUANCE OF COMMON STOCK PURSUANT TO THE CASHLESS EXERCISE OF STOCK OPTIONS | 76,013 | 8 | - | - | - | (8 | ) | - | - | - | ||||||||||||||||||||||||||
ISSUANCE OF COMMON STOCK PURSUANT TO AGREEMENT WITH INVESTOR RELATIONS FIRM | 37,500 | 3 | - | - | 29,997 | - | - | - | 30,000 | |||||||||||||||||||||||||||
PURCHASE OF TREASURY STOCK (15,550 SHARES) | - | - | - | - | - | - | - | (18,089 | ) | (18,089 | ) | |||||||||||||||||||||||||
NET INCOME | - | - | - | - | - | 2,413,645 | - | - | 2,413,645 | |||||||||||||||||||||||||||
OTHER COMPREHENSIVE LOSS, NET OF TAX | - | - | - | - | - | - | (58,956 | ) | - | (58,956 | ) | |||||||||||||||||||||||||
BALANCE AT OCTOBER 31, 2014 | 23,049,462 | $ | 2,305 | - | $ | - | $ | 1,055,436 | $ | 19,606,817 | $ | (135,708 | ) | $ | (18,089 | ) | $ | 20,510,761 |
Years ended October 31, | ||||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 2,413,645 | $ | 4,906,489 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Gain on disposition of property and equipment | (15,857 | ) | (1,483 | ) | ||||
Stock-based compensation | 94,400 | 53,161 | ||||||
Depreciation and amortization | 377,195 | 344,520 | ||||||
Decrease in accounts receivable | 1,050,843 | 428,309 | ||||||
Increase in other assets | (17,015 | ) | (383,939 | ) | ||||
(Decrease) increase in liabilities | (572,544 | ) | 279,629 | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 3,330,667 | 5,626,686 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of property and equipment | (207,507 | ) | (219,352 | ) | ||||
Proceeds from disposition of property and equipment | 38,800 | 13,946 | ||||||
NET CASH USED IN INVESTING ACTIVITIES | (168,707 | ) | (205,406 | ) | ||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of common stock | - | 109,859 | ||||||
Repurchase of common stock | (18,089 | ) | - | |||||
Payments on obligations under capital lease | (73,177 | ) | (39,436 | ) | ||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (91,266 | ) | 70,423 | |||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (28,547 | ) | 16,107 | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 3,042,147 | 5,507,810 | ||||||
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 12,045,923 | 6,538,113 | ||||||
CASH AND CASH EQUIVALENTS – END OF YEAR | $ | 15,088,070 | $ | 12,045,923 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the period for: | ||||||||
Income taxes | $ | 535,267 | $ | 1,325,910 | ||||
Interest | $ | 7,186 | $ | 7,213 | ||||
SUPPLEMENTARY SCHEDULES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Property and equipment with accumulated depreciation of $53,532 and $4,532 disposed during the years ended October 31, 2014 and 2013, respectively. | $ | 76,475 | $ | 16,995 | ||||
Income tax withheld by clients to be used as a credit in the Company’s income tax returns | $ | 79,635 | $ | 204,325 | ||||
Issuance of common stock pursuant to agreement with investor relations firm | $ | 30,000 | $ | 90,000 | ||||
Conversion of cashless exercise of warrants and options to shares of common stock | $ | 31 | $ | - | ||||
Obligations under capital lease incurred for the acquisition of a vehicle | $ | 85,995 | $ | - |
Type of security as of October 31, 2014 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||
U.S. Treasury securities | $ | 4,000,000 | $ | — | $ | — | $ | 4,000,000 | ||||||
Other government-related debt securities: | ||||||||||||||
Puerto Rico Commonwealth Government Development Bond | 95,000 | — | (27,123 | ) | 67,877 | |||||||||
Total interest-bearing and available-for-sale securities | $ | 4,095,000 | $ | — | $ | (27,123 | ) | $ | 4,067,877 |
Type of security as of October 31, 2013 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
U.S. Treasury securities | $ | 4,500,000 | $ | — | $ | — | $ | 4,500,000 | ||||||||
Other government-related debt securities: | ||||||||||||||||
Puerto Rico Commonwealth Government Development Bond | 95,000 | — | (23,740 | ) | 71,260 | |||||||||||
Total interest-bearing and available-for-sale securities | $ | 4,595,000 | $ | — | $ | (23,740 | ) | $ | 4,571,260 |
Classification in the Consolidated Balance Sheets | 2014 | 2013 | ||||||
Cash and cash equivalents | $ | 4,000,000 | $ | 4,500,000 | ||||
Marketable securities | 67,877 | 71,260 | ||||||
Total available-for-sale securities | $ | 4,067,877 | $ | 4,571,260 |
October 31, | |||||||||
Useful life (years) | 2014 | 2013 | |||||||
Vehicles | 5 | $ | 302,182 | $ | 292,662 | ||||
Leasehold improvements | 5-8 | 598,040 | 598,040 | ||||||
Computers | 3 | 678,185 | 593,273 | ||||||
Equipment | 3-7 | 1,345,151 | 1,223,096 | ||||||
Furniture and fixtures | 10 | 149,492 | 149,698 | ||||||
Total | 3,073,050 | 2,856,769 | |||||||
Less: Accumulated depreciation and amortization | (2,204,009 | ) | (1,880,346 | ) | |||||
Property and equipment, net | $ | 869,041 | $ | 976,423 |
October 31, | ||||||||
2014 | 2013 | |||||||
United States federal statutory rate | 35.0 | % | 35.0 | % | ||||
Non United States earnings invested indefinitely, and Puerto Rico Act 73 Tax Grant effect | (20.9 | )% | (15.7 | )% | ||||
Other, net | 0.7 | % | - | % | ||||
Effective tax rate | 14.8 | % | 19.3 | % |
Twelve months ending October 31, | Amount | |||
2015 | $ | 26,850 | ||
2016 | 26,214 | |||
2017 | 24,961 | |||
2018 | 18,697 | |||
2019 | 6,232 | |||
Total future minimum lease payments | 102,954 | |||
Less: Amount of imputed interest | ( 6,224 | ) | ||
Present value of future minimum lease payments | 96,730 | |||
Current portion of obligation under capital leases | (21,994 | ) | ||
Long-term portion | $ | 74,736 |
Amount | ||||
2015 | $ | 403,854 | ||
2016 | 420,277 | |||
2017 | 166,101 | |||
2018 | 81,330 | |||
2019 | 83,770 | |||
Thereafter | 93,491 | |||
Total minimum lease payments | $ | 1,248,823 |
Years ended October 31, | ||||||||
2014 | 2013 | |||||||
Net income available to common equity holders - used to compute basic and diluted earnings per share | $ | 2,413,645 | $ | 4,906,489 | ||||
Weighted average number of common shares - used to compute basic earnings per share | 22,979,290 | 22,201,514 | ||||||
Effect of warrants to purchase common stock | 47,706 | 665,911 | ||||||
Effect of restricted stock units to issue common stock | 41,314 | - | ||||||
Effect of options to purchase common stock | 625,901 | 792,937 | ||||||
Weighted average number of shares - used to compute diluted earnings per share | 23,694,211 | 23,660,362 |
Year ended October 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Number of | Average Option | Number of | Average Option | |||||||||||||
Shares | Exercise Price | Shares | Exercise Price | |||||||||||||
Outstanding at beginning of year | 1,170,000 | $ | 0.6831 | 1,740,000 | $ | 0.6965 | ||||||||||
Granted | 80,000 | $ | 2.0500 | 40,000 | $ | 0.7500 | ||||||||||
Exercised | (100,000 | ) | $ | 0.4830 | - | - | ||||||||||
Expired and/or forfeited | (50,000 | ) | $ | 0.7300 | (610,000 | ) | $ | 0.7257 | ||||||||
Total outstanding at end of year | 1,100,000 | $ | 0.7985 | 1,170,000 | $ | 0.6831 | ||||||||||
Outstanding exercisable stock options at end of year | 763,324 | $ | 0.7614 | 523,327 | $ | 0.6294 | ||||||||||
October 31, 2014 | October 31, 2013 | |||||||||||||||
Weighted average remaining years in contractual life for: | ||||||||||||||||
Total outstanding options | 2.4 years | 3.0 years | ||||||||||||||
Outstanding exercisable options | 2.3 years | 2.6 years | ||||||||||||||
Shares of common stock available for issuance pursuant to future stock option grants | 1,300,000 | 1,330,000 |
Year ended October 31, | ||||||||
2014 | 2013 | |||||||
Stock-based compensation expense: | ||||||||
Cost of services | $ | 10,018 | $ | 11,121 | ||||
Selling, general and administrative | 84,382 | 42,040 | ||||||
Stock-based compensation before tax | 94,400 | 53,161 | ||||||
Income tax benefit | - | - | ||||||
Net stock-based compensation expense | $ | 94,400 | $ | 53,161 | ||||
Effect on earnings per share: | ||||||||
Basic earnings per share | $ | (0.004 | ) | $ | (0.002 | ) | ||
Diluted earnings per share | $ | (0.004 | ) | $ | (0.002 | ) |
Year ended October 31, | ||||||||
2014 | 2013 | |||||||
Expected dividend yield | 0.0 | % | 0.0 | % | ||||
Expected stock price volatility | 54.6 | % | 47.7 | % | ||||
Risk free interest rate | 0.8 | % | 0.4 | % | ||||
Expected life of options | 3.2 years | 3.2 years | ||||||
Weighted average fair value of options granted | $ | 0.7806 | $ | 0.2495 |
Year ended October 31, | ||||||||
2014 | 2013 | |||||||
REVENUES: | ||||||||
Puerto Rico consulting | $ | 15,586,343 | $ | 15,833,248 | ||||
United States consulting | 7,760,941 | 11,334,094 | ||||||
Europe consulting | 2,184,977 | 3,596,648 | ||||||
Lab (microbiological and chemical testing) | 1,718,771 | 1,866,935 | ||||||
Other segments¹ | 304,007 | 431,085 | ||||||
Total consolidated revenues | $ | 27,555,039 | $ | 33,062,010 | ||||
INCOME (LOSS) BEFORE TAXES: | ||||||||
Puerto Rico consulting | $ | 2,380,745 | $ | 3,673,143 | ||||
United States consulting | 898,924 | 2,227,771 | ||||||
Europe consulting | (514,744 | ) | (319,193 | ) | ||||
Lab (microbiological and chemical testing) | (116,711 | ) | 250,500 | |||||
Other segments¹ | 229,958 | 244,089 | ||||||
Total consolidated income before taxes | $ | 2,878,172 | $ | 6,076,310 |