Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Oct. 31, 2013 | Jan. 28, 2014 | Apr. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Pharma-Bio Serv, Inc. | ' | ' |
Entity Central Index Key | '0001304161 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Oct-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--10-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $9,054,343 |
Entity Common Stock, Shares Outstanding | ' | 23,043,094 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Oct. 31, 2013 | Oct. 31, 2012 |
ASSETS: | ' | ' |
Cash and cash equivalents | $12,045,923 | $6,538,113 |
Marketable securities | 71,260 | 95,000 |
Accounts receivable | 7,403,987 | 7,580,167 |
Other | 767,452 | 382,773 |
Total current assets | 20,288,622 | 14,596,053 |
Property and equipment | 976,423 | 1,113,371 |
Other assets | 16,891 | 25,592 |
Total assets | 21,281,936 | 15,735,016 |
LIABILITIES AND STOCKHOLDERS' EQUITY: | ' | ' |
Current portion-obligations under capital leases | 32,188 | 39,436 |
Accounts payable and accrued expenses | 2,825,532 | 2,562,462 |
Income taxes payable | 322,731 | 173,620 |
Total current liabilities | 3,180,451 | 2,775,518 |
Obligations under capital leases | 51,724 | 83,912 |
Total liabilities | 3,232,175 | 2,859,430 |
Stockholders' equity: | ' | ' |
Preferred Stock, $0.0001 par value; authorized 10,000,000 shares; none outstanding | 0 | 0 |
Common Stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding 22,702,186 and 20,758,695 shares at October 31, 2013 and 2012, respectively | 2,271 | 2,076 |
Additional paid-in capital | 931,039 | 678,214 |
Retained earnings | 17,193,203 | 12,286,714 |
Accumulated other comprehensive loss | -76,752 | -91,418 |
Total stockholders' equity | 18,049,761 | 12,875,586 |
Total liabilities and stockholders' equity | $21,281,936 | $15,735,016 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Oct. 31, 2013 | Oct. 31, 2012 |
Stockholders' equity: | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, Authorized | 10,000,000 | 10,000,000 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, Authorized | 50,000,000 | 50,000,000 |
Common stock, Issued | 22,702,186 | 20,758,695 |
Common stock, outstanding | 22,702,186 | 20,758,695 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Income Statement [Abstract] | ' | ' |
REVENUES | $33,062,010 | $29,227,167 |
COST OF SERVICES | 21,228,554 | 19,355,440 |
GROSS PROFIT | 11,833,456 | 9,871,727 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 5,761,742 | 4,138,111 |
INCOME FROM OPERATIONS | 6,071,714 | 5,733,616 |
OTHER INCOME (EXPENSE): | ' | ' |
Interest expense | -7,213 | -7,425 |
Interest income | 10,326 | 11,076 |
Gain on disposition of property and equipment | 1,483 | 18,345 |
Total | 4,596 | 21,996 |
INCOME BEFORE INCOME TAXES | 6,076,310 | 5,755,612 |
INCOME TAXES | 1,169,821 | 1,068,606 |
NET INCOME | $4,906,489 | $4,687,006 |
BASIC EARNINGS PER COMMON SHARE | $0.22 | $0.23 |
DILUTED EARNINGS PER COMMON SHARE | $0.21 | $0.20 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC | 22,201,514 | 20,758,695 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED | 23,660,362 | 22,939,701 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Consolidated Statements Of Comprehensive Income | ' | ' |
NET INCOME | $4,906,489 | $4,687,006 |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF RECLASSIFICATION ADJUSTMENTS AND TAXES: | ' | ' |
Foreign currency translation gain (loss) | 38,406 | -71,409 |
Net unrealized losses on available-for-sale securities | -23,740 | 0 |
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | 14,666 | -71,409 |
COMPREHENSIVE INCOME | $4,921,155 | $4,615,597 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Common Stock | Preferred Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Accumulated Other Comprehensive Income / (Loss) | Total |
Beginning Balance - Amount at Oct. 31, 2011 | $2,076 | $0 | $654,550 | $7,599,708 | ($20,009) | $8,236,325 |
Beginning Balance - Shares at Oct. 31, 2011 | 20,758,695 | 0 | ' | ' | ' | ' |
Stock-based compensation | ' | ' | 23,664 | ' | ' | 23,664 |
Conversion Of Warrants To Shares Of Common Stock, Shares | ' | ' | ' | ' | ' | 0 |
COMPREHENSIVE INCOME: | ' | ' | ' | ' | ' | ' |
Net Income | ' | ' | ' | 4,687,006 | ' | 4,687,006 |
Other Comprehensive Income (Loss), Net Of Tax | ' | ' | ' | ' | -71,409 | -71,409 |
Ending Balance, Amount at Oct. 31, 2012 | 2,076 | 0 | 678,214 | 12,286,714 | -91,418 | 12,875,586 |
Ending Balance, Shares at Oct. 31, 2012 | 20,758,695 | 0 | ' | ' | ' | ' |
Stock-based compensation | ' | ' | 53,161 | ' | ' | 53,161 |
Conversion Of Warrants To Shares Of Common Stock, Shares | 1,830,991 | ' | ' | ' | ' | 0 |
Conversion Of Warrants To Shares Of Common Stock, Amount | 183 | ' | 109,676 | ' | ' | 109,859 |
Issuance Of Common Stock Pursuant To Agreement With Investor Relations Firm, Shares | 112,500 | ' | ' | ' | ' | ' |
Issuance Of Common Stock Pursuant To Agreement With Investor Relations Firm, Amount | 12 | ' | 89,988 | ' | ' | 90,000 |
COMPREHENSIVE INCOME: | ' | ' | ' | ' | ' | ' |
Net Income | ' | ' | ' | 4,906,489 | ' | 4,906,489 |
Other Comprehensive Income (Loss), Net Of Tax | ' | ' | ' | ' | 14,666 | 14,666 |
Ending Balance, Amount at Oct. 31, 2013 | $2,271 | $0 | $931,039 | $17,193,203 | ($76,752) | $18,049,761 |
Ending Balance, Shares at Oct. 31, 2013 | 22,702,186 | 0 | ' | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income | $4,906,489 | $4,687,006 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Gain on disposition of property and equipment | -1,483 | -18,345 |
Stock-based compensation | 53,161 | 23,664 |
Depreciation and amortization | 344,520 | 321,732 |
Decrease (increase) in accounts receivable | 428,309 | -2,735,046 |
Increase in other assets | -383,939 | -50,486 |
Increase in liabilities | 279,629 | 230,541 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 5,626,686 | 2,459,066 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Acquisition of property and equipment | -219,352 | -187,362 |
Proceeds from disposition of property and equipment | 13,946 | 18,836 |
NET CASH USED IN INVESTING ACTIVITIES | -205,406 | -168,526 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from issuance of common stock | 109,859 | 0 |
Payments on obligations under capital lease | -39,436 | -32,826 |
NET CASH USED IN FINANCING ACTIVITIES | 70,423 | -32,826 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 16,107 | -36,326 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 5,507,810 | 2,221,388 |
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 6,538,113 | 4,316,725 |
CASH AND CASH EQUIVALENTS - END OF YEAR | 12,045,923 | 6,538,113 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: | ' | ' |
Income taxes | 1,325,910 | 1,543,021 |
Interest | 7,213 | 7,425 |
SUPPLEMENTARY SCHEDULES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ' | ' |
Property and equipment with accumulated depreciation of $4,532 and $32,122 disposed during the years ended October 31, 2013 and 2012, respectively | 16,995 | 32,613 |
Income tax withheld by clients to be used as a credit in the Company's income tax return | 204,325 | 39,120 |
Issuance of common stock pursuant to agreement with investor relations firm | 90,000 | 0 |
Obligations under capital lease incurred for the acquisition of a vehicle | $0 | $32,795 |
Consolidated_Statements_of_Cas1
Consolidated Statements of Cash Flows (Parenthetical) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Statement of Cash Flows [Abstract] | ' | ' |
Accumulated depreciation on property and equipment disposed during the years ended October 31, 2013 and 2012, respectively | $4,532 | $32,122 |
A_ORGANIZATION_AND_SUMMARY_OF_
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Oct. 31, 2013 | ||
A. Organization And Summary Of Significant Accounting Policies | ' | |
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |
ORGANIZATION | ||
Pharma-Bio Serv, Inc. (“Pharma-Bio”) is a Delaware corporation organized on January 14, 2004. Pharma-Bio is the parent company of Pharma-Bio Serv PR, Inc. (“Pharma-PR”), Pharma Serv, Inc. (“Pharma-Serv”) both Puerto Rico corporations, Pharma-Bio Serv US, Inc. (“Pharma-US”), a Delaware corporation, Pharma-Bio Serv Validation & Compliance Limited (“Pharma-IR”), an Irish corporation, and Pharma-Bio Serv SL (“Pharma-Spain”) a Spanish limited liability company. Pharma-Bio, Pharma-PR, Pharma-Serv, Pharma-US, Pharma-IR and Pharma-Spain are collectively referred to as the “Company.” The Company operates in Puerto Rico, the United States, Ireland and Spain under the name of Pharma-Bio Serv and is engaged in providing technical compliance consulting service, and microbiological and chemical laboratory testing services primarily to the pharmaceutical, chemical, medical device and biotechnology industries. | ||
Pharma-Spain is a wholly owned subsidiary, which started operations in January 2013. | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Consolidation | ||
The accompanying consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. | ||
Use of Estimates | ||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from these estimates. | ||
Fair Value of Financial Instruments | ||
Accounting standards have established a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting standards have established three levels of inputs that may be used to measure fair value: | ||
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). | |
Marketable securities available-for-sale consist of U.S. Treasury securities and an obligation from the Puerto Rico Government Development Bank valued using quoted market prices in active markets. Accordingly, these securities are categorized in Level 1. | ||
The carrying value of the Company's financial instruments (excluding marketable securities and obligations under capital leases): cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, are considered reasonable estimates of fair value due to their liquidity or short-term nature. Management believes, based on current rates, that the fair value of its obligations under capital leases approximates the carrying amount. | ||
Revenue Recognition | ||
Revenue is primarily derived from: (1) time and materials contracts (representing approximately 92% of total revenues), which is recognized by applying the proportional performance model, whereby revenue is recognized as performance occurs, (2) short-term fixed-fee contracts or "not to exceed" contracts (representing approximately 2% of total revenues), which revenue is recognized similarly, except that certain milestones also have to be reached before revenue is recognized, and (3) laboratory testing revenue (representing approximately 6% of total revenues), which is mainly recognized as the testing is completed and certified (normally within days of sample receipt from customer). If the Company determines that a contract will result in a loss, the Company recognizes the estimated loss in the period in which such determination is made. | ||
Cash Equivalents | ||
For purposes of the consolidated statements of cash flows, cash equivalents include investments in money market obligation’s trusts that are registered under the U.S. Investment Company Act of 1940 and liquid investments with original maturities of three months or less. | ||
Marketable Securities | ||
We consider our marketable security investment portfolio and marketable equity investments as available-for-sale and, accordingly, these investments are recorded at fair value with unrealized gains and losses generally recorded in other comprehensive income; whereas realized gains and losses are included in earnings and determined based on the specific identification method. | ||
Accounts Receivable | ||
Accounts receivable are recorded at their estimated realizable value. Accounts are deemed past due when payment has not been received within the stated time period. The Company's policy is to review individual past due amounts periodically and write off amounts for which all collection efforts are deemed to have been exhausted. Due to the nature of the Company’s customers, bad debts are mainly accounted for using the direct write-off method whereby an expense is recognized only when a specific account is determined to be uncollectible. The effect of using this method approximates that of the allowance method. | ||
Income Taxes | ||
The Company follows an asset and liability approach method of accounting for income taxes. This method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. | ||
The Company follows guidance from the Financial Accounting Standards Board (“FASB”) related to Accounting for Uncertainty in Income Taxes, which includes a two-step approach to recognizing, de-recognizing and measuring uncertain tax positions. As of October 31, 2013, the Company had no significant uncertain tax positions that would be reduced as a result of a lapse of the applicable statute of limitations. | ||
Property and Equipment | ||
Owned property and equipment, and leasehold improvements are stated at cost. Equipment and vehicles under capital leases are stated at the lower of fair market value or net present value of the minimum lease payments at the inception of the leases. Depreciation and amortization of owned assets are provided for, when placed in service, in amount sufficient to relate the cost of depreciable assets to operations over their estimated service lives, using straight-line basis. Assets under capital leases and leasehold improvements are amortized, over the shorter of the estimated useful lives of the assets or initial lease term. Major renewals and betterments that extend the life of the assets are capitalized, while expenditures for repairs and maintenance are expensed when incurred. | ||
The Company evaluates for impairment its long-lived assets to be held and used, and long-lived assets to be disposed of, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on management estimates, no impairment of the operating properties was present. | ||
Stock-based Compensation | ||
Stock-based compensation expense is recognized in the consolidated financial statements based on the fair value of the awards granted. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period, and includes an estimate of awards that will be forfeited. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model at grant date. Excess tax benefits related to stock-based compensation are reflected as cash flows from financing activities rather than cash flows from operating activities. The Company has not recognized such cash flow from financing activities since there has been no tax benefit related to the stock-based compensation. | ||
Income Per Share of Common Stock | ||
Basic income per share of common stock is calculated dividing net income by the weighted average number of shares of common stock outstanding. Diluted income per share includes the dilution of common stock equivalents. | ||
The diluted weighted average shares of common stock outstanding were calculated using the treasury stock method for the respective periods. | ||
Foreign Operations | ||
The functional currency of the Company’s foreign subsidiaries are its local currency. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. The cumulative translation effect for subsidiaries using a functional currency other than the U.S. dollar is included as a cumulative translation adjustment in stockholders’ equity and as a component of comprehensive income. | ||
The Company’s intercompany accounts are typically denominated in the functional currency of the foreign subsidiary. Gains and losses resulting from the remeasurement of intercompany receivables that the Company considers to be of a long-term investment nature are recorded as a cumulative translation adjustment in stockholders’ equity and as a component of comprehensive income, while gains and losses resulting from the remeasurement of intercompany receivables from those international subsidiaries for which the Company anticipates settlement in the foreseeable future are recorded in the consolidated statements of operations. The net gains and losses recorded in the consolidated statements of income were not significant for the periods presented. | ||
Subsequent Events | ||
The Company has evaluated subsequent events to the date of the audit report as of January 29, 2014. | ||
The Company has determined that there are no events occurring in this period that required disclosure in or adjustment except as disclosed in the accompanying consolidated financial statements. | ||
Reclassifications | ||
Certain reclassifications have been made to the October 31, 2012 consolidated financial statements to conform them to the October 31, 2013 consolidated financial statements presentation. Such reclassifications do not have effect on net income as previously reported. | ||
Recent Accounting Pronouncements | ||
Recent issued FASB guidance and Securities and Exchange Commission (“SEC”) Staff Accounting Bulletins have either been implemented, with no significant effect, or are not applicable to the Company. |
B_MARKETABLE_SECURITIES_AVAILA
B. MARKETABLE SECURITIES AVAILABLE FOR SALE | 12 Months Ended | ||||||||||||||||
Oct. 31, 2013 | |||||||||||||||||
Text Block [Abstract] | ' | ||||||||||||||||
B. MARKETABLE SECURITIES AVAILABLE FOR SALE | ' | ||||||||||||||||
The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of available-for-sale securities by type of security were as follows as of October 31, 2013: | |||||||||||||||||
Type of security as of October 31, 2013 | Amortized Cost | Gross | Gross | Estimated | |||||||||||||
Unrealized Gains | Unrealized Losses | 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 | ||||||||
At October 31, 2013 and 2012, the above marketable securities included a $95,000 5.4% Puerto Rico Commonwealth Government Development Bank Bond, purchased at par and maturing in August 2019. As of October 31, 2012, this bond was the only marketable security investment, and its balance approximated its fair market value, therefore no realized or unrealized gains or losses were recorded then. | |||||||||||||||||
The fair values of available-for-sale securities by classification in the Consolidated Balance Sheets were as follows as of October 31, 2013 and 2012: | |||||||||||||||||
Classification in the Consolidated Balance Sheets | 2013 | 2012 | |||||||||||||||
Cash and cash equivalents | $ | 4,500,000 | $ | — | |||||||||||||
Marketable securities | 71,260 | 95,000 | |||||||||||||||
Total available-for-sale securities | $ | 4,571,260 | $ | 95,000 | |||||||||||||
Cash and cash equivalents in the table above exclude cash in banks of approximately $7.5 million as of October 31, 2013. | |||||||||||||||||
The primary objectives of the Company’s investment portfolio are liquidity and safety of principal. Investments are made with the objective of achieving the highest rate of return consistent with these two objectives. Our investment policy limits investments to certain types of debt and money market instruments issued by institutions primarily with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. | |||||||||||||||||
We review our available-for-sale securities for other-than-temporary declines in fair value below their cost basis on a quarterly basis and whenever events or changes in circumstances indicate that the cost basis of an asset may not be recoverable. This evaluation is based on a number of factors including, the length of time and extent to which the fair value has been less than our cost basis and adverse conditions specifically related to the security including any changes to the rating of the security by a rating agency. |
C_PROPERTY_AND_EQUIPMENT
C. PROPERTY AND EQUIPMENT | 12 Months Ended | |||||||||
Oct. 31, 2013 | ||||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||||
C. PROPERTY AND EQUIPMENT | ' | |||||||||
The balance of property and equipment at October 31, 2013 and 2012 consisted of the following: | ||||||||||
October 31, | ||||||||||
Useful life (years) | 2013 | 2012 | ||||||||
Vehicles | 5 | $ | 292,662 | $ | 269,267 | |||||
Leasehold improvements | 8-May | 598,040 | 598,040 | |||||||
Computers | 3 | 593,273 | 522,792 | |||||||
Equipment | 7-Mar | 1,223,096 | 1,126,415 | |||||||
Furniture and fixtures | 10 | 149,698 | 137,215 | |||||||
Total | 2,856,769 | 2,653,729 | ||||||||
Less: Accumulated depreciation and amortization | (1,880,346 | ) | (1,540,358 | ) | ||||||
Property and equipment, net | $ | 976,423 | $ | 1,113,371 |
D_INCOME_TAXES
D. INCOME TAXES | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
D. INCOME TAX | ' | ||||||||
In June 2011, Pharma-Bio, Pharma-PR and Pharma-Serv obtained a Grant of Industrial Tax Exemption pursuant to the terms and conditions set forth in Act No. 73 of May 28, 2008 (“the Grant”) issued by the Puerto Rico Industrial Development Company (“PRIDCO”). The Grant was effective as of November 1, 2009 and covers a fifteen year period. The Grant provides relief on various Puerto Rico taxes, including income tax, with certain limitations, for most of the activities carried on within Puerto Rico, including those that are for services to parties located outside of Puerto Rico. The Grant establishes a threshold (“Baseline”) on the Industrial Development Income (“IDI”) subject to the favorable income tax rates. Within a four year term ending with the taxable year ending October 31, 2013, the Baselines were gradually reduced to zero. Certain activities covered under the Grant are not subject to a Baseline and are allowed a four year gradual phase-in from the maximum income tax rate of 30%, as provided by the 2011 Puerto Rico Internal Revenue Code, to the favorable fixed Act 73 income tax rate of 4%. In addition, IDI earnings distributions accumulated since November 1, 2009 are exempt from Puerto Rico earnings distribution tax. | |||||||||
Currently, Puerto Rico operations not covered under the exempt activities of the Grant are subject to Puerto Rico income tax at a maximum tax rate of 30%. Effective with our fiscal year end October 31, 2014, the maximum income tax rate under the Puerto Rico Internal Revenue Code will be 39%. The operations carried out in the United States by the Company’s subsidiary are taxed in the United States at a maximum regular federal income tax rate of 35%. | |||||||||
Distribution of earnings by the Puerto Rican subsidiaries to its parent are taxed at the federal level; however, the parent is able to receive a credit for the taxes paid by the subsidiary on its operations in Puerto Rico, to the extent of the federal taxes that result from those earnings. As a result, the income tax expense of the Company, under its present corporate structure, would normally be the Puerto Rico taxes on operations in Puerto Rico, federal and state taxes on operations in the United States, plus the earnings distribution tax in Puerto Rico from dividends paid to the Puerto Rican subsidiaries’ parent, and the parent’s federal income tax, if any, incurred upon the subsidiary’s earnings distribution. | |||||||||
Deferred income tax assets and liabilities are computed for differences between the consolidated financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. | |||||||||
The reconciliation between the United States federal statutory rate and our effective tax rate for the years ended October 31, 2013, and 2012 is as follows: | |||||||||
October 31, | |||||||||
2013 | 2012 | ||||||||
United States federal statutory rate | 35 | % | 35 | % | |||||
Non United States earnings invested indefinitely, and | (15.7 | )% | (17.0 | )% | |||||
Puerto Rico Act 73 Tax Grant effect | |||||||||
Other, net | - | % | 0.6 | % | |||||
Effective tax rate | 19.3 | % | 18.6 | % | |||||
As of October 31, 2013 and 2012, the Company has not recognized deferred income taxes on $14.4 million and $10.5 million of undistributed earnings of its Puerto Rican subsidiaries, respectively, since such earnings are considered to be reinvested indefinitely. If the earnings were distributed in the form of dividends, the Company would be subject to Puerto Rico earnings distribution tax and United States federal income tax for the aggregate amount of approximately $2.9 million and $1.6 million at October 31, 2013 and 2012, respectively. | |||||||||
At October 31, 2013, Pharma-Spain and Pharma-IR have unused operating losses of approximately $178,000 and $727,000, respectively. These net operating losses are available to offset future taxable income until October 31, 2028 for Pharma-Spain and indefinitely for Pharma-IR. After considering various timing differences for income tax purposes, these unused operating losses result in a potential deferred tax asset for Pharma-Spain and Pharma-IR of approximately $35,000 and $90,000, respectively. However, an allowance has been provided covering the total amount of such balance since it is uncertain whether the net operating losses can be used to offset future taxable income. Realization of future tax benefits related to a deferred tax asset is dependent on many factors, including the company’s ability to generate taxable income. Accordingly, the income tax benefit will be recognized when realization is determined to be more probable than not. | |||||||||
The Company files income tax returns in the United States (federal and various states jurisdictions), Puerto Rico, Ireland and Spain. Tax years ending October 31, 2008 through October 31, 2013 are open and may be subject to potential examination in one or more jurisdictions. During the fiscal year ended October 31, 2012, Pharma-Bio's federal income tax return for the year ended October 31, 2008 was examined by the United States Internal Revenue Service, no deficiencies were assessed. Currently, the Company has no federal, state, Puerto Rico or foreign income tax examination. |
E_COMMITMENTS_AND_CONTINGENCIE
E. COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Oct. 31, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
E. COMMITMENTS AND CONTINGENCIES | ' | ||||
Capitalized lease obligations - The Company leases vehicles under non-cancelable capital lease agreements with a cost of $200,158 (accumulated amortization of $127,205 and $87,174) as of October 31, 2013 and 2012, respectively. Amortization expense for vehicles under non-cancelable lease agreements amounted to $40,032 and $34,566 in the years ended October 31, 2013 and 2012, respectively. | |||||
The following is a schedule, by year, of future minimum lease payments under the capitalized leases together with the present value of the net minimum lease payments at October 31, 2013: | |||||
Twelve months ending October 31, | Amount | ||||
2014 | $ | 36,402 | |||
2015 | 24,293 | ||||
2016 | 24,242 | ||||
2017 | 6,264 | ||||
Total future minimum lease payments | 91,201 | ||||
Less: Amount of imputed interest | ( 7,289 | ) | |||
Present value of future minimum lease payments | 83,912 | ||||
Current portion of obligation under capital leases | (32,188 | ) | |||
Long-term portion | $ | 51,724 | |||
Operating facilities - The Company conducts its administrative operations in office facilities which are leased under four different rental agreements. | |||||
In February 2012, the Company automatically renewed a lease agreement, with an affiliate of our principal executive officer, for the headquarters and laboratory testing facilities in Dorado, Puerto Rico. The renewal is for a term of five years with monthly rental payments of $23,930, $25,127, $26,383, $27,702 and $29,087 for each of the five years under the lease. The agreement also requires the payment of utilities, property taxes, insurance and a portion of expenses incurred by the affiliate in connection with the maintenance of common areas. | |||||
In November 2011, the Company entered into a lease agreement for the U.S. office facilities located in Plymouth, Pennsylvania. The lease was for a five-year term with monthly rental payments of $6,282 for the first three years and subsequent increases of four percent per year. During the 2013 fiscal year, the landlord filed for bankruptcy. The lease was renegotiated with a new landlord with an effective date of December 1, 2013. The new lease is for a term of seven years, with monthly rental payments of $6,282 for the first three years, and $6,596, $6,794, $6,998, and $7,208, respectively, thereafter. The lease has a renewal option for a term of three years with monthly rental payments of $7,424, $7,647 and $7,876, for each of the years, respectively. | |||||
The Company maintains office facilities in Cork, Ireland and Madrid, Spain. Both facilities are under month-to-month leases with monthly payments of approximately $900 and $1,900, respectively. | |||||
The Company leases certain apartments as dwellings for employees. The leases are under short-term lease agreements and usually are cancelable upon 30-day notification. | |||||
Minimum future rental payments under non-cancelable operating leases having remaining terms in excess of one year as of October 31, 2013 are as follows: | |||||
Amount | |||||
2014 | $ | 388,212 | |||
2015 | 403,854 | ||||
2016 | 420,277 | ||||
2017 | 166,101 | ||||
2018 | 81,330 | ||||
Thereafter | 177,261 | ||||
Total minimum lease payments | $ | 1,637,035 | |||
Rent expense during the years ended October 31, 2013 and 2012 was $521,800 and $411,100, respectively. | |||||
Contingencies - In the ordinary course of business, the Company may be a party to legal proceedings incidental to the business. These proceedings are not expected to have a material adverse effect on the Company’s business or financial condition. |
F_WARRANTS
F. WARRANTS | 12 Months Ended | ||||||||||
Oct. 31, 2013 | |||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||
F. WARRANTS | ' | ||||||||||
At October 31, 2013 and 2012, the Company had outstanding warrants to purchase shares of the Company’s common stock as follows: | |||||||||||
Outstanding Warrants | |||||||||||
October 31, | |||||||||||
Exercise Price | Expiration Date | 2013 | 2012 | ||||||||
Original Warrants A | $ | 0.06 | 16-Jan-14 | 240,800 | 240,800 | ||||||
Broker Warrants B | $ | 0.06 | January 24, 2014 | - | 1,830,991 | ||||||
Warrants Total | 240,800 | 2,071,791 | |||||||||
In January 2013, the holder of Broker Warrants B exercised its warrants to purchase 1,830,991 shares of common stock. All Original Warrants A were exercised by its holders in January 2014. |
G_CAPITAL_TRANSACTIONS
G. CAPITAL TRANSACTIONS | 12 Months Ended |
Oct. 31, 2013 | |
Notes to Financial Statements | ' |
G. CAPITAL TRANSACTIONS | ' |
On January 23, 2013, the Company entered into an agreement with an investor relations firm to assist in the Company’s shareholder communication efforts. For these services, in addition to a monthly fee of $10,000, the Company agreed to issue to the investor relations firm a total of 150,000 shares during the one year term of the agreement (75,000, 37,500 and 37,500 shares in January 2013, July 2013 and January 2014, respectively). As of January 24, 2014, pursuant to the terms of the agreement with the investor relations firm, all shares were issued. |
H_EARNINGS_PER_SHARE
H. EARNINGS PER SHARE | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
H. EARNINGS PER SHARE | ' | ||||||||
The following data show the amounts used in the calculations of basic and diluted earnings per share. | |||||||||
Years ended October 31, | |||||||||
2013 | 2012 | ||||||||
Net t income available to common equity holders - used to compute basic and diluted earnings per share | $ | 4,906,489 | $ | 4,687,006 | |||||
Weighted average number of common shares - used to compute basic earnings per share | 22,201,514 | 20,758,695 | |||||||
Effect of warrants to purchase common stock | 665,911 | 1,919,849 | |||||||
Effect of options to purchase common stock | 792,937 | 261,157 | |||||||
Weighted average number of shares - used to compute diluted earnings per share | 23,660,362 | 22,939,701 |
I_STOCK_OPTIONS_AND_STOCK_BASE
I. STOCK OPTIONS AND STOCK BASED COMPENSATION | 12 Months Ended | ||||||||||||||||
Oct. 31, 2013 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||
I. STOCK OPTIONS AND STOCK BASED COMPENSATION | ' | ||||||||||||||||
In October 2005, the Company's board of directors adopted, and on April 25, 2006, the Company’s stockholders approved, the 2005 Long-Term Incentive Plan, covering 2,500,000 shares of common stock. The 2005 plan provides for the grant of incentive and non-qualified options, stock grants, stock appreciation rights and other equity-based incentives to employees, including officers, consultants and directors. The 2005 plan is to be administered by a committee of independent directors. In the absence of a committee, the plan is administered by the board of directors. Options intended to be incentive stock options must be granted at an exercise price per share which is not less than the fair market value of the common stock on the date of grant and may have a term which is not longer than ten years. If the option holder holds at least 10% of the Company’s common stock, the exercise price must be at least 110% of the fair market value on the date of grant and the term of the option cannot exceed five years. | |||||||||||||||||
The Company recognizes stock-based compensation based on the fair value of the awards. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period, and includes an estimate of awards that will be forfeited. | |||||||||||||||||
The 2005 Plan stock options activity and status for the years ended October 31, 2013 and 2012 was as follows: | |||||||||||||||||
Year ended October 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted- | Weighted- | ||||||||||||||||
Number of | Average Option | Number of | Average Option | ||||||||||||||
Shares | Exercise Price | Shares | Exercise Price | ||||||||||||||
Outstanding at beginning of year | 1,740,000 | $ | 0.6965 | 454,585 | $ | 0.5804 | |||||||||||
Granted | 40,000 | $ | 0.75 | 1,355,000 | $ | 0.7372 | |||||||||||
Exercised | - | - | |||||||||||||||
Expired and/or forfeited | (610,000 | ) | $ | 0.7257 | (69,585 | ) | $ | 0.7317 | |||||||||
Total outstanding at end of year | 1,170,000 | $ | 0.6831 | 1,740,000 | $ | 0.6965 | |||||||||||
Outstanding exercisable stock options at end of year | 523,327 | $ | 0.6294 | 430,000 | $ | 0.5702 | |||||||||||
October 31, | October 31, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted average remaining years in contractual life for: | |||||||||||||||||
Total outstanding options | 3.0 years | 3.4 years | |||||||||||||||
Outstanding exercisable options | 2.6 years | 1.0 years | |||||||||||||||
Shares of common stock available for issuance pursuant to future stock option grants | 1,330,000 | 760,000 | |||||||||||||||
The following table presents the stock-based compensation included in the Company’s consolidated statement of income and the effect in earnings per share: | |||||||||||||||||
Year ended October 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Stock-based compensation expense: | |||||||||||||||||
Cost of services | $ | 11,121 | $ | 10,000 | |||||||||||||
Selling, general and administrative | 42,040 | 13,664 | |||||||||||||||
Stock-based compensation before tax | 53,161 | 23,664 | |||||||||||||||
Income tax benefit | - | - | |||||||||||||||
Net stock-based compensation expense | $ | 53,161 | $ | 23,664 | |||||||||||||
Effect on earnings per share: | |||||||||||||||||
Basic earnings per share | $ | (0.002 | ) | $ | (0.001 | ) | |||||||||||
Diluted earnings per share | $ | (0.002 | ) | $ | (0.001 | ) | |||||||||||
As of October 31, 2013, estimated stock based compensation expense to be recognized in future periods for granted nonvested stock options amounted to approximately $60,000. These nonvested stock options compensation expense will be recognized in a weighted average period of approximately 0.8 years. | |||||||||||||||||
The fair value of stock-based awards to employees is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The expected term of the option has been estimated using the “simplified” method as provided in (“SEC”) Staff Accounting Bulletin No. 107. Under this method, the expected term equals the arithmetic average of the vesting term and the contractual term of the option. The risk-free rate is based on the U.S. Treasury rates in effect during the corresponding period of grant. The expected volatility is based on the historical volatility of the Company’s stock price. These factors could change in the future, which would affect fair values of stock options granted in such future periods, and could cause volatility in the total amount of the stock-based compensation expense reported in future periods. | |||||||||||||||||
The following weighted average assumptions were used to estimate the fair value of stock options granted for the years ended October 31, 2013 and 2012: | |||||||||||||||||
Year ended October 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
Expected stock price volatility | 47.7 | % | 40.9 | % | |||||||||||||
Risk free interest rate | 0.4 | % | 0.3 | % | |||||||||||||
Expected life of options | 3.2 years | 3.5 years | |||||||||||||||
Weighted average fair value of options granted | $ | 0.2495 | $ | 0.2227 | |||||||||||||
As of October 31, 2013 and 2012, the aggregate intrinsic value of options outstanding was approximately $1,108,000 and $180,000, respectively. The aggregate intrinsic value represents the difference between the Company’s stock price at year end and the exercise price, multiplied by the number of in-the money options had all option holders exercised their options. This amount changes based on the fair market value of the Company’s stock. For the years ended October 31, 2013 and 2012, no stock options were exercised. |
J_CONCENTRATIONS_OF_RISK
J. CONCENTRATIONS OF RISK | 12 Months Ended |
Oct. 31, 2013 | |
Risks and Uncertainties [Abstract] | ' |
J. CONCENTRATIONS OF RISK | ' |
Cash and cash equivalents | |
The Company domestic cash and cash equivalents consist of cash deposits in FDIC insured banks (substantially covered by FDIC insurance by the spread of deposits in multiple FDIC insured banks), a money market obligations trust registered under the US Investment Company Act of 1940, as amended, and U.S. Treasury securities with maturities of three months or less. In the foreign markets we serve, we also maintain cash deposits in foreign banks, which tend to be not significant and have no specific insurance. No losses have been experienced or are expected on these accounts. | |
Accounts receivable and revenues | |
Management deems all its accounts receivable to be fully collectible, and, as such, does not maintain any allowances for uncollectible receivables. | |
The Company's revenues, and the related receivables, are concentrated in the pharmaceutical industry in Puerto Rico, the United States of America, Ireland and Spain. Although few customers represent a significant source of revenue, the Company’s functions are not a continuous process, accordingly, the client base for which the services are typically rendered, on a project-by-project basis, changes regularly. | |
The Company provided a substantial portion of its services to three customers, who accounted for 10% or more of its revenues in either of the years ended October 31, 2013 or 2012. During the year ended October 31, 2013 revenues from these customers were 28%, 15% and 12%, or a total of 55%, as compared to the same period last year for 25%, 19% and 8%, or a total of 52%, respectively. At October 31, 2013 and 2012, amounts due from these customers represented 38% and 49% of total accounts receivable balance, respectively. | |
The major customer information in the above paragraph is based on revenues earned from said customers at the segment level because in management’s opinion contracts by segments are totally independent of each other, and therefore such information is more meaningful to the reader. These revenues pertain to two global group of affiliated companies. During the year ended October 31, 2013, aggregate revenues from these global groups of affiliated companies were 51% and 12%, or a total of 63%, as compared to the same period last year for 54% and 8%, or a total of 62%, respectively. At October 31, 2013 and 2012, amounts due from this global group of affiliated companies represented 47% and 60% of total accounts receivable balance, respectively. |
K_SEGMENT_DISCLOSURES
K. SEGMENT DISCLOSURES | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
K. SEGMENT DISCLOSURES | ' | ||||||||
The Company’s segments are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision maker to determine resource allocation and assess performance. Each reportable segment is managed by its own management team and reports to executive management. The Company has four reportable segments: (i) Puerto Rico technical compliance consulting, (ii) United States technical compliance consulting, (iii) Europe technical compliance consulting, and (iv) a Puerto Rico microbiological and chemical laboratory testing division (“Lab”). These reportable segments provide services primarily to the pharmaceutical, chemical, medical device and biotechnology industries in their respective markets. | |||||||||
The following table presents information about the reported revenue from services and earnings from operations of the Company for the year ended in October 31, 2013 and 2012. There is no intersegment revenue for the mentioned periods. Corporate expenses that support the operating units have been allocated to the segments. Asset information by reportable segment is not presented, since the Company does not produce such information internally, nor does it use such data to manage its business. | |||||||||
Year ended October 31, | |||||||||
2013 | 2012 | ||||||||
REVENUES: | |||||||||
Puerto Rico consulting | $ | 15,833,248 | $ | 15,213,662 | |||||
United States consulting | 11,334,094 | 9,159,539 | |||||||
Europe consulting | 3,596,648 | 3,211,758 | |||||||
Lab (microbiological and chemical testing) | 1,866,935 | 857,948 | |||||||
Other segments¹ | 431,085 | 784,260 | |||||||
Total consolidated revenues | $ | 33,062,010 | $ | 29,227,167 | |||||
INCOME (LOSS) BEFORE TAXES: | |||||||||
Puerto Rico consulting | $ | 3,673,143 | $ | 3,664,238 | |||||
United States consulting | 2,227,771 | 2,407,190 | |||||||
Europe consulting | (319,193 | ) | (245,431 | ) | |||||
Lab (microbiological and chemical testing) | 250,500 | (381,406 | ) | ||||||
Other segments¹ | 244,089 | 311,021 | |||||||
Total consolidated income before taxes | $ | 6,076,310 | $ | 5,755,612 | |||||
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. | ||||||||
Long lived assets (property and equipment) and related depreciation and amortization expense for the year ended October 31, 2013 and 2012, were concentrated in the domestic markets (Puerto Rico and United States). The aggregate amount of long lived assets for the international operations (Europe) is considered insignificant. |
L_RETIREMENT_PLAN
L. RETIREMENT PLAN | 12 Months Ended |
Oct. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | ' |
L. RETIREMENT PLAN | ' |
Pharma-PR has a qualified profit sharing plan in accordance with the provision of Section 1081.01 of the Puerto Rico Code, for employees who meet certain age and service period requirements. The Company makes contributions to this plan as required by the provisions of the plan document. Contributions for the years ended October 31, 2013 and 2012 were $91,500 and $75,100, respectively. |
M_RELATED_PARTY_TRANSACTIONS
M. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
M. RELATED PARTY TRANSACTIONS | ' |
Our Chairman of the Board of Directors, stepped down as President and Chief Executive Officer of the Company, effective December 31, 2012. On January 7, 2013, the Company entered into a Consulting Agreement with our Chairman, effective as of January 1, 2013 (the "Consulting Agreement"). Pursuant to the Consulting Agreement, the Chairman will serve as the Company's Senior Strategic Consultant to provide advice and assistance to the Board of Directors and the officers of the Company. Pursuant to the Consulting Agreement, the Chairman will receive a consulting fee on a per hour basis, subject to an aggregate amount not to exceed $300,000 during the one year term of the Consulting Agreement. Additionally, the Chairman 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 includes standard provisions relating to non-competition, confidentiality, and non-disparagement. On July 17, 2013, the Compensation Committee of the Board of Directors of the Company approved up to 720 additional hours of consulting services to be provided by the Chairman at the previously established rate of $275 per hour during the one year term of the Consulting Agreement. | |
On December 31, 2013, the Company entered into a Consulting Agreement with a company (the “Consultant”) affiliated to our Chairman and our Chairman, effective as of January 1, 2014. 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 one year term of the Consulting Agreement. Additionally, our Chairman 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, non-transferability and non-disparagement. |
A_ORGANIZATION_AND_SUMMARY_OF_1
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Oct. 31, 2013 | ||
A. Organization And Summary Of Significant Accounting Policies Policies | ' | |
Consolidation | ' | |
The accompanying consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. | ||
Use of Estimates | ' | |
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from these estimates. | ||
Fair Value of Financial Instruments | ' | |
Accounting standards have established a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting standards have established three levels of inputs that may be used to measure fair value: | ||
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). | |
Marketable securities available-for-sale consist of U.S. Treasury securities and an obligation from the Puerto Rico Government Development Bank valued using quoted market prices in active markets. Accordingly, these securities are categorized in Level 1. | ||
The carrying value of the Company's financial instruments (excluding marketable securities and obligations under capital leases): cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, are considered reasonable estimates of fair value due to their liquidity or short-term nature. Management believes, based on current rates, that the fair value of its obligations under capital leases approximates the carrying amount. | ||
Revenue Recognition | ' | |
Revenue is primarily derived from: (1) time and materials contracts (representing approximately 92% of total revenues), which is recognized by applying the proportional performance model, whereby revenue is recognized as performance occurs, (2) short-term fixed-fee contracts or "not to exceed" contracts (representing approximately 2% of total revenues), which revenue is recognized similarly, except that certain milestones also have to be reached before revenue is recognized, and (3) laboratory testing revenue (representing approximately 6% of total revenues), which is mainly recognized as the testing is completed and certified (normally within days of sample receipt from customer). If the Company determines that a contract will result in a loss, the Company recognizes the estimated loss in the period in which such determination is made. | ||
Cash Equivalents | ' | |
For purposes of the consolidated statements of cash flows, cash equivalents include investments in money market obligation’s trusts that are registered under the U.S. Investment Company Act of 1940 and liquid investments with original maturities of three months or less. | ||
Marketable Securities | ' | |
We consider our marketable security investment portfolio and marketable equity investments as available-for-sale and, accordingly, these investments are recorded at fair value with unrealized gains and losses generally recorded in other comprehensive income; whereas realized gains and losses are included in earnings and determined based on the specific identification method. | ||
Accounts Receivable | ' | |
Accounts receivable are recorded at their estimated realizable value. Accounts are deemed past due when payment has not been received within the stated time period. The Company's policy is to review individual past due amounts periodically and write off amounts for which all collection efforts are deemed to have been exhausted. Due to the nature of the Company’s customers, bad debts are mainly accounted for using the direct write-off method whereby an expense is recognized only when a specific account is determined to be uncollectible. The effect of using this method approximates that of the allowance method. | ||
Income Taxes | ' | |
The Company follows an asset and liability approach method of accounting for income taxes. This method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. | ||
The Company follows guidance from the Financial Accounting Standards Board (“FASB”) related to Accounting for Uncertainty in Income Taxes, which includes a two-step approach to recognizing, de-recognizing and measuring uncertain tax positions. As of October 31, 2013, the Company had no significant uncertain tax positions that would be reduced as a result of a lapse of the applicable statute of limitations. | ||
Property and equipment | ' | |
Owned property and equipment, and leasehold improvements are stated at cost. Equipment and vehicles under capital leases are stated at the lower of fair market value or net present value of the minimum lease payments at the inception of the leases. Depreciation and amortization of owned assets are provided for, when placed in service, in amount sufficient to relate the cost of depreciable assets to operations over their estimated service lives, using straight-line basis. Assets under capital leases and leasehold improvements are amortized, over the shorter of the estimated useful lives of the assets or initial lease term. Major renewals and betterments that extend the life of the assets are capitalized, while expenditures for repairs and maintenance are expensed when incurred. | ||
The Company evaluates for impairment its long-lived assets to be held and used, and long-lived assets to be disposed of, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on management estimates, no impairment of the operating properties was present. | ||
Stock-based Compensation | ' | |
Stock-based compensation expense is recognized in the consolidated financial statements based on the fair value of the awards granted. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period, and includes an estimate of awards that will be forfeited. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model at grant date. Excess tax benefits related to stock-based compensation are reflected as cash flows from financing activities rather than cash flows from operating activities. The Company has not recognized such cash flow from financing activities since there has been no tax benefit related to the stock-based compensation. | ||
Income Per Share of Common Stock | ' | |
Basic income per share of common stock is calculated dividing net income by the weighted average number of shares of common stock outstanding. Diluted income per share includes the dilution of common stock equivalents. | ||
The diluted weighted average shares of common stock outstanding were calculated using the treasury stock method for the respective periods. | ||
Foreign Operations | ' | |
The functional currency of the Company’s foreign subsidiaries are its local currency. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. The cumulative translation effect for subsidiaries using a functional currency other than the U.S. dollar is included as a cumulative translation adjustment in stockholders’ equity and as a component of comprehensive income. | ||
The Company’s intercompany accounts are typically denominated in the functional currency of the foreign subsidiary. Gains and losses resulting from the remeasurement of intercompany receivables that the Company considers to be of a long-term investment nature are recorded as a cumulative translation adjustment in stockholders’ equity and as a component of comprehensive income, while gains and losses resulting from the remeasurement of intercompany receivables from those international subsidiaries for which the Company anticipates settlement in the foreseeable future are recorded in the consolidated statements of operations. The net gains and losses recorded in the consolidated statements of income were not significant for the periods presented. | ||
Subsequent Events | ' | |
The Company has evaluated subsequent events to the date of the audit report as of January 29, 2014. | ||
The Company has determined that there are no events occurring in this period that required disclosure in or adjustment except as disclosed in the accompanying consolidated financial statements. | ||
Reclassifications | ' | |
Certain reclassifications have been made to the October 31, 2012 consolidated financial statements to conform them to the October 31, 2013 consolidated financial statements presentation. Such reclassifications do not have effect on net income as previously reported. | ||
Recently issued and adopted accounting standards | ' | |
Recent issued FASB guidance and Securities and Exchange Commission (“SEC”) Staff Accounting Bulletins have either been implemented, with no significant effect, or are not applicable to the Company. |
B_MARKETABLE_SECURITIES_AVAILA1
B. MARKETABLE SECURITIES AVAILABLE FOR SALE (Tables) | 12 Months Ended | ||||||||||||||||
Oct. 31, 2013 | |||||||||||||||||
B. Marketable Securities Available For Sale Tables | ' | ||||||||||||||||
Summary of available-for-sale securities | ' | ||||||||||||||||
Type of security as of October 31, 2013 | Amortized Cost | Gross | Gross | Estimated | |||||||||||||
Unrealized Gains | Unrealized Losses | 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 | ||||||||
Fair values of available-for-sale securities | ' | ||||||||||||||||
Classification in the Consolidated Balance Sheets | 2013 | 2012 | |||||||||||||||
Cash and cash equivalents | $ | 4,500,000 | $ | — | |||||||||||||
Marketable securities | 71,260 | 95,000 | |||||||||||||||
Total available-for-sale securities | $ | 4,571,260 | $ | 95,000 |
C_PROPERTY_AND_EQUIPMENT_Table
C. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | |||||||||
Oct. 31, 2013 | ||||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||||
Summary of Property and Equipment | ' | |||||||||
October 31, | ||||||||||
Useful life (years) | 2013 | 2012 | ||||||||
Vehicles | 5 | $ | 292,662 | $ | 269,267 | |||||
Leasehold improvements | 8-May | 598,040 | 598,040 | |||||||
Computers | 3 | 593,273 | 522,792 | |||||||
Equipment | 7-Mar | 1,223,096 | 1,126,415 | |||||||
Furniture and fixtures | 10 | 149,698 | 137,215 | |||||||
Total | 2,856,769 | 2,653,729 | ||||||||
Less: Accumulated depreciation and amortization | (1,880,346 | ) | (1,540,358 | ) | ||||||
Property and equipment, net | $ | 976,423 | $ | 1,113,371 |
D_INCOME_TAXES_Tables
D. INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
D. Income Taxes Tables | ' | ||||||||
Schedule of reconciliation between federal statutory rate and effective tax rate | ' | ||||||||
October 31, | |||||||||
2013 | 2012 | ||||||||
United States federal statutory rate | 35 | % | 35 | % | |||||
Non United States earnings invested indefinitely, and | (15.7 | )% | (17.0 | )% | |||||
Puerto Rico Act 73 Tax Grant effect | |||||||||
Other, net | - | % | 0.6 | % | |||||
Effective tax rate | 19.3 | % | 18.6 | % |
E_COMMITMENTS_AND_CONTINGENCIE1
E. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Oct. 31, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Schedule of Future Minimum Lease Payments for Capital Leases | ' | ||||
Twelve months ending October 31, | Amount | ||||
2014 | $ | 36,402 | |||
2015 | 24,293 | ||||
2016 | 24,242 | ||||
2017 | 6,264 | ||||
Total future minimum lease payments | 91,201 | ||||
Less: Amount of imputed interest | ( 7,289 | ) | |||
Present value of future minimum lease payments | 83,912 | ||||
Current portion of obligation under capital leases | (32,188 | ) | |||
Long-term portion | $ | 51,724 | |||
Schedule of Future Minimum Rental Payments for Operating Leases | ' | ||||
Amount | |||||
2014 | $ | 388,212 | |||
2015 | 403,854 | ||||
2016 | 420,277 | ||||
2017 | 166,101 | ||||
2018 | 81,330 | ||||
Thereafter | 177,261 | ||||
Total minimum lease payments | $ | 1,637,035 |
F_WARRANTS_Tables
F. WARRANTS (Tables) | 12 Months Ended | ||||||||||
Oct. 31, 2013 | |||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||
Schedule of outstanding warrants | ' | ||||||||||
Outstanding Warrants | |||||||||||
October 31, | |||||||||||
Exercise Price | Expiration Date | 2013 | 2012 | ||||||||
Original Warrants A | $ | 0.06 | 16-Jan-14 | 240,800 | 240,800 | ||||||
Broker Warrants B | $ | 0.06 | January 24, 2014 | - | 1,830,991 | ||||||
Warrants Total | 240,800 | 2,071,791 |
H_EARNINGS_PER_SHARE_Tables
H. EARNINGS PER SHARE (Tables) | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Schedule of calculations of basic and diluted earnings per share | ' | ||||||||
Years ended October 31, | |||||||||
2013 | 2012 | ||||||||
Net income available to common equity holders - used to compute basic and diluted earnings per share | $ | 4,906,489 | $ | 4,687,006 | |||||
Weighted average number of common shares - used to compute basic earnings per share | 22,201,514 | 20,758,695 | |||||||
Effect of warrants to purchase common stock | 665,911 | 1,919,849 | |||||||
Effect of options to purchase common stock | 792,937 | 261,157 | |||||||
Weighted average number of shares - used to compute diluted earnings per share | 23,660,362 | 22,939,701 |
I_STOCK_OPTIONS_AND_STOCK_BASE1
I. STOCK OPTIONS AND STOCK BASED COMPENSATION (Tables) | 12 Months Ended | ||||||||||||||||
Oct. 31, 2013 | |||||||||||||||||
I. Stock Options And Stock Based Compensation Tables | ' | ||||||||||||||||
2005 Plan stock options activity | ' | ||||||||||||||||
Year ended October 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted- | Weighted- | ||||||||||||||||
Number of | Average Option | Number of | Average Option | ||||||||||||||
Shares | Exercise Price | Shares | Exercise Price | ||||||||||||||
Outstanding at beginning of year | 1,740,000 | $ | 0.6965 | 454,585 | $ | 0.5804 | |||||||||||
Granted | 40,000 | $ | 0.75 | 1,355,000 | $ | 0.7372 | |||||||||||
Exercised | - | - | |||||||||||||||
Expired and/or forfeited | (610,000 | ) | $ | 0.7257 | (69,585 | ) | $ | 0.7317 | |||||||||
Total outstanding at end of year | 1,170,000 | $ | 0.6831 | 1,740,000 | $ | 0.6965 | |||||||||||
Outstanding exercisable stock options at end of year | 523,327 | $ | 0.6294 | 430,000 | $ | 0.5702 | |||||||||||
October 31, | October 31, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted average remaining years in contractual life for: | |||||||||||||||||
Total outstanding options | 3.0 years | 3.4 years | |||||||||||||||
Outstanding exercisable options | 2.6 years | 1.0 years | |||||||||||||||
Shares of common stock available for issuance pursuant to future stock option grants | 1,330,000 | 760,000 | |||||||||||||||
Stock-based compensation | ' | ||||||||||||||||
Year ended October 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Stock-based compensation expense: | |||||||||||||||||
Cost of services | $ | 11,121 | $ | 10,000 | |||||||||||||
Selling, general and administrative | 42,040 | 13,664 | |||||||||||||||
Stock-based compensation before tax | 53,161 | 23,664 | |||||||||||||||
Income tax benefit | - | - | |||||||||||||||
Net stock-based compensation expense | $ | 53,161 | $ | 23,664 | |||||||||||||
Effect on earnings per share: | |||||||||||||||||
Basic earnings per share | $ | (0.002 | ) | $ | (0.001 | ) | |||||||||||
Diluted earnings per share | $ | (0.002 | ) | $ | (0.001 | ) | |||||||||||
Assumptions used to estimate the fair value of stock options | ' | ||||||||||||||||
Year ended October 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
Expected stock price volatility | 47.7 | % | 40.9 | % | |||||||||||||
Risk free interest rate | 0.4 | % | 0.3 | % | |||||||||||||
Expected life of options | 3.2 years | 3.5 years | |||||||||||||||
Weighted average fair value of options granted | $ | 0.2495 | $ | 0.2227 |
K_SEGMENT_DISCLOSURES_Tables
K. SEGMENT DISCLOSURES (Tables) | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Schedule of Segment Reporting Information | ' | ||||||||
Year ended October 31, | |||||||||
2013 | 2012 | ||||||||
REVENUES: | |||||||||
Puerto Rico consulting | $ | 15,833,248 | $ | 15,213,662 | |||||
United States consulting | 11,334,094 | 9,159,539 | |||||||
Europe consulting | 3,596,648 | 3,211,758 | |||||||
Lab (microbiological and chemical testing) | 1,866,935 | 857,948 | |||||||
Other segments¹ | 431,085 | 784,260 | |||||||
Total consolidated revenues | $ | 33,062,010 | $ | 29,227,167 | |||||
INCOME (LOSS) BEFORE TAXES: | |||||||||
Puerto Rico consulting | $ | 3,673,143 | $ | 3,664,238 | |||||
United States consulting | 2,227,771 | 2,407,190 | |||||||
Europe consulting | (319,193 | ) | (245,431 | ) | |||||
Lab (microbiological and chemical testing) | 250,500 | (381,406 | ) | ||||||
Other segments¹ | 244,089 | 311,021 | |||||||
Total consolidated income before taxes | $ | 6,076,310 | $ | 5,755,612 |
B_MARKETABLE_SECURITIES_AVAILA2
B. MARKETABLE SECURITIES AVAILABLE FOR SALE (Details) (USD $) | 12 Months Ended |
Oct. 31, 2013 | |
Available-for-sale securities | ' |
Amortized Cost | $4,595,000 |
Gross Unrealized Gains | 0 |
Gross Unrealized Losses | -23,740 |
Estimated Fair Value | 4,571,260 |
U.S. Treasury securities | ' |
Available-for-sale securities | ' |
Amortized Cost | 4,500,000 |
Gross Unrealized Gains | 0 |
Gross Unrealized Losses | 0 |
Estimated Fair Value | 4,500,000 |
Puerto Rico Commonwealth Government Development Bond | ' |
Available-for-sale securities | ' |
Amortized Cost | 95,000 |
Gross Unrealized Gains | 0 |
Gross Unrealized Losses | -23,740 |
Estimated Fair Value | $71,260 |
B_MARKETABLE_SECURITIES_AVAILA3
B. MARKETABLE SECURITIES AVAILABLE FOR SALE (Details 1) (USD $) | Oct. 31, 2013 | Oct. 31, 2012 |
B. Marketable Securities Available For Sale Tables | ' | ' |
Cash and cash equivalents | $4,500,000 | $0 |
Marketable securities | 71,260 | 95,000 |
Total available-for-sale securities | $4,571,260 | $95,000 |
B_MARKETABLE_SECURITIES_AVAILA4
B. MARKETABLE SECURITIES AVAILABLE FOR SALE (Details Narrative) (USD $) | Oct. 31, 2013 | Oct. 31, 2012 |
B. Marketable Securities Available For Sale Details Narrative | ' | ' |
Marketable securities | $71,260 | $95,000 |
C_PROPERTY_AND_EQUIPMENT_Detai
C. PROPERTY AND EQUIPMENT (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Property and equipment gross | $2,856,769 | $2,653,729 |
Accumulated depreciation and amortization | -1,880,346 | -1,540,358 |
Property and equipment, net | 976,423 | 1,113,371 |
Vehicles | ' | ' |
Useful life (years) | '5 years | '5 years |
Property and equipment gross | 292,662 | 269,267 |
Leasehold improvements | ' | ' |
Useful life (years) | '5-8 years | '5-8 years |
Property and equipment gross | 598,040 | 598,040 |
Computers | ' | ' |
Useful life (years) | '3 years | '3 years |
Property and equipment gross | 593,273 | 522,792 |
Equipment | ' | ' |
Useful life (years) | '3-7 years | '3-7 years |
Property and equipment gross | 1,223,096 | 1,126,415 |
Furniture and fixtures | ' | ' |
Useful life (years) | '10 years | '10 years |
Property and equipment gross | $149,698 | $137,215 |
D_INCOME_TAXES_Details
D. INCOME TAXES (Details) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
D. Income Taxes Tables | ' | ' |
United States federal statutory rate | 35.00% | 35.00% |
Non United States earnings invested indefinitely, and Puerto Rico Act 73 Tax Grant effect | -15.70% | -17.00% |
Other, net | 0.00% | 0.60% |
Effective tax rate | 19.30% | 18.60% |
D_INCOME_TAXES_Details_Narrati
D. INCOME TAXES (Details Narratives) (USD $) | Oct. 31, 2013 | Oct. 31, 2012 |
D. Income Taxes Details Narratives | ' | ' |
Undistributed earnings of Puerto Rican subsidiaries for which deferred income taxes have not been recognized | $14,400,000 | $10,500,000 |
Approximate aggregate amount of Puerto Rico earnings distribution tax and United States federal income tax, if a distribution of Puerto Rican subsidiaries earnings is made | 2,900,000 | 1,600,000 |
Unused operating losses | 905,000 | ' |
Potential deferred tax asset | 125,000 | ' |
Allowance for deferred tax asset | $125,000 | ' |
E_COMMITMENTS_AND_CONTINGENCIE2
E. COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Oct. 31, 2013 | Oct. 31, 2012 |
Twelve months ending October 31, | ' | ' |
2014 | $36,402 | ' |
2015 | 24,293 | ' |
2016 | 24,242 | ' |
2017 | 6,264 | ' |
Total future minimum lease payments | 91,201 | ' |
Less: Amount of imputed interest | -7,289 | ' |
Present value of future minimum lease payments | 83,912 | ' |
Current portion of obligation under capital leases | -32,188 | -39,436 |
Long-term portion | $51,724 | $83,912 |
E_COMMITMENTS_AND_CONTINGENCIE3
E. COMMITMENTS AND CONTINGENCIES (Details 1) (USD $) | Oct. 31, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' |
2014 | $388,212 |
2015 | 403,854 |
2016 | 420,277 |
2017 | 166,101 |
2018 | 81,330 |
Thereafter | 177,261 |
Total minimum lease payments | $1,637,035 |
E_COMMITMENTS_AND_CONTINGENCIE4
E. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Rent expense | $521,800 | $411,100 |
Vehicles | ' | ' |
Leased vehicles under non-cancelable capital lease agreements | 200,158 | 200,158 |
Accumulated amortization leased vehicles | 127,205 | 87,174 |
Amortization expense | $40,032 | $34,566 |
F_WARRANTS_Details
F. WARRANTS (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Outstanding Warrants | 240,800 | 2,071,791 |
Original Warrants A | ' | ' |
Exercise Price | $0.06 | $0.06 |
Expiration Date | '2014-01-16 | '2014-01-16 |
Outstanding Warrants | 240,800 | 240,800 |
Broker Warrants B | ' | ' |
Exercise Price | $0.06 | $0.06 |
Expiration Date | '2014-01-24 | '2014-01-24 |
Outstanding Warrants | 0 | 1,830,991 |
H_EARNINGS_PER_SHARE_Details
H. EARNINGS PER SHARE (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Net income | $4,906,489 | $4,687,006 |
Weighted average number of common shares - used to compute basic earnings per share | 22,201,514 | 20,758,695 |
Effect of warrants to purchase common stock | 665,911 | 1,919,849 |
Effect of options to purchase common stock | 792,937 | 261,157 |
Weighted average number of shares - used to compute diluted earnings per share | 23,660,362 | 22,939,701 |
I_STOCK_OPTIONS_AND_STOCK_BASE2
I. STOCK OPTIONS AND STOCK BASED COMPENSATION (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Stock option Activity | ' | ' |
Options Outstanding, Beginning | 1,740,000 | 454,585 |
Options Granted | 40,000 | 1,355,000 |
Options Exercised | 0 | 0 |
Options Expired and or forfeited | -610,000 | -69,585 |
Options Outstanding, Ending | 1,170,000 | 1,740,000 |
Options Exercisable, Ending | 523,327 | 430,000 |
Weighted Average Exercise Price | ' | ' |
Options Outstanding, Beginning | $0.70 | $0.58 |
Options Granted | $0.75 | $0.74 |
Options Exercised | $0 | $0 |
Options Expired and or forfeited | $0.73 | $0.73 |
Options Outstanding, Ending | $0.68 | $0.70 |
Options Exercisable, Ending | $0.63 | $0.57 |
Weighted average remaining years in contractual life for: Total outstanding options | '3 years | '3 years 4 months 27 days |
Weighted average remaining years in contractual life for: Outstanding exercisable options | '2 years 7 months 6 days | '1 year |
Shares of common stock available for issuance pursuant to future stock option grants | 1,330,000 | 760,000 |
I_STOCK_OPTIONS_AND_STOCK_BASE3
I. STOCK OPTIONS AND STOCK BASED COMPENSATION (Details 1) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Stock-based compensation before tax | $53,161 | $23,664 |
Income tax benefit | 0 | 0 |
Net stock-based compensation expense | 53,161 | 23,664 |
Effect on earnings per share: Basic earnings per share | ($0.00) | ($0.00) |
Effect on earnings per share: Diluted earnings per share | ($0.00) | ($0.00) |
Cost of services | ' | ' |
Stock-based compensation before tax | 11,121 | 10,000 |
Selling, general and administrative | ' | ' |
Stock-based compensation before tax | $42,040 | $13,664 |
I_STOCK_OPTIONS_AND_STOCK_BASE4
I. STOCK OPTIONS AND STOCK BASED COMPENSATION (Details 2) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Equity [Abstract] | ' | ' |
Expected dividend yield | 0.00% | 0.00% |
Expected stock price volatility | 47.70% | 40.90% |
Risk free interest rate | 0.40% | 0.30% |
Expected life of options | '3 years 2 months 12 days | '3 years 6 months |
Weighted average fair value of options granted | $0.25 | $0.22 |
I_STOCK_OPTIONS_AND_STOCK_BASE5
I. STOCK OPTIONS AND STOCK BASED COMPENSATION (Details Narrative) (USD $) | Oct. 31, 2013 | Oct. 31, 2012 |
I. Stock Options And Stock Based Compensation Details Narrative | ' | ' |
Aggregate intrinsic value of options outstanding | $1,108,000 | $180,000 |
J_CONCENTRATION_OF_RISKS_Detai
J. CONCENTRATION OF RISKS (Details Narrative) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Major Customer A | ' | ' |
Revenue from major customers | 28.00% | 25.00% |
Major Customer B | ' | ' |
Revenue from major customers | 15.00% | 19.00% |
Major Customer C | ' | ' |
Revenue from major customers | 12.00% | 8.00% |
Major Customer Total | ' | ' |
Revenue from major customers | 55.00% | 52.00% |
Amount due from major customers as percentage of accounts receivable | 38.00% | 49.00% |
Global Customer A | ' | ' |
Revenue from major customers | 51.00% | 54.00% |
Global Customer B | ' | ' |
Revenue from major customers | 12.00% | 8.00% |
Global Customer Total | ' | ' |
Revenue from major customers | 63.00% | 62.00% |
Amount due from major customers as percentage of accounts receivable | 47.00% | 60.00% |
K_SEGMENT_DISCLOSURES_Details
K. SEGMENT DISCLOSURES (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Revenues | $33,062,010 | $29,227,167 |
Income (loss) before taxes | 6,076,310 | 5,755,612 |
Puerto Rico consulting | ' | ' |
Revenues | 15,833,248 | 15,213,662 |
Income (loss) before taxes | 3,673,143 | 3,664,238 |
United States consulting | ' | ' |
Revenues | 11,334,094 | 9,159,539 |
Income (loss) before taxes | 2,227,771 | 2,407,190 |
Europe consulting | ' | ' |
Revenues | 3,596,648 | 3,211,758 |
Income (loss) before taxes | -319,193 | -245,431 |
Lab (microbiological and chemical testing) | ' | ' |
Revenues | 1,866,935 | 857,948 |
Income (loss) before taxes | 250,500 | -381,406 |
Other segments | ' | ' |
Revenues | 431,085 | 784,260 |
Income (loss) before taxes | $244,089 | $311,021 |
L_RETIREMENT_PLAN_Details_Narr
L. RETIREMENT PLAN (Details Narrative) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
L. Retirement Plan Details Narrative | ' | ' |
Contributions made to retirement plan | $91,500 | $75,100 |