Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2018 | Jan. 25, 2019 | Apr. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Pharma-Bio Serv, Inc. | ||
Entity Central Index Key | 1,304,161 | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2018 | ||
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 | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 8,003,365 | ||
Entity Common Stock, Shares Outstanding | 22,997,883 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 31, 2018 | Oct. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 16,029,920 | $ 11,591,548 |
Marketable securities | 44,475 | 26,600 |
Accounts receivable | 5,193,385 | 6,317,390 |
Current portion - promissory note receivable due from sale of assets from discontinued operations | 1,750,000 | 0 |
Other | 394,017 | 443,464 |
Assets of discontinued operations | 0 | 3,297,462 |
Total current assets | 23,411,797 | 21,676,464 |
Promissory note receivable due from sale of assets from discontinued operations | 1,250,000 | 0 |
Property and equipment | 298,020 | 250,612 |
Other assets | 418,495 | 422,925 |
Total assets | 25,378,312 | 22,350,001 |
Current liabilities | ||
Current portion-obligations under capital leases | 13,768 | 13,949 |
Accounts payable and accrued expenses | 2,140,001 | 1,416,698 |
Current portion of US Tax Reform Transition Tax and income taxes payable | 411,903 | 2,067 |
Liabilities of discontinued operations | 0 | 110,206 |
Total current liabilities | 2,565,672 | 1,542,920 |
US Tax Reform Transition Tax payable | 2,485,000 | 0 |
Obligations under capital leases | 46,027 | 59,795 |
Other liabilities | 17,950 | 0 |
Total liabilities | 5,114,649 | 1,602,715 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value; authorized 10,000,000 shares; none issued or outstanding | 0 | 0 |
Common stock, $0.0001 par value; authorized 50,000,000 shares; 23,373,817 and 23,333,083 shares issued, and 23,058,413 and 23,089,631 shares outstanding at October 31, 2018 and 2017, respectively | 2,337 | 2,333 |
Additional paid-in capital | 1,346,956 | 1,295,314 |
Retained earnings | 19,111,111 | 19,560,131 |
Accumulated other comprehensive loss | 107,947 | 137,671 |
Stockholders' equity before treasury stock | 20,568,351 | 20,995,449 |
Treasury stock, at cost; 315,404 and 243,452 common shares held at October 31, 2018 and 2017, respectively | (304,688) | (248,163) |
Total stockholders' equity | 20,263,663 | 20,747,286 |
Total liabilities and stockholders' equity | $ 25,378,312 | $ 22,350,001 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 31, 2018 | Oct. 31, 2017 |
Stockholders' equity: | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, Authorized | 10,000,000 | 10,000,000 |
Preferred stock, outstanding | 0 | 0 |
Preferred stock, issued | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, Authorized | 50,000,000 | 50,000,000 |
Common stock, Issued | 23,373,817 | 23,333,083 |
Common stock, outstanding | 23,058,413 | 23,089,631 |
Treasury stock | 315,404 | 243,452 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Income Statement [Abstract] | ||
REVENUES | $ 17,797,425 | $ 13,297,598 |
COST OF SERVICES | 12,110,618 | 9,455,274 |
GROSS PROFIT | 5,686,807 | 3,842,324 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 4,598,545 | 4,660,027 |
INCOME (LOSS) FROM CONTINUING OPERATIONS | 1,088,262 | (817,703) |
OTHER INCOME (EXPENSE), NET OF FOREIGN EXCHANGE SETTLEMENT | 435,527 | 43,751 |
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 1,523,789 | (773,952) |
INCOME TAX AND US TAX REFORM TRANSITION TAX EXPENSE | 2,785,525 | 3,866 |
NET LOSS FROM CONTINUING OPERATIONS | (1,261,736) | (777,818) |
DISCONTINUED OPERATIONS, NET OF TAX: | ||
NET LOSS FROM OPERATIONS THROUGH DISPOSAL | (170,774) | (637,091) |
GAIN ON DISPOSAL | 2,712,244 | 0 |
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS | 2,541,470 | (637,091) |
NET INCOME (LOSS) | $ 1,279,734 | $ (1,414,909) |
BASIC AND DILUTED EARNINGS PER COMMON SHARE (Continuing operations) | $ (0.055) | $ (0.034) |
BASIC AND DILIUTED EARNINGS (LOSSES) PER COMMON SHARE (Discontinued operations) | $ 0.11 | $ (0.027) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC | 23,080,995 | 23,096,547 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED | 23,096,252 | 23,099,376 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Consolidated Statements Of Comprehensive Income | ||
NET INCOME (LOSS) | $ 1,279,734 | $ (1,414,909) |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF RECLASSIFICATION ADJUSTMENTS AND TAXES: | ||
Foreign currency translation gain (loss) | 73,538 | 35,029 |
Net unrealized gain Intercompany balances foreign exchange settlement, included in net income | (121,137) | 262,240 |
Net unrealized losses on available-for-sale securities | 17,875 | 6,317 |
TOTAL OTHER COMPREHENSIVE INCOME | (29,724) | 303,586 |
COMPREHENSIVE INCOME (LOSS) | $ 1,250,010 | $ (1,111,323) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Preferred Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total |
Beginning Balance - Shares at Oct. 31, 2016 | 23,226,268 | 0 | |||||
Beginning Balance - Amount at Oct. 31, 2016 | $ 2,323 | $ 0 | $ 1,231,439 | $ 20,975,050 | $ (165,915) | $ (232,736) | $ 21,810,161 |
Stock-based compensation | 63,875 | 63,875 | |||||
Issuance Of Common Stock Pursuant To The Cashless Exercise Of Stock Options, Shares | 90,318 | ||||||
Issuance Of Common Stock Pursuant To The Cashless Exercise Of Stock Options, Amount | $ 9 | (9) | |||||
Issuance Of Common Stock Pursuant To Restricted Stock Agreements With Employees, Shares | 16,497 | ||||||
Issuance Of Common Stock Pursuant To Restricted Stock Agreements With Employees, Amount | $ 1 | (1) | |||||
Purchase of treasury stock | (15,427) | (15,427) | |||||
NET INCOME (LOSS) | (1,414,909) | (1,414,909) | |||||
Other Comprehensive Income (Loss), Net Of Tax | 303,586 | 303,586 | |||||
CASH DIVIDEND ($0.075 PER COMMON SHARE AT RECORD DATE) | 0 | ||||||
Ending Balance, Shares at Oct. 31, 2017 | 23,333,083 | 0 | |||||
Ending Balance, Amount at Oct. 31, 2017 | $ 2,333 | $ 0 | 1,295,314 | 19,560,131 | 137,671 | (248,163) | 20,747,286 |
Stock-based compensation | 51,642 | 51,642 | |||||
Issuance Of Common Stock Pursuant To The Cashless Exercise Of Stock Options, Shares | 40,734 | ||||||
Issuance Of Common Stock Pursuant To The Cashless Exercise Of Stock Options, Amount | $ 4 | (4) | |||||
Purchase of treasury stock | (56,525) | (56,525) | |||||
NET INCOME (LOSS) | 1,279,734 | 1,279,734 | |||||
Other Comprehensive Income (Loss), Net Of Tax | (29,724) | (29,724) | |||||
CASH DIVIDEND ($0.075 PER COMMON SHARE AT RECORD DATE) | (1,728,750) | (1,728,750) | |||||
Ending Balance, Shares at Oct. 31, 2018 | 23,373,817 | 0 | |||||
Ending Balance, Amount at Oct. 31, 2018 | $ 2,337 | $ 0 | $ 1,346,956 | $ 19,111,111 | $ 107,947 | $ (304,688) | $ 20,263,663 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Consolidated Statements Of Changes In Stockholders Equity | ||
Purchase of treasury stocks | 71,952 | 26,500 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 1,279,734 | $ (1,414,909) |
Add: net (income) loss from discontinued operations | (2,541,470) | 637,091 |
Net loss from continuing operations | (1,261,736) | (777,818) |
Adjustments to reconcile net loss from continuing operations: | ||
Gain on disposition of property and equipment | (6,000) | (19,092) |
Stock-based compensation | 51,642 | 63,875 |
Depreciation and amortization | 74,601 | 107,679 |
Decrease in accounts receivable | 1,158,809 | 139,866 |
Decrease in other assets | 64,815 | 21,426 |
Increase (decrease) in liabilities | 3,636,553 | (458,603) |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 3,718,684 | (922,667) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (122,009) | (56,973) |
Proceeds from disposition of property and equipment | 6,000 | 47,757 |
NET CASH USED IN INVESTING ACTIVITIES | (116,009) | (9,216) |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Repurchase of common stock | (56,525) | (15,427) |
Payments on obligations under capital lease | (13,949) | (55,678) |
Cash dividends paid to shareholders | (1,728,750) | 0 |
NET CASH USED IN FINANCING ACTIVITIES | (1,799,224) | (71,105) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (93,805) | 1,393 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS | 1,709,646 | (1,001,595) |
DISCONTINUED OPERATIONS: | ||
Net cash provided by (used in) operating activities | 728,726 | (785,707) |
Net cash provided by (used in) investing activities | 2,000,000 | (394,732) |
Net cash used in financing activities | 0 | 0 |
CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS | 2,728,726 | (1,180,439) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 4,438,372 | (2,182,034) |
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 11,591,548 | 13,773,582 |
CASH AND CASH EQUIVALENTS - END OF YEAR | 16,029,920 | 11,591,548 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Income taxes | 0 | 65 |
Interest | 1,498 | 2,946 |
SUPPLEMENTARY SCHEDULES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Promissory note receivable received from sale of assets from discontinued operations | 3,000,000 | 0 |
Property and equipment with accumulated depreciation of $32,795 and $87,364 disposed during the years ended October 31, 2018 and 2017, respectively | 32,795 | 116,029 |
Obligations under capital lease incurred for the acquisition of a vehicle | 0 | 77,470 |
Income tax withheld by clients to be used as a credit in the Company's income tax returns | 16,691 | 42,471 |
Conversion of cashless exercise of options to shares of common stock | $ 4 | $ 10 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Statement of Cash Flows [Abstract] | ||
Accumulated depreciation on property and equipment disposed during the years ended October 31, 2018 and 2017, respectively | $ 32,795 | $ 87,364 |
A. ORGANIZATION AND SUMMARY OF
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2018 | |
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”), and Scienza Labs, Inc. (“Scienza Labs”), each a Puerto Rico corporation, Pharma-Bio Serv US, Inc. (“Pharma-US”), a Delaware corporation, Pharma-Bio Serv Validation & Compliance Limited (“Pharma-IR”), an Irish corporation currently inactive, Pharma-Bio Serv SL (“Pharma-Spain”), a Spanish limited liability company, and Pharma-Bio Serv Brasil Servicos de Consultoria Ltda. (“Pharma-Brazil”), a Brazilian limited liability company. Pharma-Bio, Pharma-PR, Pharma-Serv, Scienza Labs, Pharma-US, Pharma-IR, Pharma-Spain and Pharma-Brazil are collectively referred to as the “Company.” The Company operates in Puerto Rico, the United States, Ireland, Spain and Brazil under the name of Pharma-Bio Serv and is engaged in providing technical compliance consulting service, and until September 17, 2018 microbiological and chemical laboratory testing. On September 17, 2018 (the “Sales Closing Date”), the Company sold substantially all of its Lab business assets (the “Laboratory Assets”). See Note B for further information. 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. Segments During the year ended October 31, 2017, the Company operated in 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”). On the Sales Closing Date the Company sold substantially all of its Laboratory Assets. As a result of the sale, the Company currently operates three reportable business segments: (i) Puerto Rico technical compliance consulting, (ii) United States technical compliance consulting, and (iii) Europe technical compliance consulting. Accordingly, the accompanying consolidated financial statements are presented to show these three reportable segments as continuing operations, while the Lab is presented as a discontinued operation. See Note B for further information. 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 Continuing operations - Revenue is primarily derived from: (1) time and materials contracts (representing approximately 99% of total revenues), which is recognized by applying the proportional performance model, whereby revenue is recognized as performance occurs, and (2) short-term fixed-fee contracts or "not to exceed" contracts (representing approximately 1% of total revenues), which revenue is recognized similarly, except that certain milestones also have to be reached before revenue is recognized. 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. Discontinued operations - Laboratory testing revenue is mainly recognized as the testing is completed and certified (normally within days of sample receipt from customer). 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. 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. 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, Property and Equipment Owned property and equipment, and leasehold improvements are stated at cost. 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 the lease term, including renewals that have been determined to be reasonably assured. 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. 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, while for restricted stock units the fair market value of the units is determined by Company’s share market value 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. However, the Company has not recognized such cash flow from financing activities since there has been no tax benefit related to the stock-based compensation. Earnings (Loss) Per Share of Common Stock Basic earnings (loss) per share of common stock is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) 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 is 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. Subsequent Events The Company has evaluated subsequent events to the date of the audit report as of January 29, 2019. The Company has determined that there are no events occurring in this period that required disclosure or adjustment, except as disclosed in the accompanying consolidated financial statements. Reclassifications Certain reclassifications have been made to the October 31, 2017 consolidated financial statements to conform them to the October 31, 2018 consolidated financial statements presentation. Such reclassifications do not have an effect on net loss as previously reported. Recent Accounting Pronouncements In May 2014, the FASB issued a new accounting standard that amends the guidance for the recognition of revenue from contracts with customers to transfer goods and services. The FASB has subsequently issued additional, clarifying standards to address issues arising from implementation of the new revenue standard. The new standards are required to be adopted using either a full retrospective or a modified retrospective approach. The Company expects to adopt this standard using the modified retrospective approach beginning with the Company’s fiscal year 2019. Based on the Company’s preliminary assessment, it currently does not anticipate a material impact to the Company’s total revenues. In February 2016, the FASB issued a new accounting standard that amends the guidance for the accounting and disclosure of leases. This new standard requires that lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about their leasing arrangements. The new standard is effective for interim and annual periods beginning on January 1, 2019 and may be adopted earlier. The Company continues to evaluate the impact that this new standard will have on its consolidated financial statements. The Company does not expect that this standard will have a material impact to its Consolidated Statements of Operations but expects that this standard will have a material impact on the assets and liabilities on its Consolidated Balance Sheets upon adoption. |
B. LABORATORY ASSETS SALE - DIS
B. LABORATORY ASSETS SALE - DISCONTINUED OPERATIONS | 12 Months Ended |
Oct. 31, 2018 | |
B. Laboratory Assets Sale - Discontinued Operations | |
B. LABORATORY ASSETS SALE - DISCONTINUED OPERATIONS | On September 17, 2018, the Company completed the sale of its Laboratory Assets for $5 million ($1.75 million in cash, $3.0 million in the form of a promissory note receivable (the “Promissory Note”), and $0.25 million from the application of a previously paid deposit). See Note D for further information. The gain related to this transaction of approximately $2.7 million, net of a preferential income tax rate, is included in the consolidated financial statements as a component of discontinued operations for the year ended October 31, 2018. As part of the Laboratory Assets sale transaction, the Laboratory Assets purchaser leased from the Company the laboratory space previously used by the Company’s Lab operation. See Note G for further information. Together with the Laboratory Assets sale, the Company discontinued its efforts on pursuing businesses that were not considered significant for the Company, including calibrations and a small laboratory in Spain. The following table presents summarized operating results for these discontinued operations for the years ended October 31, 2018 and 2017. Years ended October 31, 2018 2017 Revenues $ 2,164,304 $ 2,281,677 Net income (loss) after taxes, and 2018 gain on disposal of $2,712,244 $ 2,541,470 $ (637,091 ) Any corporate allocations in prior year filings to the above discontinued operations have been included in continuing operations as the amounts are not expected to change as a result of the Laboratory Assets sale. At October 31, 2017, total assets and liabilities from discontinued operations were classified as current based on the disposition date occurring one year from that balance sheet date. Components of assets from discontinued operations and liabilities from discontinued operations classified as current consist of the following: October 31, 2017 Current assets Cash and cash equivalents $ 160,166 Accounts receivable 890,664 Prepaids and other assets 106,699 Total current assets from discontinued operations 1,157,529 Property and equipment 2,139,933 Total assets from discontinued operations $ 3,297,462 Current liabilities Accounts payable and accrued expenses $ 110,206 Total liabilities from discontinued operations $ 110,206 |
C. MARKETABLE SECURITIES AVAILA
C. MARKETABLE SECURITIES AVAILABLE FOR SALE | 12 Months Ended |
Oct. 31, 2018 | |
Text Block [Abstract] | |
C. 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, 2018 and 2017: Type of security as of October 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. Treasury securities $ 4,570,275 $ — $ — $ 4,570,275 Other government-related debt securities: Puerto Rico Commonwealth Government Development Bond 40,000 4,475 - 44,475 Total interest-bearing and available-for-sale securities $ 4,610,275 $ 4,475 $ - $ 4,614,750 Type of security as of October 31, 2017 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 40,000 — (13,400 ) 26,600 Total interest-bearing and available-for-sale securities $ 4,540,000 $ — $ (13,400 ) $ 4,526,600 At October 31, 2018 and 2017, the above marketable securities included a Puerto Rico Commonwealth Government Development Bank Bond, purchased at par for $95,000 and amortized by $55,000. Subsequent to October 31, 2018, the bond was sold at an amount similar to the recorded net book value. The fair values of available-for-sale securities by classification in the Consolidated Balance Sheets were as follows as of October 31, 2018 and 2017: Classification in the Consolidated Balance Sheets 2018 2017 Cash and cash equivalents $ 4,570,275 $ 4,500,000 Marketable securities 44,475 26,600 Total available-for-sale securities $ 4,614,750 $ 4,526,600 Cash and cash equivalents in the table above exclude cash in banks of approximately $11.4 million and $7.1 million as of October 31, 2018 and 2017, respectively. 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. |
D. PROMISSORY NOTE
D. PROMISSORY NOTE | 12 Months Ended |
Oct. 31, 2018 | |
D. Promissory Note | |
D. PROMISSORY NOTE | On September 17, 2018, the Company completed the sale of its Laboratory Assets for $5 million and received, as partial payment, a $3 million Promissory Note from the purchaser. The Promissory Note is composed of two tranches; (i) Tranche A for $2 million and secured with lab equipment and (ii) Tranche B for $1 million which is unsecured. The interest rate accrual is 3% for Tranche A and 5% for Tranche B. Interest is due semi-annually in arrears commencing on the six-month after the completed sale of the Laboratory Assets. Tranche A is due in two installments of $750,000 and $1,250,000, on September 17, 2019 and 2020, respectively. Tranche B is due in two equal installments of $500,000 each, on March 17, 2019 and September 17, 2019. |
E. PROPERTY AND EQUIPMENT
E. PROPERTY AND EQUIPMENT | 12 Months Ended |
Oct. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
E. PROPERTY AND EQUIPMENT | The balance of property and equipment at October 31, 2018 and 2017 consisted of the following: October 31, Useful life (years) 2018 2017 Vehicles 5 $ 269,257 $ 248,152 Leasehold improvements 5-8 84,485 70,168 Computers 3 307,579 313,199 Equipment 3-7 132,089 70,522 Furniture and fixtures 10 1,563 3,718 Total 794,973 705,759 Less: Accumulated depreciation and amortization (496,953 ) (455,147 ) Property and equipment, net $ 298,020 $ 250,612 |
F. INCOME TAXES
F. INCOME TAXES | 12 Months Ended |
Oct. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
F. INCOME TAXES | On December 22, 2017, Public Law 115-97, commonly known as the Tax Cuts and Jobs Act of 2017 (the “Tax Reform”), was enacted. The Tax Reform is applicable to the Company commencing with its fiscal year 2018, including the Transition Tax provisions which establishes measurement dates for various computations, November 2, 2017, December 31, 2017 and October 31, 2018. The Tax Reform imposed a mandatory one-time transition tax (the “Transition Tax”) over foreign subsidiaries undistributed earnings and profits (“E&Ps”) earned prior to a date set by the statute. Based on the Company’s E&Ps, the Transition Tax is estimated to be approximately $2.7 million. The Transition Tax liability may be paid over a period of eight years starting on February 28, 2019. In the past, most of these E&Ps’ were not repatriated since such E&Ps’ were considered to be reinvested indefinitely in the foreign location, therefore no US tax liability was incurred unless the E&Ps were repatriated as a dividend. After December 31, 2017, the Tax Reform has established a 100% tax exemption on the foreign-source portion of dividends received attributable to E&Ps, with certain limitations. 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. Industrial Development Income (“IDI”) covered under the Grant are subject to a fixed income tax rate of 4%. In addition, IDI earnings distributions accumulated since November 1, 2009 are totally exempt from Puerto Rico earnings distribution tax. For the year ended October 31, 2018, the favorable consolidated net income aggregate dollar effect of the Grant was approximately $652,000, or $0.028 per basic weighted average share. For the year ended October 31, 2017, subsidiaries under the Grant were on a net loss position, therefore no income tax benefit was derived from the Grant. Puerto Rico operations not covered in the exempt activities of the Grant are subject to Puerto Rico income tax at a maximum tax rate of 39% as provided by the 1994 Puerto Rico Internal Revenue Code, as amended. The operations carried out in the United States by the Company’s subsidiary was taxed in the United States at a maximum regular federal income tax rate of 35%. Among the Tax Reform provisions, effective with the Company’s fiscal year ending on October 31, 2018, is a provision whereby the regular federal income tax rate is reduced to a 23.5% blended rate and 21% thereafter. The reconciliation between the United States federal statutory rate and our effective tax rate applicable to continuing operations for the years ended October 31, 2018, and 2017 is as follows: October 31, 2018 2017 United States federal statutory rate 23.5 % 35.0 % US Tax Reform Transition Tax Expense 177.2 % - Puerto Rico, including foreign loss positionsfor which the resulting deferred asset has been allowed, net (16.5 )% (26.2 )% Other, including US loss positions for which the resulting deferred tax asset has been allowed, net (1.4 )% (9.1 )% Effective tax rate 182.8 % (0.3 )% At October 31, 2018, Pharma-Spain, Pharma-IR, Pharma-Bio/Pharma-US, and Pharma-Serv have unused operating losses of approximately $1,270,000, $121,000, $2,695,000, and $22,000, respectively. These net operating losses are available to offset future taxable income until October 31, 2028, 2029, 2030, 2031, 2032 and 2033 for the aggregate amounts of $178,000, $332,000, $266,000, $181,000, $40,000 and $273,000, respectively for Pharma-Spain; indefinitely for Pharma-IR; until October 31, 2035, 2036, 2037, and 2038 for the aggregate amounts of $292,000, $834,000, $345,000 and $1,224,000, respectively for Pharma-Bio/Pharma-US; and until October 31, 2027 in the amount of $22,000 for Pharma-Serv. After considering various timing differences for income tax purposes, these unused operating losses result in a potential deferred tax asset for Pharma-Spain, Pharma-IR, Pharma-Bio, and Pharma-Serv of approximately $254,000, $15,000, $566,000 and $1,000, 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, Spain and Brazil. The 2014 (2013 for Puerto Rico) through 2017 tax years are open and may be subject to potential examination in one or more jurisdictions. Currently, the Company is currently not subject to a federal, state, Puerto Rico or foreign income tax examination. |
G. COMMITMENTS AND CONTINGENCIE
G. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Oct. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
G. COMMITMENTS AND CONTINGENCIES | Capitalized lease obligations 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, 2018: Twelve months ending October 31, Amount 2019 $ 15,502 2020 15,502 2021 15,502 2022 17,397 Total future minimum lease payments 63,903 Less: Amount of imputed interest ( 4,108 ) Present value of future minimum lease payments 59,795 Current portion of obligation under capital leases (13,768 ) Long-term portion $ 46,027 Operating facilities In July 2016, with effective date January 1st, 2016, the Company renegotiated a lease agreement with an affiliate of our Chairman of the Board, for the headquarters and laboratory testing facilities in Dorado, Puerto Rico. The renegotiated lease incorporates additional space for the laboratory testing facility expansion. The lease agreement is for a five-year term, with a renewal option of five years, and monthly rental payments of $30,316 for the term of the lease agreement and renewal option. The lease agreement also requires the payment of utilities, property taxes, insurance and expenses incurred by the affiliate in connection with the maintenance of common areas. As part of the Laboratory Assets transaction (see Note B), this lease was amended to (i) allow the Company to sublease to the Laboratory Assets purchaser (the “Subtenant”) the laboratory leased space area, and (ii) if Subtenant defaults under the Sublease or terminates the Sublease, the Company shall have the option to either (a) terminate the Sublease and re-occupy the Subleased Premises pursuant to the terms of the Lease, or (b) modify the Lease to terminate the Lease for the portion of the Premises that is the Subleased Premises only, without penalty. Simultaneously with the Laboratory Assets sale closing transaction the Company and Subtenant entered into a sublease agreement (the “Sublease”) with an initial term commencing at Sales Closing Date through December 31, 2019. The Sublease contains a one-year renewal option, followed by a second renewal option of five years. Provided a six months’ notice of termination, Subtenant may terminate without penalty the Sublease within the term of the second renewal option of five years. The Sublease calls for monthly rental payments of $17,950 each, and a 5% annual rent increase beginning on the second lease year and thereafter until the expiration of the Sublease initial term or the first renewal option. No rent increase will apply to the five-year term renewal option if exercised. The Sublease requires the payment of utilities, property taxes, insurance and common area expenses incurred and/or allocated to Subtenant. The Company maintains an office facility in Madrid, Spain. The facility is under a month-to-month lease with monthly payments of approximately $1,000. 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, 2018 are as follows: Amount 2019 $ 363,800 2020 363,800 2021 60,633 Total minimum future rental payments $ 788,233 Total minimum future rental payments have not been reduced by approximately $252,000 of sublease rentals to be received in the future under non-cancelable subleases. Rent expense for the years ended October 31, 2018 and 2017 was approximately $389,000 and $413,000, respectively. Contingencies - |
H. WARRANTS
H. WARRANTS | 12 Months Ended |
Oct. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
H. WARRANTS | On December 2014, the Company entered into an agreement with a firm for providing (i) business development and (ii) mergers and acquisition services to the Company. Pursuant to the agreement terms, the Company issued warrants for the purchase of 1,000,000 common shares at an exercise price of $1.80 per share. As of July 31, 2016, the underlying common shares of the warrants were fully vested. The warrants expire on December 1, 2019. |
I. EQUITY TRANSACTIONS
I. EQUITY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2018 | |
Notes to Financial Statements | |
I. EQUITY TRANSACTIONS | On June 13, 2014, the Board of Directors of the Company authorized the Company to repurchase up to two million shares of its outstanding common stock. The timing, manner, price and amount of any repurchases will be at the discretion of the Company, subject to the requirements of the Securities Exchange Act of 1934, as amended, and related rules. The program does not oblige the Company to repurchase any shares and it may be modified, suspended or terminated at any time and for any reason. Under the program no shares will be repurchased directly from directors or officers of the Company. As of October 31, 2018 and 2017, a total of 315,404 and 243,452 shares of the Company’s common stock were purchased for an aggregate amount of $304,688 and $248,163, respectively. On October 3, 2018, the Board of Directors of the Company declared a cash dividend of $0.075 per common share for shareholders of record as of the close of business on October 15, 2018. Accordingly, an aggregate dividend payment of $1,728,750 was paid on October 26, 2018. |
J. EARNINGS (LOSSES) PER SHARE
J. EARNINGS (LOSSES) PER SHARE | 12 Months Ended |
Oct. 31, 2018 | |
Earnings Per Share [Abstract] | |
J. EARNINGS (LOSSES) PER SHARE | The computation of basic earnings and losses per share is based on the weighted-average number of our common shares outstanding. The computation of diluted earnings and losses per share is based on the weighted-average number of our common shares outstanding and dilutive potential common shares, which include principally shares that may be issued under: warrants, our stock option and restricted stock unit awards, determined using the treasury stock method. The following data show the amounts used in the calculations of basic and diluted earnings per share. Years ended October 31, 2018 2017 Net loss available to common equity holders - used to compute basic and diluted earnings (losses) per share (continuing operations) $ (1,261,736 ) $ (777,818 ) Net income (loss) available to common equity holders - used to compute basic and diluted earnings (losses) per share (discontinued operations) $ 2,541,470 $ (637,091 ) Weighted average number of common shares - used to compute basic earnings (losses) per share 23,080,995 23,096,547 Effect of warrants to purchase common stock - - Effect of restricted stock units to issue common stock - 2,829 Effect of options to purchase common stock 15,257 - Weighted average number of shares - used to compute diluted earnings (losses) per share 23,096,252 23,099,376 For the year ended October 31, 2018, warrants and options for the purchase of 1,000,000 and 419,600 shares of common stock, respectively, were not included in computing losses per share because their effect were antidilutive. Also, for the year ended on October 31, 2017, warrants and options for the purchase of 1,000,000 and 660,000 shares of common stock, respectively, were not included in computing diluted losses per share because their effect were also antidilutive. |
K. STOCK OPTIONS, RESTRCTED STO
K. STOCK OPTIONS, RESTRCTED STOCK UNITS AND STOCK BASED COMPENSATION | 12 Months Ended |
Oct. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
K. STOCK OPTIONS, RESTRCTED STOCK UNITS AND STOCK BASED COMPENSATION | The Company has two incentive plans, the 2005 Long-Term Incentive Plan (the “2005 Plan”) and the 2014 Long-Term Incentive Plan (the “2014 Plan”, together the “Plans”). The 2005 Plan and the 2014 Plan cover 2,500,000 and 2,300,000 shares of the Company’s common stock, respectively. Both Plans provide 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 for a period of ten years. The 2005 Plan expired in October 2015, accordingly no further grants have been issued under this plan. The Plans are to be administered by a committee of independent directors. In the absence of a committee, the plans are 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. 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 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 the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 107, for plans with insufficient exercise experience. 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 2005 Plan stock options activity and status for the years ended October 31, 2018 and 2017 was as follows: Year ended October 31, 2018 2017 Number of Shares Weighted-Average Option Exercise Price Number of Shares Weighted-Average Option Exercise Price Outstanding at beginning of year 200,000 $ 1.4820 815,000 $ 0.9106 Granted - $ - - $ - Exercised - $ - (370,000 ) $ 0.7186 Expired and/or forfeited (40,000 ) $ 0.7500 (245,000 ) $ 0.7341 Total outstanding at end of year 160,000 $ 1.6650 200,000 $ 1.4820 Outstanding exercisable stock options at end of year 160,000 $ 1.6650 200,000 $ 1.4820 October 31, 2018 October 31, 2017 Weighted average remaining years in contractual life for: Total outstanding options 0.7 years 1.4 years Outstanding exercisable options 0.7 years 1.4 years Shares of common stock available for issuance pursuant to future stock option grants - - The 2014 Plan stock options activity and status for the years ended October 31, 2018 and 2017 was as follows: Year ended October 31, 2018 2017 Number of Shares Weighted-Average Option Exercise Price Number of Shares Weighted-Average Option Exercise Price Outstanding at beginning of year 460,000 $ 0.8887 430,000 $ 0.8860 Granted 80,000 $ 0.5200 80,000 $ 0.9100 Exercised (210,400 ) $ 0.8502 - $ - Expired and/or forfeited - $ - (50,000 ) $ 0.9000 Total outstanding at end of year 329,600 $ 0.8238 460,000 $ 0.8887 Outstanding exercisable stock options at end of year 190,000 $ 0.8653 219,998 $ 0.9098 October 31, 2018 October 31, 2017 Weighted average remaining years in contractual life for: Total outstanding options 2.8 years 3.3 years Outstanding exercisable options 2.9 years 3.3 years Shares of common stock available for issuance pursuant to future stock option grants 1,760,000 1,840,000 The following weighted average assumptions were used to estimate the fair value of stock options granted under the 2014 Plan for the years ended October 31, 2018 and 2017: Year ended October 31, 2018 2017 Expected dividend yield 0.0 % 0.0 % Expected stock price volatility 73.6 % 68.6 % Risk free interest rate 2.0 % 1.5 % Expected life of options 3.2 years 3.2 years Weighted average fair value of options granted $ 0.2624 $ 0.4286 As of October 31, 2018, estimated stock based compensation expense to be recognized in future periods for granted nonvested stock options is attributable to stock options granted under the 2014 Plan. The nonvested stock options compensation expense in the amount of $13,457 will be recognized in a weighted average period of approximately 0.3 years. As of October 31, 2018, the aggregate intrinsic value of options outstanding under the 2014 Plan was approximately $74,570, while outstanding options exercise price under the 2005 Plan were above the Company’s share market value. As of October 31, 2017, the exercise price for all options outstanding under the 2005 Plan and 2014 Plan were also above the Company’s stock market value. 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. The following table presents the total stock-based compensation included in the Company’s consolidated statement of income and the effect in earnings per share: Year ended October 31, 2018 2017 Stock-based compensation expense: Cost of services $ - $ - Selling, general and administrative 51,642 63,875 Stock-based compensation before tax 51,642 63,875 Income tax benefit - - Net stock-based compensation expense $ 51,642 $ 63,875 Effect on earnings per share: Basic earnings per share $ (0.002 ) $ (0.003 ) Diluted earnings per share $ (0.002 ) $ (0.003 ) |
L. CONCENTRATIONS OF RISKS
L. CONCENTRATIONS OF RISKS | 12 Months Ended |
Oct. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
L. CONCENTRATIONS OF RISKS | 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 and Europe. Although a 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 two customers, who accounted for 10% or more of its revenues in either of the years ended October 31, 2018 or 2017. During the year ended October 31, 2018, revenues from these customers were 15.6% and 13.8%, or a total of 29.4%, as compared to the same period last year for 1.6% and 13.6%, or a total of 15.2%, respectively. At October 31, 2018 and 2017, amounts due from these customers represented 36.9% and 9.2% 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. However, at the global level three groups of affiliated companies accounted for 10% or more of our revenues in either October 31, 2018 or 2017. During the year ended October 31, 2018, aggregate revenues from these global groups of affiliated companies were 15.6%, 13.8% and 5.3%, or a total of 34.7%, as compared to the same period last year for 1.6%, 13.6%, and 10.7%, or a total of 25.9%, respectively. At October 31, 2018 and 2017, amounts due from these global groups of affiliated companies represented 42.4% and 12.4% of total accounts receivable balance, respectively. |
M. OTHER INCOME
M. OTHER INCOME | 12 Months Ended |
Oct. 31, 2018 | |
M. Other Income | |
M. OTHER INCOME | During September 2017, the Company’s Puerto Rico operations were affected by hurricanes which severely impacted Puerto Rico (“Hurricanes”). The Company’s insurance claim for property damages resulting from the Hurricanes was settled with the insurance carrier on July 2018 for the aggregate amount of approximately $148,000. Business interruption losses and additional expenses incurred by the Company until electrical power and other basic utilities were restored is currently being assessed by the Company’s insurance provider. Based on current accounting guidance, the insurance proceeds are being recognized upon collection, as a gain contingency against other income in the consolidated financial statements. Administered and disbursed by the Puerto Rico Treasury Department, the United States federal government granted a salaries subsidy (the “Salaries Subsidy”) to Puerto Rico employers which retained employees for the period since the Hurricanes until the sooner of (i) when the employer operations were fully able to operate, or (ii) December 31, 2017. During July 2018, the Company’s Puerto Rico subsidiaries applied and collected from the Salaries Subsidy an aggregate amount of approximately $220,000. This Salaries Subsidy was recorded against other income in the consolidated financial statements. |
N. SEGMENT DISCLOSURES
N. SEGMENT DISCLOSURES | 12 Months Ended |
Oct. 31, 2018 | |
Segment Reporting [Abstract] | |
N. 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 three reportable segments: (i) Puerto Rico technical compliance consulting, (ii) United States technical compliance consulting, and (iii) Europe technical compliance consulting. 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 years ended in October 31, 2018 and 2017. 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, 2018 2017 REVENUES: Puerto Rico consulting $ 14,438,772 $ 10,936,206 United States consulting 2,137,748 1,217,498 Europe consulting 1,153,740 1,087,610 Other segments¹ 67,165 56,284 Total consolidated revenues $ 17,797,425 $ 13,297,598 INCOME (LOSS) BEFORE TAXES: Puerto Rico consulting $ 1,217,758 $ (544,658 ) United States consulting (119,140 ) (377,035 ) Europe consulting 11,194 (44,597 ) Other segments¹ 413,977 192,338 Total consolidated income before taxes $ 1,523,789 $ (773,952 ) ¹ Other segments represent activities that fall below the reportable threshold and are carried out in Puerto Rico and Brazil. These activities include a Brazilian compliance consulting division and corporate headquarters, as applicable. Long lived assets (property and equipment) and related depreciation and amortization expense for the years ended October 31, 2018 and 2017, were concentrated in the corporate headquarters in Puerto Rico. Accordingly, depreciation expense and acquisition of property and equipment, as presented in the statements of cash flows are mainly related to the corporate headquarters. |
O. RETIREMENT PLAN
O. RETIREMENT PLAN | 12 Months Ended |
Oct. 31, 2018 | |
Retirement Benefits [Abstract] | |
O. RETIREMENT PLAN | Pharma-PR and Pharma-US each have a separate qualified retirement plan in accordance with the applicable laws of the Commonwealth of Puerto Rico and the United States of America, for employees who meet certain age and service period requirements. The Company makes contributions to these plans as required by the provisions of the plan document. For the year ended October 31, 2018 the Company suspended the Contributions to the plans. During the year ended October 31, 2017, the Company contributed to these plans $66,000. |
P. RELATED PARTY TRANSACTIONS
P. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2018 | |
Related Party Transactions [Abstract] | |
P. RELATED PARTY TRANSACTIONS | 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 as amended, 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. 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 included standard provisions relating to non-competition, confidentiality, non-transferability and non-disparagement. On December 31, 2018, the Company extended the Consulting Agreement for an additional year to December 31, 2019 and maintained the past compensation structure. Pursuant to the Consulting Agreement the Company will compensate Consultant a monthly retainer of $33,700 during the Extension Term. In addition, in the event the Company achieves at least eighty percent (80%) of its budget for the year, Consultant shall receive a payment in the amount of $100,000 (the “Incentive Fee”). If the Company achieves one hundred percent (100%) or more of its budget for the year, the Incentive Fee shall be $120,000. As more fully disclosed in Note G to the consolidated financial statements, the Company leases its headquarters facilities in Dorado, Puerto Rico, from an affiliate of our Chairman of the Board. |
Q. SUBSEQUENT EVENTS
Q. SUBSEQUENT EVENTS | 12 Months Ended |
Oct. 31, 2018 | |
Related Party Transactions [Abstract] | |
Q. SUBSEQUENT EVENTS | On December 31, 2018, the Company renewed the Consulting Agreement with a company affiliated to our Chairman and our Chairman, as more fully disclosed in Note P. |
A. ORGANIZATION AND SUMMARY O_2
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2018 | |
Organization And Summary Of Significant Accounting Policies Policies Abstract | |
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. |
Segments | During the year ended October 31, 2017, the Company operated in 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”). On the Sales Closing Date the Company sold substantially all of its Laboratory Assets. As a result of the sale, the Company currently operates three reportable business segments: (i) Puerto Rico technical compliance consulting, (ii) United States technical compliance consulting, and (iii) Europe technical compliance consulting. Accordingly, the accompanying consolidated financial statements are presented to show these three reportable segments as continuing operations, while the Lab is presented as a discontinued operation. See Note B for further information. |
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 | Continuing operations - Revenue is primarily derived from: (1) time and materials contracts (representing approximately 99% of total revenues), which is recognized by applying the proportional performance model, whereby revenue is recognized as performance occurs, and (2) short-term fixed-fee contracts or "not to exceed" contracts (representing approximately 1% of total revenues), which revenue is recognized similarly, except that certain milestones also have to be reached before revenue is recognized. 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. Discontinued operations - Laboratory testing revenue is mainly recognized as the testing is completed and certified (normally within days of sample receipt from customer). |
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. 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. |
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, |
Property and equipment | Owned property and equipment, and leasehold improvements are stated at cost. 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 the lease term, including renewals that have been determined to be reasonably assured. 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. |
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, while for restricted stock units the fair market value of the units is determined by Company’s share market value 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. However, the Company has not recognized such cash flow from financing activities since there has been no tax benefit related to the stock-based compensation. |
Earnings (Loss) Per Share of Common Stock | Basic earnings (loss) per share of common stock is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) 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 is 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. |
Subsequent Events | The Company has evaluated subsequent events to the date of the audit report as of January 29, 2019. The Company has determined that there are no events occurring in this period that required disclosure or adjustment, except as disclosed in the accompanying consolidated financial statements. |
Reclassifications | Certain reclassifications have been made to the October 31, 2017 consolidated financial statements to conform them to the October 31, 2018 consolidated financial statements presentation. Such reclassifications do not have an effect on net loss as previously reported. |
Recent Accounting Pronouncements | In May 2014, the FASB issued a new accounting standard that amends the guidance for the recognition of revenue from contracts with customers to transfer goods and services. The FASB has subsequently issued additional, clarifying standards to address issues arising from implementation of the new revenue standard. The new standards are required to be adopted using either a full retrospective or a modified retrospective approach. The Company expects to adopt this standard using the modified retrospective approach beginning with the Company’s fiscal year 2019. Based on the Company’s preliminary assessment, it currently does not anticipate a material impact to the Company’s total revenues. In February 2016, the FASB issued a new accounting standard that amends the guidance for the accounting and disclosure of leases. This new standard requires that lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about their leasing arrangements. The new standard is effective for interim and annual periods beginning on January 1, 2019 and may be adopted earlier. The Company continues to evaluate the impact that this new standard will have on its consolidated financial statements. The Company does not expect that this standard will have a material impact to its Consolidated Statements of Operations but expects that this standard will have a material impact on the assets and liabilities on its Consolidated Balance Sheets upon adoption. |
B. LABORATORY ASSETS SALE - D_2
B. LABORATORY ASSETS SALE - DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Oct. 31, 2018 | |
B.Laboratory Assets Sale Discontinued Operations Tables Abstract | |
Discontinued operations | Years ended October 31, 2018 2017 Revenues $ 2,164,304 $ 2,281,677 Net income (loss) after taxes, and 2018 gain on disposal of $2,712,244 $ 2,541,470 $ (637,091 ) October 31, 2017 Current assets Cash and cash equivalents $ 160,166 Accounts receivable 890,664 Prepaids and other assets 106,699 Total current assets from discontinued operations 1,157,529 Property and equipment 2,139,933 Total assets from discontinued operations $ 3,297,462 Current liabilities Accounts payable and accrued expenses $ 110,206 Total liabilities from discontinued operations $ 110,206 |
C. MARKETABLE SECURITIES AVAI_2
C. MARKETABLE SECURITIES AVAILABLE FOR SALE (Tables) | 12 Months Ended |
Oct. 31, 2018 | |
C. Marketable Securities Available For Sale | |
Summary of available-for-sale securities | Type of security as of October 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. Treasury securities $ 4,570,275 $ — $ — $ 4,570,275 Other government-related debt securities: Puerto Rico Commonwealth Government Development Bond 40,000 4,475 - 44,475 Total interest-bearing and available-for-sale securities $ 4,610,275 $ 4,475 $ - $ 4,614,750 Type of security as of October 31, 2017 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 40,000 — (13,400 ) 26,600 Total interest-bearing and available-for-sale securities $ 4,540,000 $ — $ (13,400 ) $ 4,526,600 |
Fair values of available-for-sale securities | Classification in the Consolidated Balance Sheets 2018 2017 Cash and cash equivalents $ 4,570,275 $ 4,500,000 Marketable securities 44,475 26,600 Total available-for-sale securities $ 4,614,750 $ 4,526,600 |
E. PROPERTY AND EQUIPMENT (Tabl
E. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Oct. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | October 31, Useful life (years) 2018 2017 Vehicles 5 $ 269,257 $ 248,152 Leasehold improvements 5-8 84,485 70,168 Computers 3 307,579 313,199 Equipment 3-7 132,089 70,522 Furniture and fixtures 10 1,563 3,718 Total 794,973 705,759 Less: Accumulated depreciation and amortization (496,953 ) (455,147 ) Property and equipment, net $ 298,020 $ 250,612 |
F. INCOME TAXES (Tables)
F. INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2018 | |
F. Income Taxes | |
Schedule of reconciliation between federal statutory rate and effective tax rate | October 31, 2018 2017 United States federal statutory rate 23.5 % 35.0 % US Tax Reform Transition Tax Expense 177.2 % - Puerto Rico, including foreign loss positionsfor which the resulting deferred asset has been allowed, net (16.5 )% (26.2 )% Other, including US loss positions for which the resulting deferred tax asset has been allowed, net (1.4 )% (9.1 )% Effective tax rate 182.8 % (0.3 )% |
G. COMMITMENTS AND CONTINGENC_2
G. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Oct. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments for Capital Leases | Twelve months ending October 31, Amount 2019 $ 15,502 2020 15,502 2021 15,502 2022 17,397 Total future minimum lease payments 63,903 Less: Amount of imputed interest ( 4,108 ) Present value of future minimum lease payments 59,795 Current portion of obligation under capital leases (13,768 ) Long-term portion $ 46,027 |
Schedule of Future Minimum Rental Payments for Operating Leases | Amount 2019 $ 363,800 2020 363,800 2021 60,633 Total minimum future rental payments $ 788,233 |
J. EARNINGS (LOSSES) PER SHARE
J. EARNINGS (LOSSES) PER SHARE (Tables) | 12 Months Ended |
Oct. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of calculations of basic and diluted earnings per share | Years ended October 31, 2018 2017 Net loss available to common equity holders - used to compute basic and diluted earnings (losses) per share (continuing operations) $ (1,261,736 ) $ (777,818 ) Net income (loss) available to common equity holders - used to compute basic and diluted earnings (losses) per share (discontinued operations) $ 2,541,470 $ (637,091 ) Weighted average number of common shares - used to compute basic earnings (losses) per share 23,080,995 23,096,547 Effect of warrants to purchase common stock - - Effect of restricted stock units to issue common stock - 2,829 Effect of options to purchase common stock 15,257 - Weighted average number of shares - used to compute diluted earnings (losses) per share 23,096,252 23,099,376 |
K. STOCK OPTIONS AND STOCK BASE
K. STOCK OPTIONS AND STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Oct. 31, 2018 | |
K. Stock Options And Stock Based Compensation | |
Stock options activity | The 2005 Plan stock options activity and status for the years ended October 31, 2018 and 2017 was as follows: Year ended October 31, 2018 2017 Number of Shares Weighted-Average Option Exercise Price Number of Shares Weighted-Average Option Exercise Price Outstanding at beginning of year 200,000 $ 1.4820 815,000 $ 0.9106 Granted - $ - - $ - Exercised - $ - (370,000 ) $ 0.7186 Expired and/or forfeited (40,000 ) $ 0.7500 (245,000 ) $ 0.7341 Total outstanding at end of year 160,000 $ 1.6650 200,000 $ 1.4820 Outstanding exercisable stock options at end of year 160,000 $ 1.6650 200,000 $ 1.4820 The 2014 Plan stock options activity and status for the years ended October 31, 2018 and 2017 was as follows: Year ended October 31, 2018 2017 Number of Shares Weighted-Average Option Exercise Price Number of Shares Weighted-Average Option Exercise Price Outstanding at beginning of year 460,000 $ 0.8887 430,000 $ 0.8860 Granted 80,000 $ 0.5200 80,000 $ 0.9100 Exercised (210,400 ) $ 0.8502 - $ - Expired and/or forfeited - $ - (50,000 ) $ 0.9000 Total outstanding at end of year 329,600 $ 0.8238 460,000 $ 0.8887 Outstanding exercisable stock options at end of year 190,000 $ 0.8653 219,998 $ 0.9098 |
Assumptions used to estimate the fair value of stock options | The 2005 Plan stock options activity and status for the years ended October 31, 2018 and 2017 was as follows: October 31, 2018 October 31, 2017 Weighted average remaining years in contractual life for: Total outstanding options 0.7 years 1.4 years Outstanding exercisable options 0.7 years 1.4 years Shares of common stock available for issuance pursuant to future stock option grants - - The 2014 Plan stock options activity and status for the years ended October 31, 2018 and 2017 was as follows: October 31, 2018 October 31, 2017 Weighted average remaining years in contractual life for: Total outstanding options 2.8 years 3.3 years Outstanding exercisable options 2.9 years 3.3 years Shares of common stock available for issuance pursuant to future stock option grants 1,760,000 1,840,000 |
Stock-based compensation | Year ended October 31, 2018 2017 Stock-based compensation expense: Cost of services $ - $ - Selling, general and administrative 51,642 63,875 Stock-based compensation before tax 51,642 63,875 Income tax benefit - - Net stock-based compensation expense $ 51,642 $ 63,875 Effect on earnings per share: Basic earnings per share $ (0.002 ) $ (0.003 ) Diluted earnings per share $ (0.002 ) $ (0.003 ) |
N. SEGMENT DISCLOSURES (Tables)
N. SEGMENT DISCLOSURES (Tables) | 12 Months Ended |
Oct. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Year ended October 31, 2018 2017 REVENUES: Puerto Rico consulting $ 14,438,772 $ 10,936,206 United States consulting 2,137,748 1,217,498 Europe consulting 1,153,740 1,087,610 Other segments¹ 67,165 56,284 Total consolidated revenues $ 17,797,425 $ 13,297,598 INCOME (LOSS) BEFORE TAXES: Puerto Rico consulting $ 1,217,758 $ (544,658 ) United States consulting (119,140 ) (377,035 ) Europe consulting 11,194 (44,597 ) Other segments¹ 413,977 192,338 Total consolidated income before taxes $ 1,523,789 $ (773,952 ) |
B. LABORATORY ASSETS SALE - D_3
B. LABORATORY ASSETS SALE - DISCONTINUED OPERATIONS (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
B.Laboratory Assets Sale Discontinued Operations Details Abstract | ||
Revenues | $ 2,164,304 | $ 2,281,677 |
Net income (loss) after taxes, and 2018 gain on disposal of $2,712,244 | $ 2,541,470 | $ (637,091) |
B. LABORATORY ASSETS SALE - D_4
B. LABORATORY ASSETS SALE - DISCONTINUED OPERATIONS (Details 1) - USD ($) | Oct. 31, 2018 | Oct. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 160,166 | |
Accounts receivable | 890,664 | |
Prepaids and other assets | 106,699 | |
Total current assets from discontinued operations | 1,157,529 | |
Property and equipment | 2,139,933 | |
Total assets from discontinued operations | $ 0 | 3,297,462 |
Current liabilities | ||
Accounts payable and accrued expenses | 110,206 | |
Total liabilities from discontinued operations | $ 110,206 |
C. MARKETABLE SECURITIES AVAI_3
C. MARKETABLE SECURITIES AVAILABLE FOR SALE (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Available-for-sale securities | ||
Amortized Cost | $ 4,610,275 | $ 4,540,000 |
Gross Unrealized Gains | 4,475 | 0 |
Gross Unrealized Losses | 0 | (13,400) |
Estimated Fair Value | 4,614,750 | 4,526,600 |
U.S. Treasury securities | ||
Available-for-sale securities | ||
Amortized Cost | 4,570,275 | 4,500,000 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 4,570,275 | 4,500,000 |
Puerto Rico Commonwealth Government Development Bond | ||
Available-for-sale securities | ||
Amortized Cost | 40,000 | 40,000 |
Gross Unrealized Gains | 4,475 | 0 |
Gross Unrealized Losses | 0 | (13,400) |
Estimated Fair Value | $ 44,475 | $ 26,600 |
C. MARKETABLE SECURITIES AVAI_4
C. MARKETABLE SECURITIES AVAILABLE FOR SALE (Details 1) - USD ($) | Oct. 31, 2018 | Oct. 31, 2017 |
C. Marketable Securities Available For Sale | ||
Cash and cash equivalents | $ 4,570,275 | $ 4,500,000 |
Marketable securities | 44,475 | 26,600 |
Total available-for-sale securities | $ 4,614,750 | $ 4,526,600 |
E. PROPERTY AND EQUIPMENT (Deta
E. PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Property and equipment gross | $ 794,973 | $ 705,759 |
Less: Accumulated depreciation and amortization | (496,953) | (455,147) |
Property and equipment, net | $ 298,020 | 250,612 |
Vehicles | ||
Useful life (years) | 5 years | |
Property and equipment gross | $ 269,257 | 248,152 |
Leasehold improvements | ||
Useful life (years) | 5-8 years | |
Property and equipment gross | $ 84,485 | 70,168 |
Computers | ||
Useful life (years) | 3 years | |
Property and equipment gross | $ 307,579 | 313,199 |
Equipment | ||
Useful life (years) | 3-7 years | |
Property and equipment gross | $ 132,089 | 70,522 |
Furniture and fixtures | ||
Useful life (years) | 10 years | |
Property and equipment gross | $ 1,563 | $ 3,718 |
Projects in process | ||
Useful life (years) | - |
F. INCOME TAXES (Details)
F. INCOME TAXES (Details) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
F. Income Taxes | ||
United States federal statutory rate | 23.50% | 35.00% |
US Tax Reform Transition Tax Expense | 177.20% | 0.00% |
Puerto Rico, including foreign loss positions for which the resulting deferred asset has been allowed, net | (16.50%) | (26.20%) |
Other, including United States loss position for which the resulting deferred tax asset has been allowed, net | (1.40%) | (9.10%) |
Effective tax rate | 182.80% | (0.30%) |
F. INCOME TAXES (Details Narrat
F. INCOME TAXES (Details Narratives) | Oct. 31, 2018USD ($) |
Pharma-Spain | |
Unused operating losses | $ 1,270,000 |
Potential deferred tax asset which has been allowed | 254,000 |
Pharma-IR | |
Unused operating losses | 121,000 |
Potential deferred tax asset which has been allowed | 15,000 |
Pharma-Bio | |
Unused operating losses | 2,695,000 |
Potential deferred tax asset which has been allowed | 566,000 |
Pharma-Serv | |
Unused operating losses | 22,000 |
Potential deferred tax asset which has been allowed | $ 1,000 |
G. COMMITMENTS AND CONTINGENC_3
G. COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Oct. 31, 2018 | Oct. 31, 2017 |
Twelve months ending October 31, | ||
2,019 | $ 15,502 | |
2,020 | 15,502 | |
2,021 | 15,502 | |
2,022 | 17,397 | |
Total future minimum lease payments | 63,903 | |
Less: Amount of imputed interest | (4,108) | |
Present value of future minimum lease payments | 59,795 | |
Current portion of obligation under capital leases | (13,768) | $ (13,949) |
Long-term portion | $ 46,027 | $ 59,795 |
G. COMMITMENTS AND CONTINGENC_4
G. COMMITMENTS AND CONTINGENCIES (Details 1) | Oct. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,019 | $ 363,800 |
2,020 | 363,800 |
2,021 | 60,633 |
Total minimum lease payments | $ 788,233 |
G. COMMITMENTS AND CONTINGENC_5
G. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Rent expense | $ 389,000 | $ 413,000 |
Vehicles | ||
Leased vehicles under non-cancelable capital lease agreements | 77,470 | 77,470 |
Accumulated amortization leased vehicles | 21,163 | 5,668 |
Amortization expense | $ 15,495 | $ 22,053 |
J. EARNINGS (LOSSES) PER SHAR_2
J. EARNINGS (LOSSES) PER SHARE (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Notes to Financial Statements | ||
Net income (loss) available to common equity holders - used to compute basic and diluted earnings (losses) per share -continuing operations | $ (1,261,736) | $ (777,818) |
Net income (loss) available to common equity holders - used to compute basic and diluted earnings (losses) per share -discontinued operations | $ 2,541,470 | $ (637,091) |
Weighted average number of common shares - used to compute basic earnings (losses) per share | 23,080,995 | 23,096,547 |
Effect of warrants to purchase common stock | 0 | 0 |
Effect of restricted stock units to issue common stock | 0 | 2,829 |
Effect of options to purchase common stock | 15,257 | 0 |
Weighted average number of shares - used to compute diluted earnings (losses) per share | 23,096,252 | 23,099,376 |
K. STOCK OPTIONS AND STOCK BA_2
K. STOCK OPTIONS AND STOCK BASED COMPENSATION (Details) - $ / shares | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
2005 Plan | ||
Stock option Activity | ||
Options Outstanding, Beginning | 200,000 | 815,000 |
Options Granted | 0 | 0 |
Options Exercised | 0 | (370,000) |
Options Expired and/or forfeited | (40,000) | (245,000) |
Options Outstanding, Ending | 160,000 | 200,000 |
Options Exercisable, Ending | 160,000 | 200,000 |
Weighted Average Option Exercise Price | ||
Options Outstanding, Beginning | $ 1.4820 | $ 0.9106 |
Options Granted | 0 | 0 |
Options Exercised | 0 | 0.7186 |
Options Expired and or forfeited | 0.7500 | 0.7341 |
Options Outstanding, Ending | 1.6650 | 1.4820 |
Options Exercisable, Ending | $ 1.6650 | $ 1.4820 |
Weighted average remaining years in contractual life for: Total outstanding options | 8 months 12 days | 1 year 4 months 24 days |
Weighted average remaining years in contractual life for: Outstanding exercisable options | 8 months 12 days | 1 year 4 months 24 days |
Shares of common stock available for issuance pursuant to future stock option grants | 0 | 0 |
2014 Plan | ||
Stock option Activity | ||
Options Outstanding, Beginning | 460,000 | 430,000 |
Options Granted | 80,000 | 80,000 |
Options Exercised | (210,400) | 0 |
Options Expired and/or forfeited | 0 | (50,000) |
Options Outstanding, Ending | 329,600 | 460,000 |
Options Exercisable, Ending | 190,000 | 219,998 |
Weighted Average Option Exercise Price | ||
Options Outstanding, Beginning | $ 0.8887 | $ 0.8860 |
Options Granted | 0.5200 | 0.9100 |
Options Exercised | 0.8502 | 0 |
Options Expired and or forfeited | 0 | 0.9000 |
Options Outstanding, Ending | 0.8238 | 0.8887 |
Options Exercisable, Ending | $ 0.8653 | $ 0.9098 |
Weighted average remaining years in contractual life for: Total outstanding options | 2 years 9 months 18 days | 3 years 3 months 18 days |
Weighted average remaining years in contractual life for: Outstanding exercisable options | 2 years 10 months 24 days | 3 years 3 months 18 days |
Shares of common stock available for issuance pursuant to future stock option grants | 1,760,000 | 1,840,000 |
K. STOCK OPTIONS AND STOCK BA_3
K. STOCK OPTIONS AND STOCK BASED COMPENSATION (Details 1) - $ / shares | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
2014 Plan | ||
Expected dividend yield | 0.00% | |
Expected stock price volatility | 73.60% | |
Risk free interest rate | 2.00% | |
Expected life of options | 3 years 2 months 12 days | |
Weighted average fair value of options granted | $ 0.2624 | |
2005 Plan | ||
Expected dividend yield | 0.00% | |
Expected stock price volatility | 68.60% | |
Risk free interest rate | 1.50% | |
Expected life of options | 3 years 2 months 12 days | |
Weighted average fair value of options granted | $ 0.4286 |
K. STOCK OPTIONS AND STOCK BA_4
K. STOCK OPTIONS AND STOCK BASED COMPENSATION (Details 2) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Stock-based compensation before tax | $ 51,642 | $ 63,875 |
Income tax benefit | 0 | 0 |
Net stock-based compensation expense | $ 51,642 | $ 63,875 |
Effect on earnings per share: Basic earnings per share | $ (0.002) | $ (0.003) |
Effect on earnings per share: Diluted earnings per share | $ (0.002) | $ (0.003) |
Cost of services | ||
Stock-based compensation before tax | $ 0 | $ 0 |
Selling, general and administrative | ||
Stock-based compensation before tax | $ 51,642 | $ 63,875 |
K. STOCK OPTIONS AND STOCK BA_5
K. STOCK OPTIONS AND STOCK BASED COMPENSATION (Details Narrative) | Oct. 31, 2017USD ($) |
2014 Plan | |
Aggregate intrinsic value of options outstanding | $ 74,570 |
L. CONCENTRATION OF RISKS (Deta
L. CONCENTRATION OF RISKS (Details Narrative) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Major Customer A | ||
Revenue from major customers | 15.60% | 1.60% |
Major Customer B | ||
Revenue from major customers | 13.80% | 13.60% |
Major Customer Total | ||
Revenue from major customers | 29.40% | 15.20% |
Amount due from major customers as percentage of accounts receivable | 36.90% | 9.20% |
Global Customer A | ||
Revenue from major customers | 15.60% | 1.60% |
Global Customer B | ||
Revenue from major customers | 13.80% | 13.60% |
Global Customer C | ||
Revenue from major customers | 5.30% | 10.70% |
Global Customer Total | ||
Revenue from major customers | 34.70% | 25.90% |
Amount due from major customers as percentage of accounts receivable | 42.40% | 12.40% |
N. SEGMENT DISCLOSURES (Details
N. SEGMENT DISCLOSURES (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Revenues | $ 17,797,425 | $ 13,297,598 |
Income (loss) before taxes | 1,523,789 | (773,952) |
Puerto Rico consulting | ||
Revenues | 14,438,772 | 10,936,206 |
Income (loss) before taxes | 1,217,758 | (544,658) |
United States consulting | ||
Revenues | 2,137,748 | 1,217,498 |
Income (loss) before taxes | (119,140) | (377,035) |
Europe consulting | ||
Revenues | 1,153,740 | 1,087,610 |
Income (loss) before taxes | 11,194 | (44,597) |
Other segments | ||
Revenues | 67,165 | 56,284 |
Income (loss) before taxes | $ 413,977 | $ 192,338 |
O. RETIREMENT PLAN (Details Nar
O. RETIREMENT PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
O. Retirement Plan | ||
Contributions made to retirement plan | $ 0 | $ 66,000 |