Cover
Cover - shares | 9 Months Ended | |
Jul. 31, 2021 | Sep. 10, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | PHARMA-BIO SERV, INC. | |
Entity Central Index Key | 0001304161 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Jul. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 23,029,215 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-50956 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 20-0653570 | |
Entity Address Address Line 1 | Pharma-Bio Serv# 6 Road 696 | |
Entity Address City Or Town | Dorado | |
Entity Address Country | PR | |
Entity Address Postal Zip Code | 00646 | |
City Area Code | 787 | |
Local Phone Number | 278-2709 | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jul. 31, 2021 | Oct. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 16,498,170 | $ 17,137,924 |
Accounts receivable | 10,082,222 | 9,727,591 |
Current portion - promissory note receivable due from sale of assets from discontinued operations | 0 | 1,250,000 |
Prepaids and other assets | 818,576 | 468,703 |
Total current assets | 27,398,968 | 28,584,218 |
Property and equipment, net | 120,693 | 217,572 |
Operating lease right-of-use | 721,564 | 846,714 |
Other assets | 353,407 | 270,242 |
Total assets | 28,594,632 | 29,918,746 |
Current liabilities | ||
Current portion-obligation under finance lease | 0 | 11,640 |
Loans-short term portion | 0 | 1,287,800 |
Current operating lease liabilities | 172,957 | 162,917 |
Accounts payable and accrued expenses | 1,810,987 | 1,938,305 |
Current portion of US Tax Reform Transition Tax and income taxes payable | 377,511 | 392,131 |
Total current liabilities | 2,361,455 | 3,792,793 |
US Tax Reform Transition Tax payable | 1,850,536 | 2,062,024 |
Loans-long term portion | 0 | 643,900 |
Long term portion - obligation under finance lease | 0 | 55,439 |
Long-term operating lease liabilities | 523,960 | 629,979 |
Other liabilities | 17,950 | 17,950 |
Total liabilities | 4,753,901 | 7,202,085 |
Stockholders' equity | ||
Preferred Stock, $0.0001 par value; authorized 10,000,000 shares; none outstanding | 0 | 0 |
Common Stock, $0.0001 par value; authorized 50,000,000 shares; 23,433,341 and 23,405,753 shares issued, and 23,029,215 and 23,001,627 shares outstanding at July 31, 2021 and October 31, 2020, respectively | 2,343 | 2,341 |
Additional paid-in capital | 1,458,244 | 1,423,954 |
Retained earnings | 22,580,045 | 21,523,990 |
Accumulated other comprehensive income | 194,377 | 160,654 |
Stockholders equity before treasury stock | 24,235,009 | 23,110,939 |
Treasury stock, at cost; 404,126 common shares held at July 31, 2021 and October 31, 2020, respectively | (394,278) | (394,278) |
Total stockholders' equity | 23,840,731 | 22,716,661 |
Total liabilities and stockholders' equity | $ 28,594,632 | $ 29,918,746 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 31, 2021 | Oct. 31, 2020 |
Stockholders' equity | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 50,000,000 | 50,000,000 |
Common stock, issued | 23,433,341 | 23,405,753 |
Common stock, outstanding | 23,029,215 | 23,001,627 |
Treasury stock, shares | 404,126 | 404,126 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2021 | Jul. 31, 2020 | Jul. 31, 2021 | Jul. 31, 2020 | |
Condensed Consolidated Statements of Operations (Unaudited) | ||||
REVENUES | $ 4,987,909 | $ 6,278,370 | $ 14,517,884 | $ 16,539,304 |
COST OF SERVICES | 3,732,847 | 4,424,151 | 10,656,840 | 11,230,293 |
GROSS PROFIT | 1,255,062 | 1,854,219 | 3,861,044 | 5,309,011 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 894,572 | 1,037,529 | 2,916,654 | 3,235,178 |
INCOME FROM OPERATIONS | 360,490 | 816,690 | 944,390 | 2,073,833 |
OTHER INCOME (EXPENSE), NET | 1,952,898 | (30,198) | 1,976,390 | 63,822 |
INCOME BEFORE INCOME TAX | 2,313,388 | 786,492 | 2,920,780 | 2,137,655 |
INCOME TAX EXPENSE | 38,270 | 94,378 | 137,359 | 231,080 |
NET INCOME | $ 2,275,118 | $ 692,114 | $ 2,783,421 | $ 1,906,575 |
BASIC AND DILUTED EARNINGS PER COMMON SHARE | $ 0.098 | $ 0.030 | $ 0.120 | $ 0.083 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC | 23,029,215 | 23,001,627 | 23,022,950 | 23,003,125 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED | 23,174,605 | 23,032,641 | 23,178,091 | 23,030,066 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2021 | Jul. 31, 2020 | Jul. 31, 2021 | Jul. 31, 2020 | |
Consolidated Statements of Comprehensive Income (Unaudited) | ||||
NET INCOME | $ 2,275,118 | $ 692,114 | $ 2,783,421 | $ 1,906,575 |
OTHER COMPREHENSIVE INCOME , NET OF RECLASSIFICATION ADJUSTMENTS AND TAXES: | ||||
Foreign currency translation gain, net of tax | 5,232 | 78,730 | 33,723 | 37,263 |
TOTAL OTHER COMPREHENSIVE INCOME | 5,232 | 78,730 | 33,723 | 37,263 |
COMPREHENSIVE INCOME | $ 2,280,350 | $ 770,844 | $ 2,817,144 | $ 1,943,838 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Total | Common Stock | Preferred Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated other comprehensive loss | Treasury Stock |
Balance, shares at Oct. 31, 2019 | 23,397,707 | ||||||
Balance, amount at Oct. 31, 2019 | $ 20,607,506 | $ 2,340 | $ 0 | $ 1,381,076 | $ 19,473,069 | $ 143,600 | $ (392,579) |
STOCK-BASED COMPENSATION | 11,430 | $ 0 | 0 | 11,430 | 0 | 0 | 0 |
ISSUANCE OF COMMON STOCK PURSUANT TO THE CASHLESS EXERCISE OF STOCK OPTIONS, shares | 8,046 | ||||||
ISSUANCE OF COMMON STOCK PURSUANT TO THE CASHLESS EXERCISE OF STOCK OPTIONS, amount | 0 | $ 1 | 0 | 0 | (1) | 0 | 0 |
PURCHASE OF TREASURY STOCK (2,300 SHARES) | (1,699) | 0 | 0 | 0 | 0 | 0 | (1,699) |
NET INCOME | 526,900 | 0 | 0 | 0 | 526,900 | 0 | 0 |
OTHER COMPREHENSIVE LOSS, NET OF TAX | (11,734) | $ 0 | 0 | 0 | 0 | (11,734) | 0 |
Balance, shares at Jan. 31, 2020 | 23,405,753 | ||||||
Balance, amount at Jan. 31, 2020 | 21,132,403 | $ 2,341 | 0 | 1,392,506 | 19,999,968 | 131,866 | (394,278) |
Balance, shares at Oct. 31, 2019 | 23,397,707 | ||||||
Balance, amount at Oct. 31, 2019 | 20,607,506 | $ 2,340 | 0 | 1,381,076 | 19,473,069 | 143,600 | (392,579) |
NET INCOME | 1,906,575 | ||||||
Balance, shares at Jul. 31, 2020 | 23,405,753 | ||||||
Balance, amount at Jul. 31, 2020 | 22,583,935 | $ 2,341 | 0 | 1,415,366 | 21,379,643 | 180,863 | (394,278) |
Balance, shares at Jan. 31, 2020 | 23,405,753 | ||||||
Balance, amount at Jan. 31, 2020 | 21,132,403 | $ 2,341 | 0 | 1,392,506 | 19,999,968 | 131,866 | (394,278) |
STOCK-BASED COMPENSATION | 11,430 | 0 | 0 | 11,430 | 0 | 0 | 0 |
NET INCOME | 687,561 | 0 | 0 | 0 | 687,561 | 0 | 0 |
OTHER COMPREHENSIVE LOSS, NET OF TAX | (29,733) | $ 0 | 0 | 0 | 0 | (29,733) | 0 |
Balance, shares at Apr. 30, 2020 | 23,405,753 | ||||||
Balance, amount at Apr. 30, 2020 | 21,801,661 | $ 2,341 | 0 | 1,403,936 | 20,687,529 | 102,133 | (394,278) |
STOCK-BASED COMPENSATION | 11,430 | 0 | 0 | 11,430 | 0 | 0 | 0 |
NET INCOME | 692,114 | 0 | 0 | 0 | 692,114 | 0 | 0 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | 78,730 | $ 0 | 0 | 0 | 0 | 78,730 | 0 |
Balance, shares at Jul. 31, 2020 | 23,405,753 | ||||||
Balance, amount at Jul. 31, 2020 | 22,583,935 | $ 2,341 | 0 | 1,415,366 | 21,379,643 | 180,863 | (394,278) |
Balance, shares at Oct. 31, 2020 | 23,405,753 | ||||||
Balance, amount at Oct. 31, 2020 | 22,716,661 | $ 2,341 | 0 | 1,423,954 | 21,523,990 | 160,654 | (394,278) |
STOCK-BASED COMPENSATION | 11,430 | $ 0 | 0 | 11,430 | 0 | 0 | 0 |
ISSUANCE OF COMMON STOCK PURSUANT TO THE CASHLESS EXERCISE OF STOCK OPTIONS, shares | 27,588 | ||||||
ISSUANCE OF COMMON STOCK PURSUANT TO THE CASHLESS EXERCISE OF STOCK OPTIONS, amount | 0 | $ 2 | 0 | 0 | (2) | 0 | 0 |
NET INCOME | 268,032 | 0 | 0 | 0 | 268,032 | 0 | 0 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | 23,752 | 0 | 0 | 0 | 0 | 23,752 | 0 |
CASH DIVIDEND ($0.075 PER COMMONSHARE AT RECORD DATE) | (1,727,364) | $ 0 | 0 | 0 | (1,727,364) | 0 | 0 |
Balance, shares at Jan. 31, 2021 | 23,433,341 | ||||||
Balance, amount at Jan. 31, 2021 | 21,292,511 | $ 2,343 | 0 | 1,435,384 | 20,064,656 | 184,406 | (394,278) |
Balance, shares at Oct. 31, 2020 | 23,405,753 | ||||||
Balance, amount at Oct. 31, 2020 | 22,716,661 | $ 2,341 | 0 | 1,423,954 | 21,523,990 | 160,654 | (394,278) |
NET INCOME | 2,783,421 | ||||||
Balance, shares at Jul. 31, 2021 | 23,433,341 | ||||||
Balance, amount at Jul. 31, 2021 | 23,840,731 | $ 2,343 | 0 | 1,458,244 | 22,580,045 | 194,377 | (394,278) |
Balance, shares at Jan. 31, 2021 | 23,433,341 | ||||||
Balance, amount at Jan. 31, 2021 | 21,292,511 | $ 2,343 | 0 | 1,435,384 | 20,064,656 | 184,406 | (394,278) |
STOCK-BASED COMPENSATION | 11,430 | 0 | 0 | 11,430 | 0 | 0 | 0 |
NET INCOME | 240,271 | 0 | 0 | 0 | 240,271 | 0 | 0 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | 4,739 | $ 0 | 0 | 0 | 0 | 4,739 | 0 |
Balance, shares at Apr. 30, 2021 | 23,433,341 | ||||||
Balance, amount at Apr. 30, 2021 | 21,548,951 | $ 2,343 | 0 | 1,446,814 | 20,304,927 | 189,145 | (394,278) |
STOCK-BASED COMPENSATION | 11,430 | 0 | 0 | 11,430 | 0 | 0 | 0 |
NET INCOME | 2,275,118 | 0 | 0 | 0 | 2,275,118 | 0 | 0 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | 5,232 | $ 0 | 0 | 0 | 0 | 5,232 | 0 |
Balance, shares at Jul. 31, 2021 | 23,433,341 | ||||||
Balance, amount at Jul. 31, 2021 | $ 23,840,731 | $ 2,343 | $ 0 | $ 1,458,244 | $ 22,580,045 | $ 194,377 | $ (394,278) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2021 | Jul. 31, 2020 | Jul. 31, 2021 | Jul. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
NET INCOME | $ 2,275,118 | $ 692,114 | $ 2,783,421 | $ 1,906,575 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||
Gain on disposition of property and equipment | 0 | (8,409) | (7,404) | (13,327) |
Stock-based compensation | 11,430 | 11,430 | 34,290 | 34,290 |
Depreciation and amortization | 18,183 | 23,203 | 58,438 | 65,814 |
Loans forgiveness | (1,956,291) | 0 | (1,956,291) | 0 |
Decrease (increase) in accounts receivable | 284,599 | (50,706) | (336,467) | (1,251,494) |
Decrease (increase) in other assets | (552,175) | (126,072) | (302,324) | (851,596) |
Increase (decrease) in liabilities | 360,860 | 678,175 | (429,171) | 1,287,785 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 441,724 | 1,219,735 | (155,508) | 1,178,047 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Acquisition of property and equipment | (7,110) | (10,462) | (11,726) | (49,336) |
Proceeds from sale of property and equipment | 0 | 14,700 | 57,571 | 26,700 |
Collection from promissory note receivable | 0 | 0 | 1,250,000 | 0 |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (7,110) | 4,238 | 1,295,845 | (22,636) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from loans | 0 | 0 | 0 | 1,931,700 |
Repurchase of common stock | 0 | 0 | 0 | (1,699) |
Payments on obligations under finance lease | 0 | (2,776) | (67,079) | (8,217) |
Cash dividends paid to shareholders | 0 | 0 | (1,727,364) | (1,725,295) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 0 | (2,776) | (1,794,443) | 196,489 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (2,931) | 10,847 | 14,352 | (28,033) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 431,683 | 1,232,044 | (639,754) | 1,323,867 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 16,066,487 | 15,581,997 | 17,137,924 | 15,490,174 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 16,498,170 | 16,814,041 | 16,498,170 | 16,814,041 |
Cash paid during the period for: | ||||
Income taxes | 67,550 | 700 | 574,757 | 212,463 |
Interest | 0 | 951 | 1,404 | 2,955 |
SUPPLEMENTARY SCHEDULES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
Income tax withheld by clients to be used as a credit in the Company's income tax return | 0 | 1,120 | 4,046 | 4,769 |
Conversion of cashless exercise of options to shares of common stock and shares issued under restricted stock unit agreements | 0 | 0 | 2 | 1 |
Disposed property and equipment with accumulated depreciation of $35,833 for the nine months ended July 31, 2021, and $20,670 and $38,583 for the three and nine months ended July 31, 2020, respectively. | $ 0 | $ 26,961 | $ 86,000 | $ 51,956 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Jul. 31, 2021 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 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. (currently inactive) (“Scienza Labs”), each a Puerto Rico corporation, Pharma-Bio Serv US, Inc. (“Pharma-US”), a Delaware corporation, 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-Spain and Pharma-Brazil are collectively referred to as the “Company.” The Company operates in Puerto Rico, the United States, Europe and Brazil under the name of Pharma-Bio Serv and is engaged in providing technical compliance consulting service. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The condensed consolidated balance sheet of the Company as of October 31, 2020 is derived from audited consolidated financial statements but does not include all disclosures required by generally accepted accounting principles. The unaudited interim condensed consolidated financial statements, include all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods. The results of operations for the nine months ended July 31, 2021 are not necessarily indicative of expected results for the full 2021 fiscal year. The accompanying financial data as of July 31, 2021, and for the three-month and nine-month periods ended July 31, 2021 and 2020 has been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally contained in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our audited Consolidated Financial Statements and the notes thereto for the fiscal year ended October 31, 2020. Consolidation The accompanying condensed 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 The Company operates in 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 condensed consolidated financial statements are presented to show these three reportable segments. Use of Estimates The preparation of condensed 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 condensed 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 The carrying value of the Company's financial instruments (excluding obligations under finance 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 finance leases approximates the carrying amount. Revenue Recognition The Company records revenue under Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. We evaluate our revenue contracts with customers based on the five-step model under ASC 606: (i) Identify the contract with the customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to separate performance obligations; and (v) Recognize revenue when (or as) each performance obligation is satisfied. Revenue is primarily derived from: (1) time and material contracts (representing approximately 99% of total revenues), and (2) short-term fixed-fee contracts or "not to exceed" contracts (representing approximately 1% of total revenues). Time and material contracts are typically based on the number of hours worked at contractually agreed upon rates. These service contracts relate to work which have no alternative use and for which the Company has an enforceable right to payment for the work completed to date. As a result, revenue is recognized over time when or as the Company transfers control of the promised products or services (known as performance obligations) to its customers. Revenue for short term fixed fee contracts or “not to exceed” contracts 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. Cash Equivalents For purposes of the consolidated statements of cash flows, cash equivalents include investments in a money market obligations trust that is registered under the U.S. Investment Company Act of 1940, as amended, and liquid investments with original maturities of three months or less. 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 balance is determined to be uncollectible in full. The effect of using this method approximates that of the allowance method. However, in the event the Company determines that the collectability of any account receivable reaches a certain uncertainty threshold, the Company will provide an allowance for doubtful account to reduce said balance. 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 are stated at cost. Vehicles under finance 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 of owned assets are provided for, when placed in service, in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, using straight-line basis. Assets under finance leases are amortized over the lease term. While expenditures for repairs and maintenance are expensed when incurred. As of July 31, 2021 and October 31, 2020, the accumulated depreciation amounted to $524,094 and $501,489, respectively. Leases We categorize leases at their inception as either operating or finance leases. The Company leases include an operating lease for office space and a finance lease agreement for a vehicle which was disposed in April 2021. Under the operating lease, as of July 31, 2021 and October 31, 2020, the total right-of-use assets were $721,564 and $846,714, respectively. As of July 31, 2021 operating lease liabilities current and non-current were approximately $172,957 and $523,960, respectively, while as of October 31, 2020 operating lease liabilities current and non-current were approximately $162,917 and $629,979, respectively. The finance lease was included in net property and equipment, current installments of long-term debt, and long-term debt in our condensed consolidated balance sheets. Impairment of Long-Lived Assets The Company evaluates for impairment its long-lived assets to be held and used, and long-lived assets to be disposed of, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on management estimates, no impairment of the long-lived assets was present as of July 31, 2021 and October 31, 2020. 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 the 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. The Company has not recognized such cash flows from financing activities since there has been no tax benefit related to the stock-based compensation. Earnings Per Share of Common Stock Basic earnings per share of common stock is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding. Diluted earnings per share includes the dilution of common stock equivalents, which include principally shares that may be issued upon the exercise of warrants, stock option and restricted stock unit awards. 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 through the filing date of this report. The Company has determined that there are no events occurring in this period that required disclosure or adjustment. Reclassifications Certain reclassifications have been made to the July 31, 2020 condensed consolidated financial statements to conform them to the July 31, 2021 condensed consolidated financial statements presentation. Such reclassifications do not affect net income as previously reported. Recent Accounting Pronouncements Recent accounting pronouncements pending adoption not discussed above or in the Form 10-K for the year ended October 31, 2020 are either not applicable or will not have or are not expected to have a material impact on us. |
PROMISSORY NOTE RECEIVABLE
PROMISSORY NOTE RECEIVABLE | 9 Months Ended |
Jul. 31, 2021 | |
PROMISSORY NOTE RECEIVABLE | |
B. PROMISSORY NOTE RECEIVABLE | NOTE B – PROMISSORY NOTE On September 17, 2018, the Company sold substantially all of its Lab business assets (the “Laboratory Assets”). Upon the completion of the Laboratory Assets sale, the Company received, as partial payment, a $3 million Promissory Note from the purchaser. The Promissory Note was composed of two tranches: (i) Tranche A for $2 million and secured with lab equipment and (ii) Tranche B for $1 million which was unsecured. The interest rate accrual was 3% for Tranche A and 5% for Tranche B. The Promissory Note’s final payment installment of $1,250,000 from Tranche A was collected in November 2020. |
LOANS FORGIVENESS
LOANS FORGIVENESS | 9 Months Ended |
Jul. 31, 2021 | |
LOANS FORGIVENESS | |
C. LOANS FORGIVENESS | NOTE C – LOANS FORGIVENESS On April 23, 2020, Pharma-PR, Pharma-Serv, and Pharma-US (collectively, the “Borrowers”) entered into loan agreements and related promissory notes to receive U.S. Small Business Administration Loans. These loans were originated pursuant to the Paycheck Protection Program (the “PPP”) established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and in the aggregate amount of $1,931,700 (the “Loan Proceeds”). The Borrowers received the Loan Proceeds on April 23, 2020. These SBA Loans terms followed the CARES Act provisions and the corresponding regulations issued by the SBA. Under regulations established by the Small Business Administration and the CARES Act, in July 2021 the Company applied for and obtained the full forgiveness of the SBA Loans and the related accrued interests. The forgiveness of these loans and related interest for the aggregate amount of approximately $1,956,000 were recorded as other income on the Condensed Consolidated Statements of Operations for the quarter ended July 31, 2021. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Jul. 31, 2021 | |
INCOME TAXES | |
D. INCOME TAXES | NOTE D - 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 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 was determined to be approximately $2.7 million. The Transition Tax liability must be paid over a period of eight years which started with the Company’s second quarter of fiscal year 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. However, foreign subsidiaries earnings are subject to U.S. tax at a reduced rate of 10.5%. 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 exempt from Puerto Rico earnings distribution tax. 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 37.5% as provided by the 1994 Puerto Rico Internal Revenue Code, as amended. The operations carried out in the United States by the Company’s subsidiaries, is taxed in the United States at a maximum regular federal income tax rate of 21%. Deferred income tax assets and liabilities are computed for differences between the consolidated financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Pharma-Spain has unused operating losses which result in a potential deferred tax asset. 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 before their expiration dates. 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. Pharma-Spain net operating loss is available to offset future taxable income through 2035. The Company files income tax returns in the United States (federal and various states jurisdictions), Puerto Rico, Spain and Brazil. The 2016 (2015 for Puerto Rico) through 2019 tax years are open and may be subject to potential examination in one or more jurisdictions. Currently, the Company has no federal, state, Puerto Rico or foreign income tax examination. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Jul. 31, 2021 | |
EARNINGS PER SHARE | |
E. EARNINGS PER SHARE | NOTE E – EARNINGS PER SHARE The following data shows the amounts used in the calculations of basic and diluted earnings per share. Three months ended July 31, Nine months ended July 31, 2021 2020 2021 2020 Net income available to common equity holders - used to compute basic and diluted earnings per share $ 2,275,118 $ 692,114 $ 2,783,421 $ 1,906,575 Weighted average number of common shares - used to compute basic earnings per share 23,029,215 23,001,627 23,022,950 23,003,125 Effect of options to purchase common stock 145,390 31,014 155,141 26,941 Weighted average number of shares - used to compute diluted earnings per share 23,174,605 23,032,641 23,178,091 23,030,066 For the three-month and nine-month periods ended July 31, 2021 and July 31 2020, options for the purchase of shares of 80,000 and 340,000 common stock, respectively, were not considered in computing diluted earnings per share because their effect was antidilutive. |
EQUITY TRANSACTIONS
EQUITY TRANSACTIONS | 9 Months Ended |
Jul. 31, 2021 | |
Stockholders Equity Abstract | |
F. EQUITY TRANSACTIONS | NOTE F – 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 “Repurchase Program”). The timing, manner, price and amount of any repurchases under the Repurchase Program 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 Repurchase 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. No shares will be repurchased under the Repurchase Program directly from directors or officers of the Company. Since April 2020, the Company suspended purchases under the Repurchase Program. As of July 31, 2021, a total of 341,154 shares of the Company’s common stock were purchased under the Repurchase Program for an aggregate amount of $331,306. On January 5, 2021 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 January 25, 2021. Accordingly, an aggregate dividend payment of $1,727,364 was paid on February 5, 2021. |
CONCENTRATIONS OF RISK
CONCENTRATIONS OF RISK | 9 Months Ended |
Jul. 31, 2021 | |
CONCENTRATIONS OF RISK | |
G. CONCENTRATIONS OF RISK | NOTE G - CONCENTRATIONS OF RISK Cash and cash equivalents The Company’s 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 have no specific insurance. No losses have been experienced or are expected on these accounts. Accounts receivable and revenues Management estimates that the collectability of its accounts receivable is reasonably assured, and, as such, does not maintain any allowance for uncollectible receivables. The Company's revenues, and the related receivables, are concentrated in the pharmaceutical industry in Puerto Rico, the United States, Spain and Brazil. 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 five customers, which accounted for 10% or more of its revenues in either of the three-month and nine-month periods ended July 31, 2021 and 2020. During the three months ended July 31, 2021, revenues from these customers were 19.6%, 14.2%, 6.8%, 9.9% and 0.0%, or a total of 50.5%, as compared to the same period last year of 13.3%, 9.9%, 10.3%, 4.4% and 15.7%, or a total of 53.6%, respectively. During the nine months ended July 31, 2021, revenues from these customers were 20.7%, 12.8%, 10.4%, 10.0% and 0.0%, or a total of 53.9%, as compared to the same period last year of 14.2%, 10.4%, 11.5%, 1.9% and 19.2%, or a total of 57.2%, respectively. At July 31, 2021, amounts due from these customers represented 22.3% of the Company’s total accounts receivable balance. This customer information 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. At the global level, five global groups of affiliated companies accounted for 10% or more of its revenues in either of the three-month and nine-month periods ended July 31, 2021 and 2020. During the three months ended July 31, 2021, aggregate revenues from these global groups of affiliated companies were 19.6%, 14.2%, 7.5%,9.9% and 0.0%, or a total of 51.2%, as compared to the same period last year for 13.3%, 9.9%, 12.2%, 4.4% and 15.7%, or a total of 55.5%, respectively. During the nine months ended July 31, 2021, aggregate revenues from these global group of affiliated companies were 20.7%, 12.8%, 12.1%, 10.0% and 0.0%, or a total of 55.6%, as compared to the same period last year for 14.2%, 10.4%, 14.0%, 1.9% and 19.2%, or a total of 59.7%, respectively. At July 31, 2021, amounts due from these global groups of affiliated companies represented 24.2% of total accounts receivable balance. As of July 31, 2021, one of the Company’s customers (representing 4.5% of revenues during the nine months ended July 31, 2021) owes the Company approximately $5.2 million, which represents approximately 20.7% of the Company’s total working capital. A significant portion of the customer’s funding comes from different financing sourcing. Management is actively monitoring this account and currently estimates that collectability is reasonably assured, accordingly, no provision for losses has been recorded in the financial statements as of July 31, 2021. |
SEGMENT DISCLOSURES
SEGMENT DISCLOSURES | 9 Months Ended |
Jul. 31, 2021 | |
SEGMENT DISCLOSURES | |
H. SEGMENT DISCLOSURES | NOTE H - 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 three-month and nine-month periods ended in July 31, 2021 and 2020. 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. Three months ended July 31, Nine months ended July 31, 2021 2020 2021 2020 REVENUES: Puerto Rico consulting $ 3,749,071 $ 4,989,964 $ 10,861,147 $ 14,287,556 United States consulting 622,669 939,421 1,546,889 1,723,774 Europe consulting 579,793 310,974 1,785,115 466,924 Other segment¹ 36,376 38,011 324,733 61,050 Total consolidated revenues $ 4,987,909 $ 6,278,370 $ 14,517,884 $ 16,539,304 INCOME (LOSS) BEFORE TAXES: Puerto Rico consulting $ 2,011,030 $ 692,906 $ 2,159,988 $ 2,186,327 United States consulting 149,837 85,381 135,952 33,242 Europe consulting 154,937 1,781 534,981 (59,903 ) Other segment¹ (2,416 ) 6,424 89,859 (22,011 ) Total consolidated income before taxes $ 2,313,388 $ 786,492 $ 2,920,780 $ 2,137,655 _____________________ ¹ Other segment represents a Brazilian compliance division which falls below the reportable threshold. Long lived assets (property and equipment) as of July 31, 2021 and October 31, 2020, and related depreciation and amortization expense for the three and nine months ended July 31, 2021 and 2020, 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. |
ORGANIZATION AND SUMMARY OF S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Jul. 31, 2021 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Consolidation | The accompanying condensed 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 | The Company operates in 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 condensed consolidated financial statements are presented to show these three reportable segments. |
Use of Estimates | The preparation of condensed 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 condensed 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 | The carrying value of the Company's financial instruments (excluding obligations under finance 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 finance leases approximates the carrying amount. |
Revenue Recognition | The Company records revenue under Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. We evaluate our revenue contracts with customers based on the five-step model under ASC 606: (i) Identify the contract with the customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to separate performance obligations; and (v) Recognize revenue when (or as) each performance obligation is satisfied. Revenue is primarily derived from: (1) time and material contracts (representing approximately 99% of total revenues), and (2) short-term fixed-fee contracts or "not to exceed" contracts (representing approximately 1% of total revenues). Time and material contracts are typically based on the number of hours worked at contractually agreed upon rates. These service contracts relate to work which have no alternative use and for which the Company has an enforceable right to payment for the work completed to date. As a result, revenue is recognized over time when or as the Company transfers control of the promised products or services (known as performance obligations) to its customers. Revenue for short term fixed fee contracts or “not to exceed” contracts 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. |
Cash Equivalents | For purposes of the consolidated statements of cash flows, cash equivalents include investments in a money market obligations trust that is registered under the U.S. Investment Company Act of 1940, as amended, and liquid investments with original maturities of three months or less. |
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 balance is determined to be uncollectible in full. The effect of using this method approximates that of the allowance method. However, in the event the Company determines that the collectability of any account receivable reaches a certain uncertainty threshold, the Company will provide an allowance for doubtful account to reduce said balance. |
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 are stated at cost. Vehicles under finance 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 of owned assets are provided for, when placed in service, in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, using straight-line basis. Assets under finance leases are amortized over the lease term. While expenditures for repairs and maintenance are expensed when incurred. As of July 31, 2021 and October 31, 2020, the accumulated depreciation amounted to $524,094 and $501,489, respectively. |
Leases | We categorize leases at their inception as either operating or finance leases. The Company leases include an operating lease for office space and a finance lease agreement for a vehicle which was disposed in April 2021. Under the operating lease, as of July 31, 2021 and October 31, 2020, the total right-of-use assets were $721,564 and $846,714, respectively. As of July 31, 2021 operating lease liabilities current and non-current were approximately $172,957 and $523,960, respectively, while as of October 31, 2020 operating lease liabilities current and non-current were approximately $162,917 and $629,979, respectively. The finance lease was included in net property and equipment, current installments of long-term debt, and long-term debt in our condensed consolidated balance sheets. |
Impairment of Long-Lived Assets | The Company evaluates for impairment its long-lived assets to be held and used, and long-lived assets to be disposed of, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on management estimates, no impairment of the long-lived assets was present as of July 31, 2021 and October 31, 2020. |
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 the 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. The Company has not recognized such cash flows from financing activities since there has been no tax benefit related to the stock-based compensation. |
Earnings Per Share of Common Stock | Basic earnings per share of common stock is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding. Diluted earnings per share includes the dilution of common stock equivalents, which include principally shares that may be issued upon the exercise of warrants, stock option and restricted stock unit awards. 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 through the filing date of this report. The Company has determined that there are no events occurring in this period that required disclosure or adjustment. |
Reclassifications | Certain reclassifications have been made to the July 31, 2020 condensed consolidated financial statements to conform them to the July 31, 2021 condensed consolidated financial statements presentation. Such reclassifications do not affect net income as previously reported. |
Recent Accounting Pronouncements | Recent accounting pronouncements pending adoption not discussed above or in the Form 10-K for the year ended October 31, 2020 are either not applicable or will not have or are not expected to have a material impact on us. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Jul. 31, 2021 | |
EARNINGS PER SHARE | |
Schedule of calculations of basic and diluted earnings per share | Three months ended July 31, Nine months ended July 31, 2021 2020 2021 2020 Net income available to common equity holders - used to compute basic and diluted earnings per share $ 2,275,118 $ 692,114 $ 2,783,421 $ 1,906,575 Weighted average number of common shares - used to compute basic earnings per share 23,029,215 23,001,627 23,022,950 23,003,125 Effect of options to purchase common stock 145,390 31,014 155,141 26,941 Weighted average number of shares - used to compute diluted earnings per share 23,174,605 23,032,641 23,178,091 23,030,066 |
SEGMENT DISCLOSURES (Tables)
SEGMENT DISCLOSURES (Tables) | 9 Months Ended |
Jul. 31, 2021 | |
SEGMENT DISCLOSURES | |
Schedule of segment reporting information | Three months ended July 31, Nine months ended July 31, 2021 2020 2021 2020 REVENUES: Puerto Rico consulting $ 3,749,071 $ 4,989,964 $ 10,861,147 $ 14,287,556 United States consulting 622,669 939,421 1,546,889 1,723,774 Europe consulting 579,793 310,974 1,785,115 466,924 Other segment¹ 36,376 38,011 324,733 61,050 Total consolidated revenues $ 4,987,909 $ 6,278,370 $ 14,517,884 $ 16,539,304 INCOME (LOSS) BEFORE TAXES: Puerto Rico consulting $ 2,011,030 $ 692,906 $ 2,159,988 $ 2,186,327 United States consulting 149,837 85,381 135,952 33,242 Europe consulting 154,937 1,781 534,981 (59,903 ) Other segment¹ (2,416 ) 6,424 89,859 (22,011 ) Total consolidated income before taxes $ 2,313,388 $ 786,492 $ 2,920,780 $ 2,137,655 |
A ORGANIZATION AND SUMMARY OF S
A ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Jul. 31, 2021 | Oct. 31, 2020 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Accumulated depreciation | $ 524,094 | $ 501,489 |
Right-of-use assets | 721,564 | 846,714 |
Operating lease liabilities, current | 172,957 | 162,917 |
Operating lease liabilities, noncurrent | $ 523,960 | $ 629,979 |
B PROMISSORY NOTE (Details Narr
B PROMISSORY NOTE (Details Narrative) - USD ($) $ in Millions | 1 Months Ended | |
Sep. 17, 2018 | Nov. 30, 2020 | |
Promissory note | $ 3 | |
Tranche A [Member] | ||
Promissory note | $ 2 | $ 1,250,000 |
Interest rate | 3.00% | |
Tranche B [Member] | ||
Promissory note | $ 1 | |
Interest rate | 5.00% |
C LOANS FORGIVENESS (Details Na
C LOANS FORGIVENESS (Details Narrative) | 9 Months Ended |
Jul. 31, 2021USD ($) | |
Loans forgiveness | $ 1,956,000 |
Small Business Administration Loans [Member] | April 23, 2020 [Member] | |
Proceeds from loans | $ 1,931,700 |
D INCOME TAXES (Details Narrati
D INCOME TAXES (Details Narrative) - USD ($) $ in Millions | 9 Months Ended | |
Jul. 31, 2021 | Dec. 22, 2017 | |
Net operating loss future taxable income | through 2035 | |
PRIDCO [Member] | ||
Puerto Rico tax holiday derived from PRIDCO Grant tax rate | 37.50% | |
United States federal income tax rate | 21.00% | |
Fixed income tax rate | 4.00% | |
Tax Reform [Member] | ||
U.S. tax reduced rate | 10.5 | |
Transition Tax | $ 2.7 |
E EARNINGS PER SHARE (Details)
E EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2021 | Jul. 31, 2020 | Jul. 31, 2021 | Jul. 31, 2020 | |
EARNINGS PER SHARE | ||||
Net income available to common equity holders - used to compute basic and diluted earnings per share | $ 2,275,118 | $ 692,114 | $ 2,783,421 | $ 1,906,575 |
Weighted average number of common shares - used to compute basic earnings per share | 23,029,215 | 23,001,627 | 23,022,950 | 23,003,125 |
Effect of options to purchase common stock | 145,390 | 31,014 | 155,141 | 26,941 |
Weighted average number of shares - used to compute diluted earnings per share | 23,174,605 | 23,032,641 | 23,178,091 | 23,030,066 |
E EARNINGS PER SHARE (Details N
E EARNINGS PER SHARE (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2021 | Jul. 31, 2020 | Jul. 31, 2021 | Jul. 31, 2020 | |
Employee Stock Option [Member] | ||||
Antidilutive securities excluded from computation of earnings per share | 80,000 | 340,000 | 80,000 | 340,000 |
F EQUITY TRANSACTIONS (Details
F EQUITY TRANSACTIONS (Details Narrative) - USD ($) | Feb. 05, 2021 | Jan. 05, 2021 | Jul. 31, 2021 | Jul. 31, 2020 | Jul. 31, 2021 | Jul. 31, 2020 |
Stockholders Equity Abstract | ||||||
Shares purchased under Repurchase Program | 341,154 | 341,154 | ||||
Shares purchased under Repurchase Program, amount | $ 331,306 | $ 331,306 | ||||
Cash dividend, per share | $ 0.075 | |||||
Dividend paid | $ 1,727,364 | $ 0 | $ 0 | $ 1,727,364 | $ 1,725,295 |
G CONCENTRATION OF RISKS (Detai
G CONCENTRATION OF RISKS (Details Narrative) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2021 | Jul. 31, 2020 | Jul. 31, 2021 | Jul. 31, 2020 | |
Accounts Receivable from global groups of affiliated | 24.20% | |||
Accounts Receivable from major customers | 22.30% | |||
Major Customer A | ||||
Revenue from major customers | 19.60% | 13.30% | 20.70% | 14.20% |
Major Customer B | ||||
Revenue from major customers | 14.20% | 9.90% | 12.80% | 10.40% |
Major Customer C | ||||
Revenue from major customers | 6.80% | 10.30% | 10.40% | 11.50% |
Major Customer D | ||||
Revenue from major customers | 9.90% | 4.40% | 10.00% | 1.90% |
Major Customer E | ||||
Revenue from major customers | 0.00% | 15.70% | 0.00% | 19.20% |
Major Customer Total | ||||
Revenue from major customers | 50.50% | 53.60% | 53.90% | 57.20% |
Customer One [Member] | ||||
Revenue from major customers | 4.50% | |||
Accounts Receivable | $ 5.2 | $ 5.2 | ||
Accounts Receivable in total working capital | 20.70% | |||
Global Group A | ||||
Revenue from major customers | 19.60% | 13.30% | 20.70% | 14.20% |
Global Group B | ||||
Revenue from major customers | 14.20% | 9.90% | 12.80% | 10.40% |
Global Group C | ||||
Revenue from major customers | 7.50% | 12.20% | 12.10% | 14.00% |
Global Group D | ||||
Revenue from major customers | 9.90% | 4.40% | 10.00% | 1.90% |
Global Group E | ||||
Revenue from major customers | 0.00% | 15.70% | 0.00% | 19.20% |
Global Group Total | ||||
Revenue from major customers | 51.20% | 55.50% | 55.60% | 59.70% |
H SEGMENT DISCLOSURES (Details)
H SEGMENT DISCLOSURES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2021 | Jul. 31, 2020 | Jul. 31, 2021 | Jul. 31, 2020 | |
Total consolidated revenues | $ 4,987,909 | $ 6,278,370 | $ 14,517,884 | $ 16,539,304 |
Total consolidated income before taxes | 2,313,388 | 786,492 | 2,920,780 | 2,137,655 |
Puerto Rico Consulting | ||||
Total consolidated revenues | 3,749,071 | 4,989,964 | 10,861,147 | 14,287,556 |
Total consolidated income before taxes | 2,011,030 | 692,906 | 2,159,988 | 2,186,327 |
United States Consulting | ||||
Total consolidated revenues | 622,669 | 939,421 | 1,546,889 | 1,723,774 |
Total consolidated income before taxes | 149,837 | 85,381 | 135,952 | 33,242 |
Europe Consulting | ||||
Total consolidated revenues | 579,793 | 310,974 | 1,785,115 | 466,924 |
Total consolidated income before taxes | 154,937 | 1,781 | 534,981 | (59,903) |
Other Segment | ||||
Total consolidated revenues | 36,376 | 38,011 | 324,733 | 61,050 |
Total consolidated income before taxes | $ (2,416) | $ 6,424 | $ 89,859 | $ (22,011) |