Delaware
|
20-0653570
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(IRS Employer
Identification
No.)
|
Pharma-Bio Serv Building,
# 6 Road 696
Dorado, Puerto Rico
|
00646
(Zip
Code)
|
(Address
of Principal Executive Offices)
|
|
|
Large
accelerated filer ☐
|
Accelerated
filer ☐
|
|
Non-accelerated
filer ☐
|
Smaller
reporting company☒
|
|
|
Emerging
growth company ☐
|
|
July
31,
2018*
|
October
31,
2017**
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
15,188,876
|
$
11,751,714
|
Marketable
securities
|
38,713
|
26,600
|
Accounts
receivable
|
5,179,579
|
7,208,054
|
Other
|
488,919
|
550,163
|
Total current
assets
|
20,896,087
|
19,536,531
|
|
|
|
Property and
equipment
|
1,991,967
|
2,390,545
|
Other
assets
|
418,737
|
422,925
|
Total
assets
|
$
23,306,791
|
$
22,350,001
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
Current
liabilities:
|
|
|
Current
portion-obligations under capital leases
|
$
14,278
|
$
13,949
|
Accounts payable
and accrued expenses
|
1,787,178
|
1,526,904
|
Current portion of
US Tax Reform Transition Tax and income taxes payable
|
252,903
|
2,067
|
Total current
liabilities
|
2,054,359
|
1,542,920
|
US Tax Reform
Transition Tax payable
|
2,485,000
|
-
|
Obligations under
capital leases
|
49,506
|
59,795
|
Total
liabilities
|
4,588,865
|
1,602,715
|
|
|
|
Stockholders'
equity:
|
|
|
Preferred Stock,
$0.0001 par value; authorized 10,000,000 shares;
none
outstanding
|
-
|
-
|
Common Stock,
$0.0001 par value; authorized 50,000,000 shares; 23,333,083 and
23,333,083 shares issued, and 23,062,531 and 23,089,631 shares
outstanding, at July 31, 2018 and October 31, 2017,
respectively
|
2,333
|
2,333
|
Additional paid-in
capital
|
1,347,964
|
1,295,314
|
Retained
earnings
|
17,498,402
|
19,560,131
|
Accumulated other
comprehensive income
|
131,049
|
137,671
|
|
18,979,748
|
20,995,449
|
Treasury stock, at
cost; 270,552 and 243,452 common shares held at July 31,
2018
and October 31,
2017, respectively
|
(261,822
)
|
(248,163
)
|
Total stockholders'
equity
|
18,717,926
|
20,747,286
|
Total liabilities
and stockholders' equity
|
$
23,306,791
|
$
22,350,001
|
*
|
Unaudited.
|
**
|
Condensed
from audited financial statements.
|
|
Three months
ended July 31,
|
Nine months
ended July 31,
|
||
|
2018
|
2017
|
2018
|
2017
|
REVENUES
|
$
5,215,428
|
$
3,980,140
|
$
13,832,217
|
$
11,947,598
|
|
|
|
|
|
COST OF
SERVICES
|
3,607,236
|
3,052,030
|
10,133,666
|
8,945,953
|
|
|
|
|
|
GROSS
PROFIT
|
1,608,192
|
928,110
|
3,698,551
|
3,001,645
|
|
|
|
|
|
|
|
|
|
|
SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES
|
1,239,957
|
1,122,364
|
3,460,304
|
3,904,464
|
|
|
|
|
|
INCOME (LOSS) FROM
OPERATIONS
|
368,235
|
(194,254
)
|
238,247
|
(902,819
)
|
|
|
|
|
|
OTHER INCOME,
NET
|
397,948
|
32,622
|
436,599
|
38,145
|
|
|
|
|
|
INCOME (LOSS)
BEFORE INCOME TAX AND US TAX REFORM TRANSITION TAX
EXPENSE
|
766,183
|
(161,632
)
|
674,846
|
(864,674
)
|
|
|
|
|
|
INCOME TAX AND US
TAX REFORM TRANSITION TAX EXPENSE
|
35,552
|
1,350
|
2,736,575
|
3,206
|
|
|
|
|
|
NET INCOME
(LOSS)
|
$
730,631
|
$
(162,982
)
|
$
(2,061,729
)
|
$
(867,880
)
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS
(LOSSES) PER COMMON SHARE
|
$
0.032
|
$
(0.007
)
|
$
(0.089
)
|
$
(0.038
)
|
|
|
|
|
|
DILUTED EARNINGS
(LOSSES) PER COMMON SHARE
|
$
0.032
|
$
(0.007
)
|
$
(0.089
)
|
$
(0.038
)
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING – BASIC
|
23,062,531
|
23,101,931
|
23,076,306
|
23,090,207
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING –
DILUTED
|
23,074,606
|
23,101,931
|
23,080,758
|
23,094,105
|
|
Three months
ended July 31,
|
Nine months
ended July 31,
|
||
|
2018
|
2017
|
2018
|
2017
|
NET INCOME
(LOSS)
|
$
730,631
|
$
(162,982
)
|
$
(2,061,729
)
|
$
(867,880
)
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS), NET OF
RECLASSIFICATION
ADJUSTMENTS AND TAXES:
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain (loss)
|
(54,292
)
|
28,822
|
(18,735
)
|
33,179
|
Net unrealized gain
on available-for-sale-securities
|
2,494
|
11,044
|
12,113
|
11,067
|
|
|
|
|
|
TOTAL OTHER COMPREHENSIVE INCOME
(LOSS)
|
(51,798
)
|
39,866
|
(6,622
)
|
44,246
|
|
|
|
|
|
COMPREHENSIVE
INCOME (LOSS)
|
$
678,833
|
$
(123,116
)
|
$
(2,068,351
)
|
$
(823,634
)
|
|
Three months
ended July 31,
|
Nine months
ended July 31,
|
||
|
2018
|
2017
|
2018
|
2017
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
Net income
(loss)
|
$
730,631
|
$
(162,982
)
|
$
(2,061,729
)
|
$
(867,880
)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
Gain on disposition
of vehicle
|
-
|
(19,092
)
|
-
|
(19,092
)
|
Stock-based
compensation
|
17,550
|
19,775
|
52,650
|
63,875
|
Depreciation and
amortization
|
153,736
|
88,229
|
456,342
|
298,335
|
Decrease (increase)
in accounts receivable
|
1,377,089
|
(311,759
)
|
2,085,929
|
(51,053
)
|
Decrease (increase)
in other assets
|
(138,071
)
|
(101,792
)
|
68,224
|
141,881
|
Increase (decrease)
in liabilities
|
104,015
|
9,225
|
2,974,099
|
(768,298
)
|
NET CASH PROVIDED
BY (USED IN) OPERATING ACTIVITIES
|
2,244,950
|
(478,396
)
|
3,575,515
|
(1,202,232
)
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
Acquisition of
property and equipment
|
-
|
(40,555
)
|
(57,764
)
|
(364,647
)
|
Proceeds from
disposition of vehicle
|
-
|
47,757
|
-
|
47,757
|
NET CASH PROVIDED
BY (USED IN) INVESTING ACTIVITIES
|
-
|
7,202
|
(57,764
)
|
(316,890
)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
Repurchase of
common stock
|
-
|
-
|
(13,659
)
|
(9,922
)
|
Payments on
obligations under capital lease
|
(3,347
)
|
(42,502
)
|
(9,960
)
|
(52,415
)
|
NET CASH USED IN
FINANCING ACTIVITIES
|
(3,347
)
|
(42,502
)
|
(23,619
)
|
(62,337
)
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
(39,547
)
|
6,290
|
(56,970
)
|
5,561
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
2,202,056
|
(507,406
)
|
3,437,162
|
(1,575,898
)
|
CASH AND CASH
EQUIVALENTS - BEGINNING OF PERIOD
|
12,986,820
|
12,705,090
|
11,751,714
|
13,773,582
|
CASH AND CASH
EQUIVALENTS – END OF PERIOD
|
$
15,188,876
|
$
12,197,684
|
$
15,188,876
|
$
12,197,684
|
SUPPLEMENTAL
DISCLOURES OF
CASH FLOWS
INFORMATION
|
|
|
|
|
Cash paid during
the period for:
|
|
|
|
|
Income
taxes
|
$
-
|
$
-
|
$
-
|
$
65
|
Interest
|
$
519
|
$
527
|
$
1,610
|
$
1,709
|
SUPPLEMENTARY
SCHEDULES OF NON-CASH
INVESTING AND
FINANCING ACTIVITIES
|
|
|
|
|
Obligations under
capital lease incurred for the acquisition of a
vehicle
|
$
-
|
$
77,470
|
$
-
|
$
77,470
|
Income tax withheld
by clients to be used as a credit in the Company’s income tax
return
|
$
1,396
|
$
1,202
|
$
19,641
|
$
21,803
|
Conversion of
cashless exercise of options to shares of common stock and shares
issued under restricted stock unit agreements
|
$
-
|
$
-
|
$
-
|
$
10
|
Disposed property
and equipment with accumulated depreciation of $57,330 and $87,364
for the three and nine months ended July 31, 2017,
respectively
|
$
-
|
$
85,995
|
$
-
|
$
116,029
|
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).
|
Type of security as of July 31, 2018
|
Amortized Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Estimated
Fair Value
|
U.S.
Treasury securities
|
$
4,568,600
|
$
-
|
$
-
|
$
4,568,600
|
Other
government-related debt securities:
|
|
|
|
|
Puerto
Rico Commonwealth Government Development Bond
|
40,000
|
-
|
(1,287
)
|
38,713
|
Total
interest-bearing and available-for-sale securities
|
$
4,608,600
|
$
-
|
$
(1,287
)
|
$
4,607,313
|
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
|
|
|
|
|
|
Classification in the Consolidated Balance
Sheets
|
July 31,
2018
|
October 31,
2017
|
Cash
and cash equivalents
|
$
4,568,600
|
$
4,500,000
|
Marketable
securities
|
38,713
|
26,600
|
Total
available-for-sale securities
|
$
4,607,313
|
$
4,526,600
|
|
Three
months
ended July
31,
|
Nine
months
ended July
31,
|
||
|
2018
|
2017
|
2018
|
2017
|
Net income (loss)
available to common equity holders - used to compute basic and
diluted earnings (losses) per share
|
$
730,631
|
$
(162,982
)
|
$
(2,061,729
)
|
$
(867,880
)
|
Weighted average
number of common shares - used to compute basic earnings (losses)
per share
|
23,062,531
|
23,101,931
|
23,076,306
|
23,090,207
|
-
|
-
|
-
|
-
|
|
Effect of
restricted stock units to issue common stock
|
-
|
-
|
-
|
3,782
|
Effect of options
to purchase common stock
|
12,075
|
-
|
4,452
|
116
|
Weighted average
number of common shares - used to compute diluted earnings (losses)
per share
|
23,074,606
|
23,101,931
|
23,080,758
|
23,094,105
|
¹
|
Other
segments represent activities that fall below the reportable
threshold and are carried out in Puerto Rico, United States and
Brazil. These activities include a Brazilian compliance consulting
division, technical seminars/training division, a calibrations
division and corporate headquarters, as applicable.
|
|
Three months
ended July 31,
|
Nine months ended
July 31,
|
||||||
|
2018
|
2017
|
2018
|
2017
|
||||
Revenues
|
$
5,215
|
100.0
%
|
$
3,980
|
100.0
%
|
$
13,832
|
100.0
%
|
$
11,947
|
100.0
%
|
Cost of
services
|
3,607
|
69.2
%
|
3,052
|
76.7
%
|
10,134
|
73.3
%
|
8,946
|
74.9
%
|
Gross
profit
|
1,608
|
30.8
%
|
928
|
23.3
%
|
3,698
|
26.7
%
|
3,001
|
25.1
%
|
Selling, general
and
administrative
costs
|
1,240
|
23.7
%
|
1,122
|
28.2
%
|
3,460
|
25.0
%
|
3,904
|
32.7
%
|
Other income,
net
|
398
|
7.6
%
|
32
|
0.8
%
|
437
|
3.2
%
|
38
|
0.3
%
|
Net income (loss)
before income tax and US Tax Reform Transition Tax
|
766
|
14.7
%
|
(162
)
|
-4.1
%
|
675
|
4.9
%
|
(865
)
|
-7.3
%
|
Income tax
and US Tax Reform
Transition Tax
expense
|
35
|
0.7
%
|
1
|
-
%
|
2,737
|
19.8
%
|
3
|
-
%
|
Net income
(loss)
|
731
|
14.0
%
|
(163
)
|
-4.1
%
|
(2,062
)
|
-14.9
%
|
(868
)
|
-7.3
%
|
|
Certification
of chief executive officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
Certification
of chief financial officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
*
|
|
Certification
of the chief executive officer and chief financial officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL
Instance Document
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase
|
|
|
|
*
|
|
Furnished
herewith
|
|
PHARMA-BIO SERV, INC
.
|
|
|
|
/s/
Victor Sanchez
|
|
Victor
Sanchez
|
|
Chief
Executive Officer and President Europe Operations
|
|
(Principal
Executive Officer)
|
|
|
|
/s/
Pedro J. Lasanta
|
|
Pedro
J. Lasanta
|
|
Chief
Financial Officer and Vice President Finance and
Administration
|
|
(Principal
Financial Officer and Principal Accounting
Officer)
|
|
|
Dated:
September 14, 2018
|
|
|
/s/
Victor Sanchez
|
|
|
Victor
Sanchez
|
|
|
Chief
Executive Officer and President Europe Operations
(principal
executive officer)
|
|
/s/
Pedro J. Lasanta
|
|
|
Pedro
J. Lasanta
|
|
|
Chief
Financial Officer
(principal
financial and accounting officer)
|
/s/
Victor Sanchez
|
|
/s/
Pedro J. Lasanta
|
Victor
Sanchez
|
|
Pedro
J. Lasanta
|
Chief
Executive Officer and President Europe Operations
(principal
executive officer)
|
|
Chief
Financial Officer
(principal
financial and accounting officer)
|