Pharma-Bio Serv, Inc 10-Q for FY2023 Q1

Pharma-Bio Serv, Inc. (PBSV)

10-Q 2023-03-17 For: 2023-01-31

Added on April 06, 2026

About this 10-Q

Pharma-Bio Serv, Inc filed this 10-Q on March 17, 2023, covering the quarter ended January 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended January 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.24M; down 15.6% from $5.02M a year earlier
Net income: $426.43K; up 39.7% from net income of $305.24K a year earlier

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		Page
PART I FINANCIAL INFORMATION

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets as of January 31, 2023 and October 31, 2022 (unaudited)		1

Condensed Consolidated Statements of Income for the three-month periods ended January 31, 2023 and 2022 (unaudited)		2

Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended January 31, 2023 and 2022 (unaudited)		3

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended January 31, 2023 and 2022 (unaudited)		4

Condensed Consolidated Statements of Cash Flows for the three-month periods ended January 31, 2023 and 2022 (unaudited)		5

Notes to Condensed Consolidated Financial Statements (unaudited)		6

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		12

Item 4 – Controls and Procedures		15

PART II OTHER INFORMATION

Item 1 – Legal Proceedings		16

Item 1A – Risk Factors		16

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		16

Item 5 – Other information		16

Item 6 – Exhibits		17

SIGNATURES		18

ASSETS	January 31, 2023*			October 31, 2022**
Current assets
Cash and cash equivalents	$	7,225,250		$	14,462,729
Marketable securities		8,247,493			-
Accounts receivable		4,325,772			4,982,500
Prepaids and other assets		437,977			498,374
Total current assets		20,236,492			19,943,603

Property and equipment		65,624			73,684
Operating lease right-of-use		467,254			502,685
Other assets		131,040			130,874
Total assets	$	20,900,410		$	20,650,846

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current operating lease liabilities	$	143,714		$	140,855
Accounts payable and accrued expenses		1,328,986			1,629,600
Current portion of US Tax Reform Transition Tax and income taxes payable		488,760			337,264
Total current liabilities		1,961,460			2,107,719

US Tax Reform Transition Tax payable		1,639,048			1,639,048
Long term operating lease liabilities		309,564			346,509
Total liabilities		3,910,072			4,093,276

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; 23,464,350 and 23,457,515 shares issued, and 22,950,321 and 22,943,486 shares outstanding at January 31, 2023 and October 31, 2022, respectively		2,346			2,346
Additional paid-in capital		1,566,639			1,551,838
Retained earnings		15,693,902			15,267,470
Accumulated other comprehensive income		229,687			238,152
		17,492,574			17,059,806
Treasury stock, at cost; 514,029 common shares held at January 31, 2023 and October 31, 2022		(502,236	)		(502,236	)
Total stockholders’ equity		16,990,338			16,557,570
Total liabilities and stockholders’ equity	$	22,900,410		$	20,650,846

	Three months ended January 31,
	2023		2022
REVENUES	$	4,238,356	$	5,019,104

COST OF SERVICES		2,998,200		3,774,521

GROSS PROFIT		1,240,156		1,244,583

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		911,524		888,735

INCOME FROM OPERATIONS		328,632		355,848

OTHER INCOME, NET		246,545		615

INCOME BEFORE INCOME TAX		575,177		356,463

INCOME TAX EXPENSE		148,745		51,219

NET INCOME	$	426,432	$	305,244

BASIC AND DILUTED EARNINGS PER COMMON SHARE	$	0.019	$	0.013

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC		22,945,120		22,979,004

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		22,957,755		23,033,944

	Three months ended January 31,
	2023			2022
NET INCOME	$	426,432		$	305,244

OTHER COMPREHENSIVE INCOME (LOSS):

Foreign currency translation:
Net unrealized gain (loss)		126,152			(25,493	)
Intercompany balances foreign exchange settlement, included in net income		(134,617	)		-

TOTAL OTHER COMPREHENSIVE LOSS		(8,465	)		(25,493	)

COMPREHENSIVE INCOME	$	417,967		$	279,751

													Accumulated
									Additional				Other
FISCAL YEAR 2023	Common Stock				Preferred Stock				Paid-in		Retained		Comprehensive			Treasury
	Shares		Amount		Shares		Amount		Capital		Earnings		Income (Loss)			Stock			Total
BALANCE AT NOVEMBER 1, 2022		23,457,515	$	2,346		-	$	-	$	1,551,838	$	15,267,470	$	238,152		$	(502,236	)	$	16,557,570

STOCK-BASED COMPENSATION		-		-		-		-		14,801		-		-			-			14,801

ISSUANCE OF COMMON STOCK PURSUANT TO THE CASHLESS EXERCISE OF STOCK OPTIONS		6,835		-		-		-		-		-		-			-			-

NET INCOME		-		-		-		-		-		426,432		-			-			426,432

OTHER COMPREHENSIVE LOSS, NET OF TAX		-		-		-		-		-		-		(8,465	)		-			(8,465	)

BALANCE AT JANUARY 31, 2023		23,464,350	$	2,346		-	$	-	$	1,566,639	$	15,693,902	$	229,687		$	(502,236	)	$	16,990,338

	Three months ended January 31,
	2023		2022
Net income available to common equity holders - used to compute basic and diluted earnings per share	$	426,432	$	305,244

Weighted average number of common shares - used to compute basic earnings per share		22,945,120		22,979,004
Effect of options to purchase common stock		12,635		54,940
Weighted average number of shares - used to compute diluted earnings per share		22,957,755		23,033,944

	Three months ended January 31,
Revenues by Region:	2023				2022
Puerto Rico	$	2,174	51.3	%	$	3,364	67.0	%
United States		1,094	25.8	%		1,187	23.6	%
Europe		970	22.9	%		465	9.3	%
Other		-	0.0	%		3	0.1	%
	$	4,238	100.0	%	$	5,019	100.0	%

3.1		Amended and Restated Bylaws of Pharma-Bio Serv Inc. (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2023).
31.1		Certification of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of 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

104		Cover page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

	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, Vice President Finance and Administration, and Secretary
	(Principal Financial Officer and Principal Accounting Officer)

Dated: March 17, 2023

1.	I have reviewed this quarterly report on Form 10-Q of Pharma-Bio Serv, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

*	Unaudited.
**	Condensed from audited financial statements.

	Three months ended January 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	426,432		$	305,244
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation		14,801			14,400
Depreciation and amortization		16,127			13,205
Reinvested interests		(51,596	)		-
Decrease (increase) in accounts receivable		736,718			(446,308	)
Decrease (increase) in other assets		(65,723	)		146,533
Decrease in liabilities		(200,893	)		(360,276	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		875,866			(327,202	)

CASH FLOWS FROM INVESTING:
Acquisition of property and equipment		(8,067	)		(684	)
Marketable securities investment		(8,195,897	)		-
NET CASH USED IN INVESTING ACTIVITIES		(8,203,964	)		(684	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock		-			(55,159	)
Cash dividends paid to shareholders		-			(1,722,391	)
NET CASH USED IN FINANCING ACTIVITIES		-			(1,777,550	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		90,619			(11,356	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(7,237,479	)		(2,116,792	)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		14,462,729			17,468,345
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	7,225,250		$	15,351,553

SUPPLEMENTAL DISCLOURES OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Income taxes	$	-		$	-
Interest	$	-		$	-
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	$	9,149		$	21,538
Conversion of cashless exercise of options to common stock	$	-		$	3

	Three months ended January 31,
	2023				2022
Revenues	$	4,238	100.0	%	$	5,019	100.0	%
Cost of services		2,998	70.7	%		3,775	75.2	%
Gross profit		1,240	29.3	%		1,244	24.8	%
Selling, general and administrative expenses		911	21.5	%		889	17.7	%
Other income, net		246	5.8	%		1	0.0	%
Income before income taxes		575	13.6	%		356	7.1	%
Income tax expense		149	3.5	%		51	1.0	%
Net income		426	10.1	%		305	6.1	%