PBSV 10-K & 10-Q changes, risk factors and insider trading

To reduce their costs, many of our customers are establishing or extending the scope of their procurement departments to include consulting and project management services, such as ours. As a result, we have less interaction with the end user of our services (typically labs or production units) when bidding on a project, which we believe decreases the focus on the quality of service provided and increases the emphasis on the cost of the service. This may cause us to lower the price of our bids, which would reduce the margins in a given project. Also, some customers have established vendor management/vendor neutral-programsprograms with third parties (some of whom are also our competitors). Because these vendor management programs may receive a percentage of our fees, without a corresponding increase in the fee itself, our margins may be adversely affected. In addition, where a vendor management program is a competitor for a particular service we provide, we may have difficulty securing that particular project, which would adversely impact revenue. Some of these vendor neutral programs are intended to limit our interaction with our direct end user, and our interaction is limited to the representative of the vendor neutral agency. This limitation impairs our ability to establish and maintain our relationships with our customers and recognition of the value added to the service.

In recentthe years,past, the pharmaceutical industry has undergone consolidation,consolidation and may in the future undergo further substantial consolidation which may reduce the number of our existing and potential customers. Consolidation in the pharmaceutical industry may have a harmful effect on our business and our ability to maintain and replace customers.

As a result of the continued changes in tax laws in the United States, Puerto Rico or other jurisdictions where we do business, the tax business model of various US or foreign companies and their subsidiaries, doing business in Puerto Rico and other foreign jurisdictions may be affected, making them a less attractive investment. For example, on July 4, 2025, Public Law 119-21, commonly known as the USOne implementedBig Beautiful Bill Act of 2025 (“OBBBA”), was enacted and changed the Global Intangible Lo-Tax Income (“GILTI”) asprovisions that were part of the 2017 Tax Cuts and Jobs Act,Act (“TCJA”). OBBBA renames the GILTI provision to “net CFC tested income” and underincreases the sponsor of the Organization for Economic Cooperation and Development (the “OECD”), various other countries entered into an agreement to establish a global minimum corporateeffective tax rate ofon 15%,net effectiveCFC fortested theincome yearfrom 2024.10.5% Theto OECDapproximately agreement12.6%. isIn nowaddition, beingOBBBA challengedincludes bysome thelimitations newon USforeign governmenttax administration.credits, if any, to be used against net CFC tested income. Consequently, this may affect the willingness of such companies to continue, expand and/or bring new operations to jurisdictions where we do business, which may impair our ability to generate business in those markets, and may also impact our tax business model.

The Company holdsheld a tax grant issued by PRIDCO, which expired on October 31, 2024 pending our extension request. The tax grant provides relief on various Puerto Rico taxes, including income tax, with certain limitations, for most of the activities carried on within Puerto Rico, including those that are for services to parties located outside of Puerto Rico. The grant was effective as of November 1, 2009, and covered a fifteen-year period, ending on October 31, 2024. Under the provisions of Puerto Rico Acts 60-2019 and 73-2008, we have requested the renegotiation of the grant from PRIDCO for an additional term of fifteen years. As of the date of this filing, we have not received from PRIDCO a status for this request. If we are unable to renegotiate the term of the grant, in the future we may incur increased tax payments, which could have a material adverse effect on our business, financial condition, results of operations, and cash flow.

Our services either require us to develop intellectual property for clients or provide our personnel with access to our clients’ intellectual property. Because of the highly competitive nature of the pharmaceutical, biotechnology, medical device and chemical manufacturing industries and the sensitivity of our clients’ intellectual property rights, our ability to generate business would be impaired if we fail to protect those rights. Although our employees and contractors are required to sign non-disclosure agreements, any disclosure of a client’s intellectual property by an employee or contractor may subject us to litigation and may impair our ability to generate business either from the affected client or other potential clients. In addition, we are required to enter into confidentiality agreements and our failure to protect confidential information offrom our clients may impair our business relationship.

The Company holdsheld a tax grant issued by PRIDCOPRIDCO, which expired on October 31, 2024 pending our extension request. The tax grant providesprovided relief on various Puerto Rico taxes, including income tax, with certain limitations, for most of the activities carried onconducted within Puerto Rico, including those that are for services to parties located outside of Puerto Rico. The grant was effective as of November 1, 2009, and covered a fifteen-year period, endingwhich ended on October 31, 2024. Under the provisions of Puerto Rico Acts 60-2019 and 73-2008, we have requested PRIDCO the renegotiation of the tax grant for an additional term of fifteen years. As of the date of this filing, we have not received a status update from PRIDCO for thisthat request,tax accordingly,grant request. However, we cannotdo providenot assuranceanticipate any significant concerns with the Grant approval. Under ACT 20-2012, the Company obtained another tax grant from PRIDCO which, with certain limitations, also covers the services provided by the Company’s Puerto Rico subsidiaries to parties located outside of Puerto Rico. The ACT 20-2012 tax grant is for a twenty-year term which ends on theDecember outcome30, for our renegotiation application.2039. For additional information relating to the tax grantgrants issued by PRIDCO, please see Note D – Income Taxes of the consolidated financial statements.

Regional or global conflicts, including war orand economic sanctions between nations, price inflation, pandemics, OBBBA, possible tax changes on jurisdictions where we do business, bio-pharmaceutical industry consolidations and relocations, and the trends on managing contract resources, all pose current and future challenges which may adversely affect our future performance. We believe that our future profitability and liquidity will be dependent on the effect the local and global economy, including any impacts of regional or global conflicts, price inflation, pandemics, changes in tax laws, worldwide life science manufacturing industry consolidations,consolidations and restructurings, operational constraints imposed by our customers due to pandemics and resources management trends, will have on our operations, and our ability to seek service opportunities and adapt to industry trends.

Revenues. Revenues for the year ended October 31, 20242025 were approximately $9.5$9.0 million, a net decrease of $7.5$0.5 million when compared to last year. The European,European Puertomarket Ricosustained andan United States consulting markets had a declineincrease in projectsproject revenue of approximately $3.7,$1.2 $2.3million, which was offset by project revenue decline in the Puerto Rico, US and $1.5Brazil consulting markets of approximately $1.1, $0.5 and $0.1 million, respectively. The Brazilian market sustained no major revenue change when compared to the same period last year, which is still not significant.

Cost of Services; Gross Profit. Cost of services for the year ended October 31, 20242025 were $7.0$6.1 million, a decrease of $4.9$0.9 million when compared to last year. Gross profit for the year ended October 31, 20242025 decreasedincreased by 3.35.8 percentage points when compared to last year. The net declineincrease in gross profit percentage points is mainly attributable to the closureimprovement of margins in fiscalPuerto yearRico 2023and ofUnited States consulting markets, combined with a high margin yielding projectsproject within the European market.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were approximately $3.8$3.5 million, a net decrease of approximately $150$0.3 thousandmillion when compared to last year. However,The thedecline Companyis madeattributable investmentsto planned reduction in business development human capitalgeneral and industryadministrative activities aimed to achieve growth in targeted markets. These investments were funded with expense savings within this caption area.expenses.

Other Income, Net. Other income, net for the year ended October 31, 2024,2025, was approximately $0.5 million. This balance is mostly attributable to interest income, partially offset by a negligible amount inplus the settlement of foreign exchange rates on intercompany balances.balances of approximately $0.1 million.

Net Income (loss).loss. Net loss for the year ended October 31, 20242025 was approximately $0.8$0.1 million, an earnings declineimprovement of approximately $2.1$0.7 million when compared to last year, respectively.year.

For the year ended October 31, 2024,2025, net loss per share of common stock for both basic and diluted was $0.034,$0.004, aan decreaseimprovement of $0.091$0.030 per share when compared to last year.

Consolidation - The accompanying consolidated financial statements include the accounts of all of our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

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 inputsinput that may be used to measure fair value:

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 has 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 tomust 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 a determination is made.

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. We calculate 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 asin cash flows from financing activities rather than cash flows from operating activities. We have not recognized such cash flow from financing activities since there has been no tax benefit related to 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 following discussion of our results of operations and financial condition should be read in conjunction with the financial statements and the related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, reference should be made to our audited Consolidated Financial Statements and notes thereto, and related Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the year ended October 31, 2025. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results to differ from results discussed in the forward-looking statements, see “Forward Looking Statements” below and the “Risk Factors” section of our Annual Report on Form 10-K for the year ended October 31, 2025, our Quarterly ReportReports on Form 10-Q for the quarterquarters ended January 31, 2026 and April 30, 2026, and this Quarterly Report on Form 10-Q.

Regional or global conflicts, including war and economic sanctions between nations, price inflation, pandemics, OBBBA, possible tax changes onin jurisdictions where we do business, bio-pharmaceutical industry consolidations and relocations, and the trends on managing contract resources, all pose current and future challenges which may adversely affect our future performance. We believe that our future profitability and liquidity will be dependent on the effect the local and global economy, including any impacts of regional or global conflicts, price inflation, pandemics, changes in tax laws, worldwide life science manufacturing industry consolidations and restructurings, operational constraints imposed by our customers due to pandemics and resources management trends, will have on our operations, and our ability to seek service opportunities and adapt to industry trends.

The following table sets forth information as to our revenue for the three-month and six-monthnine-month periods ended AprilJuly 30,31, 2026 and 2025, by geographic regions (dollars in thousands, and as a percentage of total revenues).

For the six-monthnine-month period ended AprilJuly 30,31, 2026, the Company’s total revenues were approximately $5.0$7.3 million, a net increase of approximately $0.1$0.5 million when compared to the same period last year. The Puerto Rico marketand European markets sustained an increase in project revenue of approximately $0.3$0.5 and $0.1 million, respectively, which was partially offset by a decline in project revenue in the US consulting market of approximately $0.2$0.1 million, while other markets had an insignificant variance.variance, when compared to the same period last year. As depicted below, the gross profit ratio to revenue sustained no significant change for the six-monthnine-month period ended AprilJuly 30,31, 2026 when compared to the same period last year.

The following table sets forth our statements of operations for the three-month and six-monthnine-month periods ended AprilJuly 30,31, 2026 and 2025 (dollars in thousands, and as a percentage of revenues):

Revenues. Total revenues for the three and sixnine months ended AprilJuly 30,31, 2026 were $2.7$2.3 and $5.0$7.3 million, respectively, an increase of approximately $0.3$0.4 and $0.1$0.5 million when compared to the same periods last year, respectively. For the three months ended AprilJuly 30,31, 2026, when compared to the same period last year, the Puerto Rico, United States and the European markets revenue increased by $0.2, $0.1 and $0.1 million, respectively, while the revenue variance in other markets was insignificant. For the nine months ended July 31, 2026, when compared to the same period last year, the Puerto Rico and the European markets revenue increased by $0.3 and $0.1 million, respectively, offset by the decline in project revenue in the United States consulting market of approximately $0.1 million, while the Brazilian revenue variance was insignificant. For the six months ended April 30, 2026, when compared to the same period last year, the Puerto Rico market sustained an increase in project revenue of approximately $0.3$0.5 and $0.1 million, respectively, which was partially offset by a decline in project revenue in the US consulting market of approximately $0.2$0.1 million, while other markets had an insignificant variance.

Cost of Services; Gross Profit. Cost of services for the three and sixnine months ended AprilJuly 30,31, 2026 were $1.8$1.6 and $3.4$5.0 million, respectively, while the gross profit for the three and sixnine months ended AprilJuly 30,31, 2026,2026 had a slight decreaseincrease of 0.50.4 and 0.1 percentage points and sustained no change, when compared to the same periods last year, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three and sixnine months ended AprilJuly 30,31, 2026 were approximately $0.8 and $1.6$2.3 million, respectively. When compared to last year’s three and sixnine month periods ended AprilJuly 30,31, 2025, this represents a decrease in expenses in both periods of approximately $0.2$0.1 and $0.3 million, respectively, which are mainly attributable to the reduction in occupancy expenses of approximately $0.1 million, plus other planned savings in general and administrative expenses.

Other Income, Net. Other income, net for the three and sixnine months ended AprilJuly 30,31, 2026 was approximately $0.1 and $0.2$0.3 million, respectively. These balances are mostly attributable to interest income, plus a negligible amount for the settlement of foreign exchange rates on intercompany balances.

For the three and sixnine months ended AprilJuly 30,31, 2026, net earnings (loss) per common share for both basic and diluted were $0.010$(0.001) and $0.012,$0.011, respectively, an increaseimprovement of $0.006$0.008 and $0.007$0.015 per share when compared to the same periods last year, respectively.

Liquidity is a measure of our ability to meet potential cash requirements, including planned capital expenditures. As of AprilJuly 30,31, 2026, the Company had approximately $10.2 million in working capital.

On June 13, 2014, the Board of Directors of the Company authorized the Company to repurchase up to two million shares of its common stock (the “Repurchase Program”). The Repurchase Program does not have an expiration date. During the six-monthnine-month period ended AprilJuly 30,31, 2026, the Company repurchased 4,300 shares of its common stock. As of AprilJuly 30,31, 2026, the Company has 1,444,992 shares of common stock available for future repurchases under the Repurchase Program.

We were not involved in any significant off-balance sheet arrangement during the sixnine months ended AprilJuly 30,31, 2026.

There were no material changes during the sixnine months ended AprilJuly 30,31, 2026 to the critical accounting policies reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.

Our business, financial condition, results of operations, cash flows and prospects, and the prevailing market price and performance of our common stock, may be adversely affected by a number of factors, including but not limited to, the factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended October 31, 2025, our Quarterly ReportReports on Form 10-Q for the quarterquarters ended January 31, 2026 and April 30, 2026, and this Quarterly Report on Form 10-Q. Certain statements and information set forth in this Quarterly Report on Form 10-Q, as well as other written or oral statements made from time to time by us or by our authorized executive officers on our behalf, constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These statements include all statements other than those made solely with respect to historical fact and identified by words such as “believes,” “anticipates,” “expects,” “intends” and similar expressions, but such words are not the exclusive means of identifying such statements. We intend for our forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we set forth this statement and these risk factors in order to comply with such safe harbor provisions. You should note that our forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q or when made and we undertake no duty or obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we believe that the expectations, plans, intentions and projections reflected in our forward-looking statements are reasonable, such statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that our stockholders and prospective investors should consider include, but are not limited to, those set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended October 31, 2025, our Quarterly ReportReports on Form 10-Q for the quarterquarters ended January 31, 2026 and April 30, 2026, and this Quarterly Report on Form 10-Q.