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
appearing in our Annual Report on Form 10-K for the year ended
Overview
We are a compliance and technology transfer services consulting firm with
headquarters in
We actively operate in
We market our services with an active presence in industry trade shows, professional conventions, industry publications and company provided seminars to the industry. Our senior management is also actively involved in the marketing process, especially in marketing to major accounts. Our senior management and staff also concentrate on developing new business opportunities and focus on the larger customer accounts (by number of consultants or dollar volume) and responding to prospective customers' requests for proposals.
We consider our core business to be
The Company holds a tax grant issued by the
The following table sets forth information as to our revenue for the three-month
and six-month periods ended
Three months ended April 30, Six months ended April 30, 2021 2020 2021 2020 Revenues by Region: Puerto Rico$3,745 74.3%$5,117 90.6%$7,112 74.6%$9,298 90.6% United States 477 9.4% 395 7.0% 924 9.7% 784 7.7% Europe 675 13.4% 134 2.4% 1,205 12.7% 156 1.5% Brazil 145 2.9% 2 0.0% 289 3.0% 23 0.2%$5,042 100.0%$5,648 100.0%$9,530 100.0%$10,261 100.0%
For the six-month period ended
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While we have not identified any material adverse effect resulting from the coronavirus (COVID-19) pandemic, we continue to actively monitor the pandemic and any potential future impact it may have on our business and results of operations. The extent to which our operations will be impacted by the pandemic will depend largely on unknown developments which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning our customers, the severity of the pandemic and actions by government authorities to contain the outbreak or treat its impact, among other things.
The coronavirus pandemic, the
Results of Operations
The following table that sets forth our statements of operations for the
three-month and six-month periods ended
Three months ended April 30, Six months ended April 30, 2021 2020 2021 2020 Revenues$5,042 100.0%$5,648 100.0%$9,530 100.0%$10,261 100.0% Cost of services 3,751 74.4% 3,779 66.9% 6,924 72.7% 6,806 66.3% Gross profit 1,291 25.6% 1,869 33.1% 2,606 27.3% 3,455 33.7% Selling, general and administrative expenses 1,026 20.3% 1,149 20.3% 2,022 21.2% 2,198 21.4% Other income, net 21 0.4% 49 0.8% 23 0.2% 94 0.9% Income before income taxes 286 5.7% 769 13.6% 607 6.3% 1,351 13.2% Income tax expense 46 0.9% 81 1.4% 99 1.0% 137 1.4% Net income 240 4.8% 688 12.2% 508 5.3% 1,214 11.8%
Revenues. Revenues for the three and six months ended
The decrease for the three months ended
The decrease for the six months ended in
Cost of Services; gross profit. Cost of services for the three and six months
ended
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three and six months ended
The decrease for the three months ended
The decrease for the six months ended
Other Income, net. For the three-month and six-month periods ended on
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Net Income.Net income for the three and six months ended
For the three and six months ended
Liquidity and Capital Resources
Liquidity is a measure of our ability to meet potential cash requirements,
including planned capital expenditures. As of
On
Our primary cash needs consist of the payment of compensation to our consulting team, overhead expenses, and statutory taxes. Additionally, we may use cash for the repurchase of our common stock under the Company Stock Repurchase Program, capital expenditures and business development expenses. Management believes that based on the current level of working capital, operations and cash flows from operations, and the collectability of high-quality customer receivables are sufficient to fund anticipated expenses and satisfy other possible long-term contractual commitments.
To the extent that we pursue possible opportunities to expand our operations, either by acquisition or by the establishment of operations in a new market, we will incur additional overhead, and there may be a delay between the period we commence operations and our generation of net cash flow from operations.
While uncertainties relating to the current local and global economic condition, competition, the industries and geographical regions served by us and other regulatory matters exist within the consulting services industry, as described above, management is not aware of any other trends or events likely to have a material adverse effect on liquidity or its financial statements.
Off-Balance Sheet Arrangements
We were not involved in any significant off-balance sheet arrangement during the
six months ended
Critical Accounting Policies and Estimates
There were no material changes during the six months ended
New Accounting Pronouncements
There were no new accounting standards issued since our filing of the Annual
Report on Form 10-K for the fiscal year ended
-16- Forward-Looking Statements
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 the matters discussed below. 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 the following:
? Any outbreak of contagious diseases, or other adverse public health developments, could have a material and adverse effect on our business operations, financial condition and results of operations. ? Because our business is concentrated in the life science and medical devices industries inPuerto Rico ,the United States ,Europe andBrazil , any changes in those industries or in those markets could impair our ability to generate revenue and realize a profit. ?Puerto Rico's economy, including its governmental financial crisis and the impact of hurricanes or any other natural disasters, including recent earthquakes, may affect the willingness of businesses to commence or expand operations inPuerto Rico , or may also consider closing operations located inPuerto Rico . ? Because our business is dependent upon a small number of clients, the loss of a major client could impair our ability to operate profitably. ? Customer procurement and sourcing practices intended to reduce costs could have an adverse effect on our margins and profitability. ? We may be unable to pass on increased labor costs to our clients. ? Consolidation in the pharmaceutical industry may have a harmful effect on our business. ? We may be held liable for the actions of our employees or contractors when on assignment. ? To the extent that we perform services pursuant to fixed-price or incentive-based contracts, our cost of services may exceed our revenue on the contract. ? Because most of our contracts may be terminated on little or no advance notice, our failure to generate new business could impair our ability to operate profitably. ? The collectability of our account receivables may be subject to our customers funding sources. ? Because we are dependent upon our management and technical personnel, our ability to develop our business may be impaired if we are not able to engage skilled personnel. ? Our cash could be adversely affected if the financial institutions in which we hold our cash fail. ? We may be harmed if we do not penetrate markets and grow our current business operations. ?Puerto Rico government enacted ACT 154-2010 may adversely affect the willingness of our customers to do business inPuerto Rico and consequently adversely affect our business. ? US Federal Tax Reform may affect the willingness of companies to continue or expand their operations inPuerto Rico . ? Further changes in tax laws inPuerto Rico or in other jurisdictions may adversely impact the willingness of our customers to continue or to expand theirPuerto Rico operations. ? Because the pharmaceutical industry is subject to government regulations, changes in government regulations relating to this industry may affect the need for our services. ? Our CARES Act loan may be subject to regulatory review. ? Since our business is dependent upon the development and enhancement of patented pharmaceutical products or processes by our clients, the failure of our clients to obtain and maintain patents could impair our ability to operate profitably. ? If we are unable to protect our clients' intellectual property, our ability to generate business will be impaired. ? We may be subject to liability if our services or solutions for our clients infringe upon the intellectual property rights of others. ? Because there is a limited market in our common stock, stockholders may have difficulty in selling our common stock and our common stock may be subject to significant price swings. ? Our revenues, operating results and profitability will vary from quarter to quarter, which may result in increased volatility of our stock price. ? The Company Stock Repurchase Program could affect the market price of our common stock and increase its volatility. ? The issuance of securities, whether in connection with an acquisition or otherwise, may result in significant dilution to our stockholders. -17-
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