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 October 31, 2020.
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 in our Annual Report on Form 10-K for

the
year ended October 31, 2020.



Overview



We are a compliance and technology transfer services consulting firm with
headquarters in Puerto Rico, servicing the Puerto Rico, United States, Europe
and Brazil markets. The compliance consulting service sector in those markets
consists of local compliance and validation consulting firms, United States
dedicated validation and compliance consulting firms and large publicly traded
and private domestic and foreign engineering and consulting firms. We provide a
broad range of compliance related consulting services. We market our services to
pharmaceutical, chemical, biotechnology, medical devices, cosmetics and food
industries, and allied products companies in Puerto Rico, the United States,
Europe and Brazil. Our consulting team includes experienced engineering and life
science professionals, former quality assurance managers and directors, and
professionals with bachelors, masters and doctorate degrees in health sciences
and engineering.



We actively operate in Puerto Rico, the United States, Europe and Brazil and
pursue to further expand these markets by strengthening our business development
infrastructure and by constantly realigning our business strategies as new
opportunities and challenges arise.



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 Food and Drug Administration ("FDA") and international agencies regulatory compliance consulting related services.





The Company holds a tax grant issued by the Puerto Rico Industrial Development
Company ("PRIDCO"), which 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 following table sets forth information as to our revenue for the three-month and nine-month periods ended July 31, 2021 and 2020, by geographic regions (dollars in thousands).





                         Three months ended July 31,                      Nine months ended July 31,
Revenues by
Region:                 2021                    2020                     2021                     2020
Puerto Rico      $ 3,749        75.2 %   $ 4,990        79.4 %   $ 10,861        74.8 %   $ 14,287        86.4 %
United States        623        12.5 %       939        15.0 %      1,547        10.7 %      1,724        10.4 %
Europe               580        11.6 %       311         5.0 %      1,785        12.3 %        467         2.8 %
Brazil                36         0.7 %        38         0.6 %        325         2.2 %         61         0.4 %
                 $ 4,988       100.0 %   $ 6,278       100.0 %   $ 14,518       100.0 %   $ 16,539       100.0 %





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For the nine-month period ended July 31, 2021, the Company's total revenues were
approximately $14,518,000, a net decrease of approximately $2,021,000 when
compared to the same period last year. The Puerto Rico and US consulting markets
had a revenue decrease in projects of approximately $3,426,000 and $177,000,
respectively, which were partially offset by the increase in projects revenue in
Europe and Brazil markets of approximately $1,318,000 and $264,000,
respectively. When compared to the same period last year, gross profit decreased
by 5.5 percentage points. The net decrease in gross margin percentage points is
mainly attributable to some projects in the Puerto Rico market for the
nine-month period ended July 31, 2020, for which the gross margin was higher
than usual. Selling, general and administrative expenses were approximately
$2,917,000, a decrease of approximately $318,000. The net decrease is mainly
attributable to the decrease of consulting fees and other administrative
expenses of approximately $326,000 and $100,000, respectively, partially offset
by an increase in non-recurring legal fees of approximately $108,000. Other
income increased by approximately $1,912,000, mainly as the result of the
forgiveness of principal and accrued interest of the SBA Loans for the aggregate
amount of approximately $1,956,000, partially offset by the decline in interest
income because of lower interest rates. These factors resulted in a net income
of approximately $2,783,000 for the nine-month period ended July 31, 2021, or a
increase of approximately $876,000 when compared to the same period last year.



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 Puerto Rico government financial crisis, the Tax
Reform, other tax reforms on the markets where we do business,
bio-pharmaceutical industry consolidations, trends on managing contract
resources, and the Puerto Rico Act 154-2010, 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 the coronavirus pandemic, changes
in tax laws, worldwide life science manufacturing industry consolidations,
operational constraints imposed by our customers due to the coronavirus pandemic
and resources management trends will have on our operations, and our ability to
seek service opportunities and adapt to industry trends.



Results of Operations

The following table that sets forth our statements of operations for the three-month and nine-month periods ended July 31, 2021 and 2020 (dollars in thousands, and as a percentage of revenues):





                         Three months ended July 31,

Nine months ended July 31,


                        2021                    2020                      2021                     2020
Revenues         $ 4,988       100.0 %   $ 6,278       100.0 %    $ 14,518       100.0 %   $ 16,539       100.0 %
Cost of
services           3,733        74.8 %     4,424        70.5 %      10,657        73.4 %     11,230        67.9 %
Gross profit       1,255        25.2 %     1,854        29.5 %       3,861        26.6 %      5,309        32.1 %
Selling,
general and
administrative
expenses             895        17.9 %     1,038        16.5 %       2,917        20.1 %      3,235        19.6 %
Other income
(expense), net     1,953        39.1 %       (30 )      (0.5 )%      1,976        13.6 %         64         0.4 %
Income before
income taxes       2,313        46.4 %       786        12.5 %       2,920        20.1 %      2,138        12.9 %
Income tax
expense               38         0.8 %        94         1.5 %         137         0.9 %        231         1.4 %
Net income         2,275        45.6 %       692        11.0 %       2,783        19.2 %      1,907        11.5 %

Revenues. Revenues for the three and nine months ended July 31, 2021 were $4,988,000 and $14,518,000, respectively, a decrease of approximately $1,290,000 and $2,021,000, or 20.5% and 12.2%, respectively, when compared to the same periods last year.


The decrease for the three months ended July 31, 2021, when compared to the same
period last year, is mainly attributable to the decrease in projects in the
Puerto Rico, US and Brazil markets of approximately $1,241,000, 316,000 and
$2,000, respectively, partially offset by the increase in project revenue in the
Europe market of approximately $269,000.



The decrease for the nine months ended in July 31, 2021, when compared to the
same period last year, is mainly attributable to a decrease in projects in the
Puerto Rico and US markets of approximately $3,426,000 and $177,000,
respectively, partially offset by increases in project revenue in Europe and
Brazil of approximately $1,318,000, and $264,000, respectively.



Cost of Services; gross profit. Cost of services for the three and nine months
ended July 31, 2021 were approximately $3,733,000 and $10,657,000, respectively,
a decrease of $691,000 and $573,000, respectively, when compared to the same
periods last year. Gross profit for the three and nine months ended July 31,
2021 decreased by 4.3 and 5.5 percentage points, respectively, when compared to
the same periods last year. The net decrease in gross profit percentage points
is mainly attributable to some projects in the Puerto Rico market for the
three-month and nine-month periods ended July 31, 2020, which the gross profit
were higher than usual.




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Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three and nine months ended July 31, 2021 were
approximately $895,000 and $2,917,000, respectively, a decrease of approximately
$143,000 and $318,000 when compared to the same periods last year, respectively.



The decrease for the three months ended July 31, 2021, when compared to the same
period last year, is mainly attributable to the decrease of consulting fees and
other administrative expenses of approximately $131,000 and $23,000,
respectively, partially offset by an increase in non-recurring legal fees for
approximately $11,000.




The decrease for the nine months ended July 31, 2021, when compared to the same
period last year, is mainly attributable to the decrease of consulting fees and
other administrative expenses of approximately $326,000 and $100,000,
respectively, partially offset by an increase in non-recurring legal fees for
approximately $108,000.




Other Income, net. For the three-month and nine-month periods ended on July 31,
2021, other income, net was approximately $1,953,000 and $1,976,000, a net
increase of approximately $1,983,000 and $1,912,000 when compared to the same
periods last year. The net increase is mainly attributable to the forgiveness of
principal and accrued interest of the SBA Loans in the aggregate amount of
approximately $1,956,000, partially offset by the decline in interest income
because of lower interest rates.



Net Income. Net income for the three and nine months ended July 31, 2021 was
approximately $2,275,000 and $2,783,000, an increase of approximately $1,583,000
and $876,000 when compared to the same periods last year, respectively. The
increase in net income is mostly attributable to the (i) decrease in revenue and
related gross profit, (ii) partially offset by net savings on selling, general
and administrative expenses, and (iii) the forgiveness of principal and accrued
interest of the SBA Loans, partially offset by the decline in interest income
because of lower interest rates, when compared to the same periods last year.



For the three and nine months ended July 31, 2021, net income per common share
for both basic and diluted were $0.098 and $0.120, an increase of $0.068 and
$0.037 per share, when compared to the same periods last year, respectively.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including planned capital expenditures. As of July 31, 2021, the Company had approximately $25.0 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"). During April 2020, the Company suspended purchases under the
Repurchase Program to conserve cash due to the economic uncertainty caused by
the coronavirus pandemic. We may resume repurchases in the future; however, we
can provide no assurance when we will resume the Repurchase Program. As of July
31, 2021, the Company has 1,658,846 shares of common stock available for future
repurchases under the Repurchase Program.



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 nine months ended July 31, 2021.

Critical Accounting Policies and Estimates





There were no material changes during the nine months ended July 31, 2021 to the
critical accounting policies reported in our Annual Report on Form 10-K for the
fiscal year ended October 31, 2020.




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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 October 31, 2020, which could have
a significant effect on our condensed consolidated financial statements.



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 in Puerto Rico, the United States, Europe and Brazil,

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 in Puerto Rico, or may also consider closing operations

located in Puerto 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 in Puerto Rico and

consequently adversely affect our business.

· US Federal Tax Reform may affect the willingness of companies to continue

or expand their operations in Puerto Rico.

· Further changes in tax laws in Puerto Rico or in other jurisdictions may

adversely impact the willingness of our customers to continue or to expand

their Puerto 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.





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· 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.

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