2.4.0.80008 - Disclosure - A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIEStruefalsefalse1false falsefalseFrom2012-11-01to2013-07-31http://www.sec.gov/CIK0001304161duration2012-11-01T00:00:002013-07-31T00:00:001true 1PBSV_OrganizationAndSummaryOfSignificantAccountingPoliciesAbstractPBSV_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0A. Organization And Summary Of Significant Accounting Policies2false 2us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureAndSignificantAccountingPoliciesTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00ORGANIZATION   Pharma-Bio Serv, Inc. (Pharma-Bio) is a Delaware corporation organized on January 14, 2004. Pharma-Bio is the parent company of Pharma-Bio Serv PR, Inc. (Pharma-PR), Pharma Serv, Inc. (Pharma-Serv), both Puerto Rico corporations, Pharma-Bio Serv US, Inc. (Pharma-US), a Delaware corporation, and Pharma-Bio Serv Validation & Compliance Limited (Pharma-IR), an Irish corporation, and Pharma-Bio Serv SL (Pharma-Spain), a Spanish limited liability company. Pharma-Bio, Pharma-PR, Pharma Serv, Pharma-US, Pharma-IR and Pharma-Spain are collectively referred to as the Company. The Company operates in Puerto Rico, the United States, Ireland and Spain under the name of Pharma-Bio Serv and is engaged in providing technical compliance consulting service, and microbiological and chemical laboratory testing services primarily to the pharmaceutical, chemical, medical device and biotechnology industries.   Pharma-Spain is a wholly owned subsidiary, which started operations in January 2013. During the nine months ended July 31, 2013, Pharma-Spain did not earn significant revenues or incur significant expenses.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   The condensed consolidated balance sheet of the Company as of October 31, 2012 is derived from audited consolidated financial statements but does not include all disclosures required by generally accepted accounting principles. The unaudited interim condensed consolidated financial statements, include all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods. The results of operations for the nine months ended July 31, 2013 are not necessarily indicative of expected results for the full 2013 fiscal year.   The accompanying financial data as of July 31, 2013, and for the three-month and nine-month periods ended July 31, 2013 and 2012 has been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally contained in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our audited Consolidated Financial Statements and the notes thereto for the fiscal year ended October 31, 2012.   Consolidation   The accompanying condensed consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.    Use of Estimates   The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from these estimates.   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 instruments 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 inputs that may be used to measure fair value:   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="font: 8pt Times New Roman, Times, Serif"> <td style="vertical-align: top; width: 6%; text-align: center; text-indent: -0.25in; padding-left: 10pt; font: 8pt Times New Roman, Times, Serif">Level 1:</td> <td style="vertical-align: bottom; width: 1%; font: 8pt Times New Roman, Times, Serif"> </td> <td style="vertical-align: bottom; width: 93%; text-align: justify; font: 8pt Times New Roman, Times, Serif">Quoted prices in active markets for identical assets and liabilities.</td></tr> <tr style="font: 8pt Times New Roman, Times, Serif"> <td style="vertical-align: top; font: 8pt Times New Roman, Times, Serif"> </td> <td style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> </td> <td style="vertical-align: bottom; text-align: justify; font: 8pt Times New Roman, Times, Serif"> </td></tr> <tr style="font: 8pt Times New Roman, Times, Serif"> <td style="vertical-align: top; text-align: center; text-indent: -10pt; font: 8pt Times New Roman, Times, Serif">Level 2:</td> <td style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> </td> <td style="vertical-align: bottom; text-align: justify; font: 8pt Times New Roman, Times, Serif">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.</td></tr> <tr style="font: 8pt Times New Roman, Times, Serif"> <td style="vertical-align: top; font: 8pt Times New Roman, Times, Serif"> </td> <td style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> </td> <td style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> </td></tr> <tr style="font: 8pt Times New Roman, Times, Serif"> <td style="vertical-align: top; text-align: center; text-indent: -10pt; font: 8pt Times New Roman, Times, Serif">Level 3:</td> <td style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> </td> <td style="vertical-align: bottom; text-align: justify; font: 8pt Times New Roman, Times, Serif">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).</td></tr> </table>   Marketable securities consist of an obligation of the Puerto Rico Government Development Bank valued using quoted market prices in active markets with no valuation adjustment. Accordingly, this security is categorized in Level 1.   The carrying value of the Company's financial instruments (excluding marketable securities and obligations under capital leases): cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, are considered reasonable estimates of fair value due to their liquidity or short-term nature. Management believes, based on current rates, that the fair value of its obligations under capital leases approximates the carrying amount.   Revenue Recognition   Revenue is primarily derived from: (1) time and materials contracts (representing approximately 93% of total revenues), which is recognized by applying the proportional performance model, whereby revenue is recognized as performance occurs, (2) short-term fixed-fee contracts or "not to exceed" contracts (representing approximately 1% of total revenues), which revenue is recognized similarly, except that certain milestones also have to be reached before revenue is recognized, and (3) laboratory testing revenue (representing approximately 6% of total revenues) is mainly recognized as the testing is completed and certified (normally within days of sample receipt from customer). If the Company determines that a contract will result in a loss, the Company recognizes the estimated loss in the period in which such determination is made.   Cash Equivalents   For purposes of the consolidated statements of cash flows, cash equivalents include investments in a money market obligations trust that is registered under the U.S. Investment Company Act of 1940, as amended, and liquid investments with original maturities of three months or less.   Marketable Securities   We consider our marketable security investment portfolio and marketable equity investments available-for-sale and, accordingly, these investments are recorded at fair value with unrealized gains and losses generally recorded in other comprehensive income; whereas realized gains and losses are included in earnings and determined based on the specific identification method.   Accounts Receivable   Accounts receivable are recorded at their estimated realizable value. Accounts are deemed past due when payment has not been received within the stated time period. The Company's policy is to review individual past due amounts periodically and write-off amounts for which all collection efforts are deemed to have been exhausted. Due to the nature of the Companys customers, bad debts are mainly accounted for using the direct write-off method whereby an expense is recognized only when a specific account is determined to be uncollectible. The effect of using this method approximates that of the allowance method.   Income Taxes   The Company follows an asset and liability approach method of accounting for income taxes. This method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.   The Company follows guidance from the Financial Accounting Standards Board (FASB) related to Accounting for Uncertainty in Income Taxes, which includes a two-step approach to recognizing, de-recognizing and measuring uncertain tax positions. As of July 31, 2013, the Company had no significant uncertain tax positions that would be reduced as a result of a lapse of the applicable statute of limitations.   Property and equipment   Owned property and equipment, and leasehold improvements are stated at cost. Vehicles under capital leases are stated at the lower of fair market value or net present value of the minimum lease payments at the inception of the leases.   Depreciation and amortization of owned assets are provided for, when placed in service, in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, using straight-line basis. Assets under capital leases and leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or initial lease term. Major renewals and betterments that extend the life of the assets are capitalized, while expenditures for repairs and maintenance are expensed when incurred. As of July 31, 2013 and October 31, 2012, the accumulated depreciation and amortization amounted to $1,790,489 and $1,540,358, respectively.   The Company evaluates for impairment its long-lived assets to be held and used, and long-lived assets to be disposed of, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on management estimates, no impairment of the operating properties was present as of July 31, 2013.   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. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model at the grant date. Excess tax benefits related to stock-based compensation are reflected as cash flows from financing activities rather than cash flows from operating activities. The Company has not recognized such cash flow from financing activities since there has been no tax benefit related to the stock-based compensation.   Income Per Share of Common Stock   Basic income per share of common stock is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted income per share includes the dilution of common stock equivalents.   The diluted weighted average shares of common stock outstanding were calculated using the treasury stock method for the respective periods.   Foreign Operations   The functional currency of the Companys foreign subsidiaries is its local currency. The assets and liabilities of the Companys foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. The cumulative translation effect for subsidiaries using a functional currency other than the U.S. dollar is included as a cumulative translation adjustment in stockholders equity and as a component of comprehensive income.   The Companys intercompany accounts are typically denominated in the functional currency of the foreign subsidiary. Gains and losses resulting from the remeasurement of intercompany receivables that the Company considers to be of a long-term investment nature are recorded as a cumulative translation adjustment in stockholders equity and as a component of comprehensive income, while gains and losses resulting from the remeasurement of intercompany receivables from those international subsidiaries for which the Company anticipates settlement in the foreseeable future are recorded in the consolidated statements of operations. The net gains and losses recorded in the condensed consolidated statements of income were not significant for the periods presented.   Reclassifications   Certain reclassifications have been made to the July 31, 2012 condensed consolidated financial statements to conform them to the July 31, 2013 condensed consolidated financial statements presentation. Such reclassifications do not affect net income as previously reported.   Recently issued and adopted accounting standards   Recently issued FASB pronouncements, including SEC Staff Accounting Bulletins, have either been implemented or are not applicable to the Company.falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6003-108592 false0A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESfalseA. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://pharmabioserv.com/role/A.OrganizationAndSummaryOfSignificantAccountingPolicies12