UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




FORM 10-K/A


(Mark One)


þ           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the fiscal year ended October 31, 2015




o           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the transition period from _____________ to ______________




Commission File No. 000-50956




PHARMA-BIO SERV, INC.




(Exact Name of Registrant as Specified in Its Charter)




Delaware

20-0653570(State or Other Jurisdiction of Incorporation or Organization)

(IRS Employer Identification No.)





Pharma-Bio Serv Building,

#6 Road 696

Dorado, Puerto Rico

00646(Address Of Principal Executive Offices)

(Zip Code)





787-278-2709




(Registrant’s Telephone Number, Including Area Code)




Securities registered pursuant to Section 12(b) of the Act: None




Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001 per share




Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ




Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ




Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o




Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o




Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer
o
Accelerated filer
oNon-accelerated filer
o
Smaller reporting company
þ





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ




The approximate aggregate market value of common stock held by non-affiliates of the registrant, based on the closing price for the registrant’s common stock on April 30, 2015 (the last business day of the second quarter of the registrant’s current fiscal year), was $15,763,557.




The number of shares of the registrant’s common stock outstanding as of January 28, 2016 was 23,027,970.










EXPLANATORY NOTE




This Annual Report on Form 10-K/A is being filed by Pharma-Bio Serv, Inc. (the "Company") to amend the Annual Report on Form 10-K for the year ended October 31, 2015 filed by the Registrant with the Securities and Exchange Commission (the "SEC") on January 29, 2016 to include the information required to be disclosed by Part III, Items 10-14 of Form 10-K.












PHARMA-BIO SERV, INC.


ANNUAL REPORT ON FORM 10-K/A


FOR THE YEAR ENDED OCTOBER 31, 2015




TABLE OF CONTENTS




ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
1ITEM 11.
EXECUTIVE COMPENSATION
4ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
8ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
9ITEM 14
PRINCIPAL ACCOUNTING FEES AND SERVICES
10ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
11




i





PART III




ITEM 10.     DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE




(a)           Identification of Directors




Name

Age

Positions with the Company

Director SinceElizabeth Plaza(3)

52

Chairman of the Board


2006Kirk Michel(1),(2)

60

Director


2006Dov Perlysky(2),(3)

53

Director


2004Howard Spindel(1)

70

Director


2006Irving Wiesen(1),(2),(3)

61

Director


2006


________________


(1)           Member of the Audit Committee and Compensation Committee.


(2)           Member of the Mergers and Acquisition Committee.


(3)           Member of the Nominating Committee.




Elizabeth Plaza has served as the Chairman of the Board since January 2006. Also, Ms. Plaza assumed the role of Senior Strategic Consultant of the Company on January 1, 2013. Ms. Plaza served as our president and chief executive officer from January 2006 to December 2012, and as our principal executive officer from January 1, 2014 to December 31, 2014.  Ms. Plaza founded Pharma Serv, a division of Pharma-Bio Serv, Inc. on February, 1993.  Prior to founding her own company, she worked for Warner Lambert, Inc, and McNeil Pharmaceutical, a Johnson & Johnson company, as a Pharmaceutical Scientist.  Ms. Plaza graduated from the University of Puerto Rico, Magna Cum Laude with a degree in Pharmaceutical Sciences.  Also, Ms. Plaza has attended the Executive Development program of the Massachusetts Institute of Technology (MIT) and the Kellogg Management Development Program for Minority CEO’s at Northwestern University in Illinois.




Ms. Plaza is a member of numerous professional organizations.  She is a member of the US Department of Commerce, MBDA, and Washington DC National Advisory Council on Minority Business Enterprise since 2010; Active Board of Directors Member of the Puerto Rico Manufacturers Association, leading the Industrial Promotions Committee; served on the Export Commerce Advisory Council for Puerto Rico Government from 2009-2012.  She is also a QA Committee Member of the Pharmaceutical Industrial Association (PIA) as well as the Global Competitiveness Committee of PIA.  She also serves other Board of Directors, including the Labor Development Local Board for Manatí-Dorado.  In addition, she is an active member of professional organizations including the Parenteral Drug Association (PDA), where she was one of the authors of the Technical Report on the new FDA Process Validation Guidance.  She is a member of: the Delaware Valley International Society of Pharmaceutical Engineers (ISPE), the American Society for Quality Control (ASQC) and the American Association of Pharmaceutical Scientists (AAPS).




Ms. Plaza brings extensive leadership and business experience, as well as an in-depth understanding of the Company's history and tremendous knowledge of our business and the pharmaceutical industry, to the Board. Her experience as an entrepreneur in the pharmaceutical industry has given her broad understanding and expertise, particularly relating to business and industry matters.




Kirk Michel, a director since January 25, 2006, has been a managing director of KEMA Advisors, Inc., a boutique investment banking firm located in Hillsborough, North Carolina since 2000. KEMA Advisors provides corporate finance advisory services to middle market companies and governmental agencies. From 1995 to 2000, Mr. Michel was the co-founder and a managing director of Bahia Group Holdings, LLC which provided corporate finance, public finance and merger and acquisition services to middle market companies and governmental agencies. Mr. Michel holds a M.B.A. degree from the Columbia University Graduate School of Business and a B.A. in Economics from Northwestern University.




Mr. Michel brings extensive leadership, business, and finance experience to the Board. His experience as a managing director of an investment banking firm has given him broad understanding and expertise, particularly relating to business and finance matters.




Dov Perlysky, a director since 2004, has been the managing member of Nesher, LLC a private investment firm since 2000. On January 25, 2006, in connection with the reverse acquisition, Mr. Perlysky resigned as president of the Company. From 1998 until 2002, Mr. Perlysky was a vice president in the private client group of Laidlaw Global Securities, a registered broker-dealer. He received his B.S. in Mathematics and Computer Science from the University of Illinois in 1985 and a Masters in Management from the JL Kellogg Graduate School of Northwestern University in 1991. Mr. Perlysky is currently a director of Enzo Biochem, Inc., a growth-oriented life sciences and clinical laboratory company listed on the New York Stock Exchange, Engex, Inc., a closed-end mutual fund, and Highlands Bancorp, Inc., a New Jersey community bank.




Mr. Perlysky brings extensive leadership and business experience, as well as an in-depth understanding of the Company's history and tremendous knowledge of our business and the pharmaceutical industry, to the Board. His experience as the former president of the Company has given him broad understanding and expertise, particularly relating to the Company's business and industry.




1




Howard Spindel, a director since January 25, 2006, has been a consultant with Integrated Management Solutions, a securities industry consulting and recruitment firm which he founded, since 1985. In this capacity, he has also acted as a financial and operations principal, general securities principal, registered representative and options principal for several broker-dealers during this period. He is also a director of Engex, Inc., a closed-end investment company, and Oak Tree Educational Partners, Inc., a training company. Mr. Spindel received a B.S (Accounting) degree from Hunter College and is a Certified Public Accountant.




Mr. Spindel brings extensive leadership, business, and accounting experience to the Board. His experience as a consultant, certified public accountant and board member to other companies has given him broad understanding and expertise, particularly relating to business, accounting and finance matters.




Irving Wiesen, a director since January 25, 2006, has practiced as an attorney specializing in food and drug law and regulation in the pharmaceutical and medical device industries for over thirty years. For more than the past five years he has been of counsel to the New York law firms, Ullman, Shapiro and Ullman, LLP and Cohen, Tauber, Spievack & Wagner. Prior to that, Mr. Wiesen was a partner in the New York food and drug law firm, Bass & Ullman, and also served as division counsel of Boehringer Ingelheim Pharmaceuticals, Inc. Mr. Wiesen represents pharmaceutical, medical device and biotechnology companies in all aspects of FDA regulation, corporate practice and compliance, litigation and allied commercial transactions. Mr. Wiesen received his J.D. degree from the New York University School of Law and holds an M.A. in English Literature from Columbia University and a B.A., cum laude, from Yeshiva University.




Mr. Wiesen brings extensive leadership, business, and legal experience to the Board. He has practiced as an attorney specializing in food and drug law and regulation in the pharmaceutical and medical device industries for over thirty years. His experience as a practicing lawyer in the pharmaceutical and medical device industries has given him broad understanding and expertise, particularly relating to legal and industry matters impacting the Company.




(b)           Identification of Executive Officers




Name

Age

PositionVictor Sanchez

45

Chief Executive Officer, President and President of European OperationsPedro J. Lasanta

56

Chief Financial Officer, Vice President - Finance and Administration and Secretary





Victor Sanchez has served as our Chief Executive Officer and President since January 1, 2015 and as the President of the European Operations of the Company since January 2011. Prior to joining the Company, he served as Operations Manager in the LOCM and OSD divisions of Merck Sharp & Dohme (“MSD”), a pharmaceutical company, in Madrid, Spain from April 2010 to January 2011 and as Operations Manager of the LOCM division of Schering-Plough S.A., a pharmaceutical company, in Madrid, Spain, from September 2004 to April 2010. He served as Quality Control Validations Manager for Schering-Plough Products, LLC, a pharmaceutical company (“Schering-Plough”), in Puerto Rico from December 2000 to August 2004 and as Quality Control Laboratory Supervisor of Schering-Plough from April 1996 to December 2000. Mr. Sanchez holds a Bachelor of Science in Chemistry, summa cum laude, and a M.B.A. in Industrial Management, cum laude, from the Interamerican University of Puerto Rico. He holds a Post Graduate Diploma in Pharmaceutical Validation Technology from the Dublin Institute of Technology, Ireland. Mr. Sanchez is a chemist licensed by the Puerto Rico State Department and a member of the American Chemical Society, the Parenteral Drug Association, the Regulatory Affairs Professional Society, and the International Society for Pharmaceutical Engineers.




Pedro J. Lasanta has served as our Chief Financial Officer and Vice President - Finance and Administration since November 2007, and our Secretary since December 1, 2014. From 2006 until October 2007, Mr. Lasanta was in private practice as an accountant, tax and business counselor. From 1999 until 2006, Mr. Lasanta was the Chief Financial Officer for Pearle Vision Center PR, Inc. In the past, Mr. Lasanta was also an audit manager for Ernst & Young, formerly Arthur Young & Company. He is a cum laude graduate in business administration (accounting) from the University of Puerto Rico. Mr. Lasanta is a Certified Public Accountant. In 2012, he was awarded the Puerto Rico Manufacturers Association (North Region) Service Manager of the Year. Mr. Lasanta has served as a Member of the Puerto Rico District Export Council for the U.S. Department of Commerce since January 2014.




(c)           Identification of Certain Significant Employees




Not applicable.




(d)           Family Relationships




There are no family relationships among our executive officers and directors.




2




(e)           Business Experience




The business experience of each of our current directors and executive officers is set forth in Part III, Item 10(a), “Identification of Directors” and Part III, Item 10(b), “Identification of Executive Officers,” respectively, of this Annual Report on Form 10-K/A.




The directorships currently held, and held during the past five years, by each of our directors in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or subject to Section 15 of such Act or any company registered as an investment company under the Investment Company Act of 1940, as amended, are set forth in Part III, Item 10(a), “Identification of Directors” of this Annual Report on Form 10-K/A.




(f)           Involvement in Certain Legal Proceedings




To the best of our knowledge, none of our directors or executive officers that served during the year ended October 31, 2015 ("Fiscal 2015") or currently has been involved during the past ten years in any legal proceedings required to be disclosed pursuant to Item 401(f) of Regulation S-K.




(g)           Promoters and Control Persons




Not applicable.




(h) and (i) Audit Committee and Audit Committee Financial Expert




The members of the Audit Committee are Howard Spindel, Chairman, Kirk Michel and Irving Wiesen, all of whom are independent directors as determined by the Nasdaq Rules. The responsibilities and duties of the Audit Committee consist of but are not limited to: (1) overseeing the financial reporting process; (2) meeting with our external auditors regarding audit results; (3) engaging and ensuring independence of our outside audit firm and (4) reviewing the effectiveness of the Company’s internal controls.




Our Board has determined that Mr. Spindel qualifies as an “Audit Committee financial expert” within the meaning of applicable regulations of the Securities and Exchange Commission, promulgated pursuant to the Sarbanes-Oxley Act of 2002. Our board of directors has adopted a written charter for the Audit Committee which the Audit Committee reviews and reassesses for adequacy on an annual basis. A copy of the Audit Committee’s charter is located on our website at www.pharmabioserv.com.




(j)           Procedures for Stockholder Nominations to the Board of Directors




No material changes to the procedures for nominating directors by our stockholders were made during Fiscal 2015.




Section 16(a) Beneficial Ownership Reporting Compliance




Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended October 31, 2015, all such filing requirements applicable to the Company’s directors, executive officers and greater than 10% beneficial owners were complied with, except Mr. Sanchez’s untimely filed a Form 4 to report one transaction.




Code of Conduct and Ethics




We have adopted a Code of Ethics that applies to all our senior management, including our principal executive officer, principal financial officer and principal accounting officer, and directors. We intend to post amendments to or waivers from our Code of Ethics (to the extent applicable to our Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or controller, or persons performing similar functions) on our website at www.pharmabioserv.com. Our website is not part of this report.




3





ITEM 11.      EXECUTIVE COMPENSATION




Summary Compensation Table




The following table provides the compensation paid to our principal executive officer and other executive officers whose total compensation exceeded $100,000 for the fiscal years ended October 31, 2015 and 2014 (the "Named Executive Officers").




Name and Principal Position

Fiscal Year

Salary


Bonus


Option

Awards ($)(3)


All Other

Compensation


TotalElizabeth Plaza,

2015

$
-


$
-


$
-


$
522,936
(4)

$
522,936Chairman and Former Principal Executive Officer(1)

2014


-



-



-



550,754
(4)


550,754Victor Sanchez

2015

$
194,256


$
50,000
(5)

$
18,012


$
11,917
(6)

$
274,185President and

Chief Executive Officer(2)Pedro Lasanta,

2015

$
160,600


$
40,000
(5)

$
2,689



-


$
203,289Chief Financial Officer, Vice President -Finance and Administration and Secretary

2014


158,407



-



10,879



-



169,286


________________


(1)
Elizabeth Plaza served as the Principal Executive Officer of the Company from January 1, 2014 to December 31, 2014. Ms. Plaza previously served as the President and Chief Executive Officer of the Company from January 2006 to December 31, 2012.




(2)
Victor Sanchez was appointed President and Chief Executive Officer on January 1, 2015, and continued to serve as President of European Operations, a position he has held since January 2011.




(3)
Amounts shown do not reflect compensation received by the executive officers. Instead, the amounts shown are the compensation costs recognized by us in fiscal year 2015 and 2014 for option grants and restricted units awards, as applicable, that were made to officers as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of option and restricted units awards are set forth under Note I - Stock Options and Stock Based Compensation in our audited financial statements for the fiscal year ended October 31, 2015 included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2015.




(4)
Represents consulting fees and company lease payments for the vehicle under Elizabeth Plaza’s use for the years ended in October 31, 2015 and 2014 in the amount of $504,000 and $18,936, respectively, and $532,883 and $17,871, respectively. For additional information regarding these consulting fees, see Employment Agreements - Elizabeth Plaza - Consulting Agreement below.




(5)
Represents bonus for services in fiscal 2015, which were paid in December 2015.




(6)
Represents health insurance plan expenses incurred pursuant to Mr. Sanchez’s employment agreement.




4




Outstanding Equity Awards at Fiscal Year-End Table




The following table summarizes information regarding equity-based awards held by our Named Executive Officers as of October 31, 2015.




Option Awards

Stock AwardsName

Number of Securities Underlying Unexercised Options Exercisable

Number of Securities Underlying Unexercised Options Unexercisable


Option Exercise Price

Option

Expiration Date

Number

of Shares or Units of Stock that have not Vested

Market Value of Shares or Units of Stock that have not Vested

Equity Incentive Plan Awards:  Number of Unearned Shares, Units or Other Rights that have not Vested

Equity Incentive  Plan Awards:  Market or Payout Value of Unearned Shares, Units or Other Rights that have not VestedElizabeth Plaza

-

-


-

-

-


-


-

-Victor Sanchez

100,000
(1)
-

$
0.72

Jan, 30, 2017

16,675
(2)

$15,508
(3)Pedro Lasanta

200,000
(4)
-

$
0.72

Jan. 30, 2017

-


-


-

-


_________________


(1)
Represents Options to purchase 100,000 shares of common stock which were granted on January 30, 2012.  These options vested in three annual installments beginning on January 30, 2013.




(2)
Represents restricted stock units that vest as follows: 8,325 shares on January 15, 2016 and 8,350 shares on January 15, 2017.




(3)
The market value was determined using the $0.93 closing price on October 30, 2015, the last trading day of the year ended October 31, 2015.




(4)
Options to purchase 200,000 shares of common stock which were granted on January 30, 2012. These options vested in three annual installments beginning on January 30, 2013.




Employment Agreements




Elizabeth Plaza - Consulting Agreement




On December 31, 2013, the Company entered into a Consulting Agreement with Strategic Consultants International, LLC (the “Consultant”) and Ms. Plaza, effective as of January 1, 2014. On January 1, 2015, the consulting agreement was amended to extend the term of the Consulting Agreement for an additional year to December 31, 2015. On December 30, 2015, the consulting agreement was amended to extend the term of the consulting agreement for an additional year to December 31, 2016 and to amend the monthly retainer to $31,500 effective January 1, 2016. Pursuant to the consulting agreement, the Consultant will consult with the Board regarding the Company’s strategic initiatives, company services, management, operations and other matters as may be requested from time to time by the Board. Pursuant to the consulting agreement, the Consultant will receive a monthly fee of $42,000 through December 31, 2015 and a monthly fee of $31,500 from January 1, 2016 through December 31, 2016. Additionally, Ms. Plaza will receive a company automobile and such insurance as she was provided by the Company during her last year of employment with the Company. The consulting agreement also included standard provisions relating to non-competition, confidentiality, and nondisparagement.




Victor Sanchez




On January 1, 2015, the Company entered into an Employment Agreement with Victor Sanchez, the President, Chief Executive Officer and President of Europe Operations of the Company (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Sanchez is entitled to receive an annual base salary of $220,000 and such discretionary bonus, stock options and other equity-based incentives as determined by the Compensation Committee of the Company. Also, Mr. Sanchez is entitled to receive benefits provided to all other executive officers of the Company.




Also, pursuant to the Employment Agreement, if the Company terminates the Employment Agreement and Mr. Sanchez’s employment other than for death, disability or cause, the Company shall (1) pay to Mr. Sanchez within 30 days after the date of termination (a) a lump-sum severance payment in an amount equivalent to one (1) year of salary at the time of the termination, less legal withholdings, or the severance established by PR labor law No. 80 of May 30, 1976, known as the “Wrongful Discharge Act” (“Ley de Despido Injustificado”), whichever amount is higher; (b) any bonuses that he may have earned up to the date of his termination, and (c) the value of any unused accrued vacation days, (2) provide executive one (1) year health coverage for the executive and dependents, and (3) provide that any restricted stock units, options or other similar granted awards held by him will become vested and exercisable for a threemonth period following the termination. Also, pursuant to the Employment Agreement, in the event of a change of control of the Company in connection with a sale, merger or acquisition of the Company or the Company ceases to be a public company, and is no longer subject to the reporting obligations of the Securities Exchange Act of 1934, as amended, any restricted stock units, options or other similar granted awards held by Mr. Sanchez will become vested and exercisable immediately prior to such event. If the Employment Agreement is terminated for death, disability or cause, no additional compensation will be payable subsequent to the date of such termination. The Employment Agreement also includes standard provisions relating to non-competition, non-solicitation and confidentiality.




5




Pedro Lasanta




On November 5, 2007, we entered into an employment agreement with Pedro Lasanta, our chief financial officer, pursuant to which we pay Mr. Lasanta an annual salary of $100,000 plus a monthly car allowance of $500. The agreement has a one-year term, which we may extend subject to the approval of the president and chief executive officer and the Audit Committee. Mr. Lasanta’s employment agreement has a non-competition provision pursuant to which he agrees that during the term of the agreement and for one year thereafter, Mr. Lasanta will not, directly or indirectly, engage in a competing business or solicit any customer or seek to persuade any customer to reduce the amount of business it does with us or seek to persuade any employee to leave our employment.




On December 17, 2008, we entered into an amendment to the employment agreement with Pedro Lasanta pursuant to which the term of the contract was extended indefinitely. The amended employment agreement provides that we will pay Mr. Lasanta an annual salary of $110,000 and an annual bonus in cash or Company stock options to be granted based on performance metrics to be established. Pursuant to the amended employment agreement, we will grant Mr. Lasanta options to purchase 30,000 shares of Company stock having an exercise price equal to fair market value on the date of grant and vesting in three equal annual installments beginning one year from November 1, 2008. In addition, upon termination of Mr. Lasanta’s employment for reasons other than those set forth in his amended employment agreement, Mr. Lasanta will receive a lump-sum severance payment in an amount equivalent to six months of his salary at the time of the termination, less legal withholdings, or the severance established by PR labor law No. 80 of May 30, 1976 known as the “Wrongful Discharge Act” (“Ley de Despido Injustificado”), whichever amount is higher. All other terms and conditions of Mr. Lasanta’s employment agreement remain the same.




On March 11, 2009, upon the approval of the Company’s Compensation Committee, the Company entered into an Amendment to Employment Agreement with Pedro J. Lasanta to reduce Mr. Lasanta’s current annual base salary from $110,000 to $106,000 and to eliminate Mr. Lasanta’s automobile allowance effective March 1, 2009.




Effective January 1, 2010, the Company amended the Employment Agreement of Mr. Lasanta, dated November 5, 2007, to restore Mr. Lasanta's annual base salary to $110,000. All other terms and conditions of Mr. Lasanta's employment agreement, as amended, remain the same.




On January 31, 2012, the Company amended the Employment Agreement of Mr. Lasanta, dated November 5, 2007, to increase Mr. Lasanta's annual base salary from $110,000 to $125,000. All other terms and conditions of Mr. Lasanta's employment agreement, as amended, remain the same.




On December 31, 2012, the Company amended the Employment Agreement of Mr. Lasanta, dated November 5, 2007, to increase Mr. Lasanta's annual base salary from $125,000 to $150,000 as of January 1, 2013. All other terms and conditions of Mr. Lasanta's employment agreement, as amended, remain the same.




On February 17, 2014, the Company amended the Employment Agreement of Pedro Lasanta, dated November 5, 2007, to increase Mr. Lasanta’s salary to $160,000, effective January 1, 2014 (the "Lasanta Amendment").




Also, pursuant to the Lasanta Amendment, if the Company terminates the employment agreement of Mr. Lasanta other than for death, disability or cause, the Company shall (1) pay to the executive within 30 days after the date of termination (a) a lump-sum severance payment in an amount equivalent to one (1) year of salary at the time of the termination, less legal withholdings, or the severance established by PR labor law No. 80 of May 30, 1976, known as the “Wrongful Discharge Act” (“Ley de Despido Injustificado”), whichever amount is higher; (b) any bonuses that the executive may have earned up to the date of his termination, and (c) the value of any unused accrued vacation days, (2) provide executive one (1) year health coverage for the executive and dependents, and (3) provide that any restricted stock units, options or other similar granted awards held by the executive will become vested and exercisable for a threemonth period following the termination. Also, pursuant to the Lasanta Amendment, in the event of a change of control of the Company in connection with a sale, merger or acquisition of the Company or the Company ceases to be a public company, and is no longer subject to the reporting obligations of the Securities Exchange Act of 1934, as amended, any restricted stock units, options or other similar granted awards held by Mr. Lasanta will become vested and exercisable immediately prior to such event.




6




Director Compensation




Effective January 1, 2014, the Compensation Committee of the Board approved the following compensation to non-employee directors (i) a $10,000 quarterly retainer fee and (ii) an automatic annual stock option grant of 20,000 shares to be granted on the tenth day of January each year. Also, each non-employee director received an option to purchase 25,000 shares of the Company’s common stock on the date of his first election. Messrs. Michel, Perlysky, Spindel and Wiesen are our non-employee directors, all of which are independent directors since their appointment in January 2006, except for Mr. Perlysky which became an independent director in February 2009.




The following table summarizes the compensation paid to our non-employee directors for the year ended October 31, 2015. Compensation paid to Elizabeth Plaza for the year ended October 31, 2015 is set forth above in the Summary Compensation Table.




Name

Fees Earned

or Paid in

Cash(1)


Option

Awards (2)(3)


TotalKirk Michel

$
40,000


$
10,528


$
50,528Dov Perlysky

$
40,000


$
10,528


$
50,528Howard Spindel

$
40,000


$
10,528


$
50,528Irving Wiesen

$
40,000


$
10,528


$
50,528


________________


(1)
All amounts were earned and paid during fiscal 2015.




(2)
Amounts shown do not reflect compensation actually received by the directors. Instead, the amounts shown are the compensation costs recognized by us in fiscal year 2015 for option grants that were made to directors as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of option awards are set forth under Note I - Stock Options and Stock Based Compensation in our audited financial statements for the fiscal year ended October 31, 2015, included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2015.




(3)
The options grants have a term of five years from the grant date and an exercise price equal to the fair market value on the date of grant. The options are exercisable as to 50% of the shares six months from the date of grant and as to the remaining 50% 18 months from the date of grant.




As of October 31, 2015, each of our non-employee directors held the following number of options to purchase shares of common stock:




Messrs. Perlysky, Spindel, and Wiesen

Kirk MichelGrant Date

Options


Exercise Price

Grant Date

Options


Exercise Price1/03/2011


10,000


$
0.26

1/03/2012


10,000


$
0.701/03/2012


10,000


$
0.70

1/02/2013


10,000


$
0.751/02/2013


10,000


$
0.75

1/10/2014


20,000


$
2.051/10/2014


20,000


$
2.05

1/10/2015


20,000


$
1.281/10/2015


20,000


$
1.28





Compensation Committee




The members of the Compensation Committee are Kirk Michel, Chairman, Howard Spindel and Irving Wiesen, all of whom are independent directors as determined by the Nasdaq Rules. The responsibilities and duties of the Compensation Committee consist of, but are not limited to: (1) approving salaries and incentive compensation of executive officers, as well as the compensation of our Board members; (2) reviewing compensation plans, policies and benefit programs for employees, generally and (3) administering the employee stock option and benefit plans, when designed by the Board. While performing its duties, the Compensation Committee receives substantial input from the Chief Executive Officer regarding the appropriate level and type of compensation for our executives, excluding the compensation paid to the Chief Executive Officer. The Compensation Committee has determined that no risks exist rising from the Company’s compensation policies and practices for its employees that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee has not retained a compensation consultant to review our policies and procedures with respect to executive compensation. A copy of the Compensation Committee’s charter is located on our website at www.pharmabioserv.com.




7




ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS




The following table provides information as to shares of common stock beneficially owned as of February 22, 2016 by:




·
each director;




·
each officer named in the summary compensation table (“Named Executive Officers”);




·
each person owning of record or known by us, based on information provided to us by the persons named below, to own beneficially at least 5% of our common stock; and




·
all directors and executive officers as a group.




As of February 22, 2016, the Company had 23,017,570 shares of common stock outstanding. As used herein, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934 as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, including a right to acquire such power(s) during the next 60 days. Unless otherwise noted, beneficial ownership consists of sole ownership, voting and investment rights and the address for each person is c/o Pharma-Bio Serv, Inc., the Pharma-Bio Serv Building, #6 Road 696, Dorado, Puerto Rico, 00646.




Name

Shares of

Common Stock Beneficially

Owned at

February 22, 2016


PercentageDirectors and Executive OfficersElizabeth Plaza(1)


9,169,518



39.8
%Dov Perlysky(2)


2,009,726



8.7
%Kirk Michel(3)


406,247



1.8
%Howard Spindel(4)


72,381



*Irving Wiesen(5)


72,276



*Victor Sanchez(6)


116,650



*Pedro Lasanta(7)


222,146



*All Directors and Executive Officers as a group(seven persons)(8)


12,068,944



51.3
%5% or Greater StockholdersVenturetek, L.P.(9)


3,132,932



13.6
%Ramon Luis Dominguez Thomas (10)


2,060,060



8.9
%Addison McKinley Levi III (11)


2,050,059



8.9
%


________________


* Less than 1%.


(1)
Includes 4,099,241 shares owned by Ms. Plaza directly and 5,070,277 shares subject to a voting proxy in favor of Ms. Plaza. In conjunction with certification as a minority controlled business, Ms. Plaza received irrevocable proxies (“Voting Proxies”) to vote an aggregate of 5,070,277 shares of the Company’s common stock from Venturetek LP, Krovim, LLC and LDP Family Partnership. These Voting Proxies are effective until September 26, 2016, unless the business certification expires sooner.




(2)
The shares of common stock beneficially owned by Mr. Perlysky include (i) 22,381 shares directly owned, (ii) 1,164,554 shares of common stock owned by Krovim, LLC, (iii) 772,791 shares owned by LDP Family Partnership and (iv) options issued to Mr. Perlysky to purchase 50,000 shares of common stock, which are vested as of February 22, 2016. Elizabeth Plaza exercises voting power over the shares owned by Krovim pursuant to a Voting Proxy and Mr. Perlysky as the manager of Nesher, LLC, which is the manager of Krovim, may be deemed to exercise dispositive power over these shares. Mr. Perlysky disclaims beneficial interest in the shares owned by Krovim. Elizabeth Plaza exercises voting power over the shares owned by the LDP Family Partnership pursuant to a Voting Proxy and Mr. Perlysky’s wife, the general partner of LDP Family Partnership, is deemed to exercise dispositive power over these shares. Mr. Perlysky disclaims beneficial ownership in the securities owned by his wife.




(3)
The shares of common stock beneficially owned by Mr. Michel consist of (i) 15,541 shares directly owned, (ii) 50,000 shares of common stock issuable upon exercise of options, which are vested as of February 22, 2016, and (iii) 340,706 shares of common stock owned by KEMA Advisors, of which Mr. Michel is managing director.




8




(4)
The shares of common stock owned by Mr. Spindel represent 22,381 shares owned by his spouse, and 50,000 shares issuable upon exercise of options, which are vested as of February 22, 2016. Mr. Spindel disclaims beneficial ownership of the shares held by his spouse.




(5)
The shares of common stock owned by Mr. Wiesen, represent 22,276 shares directly owned, and 50,000 shares issuable upon exercise of options, which are vested as of February 22, 2016.




(6)
The shares of common stock owned by Mr. Sanchez represent 16,650 shares directly owned, and 100,000 shares issuable upon exercise of options, which are vested as of February 22, 2016.




(7)
The shares of common stock owned by Mr. Lasanta, represent 22,146 shares directly owned, and 200,000 shares issuable upon exercise of options, which are vested as of February 22, 2016.




(8)
Includes 500,000 shares issuable upon the exercise of options, which are vested as of February 22, 2016.




(9)
This information was obtained from Amendment No. 4 to Schedule 13 D/A filed by Venturetek, L.P. ("Venturetek") on September 6, 2011. Does not include 1,565,058 shares underlying warrants, which warrants expired in January 2011, listed in the Schedule 13 D/A filed on January 5, 2011. Mr. David Selengut, the manager of TaurusMax LLC, which is the general partner of Venturetek has sole dispositive power and Elizabeth Plaza has sole voting power over these shares pursuant to a Voting Proxy. The mailing address for Venturetek, L.P. is 150 East 42nd Street, New York, NY 10017.




(10)
This information was obtained from a Schedule 13D filed by Ramon Luis Dominguez Thomas on March 27, 2014. The business address for this person is c/o San Juan Holdings, Inc., MCS Plaza, Suite #305, 255 Ponce de Leon Avenue, San Juan, PR, 00917.




(11)
This information was obtained from a Schedule 13D filed by Addison McKinley Levi III on March 27, 2014. The business address for this person is c/o San Juan Holdings, Inc., MCS Plaza, Suite #305, 255 Ponce de Leon Avenue, San Juan, PR, 00917.




Equity Compensation Plan Information




The following table summarizes the equity compensation plans under which our securities may be issued as of October 31, 2015.




Plan Category

Number of securities

to be issued upon

exercise of

outstanding options


Weighted-average exercise

price per share of

outstanding options and

warrants


Number of securities

remaining available for

future issuance under

equity compensation

plansEquity compensation plans approved by security holders:2014 Long-Term Incentive Plan (1)


-


$
-



2,300,0002005 Long-Term Incentive Plan (2)


900,000


$
0.8779



-Total


900,000


$
0.8779



2,300,000


___________________


(1)
The 2014 Long-Term Incentive Plan was approved by stockholders in April 2014. As of October 31, 2015, no awards were granted.




(2)
The 2005 Long-Term Incentive Plan was approved by stockholders in April 2006, and amended by stockholder approval in April 2007. No further awards may be issued under this equity compensation plan since its term ended October 2015.




ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE




Related Party Transactions




In February 2007, we entered into an agreement for our main resource facilities in Dorado, Puerto Rico with Plaza Professional Center, Inc., a company controlled by Elizabeth Plaza, our Chairman of the Board. These facilities accommodate our testing laboratory, our customer-specialized training facilities, and our Puerto Rico consulting and headquarters offices. The agreement is for a five year term, with initial monthly installments of $18,750, which will increase by 5% annually. The agreement also requires the payment of utilities, property taxes, insurance and a portion of expenses incurred by the affiliate in connection with the maintenance of common areas. The agreement provided for a renewal option under the same terms, which became effective February 2012 for a period of five additional years. During the years ended October 31, 2015 and October 31, 2014, we paid approximately $328,000 and $313,000, respectively, to Plaza Professional Center, Inc. in connection with the lease of these facilities.




9




Also, see Employment Agreements - Elizabeth Plaza - Consulting Agreement above for a description of the Consulting Agreement.




Nelida Plaza, Elizabeth Plaza's sister, served as the Company's Chief Operating Officer of the Company from January 1, 2014 to November 28, 2014 and Secretary of the Company from January 2006 to November 28, 2014.  Also, Ms. N. Plaza served as the Company's Acting President and Chief Executive Officer from January 2013 until December 31, 2013, Vice President of Operations of Pharma-Bio Serv PR, Inc. from January 2004 until December 31, 2013, and the Company's President of Puerto Rico Operations from December 2009 until December 31, 2013.  On December 31, 2009, Pharma-Bio Serv PR, Inc., a subsidiary of the Company ("Pharma-Bio PR"), entered into an Employment Agreement with Ms. N. Plaza, which replaced the Employment Agreement entered into by and between Ms. N. Plaza and the Company, dated January 25, 2006, as amended.On November 11, 2014, Company accepted the resignation of Ms. N. Plaza as Chief Operating Officer and Secretary of the Company, effective November 28, 2014, for personal reasons.  Ms. Plaza also resigned from other positions she held with the Company’s subsidiaries.  On December 15, 2015, the Compensation Committee of the Board of Directors of the Company accelerated the vesting of options to purchase 66,600 shares of common stock of the Company at an exercise price of $0.72 per share previously granted to Ms. N. Plaza and, pursuant to the terms of Ms. Plaza’s employment agreement, approved a bonus of $45,000 (representing 20% of Ms. Plaza’s base salary) for the year ended October 31, 2014.  For the year ended October 31, 2014, Ms. Plaza's total compensation pursuant to the employment agreement was $286,683 consisting of:  $225,600 of salary, $45,000 of bonus, $10,879 representing the grant date value of options granted during 2014 and $5,204 representing lease payments.  For the year ended October 31, 2015, Ms. Plaza's  total compensation pursuant to the employment agreement was $41,658, which consisted solely of salary.




On November 28, 2014, Pharma-Bio PR entered into an Independent Contractor Agreement with Ms. N. Plaza pursuant to which Ms. N. Plaza provides independent services with project deliverables as requested by Pharm-Bio PR at a rate ranging from $90 to $125 per hour.  During the year ended October 31, 2015, Ms. Plaza was compensated $203,355 pursuant to the Independent Contractor Agreement.




Director Independence




The Board has determined that the following directors are independent pursuant to Nasdaq Rule 5605 (“Nasdaq Rules”) (even though the Company’s securities are not traded on the Nasdaq market): Kirk Michel, Dov Perlysky, Howard Spindel and Irving Wiesen.




ITEM 14       PRINCIPAL ACCOUNTING FEES AND SERVICES




We were billed by Horwath Velez & Co. PSC ("Horwath") in 2015 and 2014 as follows:




Description of services:

Fiscal 2015


Fiscal 2014Audit

$
52,250


$
49,395Audit-Related


27,825



27,825Tax and other services


20,415



22,601Total Fees

$
100,490


$
99,821





Audit fees above are professional services associated with the integrated audit of our consolidated financial statements. Audit-Related fees are primarily attributable to services rendered in connection to reviews of our quarterly condensed financial statements. Tax and other services are mainly attributable to retirement plan compliance audit and international tax compliance services.




Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors




The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent public accountants. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Horwath and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent public accountants in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case by case basis. The Audit Committee approved one hundred percent (100%) of all services provided by Horwath during fiscal 2015 and 2014.




The Audit Committee has considered the nature and amount of the fees billed by Horwath, and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining Horwath’s independence.




10




PART IV




ITEM 15.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES




The following documents are filed as a part of this Annual Report on Form 10-K/A:




1.
All Financial Statements: Consolidated Financial Statements are included in our Annual Report on Form 10-K filed with the Commission on January 29, 2016 immediately following the signature page of the report. See Index to Consolidated Financial Statements on page F-1 on our Annual Report on Form 10-K filed with the Commission on January 29, 2016.




2.
Financial Statement Schedules: None.




3.
Exhibits: The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Commission, as indicated in the description of each.




Incorporated By ReferenceExhibit Number
Exhibit Description
Form
File Number
Exhibit
Filing Date3.1
Restated Certificate of Incorporation
8-K
000-50956
99.1
5/1/20063.2
Certificate of Amendment to the Certificate of Incorporation
8-K
000-50956
3.1
4/12/133.3
By-laws
10-SB12G
000-50956
3.2
9/24/20043.4
Amendment No. 1 to the By-laws
8-K
000-50956
3.1
6/6/20083.5
Amendment No. 2 to the By-laws
8-K
000-50956
3.2
4/12/1310.1
Consulting Agreement, dated January 7, 2013, by and between Pharma-Bio Serv, Inc. and Elizabeth Plaza.
8-K
000-50956
10.1
1/11/201310.2
Approval of Compensation Committee, dated July 17, 2013, to increase the hours of service pursuant to the Consulting Agreement between the Company and Elizabeth Plaza (a description of such approval was included in the Company’s Current Report on Form 8-K, filed with the SEC on July 23, 2013, and incorporated herein by reference).
8-K
000-50956
-
7/23/1310.3
Consulting Agreement, effective January 1, 2014, between Pharma-Bio Serv Inc., Strategic Consultants International, LLC and Elizabeth Plaza.
8-K
000-50956
10.1
12/31/1310.4
Consulting Agreement, effective January 1, 2015, between Pharma-Bio Serv Inc., Strategic Consultants International, LLC and Elizabeth Plaza.
8-K
000-50956
10.1
1/5/201510.5
Consulting Agreement, effective January 1, 2016, between Pharma-Bio Serv Inc., Strategic Consultants International, LLC and Elizabeth Plaza.
8-K
000-50956
10.1
1/5/201610.6
Employment Agreement, effective January 1, 2015, between Pharma-Bio Serv, Inc. and Victor Sanchez
8-K
000-50956
10.2
1/5/201510.7
Employment Agreement dated November 5, 2007 between the Pharma-Bio Serv, Inc. and Pedro Lasanta
10-K
000-50956
10.8
1/29/200910.8
Amendment to Employment Agreement dated December 17, 2008 between the Registrant and Pedro Lasanta
8-K
000-50956
99.1
12/23/200810.9
Amendment to Employment Agreement, dated March 11, 2009, by and between the Company and Pedro Lasanta
8-K
000-50956
10.3
3/17/200910.10
Employment Agreement Amendment, effective as of January 1, 2010, by and between the Company and Pedro Lasanta.
8-K
000-50956
10.2
1/07/201010.11
Employment Agreement Amendment, dated January 31, 2012, by and between the Company and Pedro J. Lasanta
8-K
000-50956
10.1
2/2/201210.12
Employment Agreement Amendment, dated December 31, 2012, by and between the Company and Pedro J. Lasanta
8-K
000-50956
10.1
1/7/2013  11
  10.13
Employment Agreement Amendment between Pharma-Bio Serv, Inc. and Pedro Lasanta, effective January 1, 2014.
8-K
000-50956
10.1
2/21/201410.14
Employment Agreement, dated as of December 31, 2009, by and between Pharma-Bio Serv PR, Inc. and Nélida Plaza.
8-K
000-50956
10.3
1/07/201010.15
Employment Agreement Amendment, dated January 7, 2013, by and among Pharma-Bio Serv, Inc., Pharma-Bio Serv PR, Inc. and Nélida Plaza
8-K
000-50956
10.2
1/11/201310.16
Employment Agreement Amendment, dated January 7, 2013, by and among the Company, Pharma-Bio Serv PR, Inc. and Nelida Plaza
8-K
000-50956
10.2
1/11/1310.17
Employment Agreement Amendment among Pharma-Bio Serv, Inc., Pharma-Bio Serv PR, Inc. and Nélida Plaza, effective January 1, 2014.
8-K
000-50956
10.1
2/21/201410.18
2005 Long-term incentive plan, as amended
DEF 14A
000-50956
Appendix C
3/26/200710.19
Amendment to 2005 Long-Term Incentive Plan
10-Q
000-50956
10.4
3/17/201410.20
Pharma-Bio Serv, Inc. 2014 Long-Term Incentive Plan
8-K
000-50956
10.1
5/2/201410.21
Lease dated March 16, 2004 between Plaza Professional Center, Inc. and the Registrant
SB-2
333-132847
10.9
3/30/200610.22
Lease dated November 1, 2004 between Plaza Professional Center, Inc. and the Registrant
SB-2
333-132847
10.10
3/30/200614.1
Code of business conduct and ethics for senior management
10-KSB
000-50956
14.1
2/2/200721.1
List of Subsidiaries
10-K
000-50956
21.1
1/29/201623.1
Consent of Horwath Vélez & Co, PSC
10-K
000-50956
23.1
1/29/201631.1*
Certification of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
Certification of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1**
Certification of chief executive officer and chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002101.INS
XBRL Instance Document
10-K
000-50956
101.INS
1/29/2016101.SCH
XBRL Taxonomy Extension Schema
10-K
000-50956
101.SCH
1/29/2016101.CAL
XBRL Taxonomy Extension Calculation Linkbase
10-K
000-50956
101.CAL
1/29/2016101.DEF
XBRL Taxonomy Extension Definition Linkbase
10-K
000-50956
101.DEF
1/29/2016101.LAB
XBRL Taxonomy Extension Label Linkbase
10-K
000-50956
101.LAB
1/29/2016101.PRE
XBRL Taxonomy Extension Presentation Linkbase
10-K
000-50956
101.PRE
1/29/2016


-------


* Filed herewith





** Furnished herewith





Exhibits 10.1 through 10.20 are management contracts or compensatory plans, contracts or arrangements.




12




SIGNATURES




Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




PHARMA-BIO SERV, INC.Date: February 29, 2016
By:
/s/ Pedro J. LasantaName:
Pedro J. LasantaTitle:
Chief Financial Officer, Vice President -Finance and Administration and Secretary

(Principal Financial and Accounting Officer)




13




EXHIBIT INDEX




Exhibit No.

Description31.1

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 chief executive officer required by 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002).