Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2019 | Dec. 31, 2019 | Apr. 30, 2019 | |
Details | |||
Registrant CIK | 0000225628 | ||
Fiscal Year End | --10-31 | ||
Registrant Name | PASSUR AEROSPACE, INC. | ||
SEC Form | 10-K | ||
Period End date | Oct. 31, 2019 | ||
Tax Identification Number (TIN) | 11-2208938 | ||
Number of common stock shares outstanding | 7,712,091 | ||
Public Float | $ 4,306,740 | ||
Filer Category | Non-accelerated Filer | ||
Current with reporting | Yes | ||
Interactive Data Current | Yes | ||
Voluntary filer | No | ||
Well-known Seasoned Issuer | No | ||
Shell Company | false | ||
Small Business | true | ||
Emerging Growth Company | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 0-7642 | ||
Entity Incorporation, State or Country Code | NY | ||
Entity Address, Address Line One | One Landmark Square | ||
Entity Address, Address Line Two | Suite 1900 | ||
Entity Address, City or Town | Stamford | ||
Entity Address, State or Province | CT | ||
Entity Address, Postal Zip Code | 06901 | ||
City Area Code | 203 | ||
Local Phone Number | 622-4086 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Current assets: | ||
Cash | $ 145,151 | $ 100,856 |
Accounts receivable, net | 1,141,282 | 1,186,664 |
Prepaid expenses and other current assets | 249,118 | 199,173 |
Total current assets | 1,535,551 | 1,486,693 |
PASSUR Network, net | 3,948,542 | 4,800,750 |
Capitalized software development costs, net | 8,319,134 | 8,141,589 |
Property and equipment, net | 552,150 | 672,601 |
Other assets | 91,883 | 112,551 |
Total assets | 14,447,260 | 15,214,184 |
Current liabilities: | ||
Accounts payable | 1,531,112 | 989,958 |
Accrued expenses and other current liabilities | 789,370 | 1,189,342 |
Deferred revenue, current portion | 2,863,273 | 2,847,323 |
Total current liabilities | 5,183,755 | 5,026,623 |
Deferred revenue, long term portion | 377,760 | 409,971 |
Note payable - related party | 8,350,058 | 6,050,000 |
Other Liabilities | 79,958 | 113,273 |
Total liabilities | 13,991,531 | 11,599,867 |
Stockholders' equity: | ||
Preferred shares - authorized 5,000,000 shares, par value $0.01 per share; none issued or outstanding | 0 | 0 |
Common shares - authorized 20,000,000 shares, respectively, par value $0.01 per share; issued 8,480,526 at October 31, 2019 and 2018, respectively | 84,804 | 84,804 |
Additional paid-in capital | 17,958,165 | 17,345,450 |
Accumulated deficit | (15,653,562) | (11,882,259) |
Stockholders' Equity before Treasury Stock | 2,389,407 | 5,547,995 |
Treasury stock, at cost | (1,933,678) | (1,933,678) |
Total stockholders' equity | 455,729 | 3,614,317 |
Total liabilities and stockholders' equity | $ 14,447,260 | $ 15,214,184 |
Consolidated Balance Sheets - P
Consolidated Balance Sheets - Parenthetical - $ / shares | Oct. 31, 2019 | Oct. 31, 2018 |
Details | ||
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares, Issued | 8,480,526 | 8,480,526 |
Common Stock, Shares, Outstanding | 8,480,526 | 8,480,526 |
Treasury Stock, Shares | 784,435 | 784,435 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Details | ||
Revenues | $ 15,046,149 | $ 14,817,799 |
Cost of expenses: | ||
Cost of revenues | 8,368,025 | 10,481,134 |
Research and development expenses | 556,261 | 593,708 |
Selling, general, and administrative expenses | 9,253,583 | 8,887,985 |
Operating Expenses | 18,177,869 | 19,962,827 |
Loss from operations | (3,131,720) | (5,145,028) |
Interest expense - related party | 715,933 | 335,948 |
Other Loss | 0 | (1,224) |
Loss before income taxes | (3,847,653) | (5,479,752) |
(Benefit)/Provision for income taxes | (10,320) | 4,634 |
Net loss | $ (3,837,333) | $ (5,484,386) |
Net loss per common share - basic | $ (0.50) | $ (0.71) |
Net loss per common share - diluted | $ (0.50) | $ (0.71) |
Weighted average number of common shares outstanding - basic | 7,696,091 | 7,696,091 |
Weighted average number of common shares outstanding - diluted | 7,696,091 | 7,696,091 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Deficit - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Total |
Stockholders' Equity Attributable to Parent, Beginning Balance at Oct. 31, 2017 | $ 84,804 | $ 16,699,337 | $ (6,397,873) | $ (1,933,678) | $ 8,452,590 |
Shares, Outstanding, Ending Balance at Oct. 31, 2018 | 8,480,526 | ||||
Stock-based compensation | 646,113 | 646,113 | |||
Net loss | (5,484,386) | (5,484,386) | |||
Shares, Outstanding, Beginning Balance at Oct. 31, 2017 | 8,480,526 | ||||
Stockholders' Equity Attributable to Parent, Ending Balance at Oct. 31, 2018 | $ 84,804 | 17,345,450 | (11,882,259) | (1,933,678) | 3,614,317 |
Shares, Outstanding, Ending Balance at Oct. 31, 2019 | 8,480,526 | ||||
Stock-based compensation | 612,715 | 612,715 | |||
Net loss | (3,837,333) | (3,837,333) | |||
Effect of new accounting standard | 66,030 | 66,030 | |||
Shares, Outstanding, Beginning Balance at Oct. 31, 2018 | 8,480,526 | ||||
Stockholders' Equity Attributable to Parent, Ending Balance at Oct. 31, 2019 | $ 84,804 | $ 17,958,165 | $ (15,653,562) | $ (1,933,678) | $ 455,729 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (3,837,333) | $ (5,484,386) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 3,627,604 | 3,561,677 |
Provision for doubtful accounts | 6,000 | 7,500 |
Provision for obsolete and slow moving PASSUR Network parts and supplies | 0 | 229,500 |
Other Liabilities | (33,315) | 113,273 |
Stock-based compensation | 612,715 | 646,113 |
Loss from impairment charges | 0 | 1,470,479 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 39,382 | 165,283 |
Prepaid expenses and other current assets | (92,217) | 10,467 |
Other assets | 20,668 | 57,084 |
Accounts payable | 541,154 | 5,589 |
Accrued expenses and other current liabilities | (399,972) | (83,828) |
Accrued interest - related party | 200,058 | 0 |
Deferred revenue | 49,769 | (38,422) |
Total adjustments | 4,571,846 | 6,144,715 |
Net cash provided by operating activities | 734,513 | 660,329 |
Cash flows used in investing activities | ||
PASSUR Network | (15,354) | (321,703) |
Software development costs | (2,573,395) | (2,503,045) |
Property and equipment | (201,469) | (259,871) |
Net cash used in investing activities | (2,790,218) | (3,084,619) |
Cash flows from financing activities | ||
Proceeds from notes payable - related party | 2,100,000 | 2,250,000 |
Net cash provided by financing activities | 2,100,000 | 2,250,000 |
Increase/(decrease) in cash | 44,295 | (174,290) |
Cash - beginning of period | 100,856 | 275,146 |
Cash - end of period | 145,151 | 100,856 |
Supplemental cash flow information | ||
Interest - related party | 515,875 | 336,000 |
Income taxes | $ (21,779) | $ (40,579) |
1. Description of Business and
1. Description of Business and Significant Accounting Policies | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
1. Description of Business and Significant Accounting Policies | 1. Description of Business and Significant Accounting Policies Nature of Business PASSUR Aerospace, Inc. (“PASSUR” or the “Company”), a New York corporation founded in 1967, is a business intelligence company, providing predictive analytics and decision support technology for the aviation industry primarily to improve the operational performance and cash flow of airlines and the airports where they operate. PASSUR uses big data, within the aviation intelligence platform and a suite of web-based solutions that address the aviation industry’s intractable and costly challenges, including, but not limited to, the underutilization of airspace and airport capacity, delays, cancellations, and diversions. The Company’s technology platform is supported by its Aviation Intelligence Center of Excellence, a team of subject matter experts with extensive experience in airline, airport, and business aviation operations, finance, air traffic management, systems automation, and data visualization, with specific expertise in the operational and business needs, requirements, objectives, and constraints of the aviation industry. PASSUR’s mission is to improve global air traffic efficiencies by connecting the world’s aviation professionals onto a single aviation intelligence platform, making PASSUR an element in addressing the aviation industry’s system-wide inefficiencies. We are an aviation intelligence company that makes air travel more predictable, gate-to-gate, by using predictive analytics generated from our own big data – to mitigate constraints for airlines and their customers. PASSUR’s information solutions are used by the five largest North American airlines, more than 60 airport customers, including 20 of the top 30 North American airports (with PASSUR solutions also used at the remaining ten airports by one or more airline customers), and eighty-seven business aviation customer locations, and the U.S. government. PASSUR provides data aggregation and consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services. To enable this unique offering, PASSUR owns and operates the largest commercial passive radar network in the world that updates flight tracks every 1 to 4.6 seconds, powering a proprietary database that is accessible in real-time and delivers timely, accurate information and solutions via PASSUR’s industry-leading algorithms and business logic included in its products. Solutions offered by PASSUR help to ensure flight completion, covering the entire flight life cycle, from gate to gate, and result in reductions in overall costs and carbon emissions, while helping to maximize revenue opportunities, as well as improving operational efficiency and enhancing the passenger experience. PASSUR’s commercial solutions give aviation operators the ability to optimize performance in today’s air traffic management system, while also achieving Next Generation Air Transportation System (“NextGen”) and Single European Sky ATM Research objectives. PASSUR integrates data from multiple sources, including its independent network of surveillance sensors installed throughout North America creating coast to coast coverage, as well as locations in Europe and Asia; government data; customer data; and data from third party partners. PASSUR’s sensors receive aircraft and drone signals in Mode A, C, S, and Automatic Dependent Surveillance-Broadcast (“ADS-B”), providing position, altitude, beacon code, and tail number, among other information. PASSUR receives signals from aircraft that, when combined with its historical database of aircraft and airport behavior, including information recorded by its network over the last 10 years, allow the Company to know more about what has happened historically and what is happening in real-time. In addition, the historical database allows the Company to predict how aircraft, the airspace, and airports are going to perform, and more importantly, how the aircraft, the airspace, and airports should perform. Liquidity The Company’s current liabilities exceeded current assets, excluding deferred revenue by $785,000 as of October 31, 2019. The note payable to a related party, G.S. Beckwith Gilbert, the Company’s significant shareholder and Chairman, was $8,150,000 at October 31, 2019, with a maturity of November 1, 2021. The Company’s stockholders’ equity was $456,000 at October 31, 2019. The Company had a net loss of $3,837,000 for the year ended October 31, 2019. If the Company’s business plan does not generate sufficient cash flows from operations to meet the Company’s operating cash requirements, the Company will attempt to obtain external financing on commercially reasonable terms. However, the Company has received a commitment from Mr. Gilbert, dated January 27, 2020, that if the Company, at any time, is unable to meet its obligations through January 27, 2021, Mr. Gilbert will provide the necessary continuing financial support to the Company in order for the Company to meet such obligations. Such commitment for financial support may be in the form of additional advances or loans to the Company, in addition to the deferral of principal and/or interest payments due on the existing loans, if deemed necessary. Basis of Presentation The consolidated financial statements include the accounts of PASSUR Aerospace, Inc. and its wholly-owned Subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation. Certain financial information in the footnotes has been rounded to the nearest thousand for presentation purposes. Revenue Recognition Policy The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers” ("Topic 606") The Company derives revenue primarily from subscription-based, real-time decision and solution information and professional services. Revenues are recognized when control of these services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps: · Identification of the contract, or contracts, with a customer; · Identification of the performance obligations in the contract; · Determination of transaction price; · Allocation of transaction price to performance obligations in the contract; and · Recognition of revenue when, or as, the Company satisfies a performance obligation. The Company recognized revenue during the fiscal year ended October 31, 2019, of $15,046,000 under Topic 606, which was not materially different from what would have been recognized under Accounting Standards Codification ("ASC") Topic 605, “ Revenue Recognition” ("Topic 605") A. Nature of performance obligations Subscription services revenue Subscription services revenue is comprised of cloud-based subscription fees that provide the customer the right to access the Company’s software and receive support and updates, if any, for a period of time. The Company has determined such access represents a stand-ready service provided continually throughout the contract term. As such, control and satisfaction of this stand-ready performance obligation is deemed to occur over time. The Company’s subscription contracts include a fixed amount of consideration that is recognized ratably over the non-cancelable contract term, beginning on the date that access is made available to the customer. The passage of time is deemed to be the most faithful depiction of the transfer of control of the services as the customer simultaneously receives and consumes the benefit provided by the Company’s performance. Subscription contracts are generally one to three years in length, billed either monthly, quarterly or annually, typically in advance, which coincides with the terms of the agreement. The Company’s subscription contracts do not have a significant financing component and customer invoices are typically due within 30 days. There is no significant variable consideration related to these arrangements. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred. Professional services revenue Professional services primarily consist of value assessments and customer training services. Payment for professional services is generally a fixed fee or a fee based on time and materials. The obligation to provide professional services is generally satisfied over time, with the customer simultaneously receiving and consuming the benefits as the Company satisfies its performance obligations. For professional services, revenue is recognized by measuring progress toward the complete satisfaction of the Company’s obligation. Progress for services that are contracted for a fixed price is generally measured based on hours incurred as a portion of total estimated hours, and as a practical expedient, progress for services that are contracted for time and materials is generally based on the amount the Company has the right to invoice. Professional services contracts are generally one year or less in length, billed either in advance, upon pre-defined milestones or as services are rendered, which coincides with the terms of the agreement. The Company’s professional service contracts do not have a significant financing component and customer invoices are typically due within 30 days. Material rights Contracts with customers may include material rights which are also performance obligations. Material rights primarily arise when the contract gives the customer the right to renew subscription services at a discounted price in the future. This may occur from time to time when the Company’s contracts provide an implicit discount as the customer pays a nonrefundable up-front fee in connection with the initial services contract that it does not have to pay again in order to renew the service. These non-refundable up-front fees are not related to any promised service that the customer benefits from other than providing access to the subscription service. Revenue allocated to material rights is recognized when the customer exercises the right over the estimated renewal period of five years or when the right expires. If exercised by the customer, the amount previously deferred for the material right is included in the transaction price of the renewal contract and allocated to the services included in that contract. If expired, revenue is recognized as subscription services revenue in the period the right expired. If the up-front fees do not provide the customer with a material right, then the amount is included in the transaction price of the initial services contract and allocated to the performance obligations in that contract. Contracts with Multiple Performance Obligations Some of the Company’s contracts with customers contain multiple distinct performance obligations. For these contracts, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The standalone selling price reflects the price the Company would charge for a specific service if it was sold separately in similar circumstances and to similar customers. The Company maximizes the use of directly observable transactions to determine the standalone selling prices for its performance obligations. For subscription services, the Company separately determines the standalone selling prices by type of solution and customer demographics. For professional services, the Company separately determines standalone selling price by type of services. Other policies and judgments The commissions that the Company pays for obtaining a contract with a customer are conditional on future service provided by the employee. Therefore, since these costs are not incremental solely based on obtaining a contract, the Company does not defer any commission costs. B. Disaggregation The disaggregation of revenue by customer and type of performance obligation is as follows: Year Ended Revenue by type of customer: October 31, 2019 Airlines $ 9,349,000 Airports 5,608,000 Other 89,000 Total Revenue $ 15,046,000 Year Ended Revenue by type of performance obligation: October 31, 2019 Subscription services $ 14,736,000 Professional services 310,000 Total Revenue $ 15,046,000 C. Contract Balances The opening and closing balances of the Company's accounts receivable, unbilled receivables, and deferred revenues are as follows: Accounts Receivable Unbilled Receivable Deferred Revenue Balance at November 1, 2018 $ 1,175,000 $ 12,000 $ 3,191,000 Balance at October 31, 2019 $ 1,041,000 $ 100,000 $ 3,241,000 The difference in the opening and closing balances of the Company’s unbilled receivable and deferred revenue primarily results from the timing difference between the Company’s performance and the customer’s payment. Deferred revenue includes amounts billed to customers for which the revenue recognition criteria has not yet been met. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from the Company’s subscription services and, to a lesser extent, professional services. Deferred revenue is recognized as the Company satisfies its performance obligations. The Company generally invoices its customers in monthly, quarterly or annual installments for subscription services. Accordingly, the deferred revenue balance does not generally represent the total contract value of annual or multi-year, non-cancelable subscription arrangements. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent. The amount of revenue recognized during the fiscal year ended October 31, 2019 that was included in the deferred revenue balance at November 1, 2018 was $2,809,000. Unbilled accounts receivable relates to the delivery of subscription and professional services for which the related billings will occur in a future period. D. Transaction Price Allocated to the Remaining Performance Obligation The following table discloses the aggregate amount of the transaction price allocated to the remaining performance obligations as of the end of the reporting period, and when the Company expects to recognize the revenue. 12 months or less Greater than 12 months * Subscription services $ 5,342,000 $ 1,879,000 Professional services $ 84,000 $ - Material rights $ 194,000 $ 373,000 *Approximately 95% of these amounts are expected to be recognized between 12 and 36 months. The table above includes amounts billed and not yet recognized as revenue, as well as, unrecognized future committed billings in customer contracts and excludes future billing amounts for which the customer has a termination for convenience right in their agreement. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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 financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, stock-based compensation, software development costs, the PASSUR Network and income taxes. Actual results could differ from those estimates. Subsequent Events Management has evaluated subsequent events after the balance sheet date, through the date of issuance of the financial statements, for appropriate accounting and disclosure. Accounts Receivable, net The Company has a history of successfully collecting all amounts due from its customers under the original terms of its subscription agreements without making concessions. The Company records accounts receivables for agreements where amounts due from customers are contractually required and are non-refundable. The carrying amount of accounts receivables is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected. Net accounts receivable is comprised of the monthly, quarterly, or annual committed amounts due from customers pursuant to the terms of each respective customer’s agreement. Account receivable balances include amounts attributable to deferred revenues. The Company’s accounts receivable balances included $100,000 of unbilled receivables associated with contractually committed services provided to existing customers during the twelve months ended October 31, 2019, which will be invoiced subsequent to October 31, 2019. As of October 31, 2018, the Company’s accounts receivable balance included $12,000 of unbilled receivables associated with contractually committed services provided to existing customers. The provision for doubtful accounts was $165,000 and $159,000 as of October 31, 2019, and 2018, respectively. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating its reserve, including historical data, experience, customer types, credit worthiness, and economic trends. The Company monitors its outstanding accounts receivable balances and believes the provision is adequate. Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of the related assets. Amortization of leasehold improvements is calculated on a straight-line basis over the estimated useful life of the improvements or the term of the lease, including renewal options expected to be exercised, whichever is shorter. PASSUR Network The PASSUR Network is comprised of PASSUR and SMLAT Systems, which include the direct production, shipping, and installation costs incurred for each PASSUR and SMLAT System, which are recorded at cost, net of accumulated depreciation. Depreciation is charged to cost of revenues and is recorded using the straight-line method over the estimated useful life of the asset, which is estimated at five years for SMLAT Systems and seven years for PASSUR Systems. PASSUR and SMLAT Systems which are not installed, raw materials, work-in-process, and finished goods components are carried at cost and not depreciated until installed. Capitalized Software Development Costs The Company follows the provisions of ASC 350-40, “Internal Use Software” (“ASC 350-40”). ASC 350-40 provides guidance for determining whether computer software is internal-use software, and on accounting for the proceeds of computer software originally developed or obtained for internal use and then subsequently sold to the public. It also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred. The Company records amortization of the software on a straight-line basis over the estimated useful life of the software, typically over five years within “Cost of Revenues”. Long-Lived Assets The Company reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. Impairment is recognized to the extent the sum of undiscounted estimated future cash flows expected to result from the use of the asset is less than the carrying value. Assets to be disposed of are carried at the lower of their carrying value or fair value, less costs to sell. The Company evaluates the periods of amortization continually in determining whether later events and circumstances warrant revised estimates of useful lives. If estimates are changed, the unamortized costs will be allocated to the increased or decreased number of remaining periods in the asset’s revised life. During the fiscal year ended October 31, 2018, the Company recorded approximately $230,000, $510,000 and $960,000, a total of $1,700,000, of costs associated with an increase in the provision for obsolete and slow moving PASSUR Network parts and supplies, an impairment charge and write-off of carrying amounts related to certain PASSUR Network systems, and capitalized software development costs, respectively. Please refer to footnotes below for further details. The Company did not have any additions to inventory reserves, impairment charges, or write-offs during the fiscal year ended October 31, 2019. Cost of Revenues Costs associated with subscription and maintenance revenues consist primarily of direct labor, depreciation of PASSUR and SMLAT Network Systems, amortization of capitalized software development costs, communication costs, data feeds, travel and entertainment, and consulting fees. Also, included in cost of revenues are costs associated with upgrades to PASSUR and SMLAT Systems necessary to make such systems compatible with new software applications, as well as the ordinary repair and maintenance of existing PASSUR and SMLAT Systems. Additionally, cost of revenues in each reporting period is impacted by: (1) the number of PASSUR and SMLAT Systems added to the network, which includes the cost of production, shipment, and installation of these assets, which are capitalized to the PASSUR Network and (2) new capitalized costs associated with software development projects. Both of these are referred to as “Capitalized Assets” and are depreciated and/or amortized over their respective useful lives and charged to cost of revenues. Income Taxes The Company follows the liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the temporary differences in the tax bases of the assets or liabilities and their reported amounts in the financial statements. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount currently estimated to be realized. After considering the impact of the current year loss, including the Company’s increased expenses and weighting all available positive and negative evidence, the Company concluded that it was not more likely than not that the net deferred tax asset would be realized. The Company follows ASC 740, “Income Taxes,” (“ASC 740”) where tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in tax returns that do not meet these recognition and measurement standards. At October 31, 2019, the Company did not have any uncertain tax positions. As permitted by ASC 740-10, the Company’s accounting policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. On December 22, 2017 the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. The TCJA made broad and complex changes to the U.S. tax code, including, but not limited to: (1) reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018; (2) changed rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (3) accelerated expensing on certain qualified property; (4) created a new limitation on deductible interest expense to 30% of tax adjusted EBITDA through 2021 and then 30% of tax adjusted EBIT thereafter; (5) eliminated the corporate alternative minimum tax; and (6) further limited the deductibility of executive compensation under IRC §162(m) for tax years beginning after December 31, 2017. As the reduction in the U.S. federal corporate tax rate was administratively effective on January 1, 2018, the Company’s blended U.S. federal tax rate for the year ended October 31, 2018 was approximately 23.2%. The U.S. federal corporate tax rate for the fiscal year ended on and after October 31, 2019 is 21%. In response to the TCJA, the U.S. Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provided guidance on accounting for the tax effects of TCJA. The purpose of SAB 118 was to address any uncertainty or diversity of view in applying ASC Topic 740, Income Taxes in the reporting period in which the TCJA was enacted. SAB 118 addressed situations where the accounting was incomplete for certain income tax effects of the TJCA upon issuance of a company’s financial statements for the reporting period which include the enactment date. SAB 118 allowed for a provisional amount to be recorded if it was a reasonable estimate of the impact of the TCJA. Additionally, SAB 118 allowed for a measurement period to finalize the impacts of the TCJA, not to extend beyond one year from the date of enactment. In connection with the TCJA, the Company recorded income tax benefit of $1,127,000 related to the re-measurement of our deferred tax assets and liabilities for the reduced U.S. federal corporate tax rate of 21%. Such amount was fully offset by a change in our valuation allowance. The Company’s accounting for the TCJA was complete as of October 31, 2018, with no significant differences from our provisional estimates. Research and Development Costs Research and development costs are expensed as incurred. Net Loss per Share Information Basic net loss per share is computed based on the weighted average number of shares outstanding. Diluted earnings per share is computed similarly to basic earnings per share, except that it reflects the effect of common shares issuable upon exercise of stock options, using the treasury stock method in periods in which they have a dilutive effect. Shares used to calculate net loss per share for fiscal years 2019 and 2018 are as follows: 2019 2018 Basic Weighted average shares outstanding 7,696,091 7,696,091 Effect of dilutive stock options - - Diluted weighted average shares outstanding 7,696,091 7,696,091 Weighted average shares which are not included in the calculation of diluted net loss per share because their impact is anti-dilutive. These shares consist of stock options. 1,847,000 1,522,000 Weighted average options to purchase 1,847,000 and 1,522,000 shares of common stock at prices ranging from $1.10 to $5.00 per share that were outstanding during fiscal years 2019 and 2018, were excluded from each respective year’s computation of diluted earnings per share. In each of these years, such options’ exercise prices exceeded the average market price of our common stock, thereby causing the effect of such options to be anti-dilutive. Deferred Revenue Deferred revenue includes amounts attributable to advances received or billings related to customer agreements, which are contractually required and are non-refundable, and may be prepaid either annually, quarterly, or monthly. Deferred revenues from such customer agreements are recognized as revenue ratably over the period that coincides with the respective agreement. The Company recognizes initial set-up fee revenues and associated costs on a straight-line basis over the estimated life of the customer relationship period, typically five years. Fair Value of Financial Instruments The recorded amounts of the Company’s cash, receivables, and accounts payables approximate their fair values principally because of the short-term nature of these items. The fair value of related party debt is not practicable to determine due primarily to the fact that the Company’s related party debt is held by its Chairman and significant shareholder, and the Company does not have any third-party debt with which to compare. Additionally, on a recurring basis, the Company uses fair value measures when analyzing asset impairments. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present, and the review indicates that the assets will not be fully recoverable based on the undiscounted estimated future cash flows expected to result from the use of the asset, their carrying values are reduced to estimated fair value. Stock-Based Compensation The Company follows FASB ASC 718 “Compensation-Stock Compensation,” which requires measurement of compensation cost for all stock-based awards at fair value on date of grant, and recognition of stock-based compensation expense over the service period for awards expected to vest. The fair value of stock options was determined using the Black-Scholes valuation model. Such fair value is recognized as an expense over the service period, net of forfeitures. Stock-based compensation expense was $613,000 and $646,000 for the year ended October 31, 2019 and 2018, respectively, and was primarily included in selling, general, and administrative expenses. Comprehensive Loss The Company’s comprehensive loss is equivalent to that of the Company’s total net loss for fiscal years 2019 and 2018. Recent Accounting Pronouncements Adopted In May 2014, the FASB issued Topic 606 . Other Assets and Deferred Costs - Contracts with Customers On November 1, 2018, the Company adopted Topic 606 using the modified retrospective transition method which resulted in an adjustment to retained earnings for the cumulative effect of applying the standard to all contracts not completed as of the adoption date. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Revenue recognition remained substantially unchanged following adoption of Topic 606 and therefore the adoption of Topic 606 did not have a material impact on revenues. The primary impact of adopting Topic 606 relates to the accounting for nonrefundable up-front fees. The Company recognized revenue during the fiscal year ended October 31, 2019, of $15,046,000 under Topic 606, which was not materially different from what would have been recognized under Topic 605. The Company recorded an addition to opening accumulated deficit and a reduction to deferred revenue of approximately $66,000, respectively, as of November 1, 2018 due to the impact of adopting Topic 606. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation: Topic 718 Scope of Modification Accounting” (“ASU 2017-09”), to clarify when to account for a change in the terms or conditions of a share-based payment award as a modification. Under the new standard, modification is required only if the fair value, the vesting conditions, or the classification of an award as equity or liability changes as a result of the change in terms or conditions. The Company adopted this guidance during the quarter ended January 31, 2019, using the prospective method, with no material impact to its consolidated financial statements and related disclosures. Accounting Pronouncements Issued but not yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” requiring lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. During July 2018, the FASB issued additional updates to the new lease accounting standard. ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” clarifies certain aspects of the new lease accounting standard. In addition, ASU No. 2018-11, “Leases (Topic 842): Targ |
2. Property and Equipment, net
2. Property and Equipment, net | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
2. Property and Equipment, net | 2. Property and Equipment, net Property and equipment consist of the following as of October 31, 2019 and 2018: Estimated useful lives 2019 2018 Leasehold improvements 3-5 years $ 216,000 $ 216,000 Equipment 5-10 years 6,413,000 6,212,000 Furniture and fixtures 5-10 years 593,000 593,000 7,222,000 7,021,000 Less accumulated depreciation 6,670,000 6,348,000 Total $ 552,000 $ 673,000 The Company recorded depreciation expense on the assets included in property and equipment of $322,000 and $439,000 for the year ended October 31, 2019 and 2018, respectively. |
3. Passur Network
3. Passur Network | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
3. Passur Network | 3. PASSUR Network, net PASSUR Network consists of the following as of October 31, 2019 and 2018: 2019 2018 PASSUR Network, beginning balance $ 19,242,000 $ 19,788,000 Additions 15,000 322,000 Disposals (355,000) (128,000) Write-off - (510,000) Inventory reserve - (230,000) Total capitalized PASSUR Network costs 18,902,000 19,242,000 Less accumulated depreciation 14,953,000 14,441,000 PASSUR Network, ending balance, net $ 3,949,000 $ 4,801,000 The Company capitalized $61,000 and $242,000, of PASSUR Network costs, for the year ended October 31, 2019 and 2018, respectively. Depreciation expense related to the Company-owned PASSUR Network was $868,000 and $785,000 for the years ended October 31, 2019 and 2018, respectively. Depreciation is charged to cost of revenues and is calculated using the straight-line method over the estimated useful life of the asset, which is estimated at seven and five years for PASSUR and SMLAT systems, respectively. Additionally, the Company purchased parts for the PASSUR Network totaling $3,000 and $152,000, during the year ended October 31, 2019 and 2018, respectively. The Company used $49,000 and $73,000 of PASSUR Network parts for repairs during the year ended October 31, 2019 and 2018, respectively. The net carrying balance of the PASSUR Network as of October 31, 2019 and 2018 was $3,949,000 and $4,801,000, respectively. Included in the net carrying balance as of October 31, 2019, were parts and finished goods for PASSUR and SMLAT Systems totaling $1,298,000 and $533,000, respectively, which have not yet been installed. As of October 31, 2018, $1,316,000 and $576,000 of parts and finished goods for PASSUR and SMLAT systems, respectively, were included in the net carrying balance of the PASSUR Network. PASSUR and SMLAT Systems which are not installed are carried at cost and not depreciated until installed. As of October 31, 2019, depreciation expense for the PASSUR Network assets, where depreciation has commenced, is estimated to approximate $854,000, $610,000, $442,000, $136,000, and $47,000, for the fiscal years ended October 31, 2020, 2021, 2022, 2023 and 2024, respectively. During fiscal year 2018, the Company increased its reserve for PASSUR Network parts and supplies by $230,000, bringing the reserve to approximately $270,000. Additionally, during fiscal year 2018, the Company determined that certain PASSUR Network assets were no longer likely to generate future revenue as a result of a change in a customer’s requirements at a specific location, which resulted in an impairment charge and write-off of approximately $510,000. These costs were recorded within “Cost of Revenues”. During the year ended October 31, 2019, the Company disposed of four PASSUR Network assets, with a net book value of zero. During the year ended October 31, 2018, the Company disposed of one PASSUR Network asset, with a net book value of zero and deinstalled and returned to inventory, one PASSUR Network asset with a net book value of $23,000. The Company did not record any impairments related to any of the PASSUR Network assets in fiscal year 2019. |
4. Capitalized Software Develop
4. Capitalized Software Development Costs | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
4. Capitalized Software Development Costs | 4. Capitalized Software Development Costs PASSUR Software Development costs consist of the following as of October 31, 2019 and 2018: 2019 2018 Software development costs, beginning balance $ 21,159,000 $ 19,918,000 Additions 2,573,000 2,503,000 Impairment charge - (1,262,000) Total capitalized software development costs 23,732,000 21,159,000 Less accumulated amortization 15,413,000 13,017,000 Software development costs, ending balance, net $ 8,319,000 $ 8,142,000 The Company’s capitalization of software development projects was $2,573,000 and $2,503,000 for the year ended October 31, 2019 and 2018, respectively. Amortization expense related to capitalized software development projects was $2,396,000 and $2,295,000 for the year ended October 31, 2019 and 2018, respectively. As of October 31, 2019, amortization expense for capitalized software development costs where amortization has commenced is estimated to approximate $2,519,000, $2,082,000, $1,589,000, $923,000, and $234,000, for the fiscal years ending October 31, 2020, 2021, 2022, 2023 and 2024, respectively. As of October 31, 2019, the Company had $973,000 of capitalized software development costs relating to projects currently still in development, therefore, are not yet subject to amortization. During fiscal year 2018, the Company reviewed the value of its capitalized software products and determined that some capitalized software products would no longer be marketed or made available for subscription sales as currently developed, which resulted in an impairment charge of the net carrying amount of approximately $960,000. These costs were recorded within “Cost of Revenues”. The Company did not record any impairments related to capitalized software development projects in fiscal year 2019. |
5. Accrued Expenses and Other C
5. Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
5. Accrued Expenses and Other Current Liabilities | 5. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following as of October 31, 2019 and 2018: 2019 2018 Payroll, payroll taxes, and benefits $ 186,000 $ 304,000 Professional fees 197,000 272,000 Travel expenses 73,000 142,000 Accrued rent 151,000 151,000 Other liabilities 182,000 320,000 Total $ 789,000 $ 1,189,000 |
6. Notes Payable
6. Notes Payable | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
6. Notes Payable | 6. Notes Payable During the year ended October 31, 2019, the Company paid G.S. Beckwith Gilbert, the Company’s significant shareholder and Chairman, interest incurred on the existing debt agreement with Mr. Gilbert (the “Existing Gilbert Note”) through July 31, 2019, for a total amount equal to $516,000. During fiscal year 2019, Mr. Gilbert loaned the Company an additional $2,100,000 to primarily fund the Company’s near-term investment strategy to enhance the Company’s technology platform, in the form of software development personnel, third-party contractors, and PASSUR Network infrastructure support. As of October 31, 2019, the loan balance totaled $8,150,000. During the first quarter of fiscal year 2020, Mr. Gilbert loaned the Company an additional $520,000. On January 27, 2020, the Company issued Mr. Gilbert the Sixth Replacement Note in the amount of $9,071,000 representing the outstanding principal and interest owed as of such date. During the year ended October 31, 2018, the Company paid interest to Mr. Gilbert of $336,000, representing the entire fiscal year 2018 interest due, thereby meeting the payment requirements of the loan agreement. During fiscal year 2018, Mr. Gilbert loaned the Company an additional $2,250,000 to primarily fund the Company’s near-term investment strategy to enhance the Company’s technology platform. As of October 31, 2018, the loan balance totaled $6,050,000. On January 27, 2020, the Company entered into a Sixth Debt Extension Agreement with Mr. Gilbert, effective January 27, 2020, pursuant to which the Company and Mr. Gilbert agreed to modify certain terms and conditions of the Existing Gilbert Note. The maturity date of the Existing Gilbert Note was due on November 1, 2020, and the total amount of principal and interest due for the fourth quarter of fiscal year 2019 and first quarter of fiscal year 2020 and owing as of January 27, 2020, was $9,071,000. Pursuant to the Sixth Debt Extension Agreement, the Company issued a new note to Mr. Gilbert in the amount of $9,071,000 (the “Sixth Replacement Note”) equal to principal of $8,670,000 and accrued interest of $401,000, and cancelled the Existing Gilbert Note. The Company agreed to pay accrued interest equal to $401,000, included in the Sixth Replacement note, at the time and on the terms set forth in the Sixth Replacement Note. Under the terms of the Sixth Replacement Note, the maturity date was extended to November 1, 2021, and the annual interest rate remained at 9.75%. Interest payments under the Sixth Replacement Note shall be made annually on October 31st of each year. The note payable is secured by the Company’s assets. The Company has paid all interest incurred on the Existing Gilbert Note through July 31, 2019, totaling $516,000. As of October 31, 2019, the Company’s notes payable balance included accrued interest on the Existing Gilbert Note of $200,000, representing interest incurred during the fourth quarter of 2019. The amendments to the Sixth Replacement Note was determined to be a modification of the debt instrument and no gain or loss was recorded as a result of the transactions. The Company evaluated its financial position at October 31, 2019, including an operating loss of $3,132,000 and working capital deficit of $3,648,000 and has requested and received a commitment from G.S. Beckwith Gilbert, dated January 27, 2020, that if the Company, at any time, is unable to meet its obligations through January 27, 2021, Mr. Gilbert will provide the necessary continuing financial support to the Company in order for the Company to meet such obligations. Such commitment for financial support may be in the form of additional advances or loans to the Company, in addition to the deferral of principal and/or interest payments due on the existing loans, if deemed necessary. |
7. Operating Leases of Lessee D
7. Operating Leases of Lessee Disclosure | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
7. Operating Leases of Lessee Disclosure | 7. Leases The CompanyÂ’s headquarters, located in Stamford, Connecticut, are subject to a lease through June 30, 2023, at an average annual rental rate of $220,000. The CompanyÂ’s software development and manufacturing facility, located in Bohemia, New York, is subject to a lease through October 31, 2020, at an average annual rental rate of $139,000. The CompanyÂ’s primary software development facility, located in Orlando, Florida, is subject to a lease through August 31, 2021, at an average annual rental rate of $72,000. The company also has a regional office in Vienna, Virginia, which is subject to a lease through July 31, 2021, at an average rental rate of $83,000. An additional regional office in Irving, Texas is subject to a lease through April 30, 2023, at an annual rate of $60,000. These leases provide for additional payments of real estate taxes and other operating expenses over the base amount in the rental agreement. Other short-term operating leases are included below. All other operating leases are under a month-to-month arrangement. Rent expense, which includes utilities, was $655,000 and $618,000 for the year ended October 31, 2019 and 2018, respectively. Contractual obligations Fiscal Year Ended October 31: under operating leases 2020 609,833 2021 437,746 2022 308,520 2023 195,183 Thereafter - Total minimum contractual obligations $ 1,551,282 |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
8. Income Taxes | 8. Income Taxes The CompanyÂ’s provision for income taxes in each fiscal year consists of current federal, state, and local minimum taxes. The income tax expense for fiscal years ended October 31, 2019 and 2018 consisted of the following: 2019 2018 Current: Federal $ - $ - State $ (10,000) $ 5,000 Income tax provision-current $ (10,000) $ 5,000 Deferred: Federal $ - $ - State $ - $ - Total income tax (benefit)/expense, net $ (10,000) $ 5,000 The difference between income taxes expected at the U.S federal statutory income tax rate and the reported income tax expense are summarized as follows: 2019 2018 Amount Percent Amount Percent U.S. statutory tax $ (808,000) 21.0% $ (1,273,000) 23.2% Stock compensation 102,000 -2.6% 128,000 -2.3% Meals and entertainment 9,000 -0.2% 9,000 -0.2% State tax, net of federal benefit (164,000) 4.2% (209,000) 3.8% Tax law changes (U.S. Tax Reform) - 0.0% 1,127,000 -20.5% Other 44,000 -1.1% (44,000) 0.8% Change in Valuation Allowance 807,000 -21.0% 267,000 -4.9% Income tax (benefit)/expense, net $ (10,000) 0.3% $ 5,000 -0.1% The tax effect of temporary differences that give rise to deferred tax assets and liabilities as of October 31, 2019 and 2018 is as follows: 2019 2018 Deferred tax assets and liabilities: Net operating loss carry-forward $ 3,758,000 $ 3,037,000 Deferred Revenue 92,000 84,000 Allowance for doubtful accounts receivable 43,000 41,000 Stock compensation-nonqualified 205,000 171,000 Accruals 81,000 104,000 Deferred rent 29,000 37,000 Deferred interest 97,000 - Depreciation (427,000) (402,000) Sub-total $ 3,878,000 $ 3,072,000 Valuation allowance (3,878,000) (3,072,000) Deferred tax assets and liabilities $ - $ - At October 31, 2019, the Company had available a federal net operating loss carryforward of $15,565,000, of which $2,785,000 are indefinite lived and $12,780,000 will expire in various tax years from fiscal year 2022 through fiscal year 2038. At October 31, 2019 and 2018, the Company did not have any uncertain tax positions. As permitted by ASC 740-10, the CompanyÂ’s accounting policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. The CompanyÂ’s tax return years that are subject to examination by taxing authorities are fiscal years 2016 through 2019. |
9. Stock-Based Compensation
9. Stock-Based Compensation | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
9. Stock-Based Compensation | 9. Stock-Based Compensation On February 26, 2019, the Board of Directors of the Company, subject to shareholder approval, unanimously adopted the 2019 Stock Incentive Plan (the “Plan”), to replace the Company’s 2009 Stock Incentive Plan, as amended (the “2009 Plan”), which expired on February 24, 2019. The Plan became effective upon the date of its adoption by the Board, subject to shareholder approval within twelve months of the date of such adoption. The Plan provides for the granting of stock options for up to 5,000,000 shares of the Company’s common stock. On April 9, 2019, the Company’s shareholders approved the Plan. The Black-Scholes stock option valuation model was developed for use in estimating the fair value of traded stock options, which have no vesting restrictions and are fully transferable. In addition, stock option valuation models require the input of highly subjective assumptions including expected stock price volatility. Information with respect to the Company’s stock options for fiscal years 2019 and 2018 is as follows: Number of stock options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Stock options outstanding at November 1, 2017 1,594,000 $3.52 6.9 $ 84,000 Stock options granted 82,500 $2.38 Stock options exercised - $0.00 Stock options forfeited (154,500) $3.43 Stock options outstanding at October 31, 2018 1,522,000 $3.47 6.2 $ 1,800 Stock options granted 542,500 $1.96 Stock options exercised - $0.00 Stock options forfeited (217,500) $1.98 Stock options outstanding at October 31, 2019 1,847,000 $3.20 6.4 $ 2,200 Stock options exercisable at October 31, 2019 995,000 $3.59 4.7 $ - The weighted average grant date fair value of the Company’s stock options granted during fiscal years 2019 and 2018 was $1.96 and $2.38, respectively. There were no stock options exercised during fiscal year 2019 and 2018. The Company’s stock options vest over a period of five years. The fair value for these stock options was estimated at the date of grant using a Black-Scholes stock option pricing model, with the following weighted average assumptions for fiscal years 2019 and 2018: Years ended October 31, 2019 2018 Expected dividend yield 0% 0% Expected volatility 87 - 117% 93 - 117% Risk-free interest rate 1.43 – 2.94% 2.24 - 2.91% Expected term (years) 6.5 6.5 Discount for post-vesting restrictions N/A N/A The Company recognized share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the consolidated statement of operations: 2019 2018 Cost of revenues $ 17,000 $ 25,000 Research and development $ 110,000 $ 110,000 Selling, general and administrative $ 486,000 $ 511,000 $ 613,000 $ 646,000 The following table summarizes the plans under which the Company granted equity compensation as of October 31, 2019: Name of Plan Shares Authorized Shares Available for Grant Shares Outstanding Last Date for Grant of Shares PASSUR Aerospace, Inc., 2009 Stock Incentive Plan 3,000,000 0 1,529,599 February 24, 2019 PASSUR Aerospace, Inc., 2019 Stock Incentive Plan 5,000,000 4,682,500 317,500 February 26, 2029 All outstanding options granted under the Company’s equity plans have terms of ten years. The Company’s stock options vest over a period of five years. There was $1,249,000 of unrecognized stock-based compensation costs expected to be recognized over a weighted average period of 3.0 years as of October 31, 2019. The Company had 852,000 shares in unvested stock-based options as of October 31, 2019. |
10. Concentration Risk Disclosu
10. Concentration Risk Disclosure | 12 Months Ended |
Oct. 31, 2019 | |
Notes | |
10. Concentration Risk Disclosure | 10. Major Customers The CompanyÂ’s principal business is to provide predictive analytics and decision support technology for the aviation industry to primarily improve the operational performance and cash flow of airlines. The Company believes it operates in one operating segment. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Three customers accounted for 55%, or $8,296,000, of total revenues in fiscal year 2019. One customer accounted for 24% or $3,599,000, a second customer accounted for 20% or $2,985,000, and a third customer accounted for 11% or $1,713,000 of total revenues in fiscal year 2019. Three customers accounted for 53%, or $7,798,000, of total revenues in fiscal year 2018. One customer accounted for 23% or $3,344,000, a second customer accounted for 20% or $2,995,000, and a third customer accounted for 10% or $1,459,000 of total revenues in fiscal year 2018. As of October 31, 2019, the Company had three customers each of which accounted for 10% or more of the accounts receivable balance. One customer accounted for 19%, or $224,000, a second customer accounted for 14%, or $173,000, and a third customer accounted for 13% or $158,000. As of October 31, 2018, the Company had two customers each of which accounted for 10% or more of the accounts receivable balance. One customer accounted for 33%, or $446,000, and a second customer accounted for 21%, or $278,000. Credit losses historically have been immaterial, although, there is one customer, which is not one of the major customers described above, with a significant past due accounts receivable balance, which the Company has fully reserved as of the fiscal year ended October 31, 2019. The Company had foreign sales of $1,226,000 and $978,000 in fiscal years 2019 and 2018, respectively. All sales, including foreign sales, are denominated in U.S. dollars. |
1. Description of Business an_2
1. Description of Business and Significant Accounting Policies: Nature of Business (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Nature of Business | Nature of Business PASSUR Aerospace, Inc. (“PASSUR” or the “Company”), a New York corporation founded in 1967, is a business intelligence company, providing predictive analytics and decision support technology for the aviation industry primarily to improve the operational performance and cash flow of airlines and the airports where they operate. PASSUR uses big data, within the aviation intelligence platform and a suite of web-based solutions that address the aviation industry’s intractable and costly challenges, including, but not limited to, the underutilization of airspace and airport capacity, delays, cancellations, and diversions. The Company’s technology platform is supported by its Aviation Intelligence Center of Excellence, a team of subject matter experts with extensive experience in airline, airport, and business aviation operations, finance, air traffic management, systems automation, and data visualization, with specific expertise in the operational and business needs, requirements, objectives, and constraints of the aviation industry. PASSUR’s mission is to improve global air traffic efficiencies by connecting the world’s aviation professionals onto a single aviation intelligence platform, making PASSUR an element in addressing the aviation industry’s system-wide inefficiencies. We are an aviation intelligence company that makes air travel more predictable, gate-to-gate, by using predictive analytics generated from our own big data – to mitigate constraints for airlines and their customers. PASSUR’s information solutions are used by the five largest North American airlines, more than 60 airport customers, including 20 of the top 30 North American airports (with PASSUR solutions also used at the remaining ten airports by one or more airline customers), and eighty-seven business aviation customer locations, and the U.S. government. PASSUR provides data aggregation and consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services. To enable this unique offering, PASSUR owns and operates the largest commercial passive radar network in the world that updates flight tracks every 1 to 4.6 seconds, powering a proprietary database that is accessible in real-time and delivers timely, accurate information and solutions via PASSUR’s industry-leading algorithms and business logic included in its products. Solutions offered by PASSUR help to ensure flight completion, covering the entire flight life cycle, from gate to gate, and result in reductions in overall costs and carbon emissions, while helping to maximize revenue opportunities, as well as improving operational efficiency and enhancing the passenger experience. PASSUR’s commercial solutions give aviation operators the ability to optimize performance in today’s air traffic management system, while also achieving Next Generation Air Transportation System (“NextGen”) and Single European Sky ATM Research objectives. PASSUR integrates data from multiple sources, including its independent network of surveillance sensors installed throughout North America creating coast to coast coverage, as well as locations in Europe and Asia; government data; customer data; and data from third party partners. PASSUR’s sensors receive aircraft and drone signals in Mode A, C, S, and Automatic Dependent Surveillance-Broadcast (“ADS-B”), providing position, altitude, beacon code, and tail number, among other information. PASSUR receives signals from aircraft that, when combined with its historical database of aircraft and airport behavior, including information recorded by its network over the last 10 years, allow the Company to know more about what has happened historically and what is happening in real-time. In addition, the historical database allows the Company to predict how aircraft, the airspace, and airports are going to perform, and more importantly, how the aircraft, the airspace, and airports should perform. |
1. Description of Business an_3
1. Description of Business and Significant Accounting Policies: Liquidity (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Liquidity | Liquidity The CompanyÂ’s current liabilities exceeded current assets, excluding deferred revenue by $785,000 as of October 31, 2019. The note payable to a related party, G.S. Beckwith Gilbert, the CompanyÂ’s significant shareholder and Chairman, was $8,150,000 at October 31, 2019, with a maturity of November 1, 2021. The CompanyÂ’s stockholdersÂ’ equity was $456,000 at October 31, 2019. The Company had a net loss of $3,837,000 for the year ended October 31, 2019. If the CompanyÂ’s business plan does not generate sufficient cash flows from operations to meet the CompanyÂ’s operating cash requirements, the Company will attempt to obtain external financing on commercially reasonable terms. However, the Company has received a commitment from Mr. Gilbert, dated January 27, 2020, that if the Company, at any time, is unable to meet its obligations through January 27, 2021, Mr. Gilbert will provide the necessary continuing financial support to the Company in order for the Company to meet such obligations. Such commitment for financial support may be in the form of additional advances or loans to the Company, in addition to the deferral of principal and/or interest payments due on the existing loans, if deemed necessary. |
1. Description of Business an_4
1. Description of Business and Significant Accounting Policies: Basis of Presentation (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of PASSUR Aerospace, Inc. and its wholly-owned Subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation. Certain financial information in the footnotes has been rounded to the nearest thousand for presentation purposes. |
1. Description of Business an_5
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Revenue Recognition Policy | Revenue Recognition Policy The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers” ("Topic 606") The Company derives revenue primarily from subscription-based, real-time decision and solution information and professional services. Revenues are recognized when control of these services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps: · Identification of the contract, or contracts, with a customer; · Identification of the performance obligations in the contract; · Determination of transaction price; · Allocation of transaction price to performance obligations in the contract; and · Recognition of revenue when, or as, the Company satisfies a performance obligation. The Company recognized revenue during the fiscal year ended October 31, 2019, of $15,046,000 under Topic 606, which was not materially different from what would have been recognized under Accounting Standards Codification ("ASC") Topic 605, “ Revenue Recognition” ("Topic 605") A. Nature of performance obligations Subscription services revenue Subscription services revenue is comprised of cloud-based subscription fees that provide the customer the right to access the Company’s software and receive support and updates, if any, for a period of time. The Company has determined such access represents a stand-ready service provided continually throughout the contract term. As such, control and satisfaction of this stand-ready performance obligation is deemed to occur over time. The Company’s subscription contracts include a fixed amount of consideration that is recognized ratably over the non-cancelable contract term, beginning on the date that access is made available to the customer. The passage of time is deemed to be the most faithful depiction of the transfer of control of the services as the customer simultaneously receives and consumes the benefit provided by the Company’s performance. Subscription contracts are generally one to three years in length, billed either monthly, quarterly or annually, typically in advance, which coincides with the terms of the agreement. The Company’s subscription contracts do not have a significant financing component and customer invoices are typically due within 30 days. There is no significant variable consideration related to these arrangements. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred. Professional services revenue Professional services primarily consist of value assessments and customer training services. Payment for professional services is generally a fixed fee or a fee based on time and materials. The obligation to provide professional services is generally satisfied over time, with the customer simultaneously receiving and consuming the benefits as the Company satisfies its performance obligations. For professional services, revenue is recognized by measuring progress toward the complete satisfaction of the Company’s obligation. Progress for services that are contracted for a fixed price is generally measured based on hours incurred as a portion of total estimated hours, and as a practical expedient, progress for services that are contracted for time and materials is generally based on the amount the Company has the right to invoice. Professional services contracts are generally one year or less in length, billed either in advance, upon pre-defined milestones or as services are rendered, which coincides with the terms of the agreement. The Company’s professional service contracts do not have a significant financing component and customer invoices are typically due within 30 days. Material rights Contracts with customers may include material rights which are also performance obligations. Material rights primarily arise when the contract gives the customer the right to renew subscription services at a discounted price in the future. This may occur from time to time when the Company’s contracts provide an implicit discount as the customer pays a nonrefundable up-front fee in connection with the initial services contract that it does not have to pay again in order to renew the service. These non-refundable up-front fees are not related to any promised service that the customer benefits from other than providing access to the subscription service. Revenue allocated to material rights is recognized when the customer exercises the right over the estimated renewal period of five years or when the right expires. If exercised by the customer, the amount previously deferred for the material right is included in the transaction price of the renewal contract and allocated to the services included in that contract. If expired, revenue is recognized as subscription services revenue in the period the right expired. If the up-front fees do not provide the customer with a material right, then the amount is included in the transaction price of the initial services contract and allocated to the performance obligations in that contract. Contracts with Multiple Performance Obligations Some of the Company’s contracts with customers contain multiple distinct performance obligations. For these contracts, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The standalone selling price reflects the price the Company would charge for a specific service if it was sold separately in similar circumstances and to similar customers. The Company maximizes the use of directly observable transactions to determine the standalone selling prices for its performance obligations. For subscription services, the Company separately determines the standalone selling prices by type of solution and customer demographics. For professional services, the Company separately determines standalone selling price by type of services. Other policies and judgments The commissions that the Company pays for obtaining a contract with a customer are conditional on future service provided by the employee. Therefore, since these costs are not incremental solely based on obtaining a contract, the Company does not defer any commission costs. B. Disaggregation The disaggregation of revenue by customer and type of performance obligation is as follows: Year Ended Revenue by type of customer: October 31, 2019 Airlines $ 9,349,000 Airports 5,608,000 Other 89,000 Total Revenue $ 15,046,000 Year Ended Revenue by type of performance obligation: October 31, 2019 Subscription services $ 14,736,000 Professional services 310,000 Total Revenue $ 15,046,000 C. Contract Balances The opening and closing balances of the Company's accounts receivable, unbilled receivables, and deferred revenues are as follows: Accounts Receivable Unbilled Receivable Deferred Revenue Balance at November 1, 2018 $ 1,175,000 $ 12,000 $ 3,191,000 Balance at October 31, 2019 $ 1,041,000 $ 100,000 $ 3,241,000 The difference in the opening and closing balances of the Company’s unbilled receivable and deferred revenue primarily results from the timing difference between the Company’s performance and the customer’s payment. Deferred revenue includes amounts billed to customers for which the revenue recognition criteria has not yet been met. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from the Company’s subscription services and, to a lesser extent, professional services. Deferred revenue is recognized as the Company satisfies its performance obligations. The Company generally invoices its customers in monthly, quarterly or annual installments for subscription services. Accordingly, the deferred revenue balance does not generally represent the total contract value of annual or multi-year, non-cancelable subscription arrangements. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent. The amount of revenue recognized during the fiscal year ended October 31, 2019 that was included in the deferred revenue balance at November 1, 2018 was $2,809,000. Unbilled accounts receivable relates to the delivery of subscription and professional services for which the related billings will occur in a future period. D. Transaction Price Allocated to the Remaining Performance Obligation The following table discloses the aggregate amount of the transaction price allocated to the remaining performance obligations as of the end of the reporting period, and when the Company expects to recognize the revenue. 12 months or less Greater than 12 months * Subscription services $ 5,342,000 $ 1,879,000 Professional services $ 84,000 $ - Material rights $ 194,000 $ 373,000 *Approximately 95% of these amounts are expected to be recognized between 12 and 36 months. The table above includes amounts billed and not yet recognized as revenue, as well as, unrecognized future committed billings in customer contracts and excludes future billing amounts for which the customer has a termination for convenience right in their agreement. |
1. Description of Business an_6
1. Description of Business and Significant Accounting Policies: Use of Estimates (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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 financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, stock-based compensation, software development costs, the PASSUR Network and income taxes. Actual results could differ from those estimates. |
1. Description of Business an_7
1. Description of Business and Significant Accounting Policies: Subsequent Events (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Subsequent Events | Subsequent Events Management has evaluated subsequent events after the balance sheet date, through the date of issuance of the financial statements, for appropriate accounting and disclosure. |
1. Description of Business an_8
1. Description of Business and Significant Accounting Policies: Accounts Receivable, net (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Accounts Receivable, net | Accounts Receivable, net The Company has a history of successfully collecting all amounts due from its customers under the original terms of its subscription agreements without making concessions. The Company records accounts receivables for agreements where amounts due from customers are contractually required and are non-refundable. The carrying amount of accounts receivables is reduced by a valuation allowance that reflects the CompanyÂ’s best estimate of the amounts that will not be collected. Net accounts receivable is comprised of the monthly, quarterly, or annual committed amounts due from customers pursuant to the terms of each respective customerÂ’s agreement. Account receivable balances include amounts attributable to deferred revenues. The CompanyÂ’s accounts receivable balances included $100,000 of unbilled receivables associated with contractually committed services provided to existing customers during the twelve months ended October 31, 2019, which will be invoiced subsequent to October 31, 2019. As of October 31, 2018, the CompanyÂ’s accounts receivable balance included $12,000 of unbilled receivables associated with contractually committed services provided to existing customers. The provision for doubtful accounts was $165,000 and $159,000 as of October 31, 2019, and 2018, respectively. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating its reserve, including historical data, experience, customer types, credit worthiness, and economic trends. The Company monitors its outstanding accounts receivable balances and believes the provision is adequate. |
1. Description of Business an_9
1. Description of Business and Significant Accounting Policies: Property, Plant and Equipment (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Property, Plant and Equipment | Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of the related assets. Amortization of leasehold improvements is calculated on a straight-line basis over the estimated useful life of the improvements or the term of the lease, including renewal options expected to be exercised, whichever is shorter. |
1. Description of Business a_10
1. Description of Business and Significant Accounting Policies: PASSUR Network (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
PASSUR Network | PASSUR Network The PASSUR Network is comprised of PASSUR and SMLAT Systems, which include the direct production, shipping, and installation costs incurred for each PASSUR and SMLAT System, which are recorded at cost, net of accumulated depreciation. Depreciation is charged to cost of revenues and is recorded using the straight-line method over the estimated useful life of the asset, which is estimated at five years for SMLAT Systems and seven years for PASSUR Systems. PASSUR and SMLAT Systems which are not installed, raw materials, work-in-process, and finished goods components are carried at cost and not depreciated until installed. |
1. Description of Business a_11
1. Description of Business and Significant Accounting Policies: Capitalized Software Development Costs (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Capitalized Software Development Costs | Capitalized Software Development Costs The Company follows the provisions of ASC 350-40, “Internal Use Software” (“ASC 350-40”). ASC 350-40 provides guidance for determining whether computer software is internal-use software, and on accounting for the proceeds of computer software originally developed or obtained for internal use and then subsequently sold to the public. It also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred. The Company records amortization of the software on a straight-line basis over the estimated useful life of the software, typically over five years within “Cost of Revenues”. |
1. Description of Business a_12
1. Description of Business and Significant Accounting Policies: Long-lived Assets (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Long-lived Assets | Long-Lived Assets The Company reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. Impairment is recognized to the extent the sum of undiscounted estimated future cash flows expected to result from the use of the asset is less than the carrying value. Assets to be disposed of are carried at the lower of their carrying value or fair value, less costs to sell. The Company evaluates the periods of amortization continually in determining whether later events and circumstances warrant revised estimates of useful lives. If estimates are changed, the unamortized costs will be allocated to the increased or decreased number of remaining periods in the assetÂ’s revised life. During the fiscal year ended October 31, 2018, the Company recorded approximately $230,000, $510,000 and $960,000, a total of $1,700,000, of costs associated with an increase in the provision for obsolete and slow moving PASSUR Network parts and supplies, an impairment charge and write-off of carrying amounts related to certain PASSUR Network systems, and capitalized software development costs, respectively. Please refer to footnotes below for further details. The Company did not have any additions to inventory reserves, impairment charges, or write-offs during the fiscal year ended October 31, 2019. |
1. Description of Business a_13
1. Description of Business and Significant Accounting Policies: Cost of Revenues (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Cost of Revenues | Cost of Revenues Costs associated with subscription and maintenance revenues consist primarily of direct labor, depreciation of PASSUR and SMLAT Network Systems, amortization of capitalized software development costs, communication costs, data feeds, travel and entertainment, and consulting fees. Also, included in cost of revenues are costs associated with upgrades to PASSUR and SMLAT Systems necessary to make such systems compatible with new software applications, as well as the ordinary repair and maintenance of existing PASSUR and SMLAT Systems. Additionally, cost of revenues in each reporting period is impacted by: (1) the number of PASSUR and SMLAT Systems added to the network, which includes the cost of production, shipment, and installation of these assets, which are capitalized to the PASSUR Network and (2) new capitalized costs associated with software development projects. Both of these are referred to as “Capitalized Assets” and are depreciated and/or amortized over their respective useful lives and charged to cost of revenues. |
1. Description of Business a_14
1. Description of Business and Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Income Taxes | Income Taxes The Company follows the liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the temporary differences in the tax bases of the assets or liabilities and their reported amounts in the financial statements. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount currently estimated to be realized. After considering the impact of the current year loss, including the Company’s increased expenses and weighting all available positive and negative evidence, the Company concluded that it was not more likely than not that the net deferred tax asset would be realized. The Company follows ASC 740, “Income Taxes,” (“ASC 740”) where tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in tax returns that do not meet these recognition and measurement standards. At October 31, 2019, the Company did not have any uncertain tax positions. As permitted by ASC 740-10, the Company’s accounting policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. On December 22, 2017 the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. The TCJA made broad and complex changes to the U.S. tax code, including, but not limited to: (1) reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018; (2) changed rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (3) accelerated expensing on certain qualified property; (4) created a new limitation on deductible interest expense to 30% of tax adjusted EBITDA through 2021 and then 30% of tax adjusted EBIT thereafter; (5) eliminated the corporate alternative minimum tax; and (6) further limited the deductibility of executive compensation under IRC §162(m) for tax years beginning after December 31, 2017. As the reduction in the U.S. federal corporate tax rate was administratively effective on January 1, 2018, the Company’s blended U.S. federal tax rate for the year ended October 31, 2018 was approximately 23.2%. The U.S. federal corporate tax rate for the fiscal year ended on and after October 31, 2019 is 21%. In response to the TCJA, the U.S. Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provided guidance on accounting for the tax effects of TCJA. The purpose of SAB 118 was to address any uncertainty or diversity of view in applying ASC Topic 740, Income Taxes in the reporting period in which the TCJA was enacted. SAB 118 addressed situations where the accounting was incomplete for certain income tax effects of the TJCA upon issuance of a company’s financial statements for the reporting period which include the enactment date. SAB 118 allowed for a provisional amount to be recorded if it was a reasonable estimate of the impact of the TCJA. Additionally, SAB 118 allowed for a measurement period to finalize the impacts of the TCJA, not to extend beyond one year from the date of enactment. In connection with the TCJA, the Company recorded income tax benefit of $1,127,000 related to the re-measurement of our deferred tax assets and liabilities for the reduced U.S. federal corporate tax rate of 21%. Such amount was fully offset by a change in our valuation allowance. The Company’s accounting for the TCJA was complete as of October 31, 2018, with no significant differences from our provisional estimates. |
1. Description of Business a_15
1. Description of Business and Significant Accounting Policies: Research and Development Costs (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
1. Description of Business a_16
1. Description of Business and Significant Accounting Policies: Net Income Per Share Information (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Net Income Per Share Information | Net Loss per Share Information Basic net loss per share is computed based on the weighted average number of shares outstanding. Diluted earnings per share is computed similarly to basic earnings per share, except that it reflects the effect of common shares issuable upon exercise of stock options, using the treasury stock method in periods in which they have a dilutive effect. Shares used to calculate net loss per share for fiscal years 2019 and 2018 are as follows: 2019 2018 Basic Weighted average shares outstanding 7,696,091 7,696,091 Effect of dilutive stock options - - Diluted weighted average shares outstanding 7,696,091 7,696,091 Weighted average shares which are not included in the calculation of diluted net loss per share because their impact is anti-dilutive. These shares consist of stock options. 1,847,000 1,522,000 Weighted average options to purchase 1,847,000 and 1,522,000 shares of common stock at prices ranging from $1.10 to $5.00 per share that were outstanding during fiscal years 2019 and 2018, were excluded from each respective yearÂ’s computation of diluted earnings per share. In each of these years, such optionsÂ’ exercise prices exceeded the average market price of our common stock, thereby causing the effect of such options to be anti-dilutive. |
1. Description of Business a_17
1. Description of Business and Significant Accounting Policies: Deferred Revenue (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Deferred Revenue | Deferred Revenue Deferred revenue includes amounts attributable to advances received or billings related to customer agreements, which are contractually required and are non-refundable, and may be prepaid either annually, quarterly, or monthly. Deferred revenues from such customer agreements are recognized as revenue ratably over the period that coincides with the respective agreement. The Company recognizes initial set-up fee revenues and associated costs on a straight-line basis over the estimated life of the customer relationship period, typically five years. |
1. Description of Business a_18
1. Description of Business and Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The recorded amounts of the CompanyÂ’s cash, receivables, and accounts payables approximate their fair values principally because of the short-term nature of these items. The fair value of related party debt is not practicable to determine due primarily to the fact that the CompanyÂ’s related party debt is held by its Chairman and significant shareholder, and the Company does not have any third-party debt with which to compare. Additionally, on a recurring basis, the Company uses fair value measures when analyzing asset impairments. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present, and the review indicates that the assets will not be fully recoverable based on the undiscounted estimated future cash flows expected to result from the use of the asset, their carrying values are reduced to estimated fair value. |
1. Description of Business a_19
1. Description of Business and Significant Accounting Policies: Stock-based Compensation (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Stock-based Compensation | Stock-Based Compensation The Company follows FASB ASC 718 “Compensation-Stock Compensation,” which requires measurement of compensation cost for all stock-based awards at fair value on date of grant, and recognition of stock-based compensation expense over the service period for awards expected to vest. The fair value of stock options was determined using the Black-Scholes valuation model. Such fair value is recognized as an expense over the service period, net of forfeitures. Stock-based compensation expense was $613,000 and $646,000 for the year ended October 31, 2019 and 2018, respectively, and was primarily included in selling, general, and administrative expenses. |
1. Description of Business a_20
1. Description of Business and Significant Accounting Policies: Comprehensive Loss (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
Comprehensive Loss | Comprehensive Loss The CompanyÂ’s comprehensive loss is equivalent to that of the CompanyÂ’s total net loss for fiscal years 2019 and 2018. |
1. Description of Business a_21
1. Description of Business and Significant Accounting Policies: New Accounting Pronouncements, Policy (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Policies | |
New Accounting Pronouncements, Policy | Recent Accounting Pronouncements Adopted In May 2014, the FASB issued Topic 606 . Other Assets and Deferred Costs - Contracts with Customers On November 1, 2018, the Company adopted Topic 606 using the modified retrospective transition method which resulted in an adjustment to retained earnings for the cumulative effect of applying the standard to all contracts not completed as of the adoption date. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Revenue recognition remained substantially unchanged following adoption of Topic 606 and therefore the adoption of Topic 606 did not have a material impact on revenues. The primary impact of adopting Topic 606 relates to the accounting for nonrefundable up-front fees. The Company recognized revenue during the fiscal year ended October 31, 2019, of $15,046,000 under Topic 606, which was not materially different from what would have been recognized under Topic 605. The Company recorded an addition to opening accumulated deficit and a reduction to deferred revenue of approximately $66,000, respectively, as of November 1, 2018 due to the impact of adopting Topic 606. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation: Topic 718 Scope of Modification Accounting” (“ASU 2017-09”), to clarify when to account for a change in the terms or conditions of a share-based payment award as a modification. Under the new standard, modification is required only if the fair value, the vesting conditions, or the classification of an award as equity or liability changes as a result of the change in terms or conditions. The Company adopted this guidance during the quarter ended January 31, 2019, using the prospective method, with no material impact to its consolidated financial statements and related disclosures. Accounting Pronouncements Issued but not yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” requiring lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. During July 2018, the FASB issued additional updates to the new lease accounting standard. ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” clarifies certain aspects of the new lease accounting standard. In addition, ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” provides companies with the option to apply the provisions of the new lease accounting standard on the date of adoption (effective date of November 1, 2019 for the Company), and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, without adjusting the comparative periods presented, as initially required. The Company will adopt the new lease accounting standard as of November 1, 2019 and has elected to apply the provisions of the standard on the date of adoption. Accordingly, the Company will not restate prior year comparative periods for the impact of the new lease accounting standard. The Company will elect the package of practical expedients permitted under the transition guidance within the new lease accounting standard, which permits the Company not to reassess the following for any expired or existing contracts: (i) whether any contracts contain leases; (ii) lease classification (i.e. operating lease or finance/capital lease); and (iii) initial direct costs. The Company anticipates that the adoption of the new lease accounting standard will result in the recognition of approximately $1,400,000 to $1,600,000 of right-of-use assets and lease liabilities at November 1, 2019, consisting primarily of operating leases relating to real estate for offices and PASSUR and SMLAT systems. Adoption of this standard will not materially impact the Company’s Consolidated Statement of Operations or Consolidated Statement of Cash Flows. |
1. Description of Business a_22
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy: Disaggregation of Revenue (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Customer | |
Disaggregation of Revenue | Year Ended Revenue by type of customer: October 31, 2019 Airlines $ 9,349,000 Airports 5,608,000 Other 89,000 Total Revenue $ 15,046,000 |
Performance Obligation | |
Disaggregation of Revenue | Year Ended Revenue by type of performance obligation: October 31, 2019 Subscription services $ 14,736,000 Professional services 310,000 Total Revenue $ 15,046,000 |
1. Description of Business a_23
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy: Schedule of Contract Balances (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Contract Balances | Accounts Receivable Unbilled Receivable Deferred Revenue Balance at November 1, 2018 $ 1,175,000 $ 12,000 $ 3,191,000 Balance at October 31, 2019 $ 1,041,000 $ 100,000 $ 3,241,000 |
1. Description of Business a_24
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy: Transaction Price Allocated to the Remaining Performance Obligation Schedule (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Transaction Price Allocated to the Remaining Performance Obligation Schedule | 12 months or less Greater than 12 months * Subscription services $ 5,342,000 $ 1,879,000 Professional services $ 84,000 $ - Material rights $ 194,000 $ 373,000 |
1. Description of Business a_25
1. Description of Business and Significant Accounting Policies: Net Income Per Share Information: Schedule of earnings per share calculations (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of earnings per share calculations | 2019 2018 Basic Weighted average shares outstanding 7,696,091 7,696,091 Effect of dilutive stock options - - Diluted weighted average shares outstanding 7,696,091 7,696,091 Weighted average shares which are not included in the calculation of diluted net loss per share because their impact is anti-dilutive. These shares consist of stock options. 1,847,000 1,522,000 |
2. Property and Equipment, net_
2. Property and Equipment, net: Property and Equipment, net (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Property and Equipment, net | Estimated useful lives 2019 2018 Leasehold improvements 3-5 years $ 216,000 $ 216,000 Equipment 5-10 years 6,413,000 6,212,000 Furniture and fixtures 5-10 years 593,000 593,000 7,222,000 7,021,000 Less accumulated depreciation 6,670,000 6,348,000 Total $ 552,000 $ 673,000 |
3. Passur Network_ Schedule of
3. Passur Network: Schedule of Other Assets (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Passur Network 1 | |
Schedule of Other Assets | 2019 2018 PASSUR Network, beginning balance $ 19,242,000 $ 19,788,000 Additions 15,000 322,000 Disposals (355,000) (128,000) Write-off - (510,000) Inventory reserve - (230,000) Total capitalized PASSUR Network costs 18,902,000 19,242,000 Less accumulated depreciation 14,953,000 14,441,000 PASSUR Network, ending balance, net $ 3,949,000 $ 4,801,000 |
4. Capitalized Software Devel_2
4. Capitalized Software Development Costs: Schedule of Other Assets (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Capitalized Software Development Costs | |
Schedule of Other Assets | 2019 2018 Software development costs, beginning balance $ 21,159,000 $ 19,918,000 Additions 2,573,000 2,503,000 Impairment charge - (1,262,000) Total capitalized software development costs 23,732,000 21,159,000 Less accumulated amortization 15,413,000 13,017,000 Software development costs, ending balance, net $ 8,319,000 $ 8,142,000 |
5. Accrued Expenses and Other_2
5. Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Accrued Liabilities | 2019 2018 Payroll, payroll taxes, and benefits $ 186,000 $ 304,000 Professional fees 197,000 272,000 Travel expenses 73,000 142,000 Accrued rent 151,000 151,000 Other liabilities 182,000 320,000 Total $ 789,000 $ 1,189,000 |
7. Operating Leases of Lessee_2
7. Operating Leases of Lessee Disclosure: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | Contractual obligations Fiscal Year Ended October 31: under operating leases 2020 609,833 2021 437,746 2022 308,520 2023 195,183 Thereafter - Total minimum contractual obligations $ 1,551,282 |
8. Income Taxes_ Schedule of In
8. Income Taxes: Schedule of Income before Income Tax, Domestic and Foreign (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Income before Income Tax, Domestic and Foreign | 2019 2018 Current: Federal $ - $ - State $ (10,000) $ 5,000 Income tax provision-current $ (10,000) $ 5,000 Deferred: Federal $ - $ - State $ - $ - Total income tax (benefit)/expense, net $ (10,000) $ 5,000 |
8. Income Taxes_ Schedule of Co
8. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Components of Income Tax Expense (Benefit) | 2019 2018 Amount Percent Amount Percent U.S. statutory tax $ (808,000) 21.0% $ (1,273,000) 23.2% Stock compensation 102,000 -2.6% 128,000 -2.3% Meals and entertainment 9,000 -0.2% 9,000 -0.2% State tax, net of federal benefit (164,000) 4.2% (209,000) 3.8% Tax law changes (U.S. Tax Reform) - 0.0% 1,127,000 -20.5% Other 44,000 -1.1% (44,000) 0.8% Change in Valuation Allowance 807,000 -21.0% 267,000 -4.9% Income tax (benefit)/expense, net $ (10,000) 0.3% $ 5,000 -0.1% |
8. Income Taxes_ Schedule of De
8. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Deferred Tax Assets and Liabilities | 2019 2018 Deferred tax assets and liabilities: Net operating loss carry-forward $ 3,758,000 $ 3,037,000 Deferred Revenue 92,000 84,000 Allowance for doubtful accounts receivable 43,000 41,000 Stock compensation-nonqualified 205,000 171,000 Accruals 81,000 104,000 Deferred rent 29,000 37,000 Deferred interest 97,000 - Depreciation (427,000) (402,000) Sub-total $ 3,878,000 $ 3,072,000 Valuation allowance (3,878,000) (3,072,000) Deferred tax assets and liabilities $ - $ - |
9. Stock-Based Compensation_ Sc
9. Stock-Based Compensation: Schedule of Share-based Compensation, Activity (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Share-based Compensation, Activity | Number of stock options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Stock options outstanding at November 1, 2017 1,594,000 $3.52 6.9 $ 84,000 Stock options granted 82,500 $2.38 Stock options exercised - $0.00 Stock options forfeited (154,500) $3.43 Stock options outstanding at October 31, 2018 1,522,000 $3.47 6.2 $ 1,800 Stock options granted 542,500 $1.96 Stock options exercised - $0.00 Stock options forfeited (217,500) $1.98 Stock options outstanding at October 31, 2019 1,847,000 $3.20 6.4 $ 2,200 Stock options exercisable at October 31, 2019 995,000 $3.59 4.7 $ - |
9. Stock-Based Compensation_ _2
9. Stock-Based Compensation: Schedule of Assumptions Used (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Assumptions Used | Years ended October 31, 2019 2018 Expected dividend yield 0% 0% Expected volatility 87 - 117% 93 - 117% Risk-free interest rate 1.43 – 2.94% 2.24 - 2.91% Expected term (years) 6.5 6.5 Discount for post-vesting restrictions N/A N/A |
9. Stock-Based Compensation_ _3
9. Stock-Based Compensation: Schedule of Share-Based Compensation Expense (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Share-Based Compensation Expense | 2019 2018 Cost of revenues $ 17,000 $ 25,000 Research and development $ 110,000 $ 110,000 Selling, general and administrative $ 486,000 $ 511,000 $ 613,000 $ 646,000 |
9. Stock-Based Compensation_ _4
9. Stock-Based Compensation: Schedule of Stockholders Equity (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Tables/Schedules | |
Schedule of Stockholders Equity | The following table summarizes the plans under which the Company granted equity compensation as of October 31, 2019: Name of Plan Shares Authorized Shares Available for Grant Shares Outstanding Last Date for Grant of Shares PASSUR Aerospace, Inc., 2009 Stock Incentive Plan 3,000,000 0 1,529,599 February 24, 2019 PASSUR Aerospace, Inc., 2019 Stock Incentive Plan 5,000,000 4,682,500 317,500 February 26, 2029 |
1. Description of Business a_26
1. Description of Business and Significant Accounting Policies: Liquidity (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Current Assets Exceed Current Liabilities, Excluding Deferred Revenue | $ 785,000 | |
Note payable - related party | 8,350,058 | $ 6,050,000 |
Stockholders' Equity (Rounded) | 456,000 | |
Net Loss (Rounded) | 3,837,000 | |
Existing Gilbert Note | ||
Note payable - related party | $ 8,150,000 |
1. Description of Business a_27
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy (Details) | 12 Months Ended |
Oct. 31, 2019USD ($) | |
Details | |
Revenue (Rounded) | $ 15,046,000 |
Deferred Revenue, Revenue Recognized | $ 2,809,000 |
1. Description of Business a_28
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy: Disaggregation of Revenue (Details) | 12 Months Ended |
Oct. 31, 2019USD ($) | |
Revenue (Rounded) | $ 15,046,000 |
Subscription services | |
Revenue (Rounded) | 14,736,000 |
Professional Services | |
Revenue (Rounded) | 310,000 |
Airlines | |
Revenue (Rounded) | 9,349,000 |
Airports | |
Revenue (Rounded) | 5,608,000 |
Other | |
Revenue (Rounded) | $ 89,000 |
1. Description of Business a_29
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy: Schedule of Contract Balances (Details) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Details | ||
Accounts Receivable | $ 1,041,000 | $ 1,175,000 |
Unbilled Receivable | 100,000 | 12,000 |
Deferred Revenue | $ 3,241,000 | $ 3,191,000 |
1. Description of Business a_30
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy: Transaction Price Allocated to the Remaining Performance Obligation Schedule (Details) | 12 Months Ended |
Oct. 31, 2019USD ($) | |
Subscription services | |
Transaction price allocated to the remaining performance obligation, Revenue recognized in 12 months or less | $ 5,342,000 |
Transaction price allocated to the remaining performance obligation, Revenue recognized in greater than 12 months | 1,879,000 |
Professional Services | |
Transaction price allocated to the remaining performance obligation, Revenue recognized in 12 months or less | 84,000 |
Transaction price allocated to the remaining performance obligation, Revenue recognized in greater than 12 months | 0 |
Material Rights | |
Transaction price allocated to the remaining performance obligation, Revenue recognized in 12 months or less | 194,000 |
Transaction price allocated to the remaining performance obligation, Revenue recognized in greater than 12 months | $ 373,000 |
1. Description of Business a_31
1. Description of Business and Significant Accounting Policies: Accounts Receivable, net (Details) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Details | ||
Unbilled Receivable | $ 100,000 | $ 12,000 |
Accounts Receivable, Allowance for Credit Loss | $ 165,000 | $ 159,000 |
1. Description of Business a_32
1. Description of Business and Significant Accounting Policies: Net Income Per Share Information: Schedule of earnings per share calculations (Details) - shares | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Details | ||
Weighted average number of common shares outstanding - basic | 7,696,091 | 7,696,091 |
Effect of Dilutive Stock Options | 0 | 0 |
Weighted average number of common shares outstanding - diluted | 7,696,091 | 7,696,091 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,847,000 | 1,522,000 |
1. Description of Business a_33
1. Description of Business and Significant Accounting Policies: Net Income Per Share Information (Details) - shares | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,847,000 | 1,522,000 |
1. Description of Business a_34
1. Description of Business and Significant Accounting Policies: Stock-based Compensation (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Details | ||
Share-based Payment Arrangement, Noncash Expense | $ 613,000 | $ 646,000 |
2. Property and Equipment, ne_2
2. Property and Equipment, net: Property and Equipment, net (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Property, Plant and Equipment, Gross | $ 7,222,000 | $ 7,021,000 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 6,670,000 | 6,348,000 |
Property, Plant and Equipment, Net (Rounded) | 552,000 | 673,000 |
Leasehold Improvements | ||
Property, Plant and Equipment, Gross | $ 216,000 | 216,000 |
Leasehold Improvements | Minimum | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Leasehold Improvements | Maximum | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Equipment | ||
Property, Plant and Equipment, Gross | $ 6,413,000 | 6,212,000 |
Equipment | Minimum | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Equipment | Maximum | ||
Property, Plant and Equipment, Useful Life | 10 years | |
Furniture and Fixtures | ||
Property, Plant and Equipment, Gross | $ 593,000 | $ 593,000 |
Furniture and Fixtures | Minimum | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Furniture and Fixtures | Maximum | ||
Property, Plant and Equipment, Useful Life | 10 years |
2. Property and Equipment, net
2. Property and Equipment, net (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Details | ||
Depreciation | $ 322,000 | $ 439,000 |
3. Passur Network_ Schedule o_2
3. Passur Network: Schedule of Other Assets (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2019 | Oct. 31, 2018 | Oct. 31, 2017 | |
Details | |||
PASSUR Network, Gross | $ 18,902,000 | $ 19,242,000 | $ 19,788,000 |
PASSUR NETWORK, Additions (Rounded) | 15,000 | 322,000 | |
PASSUR NETWORK, Disposals (Rounded) | (355,000) | (128,000) | |
PASSUR NETWORK, Write-Off (Rounded) | 0 | (510,000) | |
PASSUR NETWORK, Inventory Reserve (Rounded) | 0 | (230,000) | |
PASSUR Network, Gross | 14,953,000 | 14,441,000 | |
PASSUR NETWORK, Net (Rounded) | $ 3,949,000 | $ 4,801,000 |
3. Passur Network (Details)
3. Passur Network (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Capitalized costs of PASSUR Network | $ 61,000 | $ 242,000 |
Passur Network Depreciation | 868,000 | 785,000 |
Purchased Parts for PASSUR Network | 3,000 | 152,000 |
PASSUR Network Parts Used in Repairs | 49,000 | 73,000 |
PASSUR NETWORK, Net (Rounded) | 3,949,000 | 4,801,000 |
Cost of uninstalled PASSUR Systems | 1,298,000 | 1,316,000 |
Cost of uninstalled SMLAT Systems | 533,000 | $ 576,000 |
Passur Network 1 | ||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 854,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 610,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 442,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 136,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | $ 47,000 |
4. Capitalized Software Devel_3
4. Capitalized Software Development Costs: Schedule of Other Assets (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2019 | Oct. 31, 2018 | Oct. 31, 2017 | |
Capitalized Computer Software, Gross | $ 23,732,000 | $ 21,159,000 | $ 19,918,000 |
Capitalized Computer Software Additions, Rounded | 2,573,000 | 2,503,000 | |
Capitalized Computer Software, Impairments | 0 | (1,262,000) | |
Capitalized Computer Software, Net (Rounded) | 8,319,000 | 8,142,000 | |
Capitalized Software Development Costs | |||
Depreciation, Depletion and Amortization, Nonproduction | $ 15,413,000 | $ 13,017,000 |
4. Capitalized Software Devel_4
4. Capitalized Software Development Costs (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Capitalized Computer Software Additions, Rounded | $ 2,573,000 | $ 2,503,000 |
Capitalized Computer Software, Amortization | 2,396,000 | $ 2,295,000 |
Capitalized software development costs not yet subject to amortization | 973,000 | |
Capitalized Software Development Costs | ||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 2,519,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 2,082,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 1,589,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 923,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | $ 234,000 |
5. Accrued Expenses and Other_3
5. Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Details) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Details | ||
Accrued Salaries, Current | $ 186,000 | $ 304,000 |
Accrued Professional Fees, Current | 197,000 | 272,000 |
Accrued travel expense | 73,000 | 142,000 |
Accrued rent | 151,000 | 151,000 |
Other Accrued Liabilities, Current | 182,000 | 320,000 |
Accounts Payable and Other Accrued Liabilities, Current | $ 789,000 | $ 1,189,000 |
6. Notes Payable (Details)
6. Notes Payable (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2019 | Oct. 31, 2018 | Jan. 27, 2020 | |
Interest Paid, Related Party (Rounded) | $ 516,000 | ||
Proceeds from notes payable - related party | 2,100,000 | $ 2,250,000 | |
Note payable - related party | $ 8,350,058 | $ 6,050,000 | |
Interest rate on related party note payable | 9.75% | ||
Operating Income Loss (Rounded) | $ (3,132,000) | ||
Working Capital Deficit | 3,648,000 | ||
Existing Gilbert Note | |||
Notes Payable, Related Parties, Noncurrent, Rounded | 8,150,000 | ||
Note payable - related party | 8,150,000 | ||
Sixth Debt Extension Agreement | |||
Note payable - related party | $ 9,071,000 | ||
Accrued Interest on Existing Gilbert Note | |||
Notes Payable, Related Parties, Noncurrent, Rounded | $ 200,000 |
7. Operating Leases of Lessee_3
7. Operating Leases of Lessee Disclosure (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Operating Leases, Rent Expense, Net | $ 655,000 | $ 618,000 |
Stamford, CT Property | ||
Annual Rental Rate | 220,000 | |
Bohemia, NY Property | ||
Annual Rental Rate | 139,000 | |
Orlando, FL | ||
Annual Rental Rate | 72,000 | |
Vienna, VA | ||
Annual Rental Rate | 83,000 | |
Irving, TX | ||
Annual Rental Rate | $ 60,000 |
7. Operating Leases of Lessee_4
7. Operating Leases of Lessee Disclosure: Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Oct. 31, 2019USD ($) |
Details | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 609,833 |
Operating Leases, Future Minimum Payments, Due in Two Years | 437,746 |
Operating Leases, Future Minimum Payments, Due in Three Years | 308,520 |
Operating Leases, Future Minimum Payments, Due in Four Years | 195,183 |
Operating Leases, Future Minimum Payments, Due Thereafter | 0 |
Operating Leases, Future Minimum Payments Due | $ 1,551,282 |
8. Income Taxes_ Schedule of _2
8. Income Taxes: Schedule of Income before Income Tax, Domestic and Foreign (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Details | ||
Current Federal Tax Expense (Benefit) | $ 0 | $ 0 |
Current State and Local Tax Expense (Benefit) | (10,000) | 5,000 |
Current Income Tax Expense (Benefit) | (10,000) | 5,000 |
Deferred Federal Income Tax Expense (Benefit) | 0 | 0 |
Deferred State and Local Income Tax Expense (Benefit) | 0 | 0 |
Income Tax Expense Benefit (Rounded) | $ (10,000) | $ 5,000 |
8. Income Taxes_ Schedule of _3
8. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Details | ||
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount | $ (808,000) | $ (1,273,000) |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 23.20% |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Payment Arrangement, Amount | $ 102,000 | $ 128,000 |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Payment Arrangement, Percent | (2.60%) | (2.30%) |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Meals and Entertainment, Amount | $ 9,000 | $ 9,000 |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Meals and Entertainment, Percent | (0.20%) | (0.20%) |
State and Local Income Tax Expense (Benefit), Continuing Operations | $ (164,000) | $ (209,000) |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | 4.20% | 3.80% |
Tax law changes (U.S. Tax Reform) | $ 0 | $ 1,127,000 |
Tax law changes (U.S. Tax Reform), Percent | 0.00% | (20.50%) |
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | $ 44,000 | $ (44,000) |
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent | (1.10%) | 0.80% |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | $ 807,000 | $ 267,000 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | (21.00%) | (4.90%) |
Income Tax Expense Benefit (Rounded) | $ (10,000) | $ 5,000 |
Income Tax Expense Benefit Percentage | 0.30% | (0.10%) |
8. Income Taxes_ Schedule of _4
8. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Details | ||
Deferred Tax Assets, Tax Credit Carryforwards | $ 3,758,000 | $ 3,037,000 |
Deferred Tax Assets, Deferred Income | 92,000 | 84,000 |
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Allowance for Doubtful Accounts | 43,000 | 41,000 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost | 205,000 | 171,000 |
Deferred Tax Assets, Other | 81,000 | 104,000 |
Deferred Rent | 29,000 | 37,000 |
Deferred Interest | 97,000 | 0 |
Depreciation | (427,000) | (402,000) |
Deferred Tax Assets, Gross | 3,878,000 | 3,072,000 |
Deferred Tax Assets, Valuation Allowance | (3,878,000) | (3,072,000) |
Deferred Tax Assets, Net of Valuation Allowance | $ 0 | $ 0 |
8. Income Taxes (Details)
8. Income Taxes (Details) | Oct. 31, 2019USD ($) |
Details | |
Operating Loss Carryforwards | $ 15,565,000 |
Operating Loss Carryforwards - Indefinite Lived | 2,785,000 |
Operating Loss Carryforwards Will Expire in Various Tax Years | $ 12,780,000 |
9. Stock-Based Compensation_ _5
9. Stock-Based Compensation: Schedule of Share-based Compensation, Activity (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2019 | Oct. 31, 2018 | Oct. 31, 2017 | |
Details | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 1,847,000 | 1,522,000 | 1,594,000 |
ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageExercisePriceStartingBalance | $ 3.20 | $ 3.47 | $ 3.52 |
Share-based Payment Arrangement, Option, Exercise Price Range, Outstanding, Weighted Average Remaining Contractual Term | 6 years 4 months 24 days | 6 years 2 months 12 days | 6 years 10 months 24 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | $ 2,200 | $ 1,800 | $ 84,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 542,500 | 82,500 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 1.96 | $ 2.38 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 0 | 0 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 0 | $ 0 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (217,500) | (154,500) | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 1.98 | $ 3.43 | |
Share-based Payment Arrangement, Option, Exercise Price Range, Shares Exercisable, Ending Balance | 995,000 | ||
Share-based Payment Arrangement, Option, Exercise Price Range, Exercisable, Weighted Average Exercise Price | $ 3.59 | ||
Share-based Payment Arrangement, Option, Exercise Price Range, Exercisable, Weighted Average Remaining Contractual Term | 4 years 8 months 12 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value | $ 0 |
9. Stock-Based Compensation_ _6
9. Stock-Based Compensation: Schedule of Assumptions Used (Details) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 6 years 6 months | 6 years 6 months |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 87.00% | 93.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.43% | 2.24% |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 117.00% | 117.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.94% | 2.91% |
9. Stock-Based Compensation_ _7
9. Stock-Based Compensation: Schedule of Share-Based Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Stock-based compensation | $ 612,715 | $ 646,113 |
Share-Based Compensation Expense (Rounded) | 613,000 | 646,000 |
Cost of Sales | ||
Stock-based compensation | 17,000 | 25,000 |
Research and Development Expense | ||
Stock-based compensation | 110,000 | 110,000 |
Selling, General and Administrative Expenses | ||
Stock-based compensation | $ 486,000 | $ 511,000 |
9. Stock-Based Compensation (De
9. Stock-Based Compensation (Details) | Oct. 31, 2019USD ($)shares |
Details | |
Unrecognized stock-based compensation costs expected to be recognized over a weighted average period | $ | $ 1,249,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | shares | 852,000 |
10. Concentration Risk Disclo_2
10. Concentration Risk Disclosure (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Foreign Sales | $ 1,226,000 | $ 978,000 |
Total Revenue | Customer A | ||
Customer Concentrations, Percentage | 24.00% | 23.00% |
Customer Concentrations | $ 3,599,000 | $ 3,344,000 |
Total Revenue | Customer B | ||
Customer Concentrations, Percentage | 20.00% | 20.00% |
Customer Concentrations | $ 2,985,000 | $ 2,995,000 |
Total Revenue | Customer C | ||
Customer Concentrations, Percentage | 11.00% | 10.00% |
Customer Concentrations | $ 1,713,000 | $ 1,459,000 |
Total Accounts Receivable | Customer A | ||
Customer Concentrations, Percentage | 19.00% | 33.00% |
Customer Concentrations | $ 224,000 | $ 446,000 |
Total Accounts Receivable | Customer B | ||
Customer Concentrations, Percentage | 14.00% | 21.00% |
Customer Concentrations | $ 173,000 | $ 278,000 |
Total Accounts Receivable | Customer C | ||
Customer Concentrations, Percentage | 13.00% | |
Customer Concentrations | $ 158,000 |