Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2020 | Dec. 31, 2020 | Apr. 30, 2020 | |
Text Block [Abstract] | |||
Registrant CIK | 0000225628 | ||
Fiscal Year End | --10-31 | ||
Registrant Name | PASSUR AEROSPACE, INC. | ||
SEC Form | 10-K | ||
Period End date | Oct. 31, 2020 | ||
Tax Identification Number (TIN) | 11-2208938 | ||
Number of common stock shares outstanding | 7,712,091 | ||
Public Float | $ 2,086,021 | ||
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 1905 | ||
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 | 2020 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
Current assets: | ||
Cash | $ 2,748,066 | $ 145,151 |
Accounts receivable, net | 662,081 | 1,141,282 |
Prepaid expenses and other current assets | 162,843 | 249,118 |
Total current assets | 3,572,990 | 1,535,551 |
PASSUR Network, net | 0 | 3,948,542 |
Capitalized software development costs, net | 1,223,399 | 8,319,134 |
Property and equipment, net | 257,561 | 552,150 |
Operating lease right-of-use assets | 232,721 | 0 |
Other assets | 53,031 | 91,883 |
Total assets | 5,339,702 | 14,447,260 |
Current liabilities: | ||
Accounts payable | 1,486,808 | 1,531,112 |
Accrued liabilities - Stimulus funding | 1,933,955 | 0 |
Accrued expenses and other current liabilities | 721,058 | 789,370 |
Operating lease liabilities, current portion | 168,923 | 0 |
Deferred revenue, current portion | 1,173,573 | 2,863,273 |
Total current liabilities | 5,484,317 | 5,183,755 |
Deferred revenue, long term portion | 249,727 | 377,760 |
Note payable - related party | 10,691,625 | 8,350,058 |
Operating lease liabilities, non-current | 271,946 | |
Other liabilities | 0 | 79,958 |
Total liabilities | 16,697,615 | 13,991,531 |
Commitments and contingencies | ||
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 8,496,526 at October 31, 2020 and 8,480,526 at October 31, 2019, respectively | 84,964 | 84,804 |
Additional paid-in capital | 18,448,202 | 17,958,165 |
Accumulated deficit | (27,957,401) | (15,653,562) |
Stockholders' Equity before Treasury Stock | (9,424,235) | 2,389,407 |
Treasury stock, at cost, 784,435 shares at October 31, 2020 and 2019, respectively | (1,933,678) | (1,933,678) |
Total stockholders' equity | (11,357,913) | 455,729 |
Total liabilities and stockholders' equity | $ 5,339,702 | $ 14,447,260 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 31, 2020 | Oct. 31, 2019 |
Text Block [Abstract] | ||
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 | 8,496,526 | 8,480,526 |
Common Stock, Shares, Outstanding | 8,496,526 | 8,480,526 |
Treasury Stock, Shares | 784,435 | 784,435 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Text Block [Abstract] | ||
Revenues | $ 11,528,813 | $ 15,046,149 |
Cost of expenses: | ||
Cost of revenues | 6,187,442 | 8,368,025 |
Research and development expenses | 338,001 | 556,261 |
Selling, general, and administrative expenses | 6,466,682 | 9,253,583 |
Impairment charges | 9,874,281 | 0 |
Operating Expenses | 22,866,406 | 18,177,869 |
Loss from operations | (11,337,593) | (3,131,720) |
Interest expense - related party | 906,567 | 715,933 |
Other loss | 22,761 | 0 |
Loss before income taxes | (12,266,921) | (3,847,653) |
Provision/(Benefit) for income taxes | 36,918 | (10,320) |
Net loss | $ (12,303,839) | $ (3,837,333) |
Net loss per common share - basic | $ (1.60) | $ (0.50) |
Net loss per common share - diluted | $ (1.60) | $ (0.50) |
Weighted average number of common shares outstanding - basic | 7,710,561 | 7,696,091 |
Weighted average number of common shares outstanding - diluted | 7,710,561 | 7,696,091 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Total |
Stockholders' Equity Attributable to Parent, Beginning Balance at Oct. 31, 2018 | $ 84,804 | $ 17,345,450 | $ (11,882,259) | $ (1,933,678) | $ 3,614,317 |
Shares, Outstanding, Beginning Balance at Oct. 31, 2018 | 8,480,526 | ||||
Stock-based compensation expense | 612,715 | 612,715 | |||
Net loss | (3,837,333) | (3,837,333) | |||
Effect of new accounting standard | 66,030 | 66,030 | |||
Stockholders' Equity Attributable to Parent, Ending Balance at Oct. 31, 2019 | $ 84,804 | 17,958,165 | (15,653,562) | (1,933,678) | 455,729 |
Shares, Outstanding, Ending Balance at Oct. 31, 2019 | 8,480,526 | ||||
Stock-based compensation expense | 466,997 | 466,997 | |||
Exercise of stock options | $ 160 | 23,040 | 23,200 | ||
Exercise of stock options, shares | 16,000 | ||||
Net loss | (12,303,839) | (12,303,839) | |||
Stockholders' Equity Attributable to Parent, Ending Balance at Oct. 31, 2020 | $ 84,964 | $ 18,448,202 | $ (27,957,401) | $ (1,933,678) | $ (11,357,913) |
Shares, Outstanding, Ending Balance at Oct. 31, 2020 | 8,496,526 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (12,303,839) | $ (3,837,333) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 2,122,920 | 3,627,604 |
Provision for doubtful accounts | 103,534 | 6,000 |
Federal Stimulus credits utilized | (1,130,232) | 0 |
Loss on disposal of assets | 22,761 | 0 |
Other Liabilities | 9,258 | (33,315) |
Stock-based compensation | 466,997 | 612,715 |
Operating lease assets and liabilities, net | 33,461 | 0 |
Impairment charges | 9,874,281 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 375,667 | 39,382 |
Prepaid expenses and other current assets | 86,275 | (92,217) |
Other assets | (41,106) | 20,668 |
Accounts payable | (44,304) | 541,154 |
Accrued expenses and other current liabilities | (7,320) | (399,972) |
Accrued interest - related party | 906,567 | 200,058 |
Deferred revenue | (1,837,611) | 49,769 |
Total adjustments | (10,941,148) | (4,571,846) |
Net cash (used in)/provided by operating activities | (1,362,691) | 734,513 |
Cash flows used in investing activities | ||
PASSUR Network | 0 | (15,354) |
Software development costs | (488,774) | (2,573,395) |
Property and equipment | (7,015) | (201,469) |
Net cash used in investing activities | (495,789) | (2,790,218) |
Cash flows from financing activities | ||
Proceeds from notes payable - related party | 1,435,000 | 2,100,000 |
Proceeds under Federal Stimulus grant program | 3,003,195 | 0 |
Proceeds from exercise of stock options | 23,200 | 0 |
Net cash provided by financing activities | 4,461,395 | 2,100,000 |
Increase in cash | 2,602,915 | 44,295 |
Cash - beginning of period | 145,151 | 100,856 |
Cash - end of period | 2,748,066 | 145,151 |
Supplemental cash flow information | ||
Interest - related party | 0 | 515,875 |
Income taxes | $ 7,275 | $ (21,779) |
1. Description of Business and
1. Description of Business and Significant Accounting Policies | 12 Months Ended |
Oct. 31, 2020 | |
Disclosure Text Block [Abstract] | |
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 to mitigate constraints for airlines, airports and their customers. PASSUR’s information solutions are used by airlines and airports in the United States as well as in Canada and Latin America. PASSUR provides data aggregation and consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services. 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. Certain of PASSUR’s services have traditionally relied on its proprietary network of sensors for aircraft surveillance. During the second quarter of fiscal year 2020, in light of the FAA's mandate for ADS-B equipage on aircrafts operating in most U.S. airspace, effective January 2020, and parallel adoption of ADS-B requirements in much of the world, the Company performed a comprehensive review of its data feeds, specifically those associated with the PASSUR Network units, and external ADS-B data feeds to determine if these external data feeds provide sufficient redundant data as to that generated from the existing PASSUR installations. The Company determined that such services could be powered by a combination of FAA data plus commercial ADS-B aggregator feeds and other data feeds available to the Company, which would provide a more cost-effective solution and allow the Company to focus more on value-added analytics, and less on sensor technology. In this regard, the Company reviewed and decommissioned approximately half of its PASSUR Network system assets during the second quarter of fiscal year 2020. As a result, the Company wrote off net assets applicable to the PASSUR Network systems of approximately $3,565,000, and lease assets applicable to these PASSUR locations of approximately $175,000 during the second quarter of fiscal 2020, which amounts are included in the impairment charge for the year ended October 31, 2020. The write-off amount includes PASSUR System and SMLAT System assets as well as inventory of finished and spare parts. It is the Company’s intention to decommission all remaining PASSUR Network system assets during fiscal 2021. Liquidity The Company’s current liabilities (excluding deferred revenue and certain CARES Act grant proceeds, described in “Impact of the COVID-19 Pandemic”, below) exceeded current assets, by $738,000 as of October 31, 2020. The note payable to a related party, G.S. Beckwith Gilbert, the Company’s significant shareholder and Non-Executive Chairman of the Board, with a maturity of November 1, 2021, was $10,692,000 at October 31, 2020, which amount included additional loans made by Mr. Gilbert in fiscal 2020 of $1,435,000, bringing the principal balance owed to $9,585,000, plus capitalized accrued and unpaid interest of $1,107,000. The capitalized interest included $200,000 incurred during the fourth quarter of fiscal 2019 and all the fiscal 2020 interest of $907,000. The Company’s stockholders’ equity was a deficit of $11,358,000 at October 31, 2020. The Company had a net loss of $12,304,000 for the year ended October 31, 2020 (inclusive of certain impairment charges of $9,874,000, described under “PASSUR Network” and “Capitalized Software Development Costs”, below). As described in more detail in Note 6, “Notes Payable,” below, as of October 31, 2019 and October 31, 2020, the total amount of principal and accrued interest owed by the Company under the promissory note issued by the Company to Mr. Gilbert was $8,335,000 and $10,692,000, respectively. On January 29, 2021, the Company and Mr. Gilbert entered into a Seventh Debt Extension Agreement, effective January 29, 2021, pursuant to which the Company cancelled the Sixth Gilbert Note and issued Mr. Gilbert a new promissory note (the “Seventh Gilbert Note”) in the amount of $10,692,000, consisting of a principal of $9,585,000 and unpaid interest of $1,107,000 accrued under the Sixth Gilbert Note through October 31, 2020. Under the terms of the Seventh Gilbert Note, the Company agreed to pay the unpaid interest of $1,107,000 accrued under the Sixth Gilbert Note and included in the Seventh Gilbert Note (as described above) at the time and on the terms set forth in the Seventh Gilbert Note. Under the terms of the Seventh Gilbert Note, the maturity date of the loan is November 1, 2022, and the annual interest rate is 9 ¾%, with annual interest payments required to be made on October 31st of each year (although any accrued interest can be paid before such time without penalty). The note payable is secured by the Company’s assets. In December 2020, the Company made a payment of accrued interest in the amount of $177,000 for November 2020 and December 2020. Interest incurred in 2021 and 2022 will be paid monthly, and any unpaid and accrued interest is due October 31 in each year. The CARES Act was enacted in March 2020 and provides economic support for, among others, businesses in the airline industry. In July 2020, the Company entered into an agreement with the U.S. Department of the Treasury to receive an aggregate of $3,003,000 in emergency relief through the CARES Act Payroll Support Program, which amounts were received in installments through September 2020. Pursuant to the Payroll Support Program Agreement, the relief payments must be used exclusively for the continuation of payment of certain employee wages, salaries and benefits. The relief payments are conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through September 30, 2020. Other conditions include prohibitions on share repurchases and dividends through September 30, 2021, and certain limitations on executive compensation. The relief payments were comprised of $3,003,000 in direct grants, received in three installments from July 2020 through September 1, 2020. 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 29, 2021, that if the Company, at any time, is unable to meet its obligations through January 30, 2022, 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. 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. 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: Revenue by type of customer: Year Ended Year Ended Airlines $ 5,589,000 $ 9,349,000 Airports 5,501,000 5,608,000 Other 439,000 89,000 Total Revenue $ 11,529,000 $ 15,046,000 Year Ended Year Ended Revenue by type of performance obligation: October 31, 2020 October 31, 2019 Subscription services $ 10,936,000 $ 14,736,000 Professional services 593,000 310,000 Total Revenue $ 11,529,000 $ 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 Unbilled Deferred Balance at November 1, 2019 $ 1,041,000 $ 100,000 $ 3,241,000 Balance at October 31, 2020 $ 609,000 $ 53,000 $ 1,423,000 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, along with lower levels of renewals in the current year compared with the prior year. 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, 2020 that was included in the deferred revenue balance at November 1, 2019 was $2,984,000. 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 Greater than Subscription services $ 2,401,000 $ 416,000 Professional services $ 335,000 $ - Material rights $ 98,000 $ 195,000 *Approximately 94% of subscription services and 79% of material rights 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. Effective as of November 13, 2020, Louis J. Petrucelly resigned his positions as Senior Vice President, Chief Financial Officer of the Company. In connection with his resignation, PASSUR and Mr. Petrucelly have entered into a separation agreement, dated as of November 25, 2020, pursuant to which, among other things, the Company will pay Mr. Petrucelly eight (8) weeks of separation pay, at his base compensation rate in effect immediately prior to his resignation. On December 18, 2020, the Board of Directors of the Company (the “Board of Directors”) approved the appointment of Sean Doherty as Executive Vice President of Finance and Administration of the Company. On January 29, 2021, the Company and Mr. Gilbert entered into a Seventh Debt Extension Agreement, effective January 29, 2021, pursuant to which the Company cancelled the Sixth Gilbert Note and issued Mr. Gilbert a new promissory note (the “Seventh Gilbert Note”) in the amount of $10,692,000. Accounts Receivable, net 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 $53,000 of unbilled receivables associated with contractually committed services provided to existing customers during the twelve months ended October 31, 2020, which will be invoiced subsequent to October 31, 2020. As of October 31, 2019, the Company’s accounts receivable balance included $100,000 of unbilled receivables associated with contractually committed services provided to existing customers. 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. However, during fiscal year 2020, several customers requested, and the Company agreed to, the suspension of certain services to those customers, or the provision of services free of charge during a specified period of time. Additionally, one customer requested extended terms of payment, which the Company also accepted. The Company believes that these decisions were in the best interests of the Company as a partner to the aviation industry and will benefit the Company in the longer term. The Company continues to believe that its products and professional service engagements are critical to the efficient operation of the air transportation market. The provision for doubtful accounts was $948,000 and $165,000 as of October 31, 2020 and 2019, 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 was comprised of PASSUR and SMLAT Systems, which included the direct production, shipping, and installation costs incurred for each PASSUR and SMLAT System, which were recorded at cost, net of accumulated depreciation. Depreciation was charged to cost of revenues and was recorded using the straight-line method over the estimated useful life of the asset, which was estimated at five years for SMLAT Systems and seven years for PASSUR Systems. PASSUR and SMLAT Systems which were not installed, raw materials, work-in-process, and finished goods components were carried at cost and not depreciated until installed. During the second quarter of fiscal year 2020, in light of the FAA's mandate for ADS-B equipage on aircrafts operating in most U.S. airspace, effective January 2020, and parallel adoption of ADS-B requirements in much of the world, the Company performed a comprehensive review of its data feeds, specifically those associated with the PASSUR Network units, and external ADS-B data feeds to determine if these external data feeds provide sufficient redundant data as to that generated from the existing PASSUR installations. The Company determined that such services could be powered by a combination of FAA data plus commercial ADS-B aggregator feeds and other data feeds available to the Company, which would provide a more cost-effective solution and allow us to focus more on value-added analytics, and less on sensor technology. In this regard, the Company reviewed and decommissioned approximately half of its PASSUR Network system assets during the second quarter of the fiscal year ended October 31, 2020. It is the Company’s intention to decommission all remaining PASSUR Network system assets during fiscal 2021. As a result, the Company wrote off the carrying value applicable to the PASSUR Network systems of approximately $3,565,000, and lease assets applicable to these PASSUR locations of approximately $175,000 during the second quarter of fiscal 2020, which amounts were included as an impairment charge for the year ended October 31, 2020. The write-off amount includes PASSUR System and SMLAT System assets as well as inventory of finished and spare parts. 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. 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 maintain and support existing 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 three years within “Cost of Revenues”. During the second quarter of 2020, due to the financial and economic hardships being experienced by the Company’s customers and air transportation support vendors in the current COVID-19 environment, there was a sufficient amount of uncertainty surrounding the ability of our customers to either renew and/or maintain their current levels of committed contracts with the Company. As a result, during the second quarter of fiscal year 2020, the Company conducted a review of its customer contracts to determine whether an impairment had occurred. In order to determine whether or not an impairment had occurred, we looked at existing contracted revenue, adjusted for future uncertainties, and compared those amounts with the net carrying value of the related software development asset. Where the contracted revenue amount was less than the net carrying value of the software development asset, we noted an impairment. As a result, the Company wrote off previously capitalized software development costs totaling approximately $6,134,000 due to impairment, given the impact of the current COVID-19 environment on the aviation industry and its customers. The total amount of these charges and write-offs of the PASSUR Network and capitalized software development costs are included as an impairment charge for the year ended October 31, 2020 totaling $9,874,000. 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. Cost of Revenues Costs associated with subscription and maintenance revenues consist primarily of direct labor, amortization of previously capitalized software development costs, communication costs, data feeds, travel and entertainment, and consulting fees. Previously, cost of revenues in each reporting period was impacted by capitalized costs associated with software development and data center projects, and costs associated with upgrades to PASSUR and SMLAT Systems necessary to make such systems compatible with new software applications (all referred to as “Capitalized Assets”), depreciation of PASSUR and SMLAT Network Systems as well as the ordinary repair and maintenance of existing PASSUR and SMLAT Systems. Additionally, cost of revenues in each previous reporting period was impacted by the number of PASSUR and SMLAT System units added to the PASSUR Network, which included the production, shipment, and installation of these assets (largely installed by unaffiliated outside contractors), which had previously been capitalized to the PASSUR Network. The labor and fringe benefit costs of the Company employees involved in creating Capitalized Assets were capitalized, rather than expensed, and amortized over three years, as determined by their projected useful life. The Company did not capitalize any software development costs as well as network and data center costs for any periods subsequent to January 31, 2020. Given business conditions in the aviation industry surrounding the unprecedented COVID-19 pandemic, the Company’s software efforts were concentrated in the areas of maintenance of existing products. As a result of the industry changes in response to the COVID-19 pandemic (described in “Impact of the COVID-19 Pandemic”, below), the corresponding review conducted by the Company during the second quarter of fiscal 2020 and the resultant write-offs taken during fiscal 2020, the Company anticipates that its level of capitalized software development costs, including related amortization of such costs, will decrease in the future. 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 weighting all available positive and negative evidence including cumulative losses in recent years, the Company continues to conclude that the more likely than not threshold for the realization of deferred tax assets has not been met. 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, 2020, 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 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 2020 and 2019 are as follows: 2020 2019 Basic Weighted average shares outstanding 7,710,561 7,696,091 Effect of dilutive stock options - - Diluted weighted average shares outstanding 7,710,561 7,696,091 Weighted average shares which are not included |
2. Property and Equipment, net
2. Property and Equipment, net | 12 Months Ended |
Oct. 31, 2020 | |
Disclosure Text Block [Abstract] | |
2. Property and Equipment, net | 2. Property and Equipment, net Property and equipment consist of the following as of October 31, 2020 and 2019: Estimated useful lives 2020 2019 Leasehold improvements 3-5 years $ 4,000 $ 216,000 Equipment 5-10 years 4,789,000 6,413,000 Furniture and fixtures 5-10 years 29,000 593,000 4,822,000 7,222,000 Less: accumulated depreciation 4,564,000 6,670,000 Total $ 258,000 $ 552,000 The Company recorded depreciation expense on the assets included in property and equipment of $279,000 and $322,000 for the year ended October 31, 2020 and 2019, respectively. In connection with the closing of certain office facilities, the Company disposed of certain assets associated with these locations and recorded a loss on disposal of $23,000 for the year ended October 31, 2020. |
3. Passur Network
3. Passur Network | 12 Months Ended |
Oct. 31, 2020 | |
Disclosure Text Block [Abstract] | |
3. Passur Network | 3. PASSUR Network, net PASSUR Network consists of the following as of October 31, 2020 and 2019: 2020 2019 PASSUR Network, beginning balance $ 18,902,000 $ 19,242,000 Additions - 15,000 Disposals (11,000) (355,000) Impairment charges taken (3,565,000) - Total capitalized PASSUR Network costs 15,326,000 18,902,000 Less accumulated depreciation 15,326,000 14,953,000 PASSUR Network, ending balance, net $ - $ 3,949,000 The Company capitalized $0 and $61,000, of PASSUR Network costs, for the year ended October 31, 2020 and 2019, respectively. Depreciation expense related to the Company-owned PASSUR Network was $374,000 and $868,000 for the years ended October 31, 2020 and 2019, respectively. Depreciation was charged to cost of revenues and is calculated using the straight-line method over the estimated useful life of the asset, which was estimated at seven and five years for PASSUR and SMLAT systems, respectively, prior to the impairment write-off of the balance of the PASSUR Network. The net carrying balance of the PASSUR Network as of October 31, 2020 and 2019 was $0 and $3,949,000, 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 were not yet installed. PASSUR and SMLAT Systems which were not installed were carried at cost and not depreciated until installed. The Company wrote off the carrying value applicable to the PASSUR Network systems of approximately $3,565,000, and lease assets applicable to these PASSUR locations of approximately $175,000 during the second quarter of fiscal 2020, which amounts were included as an impairment charge for the year ended October 31, 2020. The write-off amount includes PASSUR System and SMLAT System assets as well as inventory of finished and spare parts. During the year ended October 31, 2019, the Company disposed of four PASSUR Network assets, with a net book value of zero. 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, 2020 | |
Disclosure Text Block [Abstract] | |
4. Capitalized Software Development Costs | 4. Capitalized Software Development Costs PASSUR Software Development costs consist of the following as of October 31, 2020 and 2019: 2020 2019 Software development costs, beginning balance $ 23,732,000 $ 21,159,000 Additions 489,000 2,573,000 Impairment charge (6,134,000) - Total capitalized software development costs 18,087,000 23,732,000 Less accumulated amortization 16,864,000 15,413,000 Software development costs, ending balance, net $ 1,223,000 $ 8,319,000 The Company’s capitalization of software development projects was $489,000 and $2,573,000 for the year ended October 31, 2020 and 2019, respectively. Amortization expense related to capitalized software development projects was $1,451,000 and $2,396,000 for the year ended October 31, 2020 and 2019, 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 the year ended October 31, 2020, the Company revised the amortization period for capitalized software development costs to 36 months, to more closely align with the estimated remaining useful life of these assets. During the second quarter of 2020, due to the financial and economic hardships being experienced by airlines, airports and air transportation support vendors in the current COVID-19 environment, there was a sufficient amount of uncertainty surrounding the ability of our customers to continue to perform their contracts with the Company. In order to determine whether or not an impairment had occurred, the Company looked at existing contracted revenue, adjusted for future uncertainties, and compared those amounts with the net carrying value of the related capitalized development cost asset. Where the revenue amount was less than the net carrying value of the asset, we determined that an impairment had occurred. As a result of this exercise, during the second quarter of fiscal 2020, the Company wrote-off assets totaling $6,134,000, based on the assumption that the carrying value of the software capitalization should not exceed 100% of the committed contract values remaining. As a result of the industry changes in response to the COVID-19 pandemic, the corresponding review conducted by the Company described above and the resultant write-offs taken during fiscal year 2020, the Company anticipates that its level of capitalized software development costs, including related amortization of such costs, will decrease in the future. In connection with the impairment analysis described above, the Company revised its estimate of the remaining useful life of the capitalized software development costs to three years. 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, 2020 | |
Disclosure Text Block [Abstract] | |
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, 2020 and 2019: 2020 2019 Payroll, payroll taxes, and benefits $ $ 186,000 Professional fees 181,000 197,000 Travel expenses 29,000 73,000 Accrued rent 145,000 151,000 Other liabilities 123,000 182,000 Total $ 721,000 $ 789,000 |
6. Notes Payable
6. Notes Payable | 12 Months Ended |
Oct. 31, 2020 | |
Disclosure Text Block [Abstract] | |
6. Notes Payable | 6. Notes Payable During the fiscal year ended October 31, 2019, the Company owed certain amounts to G.S. Beckwith Gilbert, the Company’s significant shareholder and Non-Executive Chairman of the Board, under a promissory note issued by the Company to Mr. Gilbert on January 28, 2019 (the “Fifth Gilbert Note”). The maturity date under the Fifth Gilbert Note was November 1, 2020, and the annual interest rate was 9 ¾%, with annual interest payments required to be made on October 31st of each year. The note payable was secured by the Company’s assets. During the year ended October 31, 2019, the Company paid Mr. Gilbert interest accrued on the Fifth Gilbert Note through July 31, 2019 in 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 aggregate amount outstanding under the Fifth Gilbert Note was $8,335,000, consisting of a principal of $8,135,000 and interest of $200,000 accrued during the fourth quarter of fiscal year 2019. On January 27, 2020, the Company and Mr. Gilbert entered into a Sixth Debt Extension Agreement, effective as of January 27, 2020, pursuant to which the Company cancelled the Fifth Gilbert Note and issued Mr. Gilbert a new promissory note (the “Sixth Gilbert Note”) in the amount of $9,071,000, consisting of a principal of $8,670,000 (which included the principal previously outstanding under the Fifth Gilbert Note and an additional amount of $535,000 loaned to the Company by Mr. Gilbert during the period from October 31, 2019 and January 27, 2020) and unpaid interest of $401,000 accrued under the Fifth Gilbert Note through January 27, 2020. Under the terms of the Sixth Gilbert Note, the Company agreed to pay the unpaid interest of $401,000 accrued under the Fifth Gilbert Note and included in the Sixth Gilbert Note (as described above) at the time and on the terms set forth in the Sixth Gilbert Note. Under the terms of the Sixth Gilbert Note, the maturity date of the loan was extended to November 1, 2021, and the annual interest rate remained 9 ¾%, with annual interest payments required to be made on October 31st of each year. The note payable was secured by the Company’s assets. During the fiscal year ended October 31, 2020, the Company did not pay any interest on the Sixth Gilbert Note. As of October 31, 2020, the aggregate amount owed by the Company to Mr. Gilbert was $10,692,000, consisting of a principal of $9,585,000 (which included the principal of $8,670,000 outstanding under the Sixth Gilbert Note and an additional amount of $915,000 loaned to the Company by Mr. Gilbert during the period from January 27, 2020 to October 31, 2020) and unpaid interest of $1,107,000 (which included unpaid interest of $401,000 accrued under the Fifth Gilbert Note that was included in the Sixth Gilbert Note and unpaid interest of $706,000 accrued under the Sixth Gilbert Note through October 31, 2020). In December 2020, the Company made a payment in the amount of $177,000 in respect of interest accrued under the Sixth Gilbert Note during the 2021 fiscal year. On January 29, 2021, the Company and Mr. Gilbert entered into a Seventh Debt Extension Agreement effective January 29, 2021, pursuant to which the Company cancelled the Sixth Gilbert Note and issued Mr. Gilbert a new promissory note (the “Seventh Gilbert Note”) in the amount of $10,692,000, consisting of a principal of $9,585,000 and unpaid interest of $1,107,000 accrued under the Sixth Gilbert Note through October 31, 2020. Under the terms of the Seventh Gilbert Note, the Company agreed to pay the unpaid interest of $1,107,000 accrued under the Sixth Gilbert Note and included in the Seventh Gilbert Note (as described above) at the time and on the terms set forth in the Seventh Gilbert Note. Under the terms of the Seventh Gilbert Note, the maturity date of the loan was extended to November 1, 2022, and the annual interest rate remained at 9 ¾%, with annual interest payments required to be made on October 31st of each year (although any accrued interest can be paid before such time without penalty). The note payable is secured by the Company’s assets. The amendments to the Sixth Gilbert Note were determined to be a modification of the debt instrument and no gain or loss was recorded as a result of the transactions. As described in more detail in Note 1, “Description of Business and Significant Accounting Policies,” above, the Company evaluated its financial position at October 31, 2020, including an operating loss of $11,338,000 (including the effects of the impairment charges of $9,874,000) and working capital deficit of $738,000 (excluding deferred revenue and CARES Act funds) and has requested and received a commitment from G.S. Beckwith Gilbert, dated January 29, 2021, that if the Company, at any time, is unable to meet its obligations through January 30, 2022, 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. Leases
7. Leases | 12 Months Ended |
Oct. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Leases | 7. Leases In February 2016, the FASB issued ASU 2016-02, which amends the ASC and creates Topic 842, Leases . The adoption of this standard impacted the Company’s consolidated balance sheet due to the recognition of ROU assets and associated lease liabilities related to operating leases as compared to the previous accounting. The accounting for finance leases under Topic 842 is consistent with the prior accounting for capital leases. The impact of the adoption of this standard on the Company’s consolidated statement of earnings and consolidated statement of cash flows was not material. Per the guidance of Topic 842, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset. The Company recognizes a lease liability and a related ROU asset at the commencement date for leases on its consolidated balance sheet, excluding short-term leases as noted below. The lease liability is equal to the present value of unpaid lease payments over the remaining lease term. The Company’s lease term at the commencement date may reflect options to extend or terminate the lease when it is reasonably certain that such options will be exercised. To determine the present value of the lease liability, the Company uses an incremental borrowing rate, which is defined as the rate of interest that the Company would have to pay to borrow (on a collateralized basis over a similar term) an amount equal to the lease payments in similar economic environments. The ROU asset is based on the corresponding lease liability adjusted for certain costs such as initial direct costs, prepaid lease payments and lease incentives received. Both operating and finance lease ROU assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. After a ROU asset is impaired, any remaining balance of the ROU asset is amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful life. After the lease commencement date, the Company evaluates lease modifications, if any, that could result in a change in the accounting for leases. For a lease modification, an evaluation is performed to determine if it should be treated as either a separate lease or a change in the accounting of an existing lease. In addition, significant changes in events or circumstances within the Company’s control are assessed to determine whether a change in the accounting for leases is required. Certain of the Company’s leases provide for variable lease payments for the right to use an underlying asset that vary due to changes in facts and circumstances occurring after the commencement date, other than the passage of time. Variable lease payments that are dependent on an index or rate (e.g., Consumer Price Index) are included in the initial measurement of the lease liability, the initial measurement of the ROU asset, and the lease classification test based on the index or rate as of the commencement date. Any changes from the commencement date estimation of the index- and rate-based variable payments are expensed as incurred in the period of the change. Variable lease payments that are not known at the commencement date and are determinable based on the performance or use of the underlying asset, are not included in the initial measurement of the lease liability or the ROU asset, but instead are expensed as incurred. The Company’s variable lease payments primarily include common area maintenance and real estate taxes. Upon the adoption of Topic 842, the Company made the following accounting policy elections: · Certain of the Company’s contracts contain lease components as well as non-lease components. Unless an accounting policy is elected to the contrary, the contract consideration must be allocated to the separate lease and non-lease components in accordance with Topic 842. For purposes of allocating contract consideration, the Company elected not to separate the lease components from non-lease components for all asset classes. This was applied to all existing leases as of November 1, 2019 and will be applied to new leases on an on-going basis. · The Company elected not to apply the measurement and recognition requirements of Topic 842 to short-term leases (i.e., leases with a term of 12 months or less). Accordingly, short-term leases will not be recorded as ROU assets or lease liabilities on the Company’s consolidated balance sheets, and the related lease payments will be recognized in net earnings on a straight-line basis over the lease term. As a result of the adoption of Topic 842, the Company recognized operating lease ROU assets and liabilities of $1,497,000 and $1,620,000, respectively, as of November 1, 2019. The Company did not have any finance lease ROU assets and liabilities. The Company has operating leases primarily for offices and PASSUR and SMLAT systems, with remaining terms of approximately 4 months to 4.7 years. Some of the Company’s lease contracts include options to extend the leases for up to five years, while others include options to terminate the leases within 1 year. As of October 31, 2019, the Company’s headquarters, located in Stamford, Connecticut were located in a 5,300 square foot office at an average annual cost of $220,000, under a lease expiring on June 30, 2023. On October 6, 2020, the Company modified this agreement, reducing the amount of square footage under rental and extending the term to June 30, 2025, at the reduced average annual rental rate of $61,000. The Company’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 $74,000. During 2020, the Company reached settlement agreements with landlords to terminate several existing leases and vacate its facilities in Bohemia, New York, Vienna, Virginia and Irving, Texas. Activities previously performed at these locations have been consolidated into the Company’s remaining facilities. A summary of total lease costs and other information for the period relating to the Company’s operating leases is as follows: Year Ended Total lease cost October 31, 2020 Operating lease cost $ 806,810 Short-term lease cost $ 209,543 Variable lease cost $ 48,171 Total $ 1,064,524 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 778,204 Right-of-use assets obtained in exchange for new operating lease liabilities $ 14,418 Weighted-average remaining lease term - operating leases 3.3 years Weighted-average discount rate - operating leases 9.75% The total future minimum lease payments, over the remaining lease term, relating to the Company’s operating leases for each of the next five fiscal years and thereafter is as follows: Fiscal Year Ended October 31: Operating Leases 2021 $ 201,571 2022 122,494 2023 85,792 2024 62,545 2025 40,393 Thereafter - Total future minimum lease payments $ 512,795 Less imputed interest (72,699) Total $ 440,096 The following table summarizes scheduled maturities of the Company’s contractual obligations relating to operating leases for which cash flows are fixed and determinable as of October 31, 2020: Fiscal Year Ended October 31: Payments Due in 2021 $ 121,981 2022 60,590 2023 60,590 2024 60,590 2025 40,393 Thereafter - Total contractual obligations $ 344,144 (1) Minimum operating lease commitments only include base rent. Certain leases provide for contingent rents that are not measurable at inception and primarily include common area maintenance and real estate taxes. These amounts are excluded from minimum operating lease commitments and are included in the determination of total rent expense when it is probable that the expense has been incurred and the amount is reasonably measurable. Such amounts have not been material to total rent expense. The Company does not have any finance leases or any leases that have not yet commenced. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Oct. 31, 2020 | |
Disclosure Text Block [Abstract] | |
8. Income Taxes | 8. Income Taxes The Company’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, 2020 and 2019 consisted of the following: 2020 2019 Current: Federal $ - $ - State 5,000 (10,000) Foreign 32,000 - Income tax provision-current $ 37,000 $ (10,000) Deferred: Federal - - State - - Total income tax expense/(benefit) $ 37,000 $ (10,000) 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: 2020 2019 Amount Percent Amount Percent U.S. statutory tax $ (2,576,000) 21.0% $ (808,000) 21.0% Stock compensation 84,000 -0.7% 102,000 -2.6% Meals and entertainment 3,000 0.0% 9,000 -0.2% State tax, net of federal benefit (636,000) 5.2% (164,000) 4.2% Other (14,000) 0.1% 44,000 -1.1% Change in Valuation Allowance 3,176,000 -25.9% 807,000 -21.0% Income tax (benefit)/expense, net $ 37,000 -0.3% $ (10,000) 0.3% The tax effect of temporary differences that give rise to deferred tax assets and liabilities as of October 31, 2020 and 2019 is as follows: 2020 2019 Deferred tax assets and liabilities: Net operating loss carry-forward $ 6,356,000 $ 3,758,000 Deferred Revenue 72,000 92,000 Allowance for doubtful accounts receivable 251,000 43,000 Stock compensation-nonqualified 228,000 205,000 Accruals 53,000 81,000 ROU lease assets (61,000) - ROU lease liabilities 116,000 - Foreign tax credit 32,000 - Deferred rent - 29,000 Deferred interest - 97,000 Depreciation 7,000 (427,000) Sub-total $ 7,054,000 $ 3,878,000 Valuation allowance (7,054,000) (3,878,000) Deferred tax assets and liabilities $ - $ - The ultimate realization of deferred tax assets is dependent on the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized. We assess all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized. After weighting all available positive and negative evidence including cumulative losses in recent years, the Company continues to conclude that the more likely than not threshold for the realization of deferred tax assets has not been met. At October 31, 2020, the Company had available a federal net operating loss carryforward of $25,377,000, of which $12,597,000 are indefinite lived and $12,780,000 will expire in various tax years from fiscal year 2022 through fiscal year 2038. At October 31, 2020 and 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. The Company’s tax return years that are subject to examination by taxing authorities are fiscal years 2017 through 2020. |
9. Stock-Based Compensation
9. Stock-Based Compensation | 12 Months Ended |
Oct. 31, 2020 | |
Disclosure Text Block [Abstract] | |
9. Stock-Based Compensation | 9. Stock-Based Compensation On February 26, 2019, the Board of Directors unanimously adopted the Plan, to replace the Company’s 2009 Stock Incentive Plan, as amended (the “2009 Plan”), which expired on February 24, 2019. The Plan was approved by the Company’s shareholders on April 9, 2019. The Plan became effective upon the date of its adoption by the Board and provides for the granting of stock options for up to 5,000,000 shares of the Company’s common stock. The Board of Directors adopted the First Amendment to the Plan, effective as of July 8, 2020, to modify the vesting periods as set forth therein. 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 2020 and 2019 is as follows: Number of Weighted Weighted average Aggregate Stock options outstanding at November 1, 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 granted 659,500 $ 1.94 Stock options exercised (16,000) $ 1.45 Stock options forfeited (800,500) $ 3.14 Stock options outstanding at October 31, 2020 1,690,000 $ 2.77 6.9 $ - Stock options exercisable at October 31, 2020 809,000 $ 3.34 4.9 $ - The weighted average grant date fair value of the Company’s stock options granted during fiscal years 2020 and 2019 was $1.94 and $1.96, respectively. There were 16,000 options exercised during fiscal 2020 at a weighted average exercise price of $1.45. There were no stock options exercised during fiscal year 2019. 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 2020 and 2019: Years ended October 31, 2020 2019 Expected dividend yield 0% 0% Expected volatility 87-117% 87-117% Risk-free interest rate 0.37 – 2.94% 1.43 – 2.94% 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: 2020 2019 Cost of revenues $ 11,000 $ 17,000 Research and development $ 74,000 $ 110,000 Selling, general and administrative $ 382,000 $ 486,000 $ 467,000 $ 613,000 The following table summarizes the plans under which the Company granted equity compensation as of October 31, 2020: Name of Plan Shares Shares Available Shares Last Date for Grant PASSUR Aerospace, Inc., 2009 Stock Incentive Plan 3,000,000 0 1,027,500 February 24, 2019 PASSUR Aerospace, Inc., 2019 Stock Incentive Plan 5,000,000 4,337,500 662,500 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 $784,000 of unrecognized stock-based compensation costs expected to be recognized over a weighted average period of 1.8 years as of October 31, 2020. The Company had 881,000 shares in unvested stock-based options as of October 31, 2020. |
10. Major Customers
10. Major Customers | 12 Months Ended |
Oct. 31, 2020 | |
Disclosure Text Block [Abstract] | |
10. Major Customers | 10. Major Customers The Company’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 its customers. 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 36%, or $4,176,000, of total revenues in fiscal year 2020. One customer accounted for 13%, or $1,538,000. This customer was given concessions of approximately $513,000 during the fourth quarter of 2020, as a result of the COVID-19 pandemic. It is unclear at this time whether or not the customer will renew its contract with the Company. A second customer accounted for 12%, or $1,440,000, and a third customer accounted for 10%, or $1,198,000, of total revenues in fiscal year 2020. Both of these customers terminated their contracts with the Company during the year. The same 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. As of October 31, 2020, the Company had four customers each of which accounted for 10% or more of the accounts receivable balance. One customer accounted for 38%, or $597,000, and three customers accounted for 10% each, with balances ranging from $151,000 to $159,000. As of October 31, 2019, the Company had three customers each of which accounted for 10% or more of the accounts receivable balance. The customer with the largest 2020 accounts receivable balance also accounted for 19%, or $224,000, of the 2019 accounts receivable balance, a second customer accounted for 14%, or $173,000, and a third customer accounted for 13% or $158,000, of the accounts receivable balance as of October 31, 2019. Credit losses historically have been immaterial. However, one major customer included above for fiscal 2020, had a significant past due accounts receivable balance, which the Company has fully reserved as of the fiscal year ended October 31, 2020. The Company had foreign sales of $1,445,000 and $1,226,000 in fiscal years 2020 and 2019, 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 (Policies) | 12 Months Ended |
Oct. 31, 2020 | |
Policy Text Block [Abstract] | |
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 to mitigate constraints for airlines, airports and their customers. PASSUR’s information solutions are used by airlines and airports in the United States as well as in Canada and Latin America. PASSUR provides data aggregation and consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services. 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. Certain of PASSUR’s services have traditionally relied on its proprietary network of sensors for aircraft surveillance. During the second quarter of fiscal year 2020, in light of the FAA's mandate for ADS-B equipage on aircrafts operating in most U.S. airspace, effective January 2020, and parallel adoption of ADS-B requirements in much of the world, the Company performed a comprehensive review of its data feeds, specifically those associated with the PASSUR Network units, and external ADS-B data feeds to determine if these external data feeds provide sufficient redundant data as to that generated from the existing PASSUR installations. The Company determined that such services could be powered by a combination of FAA data plus commercial ADS-B aggregator feeds and other data feeds available to the Company, which would provide a more cost-effective solution and allow the Company to focus more on value-added analytics, and less on sensor technology. In this regard, the Company reviewed and decommissioned approximately half of its PASSUR Network system assets during the second quarter of fiscal year 2020. As a result, the Company wrote off net assets applicable to the PASSUR Network systems of approximately $3,565,000, and lease assets applicable to these PASSUR locations of approximately $175,000 during the second quarter of fiscal 2020, which amounts are included in the impairment charge for the year ended October 31, 2020. The write-off amount includes PASSUR System and SMLAT System assets as well as inventory of finished and spare parts. It is the Company’s intention to decommission all remaining PASSUR Network system assets during fiscal 2021. |
Liquidity | Liquidity The Company’s current liabilities (excluding deferred revenue and certain CARES Act grant proceeds, described in “Impact of the COVID-19 Pandemic”, below) exceeded current assets, by $738,000 as of October 31, 2020. The note payable to a related party, G.S. Beckwith Gilbert, the Company’s significant shareholder and Non-Executive Chairman of the Board, with a maturity of November 1, 2021, was $10,692,000 at October 31, 2020, which amount included additional loans made by Mr. Gilbert in fiscal 2020 of $1,435,000, bringing the principal balance owed to $9,585,000, plus capitalized accrued and unpaid interest of $1,107,000. The capitalized interest included $200,000 incurred during the fourth quarter of fiscal 2019 and all the fiscal 2020 interest of $907,000. The Company’s stockholders’ equity was a deficit of $11,358,000 at October 31, 2020. The Company had a net loss of $12,304,000 for the year ended October 31, 2020 (inclusive of certain impairment charges of $9,874,000, described under “PASSUR Network” and “Capitalized Software Development Costs”, below). As described in more detail in Note 6, “Notes Payable,” below, as of October 31, 2019 and October 31, 2020, the total amount of principal and accrued interest owed by the Company under the promissory note issued by the Company to Mr. Gilbert was $8,335,000 and $10,692,000, respectively. On January 29, 2021, the Company and Mr. Gilbert entered into a Seventh Debt Extension Agreement, effective January 29, 2021, pursuant to which the Company cancelled the Sixth Gilbert Note and issued Mr. Gilbert a new promissory note (the “Seventh Gilbert Note”) in the amount of $10,692,000, consisting of a principal of $9,585,000 and unpaid interest of $1,107,000 accrued under the Sixth Gilbert Note through October 31, 2020. Under the terms of the Seventh Gilbert Note, the Company agreed to pay the unpaid interest of $1,107,000 accrued under the Sixth Gilbert Note and included in the Seventh Gilbert Note (as described above) at the time and on the terms set forth in the Seventh Gilbert Note. Under the terms of the Seventh Gilbert Note, the maturity date of the loan is November 1, 2022, and the annual interest rate is 9 ¾%, with annual interest payments required to be made on October 31st of each year (although any accrued interest can be paid before such time without penalty). The note payable is secured by the Company’s assets. In December 2020, the Company made a payment of accrued interest in the amount of $177,000 for November 2020 and December 2020. Interest incurred in 2021 and 2022 will be paid monthly, and any unpaid and accrued interest is due October 31 in each year. The CARES Act was enacted in March 2020 and provides economic support for, among others, businesses in the airline industry. In July 2020, the Company entered into an agreement with the U.S. Department of the Treasury to receive an aggregate of $3,003,000 in emergency relief through the CARES Act Payroll Support Program, which amounts were received in installments through September 2020. Pursuant to the Payroll Support Program Agreement, the relief payments must be used exclusively for the continuation of payment of certain employee wages, salaries and benefits. The relief payments are conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through September 30, 2020. Other conditions include prohibitions on share repurchases and dividends through September 30, 2021, and certain limitations on executive compensation. The relief payments were comprised of $3,003,000 in direct grants, received in three installments from July 2020 through September 1, 2020. 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 29, 2021, that if the Company, at any time, is unable to meet its obligations through January 30, 2022, 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 | 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. |
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. 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: Revenue by type of customer: Year Ended Year Ended Airlines $ 5,589,000 $ 9,349,000 Airports 5,501,000 5,608,000 Other 439,000 89,000 Total Revenue $ 11,529,000 $ 15,046,000 Year Ended Year Ended Revenue by type of performance obligation: October 31, 2020 October 31, 2019 Subscription services $ 10,936,000 $ 14,736,000 Professional services 593,000 310,000 Total Revenue $ 11,529,000 $ 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 Unbilled Deferred Balance at November 1, 2019 $ 1,041,000 $ 100,000 $ 3,241,000 Balance at October 31, 2020 $ 609,000 $ 53,000 $ 1,423,000 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, along with lower levels of renewals in the current year compared with the prior year. 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, 2020 that was included in the deferred revenue balance at November 1, 2019 was $2,984,000. 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 Greater than Subscription services $ 2,401,000 $ 416,000 Professional services $ 335,000 $ - Material rights $ 98,000 $ 195,000 *Approximately 94% of subscription services and 79% of material rights 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 | 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 | 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. Effective as of November 13, 2020, Louis J. Petrucelly resigned his positions as Senior Vice President, Chief Financial Officer of the Company. In connection with his resignation, PASSUR and Mr. Petrucelly have entered into a separation agreement, dated as of November 25, 2020, pursuant to which, among other things, the Company will pay Mr. Petrucelly eight (8) weeks of separation pay, at his base compensation rate in effect immediately prior to his resignation. On December 18, 2020, the Board of Directors of the Company (the “Board of Directors”) approved the appointment of Sean Doherty as Executive Vice President of Finance and Administration of the Company. On January 29, 2021, the Company and Mr. Gilbert entered into a Seventh Debt Extension Agreement, effective January 29, 2021, pursuant to which the Company cancelled the Sixth Gilbert Note and issued Mr. Gilbert a new promissory note (the “Seventh Gilbert Note”) in the amount of $10,692,000. |
Accounts Receivable, net | Accounts Receivable, net 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 $53,000 of unbilled receivables associated with contractually committed services provided to existing customers during the twelve months ended October 31, 2020, which will be invoiced subsequent to October 31, 2020. As of October 31, 2019, the Company’s accounts receivable balance included $100,000 of unbilled receivables associated with contractually committed services provided to existing customers. 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. However, during fiscal year 2020, several customers requested, and the Company agreed to, the suspension of certain services to those customers, or the provision of services free of charge during a specified period of time. Additionally, one customer requested extended terms of payment, which the Company also accepted. The Company believes that these decisions were in the best interests of the Company as a partner to the aviation industry and will benefit the Company in the longer term. The Company continues to believe that its products and professional service engagements are critical to the efficient operation of the air transportation market. The provision for doubtful accounts was $948,000 and $165,000 as of October 31, 2020 and 2019, 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, 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. |
PASSUR Network | PASSUR Network The PASSUR Network was comprised of PASSUR and SMLAT Systems, which included the direct production, shipping, and installation costs incurred for each PASSUR and SMLAT System, which were recorded at cost, net of accumulated depreciation. Depreciation was charged to cost of revenues and was recorded using the straight-line method over the estimated useful life of the asset, which was estimated at five years for SMLAT Systems and seven years for PASSUR Systems. PASSUR and SMLAT Systems which were not installed, raw materials, work-in-process, and finished goods components were carried at cost and not depreciated until installed. During the second quarter of fiscal year 2020, in light of the FAA's mandate for ADS-B equipage on aircrafts operating in most U.S. airspace, effective January 2020, and parallel adoption of ADS-B requirements in much of the world, the Company performed a comprehensive review of its data feeds, specifically those associated with the PASSUR Network units, and external ADS-B data feeds to determine if these external data feeds provide sufficient redundant data as to that generated from the existing PASSUR installations. The Company determined that such services could be powered by a combination of FAA data plus commercial ADS-B aggregator feeds and other data feeds available to the Company, which would provide a more cost-effective solution and allow us to focus more on value-added analytics, and less on sensor technology. In this regard, the Company reviewed and decommissioned approximately half of its PASSUR Network system assets during the second quarter of the fiscal year ended October 31, 2020. It is the Company’s intention to decommission all remaining PASSUR Network system assets during fiscal 2021. As a result, the Company wrote off the carrying value applicable to the PASSUR Network systems of approximately $3,565,000, and lease assets applicable to these PASSUR locations of approximately $175,000 during the second quarter of fiscal 2020, which amounts were included as an impairment charge for the year ended October 31, 2020. The write-off amount includes PASSUR System and SMLAT System assets as well as inventory of finished and spare parts. |
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. 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 maintain and support existing 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 three years within “Cost of Revenues”. During the second quarter of 2020, due to the financial and economic hardships being experienced by the Company’s customers and air transportation support vendors in the current COVID-19 environment, there was a sufficient amount of uncertainty surrounding the ability of our customers to either renew and/or maintain their current levels of committed contracts with the Company. As a result, during the second quarter of fiscal year 2020, the Company conducted a review of its customer contracts to determine whether an impairment had occurred. In order to determine whether or not an impairment had occurred, we looked at existing contracted revenue, adjusted for future uncertainties, and compared those amounts with the net carrying value of the related software development asset. Where the contracted revenue amount was less than the net carrying value of the software development asset, we noted an impairment. As a result, the Company wrote off previously capitalized software development costs totaling approximately $6,134,000 due to impairment, given the impact of the current COVID-19 environment on the aviation industry and its customers. The total amount of these charges and write-offs of the PASSUR Network and capitalized software development costs are included as an impairment charge for the year ended October 31, 2020 totaling $9,874,000. |
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 asset’s revised life. |
Cost of Revenues | Cost of Revenues Costs associated with subscription and maintenance revenues consist primarily of direct labor, amortization of previously capitalized software development costs, communication costs, data feeds, travel and entertainment, and consulting fees. Previously, cost of revenues in each reporting period was impacted by capitalized costs associated with software development and data center projects, and costs associated with upgrades to PASSUR and SMLAT Systems necessary to make such systems compatible with new software applications (all referred to as “Capitalized Assets”), depreciation of PASSUR and SMLAT Network Systems as well as the ordinary repair and maintenance of existing PASSUR and SMLAT Systems. Additionally, cost of revenues in each previous reporting period was impacted by the number of PASSUR and SMLAT System units added to the PASSUR Network, which included the production, shipment, and installation of these assets (largely installed by unaffiliated outside contractors), which had previously been capitalized to the PASSUR Network. The labor and fringe benefit costs of the Company employees involved in creating Capitalized Assets were capitalized, rather than expensed, and amortized over three years, as determined by their projected useful life. The Company did not capitalize any software development costs as well as network and data center costs for any periods subsequent to January 31, 2020. Given business conditions in the aviation industry surrounding the unprecedented COVID-19 pandemic, the Company’s software efforts were concentrated in the areas of maintenance of existing products. As a result of the industry changes in response to the COVID-19 pandemic (described in “Impact of the COVID-19 Pandemic”, below), the corresponding review conducted by the Company during the second quarter of fiscal 2020 and the resultant write-offs taken during fiscal 2020, the Company anticipates that its level of capitalized software development costs, including related amortization of such costs, will decrease in the future. |
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 weighting all available positive and negative evidence including cumulative losses in recent years, the Company continues to conclude that the more likely than not threshold for the realization of deferred tax assets has not been met. 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, 2020, 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 |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
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 2020 and 2019 are as follows: 2020 2019 Basic Weighted average shares outstanding 7,710,561 7,696,091 Effect of dilutive stock options - - Diluted weighted average shares outstanding 7,710,561 7,696,091 Weighted average shares which are not included 1,690,000 1,847,000 Weighted average options to purchase 1,690,000 and 1,847,000 shares of common stock at prices ranging from $0.28 to $4.50 per share that were outstanding during fiscal years 2020 and 2019, 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 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 | 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 significant shareholder and Non-Executive Chairman of the Board, 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 | 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 is 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 $467,000 and $613,000 for the year ended October 31, 2020 and 2019, respectively, and was primarily included in selling, general, and administrative expenses. |
Comprehensive Loss | Comprehensive Loss The Company’s comprehensive loss is equivalent to that of the Company’s total net loss for fiscal years 2020 and 2019. |
Impact of the COVID-19 Pandemic | Impact of the COVID-19 Pandemic In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. The World Health Organization (“WHO”) declared COVID-19 a “pandemic” on March 11, 2020, and the U.S. government declared a national state of emergency on March 13, 2020. The U.S. government has implemented enhanced screenings, quarantine requirements and other travel restrictions in connection with the COVID-19 outbreak. U.S. state governments have instituted similar measures, such as “shelter-in-place” requirements and declared states of emergency. In addition, the U.S. government has strongly recommended “social distancing” measures, including avoiding gathering in groups of more than 10 people and avoiding discretionary travel. Government restrictions and consumer fears relating to the COVID-19 pandemic have impacted flight schedules and given rise to a general reluctance of consumers to fly at this time, resulted in unprecedented cancellations of flights, and substantially reduced demand for future flights for the foreseeable future. The severe reduction in air travel continued throughout 2020 and negatively impacted the Company’s revenues for fiscal 2020 and is also anticipated to impact fiscal 2021 revenue. The CARES Act was enacted in March 2020 and provides economic support for, among others, businesses in the airline industry. The Company has been granted government funds totaling $3.0 million pursuant to the Payroll Support Program for Air Carriers and Contractors under the CARES Act. Pursuant to the Payroll Support Program Agreement entered into by the Company with the U.S. Department of the Treasury, the Company is required to, among other things, refrain from conducting involuntary employee layoffs or furloughs, reducing employee rates of pay or benefits through September 30, 2020, and paying dividends or engaging in share repurchases through September 30, 2021. The Company is also required to limit certain executive compensation through March 24, 2022, maintain certain internal controls and records relating to the CARES Act funds and comply with certain reporting requirements. The Company believes that it has operated in compliance with all the provisions and requirements under the CARES Act during the fiscal year ended October 31, 2020, and fully intends to continue to comply with all such provisions and requirements. Consequently, the Company has accounted for the advanced funds as grants not requiring repayment and recognized such amounts in income as qualifying salaries, wages and benefits have been incurred. During fiscal 2020, the Company reduced its compensation expense by $1,130,000, as a portion of the CARES Act grant proceeds received by the Company was used to fund eligible payroll costs. If the Company does not comply with the provisions of the CARES Act and the Payroll Support Program Agreement, the Company may be required to repay the government funds and also be subject to other remedies. Additionally, provisions under the CARES Act allow the Company to defer payment of the employer’s share of social security taxes incurred from March of 2020 through December 31, 2020. Under the terms of the legislation, 50% of the deferred payroll taxes would be due and payable by December 31, 2021, and the remaining 50% would be due and payable by December 31, 2022. The amount of payroll taxes subject to deferred payment is approximately $111,000. During the second quarter of fiscal year 2020, in response to the uncertainty surrounding the prospects of airlines and airports and the travel industry as a result of the global COVID-19 pandemic and the declines in revenue that the Company began to experience during the same period, partly as a result of the pandemic, the Company reviewed its operating costs to more closely align those costs with its outlook for the foreseeable future. Beginning in April 2020 and prior to receiving CARES Act funds, the Company took several actions to mitigate the effects of the COVID-19 pandemic on its business, as outlined below: · Eliminated or furloughed approximately one-third of then-existing positions; · Instituted a temporary pay reduction plan affecting essentially all of the then-remaining employees; · Suspended the use of outside consultants; · Rationalized the PASSUR Network to reduce data feed and telecom costs; and · Reduced and/or eliminated other operating expenses that were not critical to the short-term outlook of the Company. The effects of the actions above were reflected in lower costs of revenues, research and development and administrative costs in the fiscal year ended October 31, 2020, as compared to the same period in 2019, and the Company anticipates that such cost savings will continue into fiscal 2021. However, if the recovery of the air transportation industry accelerates and revenue levels quickly return to pre-COVID-19 levels, these levels of cost savings may not be practicable or sustainable to support the operations necessary for the increased level of revenue. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted In February 2016, the FASB issued ASU 2016-02, which amends the ASC and creates Topic 842, Leases . On November 1, 2018, the Company adopted the revenue recognition requirements of 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 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. The primary impact of adopting Topic 606 relates to the accounting for nonrefundable up-front fees. 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 December 2019, the FASB issued ASU 2019-12, “Income Taxes Topic 740-Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of Topic 740. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods therein, and early adoption is permitted. Adoption of Topic 740 is not expected to have a material effect on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Current Expected Credit Losses” (ASU 2016-13), which introduces an impairment model based on expected, rather than incurred, losses. Additionally, it requires expanded disclosures regarding (a) credit risk inherent in a portfolio and how management monitors the portfolio’s credit quality; (b) management’s estimate of expected credit losses; and (c) changes in estimates of expected credit losses that have taken place during the period. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022. The Company has not yet quantified the impact of ASU 2016-13 on its consolidated financial statements. However, it is not expected to have a material effect on the Company’s consolidated financial statements. |
1. Description of Business an_3
1. Description of Business and Significant Accounting Policies (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Disaggregation of Revenue | The disaggregation of revenue by customer and type of performance obligation is as follows: Revenue by type of customer: Year Ended Year Ended Airlines $ 5,589,000 $ 9,349,000 Airports 5,501,000 5,608,000 Other 439,000 89,000 Total Revenue $ 11,529,000 $ 15,046,000 Year Ended Year Ended Revenue by type of performance obligation: October 31, 2020 October 31, 2019 Subscription services $ 10,936,000 $ 14,736,000 Professional services 593,000 310,000 Total Revenue $ 11,529,000 $ 15,046,000 |
Schedule of Contract Balances | The opening and closing balances of the Company's accounts receivable, unbilled receivables, and deferred revenues are as follows: Accounts Unbilled Deferred Balance at November 1, 2019 $ 1,041,000 $ 100,000 $ 3,241,000 Balance at October 31, 2020 $ 609,000 $ 53,000 $ 1,423,000 |
Schedule of Transaction Price Allocated to the Remaining Performance Obligation Schedule | 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 Greater than Subscription services $ 2,401,000 $ 416,000 Professional services $ 335,000 $ - Material rights $ 98,000 $ 195,000 |
Schedule of Net Loss per Share Information | 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 2020 and 2019 are as follows: 2020 2019 Basic Weighted average shares outstanding 7,710,561 7,696,091 Effect of dilutive stock options - - Diluted weighted average shares outstanding 7,710,561 7,696,091 Weighted average shares which are not included 1,690,000 1,847,000 |
2. Property and Equipment, net
2. Property and Equipment, net (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Property and Equipment, net | Property and equipment consist of the following as of October 31, 2020 and 2019: Estimated useful lives 2020 2019 Leasehold improvements 3-5 years $ 4,000 $ 216,000 Equipment 5-10 years 4,789,000 6,413,000 Furniture and fixtures 5-10 years 29,000 593,000 4,822,000 7,222,000 Less: accumulated depreciation 4,564,000 6,670,000 Total $ 258,000 $ 552,000 |
3. Passur Network (Tables)
3. Passur Network (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of PASSUR Network, net | PASSUR Network consists of the following as of October 31, 2020 and 2019: 2020 2019 PASSUR Network, beginning balance $ 18,902,000 $ 19,242,000 Additions - 15,000 Disposals (11,000) (355,000) Impairment charges taken (3,565,000) - Total capitalized PASSUR Network costs 15,326,000 18,902,000 Less accumulated depreciation 15,326,000 14,953,000 PASSUR Network, ending balance, net $ - $ 3,949,000 |
4. Capitalized Software Devel_2
4. Capitalized Software Development Costs (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Other Assets | PASSUR Software Development costs consist of the following as of October 31, 2020 and 2019: 2020 2019 Software development costs, beginning balance $ 23,732,000 $ 21,159,000 Additions 489,000 2,573,000 Impairment charge (6,134,000) - Total capitalized software development costs 18,087,000 23,732,000 Less accumulated amortization 16,864,000 15,413,000 Software development costs, ending balance, net $ 1,223,000 $ 8,319,000 |
5. Accrued Expenses and Other_2
5. Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Accrued Liabilities | Accrued expenses and other current liabilities consist of the following as of October 31, 2020 and 2019: 2020 2019 Payroll, payroll taxes, and benefits $ $ 186,000 Professional fees 181,000 197,000 Travel expenses 29,000 73,000 Accrued rent 145,000 151,000 Other liabilities 123,000 182,000 Total $ 721,000 $ 789,000 |
7. Leases (Tables)
7. Leases (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Total Lease Costs | A summary of total lease costs and other information for the period relating to the Company’s operating leases is as follows: Year Ended Total lease cost October 31, 2020 Operating lease cost $ 806,810 Short-term lease cost $ 209,543 Variable lease cost $ 48,171 Total $ 1,064,524 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 778,204 Right-of-use assets obtained in exchange for new operating lease liabilities $ 14,418 Weighted-average remaining lease term - operating leases 3.3 years Weighted-average discount rate - operating leases 9.75% |
Schedule of Future Minimum Rental Payments for Operating Leases | The total future minimum lease payments, over the remaining lease term, relating to the Company’s operating leases for each of the next five fiscal years and thereafter is as follows: Fiscal Year Ended October 31: Operating Leases 2021 $ 201,571 2022 122,494 2023 85,792 2024 62,545 2025 40,393 Thereafter - Total future minimum lease payments $ 512,795 Less imputed interest (72,699) Total $ 440,096 |
Schedule of Contractual Obligation Maturity | The following table summarizes scheduled maturities of the Company’s contractual obligations relating to operating leases for which cash flows are fixed and determinable as of October 31, 2020: Fiscal Year Ended October 31: Payments Due in 2021 $ 121,981 2022 60,590 2023 60,590 2024 60,590 2025 40,393 Thereafter - Total contractual obligations $ 344,144 (1) Minimum operating lease commitments only include base rent. Certain leases provide for contingent rents that are not measurable at inception and primarily include common area maintenance and real estate taxes. These amounts are excluded from minimum operating lease commitments and are included in the determination of total rent expense when it is probable that the expense has been incurred and the amount is reasonably measurable. Such amounts have not been material to total rent expense. |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | The income tax expense for fiscal years ended October 31, 2020 and 2019 consisted of the following: 2020 2019 Current: Federal $ - $ - State 5,000 (10,000) Foreign 32,000 - Income tax provision-current $ 37,000 $ (10,000) Deferred: Federal - - State - - Total income tax expense/(benefit) $ 37,000 $ (10,000) |
Schedule of U.S federal Statutory Income Tax | 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: 2020 2019 Amount Percent Amount Percent U.S. statutory tax $ (2,576,000) 21.0% $ (808,000) 21.0% Stock compensation 84,000 -0.7% 102,000 -2.6% Meals and entertainment 3,000 0.0% 9,000 -0.2% State tax, net of federal benefit (636,000) 5.2% (164,000) 4.2% Other (14,000) 0.1% 44,000 -1.1% Change in Valuation Allowance 3,176,000 -25.9% 807,000 -21.0% Income tax (benefit)/expense, net $ 37,000 -0.3% $ (10,000) 0.3% |
Schedule of Deferred Tax Assets and Liabilities | The tax effect of temporary differences that give rise to deferred tax assets and liabilities as of October 31, 2020 and 2019 is as follows: 2020 2019 Deferred tax assets and liabilities: Net operating loss carry-forward $ 6,356,000 $ 3,758,000 Deferred Revenue 72,000 92,000 Allowance for doubtful accounts receivable 251,000 43,000 Stock compensation-nonqualified 228,000 205,000 Accruals 53,000 81,000 ROU lease assets (61,000) - ROU lease liabilities 116,000 - Foreign tax credit 32,000 - Deferred rent - 29,000 Deferred interest - 97,000 Depreciation 7,000 (427,000) Sub-total $ 7,054,000 $ 3,878,000 Valuation allowance (7,054,000) (3,878,000) Deferred tax assets and liabilities $ - $ - |
9. Stock-Based Compensation (Ta
9. Stock-Based Compensation (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Stock Options Activity | Information with respect to the Company’s stock options for fiscal years 2020 and 2019 is as follows: Number of Weighted Weighted average Aggregate Stock options outstanding at November 1, 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 granted 659,500 $ 1.94 Stock options exercised (16,000) $ 1.45 Stock options forfeited (800,500) $ 3.14 Stock options outstanding at October 31, 2020 1,690,000 $ 2.77 6.9 $ - Stock options exercisable at October 31, 2020 809,000 $ 3.34 4.9 $ - |
Schedule of Assumptions Used | he 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 2020 and 2019: Years ended October 31, 2020 2019 Expected dividend yield 0% 0% Expected volatility 87-117% 87-117% Risk-free interest rate 0.37 – 2.94% 1.43 – 2.94% Expected term (years) 6.5 6.5 Discount for post-vesting restrictions N/A N/A |
Schedule of Stock Equity Plans | 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: 2020 2019 Cost of revenues $ 11,000 $ 17,000 Research and development $ 74,000 $ 110,000 Selling, general and administrative $ 382,000 $ 486,000 $ 467,000 $ 613,000 |
Schedule of equity compensation granted | The following table summarizes the plans under which the Company granted equity compensation as of October 31, 2020: Name of Plan Shares Shares Available Shares Last Date for Grant PASSUR Aerospace, Inc., 2009 Stock Incentive Plan 3,000,000 0 1,027,500 February 24, 2019 PASSUR Aerospace, Inc., 2019 Stock Incentive Plan 5,000,000 4,337,500 662,500 February 26, 2029 |
1. Description of Business an_4
1. Description of Business and Significant Accounting Policies (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2020 | Dec. 18, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | Jan. 29, 2021 | Nov. 02, 2020 | Oct. 30, 2020 | Oct. 30, 2019 | |
Impairment of assets | $ 9,874,281 | $ 0 | |||||||||
Working capital deficit | 738,000 | ||||||||||
Note payable - related party | $ 10,691,625 | 8,350,058 | |||||||||
Maturity date | Nov. 1, 2021 | ||||||||||
Proceeds from related party debt | $ 1,435,000 | 2,100,000 | |||||||||
Stockholders' equity (Deficit) | (11,357,913) | 455,729 | $ 3,614,317 | ||||||||
Net Loss | (12,303,839) | $ (3,837,333) | |||||||||
Deferred revenue, revenue recognized | $ 2,984,000 | ||||||||||
Options granted | 659,500 | 542,500 | |||||||||
Unbilled Receivable | $ 53,000 | $ 100,000 | |||||||||
Accounts receivable, allowance for credit loss | 948,000 | 165,000 | |||||||||
Impairment software development | $ (6,134,000) | $ 0 | |||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,690,000 | 1,847,000 | |||||||||
Shares based compensation expenses | $ 466,997 | $ 612,715 | |||||||||
Reduced in compensation expense | 1,130,000 | ||||||||||
Payroll taxes | 111,000 | ||||||||||
Operating lease right-of-use assets | 232,721 | 0 | $ 1,497,000 | ||||||||
Operating lease liabilities | 440,096 | $ 1,620,000 | |||||||||
Decrease in deferred revenue | $ (1,837,611) | 49,769 | |||||||||
Topic 842 [Member] | |||||||||||
Operating lease right-of-use assets | 1,497,000 | ||||||||||
Operating lease liabilities | $ 1,620,000 | ||||||||||
Topic 606 [Member] | |||||||||||
Decrease in deferred revenue | $ 66,000 | ||||||||||
Seventh Gilbert Note [Member] | |||||||||||
Maturity date | Nov. 1, 2022 | ||||||||||
Principle amount | $ 9,585,000 | ||||||||||
Accrued interest | 1,107,000 | ||||||||||
Interest rate | 9.75% | ||||||||||
Seventh Gilbert Note [Member] | Subsequent Event [Member] | |||||||||||
Principle amount | $ 10,692,000 | ||||||||||
CARES Act Payroll Support Program [Member] | |||||||||||
Proceeds from loan | $ 3,003,000 | ||||||||||
Mr. Gilbert [Member] | |||||||||||
Proceeds from related party debt | $ 1,435,000 | ||||||||||
Principle amount | 9,585,000 | ||||||||||
Accrued interest | 1,107,000 | $ 1,107,000 | |||||||||
Notes payable | $ 10,692,000 | $ 8,335,000 | |||||||||
Repayment of interest | $ 177,000 | ||||||||||
Sean Doherty [Member] | |||||||||||
Annual salary | $ 260,000 | ||||||||||
Options granted | 100,000 | ||||||||||
PASSUR Network Systems [Member] | |||||||||||
Impairment of assets | $ 3,565,000 | ||||||||||
Impairment of lease asssets | $ 175,000 |
1. Description of Business an_5
1. Description of Business and Significant Accounting Policies: Disaggregation of Revenue (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Total Revenue | $ 11,528,813 | $ 15,046,149 |
Subscription services | ||
Total Revenue | 10,936,000 | 14,736,000 |
Professional Services | ||
Total Revenue | 593,000 | 310,000 |
Airlines | ||
Total Revenue | 5,589,000 | 9,349,000 |
Airports | ||
Total Revenue | 5,501,000 | 5,608,000 |
Other | ||
Total Revenue | $ 439,000 | $ 89,000 |
1. Description of Business an_6
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy: Schedule of Contract Balances (Details) - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
Text Block [Abstract] | ||
Accounts Receivable | $ 609,000 | $ 1,041,000 |
Unbilled Receivable | 53,000 | 100,000 |
Deferred Revenue | $ 1,423,000 | $ 3,241,000 |
1. Description of Business an_7
1. Description of Business and Significant Accounting Policies: Performance Obligation Schedule (Details) | 12 Months Ended |
Oct. 31, 2020USD ($) | |
Subscription services | |
Transaction price allocated to the remaining performance obligation, Revenue recognized in 12 months or less | $ 2,401,000 |
Transaction price allocated to the remaining performance obligation, Revenue recognized in greater than 12 months | 416,000 |
Professional Services | |
Transaction price allocated to the remaining performance obligation, Revenue recognized in 12 months or less | 335,000 |
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 | 98,000 |
Transaction price allocated to the remaining performance obligation, Revenue recognized in greater than 12 months | $ 195,000 |
1. Description of Business an_8
1. Description of Business and Significant Accounting Policies: Schedule of earnings per share calculations (Details) - shares | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Text Block [Abstract] | ||
Basic Weighted average shares outstanding | 7,710,561 | 7,696,091 |
Effect of Dilutive Stock Options | 0 | 0 |
Diluted weighted average shares outstanding | 7,710,561 | 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 sharesconsist of stock options. | 1,690,000 | 1,847,000 |
2. Property and Equipment, ne_2
2. Property and Equipment, net (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Text Block [Abstract] | ||
Depreciation | $ 279,000 | $ 322,000 |
Loss on disposal of assets | $ 23,000 |
2. Property and Equipment, net_
2. Property and Equipment, net: Property and Equipment, net (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Property and equipment, gross | $ 4,822,000 | $ 7,222,000 |
Less: accumulated depreciation | 4,564,000 | 6,670,000 |
Property and equipment, net | 257,561 | 552,150 |
Leasehold Improvements | ||
Property and equipment, gross | 4,000 | 216,000 |
Equipment | ||
Property and equipment, gross | 4,789,000 | 6,413,000 |
Furniture and Fixtures | ||
Property and equipment, gross | $ 29,000 | $ 593,000 |
Minimum | Leasehold Improvements | ||
Property and equipment, useful life | 3 years | |
Minimum | Equipment | ||
Property and equipment, useful life | 5 years | |
Minimum | Furniture and Fixtures | ||
Property and equipment, useful life | 5 years | |
Maximum | Leasehold Improvements | ||
Property and equipment, useful life | 5 years | |
Maximum | Equipment | ||
Property and equipment, useful life | 10 years | |
Maximum | Furniture and Fixtures | ||
Property and equipment, useful life | 10 years |
3. Passur Network (Details)
3. Passur Network (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Apr. 30, 2020 | Oct. 31, 2020 | Oct. 31, 2019 | |
Capitalized costs of PASSUR Network | $ 0 | $ 61,000 | |
Passur Network Depreciation | 374,000 | 868,000 | |
PASSUR NETWORK, Net | 0 | 3,948,542 | |
Cost of uninstalled PASSUR Systems | 0 | 1,298,000 | |
Cost of uninstalled SMLAT Systems | 0 | 533,000 | |
Impairment of assets | $ 9,874,281 | $ 0 | |
PASSUR Network Systems [Member] | |||
Impairment of assets | $ 3,565,000 | ||
Impairment of lease asssets | $ 175,000 |
3. Passur Network_ Schedule of
3. Passur Network: Schedule of Other Assets (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Text Block [Abstract] | ||
PASSUR Network, beginning balance | $ 18,902,000 | $ 19,242,000 |
PASSUR NETWORK, Additions | 0 | 15,000 |
PASSUR NETWORK, Disposals | (11,000) | (355,000) |
PASSUR NETWORK, Impairment charges taken | (3,565,000) | 0 |
Total capitalized PASSUR Network costs | 15,326,000 | 18,902,000 |
Less accumulated depreciation | 15,326,000 | 14,953,000 |
PASSUR Network, ending balance | $ 0 | $ 3,948,542 |
4. Capitalized Software Devel_3
4. Capitalized Software Development Costs (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Text Block [Abstract] | ||
Capitalized computer software, additions | $ 489,000 | $ 2,573,000 |
Capitalized computer software, amortization | 1,451,000 | 2,396,000 |
Capitalized computer software, in-process | 0 | 973,000 |
Impairement of capitalized software | $ (6,134,000) | $ 0 |
4. Capitalized Software Devel_4
4. Capitalized Software Development Costs: Schedule of Other Assets (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Text Block [Abstract] | ||
Software development costs, beginning balance | $ 23,732,000 | $ 21,159,000 |
Software development costs, additions | 489,000 | 2,573,000 |
Software development costs, impairment charge | (6,134,000) | 0 |
Total capitalized software development costs | 18,087,000 | 23,732,000 |
Less accumulated amortization | 16,864,000 | 15,413,000 |
Software development costs, beginning balance | $ 1,223,399 | $ 8,319,134 |
5. Accrued Expenses and Other_3
5. Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Details) - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
Text Block [Abstract] | ||
Payroll, payroll taxes, and benefits | $ 243,000 | $ 186,000 |
Professional Fees | 181,000 | 197,000 |
Travel expense | 29,000 | 73,000 |
Accrued rent | 145,000 | 151,000 |
Other Liabilities | 123,000 | 182,000 |
Total | $ 721,000 | $ 789,000 |
6. Notes Payable (Details)
6. Notes Payable (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jan. 29, 2021 | Dec. 31, 2020 | Jan. 27, 2020 | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 30, 2020 | |
Maturity date | Nov. 1, 2021 | |||||
Operating loss | $ (11,337,593) | $ (3,131,720) | ||||
Impairment charges | 9,874,281 | $ 0 | ||||
Working Capital Deficit | 738,000 | |||||
Fifth Gilbert Note | G.S. Beckwith Gilbert | ||||||
Maturity date | Nov. 1, 2020 | |||||
Annual interest rate | 9.75% | |||||
Interest accrued | $ 516,000 | |||||
Proceeds from Notes Payable | 2,100,000 | |||||
Notes Payable | 8,335,000 | |||||
Fifth Gilbert Note | G.S. Beckwith Gilbert | Principal | ||||||
Notes Payable | 8,135,000 | |||||
Fifth Gilbert Note | G.S. Beckwith Gilbert | Accrued Interest | ||||||
Notes Payable | $ 401,000 | 1,107,000 | $ 200,000 | |||
Sixth Gilbert Note | G.S. Beckwith Gilbert | ||||||
Maturity date | Nov. 1, 2021 | |||||
Annual interest rate | 9.75% | |||||
Notes Payable | $ 9,071,000 | 10,692,000 | ||||
Payment of interest accrued | $ 177,000 | |||||
Sixth Gilbert Note | G.S. Beckwith Gilbert | Principal | ||||||
Notes Payable | $ 8,670,000 | $ 9,585,000 | ||||
Sixth Gilbert Note | G.S. Beckwith Gilbert | Accrued Interest | ||||||
Notes Payable | $ 1,107,000 | |||||
Seventh Gilbert Note | ||||||
Maturity date | Nov. 1, 2022 | |||||
Annual interest rate | 9.75% | |||||
Interest accrued | $ 1,107,000 | |||||
Seventh Gilbert Note | G.S. Beckwith Gilbert | ||||||
Maturity date | Nov. 1, 2022 | |||||
Annual interest rate | 9.75% | |||||
Notes Payable | $ 10,692,000 | |||||
Payment of interest accrued | 1,107,000 | |||||
Seventh Gilbert Note | G.S. Beckwith Gilbert | Principal | ||||||
Notes Payable | $ 9,585,000 |
7. Leases (Details)
7. Leases (Details) - USD ($) | Nov. 02, 2020 | Oct. 31, 2020 | Oct. 31, 2019 |
Operating lease right-of-use assets | $ 1,497,000 | $ 232,721 | $ 0 |
Operating Lease, Liability | $ 1,620,000 | 440,096 | |
Stamford, CT Property | |||
Annual Rental Rate | 220,000 | ||
Orlando, FL | |||
Annual Rental Rate | $ 74,000 |
7. Leases_ Schedule of lease co
7. Leases: Schedule of lease costs and other information relating to the Company's operating leases (Details) | 12 Months Ended |
Oct. 31, 2020USD ($) | |
Text Block [Abstract] | |
Operating Lease, Cost | $ 806,810 |
Short-term Lease, Cost | 209,543 |
Variable Lease, Cost | 48,171 |
Lease, Cost | 1,064,524 |
Operating cash flows from operating leases | 778,204 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 14,418 |
Operating Lease, Weighted Average Remaining Lease Term | 3 years 3 months 19 days |
Operating Lease, Weighted Average Discount Rate, Percent | 9.75% |
7. Leases_ Schedule of Future M
7. Leases: Schedule of Future Minimum Rental Payments for Operating Leases (Details) - USD ($) | Nov. 02, 2020 | Oct. 31, 2020 |
Text Block [Abstract] | ||
2021 | $ 201,571 | |
2022 | 122,494 | |
2023 | 85,792 | |
2024 | 62,545 | |
2025 | 40,393 | |
Thereafter | 0 | |
Total future minimum lease payments | 512,795 | |
Operating Leases Future Minimum Payments Interest Included In Payments | (72,699) | |
Operating Lease, Liability | $ 1,620,000 | $ 440,096 |
7. Leases_ Schedule of Maturiti
7. Leases: Schedule of Maturities of Contractual Obligations Relating to Operating Leases (Details) | Oct. 31, 2020USD ($) | [1] |
Text Block [Abstract] | ||
2021 | $ 121,981 | |
2022 | 60,590 | |
2023 | 60,590 | |
2024 | 60,590 | |
2025 | 40,393 | |
Thereafter | 0 | |
Total contractual obligations | $ 344,144 | |
[1] | Minimum operating lease commitments only include base rent. Certain leases provide for contingent rents that are not measurable at inception and primarily include common area maintenance and real estate taxes. These amounts are excluded from minimum operating lease commitments and are included in the determination of total rent expense when it is probable that the expense has been incurred and the amount is reasonably measurable. Such amounts have not been material to total rent expense. |
8. Income Taxes (Details)
8. Income Taxes (Details) - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
Text Block [Abstract] | ||
Operating Loss Carryforwards | $ 25,377,000 | |
Operating Loss Carryforwards - Indefinite Lived | 12,597,000 | |
Operating Loss Carryforwards Will Expire in Various Tax Years | 12,780,000 | |
Uncertain tax positions | $ 0 | $ 0 |
8. Income Taxes_ Schedule of In
8. Income Taxes: Schedule of Income before Income Tax, Domestic and Foreign (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Text Block [Abstract] | ||
Current Federal Tax Expense (Benefit) | $ 0 | $ 0 |
Current State and Local Tax Expense (Benefit) | 5,000 | (10,000) |
Current Foreign Tax Expense (Benefit) | 32,000 | 0 |
Current Income Tax Expense (Benefit) | 37,000 | (10,000) |
Deferred Federal Income Tax Expense (Benefit) | 0 | 0 |
Deferred State and Local Income Tax Expense (Benefit) | 0 | 0 |
Income tax (benefit)/expense, net | $ 37,000 | $ (10,000) |
8. Income Taxes_ Schedule of Co
8. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Text Block [Abstract] | ||
U.S. statutory tax, Amount | $ (2,576,000) | $ (808,000) |
U.S. statutory tax, Percent | 21.00% | 21.00% |
Stock compensation, Amount | $ 84,000 | $ 102,000 |
Stock compensation, Percent | (0.70%) | (2.60%) |
Meals and Entertainment, Amount | $ 3,000 | $ 9,000 |
Meals and Entertainment, Percent | 0.00% | (0.20%) |
State tax, net of federal benefit, Amount | $ (636,000) | $ (164,000) |
State tax, net of federal benefit, Percent | 5.20% | 4.20% |
Other, Amount | $ (14,000) | $ 44,000 |
Other, Percent | 0.10% | (1.10%) |
Change in Valuation Allowance, Amount | $ 3,176,000 | $ 807,000 |
Change in Valuation Allowance, Percent | (25.90%) | (21.00%) |
Income tax (benefit)/expense, net | $ 37,000 | $ (10,000) |
Income tax (benefit)/expense, net, Percentage | (0.30%) | 0.30% |
8. Income Taxes_ Schedule of De
8. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
Deferred tax assets and liabilities: | ||
Net operating loss carry-forward | $ 6,356,000 | $ 3,758,000 |
Deferred Revenue | 72,000 | 92,000 |
Allowance for doubtful accounts receivable | 251,000 | 43,000 |
Stock compensation-nonqualified | 228,000 | 205,000 |
Accruals | 53,000 | 81,000 |
ROU lease assets | (61,000) | 0 |
ROU lease liabilities | 116,000 | 0 |
Foreign tax credit | 32,000 | 0 |
Deferred Rent | 0 | 29,000 |
Deferred Interest | 0 | 97,000 |
Depreciation | 7,000 | (427,000) |
Sub-total | 7,054,000 | 3,878,000 |
Valuation allowance | (7,054,000) | (3,878,000) |
Deferred tax assets and liabilities | $ 0 | $ 0 |
9. Stock-Based Compensation (De
9. Stock-Based Compensation (Details) | 12 Months Ended |
Oct. 31, 2020USD ($)shares | |
Text Block [Abstract] | |
Unrecognized stock-based compensation costs expected to be recognized over a weighted average period | $ | $ 784,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | shares | 881,000 |
Unrecognized stock-based compensation Weighted average period | 1 year 9 months 18 days |
9. Stock-Based Compensation_ Sc
9. Stock-Based Compensation: Schedule of Share-based Compensation, Activity (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Text Block [Abstract] | |||
Stock options outstanding Beginning Balance | 1,847,000 | 1,522,000 | |
Stock options Granted | 659,500 | 542,500 | |
Stock options Exercised | (16,000) | 0 | |
Stock options Forfeited | (800,500) | (217,500) | |
Stock options outstanding Ending Balance | 1,690,000 | 1,847,000 | 1,522,000 |
Stock options exercisable | 809,000 | ||
Weighted Average Exercise Price, Outstanding Beginning Balance | $ 3.20 | $ 3.47 | |
Weighted Average Exercise Price, Granted | 1.94 | 1.96 | |
Weighted Average Exercise Price, Exercised | 1.45 | 0 | |
Weighted Average Exercise Price, Forfeited | 3.14 | 1.98 | |
Weighted Average Exercise Price, Outstanding Ending Balance | 2.77 | $ 3.20 | $ 3.47 |
Weighted Average Exercise Price, exercisable | $ 3.34 | ||
Option, Outstanding, Weighted Average Remaining Contractual Term | 6 years 10 months 25 days | 6 years 4 months 24 days | 6 years 2 months 12 days |
Option, Exercisable, Weighted Average Remaining Contractual Term | 4 years 10 months 25 days | ||
Options, Outstanding, Aggregate Intrinsic Value | $ 0 | $ 2,200 | $ 1,800 |
Options, Exercisable, Aggregate Intrinsic Value | $ 0 |
9. Stock-Based Compensation_ _2
9. Stock-Based Compensation: Schedule of Assumptions Used (Details) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Expected dividend yield | 0.00% | 0.00% |
Expected term (years) | 6 years 6 months | 6 years 6 months |
Discount for post-vesting restrictions | 0.00% | 0.00% |
Minimum | ||
Expected Volatility | 87.00% | 87.00% |
Risk Free Interest Rate | 0.37% | 1.43% |
Maximum | ||
Expected Volatility | 117.00% | 117.00% |
Risk Free Interest Rate | 2.94% | 2.94% |
9. Stock-Based Compensation_ _3
9. Stock-Based Compensation: Schedule of Share-Based Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Stock-based compensation | $ 466,997 | $ 612,715 |
Cost of Sales | ||
Stock-based compensation | 11,000 | 17,000 |
Research and Development Expense {1} | ||
Stock-based compensation | 74,000 | 110,000 |
Selling, General and Administrative Expenses | ||
Stock-based compensation | $ 382,000 | $ 486,000 |
9. Stock-Based Compensation _ E
9. Stock-Based Compensation : Equity compensation (Details) - shares | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 | |
Shares Outstanding | 1,690,000 | 1,847,000 | 1,522,000 |
2009 Stock Incentive Plan | |||
Shares Authorized | 3,000,000 | ||
Shares Available for Grant | 0 | ||
Shares Outstanding | 1,027,500 | ||
Last Date for Grant of Shares | Feb. 24, 2019 | ||
2019 Stock Incentive Plan | |||
Shares Authorized | 5,000,000 | ||
Shares Available for Grant | 4,337,500 | ||
Shares Outstanding | 662,500 | ||
Last Date for Grant of Shares | Feb. 26, 2029 |
10. Concentration Risk Disclosu
10. Concentration Risk Disclosure (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Revenues | $ 11,528,813 | $ 15,046,149 |
Accounts receivable | 662,081 | 1,141,282 |
Foreign | ||
Revenues | $ 1,445,000 | $ 1,226,000 |
Revenue | ||
Concentrations, Percentage | 36.00% | 55.00% |
Revenues | $ 4,176,000 | $ 8,296,000 |
Revenue | First Customer | ||
Concentrations, Percentage | 13.00% | 24.00% |
Revenues | $ 1,538,000 | $ 3,599,000 |
Revenue | Second Customer | ||
Concentrations, Percentage | 12.00% | 20.00% |
Revenues | $ 1,440,000 | $ 2,985,000 |
Revenue | Third Customer | ||
Concentrations, Percentage | 10.00% | 11.00% |
Revenues | $ 1,198,000 | $ 1,713,000 |
Accounts Receivable | First Customer | ||
Concentrations, Percentage | 19.00% | |
Accounts receivable | $ 224,000 | |
Accounts Receivable | Second Customer | ||
Concentrations, Percentage | 14.00% | |
Accounts receivable | $ 173,000 | |
Accounts Receivable | Third Customer | ||
Concentrations, Percentage | 13.00% | |
Accounts receivable | $ 158,000 | |
Accounts Receivable | Four Customer | ||
Concentrations, Percentage | 38.00% | |
Accounts receivable | $ 597,000 |