Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jan. 31, 2016 | Mar. 03, 2016 | |
Document and Entity Information: | ||
Entity Registrant Name | PASSUR AEROSPACE, INC. | |
Document Type | 10-Q | |
Document Period End Date | Jan. 31, 2016 | |
Trading Symbol | pssr | |
Amendment Flag | false | |
Entity Central Index Key | 225,628 | |
Current Fiscal Year End Date | --10-31 | |
Entity Common Stock, Shares Outstanding | 7,673,199 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jan. 31, 2016 | Oct. 31, 2015 |
Current assets: | ||
Cash | $ 457,476 | $ 925,508 |
Accounts receivable, net | 2,821,365 | 1,234,986 |
Deferred tax asset, current | 551,671 | 551,671 |
Prepaid expenses and other current assets | 263,561 | 157,930 |
Total current assets | 4,094,073 | 2,870,095 |
PASSUR Network, net | 5,882,743 | 5,902,751 |
Capitalized software development costs, net | 7,866,776 | 7,684,603 |
Property and equipment, net | 1,323,798 | 1,353,532 |
Deferred tax asset, non-current | 1,632,281 | 1,658,557 |
Other assets | 233,698 | 239,861 |
Total assets | 21,033,369 | 19,709,399 |
Current liabilities: | ||
Accounts payable | 568,747 | 880,819 |
Accrued expenses and other current liabilities | 942,920 | 977,900 |
Deferred revenue, current portion | 4,283,690 | 2,680,244 |
Total current liabilities | 5,795,357 | 4,538,963 |
Deferred revenue, less current portion | 172,718 | 197,336 |
Notes payable - related party | 3,500,000 | 3,500,000 |
Total liabilities | $ 9,468,075 | $ 8,236,299 |
Stockholders' equity: | ||
Preferred shares - authorized 5,000,000 shares, par value $0.01 per share; none issued or outstanding | ||
Common shares - authorized 10,000,000 shares, par value $0.01 per share; issued 8,448,526 and 8,428,526 at January 31, 2016 and October 31, 2015, respectively | $ 84,484 | $ 84,284 |
Additional paid-in capital | 15,731,215 | 15,663,796 |
Accumulated deficit | (2,354,977) | (2,379,552) |
Stockholders' deficit before treasury stock | 13,460,722 | 13,368,528 |
Treasury stock, at cost, 775,327 shares at January 31, 2016 and October 31, 2015, respectively | (1,895,428) | (1,895,428) |
Total stockholders' equity | 11,565,294 | 11,473,100 |
Total liabilities and stockholders' equity | $ 21,033,369 | $ 19,709,399 |
Consolidated Balance Sheets Par
Consolidated Balance Sheets Parenthetical - $ / shares | Jan. 31, 2016 | Oct. 31, 2015 |
Consolidated Balance Sheets Parenthetical | ||
Preferred stock par value | $ 0.01 | $ 0.01 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock shares issued | ||
Preferred stock shares outstanding | ||
Common stock par value | $ 0.01 | $ 0.01 |
Common stock shares authorized | 10,000,000 | 10,000,000 |
Common stock shares issued | 8,448,526 | 8,428,526 |
Treasury stock shares | 775,327 | 775,327 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 3 Months Ended | |
Jan. 31, 2016 | Jan. 31, 2015 | |
Consolidated Statements of Income | ||
Revenues | $ 3,435,480 | $ 2,764,012 |
Cost and expenses: | ||
Cost of revenues | 1,512,486 | 1,114,452 |
Research and development expenses | 183,409 | 182,275 |
Selling, general, and administrative expenses | 1,633,501 | 1,181,854 |
Total costs and expenses | 3,329,396 | 2,478,581 |
Income from operations | 106,084 | 285,431 |
Interest expense - related party | 53,667 | 59,262 |
Income before income taxes | 52,417 | 226,169 |
Provision for income taxes | 27,842 | 85,000 |
Net income | $ 24,575 | $ 141,169 |
Net income per common share - basic | $ 0.02 | |
Net income per common share - diluted | $ 0.02 | |
Weighted average number of common shares outstanding - basic | 7,660,590 | 7,654,928 |
Weighted average number of common shares outstanding - diluted | 7,736,288 | 7,825,820 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Jan. 31, 2016 | Jan. 31, 2015 | |
Cash flows from operating activities | ||
Net income | $ 24,575 | $ 141,169 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 785,742 | 710,085 |
Provision for deferred taxes | 26,276 | 85,000 |
Provision for doubtful accounts | 8,990 | |
Stock-based compensation | 57,219 | 28,695 |
Changes in operating assets and liabilities: | ||
Change in accounts receivable | (1,595,370) | (293,796) |
Change in prepaid expenses and other current assets | (56,282) | (64,352) |
Change in other assets | 6,164 | 6,710 |
Change in accounts payable | (312,072) | 151,406 |
Change in accrued expenses and other current liabilities | (98,318) | (129,860) |
Change in deferred revenue | 1,578,828 | 19,549 |
Change in accrued interest - related party | 39,937 | |
Total adjustments | 401,178 | 553,374 |
Net cash provided by operating activities | 425,752 | 694,543 |
Cash flows from investing activities | ||
PASSUR Network | (196,169) | (546,163) |
Software development costs | (621,395) | (520,813) |
Property and equipment | (86,620) | (94,324) |
Net cash used in investing activities | (904,184) | (1,161,300) |
Cash flows from financing activities | ||
Proceeds from the exercise of stock options | 10,400 | 34,320 |
Net cash provided from financing activities | 10,400 | 34,320 |
Decrease in cash | (468,032) | (432,437) |
Cash - beginning of period | 925,508 | 648,727 |
Cash - end of period | 457,476 | 216,290 |
Supplemental cash flow information | ||
Cash paid for Interest - related party | 53,667 | 19,325 |
Cash paid for Income taxes | 50,737 | $ 9,033 |
Non-cash investing activities: | ||
Purchase of property and equipment under capital lease | $ 63,336 |
1. Nature of Business
1. Nature of Business | 3 Months Ended |
Jan. 31, 2016 | |
Notes | |
1. Nature of Business | 1. Nature of Business PASSUR Aerospace, Inc. (PASSUR® or the Company) is a leading 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. The Company is recognized as a leader in airline and airport operational efficiency and business aviation marketing and operational solutions, and is a pioneer in the successful use of big data, with an aviation intelligence platform and suite of web-based solutions that address the aviation industrys most intractable and costly challenges, including underutilization of airspace and airport capacity, delays, cancellations, and diversions, among others. Several studies have estimated the annual direct costs of such inefficiencies at over $30 billion. The Companys technology platform is supported by its Aviation Intelligence Center of Excellence (COE), 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. PASSURs solutions are used by the five largest North American airlines, over 60 airport customers (including 22 of the top 30 North American airports as customers - with PASSUR solutions also used at the remaining top eight airports by one or more PASSUR airline customers), more than 200 corporate aviation customers, and the U.S. government. PASSURs mission is to improve global air traffic efficiencies by connecting the worlds aviation professionals onto a single aviation intelligence platform. PASSUR offers companies products that are commercially proven, commercially accepted, and with a demonstrated return on investment (ROI) for airlines, airports, governments, and business aviation companies. PASSUR provides data aggregation and consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services to airlines, airports, governments, and business aviation companies. To enable this unique offering, PASSUR owns and operates the largest commercial passive radar network in the world that updates flight tracks every 1 to 4.6 seconds, powering a proprietary database that is accessible in real-time and delivers timely, accurate information and solutions via PASSURs industry-leading algorithms and business logic included in its products. Solutions offered by PASSUR help to ensure flight completion, covering the entire flight life cycle, from gate to gate, and result in reductions in overall costs and emissions, while maximizing revenue opportunities, as well as optimizing airline completion rates and enhancing the passenger experience. PASSUR gives operators the ability to optimize performance in todays air traffic management system, while bridging the needs of operators and government aviation agencies through collaborative information exchange, shared procedures, and common operating metrics. Many of PASSURs core capabilities developed for the commercial sector help achieve Next Generation Air Transportation System (NextGen) objectives. We believe these commercial solutions have helped operators extract maximum value and capacity from todays infrastructure while creating business and operational case studies for several core NextGen programs. Commercial aviation operators using the airspace depend on information from the government Air Navigation Services Provider (ANSP) for flight, airspace, and airport information outside their own fleets. PASSUR augments and integrates government information with data from its independent network (the largest passive commercial radar network in the world), with over 180 radar locations covering North America from coast to coast, and other installations in Europe and Asia. PASSUR provides faster aircraft position updates (from 1 to 4.6 seconds), and more complete information on aircraft. PASSURs sensors receive aircraft and drone signals in Mode A, C, S, and Automatic Dependent Surveillance-Broadcast (ADS-B), providing position, altitude, beacon code, and tail number, among other information. PASSUR receives signals from aircraft that, when combined with our historical database of aircraft and airport behavior, including information recorded by our network over the last 10 years, allows the Company to know more about what has happened historically, and what is happening in real-time. In addition, the historical database allows the Company to predict how aircraft, the airspace, and airports are going to perform, and more importantly, how the aircraft, the airspace, and airport should perform. |
2. Basis of Presentation and Si
2. Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Jan. 31, 2016 | |
Notes | |
2. Basis of Presentation and Significant Accounting Policies | 2. Basis of Presentation and Significant Accounting Policies The consolidated financial information contained in this quarterly report on Form 10-Q represents condensed financial data and, therefore, does not include all footnote disclosures required to be included in financial statements prepared in conformity with accounting principles generally accepted in the United States (GAAP). Such footnote information was included in the Company's Annual Report on Form 10-K for the year ended October 31, 2015, filed with the Securities and Exchange Commission (SEC); the consolidated financial data included herein should be read in conjunction with that report. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the Companys consolidated financial position as of January 31, 2015, and its consolidated results of operations and cash flows for the three months ended January 31, 2016 and 2015. The results of operations for the interim period stated above are not necessarily indicative of the results of operations to be recorded for the full fiscal year ending October 31, 201 Certain financial information in the footnotes has been rounded to the nearest thousand for presentation purposes. Principles of Consolidation The consolidated financial statements include the accounts of PASSUR 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 FASB ASC 605-15, (Revenue Recognition in Financial Statements) which requires that four basic criteria must be met before revenues can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. The Companys revenues are generated by selling: (1) subscription-based, real-time decision and solution information and (2) professional services. Revenues generated from subscription agreements are recognized over the term of such executed agreements and/or customers receipt of such data or services. In accordance with ASC 605-15, the Company recognizes revenue when persuasive evidence of an arrangement exists which is evidenced by a signed agreement, the service has been deployed, as applicable, to its hosted servers, the fee is fixed or determinable, and collection of the resulting receivable is reasonably assured. The Company records revenues pursuant to individual contracts on a month-by-month basis, as outlined by the applicable agreement. In many cases, the Company may invoice respective customers in advance of the specified period, either quarterly or annually, which coincides with the terms of the agreement. In such cases, the Company will defer at the close of each month and/or reporting period, any subscription revenues invoiced for which services have yet to be rendered, in accordance with ASC 605-15. Revenues generated by professional services are recognized when services are provided. The individual offerings that are included in arrangements with the Companys customers are identified and priced separately to the customer based upon the relative fair value for each individual element sold in the arrangement irrespective of the combination of products and services which are included in a particular arrangement. As such, the units of accounting are based on each individual element sold, and revenue is allocated to each element based on selling price. Selling price is determined using vendor-specific objective evidence ("VSOE") if available, third-party evidence ("TPE") if VSOE is not available, or best estimate of selling price ("BESP") if neither VSOE or TPE is available. BESP must be determined in a manner that is consistent with that used to determine the price to sell the specific elements on a standalone basis. Best estimate of selling price is established considering multiple factors including, but not limited to, pricing practices with different classes of customers, geographies and other factors contemplated in negotiating the arrangement with the customer. The Company uses either VSOE or BESP. From time to time, the Company will enter into an agreement with a customer to receive a one-time fee for rights including, but not limited to, the rights to use certain data at an agreed upon location(s) for a specific use and/or for an unlimited number of users. These fees are recognized as revenue ratably over the term of the agreement or expected useful life of such arrangement, whichever is longer, but typically five years. Deferred revenue is classified on the Companys balance sheet as a liability until such time as revenue from services is properly recognized as revenue in accordance with ASC 605-15 and the corresponding agreement. Cost of Revenues Costs associated with subscription and maintenance revenues consist primarily of direct labor, depreciation of PASSUR and SMLAT Network Systems, amortization of capitalized software development costs, communication costs, data feeds, allocated overhead costs, travel and entertainment, and consulting fees. Also included in cost of revenues are costs associated with upgrades to PASSUR and SMLAT Systems necessary to make such systems compatible with new software applications, as well as the ordinary repair and maintenance of existing PASSUR and SMLAT Systems. Additionally, cost of revenues in each reporting period is impacted by: (1) the number of PASSUR and SMLAT Systems added to the Network, which includes the cost of production, shipment, and installation of these assets, which are capitalized to the PASSUR Network; and (2) new capitalized costs associated with software development projects. Both of these are referred to as Capitalized Assets and are depreciated and/or amortized over their respective useful lives and charged to cost of revenues. Accounts Receivable The Company has a history of successfully collecting all amounts due from its customers under the original terms of its subscription agreements without making concessions. The Company records accounts receivables for agreements under which 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 Companys 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 customers agreement. Account receivable balances include amounts attributable to deferred revenues. The provision for doubtful accounts was $45,000 and $30,000 as of January 31, 2016 and 2015, 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 its provision is reasonable. PASSUR Network The PASSUR Network is comprised of PASSUR and SMLAT Systems, which include the direct and indirect production, shipping, and installation costs incurred for each PASSUR and SMLAT System, which are recorded at cost, net of accumulated depreciation. Depreciation is charged to cost of revenues and is recorded using the straight-line method over the estimated useful life of the asset, which is estimated at five years for SMLAT Systems and seven years for PASSUR Systems. PASSUR and SMLAT Systems which are not installed, raw materials, work-in-process, and finished goods components are carried at cost and no depreciation is recorded. Capitalized Software Development Costs The Company follows the provisions of ASC 350-40, Internal Use Software. ASC 350-40 provides guidance for determining whether computer software is internal-use software, and on accounting for the proceeds of computer software originally developed or obtained for internal use and then subsequently sold to the public. It also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred. The Company capitalized $621,000 621,395 520,813 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 assets revised life. Deferred Tax Asset The Company had a federal net operating loss carry-forward of $7,795,000 available for income tax purposes as of January 31, 2016, which will expire in various tax years from fiscal year 2022 through fiscal year 2030. The Company evaluates whether a valuation allowance related to deferred tax assets is required each reporting period. A valuation allowance would be established if, based on the weight of available evidence, it is more likely than not that some or all of the deferred income tax asset will not be realized. The Companys deferred tax asset amount was $2,184,000 and $2,210,000 as of January 31, 2016 and October 31, 2015, respectively, and it was determined that it is more likely than not that the net operating loss carry-forward would be used. As of October 31, 2015, the Company had a federal net operating loss carry-forward of $7,847,000 available for income tax purposes, which will expire in various tax years from fiscal year 2022 through fiscal year 2030. Deferred Revenue Deferred revenue includes amounts attributable to advances received or invoices sent on customer agreements, which are contractually required and are non-refundable, and may be prepaid either annually, quarterly, or monthly. Revenues from such customer agreements are recognized as income ratably over the period that coincides with the respective agreement. The Company recognizes initial set-up fee revenues and associated costs on a straight-line basis over the estimated life of the customer relationship period, typically five years. Fair Value of Financial Instruments The recorded amounts of the Companys cash, receivables, accounts payable, and accrued liabilities 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 Companys related party debt is held by its Chairman and significant shareholder, and the Company does not have any third-party debt with which to compare. Additionally, on a recurring basis, the Company uses fair value measures when analyzing asset impairments. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present, and the review indicates that the assets will not be fully recoverable based on the undiscounted estimated future cash flows expected to result from the use of the asset, their carrying values are reduced to estimated fair value. Net Income per Share Information Basic net income 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. The Companys 2009 Stock Incentive Plan allows for a cashless exercise. Shares used to calculate net income per share are as follows: For the three months ended January 31 2016 2015 Basic weighted average shares outstanding 7,660,590 7,654,928 Effect of dilutive stock options 75,698 170,892 Diluted weighted average shares outstanding 7,736,288 7,825,820 Weighted average shares that are not included in the calculation of diluted net income per share because their impact is anti-dilutive. These shares consist of stock options. 1,117,802 632,608 Stock-Based Compensation The Company follows FASB ASC 718 Compensation-Stock Compensation, which requires the measurement of compensation cost for all stock-based awards at fair value on date of grant, and recognition of stock-based compensation expense over the service period for awards expected to vest. The fair value of stock options was determined using the Black-Scholes valuation model. Such fair value is recognized as an expense over the service period, net of forfeitures. Stock-based compensation expense was $57,000 57,219 28,695 |
3. Notes Payable - Related Part
3. Notes Payable - Related Party | 3 Months Ended |
Jan. 31, 2016 | |
Notes | |
3. Notes Payable - Related Party | 3. Notes Payable Related Party The Company has a note payable to G.S. Beckwith Gilbert, the Companys significant shareholder and Chairman, of $3,500,000 (the Second Replacement Note) as of January 31, 2016. The Second Replacement Note bears a maturity date of November 1, 2017, with an annual interest rate of 6%. Interest payments are due by October 31 of each fiscal year. The Company has paid all interest incurred on the Second Replacement Note through January 31, 2016. In February of 2016 the Company paid $600,000 of principal of the Second Replacement Note to G.S. Beckwith Gilbert. The Company believes that its liquidity is adequate to meet operating and investment requirements through March 3, 2017. |
2. Basis of Presentation and S9
2. Basis of Presentation and Significant Accounting Policies: Principles of Consolidation (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of PASSUR and its wholly-owned subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation. |
2. Basis of Presentation and 10
2. Basis of Presentation and Significant Accounting Policies: Revenue Recognition Policy (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Revenue Recognition Policy | Revenue Recognition Policy The Company recognizes revenue in accordance with FASB ASC 605-15, (Revenue Recognition in Financial Statements) which requires that four basic criteria must be met before revenues can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. The Companys revenues are generated by selling: (1) subscription-based, real-time decision and solution information and (2) professional services. Revenues generated from subscription agreements are recognized over the term of such executed agreements and/or customers receipt of such data or services. In accordance with ASC 605-15, the Company recognizes revenue when persuasive evidence of an arrangement exists which is evidenced by a signed agreement, the service has been deployed, as applicable, to its hosted servers, the fee is fixed or determinable, and collection of the resulting receivable is reasonably assured. The Company records revenues pursuant to individual contracts on a month-by-month basis, as outlined by the applicable agreement. In many cases, the Company may invoice respective customers in advance of the specified period, either quarterly or annually, which coincides with the terms of the agreement. In such cases, the Company will defer at the close of each month and/or reporting period, any subscription revenues invoiced for which services have yet to be rendered, in accordance with ASC 605-15. Revenues generated by professional services are recognized when services are provided. The individual offerings that are included in arrangements with the Companys customers are identified and priced separately to the customer based upon the relative fair value for each individual element sold in the arrangement irrespective of the combination of products and services which are included in a particular arrangement. As such, the units of accounting are based on each individual element sold, and revenue is allocated to each element based on selling price. Selling price is determined using vendor-specific objective evidence ("VSOE") if available, third-party evidence ("TPE") if VSOE is not available, or best estimate of selling price ("BESP") if neither VSOE or TPE is available. BESP must be determined in a manner that is consistent with that used to determine the price to sell the specific elements on a standalone basis. Best estimate of selling price is established considering multiple factors including, but not limited to, pricing practices with different classes of customers, geographies and other factors contemplated in negotiating the arrangement with the customer. The Company uses either VSOE or BESP. From time to time, the Company will enter into an agreement with a customer to receive a one-time fee for rights including, but not limited to, the rights to use certain data at an agreed upon location(s) for a specific use and/or for an unlimited number of users. These fees are recognized as revenue ratably over the term of the agreement or expected useful life of such arrangement, whichever is longer, but typically five years. Deferred revenue is classified on the Companys balance sheet as a liability until such time as revenue from services is properly recognized as revenue in accordance with ASC 605-15 and the corresponding agreement. |
2. Basis of Presentation and 11
2. Basis of Presentation and Significant Accounting Policies: Cost of Revenues (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Cost of Revenues | Cost of Revenues Costs associated with subscription and maintenance revenues consist primarily of direct labor, depreciation of PASSUR and SMLAT Network Systems, amortization of capitalized software development costs, communication costs, data feeds, allocated overhead costs, travel and entertainment, and consulting fees. Also included in cost of revenues are costs associated with upgrades to PASSUR and SMLAT Systems necessary to make such systems compatible with new software applications, as well as the ordinary repair and maintenance of existing PASSUR and SMLAT Systems. Additionally, cost of revenues in each reporting period is impacted by: (1) the number of PASSUR and SMLAT Systems added to the Network, which includes the cost of production, shipment, and installation of these assets, which are capitalized to the PASSUR Network; and (2) new capitalized costs associated with software development projects. Both of these are referred to as Capitalized Assets and are depreciated and/or amortized over their respective useful lives and charged to cost of revenues. |
2. Basis of Presentation and 12
2. Basis of Presentation and Significant Accounting Policies: Accounts Receivable (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Accounts Receivable | Accounts Receivable The Company has a history of successfully collecting all amounts due from its customers under the original terms of its subscription agreements without making concessions. The Company records accounts receivables for agreements under which 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 Companys 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 customers agreement. Account receivable balances include amounts attributable to deferred revenues. The provision for doubtful accounts was $45,000 and $30,000 as of January 31, 2016 and 2015, 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 its provision is reasonable. |
2. Basis of Presentation and 13
2. Basis of Presentation and Significant Accounting Policies: Passur Network (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Passur Network | PASSUR Network The PASSUR Network is comprised of PASSUR and SMLAT Systems, which include the direct and indirect production, shipping, and installation costs incurred for each PASSUR and SMLAT System, which are recorded at cost, net of accumulated depreciation. Depreciation is charged to cost of revenues and is recorded using the straight-line method over the estimated useful life of the asset, which is estimated at five years for SMLAT Systems and seven years for PASSUR Systems. PASSUR and SMLAT Systems which are not installed, raw materials, work-in-process, and finished goods components are carried at cost and no depreciation is recorded. |
2. Basis of Presentation and 14
2. Basis of Presentation and Significant Accounting Policies: Capitalized Software Development Costs (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Capitalized Software Development Costs | Capitalized Software Development Costs The Company follows the provisions of ASC 350-40, Internal Use Software. ASC 350-40 provides guidance for determining whether computer software is internal-use software, and on accounting for the proceeds of computer software originally developed or obtained for internal use and then subsequently sold to the public. It also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred. The Company capitalized $621,000 621,395 520,813 |
2. Basis of Presentation and 15
2. Basis of Presentation and Significant Accounting Policies: Long-lived Assets (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Long-lived Assets | Long-Lived Assets The Company reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. Impairment is recognized to the extent the sum of undiscounted estimated future cash flows expected to result from the use of the asset is less than the carrying value. Assets to be disposed of are carried at the lower of their carrying value or fair value, less costs to sell. The Company evaluates the periods of amortization continually in determining whether later events and circumstances warrant revised estimates of useful lives. If estimates are changed, the unamortized costs will be allocated to the increased or decreased number of remaining periods in the assets revised life. |
2. Basis of Presentation and 16
2. Basis of Presentation and Significant Accounting Policies: Deferred Tax Asset (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Deferred Tax Asset | Deferred Tax Asset The Company had a federal net operating loss carry-forward of $7,795,000 available for income tax purposes as of January 31, 2016, which will expire in various tax years from fiscal year 2022 through fiscal year 2030. The Company evaluates whether a valuation allowance related to deferred tax assets is required each reporting period. A valuation allowance would be established if, based on the weight of available evidence, it is more likely than not that some or all of the deferred income tax asset will not be realized. The Companys deferred tax asset amount was $2,184,000 and $2,210,000 as of January 31, 2016 and October 31, 2015, respectively, and it was determined that it is more likely than not that the net operating loss carry-forward would be used. As of October 31, 2015, the Company had a federal net operating loss carry-forward of $7,847,000 available for income tax purposes, which will expire in various tax years from fiscal year 2022 through fiscal year 2030. |
2. Basis of Presentation and 17
2. Basis of Presentation and Significant Accounting Policies: Deferred Revenue (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Deferred Revenue | Deferred Revenue Deferred revenue includes amounts attributable to advances received or invoices sent on customer agreements, which are contractually required and are non-refundable, and may be prepaid either annually, quarterly, or monthly. Revenues from such customer agreements are recognized as income 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. |
2. Basis of Presentation and 18
2. Basis of Presentation and Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The recorded amounts of the Companys cash, receivables, accounts payable, and accrued liabilities 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 Companys related party debt is held by its Chairman and significant shareholder, and the Company does not have any third-party debt with which to compare. Additionally, on a recurring basis, the Company uses fair value measures when analyzing asset impairments. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present, and the review indicates that the assets will not be fully recoverable based on the undiscounted estimated future cash flows expected to result from the use of the asset, their carrying values are reduced to estimated fair value. |
2. Basis of Presentation and 19
2. Basis of Presentation and Significant Accounting Policies: Net Income Per Share Information (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Net Income Per Share Information | Net Income per Share Information Basic net income 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. The Companys 2009 Stock Incentive Plan allows for a cashless exercise. Shares used to calculate net income per share are as follows: For the three months ended January 31 2016 2015 Basic weighted average shares outstanding 7,660,590 7,654,928 Effect of dilutive stock options 75,698 170,892 Diluted weighted average shares outstanding 7,736,288 7,825,820 Weighted average shares that are not included in the calculation of diluted net income per share because their impact is anti-dilutive. These shares consist of stock options. 1,117,802 632,608 |
2. Basis of Presentation and 20
2. Basis of Presentation and Significant Accounting Policies: Stock-based Compensation (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Policies | |
Stock-based Compensation | Stock-Based Compensation The Company follows FASB ASC 718 Compensation-Stock Compensation, which requires the measurement of compensation cost for all stock-based awards at fair value on date of grant, and recognition of stock-based compensation expense over the service period for awards expected to vest. The fair value of stock options was determined using the Black-Scholes valuation model. Such fair value is recognized as an expense over the service period, net of forfeitures. Stock-based compensation expense was $57,000 57,219 28,695 |
2. Basis of Presentation and 21
2. Basis of Presentation and Significant Accounting Policies: Net Income Per Share Information: Schedule of earnings per share basic and diluted (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
Tables/Schedules | |
Schedule of earnings per share basic and diluted | For the three months ended January 31 2016 2015 Basic weighted average shares outstanding 7,660,590 7,654,928 Effect of dilutive stock options 75,698 170,892 Diluted weighted average shares outstanding 7,736,288 7,825,820 Weighted average shares that are not included in the calculation of diluted net income per share because their impact is anti-dilutive. These shares consist of stock options. 1,117,802 632,608 |
2. Basis of Presentation and 22
2. Basis of Presentation and Significant Accounting Policies: Accounts Receivable (Details) - USD ($) | Jan. 31, 2016 | Jan. 31, 2015 |
Details | ||
Allowance for Doubtful Accounts Receivable, Current | $ 45,000 | $ 30,000 |
2. Basis of Presentation and 23
2. Basis of Presentation and Significant Accounting Policies: Capitalized Software Development Costs (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2016 | Jan. 31, 2015 | |
Details | ||
Software development costs | $ 621,395 | $ 520,813 |
2. Basis of Presentation and 24
2. Basis of Presentation and Significant Accounting Policies: Deferred Tax Asset (Details) - USD ($) | Jan. 31, 2016 | Oct. 31, 2015 |
Details | ||
Operating Loss Carryforwards | $ 7,795,000 | $ 7,847,000 |
Deferred Tax Assets, Net of Valuation Allowance | $ 2,184,000 | $ 2,210,000 |
2. Basis of Presentation and 25
2. Basis of Presentation and Significant Accounting Policies: Net Income Per Share Information: Schedule of earnings per share basic and diluted (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2016 | Jan. 31, 2015 | |
Details | ||
Weighted average number of common shares outstanding - basic | 7,660,590 | 7,654,928 |
Dilutive Securities, Effect on Basic Earnings Per Share, Dilutive Convertible Securities | $ 75,698 | $ 170,892 |
Weighted average number of common shares outstanding - diluted | 7,736,288 | 7,825,820 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,117,802 | 632,608 |
2. Basis of Presentation and 26
2. Basis of Presentation and Significant Accounting Policies: Stock-based Compensation (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2016 | Jan. 31, 2015 | |
Details | ||
Stock-based compensation | $ 57,219 | $ 28,695 |
3. Notes Payable - Related Pa27
3. Notes Payable - Related Party (Details) - USD ($) | Jan. 31, 2016 | Oct. 31, 2015 |
Details | ||
Notes payable - related party | $ 3,500,000 | $ 3,500,000 |
Interest rate on related party note payable | 6.00% |