Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Dec. 31, 2017 | Apr. 30, 2017 | |
Document and Entity Information: | |||
Entity Registrant Name | PASSUR AEROSPACE, INC. | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2017 | ||
Trading Symbol | pssr | ||
Amendment Flag | false | ||
Entity Central Index Key | 225,628 | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Common Stock, Shares Outstanding | 7,696,091 | ||
Entity Public Float | $ 12,234,165 | ||
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 | 2,017 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 | [1] |
Current assets: | |||
Cash | $ 275,146 | $ 1,523,655 | |
Accounts receivable, net | 1,308,091 | 1,073,498 | |
Deferred tax assets, current | 0 | 418,889 | |
Prepaid expenses and other current assets | 303,045 | 217,410 | |
Total current assets | 1,886,282 | 3,233,452 | |
PASSUR Network, net | 6,004,367 | 5,198,421 | |
Capitalized software development costs, net | 8,893,414 | 7,600,038 | |
Property and equipment, net | 852,147 | 1,187,158 | |
Deferred tax assets, non-current | 0 | 1,522,967 | |
Other assets | 169,635 | 208,755 | |
Total assets | 17,805,845 | 18,950,791 | |
Current liabilities: | |||
Accounts payable | 984,369 | 356,387 | |
Accrued expenses and other current liabilities | 1,273,170 | 936,272 | |
Deferred revenue, current portion | 2,824,885 | 3,140,292 | |
Total current liabilities | 5,082,424 | 4,432,951 | |
Deferred revenue, long term portion | 470,831 | 423,346 | |
Note payable - related party | 3,800,000 | 2,700,000 | |
Total liabilities | 9,353,255 | 7,556,297 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred shares - authorized 5,000,000 shares, par value $0.01 per share; none issued or outstanding | |||
Common shares - authorized 20,000,000 and 10,000,000 shares, respectively, par value $0.01 per share; issued 8,480,526 and 8,465,526 at October 31, 2017 and 2016, respectively | 84,804 | 84,654 | |
Additional paid-in capital | 16,699,337 | 16,082,865 | |
Accumulated deficit | (6,397,873) | (2,877,597) | |
Stockholders' equity before treasury stock | 10,386,268 | 13,289,922 | |
Treasury stock, at cost, 784,435 and 775,327 shares at October 31, 2017 and 2016, respectively | (1,933,678) | (1,895,428) | |
Total stockholders' equity | 8,452,590 | 11,394,494 | |
Total liabilities and stockholders' equity | $ 17,805,845 | $ 18,950,791 | |
[1] | Restated |
Consolidated Balance Sheets Par
Consolidated Balance Sheets Parenthetical - $ / shares | Oct. 31, 2017 | Oct. 31, 2016 |
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 | 20,000,000 | 10,000,000 |
Common stock shares issued | 8,480,526 | 8,465,526 |
Treasury stock shares | 784,435 | 775,327 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | [1] | |
Consolidated Statements of Operations | |||
Revenues | $ 13,871,495 | $ 14,892,495 | |
Cost of expenses: | |||
Cost of revenues | 6,449,931 | 6,240,949 | |
Research and development expenses | 783,014 | 826,227 | |
Selling, general, and administrative expenses | 8,021,182 | 6,481,260 | |
Total costs and expenses | 15,254,127 | 13,548,436 | |
(Loss)/Income from operations | (1,382,632) | 1,344,059 | |
Interest expense - related party | 170,917 | 183,333 | |
Other (Loss)/Income | (5,221) | 0 | |
(Loss)/Income before income taxes | (1,558,770) | 1,160,726 | |
Provision for income taxes | 1,961,506 | 643,023 | |
Net (loss)/income | $ (3,520,276) | $ 517,703 | |
Net (loss)/income per common share - basic | $ (0.46) | $ 0.07 | |
Net (loss)/income per common share - diluted | $ (0.46) | $ 0.07 | |
Weighted average number of common shares outstanding - basic | 7,693,831 | 7,679,696 | |
Weighted average number of common shares outstanding - diluted | 7,693,831 | 7,730,566 | |
[1] | Restated |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common stock | Additional Paid-in Capital | (Accumulated deficit) Retained Earnings | Treasury Stock | Total | ||
Balance at Oct. 31, 2015 | [1] | $ 84,284 | $ 15,663,796 | $ (3,395,300) | $ (1,895,428) | $ 10,457,352 | |
Balance - shares at Oct. 31, 2015 | 7,653,199 | ||||||
Exercise of common stock options | $ 370 | 17,850 | 18,220 | ||||
Exercise of common stock options - shares | 37,000 | ||||||
Stock-based compensation expense | 401,219 | 401,219 | |||||
Net (loss)/income | 517,703 | 517,703 | [1] | ||||
Balance at Oct. 31, 2016 | [1] | $ 84,654 | 16,082,865 | (2,877,597) | (1,895,428) | 11,394,494 | |
Balance - shares at Oct. 31, 2016 | 7,690,199 | ||||||
Exercise of common stock options | $ 150 | 38,100 | 38,250 | ||||
Exercise of common stock options - shares | 15,000 | ||||||
Purchase of treasury stock | (38,250) | (38,250) | |||||
Purchase of treasury stock - shares | (9,108) | ||||||
Stock-based compensation expense | 578,372 | 578,372 | |||||
Net (loss)/income | (3,520,276) | (3,520,276) | |||||
Balance at Oct. 31, 2017 | $ 84,804 | $ 16,699,337 | $ (6,397,873) | $ (1,933,678) | $ 8,452,590 | ||
Balance - shares at Oct. 31, 2017 | 7,696,091 | ||||||
[1] | Restated |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |||
Oct. 31, 2017 | Oct. 31, 2016 | |||
Cash flows from operating activities | ||||
Net (loss)/income | $ (3,520,276) | $ 517,703 | [1] | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 2,967,557 | 2,890,541 | [1] | |
Provision for deferred taxes | 1,941,856 | 593,605 | [1] | |
Provision for doubtful accounts | 179,415 | 5,982 | [1] | |
Stock-based compensation | 578,372 | 401,219 | [1] | |
Changes in operating assets and liabilities: | ||||
Change in accounts receivable | (414,008) | 155,506 | [1] | |
Change in prepaid expenses and other current assets | (134,497) | (120,260) | [1] | |
Change in other assets | 39,120 | 31,106 | [1] | |
Change in accounts payable | 627,982 | (524,432) | [1] | |
Change in accrued expenses and other current liabilities | 336,898 | (41,628) | [1] | |
Change in deferred revenue | (267,922) | 686,058 | [1] | |
Total adjustments | 5,854,773 | 4,077,697 | [1] | |
Net cash provided by operating activities | 2,334,497 | 4,595,400 | [1] | |
Cash flows from investing activities | ||||
PASSUR Network | (1,400,624) | (622,098) | [1] | |
Software development costs | (3,027,394) | (2,263,198) | [1] | |
Property and equipment | (254,988) | (330,177) | [1] | |
Net cash used in investing activities | (4,683,006) | (3,215,473) | [1] | |
Cash flows from financing activities | ||||
Purchase of treasury stock | 0 | [1] | ||
Payment of notes payable-related party | 0 | (800,000) | [1] | |
Proceeds from notes payable - related party | 1,100,000 | 0 | [1] | |
Proceeds from exercise of stock options | 0 | 18,220 | [1] | |
Net cash provided by/(used in) financing activities | 1,100,000 | (781,780) | [1] | |
(Decrease)/increase in cash | (1,248,509) | 598,147 | [1] | |
Cash - beginning of period | 1,523,655 | [1] | 925,508 | |
Cash - end of period | 275,146 | 1,523,655 | [1] | |
Supplemental cash flow information | ||||
Cash paid for Interest - related party | 171,000 | 183,000 | [1] | |
Cash paid for Income taxes | 89,000 | 62,000 | [1] | |
Non-cash financing activities - purchase of treasury stock | 38,250 | 0 | [1] | |
Non-cash financing activities - proceeds from exercise of stock options | $ 38,250 | $ 0 | [1] | |
[1] | Restated |
1. Description of Business and
1. Description of Business and Significant Accounting Policies | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
1. Description of Business and Significant Accounting Policies | 1. Description of Business and Significant Accounting Policies Nature of Business PASSUR Aerospace, Inc. (“PASSUR” or the “Company”), a New York corporation founded in 1967, is a business intelligence company, providing predictive analytics and decision support technology for the aviation industry’s 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 suite of web-based solutions that address the aviation industry’s intractable and costly challenges, including, but not limited to, the underutilization of airspace and airport capacity, delays, cancellations, and diversions. The Company’s technology platform is supported by its Aviation Intelligence Center of Excellence, a team of subject matter experts with extensive experience in airline, airport, and business aviation operations, finance, air traffic management, systems automation, and data visualization, with specific expertise in the operational and business needs, requirements, objectives, and constraints of the aviation industry. PASSUR’s mission is to improve global air traffic efficiencies by connecting the world’s aviation professionals onto a single aviation intelligence platform, making PASSUR an element in addressing the aviation industry’s system-wide inefficiencies. We are an aviation intelligence company that makes air travel more predictable, gate-to-gate, by using predictive analytics generated from our own big data – to mitigate constraints for airlines and their customers. PASSUR’s information solutions are used by the largest five North American airlines, more than 60 airport customers, including 21 of the top 30 North American airports (with PASSUR solutions also used at the remaining nine airports by one or more airline customers), hundreds of corporate aviation customers, and the U.S. government. PASSUR provides data aggregation and consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services. To enable this unique offering, PASSUR owns and operates the largest commercial passive radar network in the world that updates flight tracks every 1 to 4.6 seconds, powering a proprietary database that is accessible in real-time and delivers timely, accurate information and solutions via PASSUR’s industry-leading algorithms and business logic included in its products. Solutions offered by PASSUR help to ensure flight completion, covering the entire flight life cycle, from gate to gate, and result in reductions in overall costs and carbon emissions, while helping to maximizing revenue opportunities, as well as improving operational efficiency and enhancing the passenger experience. PASSUR’s commercial solutions give aviation operators the ability to optimize performance in today’s air traffic management system, while also achieving Next Generation Air Transportation System (“NextGen”) and Single European Sky ATM Research objectives. PASSUR integrates data from multiple sources, including its independent network of over 180 surveillance sensors installed throughout North America creating coast to coast coverage, as well as locations in Europe and Asia; government data; customer data; and data from third party partners. PASSUR’s sensors receive aircraft and drone signals in Mode A, C, S, and Automatic Dependent Surveillance-Broadcast (“ADS-B”), providing position, altitude, beacon code, and tail number, among other information. PASSUR receives signals from aircraft that, when combined with its historical database of aircraft and airport behavior, including information recorded by its network over the last 10 years, allow the Company to know more about what has happened historically and what is happening in real-time. In addition, the historical database allows the Company to predict how aircraft, the airspace, and airports are going to perform, and more importantly, how the aircraft, the airspace, and airports should perform. Basis of Presentation The consolidated financial statements include the accounts of PASSUR Aerospace, Inc. and its wholly-owned Subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation. Certain financial information in the footnotes has been rounded to the nearest thousand for presentation purposes. Revenue Recognition Policy The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-15, “Revenue Recognition in Financial Statements” (“ASC 605-15”), 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 Company’s 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 the customer’s 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 and 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 Company’s 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, installation costs associated with the deployment of additions to the Company owned PASSUR Network, or set-up fees associated with new deployments of the Company software solutions. These fees are recognized as revenue ratably over the term of the agreement or relationship period of such arrangement, whichever is longer, but typically five years. Deferred revenue is classified on the Company’s 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. 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 issuance of the financial statements, for appropriate accounting and disclosure. 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 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 provision for doubtful accounts was $184,000 and $26,000 as of October 31, 2017, and 2016, respectively. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating its reserve, including historical data, experience, customer types, credit worthiness, and economic trends. The Company monitors its outstanding accounts receivable balances and believes the provision is adequate. Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of the related assets. Amortization of leasehold improvements is calculated on a straight-line basis over the estimated useful life of the improvements or the term of the lease, including renewal options expected to be exercised, whichever is shorter. PASSUR Network The PASSUR Network is comprised of PASSUR and SMLAT Systems, which include the direct production, shipping, and installation costs incurred for each PASSUR and SMLAT System, which are recorded at cost, net of accumulated depreciation. Depreciation is charged to cost of revenues and is recorded using the straight-line method over the estimated useful life of the asset, which is estimated at five years for SMLAT Systems and seven years for PASSUR Systems. PASSUR and SMLAT Systems which are not installed, raw materials, work-in-process, and finished goods components are carried at cost and not depreciated until installed. Capitalized Software Development Costs The Company follows the provisions of ASC 350-40, “Internal Use Software” (“ASC 350-40”). ASC 350-40 provides guidance for determining whether computer software is internal-use software, and on accounting for the proceeds of computer software originally developed or obtained for internal use and then subsequently sold to the public. It also 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 revised life. As of October 31, 2017, and 2016 based upon management’s evaluation of the above asset groups, there is no impairment of these asset groups. Cost of Revenues Costs associated with subscription and maintenance revenues consist primarily of direct labor, depreciation of PASSUR and SMLAT Network Systems, amortization of capitalized software development costs, communication costs, data feeds, travel and entertainment, and consulting fees. Also, included in Cost of Revenues are costs associated with upgrades to PASSUR and SMLAT Systems necessary to make such systems compatible with new software applications, as well as the ordinary repair and maintenance of existing PASSUR and SMLAT Systems. Additionally, cost of revenues in each reporting period is impacted by: (1) the number of PASSUR and SMLAT Systems added to the Network, which includes the cost of production, shipment, and installation of these assets, which are capitalized to the PASSUR Network; and (2) new capitalized costs associated with software development projects. Both of these are referred to as “Capitalized Assets” and are depreciated and/or amortized over their respective useful lives and charged to cost of revenues. Income Taxes The Company follows the liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the temporary differences in the tax bases of the assets or liabilities and their reported amounts in the financial statements. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount currently estimated to be realized. After considering the impact of the current year loss, including the Company’s increased expenses and weighting all available positive and negative evidence, the Company concluded that it was not more likely than not that the net deferred tax asset would be realized. The Company follows ASC 740, “Income Taxes,” (“ASC 740”) where tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in tax returns that do not meet these recognition and measurement standards. At October 31, 2017, the Company did not have any uncertain tax positions. As permitted by ASC 740-10, the Company’s accounting policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. On December 22, 2017, the Tax Cuts and Jobs Acts was enacted into law. The new tax legislation represents a fundamental and dramatic shift in US taxation. The new legislation contains several key tax provisions that will impact us including the reduction of the corporate income tax rate to 21% effective January 1, 2018. The new legislation also includes a variety of other changes including but not limited to a limitation on the tax deductibility of interest expense, acceleration of business asset expensing and reduction in the amount of executive pay that could qualify as a tax deduction. ASC 740 requires the Company to recognize the effect of the tax law changes in the period of enactment. The SEC staff has issued Staff Accounting Bulletin No.118 which will allow the recording of provisional amounts during a measurement period, which is similar to the measurement period used when accounting for business combinations. The Company will continue to assess the impact of the recently enacted tax law on our business and its consolidated financial statements and will reflect the provisional impact of the tax law change in the fourth quarter of fiscal 2018. Research and Development Costs Research and development costs are expensed as incurred. 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. Shares used to calculate net income per share for fiscal years 2017 and 2016 are as follows: 2017 2016 Basic Weighted average shares outstanding 7,693,831 7,679,696 Effect of dilutive stock options - 50,870 Diluted weighted average shares outstanding 7,693,831 7,730,566 Weighted average shares which are not included in the calculation of diluted net income per share because their impact is anti-dilutive. These shares consist of stock options. 1,594,000 1,182,000 Weighted average options to purchase 1,594,000 and 1,182,000 shares of common stock at prices ranging from $1.40 to $5.48 per share that were outstanding during fiscal years 2017 and 2016 were excluded from each respective year’s computation of diluted earnings per share. In each of these years, such options’ exercise prices exceeded the average market price of our common stock, thereby causing the effect of such options to be anti-dilutive. Deferred Revenue Deferred revenue includes amounts attributable to advances received or billings related to customer agreements, which are contractually required and are non-refundable, and may be prepaid either annually, quarterly, or monthly. Deferred revenues from such customer agreements are recognized as revenue ratably over the period that coincides with the respective agreement. The Company recognizes initial set-up fee revenues and associated costs on a straight-line basis over the estimated life of the customer relationship period, typically five years. Fair Value of Financial Instruments The recorded amounts of the Company’s cash, receivables, 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 Company’s related party debt is held by its Chairman and significant shareholder, and the Company does not have any third-party debt with which to compare. Additionally, on a recurring basis, the Company uses fair value measures when analyzing asset impairments. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present, and the review indicates that the assets will not be fully recoverable based on the undiscounted estimated future cash flows expected to result from the use of the asset, their carrying values are reduced to estimated fair value. Stock-Based Compensation The Company follows FASB ASC 718 “Compensation-Stock Compensation”, which requires measurement of compensation cost for all stock-based awards at fair value on date of grant, and recognition of stock-based compensation expense over the service period for awards expected to vest. The fair value of stock options was determined using the Black-Scholes valuation model. Such fair value is recognized as an expense over the service period, net of forfeitures. Stock-based compensation expense was 578,372 401,219 Comprehensive Income The Company’s comprehensive income is equivalent to that of the Company’s total net income for fiscal years 2017 and 2016. Accounting Pronouncements issued but not yet adopted In May 2017, the FASB issued Accounting Standards Update (“ASU”) No 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. ASU 2017-09 will be effective for the Company beginning November 1, 2018, and will be applied prospectively. In March 2016, the FASB issued new guidance on accounting for employee share-based payment awards to simplify the accounting related to several aspects of accounting for share-based payment transactions, including income tax consequences of share-based payment transactions, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flows. The new standard is effective for the annual period beginning after December 15, 2016, including interim reporting periods within that period, which for the Company will be the annual period ending October 31, 2018. Early adoption, including adoption in an interim period, is permitted. The standard requires the use of several transition methods including a modified retrospective transition method, retrospective method, and prospective method. The Company is evaluating the effect that this new guidance will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, which amends the ASC and creates Topic 842, Leases (“Topic 842”). Topic 842 will require lessees to recognize lease assets and lease liabilities for those leases classified as operating leases under previous GAAP on the balance sheet. This guidance is effective for annual periods beginning after December 15, 2018, which for the Company will be the annual period ending October 31, 2020, and early adoption is permitted. The Company does not believe this new accounting standard update will have a material impact on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Assets. This ASU is intended to simplify the presentation of deferred taxes on the balance sheet and will require an entity to present all deferred tax assets and deferred tax liabilities as non-current on the balance sheet. Under the current guidance, entities are required to separately present deferred taxes as current or non-current. This guidance will be effective beginning in 2018, with early adoption permitted. The Company does not believe this new accounting standard update will have a material impact on its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers: Topic 606” (“ASU 2014-09”), to supersede nearly all-existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services, ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new standard is effective for the annual period beginning after December 15, 2017, including interim reporting periods within that period, which for the Company will be the annual period ending October 31, 2019. Early application as of January 1, 2017, is permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that this new guidance will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its financial reporting. |
2. Restatement of Previously Is
2. Restatement of Previously Issued Consolidated Financial Statement | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
2. Restatement of Previously Issued Consolidated Financial Statement | 2. Restatement of Previously Issued Consolidated Financial Statement In connection with the preparation, review and audit of the Company's consolidated financial statements required to be included in this Annual Report on Form 10-K for the year ended October 31, 2017, management identified certain errors in the Company's current and historical consolidated financial statements. A conclusion was reached by the Audit Committee of the Company's Board of Directors, in consultation with management and the Company's independent registered public accounting firm, that the Company's previously issued consolidated financial statements for fiscal years 2016, along with each of the three quarters included in fiscal year 2017, and the opening balance sheet of fiscal year 2016, needed to be restated. This Note 2 to the consolidated financial statements discloses the nature of the restatement matters and shows the impact of the revised amounts for the year ended October 31, 2016 and the restated unaudited quarterly financial data for the interim periods in fiscal year 2017, which is immaterial to each statement of operations for each individual quarter, and is, collectively referred to as the “Restatement.” The Restatement corrects errors primarily related to: (1) the capitalization of certain operating costs associated with software development which should have been expensed as incurred are contained in the Company’s financial statements; and (2) the capitalization of certain operating costs associated with the manufacturing and installation of fixed assets. The Company has also identified one other adjustment described below in items (3) that have been corrected as part of this Restatement. Adjustments needed to correct errors (1) Capitalized software – The Company capitalized certain internally developed software costs that did not meet criteria for deferral under ASC 350-40, Internal-Use Software. an over-capitalization of certain software expenses, an understatement of operating expenses, and an overstatement of certain balance sheet accounts, (2) Fixed Assets – The Company capitalized certain fixed asset costs that did not meet criteria for deferral under ASC 360, Property, Plant and Equipment. an over-capitalization of certain manufacturing and installation costs, an understatement of operating expenses, and an overstatement of certain balance sheet accounts, (3) Income taxes – During the first quarter of fiscal year 2017, the Company recorded approximately $198,000 tax provision as a result of the Company adjusting its deferred tax asset relating to net operating losses in various state jurisdictions the carrying value of certain state deferred tax assets related to periods prior to fiscal year 2016. The Restatement resulted in adjustments to opening retained earnings and certain assets as of November 1, 2016, related to fiscal year 2015 and prior. The cumulative effect of those adjustments decreased previously reported retained earnings by approximately $1,016,000, decreased previously reported PASSUR Network assets by approximately $600,000, decreased previously reported capitalized software development costs by approximately $800,000, and increased deferred tax assets by approximately $325,000. The table below summarizes the effects of the cumulative Restatement adjustments recorded to all periods prior to November 1, 2016 on previously reported retained earnings, PASSUR Network assets, capitalized software development costs, and deferred tax assets: October 31, 2015 Select Balance Sheet Accounts As Reported Adjustments As Restated Reference PASSUR Network, net $ 5,902,751 $ (554,088) $ 5,348,663 2 Capitalized software development costs, net $ 7,684,603 $ (786,894) $ 6,897,709 1 Deferred tax asset, non-current $ 1,658,557 $ 325,234 $ 1,983,791 1-3 Total stockholders' equity $ 11,473,100 $ (1,015,748) $ 10,457,352 1-3 The following tables summarize the impact of the Restatement on our previously reported Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Cash Flows for the year ending October 31, 2016: October 31, 2016 Select Balance Sheet Accounts As Reported Period Adjustments Prior Period Adjustments As Restated Reference PASSUR Network, net $ 5,739,753 $ 12,756 $ (554,088) $ 5,198,421 2 Capitalized software development costs, net $ 8,263,533 $ 123,399 $ (786,894) $ 7,600,038 1 Deferred tax asset, non-current $ 1,250,833 $ (53,100) $ 325,234 $ 1,522,967 1-2 Total stockholders' equity $12,327,187 $ 83,055 $ (1,015,748) $11,394,494 1-2 October 31, 2016 Select Statement of Operations Accounts As Reported Adjustments As Restated Reference Cost of revenues $ 6,377,104 $ (136,155) $ 6,240,949 1-2 Income from operations $ 1,207,904 $ 136,155 $ 1,344,059 1-2 Income tax expense $ 589,923 $ 53,100 $ 643,023 1-2 Net income $ 434,648 $ 83,055 $ 517,703 1-2 Net income per common share - basic $ 0.06 $ 0.01 $ 0.07 Net income per common share - diluted $ 0.06 $ 0.01 $ 0.07 October 31, 2016 Select Statement of Cash Flows Accounts As Reported Adjustments As Restated Reference Net income $ 434,648 $ 83,055 $ 517,703 1-2 Depreciation and amortization $ 3,341,349 $ (450,808) $ 2,890,541 1-2 Provision for deferred taxes $ 540,505 $ 53,100 $ 593,605 Net cash provided by operating activities $ 4,910,053 $ (314,653) $ 4,595,400 1-2 PASSUR Network $ (776,138) $ 154,040 $ (622,098) 2 Capitalized software development $ (2,423,811) $ 160,613 $ (2,263,198) 1 Net cash used in investing activities $ (3,530,126) $ 314,653 $ (3,215,473) 1-2 The following tables summarize the impact of the Restatement on our previously reported unaudited Consolidated Balance Sheets, unaudited Consolidated Statements of Operations, and unaudited Consolidated Statements of Cash Flows for each of the quarters of fiscal year 2017: Three months ended January 31, 2017 Select Balance Sheet Accounts As Reported Period Adjustments Prior Period Adjustments As Restated Reference PASSUR Network, net $ 5,686,154 $ (18,833) $ (541,332) $ 5,125,989 2 Capitalized software development costs, net $ 8,419,097 $ 27,068 $ (663,495) $ 7,782,670 1 Deferred tax asset, non-current $ 1,165,039 $ - $ 272,134 $ 1,437,173 Total stockholders' equity $ 12,212,596 $ 8,235 $ (932,693) $ 11,288,138 1-2 Six months ended April 30, 2017 Select Balance Sheet Accounts As Reported Period Adjustments Prior Period Adjustments As Restated Reference PASSUR Network, net $ 5,918,106 $ (55,970) $ (560,165) $ 5,301,971 2 Capitalized software development costs, net $ 8,616,778 $ 22,783 $ (636,427) $ 8,003,134 1 Deferred tax asset, non-current $ 1,358,400 $ - $ 272,134 $ 1,630,534 Total stockholders' equity $ 12,287,185 $ (33,187) $ (924,458) $ 11,329,540 1-2 Nine months ended July 31, 2017 Select Balance Sheet Accounts As Reported Period Adjustments Prior Period Adjustments As Restated Reference PASSUR Network, net $ 6,169,478 $ (35,256) $ (616,135) $ 5,518,087 2 Capitalized software development costs, net $ 8,957,601 $ 16,449 $ (613,644) $ 8,360,406 1 Deferred tax asset, non-current $ 1,271,900 $ - $ 272,134 $ 1,544,034 Total stockholders' equity $ 11,861,213 $ (18,807) $ (957,645) $ 10,884,761 1-2 Three months ended January 31, 2017 Select Statement of Operations Accounts As Reported Adjustments As Restated Reference Cost of revenues $ 1,690,009 $ (8,235) $ 1,681,774 1-2 (Loss)/Income from operations $ (120,467) $ 8,235 $ (112,232) 1-2 (Benefit) provision for income taxes $ 94,684 $ (197,749) $ (103,065) 3 Net (loss)/income $ (256,551) $ 205,984 $ (50,567) Net (loss)/income per common share - basic $ (0.03) $ 0.02 $ (0.01) Net (loss)/income per common share - diluted $ (0.03) $ 0.02 $ (0.01) Three months ended April 30, 2017 Select Statement of Operations Accounts As Reported Adjustments As Restated Reference Cost of revenues $ 1,534,126 $ 33,187 $ 1,567,313 1-2 (Loss)/Income from operations $ (185,166) $ (33,187) $ (218,353) 1-2 (Benefit) provision for income taxes $ (192,325) $ - $ (192,325) Net (loss)/income $ (38,112) $ (33,187) $ (71,299) Net (loss)/income per common share - basic $ 0.00 $ (0.01) $ (0.01) Net (loss)/income per common share - diluted $ 0.00 $ (0.01) $ (0.01) Three months ended July 31, 2017 Select Statement of Operations Accounts As Reported Adjustments As Restated Reference Cost of revenues $ 1,489,703 $ 18,807 $ 1,508,510 1-2 (Loss)/Income from operations $ (451,460) $ (18,807) $ (470,267) 1-2 (Benefit) provision for income taxes $ 86,500 $ - $ 86,500 Net (loss)/income $ (579,360) $ (18,807) $ (598,167) Net (loss)/income per common share - basic $ (0.08) $ - $ (0.08) Net (loss)/income per common share - diluted $ (0.08) $ - $ (0.08) Three months ended January 31, 2017 Select Statement of Cash Flows Accounts As Reported Adjustments As Restated Reference Net (loss)/income $ (256,551) $ 205,984 $ (50,567) 1-3 Depreciation and amortization $ 857,174 $ (111,256) $ 745,918 1-2 Provision for deferred taxes $ 85,794 $ (197,749) $ (111,955) 3 Net cash (used in)/ provided by operating activities $ (124,381) $ (103,021) $ (227,402) 1-3 PASSUR Network $ (162,795) $ 62,658 $ (100,137) 2 Capitalized software development $ (647,432) $ 40,362 $ (607,070) 1 Net cash used in investing activities $ (896,046) $ 103,021 $ (793,025) 1-2 Six months ended April 30, 2017 Select Statement of Cash Flows Accounts As Reported Adjustments As Restated Reference Net (loss)/income $ (294,663) $ 172,797 $ (121,866) 1-3 Depreciation and amortization $ 1,702,760 $ (222,512) $ 1,480,248 1-2 Provision for deferred taxes $ (107,567) $ (197,749) $ (305,316) 3 Net cash (used in)/ provided by operating activities $ 2,339,774 $ (247,464) $ 2,092,310 1-3 PASSUR Network $ (596,533) $ 162,453 $ (434,080) 2 Capitalized software development $ (1,327,848) $ 85,009 $ (1,242,839) 1 Net cash used in investing activities $ (2,021,324) $ 247,464 $ (1,773,860) 1-2 Nine months ended July 31, 2017 Select Statement of Cash Flows Accounts As Reported Adjustments As Restated Reference Net (loss)/income $ (874,024) $ 153,990 $ (720,034) 1-3 Depreciation and amortization $ 2,519,500 $ (349,331) $ 2,170,169 1-2 Provision for deferred taxes $ (21,067) $ (197,749) $ (218,816) 3 Net cash (used in)/ provided by operating activities $ 2,711,495 $ (393,090) $ 2,318,405 1-3 PASSUR Network $ (1,023,608) $ 261,238 $ (762,370) 2 Capitalized software development $ (2,144,555) $ 131,850 $ (2,012,705) 1 Net cash used in investing activities $ (3,421,958) $ 393,090 $ (3,028,868) 1-2 |
3. Property, Plant and Equipmen
3. Property, Plant and Equipment | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
3. Property, Plant and Equipment | 3. Property and Equipment Property and equipment consist of the following as of October 31, 2017 and 2016: Estimated useful lives 2017 2016 Leasehold improvements 3-5 years $ 216,000 $ 216,000 Equipment 5-10 years 5,960,000 5,727,000 Furniture and fixtures 5-10 years 585,000 563,000 6,761,000 6,506,000 Less accumulated depreciation 5,909,000 5,319,000 Total $ 852,000 $ 1,187,000 $ 852,147 $ 1,187,158 The Company recorded depreciation expense on the assets included in property and equipment of $590,000 and $496,000 for the year ended October 31, 2017 and 2016, respectively. |
4. Passur Network
4. Passur Network | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
4. Passur Network | PASSUR Network PASSUR Network consists of the following as of October 31, 2017 and 2016: 2017 2016 (As Restated) PASSUR Network, beginning balance $ 18,387,000 $ 17,765,000 Additions -1,400,624 1,401,000 -622,098 Total capitalized PASSUR Network costs 19,788,000 18,387,000 Less accumulated depreciation 13,784,000 13,189,000 PASSUR Network, ending balance, net $ 6,004,000 $ 5,198,000 $ 6,004,367 $ 5,198,421 The Company capitalized $1,197,000 and $489,000, of PASSUR Network costs, for the year ended October 31 2017 and 2016, respectively. These amounts exclude $204,000 and $133,000 of parts purchased, related to the PASSUR Network, for the year ended October 31, 2017 and 2016, respectively. Depreciation expense related to the Company-owned PASSUR Network was $595,000 and $773,000 for the period ended October 31, 2017 and 2016, respectively. Depreciation is charged to cost of revenues and is calculated using the straight-line method over the estimated useful life of the asset, which is estimated at seven and five years for PASSUR and SMLAT systems, respectively. The net carrying balance of the PASSUR Network as of October 31, 2017 and October 31, 2016, was $6,004,000 and $5,198,000, respectively. Included in the net carrying balance as of October 31, 2017, were parts and finished goods for PASSUR and SMLAT Systems totaling $1,636,000 and $642,000, respectively, which have not yet been installed. As of October 31, 2016, $1,815,000 and $911,000 of parts and finished goods for PASSUR and SMLAT systems, respectively, were included in the net carrying balance of the PASSUR Network. PASSUR and SMLAT Systems which are not installed are carried at cost and not depreciated until installed. As of October 31, 2017, depreciation expense for the PASSUR Network assets, where depreciation has commenced is estimated to approximate $673,000, $659,000, $626,000, $412,000, and $255,000, for the fiscal years ended October 31, 2018, 2019, 2020, 2021 and 2022, respectively. The Company did not dispose of or record any impairments related to any of the PASSUR Network assets in fiscal years 2017 or 2016. |
5. Capitalized Software Develop
5. Capitalized Software Development Costs | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
5. Capitalized Software Development Costs | Capitalized Software Development Costs PASSUR Software Development costs consist of the following as of October 31, 2017 and 2016: 2017 2016 (As Restated) Software development costs, beginning balance $ 16,890,000 $ 14,627,000 Additions 3,027,000 3,027,394 2,263,000 2,263,198 Total capitalized software development costs 19,917,000 16,890,000 Less accumulated amortization 11,024,000 9,290,000 Software development costs, ending balance, net $ 8,893,000 8,893,414 $ 7,600,000 7,600,038 The CompanyÂ’s capitalization of software development projects was $3,027,000 and $2,263,000 for the year ended October 31, 2017 and 2016, respectively. Amortization related to capitalized software development projects was $1,734,000 and $1,561,000 for the year ended October 31, 2017 and 2016, respectively. As of October 31, 2017, amortization expense for capitalized software development costs where amortization has commenced is estimated to approximate $1,893,000, $1,480,000, $1,368,000, $906,000, and $359,000, for the fiscal years ended October 31, 2018, 2019, 2020, 2021 and 2022, respectively. As of October 31, 2017, the Company had $2,727,000 of capitalized software development costs relating to projects currently still in development, therefore, are not yet subject to amortization. The Company did not record any impairments related to capitalized software development projects in fiscal years 2017 or 2016. |
6. Accrued Expenses and Other C
6. Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
6. Accrued Expenses and Other Current Liabilities | 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following as of October 31, 2017 and 2016: 2017 2016 Payroll, payroll taxes, and benefits $ 565,000 $ 513,000 Professional fees 156,000 148,000 Travel expenses 171,000 142,000 Contractor fees 172,000 - Other liabilities 209,000 133,000 Total $1,273,000 $ 936,000 $1,273,170 $ 936,272 |
7. Notes Payable
7. Notes Payable | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
7. Notes Payable | 7. Notes Payable For the year ended October 31, 2017, the Company paid interest to G.S. Beckwith Gilbert, the Company’s significant shareholder and Chairman, of 170917 During the first quarter of fiscal year 2018, Mr. Gilbert loaned the Company an additional $925,000. As of February 12, 2018, the loan balance totaled $4,725,000. During the year ended October 31, 2016, the Company paid interest to G.S. Beckwith Gilbert of 183333 On February 9, 2018, the Company entered into a Fourth Debt Extension Agreement with G.S. Beckwith Gilbert, the Company’s Chairman and significant stockholder, effective February 9, 2018, pursuant to which the Company and Mr. Gilbert agreed to modify certain terms and conditions of the existing debt agreement with Mr. Gilbert (the “Existing Gilbert Note”). The maturity date of the Existing Gilbert Note was due on November 1, 2018, and the total amount of principal and interest due and owing as of February 12, 2018, was $4,734,000. Pursuant to the Fourth Debt Extension Agreement, the Company issued a new note to Mr. Gilbert in the principal amount of $4,725,000 (the “Fourth Replacement Note”) in exchange for the Existing Gilbert Note and the Company agreed to pay the accrued interest under the Existing Gilbert Note as of February 9, 2018, in an amount equal to $7,000, at the time and on the terms set forth in the Existing Gilbert Note. Under the terms of the Fourth Replacement Note, the maturity date was extended to November 1, 2019, and the annual interest rate remained at 6%. Interest payments under the Fourth Replacement Note shall be made annually on October 31st of each year. The note payable is secured by the Company’s assets. The Company has paid all interest incurred on the Fourth Replacement Note through October 31, 2017, totaling $171,000. Subsequent to October 31, 2017, the Company paid all interest incurred on the note payable, through January 31, 2018 in the amount of $66,000. The Company evaluated its financial position at October 31, 2017, including an operating loss of $1,383,000 and working capital deficit of $3,196,000 and has requested and received a commitment from G.S. Beckwith Gilbert, dated February 12, 2018, that if the Company, at any time, is unable to meet its obligations through February 12, 2019, G.S. Beckwith 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. The note payable is secured by the Company’s assets. |
8. Operating Leases of Lessee D
8. Operating Leases of Lessee Disclosure | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
8. Operating Leases of Lessee Disclosure | 8. Leases The CompanyÂ’s headquarters, located in Stamford, Connecticut, are subject to a lease through January 31, 2018, at an average annual rental rate of $235,000. The CompanyÂ’s software development and manufacturing facility, located in Bohemia, New York, is subject to a lease through October 31, 2018, at an average annual rental rate of $139,000. The CompanyÂ’s primary software development facility, located in Orlando, Florida, is subject to a lease through August 31, 2021, at an average annual rental rate of $67,000. These leases provide for additional payments of real estate taxes and other operating expenses over the base amount in the rental agreement. Other short-term operating leases are included below. All other operating leases are under a month-to-month arrangement. Rent expense, which includes utilities, was $645,000 and $590,000 for the year ended October 31, 2017 and 2016, respectively. Contractual obligations Fiscal Year Ended October 31: under operating leases 2018 $ 287,133 2019 64,002 2020 71,882 2021 61,392 Thereafter - Total minimum contractual obligations $ 484,409 On November 20, 2017, the Company modified its lease agreement for its Company headquarters located in Stamford, Connecticut, extending the term to June 30, 2023, at an annual rate of $220,000. On December 20, 2017, the Company entered into a new lease through April 30, 2023 for a regional office in Irving, Texas, at an annual rate of $60,000. These subsequent lease agreements are not included in the table above. |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
9. Income Taxes | 9. Income Taxes The CompanyÂ’s provision for income taxes in each fiscal year consists of current federal, state, and local minimum taxes. The income tax expense for fiscal years ended October 31, 2017 and 2016 consisted of the following: 2017 2016 (As Restated) Current: Federal $ - $ - State $ 20,000 $ 50,000 Income tax provision-current $ 20,000 $ 50,000 Deferred: Federal $ 1,826,000 $ 514,000 State $ 116,000 $ 79,000 Total income tax expense, net $ 1,962,000 $ 643,000 $ 1,961,506 $ 643,023 The difference between income taxes expected at the U.S federal statutory income tax rate of 34% and the reported income tax expense are summarized as follows: 2017 2016 Amount Percent Amount Percent (As Restated) U.S. statutory tax $ (530,000) 34.0% $395,000 34.0% Stock compensation 174,000 - -11.2% 125,000 10.8% Meals and entertainment 14,000 -0.9% 14,000 1.2% State tax, net of federal benefit (37,000) 2.4% 109,000 9.4% Other 63,000 -4.0% - 0.0% Change in Valuation Allowance 2,278,000 -146.1% - 0.0% Income tax expense, net $ 1,962,000 -125.8% $643,000 55.4% 1,961,506 643,023 The tax effect of temporary differences that give rise to deferred tax assets and liabilities as of October 31, 2017 and 2016 is as follows: 2017 2016 (As Restated) Deferred tax assets and liabilities: Net operating loss carry-forward $ 2,157,000 $ 1,696,000 Deferred Revenue 178,000 - Allowance for doubtful accounts receivable 70,000 19,000 Stock compensation-nonqualified 217,000 198,000 Accruals 58,000 - Depreciation (402,000) 29,000 Sub-total $ 2,278,000 $ 1,942,000 Valuation allowance (2,278,000) - Deferred tax assets and liabilities $ - $ 1,942,000 At October 31, 2017, the Company had available federal net operating loss carryforwards of $7,474,000, which will expire in various tax years from fiscal year 2023 through fiscal year 2037. As a result of certain realization requirements of ASC 718, the table of deferred tax assets and liabilities does not include certain deferred tax assets that arose directly from tax deductions related to equity compensation greater than compensation recognized for financial reporting. At October 31, 2017 and 2016, the Company did not have any uncertain tax positions. As permitted by ASC 740-10, the CompanyÂ’s accounting policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. The CompanyÂ’s tax return years that are subject to examination by taxing authorities are fiscal years 2014 through 2017. |
10. Stock-Based Compensation
10. Stock-Based Compensation | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
10. Stock-Based Compensation | 10. Stock-Based Compensation In fiscal year 2009, the Company’s Board of Directors approved the Company’s 2009 stock option plan, which provides for the granting of stock options for up to 500,000 shares of the Company’s common stock. During fiscal year 2010, the plan was amended to provide for the granting of another 500,000 stock option shares, for a total provision of 1,000,000 stock option shares of the Company’s common stock as of October 31, 2010. During fiscal year 2011, the plan was amended for the granting of another 500,000 stock option shares, for a total provision of 1,500,000 stock option shares of the Company’s common stock as of October 31, 2011. During fiscal year 2017, the plan was amended for the granting of another 1,500,000 stock option shares, for a total provision of 3,000,000 stock option shares of the Company’s common stock as of October 31, 2017. 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 2017 and 2016 is as follows: Number of stock options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Stock options outstanding at November 1, 2015 1,186,000 $3.27 7.1 $ 293,000 Stock options granted 240,000 $3.41 Stock options exercised (37,000) $0.49 Stock options forfeited (60,000) $2.49 Stock options outstanding at October 31, 2016 1,329,000 $3.42 7.1 $ 130,000 Stock options granted 380,000 $3.78 Stock options exercised (15,000) $2.55 Stock options forfeited (100,000) $3.28 Stock options outstanding at October 31, 2017 1,594,000 $3.52 6.9 $ 84,000 Stock options exercisable at October 31, 2017 779,500 $3.51 5.0 $ 84,000 The weighted average grant date fair value of the Company’s stock options granted during fiscal years 2017 and 2016 was $3.78 and $3.41, respectively. The total intrinsic value of stock options exercised was $25,000 and $77,000 during fiscal years 2017 and 2016, respectively. 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 2017 and 2016: Years ended October 31, 2017 2016 Expected dividend yield 0% 0% Expected volatility 117% 117% Risk-free interest rate 1.84-2.26% 1.41 - 1.85% Expected term (years) 4.9 - 6.5 4.9 - 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: 2017 2016 Cost of revenues $ 27,000 $ 25,000 Research and development $ 113,000 122,000 Selling, general and administrative $ 438,000 254,000 $ 578,000 $ 401,000 578,372 401,219 The following table summarizes the plans under which the Company granted equity compensation as of October 31, 2017: Name of Plan Shares Authorized Shares Available for Grant Shares Outstanding Last Date for Grant of Shares PASSUR Aerospace, Inc., 2009 Stock Incentive Plan 3,000,000 1,448,000 1,552,000 February 24, 2019 The following table summarizes the Company’s equity plans that have expired but that still have equity awards outstanding as of October 31, 2017: Name of Plan Shares Available for Grant Shares Outstanding PASSUR Aerospace, Inc., 1999 Stock Incentive Plan — 42,000 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 $2,247,000 of unrecognized stock-based compensation costs expected to be recognized over a weighted average period of 3.7 years as of October 31, 2017. The Company had 814,500 shares in unvested stock-based options as of October 31, 2017. |
11. Concentration Risk Disclosu
11. Concentration Risk Disclosure | 12 Months Ended |
Oct. 31, 2017 | |
Notes | |
11. Concentration Risk Disclosure | 11. Major Customers The CompanyÂ’s principal business is to provide predictive analytics and decision support technology for the aviation industry to primarily improve the operational performance and cash flow of airlines. The Company believes it operates in one operating segment. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Three customers accounted for 52%, or $7,165,000, of total revenues in fiscal year 2017. One customer accounted for 22% or $2,988,000, a second customer accounted for 19% or $2,637,000, and a third customer accounted for 11% or $1,540,000 of total revenues in fiscal year 2017. Three customers accounted for 45%, or $6,698,000, of total revenues in fiscal year 2016. One customer accounted for 17% or $2,555,000, a second customer accounted for 17% or $2,460,000, and a third customer accounted for 11% or $1,683,000 of total revenues in fiscal year 2016. As of October 31, 2017, the Company had three customers each of which accounted for 10% or more of the accounts receivable balance. One customer accounted for 21%, or $309,000, a second customer accounted for 16%, or $242,000, and a third customer accounted for 15%, or $218,000. As of October 31, 2016, the Company had three customers each of which accounted for 10% or more of the accounts receivable balance. One customer accounted for 30%, or $330,000, and a second customer accounted for 21%, or $226,000 and a third customer accounted for 14% or $157,000. Credit losses historically have been immaterial, although, there is one customer with a significant past due accounts receivable balance, which is not one of the major customers described above, which the Company has fully reserved as of the fiscal year ended October 31, 2017. The Company had foreign sales of $320,000 and $206,000 in fiscal years 2017 and 2016, respectively. All sales, including foreign sales, are denominated in U.S. dollars. |
1. Description of Business an18
1. Description of Business and Significant Accounting Policies: Nature of Business (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Nature of Business | Nature of Business PASSUR Aerospace, Inc. (“PASSUR” or the “Company”), a New York corporation founded in 1967, is a business intelligence company, providing predictive analytics and decision support technology for the aviation industry’s 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 suite of web-based solutions that address the aviation industry’s intractable and costly challenges, including, but not limited to, the underutilization of airspace and airport capacity, delays, cancellations, and diversions. The Company’s technology platform is supported by its Aviation Intelligence Center of Excellence, a team of subject matter experts with extensive experience in airline, airport, and business aviation operations, finance, air traffic management, systems automation, and data visualization, with specific expertise in the operational and business needs, requirements, objectives, and constraints of the aviation industry. PASSUR’s mission is to improve global air traffic efficiencies by connecting the world’s aviation professionals onto a single aviation intelligence platform, making PASSUR an element in addressing the aviation industry’s system-wide inefficiencies. We are an aviation intelligence company that makes air travel more predictable, gate-to-gate, by using predictive analytics generated from our own big data – to mitigate constraints for airlines and their customers. PASSUR’s information solutions are used by the largest five North American airlines, more than 60 airport customers, including 21 of the top 30 North American airports (with PASSUR solutions also used at the remaining nine airports by one or more airline customers), hundreds of corporate aviation customers, and the U.S. government. PASSUR provides data aggregation and consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services. To enable this unique offering, PASSUR owns and operates the largest commercial passive radar network in the world that updates flight tracks every 1 to 4.6 seconds, powering a proprietary database that is accessible in real-time and delivers timely, accurate information and solutions via PASSUR’s industry-leading algorithms and business logic included in its products. Solutions offered by PASSUR help to ensure flight completion, covering the entire flight life cycle, from gate to gate, and result in reductions in overall costs and carbon emissions, while helping to maximizing revenue opportunities, as well as improving operational efficiency and enhancing the passenger experience. PASSUR’s commercial solutions give aviation operators the ability to optimize performance in today’s air traffic management system, while also achieving Next Generation Air Transportation System (“NextGen”) and Single European Sky ATM Research objectives. PASSUR integrates data from multiple sources, including its independent network of over 180 surveillance sensors installed throughout North America creating coast to coast coverage, as well as locations in Europe and Asia; government data; customer data; and data from third party partners. PASSUR’s sensors receive aircraft and drone signals in Mode A, C, S, and Automatic Dependent Surveillance-Broadcast (“ADS-B”), providing position, altitude, beacon code, and tail number, among other information. PASSUR receives signals from aircraft that, when combined with its historical database of aircraft and airport behavior, including information recorded by its network over the last 10 years, allow the Company to know more about what has happened historically and what is happening in real-time. In addition, the historical database allows the Company to predict how aircraft, the airspace, and airports are going to perform, and more importantly, how the aircraft, the airspace, and airports should perform. |
1. Description of Business an19
1. Description of Business and Significant Accounting Policies: Basis of Presentation (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of PASSUR Aerospace, Inc. and its wholly-owned Subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation. Certain financial information in the footnotes has been rounded to the nearest thousand for presentation purposes. |
1. Description of Business an20
1. Description of Business and Significant Accounting Policies: Revenue Recognition Policy (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Revenue Recognition Policy | Revenue Recognition Policy The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-15, “Revenue Recognition in Financial Statements” (“ASC 605-15”), 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 Company’s 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 the customer’s 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 and 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 Company’s 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, installation costs associated with the deployment of additions to the Company owned PASSUR Network, or set-up fees associated with new deployments of the Company software solutions. These fees are recognized as revenue ratably over the term of the agreement or relationship period of such arrangement, whichever is longer, but typically five years. Deferred revenue is classified on the Company’s 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. |
1. Description of Business an21
1. Description of Business and Significant Accounting Policies: Use of Estimates (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, stock-based compensation, software development costs, the PASSUR Network and income taxes. Actual results could differ from those estimates. |
1. Description of Business an22
1. Description of Business and Significant Accounting Policies: Subsequent Events (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Subsequent Events | Subsequent Events Management has evaluated subsequent events after the balance sheet date, through the issuance of the financial statements, for appropriate accounting and disclosure. |
1. Description of Business an23
1. Description of Business and Significant Accounting Policies: Accounts Receivable (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
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 where amounts due from customers are contractually required and are non-refundable. The carrying amount of accounts receivables is reduced by a valuation allowance that reflects the CompanyÂ’s best estimate of the amounts that will not be collected. Net accounts receivable is comprised of the monthly, quarterly, or annual committed amounts due from customers pursuant to the terms of each respective customerÂ’s agreement. Account receivable balances include amounts attributable to deferred revenues. The provision for doubtful accounts was $184,000 and $26,000 as of October 31, 2017, and 2016, respectively. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating its reserve, including historical data, experience, customer types, credit worthiness, and economic trends. The Company monitors its outstanding accounts receivable balances and believes the provision is adequate. |
1. Description of Business an24
1. Description of Business and Significant Accounting Policies: Property, Plant and Equipment (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Property, Plant and Equipment | Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of the related assets. Amortization of leasehold improvements is calculated on a straight-line basis over the estimated useful life of the improvements or the term of the lease, including renewal options expected to be exercised, whichever is shorter. |
1. Description of Business an25
1. Description of Business and Significant Accounting Policies: Capitalized Software Development Costs (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Capitalized Software Development Costs | Capitalized Software Development Costs The Company follows the provisions of ASC 350-40, “Internal Use Software” (“ASC 350-40”). ASC 350-40 provides guidance for determining whether computer software is internal-use software, and on accounting for the proceeds of computer software originally developed or obtained for internal use and then subsequently sold to the public. It also |
1. Description of Business an26
1. Description of Business and Significant Accounting Policies: Long-lived Assets (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
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 revised life. As of October 31, 2017, and 2016 based upon managementÂ’s evaluation of the above asset groups, there is no impairment of these asset groups. |
1. Description of Business an27
1. Description of Business and Significant Accounting Policies: Cost of Revenues (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Cost of Revenues | Cost of Revenues Costs associated with subscription and maintenance revenues consist primarily of direct labor, depreciation of PASSUR and SMLAT Network Systems, amortization of capitalized software development costs, communication costs, data feeds, travel and entertainment, and consulting fees. Also, included in Cost of Revenues are costs associated with upgrades to PASSUR and SMLAT Systems necessary to make such systems compatible with new software applications, as well as the ordinary repair and maintenance of existing PASSUR and SMLAT Systems. Additionally, cost of revenues in each reporting period is impacted by: (1) the number of PASSUR and SMLAT Systems added to the Network, which includes the cost of production, shipment, and installation of these assets, which are capitalized to the PASSUR Network; and (2) new capitalized costs associated with software development projects. Both of these are referred to as “Capitalized Assets” and are depreciated and/or amortized over their respective useful lives and charged to cost of revenues. |
1. Description of Business an28
1. Description of Business and Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Income Taxes | Income Taxes The Company follows the liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the temporary differences in the tax bases of the assets or liabilities and their reported amounts in the financial statements. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount currently estimated to be realized. After considering the impact of the current year loss, including the Company’s increased expenses and weighting all available positive and negative evidence, the Company concluded that it was not more likely than not that the net deferred tax asset would be realized. The Company follows ASC 740, “Income Taxes,” (“ASC 740”) where tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in tax returns that do not meet these recognition and measurement standards. At October 31, 2017, the Company did not have any uncertain tax positions. As permitted by ASC 740-10, the Company’s accounting policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. On December 22, 2017, the Tax Cuts and Jobs Acts was enacted into law. The new tax legislation represents a fundamental and dramatic shift in US taxation. The new legislation contains several key tax provisions that will impact us including the reduction of the corporate income tax rate to 21% effective January 1, 2018. The new legislation also includes a variety of other changes including but not limited to a limitation on the tax deductibility of interest expense, acceleration of business asset expensing and reduction in the amount of executive pay that could qualify as a tax deduction. ASC 740 requires the Company to recognize the effect of the tax law changes in the period of enactment. The SEC staff has issued Staff Accounting Bulletin No.118 which will allow the recording of provisional amounts during a measurement period, which is similar to the measurement period used when accounting for business combinations. The Company will continue to assess the impact of the recently enacted tax law on our business and its consolidated financial statements and will reflect the provisional impact of the tax law change in the fourth quarter of fiscal 2018. |
1. Description of Business an29
1. Description of Business and Significant Accounting Policies: Research and Development Costs (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
1. Description of Business an30
1. Description of Business and Significant Accounting Policies: Net Income Per Share Information (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
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. Shares used to calculate net income per share for fiscal years 2017 and 2016 are as follows: 2017 2016 Basic Weighted average shares outstanding 7,693,831 7,679,696 Effect of dilutive stock options - 50,870 Diluted weighted average shares outstanding 7,693,831 7,730,566 Weighted average shares which are not included in the calculation of diluted net income per share because their impact is anti-dilutive. These shares consist of stock options. 1,594,000 1,182,000 Weighted average options to purchase 1,594,000 and 1,182,000 shares of common stock at prices ranging from $1.40 to $5.48 per share that were outstanding during fiscal years 2017 and 2016 were excluded from each respective yearÂ’s computation of diluted earnings per share. In each of these years, such optionsÂ’ exercise prices exceeded the average market price of our common stock, thereby causing the effect of such options to be anti-dilutive. |
1. Description of Business an31
1. Description of Business and Significant Accounting Policies: Deferred Revenue (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Deferred Revenue | Deferred Revenue Deferred revenue includes amounts attributable to advances received or billings related to customer agreements, which are contractually required and are non-refundable, and may be prepaid either annually, quarterly, or monthly. Deferred revenues from such customer agreements are recognized as revenue ratably over the period that coincides with the respective agreement. The Company recognizes initial set-up fee revenues and associated costs on a straight-line basis over the estimated life of the customer relationship period, typically five years. |
1. Description of Business an32
1. Description of Business and Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The recorded amounts of the CompanyÂ’s 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 CompanyÂ’s related party debt is held by its Chairman and significant shareholder, and the Company does not have any third-party debt with which to compare. Additionally, on a recurring basis, the Company uses fair value measures when analyzing asset impairments. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present, and the review indicates that the assets will not be fully recoverable based on the undiscounted estimated future cash flows expected to result from the use of the asset, their carrying values are reduced to estimated fair value. |
1. Description of Business an33
1. Description of Business and Significant Accounting Policies: Stock-based Compensation (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Stock-based Compensation | Stock-Based Compensation The Company follows FASB ASC 718 “Compensation-Stock Compensation”, which requires measurement of compensation cost for all stock-based awards at fair value on date of grant, and recognition of stock-based compensation expense over the service period for awards expected to vest. The fair value of stock options was determined using the Black-Scholes valuation model. Such fair value is recognized as an expense over the service period, net of forfeitures. Stock-based compensation expense was 578,372 401,219 |
1. Description of Business an34
1. Description of Business and Significant Accounting Policies: Comprehensive Income (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Comprehensive Income | Comprehensive Income The CompanyÂ’s comprehensive income is equivalent to that of the CompanyÂ’s total net income for fiscal years 2017 and 2016. |
1. Description of Business an35
1. Description of Business and Significant Accounting Policies: Accounting Pronouncements Issued But Not Yet Adopted (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Policies | |
Accounting Pronouncements Issued But Not Yet Adopted | Accounting Pronouncements issued but not yet adopted In May 2017, the FASB issued Accounting Standards Update (“ASU”) No 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. ASU 2017-09 will be effective for the Company beginning November 1, 2018, and will be applied prospectively. In March 2016, the FASB issued new guidance on accounting for employee share-based payment awards to simplify the accounting related to several aspects of accounting for share-based payment transactions, including income tax consequences of share-based payment transactions, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flows. The new standard is effective for the annual period beginning after December 15, 2016, including interim reporting periods within that period, which for the Company will be the annual period ending October 31, 2018. Early adoption, including adoption in an interim period, is permitted. The standard requires the use of several transition methods including a modified retrospective transition method, retrospective method, and prospective method. The Company is evaluating the effect that this new guidance will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, which amends the ASC and creates Topic 842, Leases (“Topic 842”). Topic 842 will require lessees to recognize lease assets and lease liabilities for those leases classified as operating leases under previous GAAP on the balance sheet. This guidance is effective for annual periods beginning after December 15, 2018, which for the Company will be the annual period ending October 31, 2020, and early adoption is permitted. The Company does not believe this new accounting standard update will have a material impact on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Assets. This ASU is intended to simplify the presentation of deferred taxes on the balance sheet and will require an entity to present all deferred tax assets and deferred tax liabilities as non-current on the balance sheet. Under the current guidance, entities are required to separately present deferred taxes as current or non-current. This guidance will be effective beginning in 2018, with early adoption permitted. The Company does not believe this new accounting standard update will have a material impact on its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers: Topic 606” (“ASU 2014-09”), to supersede nearly all-existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services, ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new standard is effective for the annual period beginning after December 15, 2017, including interim reporting periods within that period, which for the Company will be the annual period ending October 31, 2019. Early application as of January 1, 2017, is permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that this new guidance will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its financial reporting. |
1. Description of Business an36
1. Description of Business and Significant Accounting Policies: Net Income Per Share Information: Schedule of earnings per share calculations (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of earnings per share calculations | 2017 2016 Basic Weighted average shares outstanding 7,693,831 7,679,696 Effect of dilutive stock options - 50,870 Diluted weighted average shares outstanding 7,693,831 7,730,566 Weighted average shares which are not included in the calculation of diluted net income per share because their impact is anti-dilutive. These shares consist of stock options. 1,594,000 1,182,000 |
2. Restatement of Previously 37
2. Restatement of Previously Issued Consolidated Financial Statement: Restatement to Prior Year Income (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Restatement to Prior Year Income | October 31, 2015 Select Balance Sheet Accounts As Reported Adjustments As Restated Reference PASSUR Network, net $ 5,902,751 $ (554,088) $ 5,348,663 2 Capitalized software development costs, net $ 7,684,603 $ (786,894) $ 6,897,709 1 Deferred tax asset, non-current $ 1,658,557 $ 325,234 $ 1,983,791 1-3 Total stockholders' equity $ 11,473,100 $ (1,015,748) $ 10,457,352 1-3 The following tables summarize the impact of the Restatement on our previously reported Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Cash Flows for the year ending October 31, 2016: October 31, 2016 Select Balance Sheet Accounts As Reported Period Adjustments Prior Period Adjustments As Restated Reference PASSUR Network, net $ 5,739,753 $ 12,756 $ (554,088) $ 5,198,421 2 Capitalized software development costs, net $ 8,263,533 $ 123,399 $ (786,894) $ 7,600,038 1 Deferred tax asset, non-current $ 1,250,833 $ (53,100) $ 325,234 $ 1,522,967 1-2 Total stockholders' equity $12,327,187 $ 83,055 $ (1,015,748) $11,394,494 1-2 October 31, 2016 Select Statement of Operations Accounts As Reported Adjustments As Restated Reference Cost of revenues $ 6,377,104 $ (136,155) $ 6,240,949 1-2 Income from operations $ 1,207,904 $ 136,155 $ 1,344,059 1-2 Income tax expense $ 589,923 $ 53,100 $ 643,023 1-2 Net income $ 434,648 $ 83,055 $ 517,703 1-2 Net income per common share - basic $ 0.06 $ 0.01 $ 0.07 Net income per common share - diluted $ 0.06 $ 0.01 $ 0.07 October 31, 2016 Select Statement of Cash Flows Accounts As Reported Adjustments As Restated Reference Net income $ 434,648 $ 83,055 $ 517,703 1-2 Depreciation and amortization $ 3,341,349 $ (450,808) $ 2,890,541 1-2 Provision for deferred taxes $ 540,505 $ 53,100 $ 593,605 Net cash provided by operating activities $ 4,910,053 $ (314,653) $ 4,595,400 1-2 PASSUR Network $ (776,138) $ 154,040 $ (622,098) 2 Capitalized software development $ (2,423,811) $ 160,613 $ (2,263,198) 1 Net cash used in investing activities $ (3,530,126) $ 314,653 $ (3,215,473) 1-2 The following tables summarize the impact of the Restatement on our previously reported unaudited Consolidated Balance Sheets, unaudited Consolidated Statements of Operations, and unaudited Consolidated Statements of Cash Flows for each of the quarters of fiscal year 2017: Three months ended January 31, 2017 Select Balance Sheet Accounts As Reported Period Adjustments Prior Period Adjustments As Restated Reference PASSUR Network, net $ 5,686,154 $ (18,833) $ (541,332) $ 5,125,989 2 Capitalized software development costs, net $ 8,419,097 $ 27,068 $ (663,495) $ 7,782,670 1 Deferred tax asset, non-current $ 1,165,039 $ - $ 272,134 $ 1,437,173 Total stockholders' equity $ 12,212,596 $ 8,235 $ (932,693) $ 11,288,138 1-2 Six months ended April 30, 2017 Select Balance Sheet Accounts As Reported Period Adjustments Prior Period Adjustments As Restated Reference PASSUR Network, net $ 5,918,106 $ (55,970) $ (560,165) $ 5,301,971 2 Capitalized software development costs, net $ 8,616,778 $ 22,783 $ (636,427) $ 8,003,134 1 Deferred tax asset, non-current $ 1,358,400 $ - $ 272,134 $ 1,630,534 Total stockholders' equity $ 12,287,185 $ (33,187) $ (924,458) $ 11,329,540 1-2 Nine months ended July 31, 2017 Select Balance Sheet Accounts As Reported Period Adjustments Prior Period Adjustments As Restated Reference PASSUR Network, net $ 6,169,478 $ (35,256) $ (616,135) $ 5,518,087 2 Capitalized software development costs, net $ 8,957,601 $ 16,449 $ (613,644) $ 8,360,406 1 Deferred tax asset, non-current $ 1,271,900 $ - $ 272,134 $ 1,544,034 Total stockholders' equity $ 11,861,213 $ (18,807) $ (957,645) $ 10,884,761 1-2 Three months ended January 31, 2017 Select Statement of Operations Accounts As Reported Adjustments As Restated Reference Cost of revenues $ 1,690,009 $ (8,235) $ 1,681,774 1-2 (Loss)/Income from operations $ (120,467) $ 8,235 $ (112,232) 1-2 (Benefit) provision for income taxes $ 94,684 $ (197,749) $ (103,065) 3 Net (loss)/income $ (256,551) $ 205,984 $ (50,567) Net (loss)/income per common share - basic $ (0.03) $ 0.02 $ (0.01) Net (loss)/income per common share - diluted $ (0.03) $ 0.02 $ (0.01) Three months ended April 30, 2017 Select Statement of Operations Accounts As Reported Adjustments As Restated Reference Cost of revenues $ 1,534,126 $ 33,187 $ 1,567,313 1-2 (Loss)/Income from operations $ (185,166) $ (33,187) $ (218,353) 1-2 (Benefit) provision for income taxes $ (192,325) $ - $ (192,325) Net (loss)/income $ (38,112) $ (33,187) $ (71,299) Net (loss)/income per common share - basic $ 0.00 $ (0.01) $ (0.01) Net (loss)/income per common share - diluted $ 0.00 $ (0.01) $ (0.01) Three months ended July 31, 2017 Select Statement of Operations Accounts As Reported Adjustments As Restated Reference Cost of revenues $ 1,489,703 $ 18,807 $ 1,508,510 1-2 (Loss)/Income from operations $ (451,460) $ (18,807) $ (470,267) 1-2 (Benefit) provision for income taxes $ 86,500 $ - $ 86,500 Net (loss)/income $ (579,360) $ (18,807) $ (598,167) Net (loss)/income per common share - basic $ (0.08) $ - $ (0.08) Net (loss)/income per common share - diluted $ (0.08) $ - $ (0.08) Three months ended January 31, 2017 Select Statement of Cash Flows Accounts As Reported Adjustments As Restated Reference Net (loss)/income $ (256,551) $ 205,984 $ (50,567) 1-3 Depreciation and amortization $ 857,174 $ (111,256) $ 745,918 1-2 Provision for deferred taxes $ 85,794 $ (197,749) $ (111,955) 3 Net cash (used in)/ provided by operating activities $ (124,381) $ (103,021) $ (227,402) 1-3 PASSUR Network $ (162,795) $ 62,658 $ (100,137) 2 Capitalized software development $ (647,432) $ 40,362 $ (607,070) 1 Net cash used in investing activities $ (896,046) $ 103,021 $ (793,025) 1-2 Six months ended April 30, 2017 Select Statement of Cash Flows Accounts As Reported Adjustments As Restated Reference Net (loss)/income $ (294,663) $ 172,797 $ (121,866) 1-3 Depreciation and amortization $ 1,702,760 $ (222,512) $ 1,480,248 1-2 Provision for deferred taxes $ (107,567) $ (197,749) $ (305,316) 3 Net cash (used in)/ provided by operating activities $ 2,339,774 $ (247,464) $ 2,092,310 1-3 PASSUR Network $ (596,533) $ 162,453 $ (434,080) 2 Capitalized software development $ (1,327,848) $ 85,009 $ (1,242,839) 1 Net cash used in investing activities $ (2,021,324) $ 247,464 $ (1,773,860) 1-2 Nine months ended July 31, 2017 Select Statement of Cash Flows Accounts As Reported Adjustments As Restated Reference Net (loss)/income $ (874,024) $ 153,990 $ (720,034) 1-3 Depreciation and amortization $ 2,519,500 $ (349,331) $ 2,170,169 1-2 Provision for deferred taxes $ (21,067) $ (197,749) $ (218,816) 3 Net cash (used in)/ provided by operating activities $ 2,711,495 $ (393,090) $ 2,318,405 1-3 PASSUR Network $ (1,023,608) $ 261,238 $ (762,370) 2 Capitalized software development $ (2,144,555) $ 131,850 $ (2,012,705) 1 Net cash used in investing activities $ (3,421,958) $ 393,090 $ (3,028,868) 1-2 |
3. Property, Plant and Equipm38
3. Property, Plant and Equipment: Property, Plant and Equipment (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Property, Plant and Equipment | Estimated useful lives 2017 2016 Leasehold improvements 3-5 years $ 216,000 $ 216,000 Equipment 5-10 years 5,960,000 5,727,000 Furniture and fixtures 5-10 years 585,000 563,000 6,761,000 6,506,000 Less accumulated depreciation 5,909,000 5,319,000 Total $ 852,000 $ 1,187,000 $ 852,147 $ 1,187,158 |
4. Passur Network_ Schedule of
4. Passur Network: Schedule of Passur Network (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Passur Network | 2017 2016 (As Restated) PASSUR Network, beginning balance $ 18,387,000 $ 17,765,000 Additions -1,400,624 1,401,000 -622,098 Total capitalized PASSUR Network costs 19,788,000 18,387,000 Less accumulated depreciation 13,784,000 13,189,000 PASSUR Network, ending balance, net $ 6,004,000 $ 5,198,000 $ 6,004,367 $ 5,198,421 |
5. Capitalized Software Devel40
5. Capitalized Software Development Costs: Schedule of Capitalized Software Development Costs (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Capitalized Software Development Costs | 2017 2016 (As Restated) Software development costs, beginning balance $ 16,890,000 $ 14,627,000 Additions 3,027,000 3,027,394 2,263,000 2,263,198 Total capitalized software development costs 19,917,000 16,890,000 Less accumulated amortization 11,024,000 9,290,000 Software development costs, ending balance, net $ 8,893,000 8,893,414 $ 7,600,000 7,600,038 |
6. Accrued Expenses and Other41
6. Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Accrued Liabilities | 2017 2016 Payroll, payroll taxes, and benefits $ 565,000 $ 513,000 Professional fees 156,000 148,000 Travel expenses 171,000 142,000 Contractor fees 172,000 - Other liabilities 209,000 133,000 Total $1,273,000 $ 936,000 $1,273,170 $ 936,272 |
8. Operating Leases of Lessee42
8. Operating Leases of Lessee Disclosure: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | Contractual obligations Fiscal Year Ended October 31: under operating leases 2018 $ 287,133 2019 64,002 2020 71,882 2021 61,392 Thereafter - Total minimum contractual obligations $ 484,409 |
9. Income Taxes_ Schedule of In
9. Income Taxes: Schedule of Income before Income Tax, Domestic and Foreign (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Income before Income Tax, Domestic and Foreign | 2017 2016 (As Restated) Current: Federal $ - $ - State $ 20,000 $ 50,000 Income tax provision-current $ 20,000 $ 50,000 Deferred: Federal $ 1,826,000 $ 514,000 State $ 116,000 $ 79,000 Total income tax expense, net $ 1,962,000 $ 643,000 $ 1,961,506 $ 643,023 |
9. Income Taxes_ Schedule of Co
9. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Components of Income Tax Expense (Benefit) | 2017 2016 Amount Percent Amount Percent (As Restated) U.S. statutory tax $ (530,000) 34.0% $395,000 34.0% Stock compensation 174,000 - -11.2% 125,000 10.8% Meals and entertainment 14,000 -0.9% 14,000 1.2% State tax, net of federal benefit (37,000) 2.4% 109,000 9.4% Other 63,000 -4.0% - 0.0% Change in Valuation Allowance 2,278,000 -146.1% - 0.0% Income tax expense, net $ 1,962,000 -125.8% $643,000 55.4% 1,961,506 643,023 |
9. Income Taxes_ Schedule of De
9. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Deferred Tax Assets and Liabilities | 2017 2016 (As Restated) Deferred tax assets and liabilities: Net operating loss carry-forward $ 2,157,000 $ 1,696,000 Deferred Revenue 178,000 - Allowance for doubtful accounts receivable 70,000 19,000 Stock compensation-nonqualified 217,000 198,000 Accruals 58,000 - Depreciation (402,000) 29,000 Sub-total $ 2,278,000 $ 1,942,000 Valuation allowance (2,278,000) - Deferred tax assets and liabilities $ - $ 1,942,000 |
10. Stock-Based Compensation_ S
10. Stock-Based Compensation: Schedule of Share-based Compensation, Activity (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Share-based Compensation, Activity | Number of stock options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Stock options outstanding at November 1, 2015 1,186,000 $3.27 7.1 $ 293,000 Stock options granted 240,000 $3.41 Stock options exercised (37,000) $0.49 Stock options forfeited (60,000) $2.49 Stock options outstanding at October 31, 2016 1,329,000 $3.42 7.1 $ 130,000 Stock options granted 380,000 $3.78 Stock options exercised (15,000) $2.55 Stock options forfeited (100,000) $3.28 Stock options outstanding at October 31, 2017 1,594,000 $3.52 6.9 $ 84,000 Stock options exercisable at October 31, 2017 779,500 $3.51 5.0 $ 84,000 |
10. Stock-Based Compensation_47
10. Stock-Based Compensation: Schedule of Assumptions Used (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Assumptions Used | Years ended October 31, 2017 2016 Expected dividend yield 0% 0% Expected volatility 117% 117% Risk-free interest rate 1.84-2.26% 1.41 - 1.85% Expected term (years) 4.9 - 6.5 4.9 - 6.5 Discount for post-vesting restrictions N/A N/A |
10. Stock-Based Compensation_48
10. Stock-Based Compensation: Schedule of Share-Based Compensation Expense (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Share-Based Compensation Expense | 2017 2016 Cost of revenues $ 27,000 $ 25,000 Research and development $ 113,000 122,000 Selling, general and administrative $ 438,000 254,000 $ 578,000 $ 401,000 578,372 401,219 |
10. Stock-Based Compensation_49
10. Stock-Based Compensation: Schedule of Stockholders Equity (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Tables/Schedules | |
Schedule of Stockholders Equity | The following table summarizes the plans under which the Company granted equity compensation as of October 31, 2017: Name of Plan Shares Authorized Shares Available for Grant Shares Outstanding Last Date for Grant of Shares PASSUR Aerospace, Inc., 2009 Stock Incentive Plan 3,000,000 1,448,000 1,552,000 February 24, 2019 The following table summarizes the Company’s equity plans that have expired but that still have equity awards outstanding as of October 31, 2017: Name of Plan Shares Available for Grant Shares Outstanding PASSUR Aerospace, Inc., 1999 Stock Incentive Plan — 42,000 |
1. Description of Business an50
1. Description of Business and Significant Accounting Policies: Accounts Receivable (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Details | ||
Allowance for Doubtful Accounts Receivable | $ 184,000 | $ 26,000 |
1. Description of Business an51
1. Description of Business and Significant Accounting Policies: Net Income Per Share Information: Schedule of earnings per share calculations (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | ||
Details | |||
Weighted average number of common shares outstanding - basic | 7,693,831 | 7,679,696 | [1] |
Dilutive Securities, Effect on Basic Earnings Per Share, Options and Restrictive Stock Units | $ 50,870 | ||
Weighted average number of common shares outstanding - diluted | 7,693,831 | 7,730,566 | [1] |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,594,000 | 1,182,000 | |
[1] | Restated |
1. Description of Business an52
1. Description of Business and Significant Accounting Policies: Net Income Per Share Information (Details) - shares | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,594,000 | 1,182,000 |
1. Description of Business an53
1. Description of Business and Significant Accounting Policies: Stock-based Compensation (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Details | ||
Stock-based compensation expense | $ 578,372 | $ 401,219 |
3. Property, Plant and Equipm54
3. Property, Plant and Equipment: Property, Plant and Equipment (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | ||
Property, Plant and Equipment, Gross | $ 6,761,000 | $ 6,506,000 | |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 5,909,000 | 5,319,000 | |
Property and equipment, net | 852,147 | 1,187,158 | [1] |
Leasehold Improvements | |||
Property, Plant and Equipment, Gross | $ 216,000 | 216,000 | |
Leasehold Improvements | Minimum | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Leasehold Improvements | Maximum | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Equipment | |||
Property, Plant and Equipment, Gross | $ 5,960,000 | 5,727,000 | |
Equipment | Minimum | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Equipment | Maximum | |||
Property, Plant and Equipment, Useful Life | 10 years | ||
Furniture and Fixtures | |||
Property, Plant and Equipment, Gross | $ 585,000 | $ 563,000 | |
Furniture and Fixtures | Minimum | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Furniture and Fixtures | Maximum | |||
Property, Plant and Equipment, Useful Life | 10 years | ||
[1] | Restated |
3. Property, Plant and Equipm55
3. Property, Plant and Equipment (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Details | ||
Depreciation | $ 590,000 | $ 496,000 |
4. Passur Network_ Schedule o56
4. Passur Network: Schedule of Passur Network (Details) - USD ($) | 12 Months Ended | |||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | ||
PASSUR Network, Gross | $ 19,788,000 | $ 18,387,000 | $ 17,765,000 | |
PASSUR Network | (1,400,624) | (622,098) | [1] | |
PASSUR Network, net | 6,004,367 | 5,198,421 | [1] | |
PassurNetwork1Member | ||||
Depreciation, Depletion and Amortization, Nonproduction | $ 13,784,000 | $ 13,189,000 | ||
[1] | Restated |
4. Passur Network (Details)
4. Passur Network (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Capitalized costs of PASSUR Network | $ 1,197,000 | $ 489,000 |
Passur Network Depreciation | 595,000 | 773,000 |
Cost of uninstalled PASSUR Systems | 1,636,000 | 1,815,000 |
Cost of uninstalled SMLAT Systems | 642,000 | $ 911,000 |
PassurNetwork1Member | ||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 673,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 659,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 626,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 412,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | $ 255,000 |
5. Capitalized Software Devel58
5. Capitalized Software Development Costs: Schedule of Capitalized Software Development Costs (Details) - USD ($) | 12 Months Ended | |||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | ||
Capitalized Computer Software, Gross | $ 19,917,000 | $ 16,890,000 | $ 14,627,000 | |
Capitalized Computer Software, Additions | 3,027,394 | 2,263,198 | ||
Capitalized software development costs, net | 8,893,414 | 7,600,038 | [1] | |
CapitalizedSoftwareDevelopmentCostsMember | ||||
Depreciation, Depletion and Amortization, Nonproduction | $ 11,024,000 | $ 9,290,000 | ||
[1] | Restated |
5. Capitalized Software Devel59
5. Capitalized Software Development Costs (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Capitalized Computer Software, Amortization | $ 1,734,000 | $ 1,561,000 |
Capitalized software development costs not yet subject to amortization | 2,727,000 | |
CapitalizedSoftwareDevelopmentCostsMember | ||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 1,893,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 1,480,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 1,368,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 906,000 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | $ 359,000 |
6. Accrued Expenses and Other60
6. Accrued Expenses and Other Current Liabilities: Schedule of Accrued Liabilities (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 | |
Details | |||
Accrued Salaries, Current | $ 565,000 | $ 513,000 | |
Accrued Professional Fees, Current | 156,000 | 148,000 | |
Accrued travel expense | 171,000 | 142,000 | |
Accrued Contractor Fees | 172,000 | ||
Other Accrued Liabilities, Current | 209,000 | 133,000 | |
Accrued expenses and other current liabilities | $ 1,273,170 | $ 936,272 | [1] |
[1] | Restated |
7. Notes Payable (Details)
7. Notes Payable (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | [1] | |
Details | |||
Interest expense - related party | $ 170,917 | $ 183,333 | |
Note payable - related party | 3,800,000 | 2,700,000 | |
Payment of notes payable-related party | $ 0 | $ 800,000 | |
[1] | Restated |
8. Operating Leases of Lessee62
8. Operating Leases of Lessee Disclosure (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Operating Leases, Rent Expense, Net | $ 645,000 | $ 590,000 |
Corporate Segment | ||
Lease, Cost | 220,000 | |
Other Segments | ||
Lease, Cost | 60,000 | |
StamfordCtPropertyMember | ||
Annual Rental Rate | 235,000 | |
BohemiaNyPropertyMember | ||
Annual Rental Rate | $ 139,000 |
8. Operating Leases of Lessee63
8. Operating Leases of Lessee Disclosure: Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Oct. 31, 2017USD ($) |
Details | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 287,133 |
Operating Leases, Future Minimum Payments, Due in Two Years | 64,002 |
Operating Leases, Future Minimum Payments, Due in Three Years | 71,882 |
Operating Leases, Future Minimum Payments, Due in Four Years | 61,392 |
Operating Leases, Future Minimum Payments Due | $ 484,409 |
9. Income Taxes_ Schedule of 64
9. Income Taxes: Schedule of Income before Income Tax, Domestic and Foreign (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | ||
Details | |||
Current State and Local Tax Expense (Benefit) | $ 20,000 | $ 50,000 | |
Current Income Tax Expense (Benefit), Total | 20,000 | 50,000 | |
Deferred Federal Income Tax Expense (Benefit) | 1,826,000 | 514,000 | |
Deferred State and Local Income Tax Expense (Benefit) | 116,000 | 79,000 | |
Provision for income taxes | $ 1,961,506 | $ 643,023 | [1] |
[1] | Restated |
9. Income Taxes_ Schedule of 65
9. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | ||
Details | |||
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount | $ (530,000) | $ 395,000 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 34.00% | 34.00% | |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Amount | $ 174,000 | $ 125,000 | |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Percent | (11.20%) | 10.80% | |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Meals and Entertainment, Amount | $ 14,000 | $ 14,000 | |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Meals and Entertainment, Percent | (0.90%) | 1.20% | |
State and Local Income Tax Expense (Benefit), Continuing Operations | $ (37,000) | $ 109,000 | |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | 2.40% | 9.40% | |
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | $ 63,000 | ||
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent | (4.00%) | ||
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | $ 2,278,000 | ||
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | (146.10%) | ||
Income Tax Expense Benefit Percentage | (125.80%) | 55.40% | |
Provision for income taxes | $ 1,961,506 | $ 643,023 | [1] |
[1] | Restated |
9. Income Taxes_ Schedule of 66
9. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Details | ||
Deferred Tax Assets, Tax Credit Carryforwards | $ 2,157,000 | $ 1,696,000 |
Deferred Tax Assets, Deferred Income | 178,000 | |
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Allowance for Doubtful Accounts | 70,000 | 19,000 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost | 217,000 | 198,000 |
Deferred Tax Assets, Other | 58,000 | |
Deferred Tax Assets, Tax Deferred Expense, Other | (402,000) | 29,000 |
Deferred Tax Assets, Gross | 2,278,000 | 1,942,000 |
Deferred Tax Assets, Valuation Allowance | $ (2,278,000) | |
Deferred Tax Assets, Net of Valuation Allowance | $ 1,942,000 |
9. Income Taxes (Details)
9. Income Taxes (Details) | Oct. 31, 2017USD ($) |
Details | |
Operating Loss Carryforwards | $ 7,474,000 |
10. Stock-Based Compensation_68
10. Stock-Based Compensation: Schedule of Share-based Compensation, Activity (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | |
Details | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 1,594,000 | 1,329,000 | 1,186,000 |
ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageExercisePriceStartingBalance | $ 3.52 | $ 3.42 | $ 3.27 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 6 years 10 months 24 days | 7 years 1 month 6 days | 7 years 1 month 6 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | $ 84,000 | $ 130,000 | $ 293,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 380,000 | 240,000 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 3.78 | $ 3.41 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | (15,000) | (37,000) | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 2.55 | $ 0.49 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (100,000) | (60,000) | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 3.28 | $ 2.49 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options, Ending Balance | 779,500 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price | $ 3.51 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term | 5 years | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value | $ 84,000 |
10. Stock-Based Compensation (D
10. Stock-Based Compensation (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Details | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 25,000 | $ 77,000 |
Unrecognized stock-based compensation costs expected to be recognized over a weighted average period | $ 2,247,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 814,500 |
10. Stock-Based Compensation_70
10. Stock-Based Compensation: Schedule of Assumptions Used (Details) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 117.00% | 117.00% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.84% | 1.41% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 4 years 10 months 24 days | 4 years 10 months 24 days |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.26% | 1.85% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 6 years 6 months | 6 years 6 months |
10. Stock-Based Compensation_71
10. Stock-Based Compensation: Schedule of Share-Based Compensation Expense (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | ||
Stock-based compensation | $ 578,372 | $ 401,219 | [1] |
Cost of Sales | |||
Stock-based compensation | 27,000 | 25,000 | |
Research and Development Expense | |||
Stock-based compensation | 113,000 | 122,000 | |
Selling, General and Administrative Expenses | |||
Stock-based compensation | $ 438,000 | $ 254,000 | |
[1] | Restated |
11. Concentration Risk Disclo72
11. Concentration Risk Disclosure (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Foreign Sales | $ 320,000 | $ 206,000 |
Total Revenue | ||
Concentration Risk, Customer | Three customers accounted for 52%, or $7,165,000, of total revenues in fiscal year 2017. One customer accounted for 22% or $2,988,000, a second customer accounted for 19% or $2,637,000, and a third customer accounted for 11% or $1,540,000 of total revenues in fiscal year 2017 | Three customers accounted for 45%, or $6,698,000, of total revenues in fiscal year 2016. One customer accounted for 17% or $2,555,000, a second customer accounted for 17% or $2,460,000, and a third customer accounted for 11% or $1,683,000 of total revenues in fiscal year 2016 |
Total Accounts Receivable | ||
Concentration Risk, Customer | the Company had three customers each of which accounted for 10% or more of the accounts receivable balance. One customer accounted for 21%, or $309,000, a second customer accounted for 16%, or $242,000, and a third customer accounted for 15%, or $218,000 | the Company had three customers each of which accounted for 10% or more of the accounts receivable balance. One customer accounted for 30%, or $330,000, and a second customer accounted for 21%, or $226,000 and a third customer accounted for 14% or $157,000 |