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

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.