9. Stock-Based Compensation

12 Months Ended

Oct. 31, 2019

Notes

9. Stock-Based Compensation

9. Stock-Based Compensation

On February 26, 2019, the Board of Directors of the Company, subject to shareholder approval, unanimously adopted the 2019 Stock Incentive Plan (the “Plan”), to replace the Company’s 2009 Stock Incentive Plan, as amended (the “2009 Plan”), which expired on February 24, 2019. The Plan became effective upon the date of its adoption by the Board, subject to shareholder approval within twelve months of the date of such adoption. The Plan provides for the granting of stock options for up to 5,000,000 shares of the Company’s common stock. On April 9, 2019, the Company’s shareholders approved the Plan.

The Black-Scholes stock option valuation model was developed for use in estimating the fair value of traded stock options, which have no vesting restrictions and are fully transferable. In addition, stock option valuation models require the input of highly subjective assumptions including expected stock price volatility.

Information with respect to the Company’s stock options for fiscal years 2019 and 2018 is as follows:

	Number of stock options	Weighted average exercise price	Weighted average remaining contractual term (in years)	Aggregate intrinsic value
Stock options outstanding at November 1, 2017	1,594,000	$3.52	6.9	$     84,000
Stock options granted	82,500	$2.38
Stock options exercised	-	$0.00
Stock options forfeited	(154,500)	$3.43
Stock options outstanding at October 31, 2018	1,522,000	$3.47	6.2	$       1,800
Stock options granted	542,500	$1.96
Stock options exercised	-	$0.00
Stock options forfeited	(217,500)	$1.98
Stock options outstanding at October 31, 2019	1,847,000	$3.20	6.4	$       2,200
Stock options exercisable at October 31, 2019	995,000	$3.59	4.7	$             -

The weighted average grant date fair value of the Company’s stock options granted during fiscal years 2019 and 2018 was $1.96 and $2.38, respectively. There were no stock options exercised during fiscal year 2019 and 2018.

The Company’s stock options vest over a period of five years. The fair value for these stock options was estimated at the date of grant using a Black-Scholes stock option pricing model, with the following weighted average assumptions for fiscal years 2019 and 2018:

	Years ended October 31,
	2019	2018
Expected dividend yield	0%	0%
Expected volatility	87 - 117%	93 - 117%
Risk-free interest rate	1.43 – 2.94%	2.24 - 2.91%
Expected term (years)	6.5	6.5
Discount for post-vesting restrictions	N/A	N/A

The Company recognized share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the consolidated statement of operations:

	2019	2018
Cost of revenues	$    17,000	$    25,000
Research and development	$  110,000	$  110,000
Selling, general and administrative	$  486,000	$  511,000
	$  613,000	$  646,000

The following table summarizes the plans under which the Company granted equity compensation as of October 31, 2019: 

Name of Plan	Shares Authorized	Shares Available for Grant	Shares Outstanding	Last Date for Grant of Shares
PASSUR Aerospace, Inc., 2009 Stock Incentive Plan	3,000,000	0	1,529,599	February 24, 2019
PASSUR Aerospace, Inc., 2019 Stock Incentive Plan	5,000,000	4,682,500	317,500	February 26, 2029

All outstanding options granted under the Company’s equity plans have terms of ten years. The Company’s stock options vest over a period of five years.

There was $1,249,000 of unrecognized stock-based compensation costs expected to be recognized over a weighted average period of 3.0 years as of October 31, 2019. The Company had 852,000 shares in unvested stock-based options as of October 31, 2019.