9. Stock-Based Compensation

12 Months Ended

Oct. 31, 2020

Disclosure Text Block [Abstract]

9. Stock-Based Compensation

9. Stock-Based Compensation

On February 26, 2019, the Board of Directors unanimously adopted the Plan, to replace the Company’s 2009 Stock Incentive Plan, as amended (the “2009 Plan”), which expired on February 24, 2019. The Plan was approved by the Company’s shareholders on April 9, 2019. The Plan became effective upon the date of its adoption by the Board and provides for the granting of stock options for up to 5,000,000 shares of the Company’s common stock. The Board of Directors adopted the First Amendment to the Plan, effective as of July 8, 2020, to modify the vesting periods as set forth therein.

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

Information with respect to the Company’s stock options for fiscal years 2020 and 2019 is as follows:

	Number of stock options	Weighted average exercise price	Weighted average remaining contractual term (in years)	Aggregate intrinsic value
Stock options outstanding at November 1, 2018	1,522,000	$ 3.47	6.2	$ 1,800
Stock options granted	542,500	$ 1.96
Stock options exercised	-	$ 0.00
Stock options forfeited	(217,500)	$ 1.98
Stock options outstanding at October 31, 2019	1,847,000	$ 3.20	6.4	$ 2,200
Stock options granted	659,500	$ 1.94
Stock options exercised	(16,000)	$ 1.45
Stock options forfeited	(800,500)	$ 3.14
Stock options outstanding at October 31, 2020	1,690,000	$ 2.77	6.9	$ -
Stock options exercisable at October 31, 2020	809,000	$ 3.34	4.9	$ -

The weighted average grant date fair value of the Company’s stock options granted during fiscal years 2020 and 2019 was $1.94 and $1.96, respectively. There were 16,000 options exercised during fiscal 2020 at a weighted average exercise price of $1.45. There were no stock options exercised during fiscal year 2019.

The Company’s stock options vest over a period of five years. The fair value for these stock options was estimated at the date of grant using a Black-Scholes stock option pricing model, with the following weighted average assumptions for fiscal years 2020 and 2019:

	Years ended October 31,
	2020	2019
Expected dividend yield	0%	0%
Expected volatility	87-117%	87-117%
Risk-free interest rate	0.37 – 2.94%	1.43 – 2.94%
Expected term (years)	6.5	6.5
Discount for post-vesting restrictions	N/A	N/A

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

	2020	2019
Cost of revenues	$ 11,000	$ 17,000
Research and development	$ 74,000	$ 110,000
Selling, general and administrative	$ 382,000	$ 486,000
	$ 467,000	$ 613,000

The following table summarizes the plans under which the Company granted equity compensation as of October 31, 2020:

Name of Plan	Shares Authorized	Shares Available for Grant	Shares Outstanding	Last Date for Grant of Shares
PASSUR Aerospace, Inc., 2009 Stock Incentive Plan	3,000,000	0	1,027,500	February 24, 2019
PASSUR Aerospace, Inc., 2019 Stock Incentive Plan	5,000,000	4,337,500	662,500	February 26, 2029

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

There was $784,000 of unrecognized stock-based compensation costs expected to be recognized over a weighted average period of 1.8 years as of October 31, 2020. The Company had 881,000 shares in unvested stock-based options as of October 31, 2020.