9. Stock-Based Compensation

12 Months Ended

Oct. 31, 2021

Notes

9. Stock-Based Compensation

9. Stock-Based Compensation

On February 26, 2019, the Board of Directors 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 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.

On August 16, 2021, the Company’s Board of Directors adopted the Second Amendment to the Plan, to authorize the granting of restricted stock unit (RSU) awards under the Plan. Each RSU represents the right to receive, following vesting, one share of the Company’s common stock.  In connection with the Second Amendment to the Plan, the Board of Directors has authorized an aggregate of 800,000 RSU awards to be granted under the Plan.  As of October 31, 2021, 797,500 RSU awards were granted under the Plan at a grant date fair market value of $0.63 per share, which RSU awards vest ratably over a three-year period.  All 797,500 RSU awards were granted on October 22, 2021 and all are unvested at October 31, 2021.  As of October 31, 2021, total unrecognized compensation cost related to unamortized RSU awards under the Plan totaled $502,000.  The Company expects to recognize this expense over the remaining vesting period of three years.

PASSUR Aerospace, Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

9. Stock-Based Compensation (continued)

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 2021 and 2020 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, 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 granted	212,500	$0.48
Stock options exercised	-	-
Stock options forfeited	(430,000)	$3.08
Stock options outstanding at October 31, 2021	1,472,500	$2.35	6.8	$ 50,800
Stock options exercisable at October 31, 2021	664,000	$3.18	3.2	$ -

The weighted average grant date fair value of the Company’s stock options granted during fiscal years 2021 and 2020 was $0.48 and $1.94, 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 2021.

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 2021 and 2020:

	Years ended October 31,
	2021	2020
Expected dividend yield	0%	0%
Expected volatility	127%	87-117%
Risk-free interest rate	0.63-1.28%	0.37-2.94%
Expected term (years)	6.5	6.5

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:

	2021	2020
Cost of revenues	$ 7,000	$ 11,000
Research and development	$ 3,000	$ 74,000
Selling, general and administrative	$ 213,000	$ 382,000
	$ 223,000	$ 467,000

PASSUR Aerospace, Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

9. Stock-Based Compensation (continued)

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		-		637,500		February 24, 2019
PASSUR Aerospace, Inc. 2019 Stock Incentive Plan	5,000,000	(1)	3,367,500	(2)	1,632,500	(2)	February 26, 2029

(1) Includes 800,000 shares of the Company’s common stock authorized for issuance under the 2019 Stock Incentive Plan that have been reserved for issuance upon the vesting of RSU awards granted thereunder.

(2) As of October 31, 2021, RSU awards representing an aggregate of 797,500 shares of the Company’s common stock were outstanding, and 2,500 shares remained available for issuance as RSU awards granted pursuant to the 2019 Stock Incentive Plan.

All outstanding options granted under the Company’s stock incentive plans have terms of ten years. The Company’s stock options vest over a period of five years.  The Company’s RSU awards under the Plan vest ratably over a three-year term.

There was $429,000 of unrecognized stock-based compensation costs expected to be recognized over a weighted average period of 3.1 years as of October 31, 2021. The Company had 808,500 shares in unvested stock-based options and 797,500 in unvested RSU awards outstanding as of October 31, 2021. There was $502,000 of unrecognized compensation cost related to unamortized RSU awards at October 31, 2021, expected to be recognized over a three-year period.