3. Impact of the COVID-19 Pandemic	3 Months Ended
Jan. 31, 2022
Notes
3. Impact of the COVID-19 Pandemic	3. Impact of the COVID-19 Pandemic The aviation and travel industries, which are served by the Company and its products, were severely affected by the COVID-19 outbreak. Travel restrictions and other measures imposed by most jurisdictions, coupled with the public’s reluctance to travel during this time, resulted in a precipitous decline in demand for air travel, and our customers in the aviation and travel industries drastically reduced their capacity and operations from 2020 into 2021 as compared to 2019, which in turn has resulted in a significant reduction of demand for our products and services. As a result, the Company has faced increased economic pressures and experienced a significant loss of revenue during the three month periods ended January 31, 2022 and 2021. The Company anticipates a return to an improved economic environment in the latter half of fiscal 2022 given the state of vaccinations, treatments available, and changes in public behaviors. The recovery, however, depends on many factors, the outcomes of which are uncertain or unknown at this time, such as, among other things, the scope, severity and duration of any variants to the COVID-19 virus, the continuing actions to contain the pandemic or to mitigate its impact, the acceptance and public distribution of treatments and vaccines for the disease (including its variants), and the length of time before the public feels safe to travel. All of these variables will impact how quickly the industry can recover and may affect the revenue and earnings levels of the Company. See “Risk Factors”. The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), enacted in March 2020, as well as subsequently enacted legislation, including the American Rescue Plan Act of 2021 (the “Rescue Act”), have provided economic support for, among others, businesses in the airline industry. The Company has received grants under both the CARES Act and the Rescue Act (collectively referred to herein as “CARES Act grants”), totaling approximately $6,498,000, as described in more detail below. `1.`In July 2020, the Company entered into an agreement with the U.S. Department of the Treasury to receive an aggregate of $3,003,000 in emergency relief through the CARES Act Payroll Support Program (“PSP1”). The relief payments were received in three installments from July 2020 through September 2020. Pursuant to the Payroll Support Program Agreement, the relief payments must be used exclusively for the continuation of payment of certain employee wages, salaries and benefits. The Company has used such relief payments for such purpose. The Payroll Support Program Agreement provides that the relief payments are conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through September 30, 2020, as well as other conditions including prohibitions on share repurchases and dividends through September 30, 2021, and certain limitations on executive compensation. `2.`On February 12, 2021, the Company received an additional “top off” disbursement of $875,000 under PSP1, subject to the terms and conditions described above. `3.`On March 5, 2021, the Company entered into a Payroll Support Program Extension Agreement with the U.S. Department of the Treasury for an award the Company received under the CARES Act Payroll Support Program (“PSP2”). The total amount awarded to the Company under PSP2 was approximately $1,310,000. The relief payments under PSP2 were received in two installments of approximately $655,000 each on March 8, 2021 and April 26, 2021. As with the original grant under PSP1, PSP2 proceeds are to be used exclusively for the continuation of payment of certain employee wages, salaries, and benefits. The Company has used such relief payments for such purpose. The Payroll Support Program Extension Agreement for PSP2 provides that the relief payments are conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through the later of March 31, 2021, or the date on which the Company has expended all of the payroll support, as well as other conditions including prohibitions on share repurchases and dividends through March 31, 2022, and certain limitations on executive compensation. `4.`On April 16, 2021, the Company entered into a Payroll Support Program 3 Agreement with the U.S. Department of the Treasury for an award the Company received under the Rescue Act (PSP3”). The total amount awarded to the Company under PSP3 was approximately $1,310,000. The first installment, in the amount of approximately $655,000, was received by the Company on April 29, 2021. The second installment of approximately $655,000 was received by the Company on May 27, 2021. The Company does not anticipate any additional stimulus grant payments under the Payroll Support Programs. As with the original grants under PSP1 and PSP2, proceeds under PSP3 are to be used exclusively for the continuation of payment of certain employee wages, salaries, and benefits. The Company has used such proceeds for such purpose. The Payroll Support Program 3 Agreement provides that the relief payments are conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through the later of September 30, 2021, or the date on which the Company has expended all of the payroll support under PSP3, as well as other conditions including prohibitions on share repurchases and dividends through September 30, 2022, and certain limitations on executive compensation. The Company expended the remaining balance of funds received under the various Payroll Support Programs during the three months ended January 31, 2022. The amount of unused stimulus funding as of January 31, 2022 and October 31 2021 was $0 and $867,000, respectively, and is shown in the balance sheet under current liabilities as Accrued Liabilities - Stimulus Funding. The Company believes that it has operated in compliance with all the provisions and requirements under the CARES Act and the Rescue Act during the time periods that funds under the CARES Act grants were outstanding, and fully intends to continue to comply with all such provisions and requirements. Consequently, the Company has accounted for the advanced funds as grants not requiring repayment and recognized such amounts in income as qualifying salaries, wages and benefits were incurred. During the three months ended January 31, 2022 and 2021, the Company reduced its compensation expense by $789,000 and $1,016,000, respectively, as the CARES Act grant proceeds received by the Company were used to fund eligible payroll costs. If the Company does not comply with the provisions of the CARES Act, the Rescue Act and the Payroll Support Program Agreements, the Company may be required to repay the government funds and also be subject to other remedies. Additionally, provisions under the CARES Act allowed the Company to defer payment of the employer’s share of social security taxes incurred from March of 2020 through December 31, 2020. The amount of payroll taxes subject to deferred payment was approximately $139,000. Under the terms of the legislation, 50%, or approximately $70,000 of the deferred payroll taxes were due and paid by December 31, 2021, and the remaining 50%, or approximately $69,000 are due and payable by December 31, 2022. The Company has taken several actions beginning in April 2020 and prior to receiving CARES Act funds, to mitigate the effects of the COVID-19 pandemic on its business, as outlined below: `·`Eliminated or furloughed approximately one-third of then-existing positions; `·`Instituted a temporary pay reduction plan affecting essentially all of the then-remaining employees; `·`Reduced the use of outside consultants; `·`Decommissioned the PASSUR Network to reduce data feed and telecom costs; and `·`Reduced and/or eliminated other operating expenses that were not critical to the short-term outlook of the Company. The effects of the actions above are reflected in the costs of revenues, research and development and administrative costs for the three months ended January 31, 2022 and 2021, and the Company anticipates that such cost savings will continue to benefit the remainder of fiscal 2022. However, if the recovery of the air transportation industry accelerates and revenue levels quickly return to pre-COVID-19 levels, these levels of cost savings may not be practicable or sustainable to support the operations necessary for the increased level of revenue. During the three months ended January 31, 2022, the Company made investments in, among other areas, infrastructure and marketing, to benefit the longer term growth of the Company. See “Risk Factors”.

3. Impact of the COVID-19 Pandemic

3 Months Ended

Jan. 31, 2022

3. Impact of the COVID-19 Pandemic

The aviation and travel industries, which are served by the Company and its products, were severely affected by the COVID-19 outbreak. Travel restrictions and other measures imposed by most jurisdictions, coupled with the public’s reluctance to travel during this time, resulted in a precipitous decline in demand for air travel, and our customers in the aviation and travel industries drastically reduced their capacity and operations from 2020 into 2021 as compared to 2019, which in turn has resulted in a significant reduction of demand for our products and services. As a result, the Company has faced increased economic pressures and experienced a significant loss of revenue during the three month periods ended January 31, 2022 and 2021. The Company anticipates a return to an improved economic environment in the latter half of fiscal 2022 given the state of vaccinations, treatments available, and changes in public behaviors. The recovery, however, depends on many factors, the outcomes of which are uncertain or unknown at this time, such as, among other things, the scope, severity and duration of any variants to the COVID-19 virus, the continuing actions to contain the pandemic or to mitigate its impact, the acceptance and public distribution of treatments and vaccines for the disease (including its variants), and the length of

time before the public feels safe to travel. All of these variables will impact how quickly the industry can recover and may affect the revenue and earnings levels of the Company. See “Risk Factors”.

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), enacted in March 2020, as well as subsequently enacted legislation, including the American Rescue Plan Act of 2021 (the “Rescue Act”), have provided economic support for, among others, businesses in the airline industry. The Company has received grants under both the CARES Act and the Rescue Act (collectively referred to herein as “CARES Act grants”), totaling approximately $6,498,000, as described in more detail below.

1.In July 2020, the Company entered into an agreement with the U.S. Department of the Treasury to receive an aggregate of $3,003,000 in emergency relief through the CARES Act Payroll Support Program (“PSP1”). The relief payments were received in three installments from July 2020 through September 2020. Pursuant to the Payroll Support Program Agreement, the relief payments must be used exclusively for the continuation of payment of certain employee wages, salaries and benefits. The Company has used such relief payments for such purpose. The Payroll Support Program Agreement provides that the relief payments are conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through September 30, 2020, as well as other conditions including prohibitions on share repurchases and dividends through September 30, 2021, and certain limitations on executive compensation.

2.On February 12, 2021, the Company received an additional “top off” disbursement of $875,000 under PSP1, subject to the terms and conditions described above.

3.On March 5, 2021, the Company entered into a Payroll Support Program Extension Agreement with the U.S. Department of the Treasury for an award the Company received under the CARES Act Payroll Support Program (“PSP2”). The total amount awarded to the Company under PSP2 was approximately $1,310,000. The relief payments under PSP2 were received in two installments of approximately $655,000 each on March 8, 2021 and April 26, 2021. As with the original grant under PSP1, PSP2 proceeds are to be used exclusively for the continuation of payment of certain employee wages, salaries, and benefits. The Company has used such relief payments for such purpose. The Payroll Support Program Extension Agreement for PSP2 provides that the relief payments are conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through the later of March 31, 2021, or the date on which the Company has expended all of the payroll support, as well as other conditions including prohibitions on share repurchases and dividends through March 31, 2022, and certain limitations on executive compensation.

4.On April 16, 2021, the Company entered into a Payroll Support Program 3 Agreement with the U.S. Department of the Treasury for an award the Company received under the Rescue Act (PSP3”). The total amount awarded to the Company under PSP3 was approximately $1,310,000. The first installment, in the amount of approximately $655,000, was received by the Company on April 29, 2021. The second installment of approximately $655,000 was received by the Company on May 27, 2021. The Company does not anticipate any additional stimulus grant payments under the Payroll Support Programs. As with the original grants under PSP1 and PSP2, proceeds under PSP3 are to be used exclusively for the continuation of payment of certain employee wages, salaries, and benefits. The Company has used such proceeds for such purpose. The Payroll Support Program 3 Agreement provides that the relief payments are conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through the later of September 30, 2021, or the date on which the Company has expended all of the payroll support under PSP3, as well as other conditions including prohibitions on share repurchases and dividends through September 30, 2022, and certain limitations on executive compensation.

The Company expended the remaining balance of funds received under the various Payroll Support Programs during the three months ended January 31, 2022. The amount of unused stimulus funding as of January 31, 2022 and October 31 2021 was $0 and $867,000, respectively, and is shown in the balance sheet under current liabilities as Accrued Liabilities - Stimulus Funding.

The Company believes that it has operated in compliance with all the provisions and requirements under the CARES Act and the Rescue Act during the time periods that funds under the CARES Act grants were outstanding, and fully intends to continue to comply with all such provisions and requirements. Consequently, the Company has accounted for the advanced funds as grants not requiring repayment and recognized such amounts in income as qualifying salaries, wages and benefits were incurred. During the three months ended January 31, 2022 and 2021, the Company reduced its compensation expense by $789,000 and $1,016,000, respectively, as the CARES Act grant proceeds received by the Company were used to fund eligible payroll costs. If the Company does not comply with the provisions of the CARES Act, the Rescue Act and the Payroll Support Program Agreements, the Company may be required to repay the government funds and also be subject to other remedies.

Additionally, provisions under the CARES Act allowed the Company to defer payment of the employer’s share of social security taxes incurred from March of 2020 through December 31, 2020. The amount of payroll taxes subject to deferred payment was approximately $139,000. Under the terms of the legislation, 50%, or approximately $70,000 of the deferred payroll taxes were due and paid by December 31, 2021, and the remaining 50%, or approximately $69,000 are due and payable by December 31, 2022.

The Company has taken several actions beginning in April 2020 and prior to receiving CARES Act funds, to mitigate the effects of the COVID-19 pandemic on its business, as outlined below:

·Eliminated or furloughed approximately one-third of then-existing positions;

·Instituted a temporary pay reduction plan affecting essentially all of the then-remaining employees;

·Reduced the use of outside consultants;

·Decommissioned the PASSUR Network to reduce data feed and telecom costs; and

·Reduced and/or eliminated other operating expenses that were not critical to the short-term outlook of the Company.

The effects of the actions above are reflected in the costs of revenues, research and development and administrative costs for the three months ended January 31, 2022 and 2021, and the Company anticipates that such cost savings will continue to benefit the remainder of fiscal 2022. However, if the recovery of the air transportation industry accelerates and revenue levels quickly return to pre-COVID-19 levels, these levels of cost savings may not be practicable or sustainable to support the operations necessary for the increased level of revenue. During the three months ended January 31, 2022, the Company made investments in, among other areas, infrastructure and marketing, to benefit the longer term growth of the Company. See “Risk Factors”.