3. Impact of the COVID-19 Pandemic	6 Months Ended
Apr. 30, 2020
Notes
3. Impact of the COVID-19 Pandemic	3. Impact of the COVID-19 Pandemic In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. The World Health Organization (“WHO”) declared COVID-19 a “pandemic” on March 11, 2020 and the U.S. government declared a national state of emergency on March 13, 2020. The U.S. government has implemented enhanced screenings, quarantine requirements and other travel restrictions in connection with the COVID-19 outbreak. U.S. state governments have instituted similar measures, such as “shelter-in-place” requirements and declared states of emergency. In addition, the U.S. government has strongly recommended “social distancing” measures, including avoiding gathering in groups of more than 10 people and avoiding discretionary travel. Government restrictions and consumer fears relating to the COVID-19 pandemic have impacted flight schedules and given rise to a general reluctance of consumers to fly at this time, resulted in unprecedented cancellations of flights, and substantially reduced demand for future flights for the foreseeable future. The severe reduction in air travel continued through May 2020 and will negatively impact the Company’s revenues for the remainder of fiscal 2020. The CARES Act was enacted in March 2020 and provides economic support for, among others, businesses in the airline industry. The Company has applied for assistance under the Payroll Support Program for Air Carriers and Contractors, part of the CARES Act. Presently, the Company is still awaiting a decision regarding its application for assistance under the CARES Act. There can be no assurances however, that the Company will receive any financial assistance as a result of its application. Additionally, provisions under the CARES Act allow the Company to defer payment of the employer’s share of Social Security taxes incurred from March of 2020 through December 31, 2020. Under the terms of the legislation, 50% of the deferred payroll taxes would be due and payable by December 31, 2021, and the remaining 50% would be due and payable by December 31, 2022. The amount of payroll taxes subject to deferred payment is approximately $130,000. The Company has taken several actions to mitigate the effects of the COVID-19 pandemic on its business, as outlined below: `·`Eliminated or furloughed approximately one-third of existing positions; `·`Instituted a temporary pay reduction plan affecting essentially all of the remaining employees; `·`Suspended the use of outside consultants; `·`Rationalized 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. Due to the financial and economic hardships being experienced by airlines, airports and air transportation support vendors in the current COVID-19 environment, there is a sufficient amount of uncertainty surrounding the ability of our customers to continue to perform their contracts with the Company. During the three months ended April 30, 2020, the Company determined that impairments had occurred. As a result of the Company’s analysis, the Company recorded an impairment of $9,874,000, related to its capitalized software of $6,134,000, PASSUR Network system assets of $3,565,000 and $175,000 related to the leased assets applicable to the PASSUR locations.

3. Impact of the COVID-19 Pandemic

6 Months Ended

Apr. 30, 2020

3. Impact of the COVID-19 Pandemic

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. The World Health Organization (“WHO”) declared COVID-19 a “pandemic” on March 11, 2020 and the U.S. government declared a national state of emergency on March 13, 2020. The U.S. government has implemented enhanced screenings, quarantine requirements and other travel restrictions in connection with the COVID-19 outbreak. U.S. state governments have instituted similar measures, such as “shelter-in-place” requirements and declared states of emergency. In addition, the U.S. government has strongly recommended “social distancing” measures, including avoiding gathering in groups of more than 10 people and avoiding discretionary travel.

Government restrictions and consumer fears relating to the COVID-19 pandemic have impacted flight schedules and given rise to a general reluctance of consumers to fly at this time, resulted in unprecedented cancellations of flights, and substantially reduced demand for future flights for the foreseeable future. The severe reduction in air travel continued through May 2020 and will negatively impact the Company’s revenues for the remainder of fiscal 2020.

The CARES Act was enacted in March 2020 and provides economic support for, among others, businesses in the airline industry. The Company has applied for assistance under the Payroll Support Program for Air Carriers and Contractors, part of the CARES Act. Presently, the Company is still awaiting a decision regarding its application for assistance under the CARES Act. There can be no assurances however, that the Company will receive any financial assistance as a result of its application. Additionally, provisions under the CARES Act allow the Company to defer payment of the employer’s share of Social Security taxes incurred from March of 2020 through December 31, 2020. Under the terms of the legislation, 50% of the deferred payroll taxes would be due and payable by December 31, 2021, and the remaining 50% would be due and payable by December 31, 2022. The amount of payroll taxes subject to deferred payment is approximately $130,000.

The Company has taken several actions to mitigate the effects of the COVID-19 pandemic on its business, as outlined below:

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

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

·Suspended the use of outside consultants;

·Rationalized 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.

Due to the financial and economic hardships being experienced by airlines, airports and air transportation support vendors in the current COVID-19 environment, there is a sufficient amount of uncertainty surrounding the ability of our customers to continue to perform their contracts with the Company. During the three months ended April 30, 2020, the Company determined that impairments had occurred. As a result of the Company’s analysis, the Company recorded an impairment of $9,874,000, related to its capitalized software of $6,134,000, PASSUR Network system assets of $3,565,000 and $175,000 related to the leased assets applicable to the PASSUR locations.