UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2014
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 000-7642
New York 11-2208938
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
One Landmark Square, Suite 1900, Stamford, Connecticut 06901
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(Address of Principal Executive Office) (Zip Code)
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Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). YES [X] NO [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X]
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Act).
YES [ ] NO [X]
INDEX
PASSUR Aerospace, Inc. and Subsidiary
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of July 31, 2014
(unaudited) and October 31, 2013. 3
Consolidated Statements of Income (unaudited)
Nine months ended July 31, 2014 and 2013. 4
Consolidated Statements of Income (unaudited)
Three months ended July 31, 2014 and 2013. 5
Consolidated Statements of Cash Flows (unaudited)
Nine months ended July 31, 2014 and 2013. 6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk. 19
Item 4. Controls and Procedures. 19
PART II. OTHER INFORMATION 20
Item 5. Other Information. 20
Item 6. Exhibits. 21
Signatures. 22
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PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PASSUR Aerospace, Inc. and Subsidiary
Consolidated Balance Sheets
JULY 31, October 31,
2014 2013
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(UNAUDITED)
ASSETS
Current assets:
Cash $ 569,936 $ 454,650
Accounts receivable, net 1,018,128 1,637,844
Deferred tax asset, current 773,419 926,771
Prepaid expenses and other current assets 307,013 174,960
------------- --------------
Total current assets 2,668,496 3,194,225
PASSUR(R) Network, net 5,105,552 5,337,740
Capitalized software development costs, net 6,548,755 6,126,868
Property and equipment, net 1,347,787 1,346,868
Deferred tax asset, non-current 2,121,136 2,121,136
Other assets 149,831 152,868
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TOTAL ASSETS $ 17,941,557 $ 18,279,705
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 461,416 $ 561,559
Accrued expenses and other current liabilities 661,028 722,898
Deferred revenue, current portion 1,921,693 1,931,374
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Total current liabilities 3,044,137 3,215,831
Deferred revenue, less current portion 107,906 135,722
Notes payable - related party 3,864,880 4,364,880
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7,016,923 7,716,433
COMMITMENT AND CONTINGENCIES
Stockholders' equity:
Preferred shares - authorized 5,000,000 shares,
par value $0.01 per share; none issued or outstanding -- --
Common shares - authorized 10,000,000 shares,
par value $0.01 per share; issued 8,225,526 and 8,041,001
at July 31, 2014 and October 31, 2013 82,255 80,410
Additional paid-in capital 15,199,365 15,113,495
Accumulated deficit (2,733,511) (3,007,158)
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12,548,109 12,186,747
Treasury stock, at cost, 696,500 shares at
July 31, 2014 and October 31, 2013 (1,623,475) (1,623,475)
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Total stockholders' equity 10,924,634 10,563,272
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,941,557 $ 18,279,705
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See accompanying notes to consolidated financial statements.
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PASSUR Aerospace, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
NINE MONTHS ENDED JULY 31,
2014 2013
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REVENUES $ 8,574,311 $ 8,078,439
COST AND EXPENSES:
Cost of revenues 3,989,402 4,341,246
Research and development 506,604 475,316
Selling, general, and administrative expenses 3,468,094 2,782,620
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7,964,100 7,599,182
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INCOME FROM OPERATIONS 610,211 479,257
Interest expense - related party 180,063 216,802
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Income before income taxes 430,148 262,455
Provision for income taxes 156,502 80,799
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NET INCOME $ 273,646 $ 181,656
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Net income per common share - basic $ .04 $ .03
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Net income per common share - diluted $ .04 $ .02
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Weighted average number of common shares outstanding - basic 7,433,951 7,236,371
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Weighted average number of common shares outstanding - diluted 7,713,440 7,776,540
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See accompanying notes to consolidated financial statements.
PASSUR Aerospace, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
THREE MONTHS ENDED JULY 31,
2014 2013
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REVENUES $ 2,865,319 $ 2,742,681
COST AND EXPENSES:
Cost of revenues 1,300,968 1,426,091
Research and development expenses 171,325 164,781
Selling, general, and administrative expenses 1,168,614 942,170
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2,640,907 2,533,042
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INCOME FROM OPERATIONS 224,412 209,639
Interest expense - related party 59,262 73,062
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Income before income taxes 165,150 136,577
Provision for income taxes 36,408 31,223
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NET INCOME $ 128,742 $ 105,354
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Net income per common share - basic $ .02 $ .01
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Net income per common share - diluted $ .02 $ .01
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Weighted average number of common shares outstanding - basic 7,529,026 7,299,666
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Weighted average number of common shares outstanding - diluted 7,812,157 7,814,895
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See accompanying notes to consolidated financial statements.
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PASSUR Aerospace, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
NINE MONTHS ENDED JULY 31,
2014 2013
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 273,646 $ 181,656
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,088,122 1,958,227
Provision for deferred taxes 153,352 42,500
Provision for (recovery of) doubtful accounts 97,295 (17,340)
Stock-based compensation 236,242 202,295
Changes in operating assets and liabilities:
Accounts receivable. net 522,421 438,470
Prepaid expenses and other current assets (132,053) (47,329)
Other assets 3,037 27,952
Accounts payable (100,143) (167,283)
Accrued expenses and other current liabilities (61,870) 9,395
Deferred revenue (37,497) 412,559
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Total adjustments 2,768,906 2,859,446
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Net cash provided by operating activities 3,042,552 3,041,102
CASH FLOWS FROM INVESTING ACTIVITIES
PASSUR(R) Network, net (654,319) (331,618)
Software development costs, net (1,349,081) (1,266,399)
Property and equipment, net (275,340) (446,419)
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Net cash used in investing activities (2,278,740) (2,044,436)
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CASH FLOWS FROM FINANCING ACTIVITIES
Surrender of shares to pay withholding taxes (180,026) (286,261)
Proceeds from the exercise of stock options 31,500 5,343
Repayments of note payable - related party (500,000) --
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Net cash used in financing activities (648,526) (280,918)
============== ================
Increase in cash 115,286 715,748
Cash - beginning of period 454,650 261,053
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Cash - end of period $ 569,936 $ 976,801
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SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest - related party $ 180,063 $ 216,802
Income taxes $ 3,150 $ 41,465
See accompanying notes to consolidated financial statements.
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PASSUR Aerospace, Inc. and Subsidiary
Notes to Consolidated Financial Statements
July 31, 2014
(Unaudited)
1. NATURE OF BUSINESS
PASSUR Aerospace, Inc. ("PASSUR(R)" or the "Company") is a leading aviation business intelligence company that provides predictive analytics and decision-support technology for the aviation industry based on its unique, proprietary technology and real-time accessible databases, supported by a number of leading industry experts, and a proven management team.
PASSUR(R) serves all of the 8 largest North American airlines, more than 60 airport customers, including 22 of the top 30 North American airports, approximately 150 corporate aviation customers, as well as the U.S. government, using a recurring-revenue subscription model.
PASSUR(R)'s products include a suite of web-based solutions that address the aviation industry's most intractable and costly challenges, including underutilization of airspace and airport capacity, delays, cancellations, and diversions, among other inefficiencies. Solutions offered by PASSUR(R) cover the entire flight life cycle, from gate to gate, and result in reductions in overall costs, fuel costs, and emissions, while maximizing revenue opportunities, as well as improving operational efficiency, and enhancing the passenger experience. The Company provides data consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services.
PASSUR(R) owns and operates what the Company believes is the largest private passive commercial air traffic surveillance and passive radar network in the world, with one hundred and eighty-five passive radar locations, powering a unique, proprietary database that is accessible in real time, on demand, for critical and timely decision-making with nationwide coverage to support network-wide systemic deployments. The Company's database contains over 10 years of archived data derived from the network. The Company's network provides a unique flight tracking data source available to the private sector, which is based on independent, non-U.S. government data, while also including all publicly available government feeds as well. The Company's unique data supplements the government feeds and offers faster updates, with flight tracks updated every 1 to 4.6 seconds, enabling better flight tracking and more cost effective decision-making during irregular operations.
Management is addressing the Company's working capital deficiency by aggressively marketing the Company's PASSUR(R) Network Systems information capabilities in its existing product and professional service lines, as well as in new products and professional services, which are continually being developed and deployed. Management believes that expanding its existing suite of software products and professional services, which address the wide array of needs of the aviation industry, through the continued development of new product and service offerings, will continue to lead to increased growth in the Company's customer-base and subscription-based revenues.
If the Company's business plan does not generate sufficient cash flows from operations to meet the Company's operating cash requirements, the Company will attempt to obtain external financing. However, the Company has received a commitment from its significant shareholder and Chairman, G.S. Beckwith Gilbert, dated September 9, 2014, that if the Company, at any time, is unable to meet its obligations through September 9, 2015, G.S. Beckwith Gilbert will provide the necessary continuing financial support to the Company in order for the Company to meet such obligations.
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial information contained in this Form 10-Q represents condensed financial data and, therefore, does not include all footnote disclosures required to be included in financial statements prepared in conformity with accounting principles generally accepted in the United States. Such footnote information was included in the Company's annual report on Form 10-K for the year ended October 31, 2013, filed with the Securities and Exchange Commission ("SEC"); the consolidated financial data included herein should be read in conjunction with that report. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the Company's consolidated financial position at July 31, 2014, and its consolidated results of operations and cash flows for the nine months ended July 31, 2014 and 2013.
The results of operations for the interim period stated above are not necessarily indicative of the results of operations to be recorded for the full fiscal year ending October 31, 2014.
Certain financial information in the footnotes has been rounded to the nearest thousand for presentation purposes.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of PASSUR(R) and its wholly-owned subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation.
REVENUE RECOGNITION POLICY
The Company recognizes revenue in accordance with FASB ASC 605-15, ("Revenue
Recognition in Financial Statements") which requires that four basic criteria
must be met before revenues can be recognized: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services have been rendered;
(3) the fee is fixed and determinable; and (4) collectability is reasonably
assured.
The Company's revenues are generated by selling: (1) subscription-based, real-time decision and solution information; (2) professional services; and (3) annual maintenance contracts for PASSUR(R) Radar Systems.
Revenues generated from subscription and maintenance agreements are recognized over the term of such executed agreements and/or customer's receipt of such data or services. In accordance with ASC 605-15, we recognize revenue when persuasive evidence of an arrangement exists which is evidenced by a signed agreement, the service has been deployed, as applicable, to the Company's hosted servers, the fee is fixed and determinable, and collection of the resulting receivable is reasonably assured. The Company records revenues pursuant to individual contracts on a month-by-month basis, as outlined by the applicable agreement. In many cases, the Company may invoice respective customers in advance of the specified period, either quarterly or annually, which coincides with the terms of the agreement. In such cases, the Company will defer at the close of each month and/or reporting period, any subscription or maintenance revenues invoiced for which services have yet to be rendered, in accordance with ASC 605-15. Revenues generated by professional services are recognized over the term of such executed agreements or as provided.
The Company recognizes initial set-up fee revenues and associated costs on a straight-line basis over the estimated life of the customer relationship period, typically five years.
COST OF REVENUES
Costs associated with subscription and maintenance revenues consist primarily of direct labor, depreciation of PASSUR(R) Network Systems, amortization of capitalized software development costs, communication costs, data feeds, allocated overhead costs, travel and entertainment, and consulting fees. Also included in cost of revenues are costs associated with upgrades to PASSUR(R) Systems necessary to make such systems compatible with new software applications, as well as the ordinary repair and maintenance of existing PASSUR(R) Systems. Additionally, cost of revenues in each reporting period is impacted by: (1) the number of PASSUR(R) Systems added to the Network, which include the cost of production, shipment, and installation of these assets, which are capitalized to the PASSUR(R) Network; and (2) capitalized costs associated with software development projects. Both of these are referred to as "Capitalized Assets", and are depreciated and/or amortized over their respective useful lives and charged to cost of revenues.
ACCOUNTS RECEIVABLE
The Company has a history of successfully collecting all amounts due from its customers under the original terms of its subscription agreements without making concessions. The Company records accounts receivables for agreements where amounts due from customers are contractually required and are non-refundable. Net accounts receivable is comprised of the monthly, quarterly, or annual committed amounts due from customers pursuant to the terms of each respective customer's agreement. Account receivable balances include amounts attributable to deferred revenues, as well as initial set-up fees.
The provision for doubtful accounts was $65,000 and $29,000 as of July 31, 2014 and October 31, 2013, respectively. The Company monitors its outstanding accounts receivable balances and believes the provision is reasonable.
PASSUR(R) NETWORK
The PASSUR(R) Network is comprised of PASSUR(R) Systems, which include the direct and indirect production, shipping, and installation costs incurred for each PASSUR(R) System, which are recorded at cost, net of accumulated depreciation. Depreciation is charged to cost of revenues and is calculated using the straight-line method over the estimated useful life of the asset, which is estimated at seven years. PASSUR(R) Systems which are not installed, raw materials, work-in-process, and finished goods components are carried at cost and no depreciation is recorded.
CAPITALIZED SOFTWARE DEVELOPMENT COSTS
The Company follows the provisions of ASC 350-40, "Internal Use Software." ASC 350-40 provides guidance for determining whether computer software is internal-use software, and on accounting for the proceeds of computer software originally developed or obtained for internal use and then subsequently sold to the public. It also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred. The Company records amortization of the software on a straight-line basis over the shorter of the estimated useful life of the software or revenues, typically five years. The Company had $1,244,000 of software development projects in development as of July 31, 2014. There are several new software developments projects scheduled to begin in fiscal year 2014.
LONG-LIVED ASSETS
The Company reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. Impairment is recognized to the extent the sum of undiscounted estimated future cash flows expected to result from the use of the asset is less than the carrying value. Assets to be disposed of are carried at the lower of their carrying value or fair value, less costs to sell. The Company evaluates the periods of amortization continually in determining whether later events and circumstances warrant revised estimates of useful lives. If estimates are changed, the unamortized costs will be allocated to the increased or decreased number of remaining periods in the revised life.
DEFERRED TAX ASSET
The Company had available a federal net operating loss carry-forward of $9,695,000 for income tax purposes as of July 31, 2014, which will expire in various tax years from fiscal year 2020 through fiscal year 2033. The Company evaluates whether a valuation allowance related to deferred tax assets is required each reporting period. A valuation allowance would be established if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized. As of July 31, 2014, the Company's deferred tax asset was $2,895,000, and it was determined it is more likely than not that the net operating loss carry-forward would be used.
DEFERRED REVENUE
Deferred revenue includes amounts attributable to advances received on customer agreements, which may be billed either annually or quarterly. Revenues from such customer agreements are recognized as income ratably as services are provided.
The Company recognizes initial set-up fee revenues and associated costs on a straight-line basis over the estimated life of the customer relationship period, typically five years.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The recorded amounts of the Company's receivables, accrued expenses, and payables approximate their fair values, principally because of the short-term nature of these items. The fair value of related party debt is not practicable to determine due primarily to the fact that the Company's related party debt is held by its Chairman and significant shareholder, and the Company does not have any third-party debt with which to compare.
Additionally, on a recurring basis, the Company uses fair value measures when analyzing asset impairments. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined such indicators are present, and the review indicates that the assets will not be fully recoverable based on the undiscounted estimated future cash flows expected to result from the use of the asset, their carrying values are reduced to estimated fair value.
NET INCOME PER SHARE INFORMATION
Basic net income per share is computed based on the weighted average number of
shares outstanding. Diluted net income per share gives effect to all diluted
potential common shares outstanding and common stock equivalents during the
period using the treasury stock method. The Company's 2009 Stock Incentive Plan
allows for a cashless exercise. Shares used to calculate net income per share
are as follows:
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
2014 2013 2014 2013
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Basic weighted average shares outstanding 7,529,026 7,299,666 7,433,951 7,236,371
Effect of dilutive stock options 283,131 515,229 279,489 540,169
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Diluted weighted average shares outstanding 7,812,157 7,814,895 7,713,440 7,776,540
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Weighted average shares which are not included 575,869 631,271 579,511 606,331
in the calculation of diluted net income per
share because their impact is anti-dilutive
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STOCK-BASED COMPENSATION
The Company follows FASB ASC 718 "Compensation-Stock Compensation", which requires measurement of compensation cost for all stock-based awards at fair value on date of grant, and recognition of stock-based compensation expense over the service period for awards expected to vest. The fair value of stock options was determined using the Black-Scholes valuation model. Such fair value is recognized as an expense over the service period, net of forfeitures. Stock-based compensation expense was $82,000 and $62,000 and $236,000 and $202,000 for the three and nine months ended July 31, 2014 and 2013, respectively, and was primarily included in selling, general, and administrative expenses.
3. NOTES PAYABLE - RELATED PARTY
The Company had a note payable to G.S. Beckwith Gilbert, the Company's significant shareholder and Chairman, of $3,865,000 (the "Gilbert Note") as of July 31, 2014. The Gilbert Note bears a maturity date of November 1, 2016, with an annual interest rate of 6%. Interest payments are due by October 31 of each fiscal year. The Company has paid all interest incurred on the Gilbert Note through July 31, 2014. During the first nine months of fiscal year 2014, the Company made $500,000 in principal payments, bringing the principal amount of the note payable of $4,365,000 as of October 31, 2013 to $3,865,000 as of July 31, 2014.
On June 11, 2014, the Company entered into a Debt Extension Agreement with G.S. Beckwith Gilbert, effective June 11, 2014, pursuant to which the Company and Mr. Gilbert agreed to modify certain terms and conditions of the Gilbert Note. The maturity date of the Gilbert Note was due on November 1, 2014, and the total amount of principal and interest due and owing as of June 11, 2014 was $3,891,934. Pursuant to the Debt Extension Agreement, the Company issued a new note to Mr. Gilbert in the principal amount of $3,864,880 (the "New Gilbert Note") in exchange for the Gilbert Note and the Company agreed to pay the accrued interest under the Gilbert Note as of June 11, 2014, in an amount equal to $27,054, at the time and on the terms set forth in the Gilbert Note. Under the terms of the New Gilbert Note, the maturity date was extended to November 1, 2016 and the annual interest rate remained at 6%. Interest payments under the New Gilbert Note shall be made annually at October 31 of each year.
The Company has received a commitment from G.S. Beckwith Gilbert, dated September 9, 2014, that if the Company, at any time, is unable to meet its obligations through September 9, 2015, G.S. Beckwith Gilbert will provide the necessary continuing financial support to the Company in order for the Company to meet such obligations. Such commitment for financial support may be in the form of additional advances or loans to the Company, in addition to the deferral of principal and/or interest payments due on the existing loans, if deemed necessary. The note payable is secured by the Company's assets.
The Company believes that its liquidity is adequate to meet operating and investment requirements through October 31, 2014. During such period the Company does not anticipate borrowing additional funds from G.S. Beckwith Gilbert, although it has received a commitment from G.S. Beckwith Gilbert to do so if the Company requires additional funds.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
The information provided in this Quarterly Report on Form 10-Q (including, without limitation, "Management's Discussion and Analysis of Financial Condition and Results of Operations", and "Liquidity and Capital Resources", below) contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company's future plans, objectives, and expected performance. The words "believe," "may," "will," "could," "should," "would," "anticipate," "estimate," "expect," "project," "intend," "objective," "seek," "strive," "might," "likely result," "build," "grow," "plan," "goal," "expand," "position," or similar words, or the negatives of these words, or similar terminology, identify forward-looking statements. These statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks and uncertainties, and a number of factors could cause the Company's actual results to differ materially from those expressed in the forward-looking statements referred to above. These factors include, without limitation, the risks and uncertainties related to the ability of the Company to sell PASSUR(R) Network Systems information capabilities in its existing product and professional service lines, as well as in new products and professional services (due to potential competitive pressure from other companies or other products), as well as the current uncertainty in the aviation industry due to terrorist events, the continued war on terrorism, changes in fuel costs, airline bankruptcies and consolidations, economic conditions, and other risks detailed in the Company's periodic report filings with the SEC. Other uncertainties which could impact the Company include, without limitation, uncertainties with respect to future changes in governmental regulation and the impact that such changes in regulation will have on the Company's business. Additional uncertainties include, without limitation, uncertainties relating to: (1) the Company's ability to find and maintain the personnel necessary to sell, manufacture, and service its products; (2) its ability to adequately protect its intellectual property; (3) its ability to secure future financing; and (4) its ability to maintain the continued support of its significant shareholder. Readers are cautioned not to place undue reliance on these forward-looking statements, which relate only to events as of the date on which the statements are made and which reflect management's analysis, judgments, belief, or expectation only as of such date. The Company undertakes no obligation to publicly update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
DESCRIPTION OF BUSINESS
PASSUR(R) is a leading aviation business intelligence company that provides predictive analytics and decision-support technology for the aviation industry based on its unique, proprietary technology and real-time accessible databases, supported by a number of leading industry experts, and a proven management team.
PASSUR(R) serves all of the 8 largest North American airlines, more than 60 airport customers, including 22 of the top 30 North American airports, approximately 150 corporate aviation customers, as well as the U.S. government, using a recurring-revenue subscription model.
PASSUR(R)'s products include a suite of web-based solutions that address the aviation industry's most intractable and costly challenges, including underutilization of airspace and airport capacity, delays, cancellations, and diversions, among other inefficiencies. Solutions offered by PASSUR(R) cover the entire flight life cycle, from gate to gate, and result in reductions in overall costs, fuel costs, and emissions, while maximizing revenue opportunities, as well as improving operational efficiency, and enhancing the passenger experience. The Company provides data consolidation, information, decision support, predictive analytics, collaborative solutions, and professional services.
PASSUR(R) owns and operates what the Company believes is the largest private passive commercial air traffic surveillance and passive radar network in the world, with one hundred and eighty-five passive radar locations, powering a unique, proprietary database that is accessible in real time, on demand, for critical and timely decision-making with nationwide coverage to support network-wide systemic deployments. The Company's database contains over 10 years of archived data derived from the network. The Company's network provides a unique flight tracking data source available to the private sector, which is based on independent, non-U.S. government data, while also including all publicly available government feeds as well. The Company's unique data supplements the government feeds and offers faster updates, with flight tracks updated every 1 to 4.6 seconds, enabling better flight tracking and more cost effective decision-making during irregular operations.
RESULTS OF OPERATIONS
REVENUES
Management concentrates its efforts on the sale of business intelligence, predictive analytics, and decision support product applications, utilizing data primarily derived from the PASSUR(R) Network. Such efforts include the continued development of new products, professional services, and existing product enhancements.
Revenue increased $123,000, or 4%, and $496,000, or 6%, to $2,865,000 and $8,574,000 for the three and nine months ended July 31, 2014, as compared to the same periods in fiscal year 2013. New customer subscriptions and existing customer upgrades to the Company's suite of software applications increased vs the prior period by $183,000, or 7%, and $472,000, or 6%, respectively, for the three and nine months ended July 31, 2014. Professional service revenue for the three months ended July 31, 2014, dropped by $60,000, offsetting part of the subscription revenue increase. Professional service revenue for the nine months ended July 31, 2014, increased $24,000 as compared to the same period in the prior year. The Company continues to develop and deploy new software applications and solutions, as well as a wide selection of products which address customers' needs, easily delivered through web-based applications, as well as other new products which include stand-alone professional services.
COST OF REVENUES
Costs associated with subscription and maintenance revenues consist primarily of direct labor, depreciation of PASSUR(R) Network Systems, amortization of capitalized software development costs, communication costs, data feeds, allocated overhead costs, travel and entertainment, and consulting fees. Also included in cost of revenues are costs associated with upgrades to PASSUR(R) Systems necessary to make such systems compatible with new software applications, as well as the ordinary repair and maintenance of existing PASSUR(R) Systems. Additionally, cost of revenues in each reporting period is impacted by: (1) the number of PASSUR(R) System units added to the Network, which include the production, shipment, and installation of these assets, which are capitalized to the PASSUR(R) Network; and (2) capitalized costs associated with software development and data center projects. Both of these are referred to as "Capitalized Assets", and are depreciated and/or amortized over their respective useful lives and charged to cost of revenues. The Company does not break down its costs by product.
When the Company uses its employees to manufacture PASSUR(R) Systems, build capital assets, and ship and install PASSUR(R) Systems in the field, or for software development, there is a reduction in cost of revenues due to the fact that the labor-related costs for these systems are capitalized, rather than expensed in the period.
Cost of revenues decreased $125,000, or 9%, and $352,000, or 8% for the three and nine months ended July 31, 2014, as compared to the same period in fiscal year 2013.
In the current three month period compared to the same period in the prior year, the reduction in cost of revenues primarily resulted from higher capitalized costs due to (1) an increase in the number of PASSUR(R) Systems manufactured, shipped, and installed in the field of $99,000 and (2) higher capitalized software development costs of $121,000, and was partially offset by lower capitalized data center costs of $84,000 and higher depreciation and amortization of $55,000. Lower communication costs of $13,000 and lower compensation and related costs of $34,000 also contributed to the reduction of costs.
In the current nine month period compared to the same period in the prior year, the reduction in cost of revenues primarily resulted from higher capitalized costs due to (1) an increase in the number of PASSUR(R) Systems manufactured, shipped, and installed in the field of $278,000 and (2) higher capitalized software development costs of $83,000, and was partially offset by lower capitalized data center costs of $229,000 and higher depreciation and amortization of $134,000. Lower communication costs resulting from the transition to a new network infrastructure of $144,000 and lower compensation and related costs of $150,000 also contributed to the reduction in costs.
RESEARCH AND DEVELOPMENT
The Company's research and development efforts include activities associated with new product development, as well as the enhancement and improvement of the Company's existing software and information products. Research and development expenses increased $7,000, or 4%, and $31,000, or 7% for the three and nine months ended July 31, 2014, as compared to the same period in fiscal year 2013, primarily due to an increase in salaries plus travel and entertainment expenses.
The Company anticipates that it will continue to invest in research and development to develop, maintain, and support existing and newly developed applications for its customers.
SELLING, GENERAL, AND ADMINISTRATIVE
Selling, general, and administrative expenses increased $226,000, or 24%, and $685,000, or 25%, for the three and nine months ended July 31, 2014, as compared to the same periods in fiscal year 2013. The increase in the current three month period compared to the same period in the prior year was largely due to an increase in compensation and related costs of $161,000, higher marketing expense of $120,000, largely as a result of a major customer user conference, as well as higher travel and entertainment expense of $26,000, partially offset by lower legal and accounting expense of $34,000. The increase in the current nine month period compared to the same period in the prior year was due primarily to higher compensation and related costs of $341,000, higher travel and entertainment expense of $149,000, higher marketing expense of $145,000. Several new employees were hired during the period.
INCOME FROM OPERATIONS
Income from operations increased $15,000, or 7%, and $131,000, or 27% for the three and nine months ended July 31, 2014, to $224,000 and $610,000, for the three and nine months ended July 31, 2014, as compared to the same periods in fiscal year 2013. This increase was due to higher revenue of $123,000, or 4%, and $496,000, or 6%, respectively, offset by higher costs and expenses of $108,000, or 4%, and $365,000, or 5%, in the two periods.
INTEREST EXPENSE - RELATED PARTY
Interest expense - related party decreased $14,000, or 19%, and $37,000, or 17%, for the three and nine months ended July 31, 2014, as compared to the same periods in fiscal year 2013, due to a reduction in note payable - related party of $900,000, compared to July 31, 2013.
NET INCOME
The Company had net income of $129,000, or $0.02 per diluted share, and $274,000, or $0.04 per diluted share for the three and nine months ended July 31, 2014, as compared to net income of $105,000, or $0.01 per diluted share, and $182,000, or $0.02 per diluted share for the same periods in fiscal year 2013.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current liabilities exceeded current assets by $376,000 as of July 31, 2014. The note payable to a related party, G.S. Beckwith Gilbert, the Company's significant shareholder and Chairman, was $3,865,000 as of July 31, 2014, with a maturity of November 1, 2016 (the "Gilbert Note"). The Company's stockholders' equity was $10,925,000 as of July 31, 2014. The Company had net income of $274,000 for the nine months ended July 31, 2014.
On June 11, 2014, the Company entered into a Debt Extension Agreement with G.S. Beckwith Gilbert, effective June 11, 2014, pursuant to which the Company and Mr. Gilbert agreed to modify certain terms and conditions of the Gilbert Note. The maturity date of the Gilbert Note was due on November 1, 2014, and the total amount of principal and interest due and owing as of June 11, 2014 was $3,891,934. Pursuant to the Debt Extension Agreement, the Company issued a new note to Mr. Gilbert in the principal amount of $3,864,880 (the "New Gilbert Note") in exchange for the Gilbert Note and the Company agreed to pay the accrued interest under the Gilbert Note as of June 11, 2014, in an amount equal to $27,054, at the time and on the terms set forth in the Gilbert Note. Under the terms of the New Gilbert Note, the maturity date was extended to November 1, 2016 and the annual interest rate remained at 6%. Interest payments under the New Gilbert Note shall be made annually at October 31 of each year.
Management is addressing the Company's working capital deficiency by aggressively marketing the Company's PASSUR(R) Network Systems information capabilities in its existing product and professional service lines, as well as in new products and professional services, which are continually being developed and deployed. Management believes that expanding its existing suite of software products and professional services, which address the wide array of needs of the aviation industry, through the continued development of new product and service offerings, will continue to lead to increased growth in the Company's customer-base and subscription-based revenues.
If the Company's business plan does not generate sufficient cash flows from operations to meet the Company's operating cash requirements, the Company will attempt to obtain external financing. However, the Company has received a commitment from its significant shareholder and Chairman, G.S. Beckwith Gilbert, dated September 9, 2014, that if the Company, at any time, is unable to meet its obligations through September 9, 2015, G.S. Beckwith Gilbert will provide the necessary continuing financial support to the Company in order for the Company to meet such obligations. Such commitment for financial support may be in the form of additional advances or loans to the Company, in addition to the deferral of principal and/or interest payments due on the existing loans, if deemed necessary. The note payable is secured by the Company's assets.
The Company believes that its liquidity is adequate to meet operating and investment requirements through October 31, 2014. During such period the Company does not anticipate borrowing additional funds from G.S. Beckwith Gilbert, although it has received a commitment from G.S. Beckwith Gilbert to do so if the Company requires additional funds.
Net cash provided by operating activities was $3,043,000 for the nine months ended July 31, 2014, and consisted of $274,000 of net income, depreciation and amortization of $2,088,000, and stock-based compensation expense of $236,000, with the balance consisting of an increase in operating assets and a decrease in liabilities. Net cash used in investing activities was $2,279,000 for the nine months ended July 31, 2014, which was expended for capitalized software development costs, additions to the PASSUR(R) Network, and a redundant server center at an off-site location. Net cash used for financing was $649,000, for the nine months ended July 31, 2014, which primarily consisted of a $500,000 repayment of the note payable - related party plus $180,000 for employee's cashless exercise of stock options, which was partially offset by proceeds from the exercise of stock options for $31,000.
The Company is actively addressing the increasing costs associated with supporting the business, and plans to identify and reduce any unnecessary costs as part of its cost reduction initiatives. Additionally, the aviation market has been impacted by budgetary constraints, airline bankruptcies and consolidations, current economic conditions, the continued war on terrorism, and fluctuations in fuel costs. The aviation market is extensively regulated by government agencies, particularly the Federal Aviation Administration and the National Transportation Safety Board, and management anticipates that new regulations relating to air travel may continue to be issued. Substantially all of the Company's revenues are derived from airports, airlines, and organizations that serve, or are served by, the aviation industry. Any new regulations or changes in the economic situation of the aviation industry could have an impact on the future operations of the Company, either positively or negatively.
Interest by potential customers in the information and decision support software products obtained from PASSUR(R) Network Systems and its professional services remains strong. As a result, the Company anticipates an increase in future revenues from its airline and airport business. However, the Company cannot predict if such revenues will materialize. If sales do not increase, losses may occur. The extent of such profits or losses will be dependent on sales volume achieved and Company cost reduction initiatives.
OFF-BALANCE SHEET ARRANGEMENTS
None.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
GENERAL
The Company's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities based upon accounting policies management has implemented. These significant accounting policies are disclosed in Note 1 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2013 and there have been no material changes to such policies since the filing of such Annual Report. These policies and estimates are critical to the Company's business operations and the understanding of its results of operations. The impact and any associated risks related to these policies on the Company's business operations are discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2013, as such policies affect its reported financial results. The actual impact of these factors may differ under different assumptions or conditions.
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers: Topic 606" (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services, ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, management carried out an evaluation, under the supervision, and with the participation of, the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission's rules. The Company believes that a control system, no matter how well designed and operated, can provide only reasonable assurance, not absolute assurance, that the objectives of the control system are met. Based on their evaluation as of the end of the period covered by this report, the Company's Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective at a reasonable assurance level as of July 31, 2014.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) within the fiscal quarter to which this report relates, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
On September 9, 2014, the Company's significant shareholder and Chairman confirmed his commitment to provide the necessary continuing financial support to the Company in order for the Company to meet its obligations through September 9, 2015. A copy of the commitment is attached as Exhibit 10.1 to this Form 10-Q and incorporated by reference into this Item 5.
On June 11, 2014, the Company entered into a Debt Extension Agreement with G.S. Beckwith Gilbert, effective June 11, 2014, pursuant to which the Company and Mr. Gilbert agreed to modify certain terms and conditions of the Gilbert Note. The maturity date of the Gilbert Note was due on November 1, 2014, and the total amount of and interest due and owing as of June 11, 2014 was $3,891,934. Pursuant to the Debt Extension Agreement, the Company issued a new note to Mr. Gilbert in the principal amount of $3,864,880 (the "New Gilbert Note") in exchange for the Gilbert Note and the Company agreed to pay the accrued interest under the Gilbert Note as of June 11, 2014, in an amount equal to $27,054, at the time and on the terms set forth in the Gilbert Note for the payment of interest. Under the terms of the New Gilbert Note, the maturity date was extended to November 1, 2016 and the annual interest rate remained at 6%. Interest payments under the New Gilbert Note shall be made annually at October 31 of each year. The foregoing descriptions of the Debt Extension Agreement and the New Gilbert Note do not purport to be complete and are qualified in their entirety by reference to such documents.
ITEM 6. EXHIBITS.
10.1 *Commitment of G.S. Beckwith Gilbert, dated September 9, 2014.
31.1 *Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 *Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.2 *Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
101.ins* XBRL Instance
101.xsd* XBRL Schema
101.cal* XBRL Calculation
101.def* XBRL Definition
101.lab* XBRL Label
101.pre* XBRL Presentation
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* Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PASSUR AEROSPACE, INC.
DATED: SEPTEMBER 12, 2014 By: /s/ James T. Barry
------------------
James T. Barry
President and Chief Executive Officer
(Principal Executive Officer)
DATED: SEPTEMBER 12, 2014 By: /s/ Jeffrey P. Devaney
----------------------
Jeffrey P. Devaney
Chief Financial Officer, Treasurer,
and Secretary
(Principal Financial and Accounting
Officer)
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EXHIBIT 10.1
FIELD POINT CAPITAL MANAGEMENT COMPANY
ONE LANDMARK SQUARE, SUITE 1900
STAMFORD, CT 06901
September 9, 2014
PASSUR Aerospace, Inc.
One Landmark Square, Suite 1900
Stamford, CT 06901
As Chairman of the Board as well as the principal shareholder of PASSUR Aerospace, Inc. ("PASSUR Aerospace" or the "Company"), I make the following commitment to the Company with respect to the period from the date of this commitment through September 9, 2015.
Liquidity
I commit that if the Company at any time is unable to meet its obligations through September 9, 2015, that I will provide the necessary continuing financial support to the Company to ensure the Company's ability to operate as a going concern through the period ending September 9, 2015. Such continuing support may take the form of additional loans or advances to PASSUR Aerospace in addition to the deferral of principal and/or interest payments due on outstanding loans to PASSUR Aerospace as referred to above.
These commitments are not conditional and are irrevocable through the period ending September 9, 2015.
I, G.S. Beckwith Gilbert, having the financial wherewithal to enter into this irrevocable commitment, make the above commitments to the Company and its shareholders.
/s/ G.S. Beckwith Gilbert --------------------------- G.S. Beckwith Gilbert President |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) or 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James T. Barry, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PASSUR Aerospace, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: September 12, 2014
By: /s/ James T. Barry
---------------------
James T. Barry
Chief Executive Officer
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EXHIBIT 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) or 15d-14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeffrey P. Devaney, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PASSUR Aerospace, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: September 12, 2014
By: /s/ Jeffrey P. Devaney
----------------------
Jeffrey P. Devaney
Chief Financial Officer
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of PASSUR Aerospace, Inc. (the "Company") on Form 10-Q for the fiscal quarter ended July 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James T. Barry, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
By: /s/ James T. Barry
-------------------
James T. Barry
Chief Executive Officer
September 12, 2014
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EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of PASSUR Aerospace, Inc. (the "Company") on Form 10-Q for the fiscal quarter ended July 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey P. Devaney, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
By: /s/ Jeffrey P. Devaney
-----------------------
Jeffrey P. Devaney
Chief Financial Officer
September 12, 2014
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