**UNITED
STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
D.C. 20549**








**FORM
10-KSB**




**[X] 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)**


**OF
THE SECURITIES EXCHANGE ACT OF 1934**





**For
the Fiscal Year Ended October 31, 2005**





**[ 
]  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 0-15362





**NAVTECH,
INC.**


(Exact
name of small business issuer in its charter)




**Delaware**
    
    **11-2883366**(State
      or other jurisdiction of
      incorporation
      or organization)
    
    (I.R.S.
      Employer
      Identification
      No.)
  **Suite
      207, 2340 Garden Road**
      **Monterey,
      California**
    
    ****
      **93940**(Address
      of principal executive offices)
    
    (Zip
      Code)


Issuer’s
telephone number, including area code: **(519)
747-1170**




Securities
registered under Section 12(b) of the Exchange Act:




Title
      of Each Class
    
    Name
      of Each Exchange
      on Which RegisteredNone


Securities
registered under Section 12(g) of the Exchange Act:





Common
Stock, $.001 par value


(Title of
class)





Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act. [  ]





Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 
[ ]




Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
[X] No [
]




State
issuer's revenues for its most recent fiscal year: **$11,142,788**




The
aggregate market value of the common stock held by non-affiliates, based upon
the closing price of such stock as of December 31, 2005, was **$4,609,235** .




**ISSUERS
INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS**




Check
whether the issuer has filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.   Yes 
[X] No [
]




**APPLICABLE
ONLY TO CORPORATE REGISTRANTS**


The
number of shares outstanding of the issuer's common stock as of December 31,
2005 was **4,904,640** shares.




Transitional
Small Business Disclosure Format.  Yes  [X] No [
]




**DOCUMENTS
INCORPORATED BY REFERENCE: none**




















**NAVTECH,
INC.**




**FORM
10-KSB**




**For
the Fiscal Year Ended October 31, 2005**






INDEX
  ****
      **PART
      I**
    
    **PAGE**Item
      1.
    Description
      of Business
    3Item
      2
    Description
      of Property
    10Item
      3.
    Legal
      Proceedings
    11Item
      4.
    Submission
      of Matters to a Vote of Security Holders
    12****
      **PART
      II**Item
      5.
    Market
      for Common Equity, Related Stockholder Matters and Small Business Issuer
      Purchases of Equity Securities
    13Item
      6.
    Management=s
      Discussion and Analysis or Plan of Operation
    14Item
      7.
    Financial
      Statements
    26Item
      8.
    Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
    27Item
      8A.
    Controls
      and Procedures
    28Item
      8B.
    Other
      Information
    29****
      **PART
      III**Item
      9.
    Directors
      and Executive Officers of the Registrant
    30Item
      10.
    Executive
      Compensation
    31Item
      11.
    Security
      Ownership of Certain Beneficial Owners and Management andRelated
      Stockholder Matters
    34Item
      12.
    Certain
      Relationships and Related Transactions
    38Item****13.
    Exhibits
    40Item
      14.
    Principal
      Accountant Fees and Services
    42INDEX
      TO FINANCIAL STATEMENTS
    F-1****
      SIGNATURES
    
    43





NAVTECH,
INC.
 2005
10-KSB
 Page 2





**PART
I**




**Forward-Looking
Statements**




This
document contains forward-looking statements as that term is defined in the
federal securities laws. The events described in forward-looking statements we
make in this Form 10-KSB may not occur. Generally these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of our plans or strategies, projected or anticipated benefits from
acquisitions that have been or may be made by us, or projections involving
anticipated revenues, earnings or other aspects of our operating results. The
words "may," "will," "expect," "believe," "anticipate," "project," "plan,"
"intend," "estimate," and "continue," and their opposites and similar
expressions are intended to identify forward-looking statements. We caution you
that these statements are not guarantees of future performance or events and are
subject to a number of uncertainties, risks and other influences (including
those discussed under “Other Considerations” in Item 6 below), many of which are
beyond our control, that may influence the accuracy of the statements and the
projections upon which the statements are based. Our actual results, performance
and achievements could differ materially from those expressed or implied in
these forward-looking statements. We undertake no obligation to publicly update
or revise any forward-looking statements, whether from new information, future
events or otherwise.




**Dollar
Amounts**




Whenever
we state dollar amounts in this document, we mean United States dollars (unless
we specifically indicate Canadian dollars).




**Item
1. Description of Business**





**THE
COMPANY**





Navtech,
Inc. (Navtech-US) was originally incorporated in the State of New York in 1981
and then reincorporated in the State of Delaware in 1987. Navtech Systems
Support Inc. (Navtech-Canada), a wholly-owned subsidiary of Navtech-US, was
incorporated in the Province of Ontario in 1987. Navtech (UK) Limited
(Navtech-UK), a wholly-owned subsidiary of Navtech-Canada, was incorporated in
the United Kingdom in 1994. Navtech, LLC, a wholly owned subsidiary of
Navtech-Canada was formed in the State of Delaware in 2005. Navtech (Systems)
AB, a wholly owned subsidiary of Navtech-Canada, was incorporated in Sweden in
2005.  When we refer to Navtech, we are speaking of Navtech-US and its
subsidiaries.





Our U.S.
office is located at 2340 Garden Road, Suite 207, Monterey, CA 93940. Our
principal operations are based at 175 Columbia Street West, Suite 102, Waterloo,
Ontario, Canada, N2L 5Z5. We maintain a website at www.navtechinc.com. Our
common stock is publicly traded on the OTC Bulletin Board under the symbol
“NAVH”. For investor information, we can be reached at (519)
747-1170.





**RECENT
DEVELOPMENTS**





**Acquisition
of European Aeronautical Group AB**




On
November 22, 2005, we acquired all of the issued and outstanding shares of
European Aeronautical Group AB (“EAG”) from SAS Group AB.  The estimated
purchase price for the EAG Acquisition was SEK 162,000,000 (approximately $20
million USD) in cash and possible future cash payments to a maximum of SEK
30,000,000 (approximately $3.7 million USD) conditional on the achievement of
certain business performance measures.  The purchase price is also subject
to adjustment based on finalization of the working capital of EAG at closing.
The acquisition was financed with the preferred stock offering and the private
placement described below. EAG provides aeronautical documentation and systems
to the aviation industry including aeronautical charts and navigation data. In
compliance with the Securities Exchange Act of 1934, we will be providing
financial information related to EAG by way of an amendment to the Form 8-K
filed by us on November 28, 2005.


NAVTECH,
INC.
2005
10-KSB
Page 3


**Preferred
Stock Offering**




On
November 22, 2005, we issued 1,600,000 shares of Series A Convertible
Participating Preferred Stock, and warrants to acquire 100,000 shares of our
common stock with an exercise price of $3.00, for $4,000,000 cash consideration.
The proceeds were used to consummate the EAG acquisition. The terms of the
preferred stock and warrants are summarized in Item 12 of this Annual
Report.





**Private
Placement**




On
November 22, 2005, Navtech-Canada, entered into a Note Purchase Agreement
whereby Navtech-Canada agreed to sell (i) $6,000,000 Senior Subordinated Notes,
with an interest rate of 9.0% and due 2011 and (ii) $15,000,000 Senior
Subordinated Notes, with an interest rate of 12.5% and due 2011. In connection
with the sale of the Senior Subordinated Notes, we also issued to the purchaser
warrants to purchase 312,176 shares of common stock with an exercise price of
$0.01. The proceeds received by Navtech-Canada in connection with the private
placement were used to consummate the EAG acquisition.





**BUSINESS
OF THE COMPANY**





We
develop, market and support flight operations management systems for the
commercial aviation industry. Our systems are designed to assist commercial
passenger and cargo air carriers in the management of their daily flight
operations.





We
believe that our success is generally attributable to four factors. First, we
offer best of breed solutions through our retention of a highly skilled and
experienced technical and flight operations workforce that combine knowledge of
both aviation and software development. Second, we employ a highly regarded
technical and operations support team that provides customer service on a
round-the-clock basis. Third, we have a broad customer base that includes small,
medium and large airlines, and they consist of charter, cargo, and scheduled
passenger carriers that operate in all geographic regions of the world. Finally,
we have a reputation as an entrepreneurial organization capable of partnering
and meeting the ever-changing needs of our customers to allow them to
effectively compete in their marketplace.





**Strategy**





Our
objective is to be the premiere provider of a complete and integrated flight
operations management system to the airlines of the world. We will achieve this
objective with a concentrated effort on continued product development and
geographic expansion. We intend to continue to enhance our premiere flight
planning, aircraft performance, and crew planning product lines; introduce our
newly acquired aeronautical charts and FMS data into new geographic markets and
build, license or acquire the operations control, reservation, aircraft
maintenance and ground operations components to complete our overall integrated
flight operations management system.





**Industry
Overview**





The
flight operations industry has undergone significant changes in recent years
with a number of trends emerging that have had a significant impact on the
marketplace. These trends have caused convergence of flight operations
management systems as it relates to airspace management and the different
functions required to efficiently manage airlines operations. The major trends
are:


·
    Significant
      increases in operating costs including labor, insurance and, most
      recently, security and fuel;
 ·
    Rationalization
      of routes by the major network carriers in response to the general
      economic conditions and the increased competition from low fare
      carriers;
 ·
    Strategic
      investments by airlines in the areas of operational planning, control,
      revenue and network management and customer
loyalty;
 ·
    Alliances
      of major airlines and their associated regional carriers creating virtual
      buying groups and substantial new competitors in market segments in which
      the individual airlines were weak;
 ·
    Increased
      outsourcing of non-core business activities as a means of reducing
      costs.






NAVTECH,
INC.
 2005
10-KSB
 Page 4


The
effects of convergence and the development of hardware technology, operating
systems and wireless technology should continue the trend toward the creation of
a real-time integrated operations control system wherein the air traffic control
authorities, airline operations centers and pilots all have the same information
available to make decisions and can seamlessly communicate and implement those
decisions throughout their networks.





Airline
passenger traffic during our last fiscal year continued to recover after the
tragic events of September 11, 2001 and the viral epidemic Severe Acute
Respiratory Syndrome (SARS) early in 2003. However, the lingering effects of
these events continue to depress the industry. Traffic has started to recover
worldwide, in many regions such as North America and Europe, but ticket prices
and yields have remained depressed due to the continued penetration of low cost
carriers and the overcapacity of seats.





In recent
years, airlines have reduced their capital expenditures, which has had a
corresponding effect on our market. This resulted in an increased length of
sales cycle and a reduction of the resources that prospective customers can
apply to evaluating and improving internal systems. Finally, there have been new
entrants in most segments of the crew scheduling and dispatch markets in recent
years. These factors have combined to lead to price declines in certain
product-market segments.





The more
recent recovery and industry restructuring among airlines in North America and
Europe, and the drive for increased operational efficiency within the airlines,
has led to a significant increase in interest for certain products and services
that we offer. As well, the continuing deregulation of the airline industry in
Asia (excluding China and India) is leading to a record number of new start-up
airlines, a phenomenon similar to the previous North American and more recent
European industry cycles.





**Market
Trends**





Trends in
the airline industry have created a market for firms capable of creating a fully
integrated operations management system that interfaces with legacy systems and
performs all of the following required functions in an integrated
fashion:





·
    Flight
      Planning


·
    Aircraft
      Performance


·
    Aeronautical
      Charts


·
    FMS
      Data


·
    Airline
      Schedule and Commercial Planning


·
    Crew
      Scheduling


·
    Aircraft
      Maintenance


·
    Ground
      Operations


·
    Reservations





The
flight support business is facing a technical paradigm shift, gradually moving
from paper products to electronic solutions. Changes in customer requirements
regarding functionality and interactivity are resulting in the combination of
aeronautical data and software, in “paperless” operational use.





This will
change the business model for providers of flight operations solutions and we
think will result in further industry consolidation.




**Current
Solutions**





*Flight
Plan Services*





·
    **Dispatch*****Pro******TM*****& RODOS*****TM******.***These
      flight planning systems provide real-time mission critical decision
      support to the dispatcher or airline operations manager in the creation of
      a flight release and the subsequent tracking and reporting of airline
      performance. The systems bring together the requirements of flight
      planning, weather, Notices to Airmen (NOTAMs), communications, flight
      schedule maintenance, mapping, runway analysis, aviation communications,
      third-party integration


NAVTECH,
INC.
 2005
10-KSB
 Page 5
 
 and
      management reporting. Dispatch*Pro**TM*and/or RODOS***TM***are currently used by customers in North America, Europe, and the
      Asia-Pacific region.


·
    **Web*****FP******TM***.
      Web*FP**TM*is
      an Internet-based version of Dispatch*Pro**TM***available
      to airlines with smaller fleet sizes that may reduce their requirements
      for the more sophisticated functionality of our Dispatch*Pro**TM*product.





·
    **Dispatch*****Express******TM***-
      Dispatch*Express**TM*is
      our newly released web-based crew briefing system. With
      Dispatch*Express****TM***airlines can streamline and standardize the process of providing necessary
      flight paperwork to crew members, allow crew members to request up to the
      minute weather and other operational updates, and reduce the costs
      typically associated with the distribution of this data by by-passing
      proprietary third-party networks.





*Aeronautical
Charting*





·
    **Route
      Manual*****TM*****& Aerad*****TM*****.**Route Manual*TM*and Aerad*TM*products provide international Aerodrome and Enroute charts, and are
      available as a paper-based or electronic products. Aerodrome charts
      provide standard arrival and departure routes/procedures, approach
      procedures and aerodrome layout diagrams for international airports.
      Enroute charts provide the navigational and operational information for a
      required flight path.





*Navigation
Database Services*





·
    **Navigation
      Database Services.**Our FMS data service supports navigation databases for most major flight
      management systems. Databases are updated for each AIRAC cycle and
      tailored to an airline’s requirement, optimizing the use of its flight
      management system and minimizing processing costs.





*Aircraft
Performance Systems*





·
    **V1*****Plus******TM***.
      Our V1*Plus**TM*service is an aircraft performance engineering subscription service that
      is offered to airlines that do not maintain in-house engineering
      departments to provide regulatory approved aircraft take-off and landing
      performance calculations. Our Aircraft Performance Systems group prepares
      monthly manuals or CD-ROMs that provide customized updated take-off and
      landing data specific to various aircraft/engine combinations, flap
      settings and runways for thousands of airports around the world.
      V1*Plus**TM*is
      also available in an onboard solution and as an integrated module to
      Dispatch*Pro**TM*.





·
    **ToDc*****TM***.
      ToDc*TM*software allows the customer to perform aircraft take-off and landing
      performance calculations internally. With an integrated airport database
      and an interface to aircraft performance data provided by the aircraft
      manufacturer, the system enables the customer to produce the required
      take-off and landing data in a format specified by the user.





·
    **C.G.
      Pro*****TM***.
      Our aircraft weight and balance system, C.G. Pro*TM*,
      incorporates aircraft first principles and technology to improve flight
      release processes and on-time effectiveness. The system is available for
      use on a stand-alone basis or across a network, and in both wide and
      narrow body aircraft, in passenger, freight or combination
      configurations.





*Outsourced
Services*





·
    **Operations*****Centre******TM***.
      Our Operations*Centre**TM*service provides outsourced dispatch and crew management services to
      airlines around the world. Our capabilities include flight planning,
      overflight and landing permits, slot control, ground handling, and flight
      following. This service is targeted at small and start up carriers that
      may not be able to afford in-house dispatch or those that have seasonal
      flight operations and do not want to deal with annual hiring, training and
      dismissing to meet their changing
requirements.




NAVTECH,
INC.
 2005
10-KSB
 Page 6


*Crew
Management Systems*





·
    **CLASS*****TM***.
      CLASS*TM*, a
      preferential bidding system, allows the user to match available flying to
      an individual crew member’s preferences in order to produce and optimize a
      final crew schedule that respects contractual constraints and airline
      specific operating requirements. Today, our customers’ pilots and flight
      attendants use CLASS*TM*to
      bid their scheduling preferences globally via the Internet, which makes
      the process of crew planning simple and efficient. The system is a true
      win-win for the airline and its crew members and demonstrates extremely
      high overall crew satisfaction, and a reduction in crew-related expenses
      and crew planner work.





·
    **CygnusTM**.
      In August 2003, we acquired the source code rights to a premium crew
      pairing optimizer, CygnusTM, in use by some of the world’s premiere
      airlines. A crew pairing optimizer is the primary tool available to
      airlines and crew planners in minimizing crew costs and ensuring
      operational effectiveness once the contract and marketing schedule are
      set.





·
    **Crew*****Bid******TM***.
      Crew*Bid**TM*is
      our newly launched suite of applications for crew members to state or bid
      for preferences for training, vacation assignments or trading of duties.
      Our system is accessible worldwide via the Internet and greatly reduces
      the costs associated with gathering and sorting through this information
      from crew members as there are, usually, contractual penalties for the
      airline for improper processing. Crew members benefit through
      standardization of processes and accessibility to features and functions
      associated with the work schedule that otherwise would not be available
      through the use of manual systems.





*Ancillary
Products and Services*





·
    **Customer
      Support**.
      We offer comprehensive software support and customer account management in
      the United States, Canada, Africa, Europe, and the Asia Pacific region
      designed to maximize the benefits and utility of the software at the
      customer’s location. These services include training and installation
      support, software updates, including new system functionality and ongoing
      enhancements, and 24/7 telephone hot-line support. We believe that quality
      support services are a critical component of the customer’s satisfaction
      level. Our customer support services are provided from centers in Canada,
      the United Kingdom and Sweden.





·
    **Custom
      Programming Services**.
      Design and programming services are provided to customers that require
      specific custom solutions to their flight operations requirements. We
      believe that there is an increased demand in the commercial aviation
      market for systems integration services that link our software to third
      party vendor applications. We also provide consulting services to assist
      customers in optimizing the use of the product functionality within their
      flight operations process.





**Customers**





We have a
broad customer base that consists of all types of airlines carriers including
leading international carriers, national airlines, large business jet operators,
scheduled passenger, low cost airlines, charter, specialty cargo, commuter
airlines, and recent start-up airlines. Our core market by number of aircraft
has been small to medium sized air carriers that operate modern aircraft with
fleet sizes of 5 - 100 aircraft; however, our customer base includes customers
with one aircraft up to the largest carriers in the world. Our primary
geographical markets are North America, Europe, India/Middle East, and the Asia
Pacific region.





With the
acquisition of EAG in November 2005, we have broadened our customer base from
approximately 120 airlines to more than 250 worldwide. Approximately 65% of our
customers are based in Europe, 25% in North America, 5% in Asia Pacific and the
remainder in other regions including Africa and the Middle East.





As a
result of significant professional services projects during this fiscal year,
two customers combined represented 22% of our revenue in the fiscal year.




NAVTECH,
INC.
 2005
10-KSB
 Page 7
 **Industry
Competition**





The
market for the flight support services and systems is intensely competitive and
subject to rapid change. We expect competition to increase in the future as new
market entrants and products come to market and consolidation of vendors
continues. We believe that the principal competitive factors include product
functionality, total cost of solution, support infrastructure, and underlying
technology.





Our main
competitors can be divided into three main categories:





·
    Major
      airline information technology spin-offs such as Lufthansa’s Information
      Technology Software GmbH (Lufthansa Systems), The Sabre Group (a former
      subsidiary of American Airlines), and EDS;


·
    Large
      aviation software vendors such as Jeppesen (owned by Boeing), Honeywell,
      SITA (the European aviation network provider), ARINC (the American
      aviation network provider), Kronos (providers of work-force management
      systems); and


·
    Smaller
      independent companies with annual revenue of less than $20 million that
      have developed flight operations management solutions for commercial
      aviation, such as AIMS, Carmen Systems, Air Data, FWZ, and
    AOS





We
believe that competitors that lack a full product portfolio will require a close
cooperation or partnership with a major suppliers in order to survive. This has
resulted in a number of consolidation transactions of the smaller independent
companies in our industry during the last few years.





**Marketing
and Distribution**





We employ
a direct sales force to market our products and services in North America,
Europe, and the Asia Pacific region through offices in Canada, the United
Kingdom, Singapore and Sweden. In addition, we employ an account management team
that provides customer and sales support and sells add-on services to existing
customers. The further development of this team in fiscal 2005 and the
acquisition of EAG will continue to enhance our ability to distribute new
products to new and existing customers, expand our customer base into new
geographical areas, and target different types and sizes of air carriers.





We have
chosen to use direct sales as our primary means of distribution since (i) the
nature of our sales transactions typically represent smaller recurring revenue
streams; (ii) the number of potential customers is small; and (iii) the primary
markets that we are currently targeting include modern industrial nations.
However, we do employ sales agents to represent us in specific markets where
local representation is required, or where language/cultural support is needed.
The sales approach is revisited periodically and additional distribution
partners may be secured if appropriate.





**Product
Development**





Prior to
the acquisition of EAG, most of our software products were developed internally.
EAG has historically used third parties to assist in the development of software
products and production tools. We plan to continue utilizing both our internal
development resources and external development partners, depending on the nature
of the development required for our products. We also purchase technology and
license intellectual property rights.




We have
established development methodologies and procedures that provide structure to
our product development activities and allow us to track the efforts of the
internal product development group. Development through third-party resources is
also tracked by a quality management system and subject to ISO 9001-2000
certification in EAG’s United Kingdom and Swedish offices.




We
communicate with our customers through account managers and user group meetings
to determine the latest requirements of the operations department of an airline.
The product management function within our business coordinates requirements and
manages the life-cycle and positioning of our products.




During
fiscal 2005 and 2004 (prior to the acquisition of EAG), we spent approximately
$1,025,000 and $817,000, respectively, on product research and development
activities. These amounts represented approximately 9% and 10%, respectively, of
revenue in each of those years. We are committed to continuing our expenditures
on research and product development.




NAVTECH,
INC.
 2005
10-KSB
 Page 8
 
 **Intellectual
Property Rights**





We regard
all of our software products as proprietary. Our software products are generally
licensed to end users on a “right to use” basis pursuant to a perpetual,
non-transferable license that generally restricts the use of the software to the
customer’s operations or third parties affiliated with the customer.





**Government
Regulations**





We are
not subject to any government regulations with respect to the operations of our
business. It is an airline’s responsibility to ensure that the flight plan and
other data meet all local civil aviation authority regulations and
requirements.





**Employees**





As of
December 31, 2005, we had a total of 256 employees (of which 252 were full time
employees) located in the following countries:





·
    75
      in Canada


·
    6
      in the United States


·
    83
      in the United Kingdom


·
    92
      in Sweden





We are
bound by collective bargaining agreements for our salaried staff in the Swedish
office. These agreements are applicable to salaried employees of companies
associated with the Swedish Air Transport Industry. We believe that our employee
relations in each country where we maintain an office are good. We believe
that our success will depend, to a large degree, upon our ability to attract and
retain highly skilled, technical, managerial and sales personnel, and to retain
personnel with flight operations expertise.





Prior to
the acquisition of EAG in November 2005, we had a total of approximately 100
employees.




NAVTECH,
INC.
 2005
10-KSB
 Page 9


**Item
2. Description of Property**





We have
offices in the following locations:





**Monterey,
California**





Our U.S.
office is located at Suite 207, 2340 Garden Road, Monterey, California. We moved
to this location in March 2000 and w e
currently sublet approximately 750 square feet of office space for $2,400 per
month pursuant to a sublease that expires in June 2006.





**Waterloo,
Ontario**





Navtech-Canada
leases approximately 11,000 square feet of office space at Suite 102, 175
Columbia Street West, Waterloo, Ontario. This location is used for flight
operations, software development, customer support, sales, account management
and administration. The lease provides for a current monthly rent expense,
inclusive of common area rent, of approximately $19,000 Canadian (approximately
$16,000 US) and terminates on October 31, 2006. We intend to relocate in October
2006 and expect the monthly facility costs to increase.





**Crawley,
West Sussex, UK**





In order
to support growth in the European market, we relocated in February 2005 to a
larger facility, located at Mack House, Aviation Court, Crawley, West Sussex,
UK. This office encompasses approximately 3,200 square feet of space and is used
for flight operations, customer support, sales and administration. The lease
provides for a current monthly rent expense, inclusive of common area rent, of
approximately £4,000 (approximately $7,000 US) and expires May
2008.





Our total
rent expense was approximately $330,000 for the year ended October 31, 2005. We
believe that the facilities are adequate for our current needs and that suitable
additional space will be available as required.





As part
of the acquisition of EAG in November 2005 we acquired offices in the following
locations:





**Hersham,
Surrey,UK**





European
Aeronautical Group UK Ltd leases approximately 12,700 square feet at Hersham
House, Lyon Road, Walton-on-Thames, Surrey. This location supports the Aerad
charting and Navdata product lines including production, sales, customer support
and administration. The monthly rent is approximately £22,400 (approximately
$39,200 US) and the lease expires in June 2010.





**Northolt,
Middlesex, UK**





European
Aeronautical Group UK Ltd also leases approximately 7,000 of square feet at
Building 106 RAF Northolt, Middlesex, which is on an English Ministry of Defence
site near Heathrow Airport. The premises are used for storage, packing and
distribution of aeronautical charts. The monthly rental is £8,750 (approximately
$15,300 US). The lease expires at the end of July 2006.





**Häggvik,
Sollentuna - Stockholm**





European
Aeronautical Group AB leases approximately 21,000 square feet of office space at
Hammarbacken 12 in Sollentuna Stockholm. The monthly rent is SEK 367,000
(approximately $47,700 US) pursuant
to a sublease that expires in December 2008.




NAVTECH,
INC.
 2005
10-KSB
 Page 10


**Item
3. Legal Proceedings**





There are
no significant outstanding legal proceedings.




NAVTECH,
INC.
 2005
10-KSB
 Page
11





**Item
4. Submission of Matters To A Vote Of Security Holders**





There
were no matters submitted to a vote of security holders during the quarter ended
October 31, 2005.




NAVTECH,
INC.
 2005
10-KSB
 Page
12




**PART
II**





Item 5. **Market
for Common Equity, Related Stockholder Matters and Small Business Issuer
Purchases of Equity Securities**





**Market
Information**





Our
common stock is traded on the OTC Bulletin Board under the symbol “NAVH”. The
high and low closing bid prices of the common stock are listed below by fiscal
quarter. These prices represent prices between dealers; they do not include
retail markup, markdown or commission. These are bid prices only and do not
represent actual transactions.





High
    LowYear
      Ended October 31, 2005Fourth
      Quarter
    $3.25
    $2.20Third
      Quarter
    5.50
    1.96Second
      Quarter
    2.55
    1.65First
      Quarter
    1.80
    1.06Year
      Ended October 31, 2004Fourth
      Quarter
    $1.18
    $1.05Third
      Quarter
    1.15
    0.98Second
      Quarter
    1.09
    0.70First
      Quarter
    0.75
    0.40




**Shareholders**





Our
transfer agent has advised that the approximate number of record holders of
common stock at December 31, 2005 was 316.





**Dividends**





We have
paid no cash dividends on the common stock and we do not anticipate paying any
cash dividends in the foreseeable future. Our ability to pay dividends on our
common stock is also affected by the dividend restrictions contained the note
purchase agreement referred to Item 1 of this Annual Report.




**Recent
Sales of Unregistered Securities**





There
were no sales of unregistered shares during the quarter ended October 31, 2005.




NAVTECH,
INC.
 2005
10-KSB
 Page 13


**Item
6. Management’s Discussion and Analysis or Plan of
Operation**





**RESULTS
OF OPERATIONS**





The
following table shows our annual results of operations for fiscal years 2005 and
2004 (in thousands except per share amounts):


Results
      of Operations
    
    Percentage
      of Total Revenue***For
      the year ended October 31,***
    
    ***For
      the year ended October 31,***2005
    
    2004
    
    2005
    
    2004REVENUEService fees
    
    $
    8,108
    
    $
    7,129
    
    
    73
    %
    
    90
    %Professional
    services
    
    
    1,750
    
    
    725
    
    
    16
    
    
    9Hardware revenue
    
    
    1,285
    
    
    47
    
    
    11
    
    
    1Total revenue
    
    
    11,143
    
    
    7,901
    
    
    100
    
    
    100COSTS
      AND EXPENSESCost of services
    
    
    4,985
    
    
    4,183
    
    
    45
    
    
    53Cost of hardware
      revenue
    
    
    1,063
    
    
    47
    
    
    10
    
    
    1Research and
      development
    
    
    1,025
    
    
    817
    
    
    9
    
    
    10Selling and
    marketing
    
    
    1,588
    
    
    1,178
    
    
    14
    
    
    15General and
      administrative
    
    
    1,869
    
    
    1,443
    
    
    17
    
    
    18Total costs and
      expenses
    
    
    10,530
    
    
    7,668
    
    
    95
    
    
    97*Income
      from operations*
    
    
    613
    
    
    232
    
    
    5
    
    
    3*Other
      income (expense)*Interest expense
    
    
    (29
    )
    
    (32
    )
    
    -
    
    
    -Interest revenue
    
    
    -
    
    
    3
    
    
    -
    
    
    -(29
    )
    
    (29
    )
    
    -
    
    
    -Income
      before income taxes
    
    
    584
    
    
    203
    
    
    5
    
    
    3Recovery
      of income taxes
    
    
    89
    
    
    191
    
    
    1
    
    
    2*Net
      earnings*
    
    
    673
    
    
    394
    
    
    6
    %
    
    5
    %Net
      earnings per shareBasic
    
    $
    0.14
    
    $
    0.09Diluted
    
    $
    0.13
    
    $
    0.07





**Overview**




For
fiscal 2005, our total revenues increased $3,242,000, or 41%, to $11,143,000 as
compared to $7,901,000 in fiscal 2004. Our income from operations was $613,000
and net earnings were $673,000 in fiscal 2005, compared with fiscal 2004 income
from operations of $232,000 and net earnings of $394,000.




The
recent appreciation of major currencies relative to the US dollar had an adverse
effect on our income from operations and net earnings in fiscal 2005. The
majority of our revenues (77%) are denominated in US dollars, while 77% of our
expenditures are denominated in currencies other than the US dollar.




For the
year ended October 31, 2005, the relative appreciation of other currencies
relative to the US dollar resulted in an increase in total revenues of
approximately $190,000, offset by an increase in costs and expenses of
approximately $580,000.




The
following summarizes the approximate changes in costs and expenses in fiscal
2005 as compared to fiscal 2004, excluding the impact of changes in relative
currency values:




·
    Cost
      of services increased $513, or 12%




·
    Cost
      of hardware revenue increased $925, or
1968%




·
    Expenditures
      on research and development increased $225,000, or
32%




·
    Selling
      and marketing expenses increased $351,000, or
30%




·
    General
      and administrative expenses increased $371,000, or
26%




NAVTECH,
INC.
 2005
10-KSB
 Page 14





**Critical
Accounting Policies**





The
preparation of this report requires us to make estimates and assumptions that
affect the reported amount of assets and liabilities at the date of our
financial statements, and the reported amounts of revenue and expenses during
the reporting period. On an ongoing basis, management evaluates its estimates
and judgments, including those related to revenue recognition. Management bases
its estimates and judgments on historical experience and on various other
factors that are believed to be reasonable under the circumstances. The
application of accounting policies that are reflective of significant estimates
could result in materially different results under different assumptions and
conditions, and actual results may differ from the estimates used.




We
consider accounting policies to be critical when there is significant complexity
or judgment involved in their application. We have identified the policies below
as critical to the understanding of our results of operations.




All
significant accounting policies are disclosed in Note 2 to the consolidated
financial statements contained in Item 7.




*Revenue
recognition*




Please
refer also to our revenue recognition policy in Note 2 to the consolidated
financial statements contained in Item 7.




We
generate revenue from the following primary sources: (i) monthly subscription
fees which include monthly software license, hosting services, customer support
and data services; (ii) professional services consisting of software
configuration and custom programming; and (iii) the sale of computer hardware.




To
determine the appropriate revenue recognition, we consider the terms of the
contracts, taken as a whole, under which services are to be provided. Depending
on the terms of these contracts, we recognize revenue under American Institute
of Certified Public Accountants Statement of Position (“SOP”) 81-1, “Accounting
for Performance of Construction-Type and Certain Production-Type Contracts”
(“SOP 81-1”), SOP 97-2, “Software Revenue Recognition” (“SOP 97-2”), or SEC
Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition” (“SAB 104”), which
was preceded by SAB 101, “Revenue Recognition in Financial Statements” (“SAB
101”). The application of these requirements may involve significant judgment in
terms of estimates and assumptions.




For
certain contracts we also apply the FASB Emerging Issues Task Force (“EITF”)
Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables”, which
requires us to evaluate each deliverable to determine whether it represents a
separate unit of accounting based on certain criteria. Based on that assessment,
each identified unit of accounting is accounted for under the applicable revenue
recognition guidance.




We have
classified our products and service revenue under the following categories and
revenue recognition policies:




a)
    Service
      fees




Service
fees revenue consists of monthly subscription fees which include monthly
software license, hosting services, customer support and data services.




We
recognize subscription fee revenue as the services are provided on a monthly
basis.




We
recognize revenues related to a hosting arrangement under SOP 97-2 only if the
customer has the contractual right to take possession of the software at any
time during the hosting period without significant penalty and it is feasible
for the customer to either run the software on its own hardware or contract with
another party unrelated to the vendor to host the software. Hosting arrangements
that do not give the customer such an option are service contracts for which we
recognize the revenue in accordance with SEC Staff Accounting Bulletin (“SAB”)
104.




NAVTECH,
INC.
 2005
10-KSB
 Page 15


b)
    Professional
      services




Professional
service revenue consists of software configuration and custom programming.




When
customer contracts relate to customized software development and the customer
has the right to, or has possession of the software, we recognize revenue under
American Institute of Certified Public Accountants (“AICPA”) Statement of
Position (“SOP”) 81-1 using the percentage-of-completion method. In using the
percentage-of-completion method, we recognize revenue based on a measure of the
percentage of costs incurred to date on a contract relative to the estimated
total expected contract costs. We evaluate profit estimates on long-term
contracts on a regular basis and revise if necessary based on changes in
circumstances. Any losses on contracts are recognized in the period that such
losses become known.




c)
    Hardware
      revenue




Sales of
hardware include arrangements where we provide hosting equipment to our
customers.




In
circumstances where we provide specific computer equipment to fulfill
obligations under hosting arrangements, we recognize revenue under EITF Issue
No. 01-8, “Determining whether an Arrangement Contains a Lease.” We record a
sale of hardware under a capital lease arrangement if the conditions meet the
definition of a sales-type lease as defined in Statement of Financial Accounting
Standard (“SFAS”) 13.




*Income
taxes*




Please
refer also to our accounting policy related to income taxes in Note 2 to the
consolidated financial statements contained in Item 7.




We
account for income taxes in accordance with Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). SFAS 109 requires
the determination of deferred tax assets and liabilities based on the
differences between the financial statement and income tax bases of assets and
liabilities, using estimated tax rates in effect for the year in which the
differences are expected to reverse.




The
majority of our deferred tax assets relate to losses and income tax credits from
prior years available to reduce income taxes payable in future years in certain
jurisdictions. The measurement of our deferred tax asset involves judgment as to
whether it is more likely than not that the benefit of the losses and credits
will be realized. We reduce our deferred tax asset by a valuation allowance in
circumstances we believe this criteria is not met.




**Recently
Issued Accounting Pronouncements**





*Stock-based
compensation*




In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment
("SFAS No. 123R"), which is a revision of SFAS No. 123, Accounting for
Stock-Based Compensation ("SFAS 123"), as amended by SFAS No. 148, Accounting
for Stock-Based Compensation-Transition and Disclosure and Amendment of SFAS No.
123 ("SFAS 148"). SFAS No. 123R supersedes Accounting Principles Board Opinion
("APB") No. 25, Accounting for Stock Issued to Employees ("APB 25") and amends
certain provisions of SFAS No. 95, Statement of Cash Flows. SFAS No. 123R
requires all share-based payments to employees, including grants of employee
stock options to be measured at fair value. In addition, SFAS No. 123R will
cause unrecognized expense (based on the amounts in our pro forma footnote
disclosure) related to options vesting after the date of initial adoption to be
recognized as a charge to operations over the remaining vesting period. We are
required to adopt SFAS No. 123R effective October 1, 2006. Under SFAS No. 123R,
we must determine the appropriate fair value model to be used for valuing
share-based payments, the amortization method for compensation cost and the
transition method to be used at the date of adoption. The transition
alternatives include prospective and retroactive adoption methods. Under the
retroactive method, prior periods may be restated either as of the beginning of
the year of adoption or for all periods presented. The prospective method
requires that compensation expense be recorded for all unvested stock options
and share awards at the beginning of the first quarter of adoption of SFAS No.
123R, while the




NAVTECH,
INC.
 2005
10-KSB
 Page 16




retroactive method would record compensation expense
for all unvested stock options and share awards beginning with the first period
restated.




In March
2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the
SEC’s interpretation of SFAS 123R and the valuation of share-based payments for
public companies.




We are
evaluating the requirements of SFAS No. 123R and SAB 107 and have not yet
quantified the impact of SFAS No. 123R on the future consolidated results
of operations and earnings per share.




*Exchanges
of non-monetary assets*




In
December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-Monetary Assets”
(“SFAS 153”). SFAS 153 amends Accounting Principle Board Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. This standard is in effect for exchanges
occurring in fiscal years beginning after June 15, 2005. We do not expect that
the adoption of this standard will have a significant impact on our consolidated
financial statements.




*Accounting
changes and error corrections*




In May
2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,”
(“SFAS 154”), which replaces Accounting Principles Board Opinion No. 20,
“Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim
Financial Statements - An Amendment of APB Opinion No. 28.” SFAS 154 provides
guidance on the accounting for and reporting of changes in accounting principles
and error corrections. SFAS 154 requires retrospective application to the prior
period’s financial statements of voluntary changes in accounting principle and
changes required by new accounting standards when the standard does not include
specific transition provisions, unless it is impracticable to do so. Certain
disclosures are also required for restatements due to the correction of an
error. SFAS 154 is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005. The impact that the
adoption of SFAS 154 will have on our results of operations and financial
condition will depend on the nature of future accounting changes and the nature
of transitional guidance provided in future accounting pronouncements.




NAVTECH,
INC.
 2005
10-KSB
 Page 17


**Revenue**





Over the
past several years we have derived revenue from the following sources: (i)
service fees from the provision of flight planning services, runway analysis
services, weather and NOTAMs data, crew management services, and ongoing
customer support; (ii) professional services associated with customer specific
software configuration or customized software development, and (iii) the sale of
hardware in conjunction with the initiation of services for a new
customer.





Total
revenue was approximately $11.1 million in fiscal 2005, an increase of 41% from
approximately $7.9 million in fiscal 2004.





*Service
fees*




Revenue
from service fees increased $979,000, or 14%, to approximately $8.1 million in
fiscal 2005 from approximately $7.1 million in fiscal 2004. This increase is due
primarily to:




·
    an
      increase in service fees for the provision of flight planning and runway
      analysis services of $0.9 million; this increase is primarily the result
      of long-term contracts with new customers, the majority of which were with
      airlines based in Europe and Asia-Pacific


·
    an
      increase in service fees for the provision of crew management services in
      North America of $0.2 million.


·
    a
      decrease in service fees associated with the supply of weather and NOTAMs
      data of $0.1 million.





*Professional
services*




Revenue
from professional services increased $1,025,000, or 141%, to approximately $1.8
million in fiscal 2005 from approximately $0.7 million in fiscal 2004. This
increase is due to the number and size of new customers added during the year
for crew management services. The crew management products typically involve
higher levels of systems consulting, configuration and custom programming than
the flight planning and runway analysis services.




*Hardware
revenue*




Revenue
from hardware sales increased $1,238,000 to approximately $1.3 million in fiscal
2005 from $47,000 in fiscal 2004. This increase is due to unusually large sales
of hardware to two new crew management customers during the year.







*Geographic
Analysis*





Our
products and services are used by airline carriers located primarily in the
United States, Canada and Europe, although we also have customers located in
Mexico, Africa, South America, and the Asia Pacific region.





The
following table shows total revenues on a customer geographic basis for fiscal
2005 and 2004 (in thousands):




Total
      Revenue**2005**
    2004United
      States, Mexico, South America and other
    **$****6,984**
    $5,476Canada
    **2,541**
    1,075Europe,
      Africa, Middle East and Asia Pacific
    **1,618**
    1,350**$****11,143**
    $7,901







NAVTECH,
INC.
 2005
10-KSB
 Page 18


**Costs
and Expenses**





Overall,
the recent appreciation of major currencies relative to the US dollar has
increased our total costs and expenses as reported in US dollars. The majority
of our expenditures, including personnel costs, originate in Canada or the
United Kingdom. Consequently, the relatively stronger currencies in those
countries have effectively increased our costs and expenses as reported in US
dollars. For the year ended October 31, 2005, the relative appreciation of other
currencies relative to the US dollar has resulted in an increase in our total
costs and expenses by approximately $580,000 as compared to fiscal year
2004.





*Cost
of services*





Costs of
services consist mainly of personnel and other expenses related to providing
flight planning, runway analysis and crew management services, ongoing customer
support and professional services. Also included in operating expenses are the
communication costs associated with the provision of flight planning services
and customer support.





The
following table shows the major components of operating expenses for fiscal
years 2005 and 2004 (in thousands except percentage amounts):





**2005**
    
    
    2004
    
    Percentage
      ChangeSalaries
      and benefits
    
    **$******
    ******2,954**
    
    $
    2,465
    
    
    20
    %Communication
      costs
    
    
    **863**
    
    
    809
    
    
    7Rent
    
    
    **330**
    
    
    240
    
    
    38Royalties
    
    
    **253**
    
    
    189
    
    
    34Travel
    
    
    **185**
    
    
    123
    
    
    50Depreciation
    
    
    **166**
    
    
    133
    
    
    25Other
    
    
    **234**
    
    
    224
    
    
    4**$******
    ******6,048**
    
    $
    4,230
    
    
    43
    %





Excluding
the impact of changes in relative currency value, the cost of services increased
by $0.5 million, or 12%, in fiscal 2005.




Excluding
the impact of changes in relative currency values, salaries and benefits
increased 11% from the prior year. This increase was primarily a result of
staffing increases in the quality assurance, installation management and
customer support groups to support the current and anticipated future growth of
our customer base.




Excluding
the impact of changes in relative currency values, communication costs increased
5% from the previous year as a result of the increase in services provided
during the year.




Excluding
the impact of changes in relative currency values, rent expense increased 30%
from the prior year. This increase was a result of higher costs associated with
the relocation and expansion of our UK office during fiscal 2005.




Royalty
costs, which are all denominated in US dollars and paid as a direct percentage
of the related revenue, increased by 34% in fiscal 2005. This increase is a
direct result of an increase in monthly service volumes and an increase in the
proportion of revenues subject to royalties.




Excluding
the impact of changes in relative currency values, travel costs increased 41%
from the prior year. This increase was a direct result of an increase in the
number of customer contracts and a broader geographic focus.




NAVTECH,
INC.
 2005
10-KSB
 Page 19


*Cost
of hardware revenue*





Excluding
the impact of changes in relative currency values, the cost of hardware sales
increased $925,000 to approximately $1.1 million from $47,000 in the prior year.
This increase was primarily a result of unusually large sales of hardware to two
new customers of crew management services during the year.





*Research
and development*





Prior to
the acquisition of EAG, all research and development activities had been
undertaken in Canada. Navtech-Canada qualifies for scientific research and
experimental development investment tax credits on eligible research and
development expenditures. Federal tax credits are generated at a rate of 20% of
qualifying expenditures and provincial refundable tax credits are generated at a
rate of 10% of qualifying expenditures. The Federal tax credits are available to
reduce future income taxes payable. The provincial credits may not be available
in the future due to increases in our Canadian taxable income. In accordance
with GAAP, these credits are recorded as a reduction of our provision for income
taxes. We expect to continue research and development activities in Canada;
however, research and development related to the products acquired through the
EAG acquisition may take place in other jurisdictions.





Excluding
the impact of changes in relative currency values, research and development
expenses increased approximately $225,000 in fiscal 2005, or 32%. Research and
development costs are primarily wages and benefits for staff directly involved
in research and development activities. The increase in costs is a result of a
continued concentration of effort on new development aimed at improving the
competitiveness of our products and expanding our product suite. We anticipate
research and development will continue to be an area of focus in 2006. Research
and development costs decreased as a percentage of revenues during fiscal 2005
to 9% from 10% in fiscal 2004, primarily due to the unusually high proportion of
hardware sales in this fiscal year. Research and development expenditures as a
percentage of revenue, excluding hardware revenue, were 10% in fiscal 2005 and
2004.





*Selling
and marketing expenses*





The
following table shows the major components of selling and marketing expenses for
fiscal 2005 and 2004 (in thousands except percentage amounts):





**2005**
    
    
    2004
    
    
    Percentage
      ChangeSalaries
      and benefits
    
    **$******
    ******1,165**
    
    $
    881
    
    
    32
    %Travel
    
    
    **278**
    
    
    221
    
    
    26Marketing
      and trade shows
    
    
    **124**
    
    
    58
    
    
    114Other
    
    
    **21**
    
    
    18
    
    
    17**$******
    ******1,588**
    
    $
    1,178
    
    
    35
    %





Excluding
the impact of changes in relative currency values, total selling and marketing
expenses increased by approximately $351,000, or 30%, in fiscal
2005.




Excluding
the impact of changes in relative currency values, salaries and benefits
increased approximately $235,000, or 27%, as a result of a larger sales force
and account management team with an expanded geographic focus.




Excluding
the impact of changes in relative currency values, travel expenses have
increased approximately $49,000, or 22%, also as a result of a larger sales
force and account management team with an expanded geographic
focus.




Marketing
costs, which were primarily denominated in US dollars, increased $65,000 as a
result of additional events that were held or attended in 2005 but not in the
prior year.




As we
continue to expand our product scope and geographic focus, we intend to dedicate
further resources to our sales and marketing efforts. As a result, we anticipate
that our selling and marketing expenses will increase further in fiscal
2006.




NAVTECH,
INC.
 2005
10-KSB
 Page 20
 
 *General
and administrative expenses*





The
following table shows the major components of general and administrative
expenses for fiscal 2005 and 2004 (in thousands except percentage
amounts):





**2005**
    
    
    2004
    
    
    Percentage
      ChangeSalaries
      and benefits
    
    **$******
    ******657**
    
    $
    512
    
    
    28
    %Professional
      and consulting
    
    
    **298**
    
    
    224
    
    
    33Insurance
    
    
    **218**
    
    
    216
    
    
    1Telephone
    
    
    **182**
    
    
    157
    
    
    16Travel
    
    
    **73**
    
    
    53
    
    
    38Provision
      for bad debts
    
    
    **184**
    
    
    91
    
    
    102Loss
      on foreign exchange
    
    
    **24**
    
    
    60
    
    
    (60
    )Depreciation
    
    
    **35**
    
    
    28
    
    
    25Other
    
    
    **198**
    
    
    102
    
    
    94**$******
    ******1,869**
    
    $
    1,443
    
    
    30
    %





Excluding
the impact of changes in relative currency values, general and administrative
expenses increased by approximately $371,000, or 26%, in fiscal 2005.




Excluding
the change in relative currency values, salaries and benefits increased
approximately $95,000, or 19%, in fiscal 2005 due to an increase in personnel
and compensation costs for general and administrative positions.




Excluding
the change in relative currency values, professional fees increased
approximately $65,000, or 29%, in fiscal 2005 as a result of additional costs
associated with increasing regulatory requirements associated with the public
markets.




There was
no significant change in fiscal 2005 in insurance costs, which are primarily
denominated in US dollars.




Excluding
the change in relative currency values, telephone costs increased approximately
$16,000, or 10%, in fiscal 2005 as a result of increased staffing levels and a
broader geographic focus.




Provision
for bad debts increased approximately $92,000, or 101%, as a result of a number
customers filing for Chapter 11 protection during the 2005 fiscal
year.




We
incurred a loss on foreign exchange of approximately $24,000 during fiscal 2005
compared to a loss of approximately $60,000 during fiscal 2004. The relative
depreciation of the US dollar was smaller in the 2005 fiscal year compared to
the previous year, resulting in a smaller impact on net monetary assets held in
foreign currencies.




**Other
Income (Expense)**





*Interest
expense* decreased approximately $3,000, or 10%, to approximately $29,000 in fiscal 2005
from approximately $32,000 in fiscal 2004. The reduction in interest expense was
due to the elimination of long-term debt balances during fiscal 2004 as well as
the continued improvement in our working capital that has resulted in a decrease
in short-term borrowings during 2005.




*Interest
revenue* was Nil
in fiscal 2005 compared to approximately $3,000 in fiscal 2004. Interest revenue
in the previous year related primarily to interest received on the settlement of
a tax appeal from a prior period.




**Recovery
of Income Taxes**




Recovery
of income taxes was approximately $89,000 in fiscal 2005 as compared to
approximately $191,000 in fiscal 2004. The recovery in 2005 is predominantly
related to the recognition of future tax benefits from research and development
tax credits, partially offset by the current year’s income tax provision. The
recovery in 2004 represented Canadian investment tax credits for the 2002 and
2003 fiscal years which were filed and assessed during fiscal 2004.





NAVTECH,
INC.
 2005
10-KSB
 Page 21


The tax
benefits resulting from tax losses in the United States and the United Kingdom
have not been recognized due to the uncertainty regarding future profitability
in those jurisdictions.





**Net
Earnings**





The
financial statements reflect net earnings of approximately $673,000 for fiscal
2005, as compared to approximately $394,000 for fiscal 2004.





An
increase in our revenue of approximately $3,242,000 was offset by a net increase
in costs and expenses (including interest) of approximately $2,861,000,
resulting in a net increase in earnings before income taxes of approximately
$381,000. Net earnings increased $279,000 between fiscal 2004 and 2005 as there
was a recovery of approximately $89,000 of income taxes in 2005, compared to the
recovery of approximately $191,000 in 2004.





**Acquisition
of EAG**





On
November 22, 2005, we acquired all of the issued and outstanding shares of
European Aeronautical Group AB (“EAG”) from SAS Group AB.  In compliance
with the Securities Exchange Act of 1934, we will be providing financial
information related to EAG by way of an amendment to the Form 8-K
filed by us on November 28, 2005.





**LIQUIDITY
AND CAPITAL RESOURCES**





As of
October 31, 2005, our available funds consisted of approximately $444,000 in
cash and an operating line of credit of $800,000 with RBC Royal Bank. There was
no balance outstanding on the facility at October 31, 2005 to finance the
purchase of hardware re-sold to customers. The facility is secured by the assets
of Navtech-Canada and is due for annual renewal in February 2006.





We also
have lease credit facilities in the amount of $710,000, the full amount of which
was drawn upon as at October 31,2005. The lease facilities are subject to the
same terms and conditions as the operating line of credit.





At
October 31, 2005, our working capital had increased to $1,008,000 from $152,000
at October 31, 2004.





***Cash
flows from operating activities*** for the
year ended October, 31 2005 accounted for a net inflow of approximately $4,000
primarily based on the net earnings of $673,000 for the year, depreciation of
approximately $237,000 and provision for uncollectible accounts of approximately
$184,000, offset by an increase in deferred taxes of approximately $25,000 and a
decrease in net operating assets of approximately $1,070,000.




***Cash
flows from investing activities*** for year
ended October, 31 2005 represent a net outflow of approximately $263,000 due to
the purchase of capital assets.




***Cash
flows from financing activities*** **** for the
year ended October, 31 2005 represent a net inflow of approximately $292,000 due
to cash received on the exercise of warrants and employee stock options,
partially offset by repayments of capital leases.




At
October 31, 2005 we had no significant capital commitments.





On
November 22, 2005, we acquired all of the issued and outstanding shares of
European Aeronautical Group AB (“EAG”) from SAS Group AB.  The purchase
price for the EAG acquisition was SEK 162,000,000 (approximately $20 million
USD) in cash and possible future cash payments to a maximum of SEK 30,000,000
(approximately $3.7 million USD) conditional on the achievement of certain
business performance measures. The purchase price is also subject to adjustment
based on finalization of the working capital of EAG at closing. In conjunction
with this transaction we received $21 million on completion of a private
placement of senior subordinated notes and $4 million on completion of a
preferred stock offering. The total proceeds of $25 million were used to fund
the approximately $20 million due on the closing of the acquisition, cover
expenses associated with the transactions and provide for future




NAVTECH,
INC.
 2005
10-KSB
 Page 22
 working capital requirements. We believe this provides sufficient
liquidity to fund our current operating requirements. The terms of the senior
subordinated notes are summarized in Item 1 of this Annual Report. The terms of
the preferred stock are summarized in Item 12 of this Annual Report.




**OFF-BALANCE
SHEET ARRANGEMENTS**





None




**OTHER
CONSIDERATIONS**





**Uncertainty
of Future Operating Results; Industry volatility**





While our
operating results were positive during fiscal 2005 and fiscal 2004, future
operating results may vary significantly due to the volatility of our industry.
The airline industry has been subject to significant change in recent years due
to factors including the tragic events of September 11, 2001, the viral epidemic
Severe Acute Respiratory syndrome (SARS), and the recent volatility fuel costs.
As a result of volatility in the industry, several large carriers have filed for
bankruptcy over the past four years. The continued impact of these factors, or
the impact of future events cannot be predicted. The bankruptcy of one or more
significant customers can have a material adverse effect on future reports
results of operations and financial condition.





**Global
Economic and Political Conditions**





Our
operating results may vary significantly based upon the impact of changes in
global economic and political conditions on our customers. The unpredictability
of future military action and other responses associated with a global war on
terrorism has resulted in economic uncertainty that could negatively impact the
financial health of several of our customers. In fiscal 2005, only 2% of our
revenues were derived from customers with significant operations in Africa or
the Middle-East, thus mitigating this risk.





**Competition**





Competition
in our industry has increased in recent years as competitors attempt to acquire
market share in segments where we have significant customers. In addition, many
of these competitors have larger financial, technical and marketing resources
than us giving rise to the risk that we may not be able to compete with these
companies in the long-term. In order to maintain our market share, we must rely
on our ability to develop and market innovative products according to our
strategic plan. However, there is no assurance that our competitors will not
attempt to develop and market similar products.





**Risk
of Exchange Rate Fluctuations**





Our cash
inflows from sales contracts are denominated in various currencies. The relative
proportion of these currencies is different from the proportion of currencies
required for payment of our operating expenses. Adverse fluctuations in exchange
rates of the currencies of sales contracts relative currencies of operating
expenses, or fluctuations in the exchange rates of the currencies of sales
contracts or operating expenses relative to our reporting currency may have an
adverse effect on future reported results of operations and financial condition.
In addition, cash flows from operations are comprised of various currencies
while the recently issued senior subordinated debt is denominated in US dollars.
Adverse fluctuations in exchange rates of the currencies providing operating
cash flows relative to the US dollar may impact our ability to finance our debt.
We intend to evaluate possible currency hedging strategies in 2006.





**Uncertain
Protection of Intellectual Property Rights**





Our
success depends significantly on our proprietary technology. We rely on a
combination of copyright, trademark and trade secret laws, non-disclosure
agreements and other contractual provisions to establish




NAVTECH,
INC.
 2005
10-KSB
 Page 23


and maintain our proprietary rights. We have not
sought patent protection for our products. Enforcement of our intellectual
property rights may be difficult, particularly in some countries outside of the
United States and Canada, in which we market our products. In the past, we have
been required to provide limited confidential disclosure of portions of our
source code for our products or to place such source code into escrow as a
condition of a license agreement. Despite the precautions taken by us, it may be
possible for unauthorized third parties to copy certain portions of our products
or to reverse engineer or obtain or use information that we consider
proprietary. Also, there can be no assurance that our competitors will not
independently develop technologies that are perceived to be substantially
equivalent or superior to our technologies. Further, no assurance can be given
that we will have the financial resources to engage in litigation against
parties who may infringe on our intellectual property rights. While we realize
that our competitive position may be affected by our ability to legally protect
our software, we believe the impact of this protection is less significant to
our commercial success than factors such as the level of experience of our
personnel, name recognition, and increased investment in new product
development.


There can
be no assurances that third parties will not assert infringement claims against
us in the future, or that any such assertion will not result in litigation,
which may be costly, or require that we obtain a license for the intellectual
property rights of others. There can be no assurance that such licenses will be
available on reasonable terms or at all.





**Retention
of Key Customers**





During
fiscal 2005, two of our customers accounted for 22% of our total revenue. Our
customer base changed significantly with the acquisition of EAG; however, it is
expected that in the future certain customers will account for a significant
portion of our revenue. The loss of any customer that accounts for a significant
portion of our revenue would have an adverse effect on future reported results
of operations and financial condition.





**Attraction
and Retention of Key Personnel**





Execution
of our strategic plan requires us to attract and retain talented and qualified
employees. Our success is highly dependent on our ability to identify, hire,
train and retain highly qualified technical and sales and marketing personnel
with flight operations experience. Competition for such personnel is always
strong, and there can be no assurance that we will be successful in our efforts.
This may have a material adverse effect on future reported results of operations
and financial condition.





**Integration
of Acquired Companies or Assets**





We have
recently completed the acquisition of a company of significant size in relation
to us, and expect that we may in the future acquire additional complementary
companies, products, services or technologies. The risks we may encounter
include: the acquired company or assets do not further improve our financial and
strategic position as planned; difficulty integrating the operations and
personnel of the acquired business; difficulty retaining the technical skills
needed to provide services on the acquired products; difficulty incorporating
the acquired technologies or products with our existing product lines; product
liability, customer liability or intellectual property liability associated with
the sale of the acquired company’s products; our ongoing business may be
disrupted by transition or integration issues; our management’s attention may be
diverted from other business concerns; difficulty maintaining uniform standards,
controls, procedures and policies; our relationships with current and new
employees, customers and distributors could be impaired; increased litigation
risk including litigation from terminated employees or third parties; and our
due diligence process may fail to identify significant issues with the target
company’s product quality, financial disclosures, accounting practices, internal
control deficiencies, including material weaknesses, product architecture, legal
contingencies and other matters. These factors could have a material adverse
effect on future reported results of operations and financial condition,
particularly in the case of a large acquisition or number of acquisitions. To
the extent we issue shares of stock or other rights to purchase stock, including
options, to pay for acquisitions, existing stockholders’ interests may be
diluted and earnings per share may decrease.




NAVTECH,
INC.
 2005
10-KSB
 Page 24


**Ability** **to Adapt to Technological Change**





We
operate in a competitive industry in which technological change, evolving
industry standards, changes in customer requirements and the potential of new
product introductions and enhancements play a significant role. Our ability to
compete effectively is dependant on our ability to keep pace with these changes,
and a failure to do so would have an adverse impact on future reported results
of operations and financial condition.





**Ability
to Produce Quality Products**





The
software and services we offer are inherently complex. Despite testing and
quality control, we cannot be certain that errors will not be found in current
versions, new versions, or enhancements of our products once in use by
customers. If new or existing customers have difficulty deploying our products
or require significant amounts of customer support, future reported results of
operations and financial condition could be adversely affected. Moreover, we
could face possible claims and higher development costs if our software contains
undetected errors or if we fail to meet our customers’ expectations.





**Ability
to Service Debt**





In
conjunction with the acquisition of EAG, we incurred a significant amount of
debt in the form of senior subordinated notes. We are dependant on the future
cash flows of the acquired business to be able to fulfill our obligations under
this debt. If the financial performance of the combined business fails to meet
our objectives we may have difficulty fulfilling the obligations under the debt,
and failure to do so could have an adverse effect on future reported results of
operations and financial condition.





**Acquisition
of Companies / Completion of Development to Meet Strategic
Objectives**





In order
to provide an integrated product offering, we need to either acquire companies
that possess required technologies, or develop these technologies internally. If
there are no suitable companies available to acquire or if we do not secure the
funding required to complete such an acquisition or complete internal
development, this may impede our ability to maintain or increase our market
share.





NAVTECH,
INC.
 2005
10-KSB
 Page 25


**Item
7. Financial Statements**





The
financial statements begin on Page F-1 following Item 14 hereof.




NAVTECH,
INC.
 2005
10-KSB
 Page 26


**Item
8. Changes In And Disagreements With Accountants On Accounting and Financial
Disclosure**





None.




NAVTECH,
INC.
 2005
10-KSB
 Page 27


**Item** **8a** **.
Controls And Procedures**





Our Chief
Executive Officer and Chief Financial Officer conducted an evaluation of the
effectiveness of our disclosure controls and procedures. Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of October 31,
2005 in alerting them in a timely manner to material information required to be
included in our SEC reports. In addition, no change in our internal control over
financial reporting occurred during the fiscal quarter ended October 31, 2005
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.





NAVTECH,
INC.
 2005
10-KSB
 Page 28


**Item
8b. Other Information**





None.




NAVTECH,
INC.
 2005
10-KSB
 Page 29
 
 **PART
III**





**Item
9. Directors and Executive Officers of the Registrant**





**Executive
Officers and Directors**





The
following table sets forth the positions and offices presently held by each of
our current directors and executive officers and their ages:





**Name**
    **Age**
    **Positions
      and Offices**David
      Strucke
    37
    President,
      Chief Executive Officer, Secretary and DirectorGordon
      Heard
    37
    Chief
      Financial OfficerThomas
      D. Beynon
    64
    DirectorMichael
      Jakobowski
    46
    DirectorMichael
      Ueltzen
    60
    DirectorJohn
      Hunt
    40
    DirectorAndrew
      M. Snyder
    35
    Director




*David
Strucke* has
served as our President, Chief Executive Officer, Secretary and a director since
November 2001. Mr. Strucke also served as our Chief Financial Officer from
January 2000 to November 2003. Mr. Strucke served as Vice President - Finance
& Accounting of Navtech-Canada from October 1999 to January 2000 and as its
Director of Finance and Accounting and a Business Analyst from January 1999 to
October 1999. Prior to joining us, Mr. Strucke served as a Financial Analyst
focusing on mergers and acquisitions for an automotive capital equipment
manufacturer and performed financial and accounting consulting work for
manufacturing companies from 1996 to 1998. Mr. Strucke obtained a Masters of
Business Administration from Wilfrid Laurier University and is a graduate of the
University of Waterloo with a Bachelor’s degree in Science in Engineering. Mr.
Strucke has lectured on Introductory Finance for the undergraduate business
program at Wilfrid Laurier University.





*Gordon
Heard* joined
Navtech as Chief Financial Officer in November 2003. Mr. Heard is a Chartered
Accountant and a graduate of Wilfrid Laurier University with a Bachelor's degree
in Business Administration. Prior to joining Navtech, Mr. Heard served as
Corporate Controller at Descartes Systems Group from 2002 to 2003, and as Vice
President, Controller at AMEC E&C Services from 2000 to 2002. Mr. Heard
served in progressive financial positions at Wajax Limited from 1995 to 1999
ending as Corporate Controller, and worked in assurance services with KPMG from
1990 to 1995.





*Thomas
D. Beynon* is a
partner in the Waterloo, Ontario law firm of McCarter Grespan Beynon Thompson
LLP and a member of the Law Society of Upper Canada. He has been with the firm
since March 1996. Prior to this, Mr. Beynon spent six years with the law firm,
Sims Clement Eastman, from 1991 to 1996. Mr. Beynon serves as Corporate
Secretary of Virtek Vision International Inc., a public company, and is a
director of a number of private companies. Mr. Beynon has served as one of our
directors since July 2000.





*Michael
Jakobowski* has
served as Chief Financial Officer of Cambridge Information Group since September
1999. Prior to joining Cambridge, Mr. Jakobowski was the Vice President of
Accounting for Thomson Financial Database Group from August 1997 to September
1999, and the Corporate Controller for Kline Group from June 1994 to August
1997. Mr. Jakobowski is a member of the American Institute of Certified Public
Accountants. Prior to 1994, Mr. Jakobowski spent over 11 years in public
accounting with


NAVTECH,
INC.
 2005
10-KSB
 Page 30


Price Waterhouse, Coopers & Lybrand, and Johnson
Lambert and Co. Mr. Jakobowski has served as one of our Directors since November
2001.


**


*Michael
Ueltzen* is the
President and CEO of The Republic Group (TRG) in Arlington, Virginia. Mr.
Ueltzen joined TRG in 1968. TRG is a high-tech export management firm with
representatives in 78 countries, and specializes in systems integration and
engineering projects with emphasis on international environmental problems. Mr.
Ueltzen and TRG were awarded the Presidential E-Star Award for outstanding
contribution to the United States Export Expansion Program. Mr. Ueltzen has been
a member of the American Meteorological Society since 1985. Mr. Ueltzen has
served as one of our directors since July 2001.





*John
Hunt* is a
partner at ABRY Partners, LLC (ABRY). Mr. Hunt joined ABRY in 2004. ABRY,
headquartered in Boston, MA, is a private equity firm focused on the media and
communications industry. Mr. Hunt is also co-head of ABRY Mezzanine Partners,
LP. From 1990 until May 2004, Mr. Hunt was a general partner at Boston Ventures
Management, Inc., a media and communications focused private equity fund. Mr.
Hunt serves on the board of SoftBrands, Inc. and on the boards of a number of
private companies. Mr. Hunt has served as one of our directors since November
2005.





*Andrew
M. Snyder* is the
President of Cambridge Information Group (CIG), a
privately owned group of information services, publishing, and education
companies. Mr.
Snyder has been with CIG since 2003, and is also Chairman of CIG’s subsidiary,
RR Bowker.  Prior to joining CIG, Mr. Snyder spent seven years at the
Goldman Sachs Group, most recently as Vice President in the Principal Investment
Area.  He also spent one year as the Assistant to the Chairman. Mr. Snyder
graduated from the Wharton School at the University of Pennsylvania, and earned
a J.D. from Georgetown University Law Center. He is a member of the Bar of the
State of New York.  Mr. Snyder has served as one of our directors since
November 2005.





Each
director will hold office until the next Annual Meeting of Stockholders or until
his successor is elected and qualified. Each executive officer will hold office
until the next regular meeting of the Board of Directors following the next
Annual Meeting of Stockholders or until his successor is elected or appointed
and qualified.





**Audit
Committee Financial Expert**





Our Board
of Directors has determined that Mr. Jakobowski, a member of the Audit Committee
of the Board, is an “audit committee financial expert,” as that term is defined
in Item 401(e)(2) of Regulation S-B. Mr. Jakobowski is not an “independent
director” based on the definition of independence in Rule 4200A(a)(14) of the
listing standards of the National Association of Securities Dealers currently
applicable to small business issuers.





**Section
16(a) Beneficial Ownership Reporting Compliance**





Based
solely on a review of copies of Forms 3 and 4 furnished to us and written
representations that no other reports were required, during the fiscal year
ended October 31, 2005, all officers, directors and 10% stockholders were in
compliance with Section 16(a) filing requirements except that, on two occasions,
John Bethanis, a 10% stockholder, filed a Form 4 late (each form reported one
transaction late), and Cambridge Information Group, Inc., a 10% stockholder,
filed its Form 3 late.





**Code
of Ethics for Senior Financial Officers**





Our Board
of Directors has adopted a Code of Ethics for our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. A copy of the Code of Ethics is filed as
an exhibit to our Annual Report on Form 10-KSB for the year ended October 31,
2003.





We intend
to disclose any amendments to or waivers of our Code of Ethics on our corporate
website www.navtechinc.com.




NAVTECH,
INC.
2005
10-KSB
Page 31


**Item
10. Executive Compensation**





**Summary
Compensation Table**





The
following table sets forth information concerning the compensation for the last
three fiscal years of all of our executive officers as of October 31, 2005, and
of one additional individual, who had a total salary and bonus for such year in
excess of $100,000.




**Annual
      Compensation**
    **Long-Term**
      **Compensation****Awards****Name
      and Principal Position**
    **Year**
    **Salary**
    **Bonus**
    **Other
      Annual**
      **Compensation**
    **Common**
      **Stock**
      **Underlying**
      **Options**David
      Strucke, Chief Executive Officer
    2005
      2004
      2003
    $156,215
      $130,807
      $118,675
    $65,876
      $32,417
      $23,734
    -0-
      -0-
      -0-
    -0-
      50,000
      -0-Gordon
      Heard, Chief Financial Officer(1)
    2005
      2004
    $117,460
      $ 98,664
    -0-
      -0-
    -0-
      -0-
    -0-
      50,000Britt
      Bowra, Vice President - Client Services
    2005
      2004
      2003
    $113,179
      $94,631
      $77,092
    -0-
      -0-
      $6,107
    -0-
      -0-
      -0-
    -0-
      -0-
      -0-Derek
      Dawson, Vice President - Sales and Business
      Development(2)
    2005
      2004
      2003
    $182,691
      $136,889
      $112,122
    -0-
      -0-
      -0-
    -0-
      -0-
      -0-
    -0-
      40,000
      -0-


(1)
    Mr.
      Heard joined Navtech as Chief Financial Officer in November
      2003.


(2)
    Mr.
      Dawson resigned from Navtech effective November 18,
  2005.




**Option
Tables**





**OPTION
GRANTS IN FISCAL YEAR ENDED OCTOBER 31, 2005**





There
were no option grants during the fiscal year ended October 31,
2005.





**AGGREGATED
OPTION EXERCISES IN FISCAL YEAR ENDED OCTOBER 31, 2005 AND FISCAL YEAR-END
OPTION VALUES**





**Shares
      Acquired on Exercise**
    **Value
      Realized**
    **Number
      of Unexercised**
      **Options
      at**
      **October
      31, 2005**
    **Value
      of Unexercised**
      **In-the-Money
      Options**
      **at
      October 31, 2005****Name**
    
    
    **Exercisable/Unexercisable**
    **Exercisable/Unexercisable**David
      Strucke
    50,000
    $98,438
    150,000/-0-
    $68,000/$NilGordon
      Heard
    -0-
    -0-
    50,000/14,062
    $45,250/$10,547Britt
      Bowra
    20,000
    $19,975
    -0-
    -0-Derek
      Dawson
    50,000
    $70,938
    -0-
    -0-


NAVTECH,
INC.
 2005
10-KSB
 Page 32


**Long-Term
Incentive Plan Awards**





No awards
were made to Messrs. Strucke, Heard, Bowra, or Dawson during the fiscal year
ended October 31, 2005 under any long-term incentive plan.





**Compensation
of Directors**





Our
directors, with the exception of salaried officers, are entitled to receive an
annual retainer of $7,200 (payable quarterly in advance) and $600 per Board
and/or committee meeting attended. The Chairman of the Board is entitled to
receive an annual retainer of $8,640 (payable quarterly in advance), and the
Chairman of a committee is entitled to receive $900 per committee meeting
chaired. In addition, our directors are entitled to be reimbursed for travel
expenses incurred in attending any meeting of the Board or any of its
committees. Our By-Laws also provide, to the extent permitted by law, for
certain indemnification of our directors.





**Employment
Contracts, Termination of Employment and Change-In-Control
Arrangements**





We have
entered into an employment agreement with Mr. Strucke that provides for an
annual base salary of $265,000 (CDN) ($230,000 USD). In addition, Mr. Strucke is
eligible for an annual performance bonus of $132,500 (CDN) ($115,000 USD) based
upon the achievement of specific performance objectives established by our
Board’s Human Resources and Compensation Committee. In the event we terminate
Mr. Strucke’s employment without cause, he would be entitled to receive an
amount equal to 12 months base salary, and an additional month base
salary for every year of service after November 1, 2005 to a maximum
entitlement of 18 months.





We have
entered into an employment agreement with Mr. Heard that provides for an annual
base salary of $185,000 (CDN) ($160,000 USD). In addition, Mr. Heard is eligible
for an annual performance bonus of $37,000 (CDN) ($32,000 USD) based upon the
achievement of specific performance objectives established by our Board’s Human
Resources and Compensation Committee. In the event we terminate Mr. Heard’s
employment without cause, he would be entitled to receive an amount equal to six
months base salary.





NAVTECH,
INC.
 2005
10-KSB
 Page 33




Item 11.
Security Ownership of Certain Beneficial Owners and Management And Related
Stockholder Matters





**Security
Ownership**





At
December 31, 2005, we had two classes of stock outstanding: common stock and
series A convertible participating preferred stock. We refer to the series A
convertible participating preferred stock as the “series A preferred stock.” We
refer to the common stock and the series A preferred stock together as “capital
stock.” On December 31, 2005, there were outstanding 4,904,640 shares of common
stock and 1,600,000 shares of series A preferred stock. Each share of common
stock entitles the holder to one vote on each matter submitted to stockholders.
Each share of series A preferred stock is convertible, at the holder’s option,
into one share of common stock, and entitles the holder to one vote on each
matter submitted to stockholders. We refer to the number of votes the holder of
a share of capital stock is entitled to cast as the share’s “voting power” and
the aggregate of all votes entitled to be cast by a holder of capital stock as
that holder’s “total voting power.” In calculating the number of votes to which
a holder of series A preferred stock is entitled, any shares issuable upon the
conversion of accrued but unpaid dividends are disregarded.





The
following table sets forth certain information regarding our outstanding common
stock and series A preferred stock beneficially owned as of December
31 , 2005 by:





·
    each
      person who is known by us to own beneficially or exercise voting or
      dispositive control over more than 5% of our common stock and series A
      preferred stock,


·
    each
      present director,


·
    each
      person named in the Summary Compensation Table above,
  and


·
    all
      of our present executive officers and directors as a
  group




NAVTECH,
INC.
 2005
10-KSB
 Page 34


**Name
      and Address**
      **of
      Beneficial Owner**
    **Common
      Stock**
    **Series
      A Preferred Stock**
    ****
      **Percent
      of**
      **Total
      Voting**
      **Power******
      **Number
      of Shares**
      **Beneficially
      Owned**
    ****
      **Approximate**
      **Percentage
      of Class**
    ****
      **Number
      of Shares Beneficially Owned**
    ****
      **Approximate**
      **Percentage
      of Class**Robert
      N. Snyder (1)
    2,215,000
      (2)(3)
    35.8%
    1,200,000(4)
    75%
    33.7%Alain
      Mallart
      38
      avenue des Klauwaerts
      1050
      Brussels, Belgium
    1,123,670
      (3)(5)
    21.1%
    400,000(6)
    25%
    17.2%John
      Bethanis
      11420
      S W 109th Raod
      Miami
      Florida
    978,766
      (7)
    20.0%
    -
    -
    15.0%Dorothy
      English (8)
    358,958
      (3)
    7.3%
    -
    -
    5.5%Michael
      Ueltzen
      5801
      Lee Highway
      Arlington,
      Virginia
    345,000
      (3)(9)
    7.0%
    -
    -
    5.3%John
      Hunt
      111
      Huntington Avenue
      Boston,
      Massachusetts
    310,791
      (10)
    6.0%
    -
    -
    4.6%David
      Strucke (8)
    240,000
      (11)
    4.7%
    -
    -
    3.6%Michael
      Jakobowski (1)
    78,500
      (12)
    1.6%
    -
    -
    1.2%Thomas
      D. Beynon
      675
      Riverbend Drive
      Kitchener,
      Ontario, Canada
    70,000
      (13)
    1.4%
    -
    -
    1.1%Andrew
      M. Snyder (1)
    53,240
      (3)(14)
    1.1%
    -
    -
    *Gordon
      Heard (8)
    39,062
      (15)
    1.0%
    -
    -
    *Derek
      Dawson (8)
    35,000
    *
    -
    -
    *Britt
      Bowra (8)
    20,000
    *
    -
    -
    *All
      executive officers and
      directors
      as a group
      (7
      persons)
    1,136,593
      (3)(9)(10)(11)(12)
      (13)(14)(15)
    20.5%
    -
    -
    15.9%





* Less
than 1%





(1)
    Address
      is 7200 Wisconsin Avenue, Bethesda,
Maryland


(2)
    Based
      upon Schedule 13D, as amended, filed with the Securities and Exchange
      Commission. Includes (i) 1,200,000 shares that are issuable upon the
      conversion of series A preferred stock held by Cambridge Information
      Group, Inc. (“Cambridge”), of which Robert N. Snyder is the controlling
      shareholder, (ii) 75,000 shares that are issuable upon the exercise of
      warrants held by Cambridge that are currently exercisable, and (iii)
      40,000 shares owned by Wyoming Investments Limited Partnership, of which
      Robert N. Snyder is a general partner. Robert N. Snyder shares voting and
      dispositive control over the shares held by Cambridge. Excludes shares
      that are issuable upon the conversion of accrued and unpaid dividends on
      the series A preferred stock.
 (3)
    Based
      upon Schedule 13D, as amended, filed with the Securities and Exchange
      Commission. Robert N. Snyder, Andrew M. Snyder, Republic
      ElectronicsCorporation (of which Michael Ueltzen, one of our directors, is the
      majority shareholder, President and Chief Executive Officer), Externalis
      S.A. (formerly known as Finextern S.A.) (of which Alain Mallart is the
      controlling shareholder), and Dorothy English, among others, are parties
      to a Shareholders Agreement, dated as of March 4, 2005, relating to the
      2,525,868 shares of common stock collectively beneficially owned by
      them at such time.  Except as indicated in the footnotes hereto, each
      party to the Shareholders Agreement has the sole power to vote or direct
      the vote, and the sole power to.


NAVTECH,
INC.
 2005
10-KSB
 Page 35


dispose or direct the disposition of, its respective
      shares.  Pursuant to the Shareholders Agreement, the parties have
      agreed, among other things, and subject to limited exception, to vote in
      favor of the election to our Board of those persons nominated to
      serve as directors by our Board.  The term of the Shareholders
      Agreement is five years, or less under certain
circumstances.
 (4)
    Represents
      shares owned by Cambridge, of which Robert N. Snyder is the controlling
      shareholder. Robert N. Snyder shares voting and dispositive control over
      the shares held by Cambridge.


(5)
    Based
      upon Schedule 13D, as amended, filed with the Securities and Exchange
      Commission. Represents (i) 698,670 shares held by Externalis S.A., (ii)
      400,000 shares that are issuable upon the conversion of series A preferred
      stock held by Externalis S.A. and (iii) 25,000 shares that are issuable
      upon the exercise of warrants held by Externalis S.A. that are currently
      exercisable. Mr. Mallart is the controlling shareholder of Externalis S.A.
      and shares with Externalis S.A. the voting and dispositive control over
      the shares held by it. Excludes shares that are issuable upon the
      conversion of accrued and unpaid dividends on the series A preferred
      stock.


(6)
    Represents
      shares owned by Externalis S.A. of which Alain Mallart is a controlling
      shareholder. Mr. Mallart shares voting and dispositive control over the
      shares held by Externalis S.A.


(7)
    Based
      upon Schedule 13D, as amended, and other statements filed with the
      Securities and Exchange Commission. Jack Taraboulos shares voting power
      with Mr. Bethanis.


(8)
    Address
      is 175 Columbia Street West, Waterloo, Ontario,
Canada.


(9)
    Based
      upon Schedule 13D, as amended, filed with the Securities and Exchange
      Commission. Represents (i) 300,000 shares owned by Republic Electronics
      Corporation of which Mr. Ueltzen is the majority shareholder, President
      and Chief Executive Officer, and (ii) 45,000 shares that are issuable upon
      the exercise of options that are currently
exercisable.


(10)
    Based
      upon Form 3 filed with the Securities and Exchange Commission. Represents
      shares that are issuable upon the exercise of warrants held by ABRY
      Mezzanine Partners, L.P. that are currently exercisable.  The general
      partner of ABRY Mezzanine Partners, L.P. is ABRY Mezzanine Investors, L.P.
      ABRY Mezzanine Investors, L.P.’s general partner is ABRY Mezzanine
      Holdings LLC.  Mr. Hunt is a Vice President of ABRY Mezzanine
      Holdings LLC.  An Investment Committee of ABRY Mezzanine Holdings LLC
      exercises exclusive decision making authority with respect to investments
      by ABRY Mezzanine Partners, L.P.


(11)
    Includes
      150,000 shares that are issuable upon the exercise of options that are
      currently exercisable.


(12)
    Includes
      50,000 shares that are issuable upon the exercise of options that are
      currently exercisable.


(13)
    Includes
      45,000 shares that are issuable upon the exercise of options that are
      currently exercisable.


(14)
    Based
      upon Schedule 13D, as amended, filed with the Securities and Exchange
      Commission. Does not include (i) 750,000 shares owned by Cambridge, of
      which Andrew M. Snyder is President and a shareholder, (ii) 1,200,000
      shares that are issuable upon the conversion of series A preferred stock
      held by Cambridge and (iii) 75,000 shares that are issuable upon the
      exercise of warrants held by Cambridge that are currently
      exercisable.


(15)
    Represents
      shares that are issuable upon the exercise of options that are exercisable
      currently or within 60 days.





NAVTECH,
INC.
 2005
10-KSB
 Page 36


**Securities
Authorized for Issuance Under Equity Compensation Plans**





The
following table sets forth information as of October 31, 2005 with respect to
compensation plans (including individual compensation arrangements) under which
our common stock is authorized for issuance, aggregated as follows:





·
    All
      compensation plans previously approved by security holders;
      and


·
    All
      compensation plans not previously approved by security
      holders.








**EQUITY
COMPENSATION PLAN INFORMATION**





**Number
      of**
      **securities
      to be**
      **issued
      upon**
      **exercise
      of**
      **outstanding**
      **options,
      warrants**
      **and
      rights**
      **(column
      (a))**
    **Weighted**
      **average
      exercise**
      **price
      of**
      **outstanding**
      **options,**
      **warrants
      and**
      **rights**
    **Number
      of securities**
      **remaining
      available for**
      **future
      issuance under**
      **equity
      compensation**
      **plans
      (excluding**
      **securities
      reflected in**
      **column
      (a))**Equity
      compensation plans approved by security holders
    431,000
    $.67
    1,816,578Equity
      compensation plans not approved by security holders
    -0-
    -0-
    -0-Total
    431,000
    $.67
    1,816,578






NAVTECH,
INC.
 2005
10-KSB
 Page 37


**Item
12. Certain Relationships And Related Transactions**





On
November 22, 2005, we entered into a Series A Convertible Participating
Preferred Stock and Warrant Purchase Agreement with Cambridge Information Group,
Inc. (“Cambridge”) and Externalis S.A. (“Externalis”, and together with
Cambridge, the “Investors”) (the “Series A Purchase Agreement”) whereby the
Investors purchased 1,600,000 shares of our Series A Convertible Participating
Preferred Stock (the “Series A Preferred Stock”) (1,200,000 by Cambridge and
400,000 by Externalis) and warrants (the “Warrants”) evidencing the right to
acquire an aggregate of 100,000 shares of our common stock (the “Common Stock”)
(75,000 by Cambridge and 25,000 by Externalis), for an aggregate purchase price
of $4,000,000 (the “Preferred Stock Offering”).  Pursuant to the terms of
the Series A Purchase Agreement, we granted to the Investors preemptive rights
in connection with issuances by us of certain of our shares of capital stock
that in any way rank senior to the Common Stock.  The proceeds received by
us in connection with the Preferred Stock Offering were used to consummate the
acquisition of EAG discussed in Items 1 and 6 of this Annual Report. Each of the
Investors was, prior to the execution of the Series A Purchase Agreement, and
currently is, one of our principal stockholders. See Item 11 of this Annual
Report.




The
Series A Preferred Stock is senior in rights, preferences and privileges to the
Common Stock as more fully described in the Certificate of Designation creating
the Series A Preferred Stock.




The
Series A Preferred Stock has the following material terms:




**Dividends** . The
holders (each a “Holder” and, collectively, the “Holders”) of the Series A
Preferred Stock are entitled to receive, if and when declared by our Board of
Directors and paid by us, in preference to the holders of the shares of Common
Stock and our other capital stock ranking junior to the Series A Preferred Stock
as to the payment of dividends, annual dividends at the rate per annum of $0.125
per share.  Such dividends will accrue on a daily basis, whether or not
earned or declared, and will be compounded annually (to the extent such accruing
dividends remain unpaid) on each anniversary of the issuance of the Series A
Preferred Stock.  In addition to the dividend described above, the Holders
are entitled to participate ratably on any dividends paid with respect to the
Common Stock.  In the case of any such dividend, each Holder shall be
entitled to receive an amount as of the record date for such dividend that would
be payable on the largest number of whole shares of Common Stock into which such
shares of Series A Preferred Stock held by such Holder could be converted
pursuant to the terms of the Certificate of Designation.




**Convertibility** . The
Series A Preferred Stock is convertible at the option of the Holder thereof, at
anytime after the date of issuance and without payment of additional
consideration therefor, into that number of fully paid and nonassessable shares
of Common Stock as is determined by dividing the Series A Liquidation Preference
(as defined below) per share of Series A Preferred Stock by the Series A
Conversion Price (as defined below), in each case as in effect at the time of
conversion.  The “Series A Conversion Price” at which shares of Common
Stock shall be deliverable upon conversion of Series A Preferred Stock shall
initially be $2.50 per share. The “Series A Liquidation Preference” shall be
$2.50 per share of Series A Preferred Stock (subject to equitable adjustment in
the event of any stock dividend, stock split, combination, reorganization,
recapitalization, reclassification, or other similar event affecting such
shares), plus all
accrued but unpaid dividends on the Series A Preferred Stock.  Such initial
Series A Conversion Price shall be subject to anti-dilution adjustment (in order
to adjust the number of shares of Common Stock into which the Series A Preferred
Stock is convertible) as provided in the Certificate of Designation.  At
our option, we may elect to convert not less than all of the outstanding shares
of Series A Preferred Stock at the then effective Series A Liquidation
Preference (i) at any time on or after November 22, 2006, if the 30-trading day
trailing average of the Common Stock (as reported on *Yahoo
Finance* (www.yahoo.com)) exceeds 250% of the then effective conversion price (the
“Trigger Date”, and each a “Trigger Date”), provided that we may not give notice
of our conversion right until November 22, 2006 and we must exercise such
conversion right within 60 days after the applicable Trigger Date, or (ii) upon
the closing of an underwritten, firm commitment public offering pursuant to an
effective registration statement under the Securities Act, in which the price to
the public per share of Common Stock exceeds 200% of the then effective
conversion price.




**Voting
Rights** . Subject
to certain limitations, the Holders are entitled to vote with the holders of
Common Stock, voting together as one class, on all matters submitted to a vote
of the holders of Common Stock, and




NAVTECH,
INC.
 2005
10-KSB
 Page 38


each share of Series A Preferred Stock is entitled to
a number of votes equal to the number of shares of Common Stock into which each
such share is convertible as of the record date for the applicable vote. 
In addition, we may not, without the consent of the Holders of a majority of the
shares of the Series A Preferred Stock then outstanding, take certain actions,
including, without limitation, (i) create a new class or series of capital stock
that are, with respect to the payment of dividends or upon liquidation, senior
to or *pari
passu*with the
Series A Preferred Stock, (ii) alter, amend or repeal the rights, preferences
and privileges of the Series A Preferred Stock or (iii) amend, alter or repeal
any provision of the Certificate of Designation.





**Liquidation.** Upon the
liquidation, dissolution, change of control or winding-up of Navtech, the
Holders will be entitled to receive an amount equal to the greater of (i) $2.50
per share of Series A Preferred Stock (subject to anti-dilution adjustments) plus accrued
and unpaid dividends or (ii) the amount that they would have received if they
had converted their shares of Series A Preferred Stock to Common Stock on the
day prior to the liquidation, dissolution, change of control or
winding-up.




The
Warrants have an exercise price of $3.00 (subject to adjustment as set forth in
the Warrants), are exerciseable at any time from the date of issuance until the
tenth anniversary of the date of issuance and have weighted average
anti-dilution protection provisions as set forth in the Warrants.




In
connection with the Series A Purchase Agreement, we entered into a registration
rights agreement dated November 22, 2005 with, among others, the Investors
(the “Registration Rights Agreement”).  The Registration Rights Agreement
obligates us to file a registration statement covering, among other shares, (i)
the shares of Common Stock issuable upon conversion of the Series A Preferred
Stock, (ii) the shares of Common Stock issuable upon the exercise of the
Warrants and (iii) any shares of Common Stock previously held by the Investors
or acquired after the date of the Registration Rights Agreement by the
Investors.  Pursuant to the terms of the Registration Rights Agreement, the
Investors are entitled to two demand registration rights and unlimited
piggy-back registration rights.




In
connection with the Series A Purchase Agreement, we entered into a letter
agreement dated November 22, 2005 with Cambridge (the “Letter Agreement”),
whereby we granted Cambridge the right to designate two members to serve on our
Board of Directors so long as Cambridge holds 22% of our Common Stock on a
fully-diluted and as converted basis.  The Letter Agreement further
provides that Cambridge shall have the right to designate one member to serve on
our Board of Directors so long as Cambridge holds 10% of our Common Stock on a
fully-diluted and as converted basis.  Subject to the requirements of
applicable law and any other rules or regulations that apply to us, the persons
designated by Cambridge to serve as directors pursuant to the terms of the
Letter Agreement shall also be entitled to serve on all committees of the Board
of Directors established by the Board. Effective upon the closing of the
Preferred Stock Offering and pursuant to and in accordance with the terms of the
Letter Agreement, Andrew M. Snyder, a designee of Cambridge, was appointed to
fill one existing vacancy on our Board of Directors by the sitting members of
our Board.




The
foregoing descriptions of the Series A Purchase Agreement, the Warrants, the
Certificate of Designation, the Registration Rights Agreement and the Letter
Agreement do not purport to be complete and are qualified in their entirety by
reference to the Series A Purchase Agreement, the Warrants, the Certificate of
Designation, the Registration Rights Agreement and the Letter Agreement, which
are filed as Exhibit 10(G), Exhibits 10(H) and 10(I), Exhibit 3(B), Exhibit
10(J) and Exhibit 10(K) respectively hereto, and are incorporated into this
report by reference.




NAVTECH,
INC.
 2005
10-KSB
 Page 39


**Item
13. Exhibits**





(a) **Exhibits**




3(A)
    Certificate of Incorporation, as amended
(6)




3(B)
    Certificate
      of Designation filed with the Delaware Secretary of State on November 21,
      2005 (8)




3(C)
    By-Laws (3)




10(A)
    Lease
      dated October 8, 1996 between 1394464 Ontario Inc. and Navtech Systems
      Support Inc. with respect to Waterloo, Ontario premises (2)




10(B)
    1995
      Key Employees and Advisors Stock Option Plan, as amended
    (1)




10(C)
    1999 Stock Option Plan (4)





10(D)
    Form
      of Stock Option Agreement for options granted to Michael Jakobowski,
      Michael Ueltzen, Thomas Beynon and David Strucke dated as of September 9,
      2004 (7)





10(E)
    Stock
      Option Agreement dated as of September 9, 2004 between Navtech, Inc. and
      Derek Dawson (7)





10(F)
    Securities
      Purchase Agreement dated November 22, 2005 by and among Navtech, Inc.,
      Navtech (Sweden) AB and SAS AB (8)





10(G)
    Series
      A Convertible Participating Preferred Stock and Warrant Purchase Agreement
      dated November 22, 2005 by and among Navtech, Inc., Cambridge Information
      Group, Inc. and Externalis S.A. (8)





10(H)
    Warrant
      dated November 22, 2005 issued by Navtech, Inc. to Cambridge Information
      Group, Inc. (8)





10(I)
    Warrant
      dated November 22, 2005 issued by Navtech, Inc. to Externalis S.A.
      (8)





10(J)
    Registration
      Rights Agreement dated November 22, 2005 by and among Navtech, Inc.,
      Cambridge Information Group, Inc., Externalis S.A., ABRY Mezzanine
      Partners, L.P. and ABRY Investment Partnership, L.P.
(8)





10(K)
    Letter
      Agreement dated November 22, 2005 by and between Navtech, Inc. and
      Cambridge Information Group, Inc. (8)





10(L)
    Note
      Purchase Agreement dated November 22, 2005 by and among Navtech Systems
      Support Inc., ABRY Mezzanine Partners, L.P. and ABRY Investment
      Partnership, L.P. (8)





10(M)
    Tranche
      A Notes dated November 22, 2005 issued by Navtech Systems Support Inc.
      (8)





10(N)
    Tranche
      B Notes dated November 22, 2005 issued by Navtech Systems Support Inc.
      (8)





10(O)
    Parent
      Guaranty dated November 22, 2005 by and among Navtech, Inc., ABRY
      Mezzanine Partners, L.P. and ABRY Investment Partnership, L.P.
      (8)





10(P)
    Warrant
      Agreement dated November 22, 2005 by and among Navtech, Inc., ABRY
      Mezzanine Partners, L.P. and ABRY Investment Partnership, L.P.
      (8)




NAVTECH,
INC.
 2005
10-KSB
 Page 40




10(Q)
    Warrant
      dated November 22, 2005 issued by Navtech, Inc. to ABRY Mezzanine
      Partners, L.P. (8)





10(R)
    Warrant
      dated November 22, 2005 issued by Navtech, Inc. to ABRY Investment
      Partnership, L.P. (8)





10(S)
    Employment
      agreement dated January 30th,
      2006 between Navtech Systems Support, Inc. and David
    Strucke





10(T)
    Employment
      agreement dated January 30th,
      2006 between Navtech Systems Support, Inc. and Gordon
  Heard





14
    Code
      of Ethics (5)




21
    Subsidiaries




23
    Consent
      of Deloitte & Touche LLP




31(A)
    Rule
      13a-14(a)/15d-14(a) Certification of Chief Executive Officer, as Adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002





31(B)
    Rule
      13a-14(a)/15d-14(a) Certification of Chief Financial Officer, as Adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002





32
    Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to 18
      U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.








(1) We
hereby incorporate the footnoted exhibit by reference in accordance with Rule
12b-32, as such exhibit was originally filed as an exhibit in our Annual Report
on Form 10-KSB for the fiscal year ended October 31, 1994.





(2) We
hereby incorporate the footnoted exhibit by reference in accordance with Rule
12b-32, as such exhibit was originally filed as an exhibit in our Annual Report
on Form 10-KSB for the fiscal year ended October 31, 1996.





(3) We
hereby incorporate the footnoted exhibit by reference in accordance with Rule
12b-32, as such exhibit was originally filed as an exhibit in our Annual Report
on Form 10-KSB for the fiscal year ended October 31, 1999.





(4) We
hereby incorporate the footnoted exhibit by reference in accordance with Rule
12b-32, as such exhibit was originally filed as an exhibit in our Registration
Statement on Form S-8 (File No. 333-32656)





(5) We
hereby incorporate the footnoted exhibit by reference in accordance with Rule
12b-32, as such exhibit was originally filed as an exhibit in our Annual Report
on Form 10-KSB for the fiscal year ended October 31, 2003.





(6) We
hereby incorporate the footnoted exhibit by reference in accordance with Rule
12b-32, as such exhibit was originally filed as an exhibit in our Quarterly
Report on Form 10-QSB for the quarter ended April 30, 2001.





(7) We
hereby incorporate the footnoted exhibit by reference in accordance with Rule
12b-32, as such exhibit was originally filed as an exhibit in our Annual Report
on Form 10-KSB for the fiscal year ended October 31, 2004.





(8) We
hereby incorporate the footnoted exhibit by reference in accordance with Rule
12b-32, as such exhibit was originally filed as Current Report on Form 8-K for
an event dated November 21, 2005.




NAVTECH,
INC.
 2005
10-KSB
 Page 41


****


**Item
14. Principal Accountant Fees and Services**





The
following is a summary of the fees billed to us by Deloitte & Touche, LLP,
our independent auditors, for professional services rendered for the fiscal
years ended October 31, 2005 and 2004:




**Fee
      Category**
    **Fiscal
      2005 Fees**
    **Fiscal
      2004 Fees**Audit
      fees (1)
    53,391
    36,398Audit
      related fees (2)
    8,214
    14,408Tax
      fees (3)
    49,991
    78,623All
      other fees
    -
    -Total
    111,596
    129,429


(1)
    Audit
      Fees consist of aggregate fees billed for professional services rendered
      for the audit of our annual financial statements and review of the interim
      financial statements included in the quarterly reports of services that
      are normally provided by the independent auditors in connection with the
      statutory and regulatory filings or engagements for the fiscal years ended
      October 31, 2005 and October 31, 2004,
respectively.




(2)
    For
      assurance and related services that are reasonably related to the
      performance of the audit and are not reported with audit fees, including
      accounting consultations.




(3)
    For
      tax compliance, advice, planning and return preparation and for services
      related to the submission and receipt of investment tax credits earned
      from Canadian Scientific Research and Experimental Development (SR&ED)
      qualified expenditures.






The Audit
Committee is responsible for the appointment, compensation and oversight of the
work of the independent auditors and approves in advance any services to be
performed by the independent auditors, whether audit-related or not. The Audit
Committee reviews each proposed engagement to determine whether the provision of
services is compatible with maintaining the independence of the independent
auditors. All of the fees shown above were pre-approved by the Audit
Committee.




NAVTECH,
INC.
 2005
10-KSB
 Page 42





REPORT OF
INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS


To the
Board of Directors and Stockholders of Navtech, Inc.

We have
audited the accompanying consolidated balance sheets of Navtech, Inc. and
subsidiaries (the “Company”) as of October 31, 2005 and 2004, and the related
consolidated statements of operations, stockholders’ equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We
conducted our audits in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board
(United States). These standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our
opinion, such consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of October 31, 2005 and 2004,
and the results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion.

/s/
Deloitte & Touche LLP
Independent
Registered Chartered Accountants
Kitchener,
Ontario
January
25, 2006**NAVTECH,
INC.**
**F-1**
**CONSOLIDATED
STATEMENTS OF OPERATIONS**
**(In
US Dollars)**


*Year
      Ended October 31,*
    
    
    **2005**
    
    
    2004**REVENUE**Service
      fees
    
    **$******
    ******8,107,947**
    
    $
    7,128,933Professional
      services
    
    
    **1,749,938**
    
    
    724,611Hardware
      revenue
    
    
    **1,284,903**
    
    
    47,071Total
      revenue
    
    
    **11,142,788**
    
    
    7,900,615**COSTS
      AND EXPENSES**Cost
      of services
    
    
    **4,984,847**
    
    
    4,183,459Cost
      of hardware revenue
    
    
    **1,062,682**
    
    
    47,071Research
      and development
    
    
    **1,025,185**
    
    
    816,895Selling
      and marketing
    
    
    **1,588,036**
    
    
    1,177,546General
      and administrative
    
    
    **1,868,933**
    
    
    1,443,314Total
      costs and expenses
    
    
    **10,529,683**
    
    
    7,668,285***Income
      from operations***
    
    
    **613,105**
    
    
    232,330***Other
      income (expense)***Interest
      expense
    
    
    **(29,131**
    **)**
    
    (32,433
    )Interest
      revenue
    
    
    **-**
    
    
    2,720**(29,131**
    **)**
    
    (29,713
    )***Income
      before income taxes***
    
    
    **583,974**
    
    
    202,617***Recovery
      of income taxes***(Note
      11)
    
    
    **88,606**
    
    
    191,191***Net
      earnings***
    
    **$******
    ******672,580**
    
    $
    393,808***Net
      earnings per share*******(Note
      10)Basic
    
    **$******
    ******0.14**
    
    $
    0.09Diluted
    
    **$******
    ******0.13**
    
    $
    0.07***Weighted
      average common shares outstanding***(Note
      10)Basic
    
    
    **4,683,869**
    
    
    4,251,921Diluted
    
    
    **5,114,869**
    
    
    5,259,446

See Notes
to the Consolidated Financial Statements
**NAVTECH,
INC.**
**F-2**
**CONSOLIDATED
BALANCE SHEETS**
**(In
US Dollars)**

*October
      31,*
    
    **2005**
    
    2004**ASSETS***Current
      Assets*Cash
    
    **$******
    ******444,352**
    
    $
    445,309Accounts
      receivable (net of allowance for bad debtsof**$247,177**;
      2004 - $158,011)
    
    
    **1,615,929**
    
    
    1,133,963Lease
      receivable - current portion (Note 14)
    
    
    **186,542**
    
    
    -Prepaid
      expenses and other current assets (Note 3)
    
    
    **1,424,845**
    
    
    223,209**3,671,668**
    
    
    1,802,481*Lease
      Receivable*(Note
      14)
    
    
    **560,962**
    
    
    -*Deferred
      Taxes*(Note
      11)
    
    
    **476,871**
    
    
    437,419*Capital
      Assets, Net*(Note
      4)
    
    
    **581,551**
    
    
    547,914**$******
    ******5,291,051**
    
    $
    2,787,814**LIABILITIES***Current
      Liabilities*Accounts
      payable
    
    **$******
    ******680,634**
    
    $
    672,602Accrued
      liabilities
    
    
    **882,124**
    
    
    300,982Obligation
      under capital leases - current portion (Note 5)
    
    
    **241,884**
    
    
    36,310Deferred
      lease inducements - current portion (Note 7)
    
    
    **32,761**
    
    
    17,850Deferred
      revenue
    
    
    **826,275**
    
    
    623,183**2,663,678**
    
    
    1,650,927*Obligation
      Under Capital Leases*(Note 5)
    
    
    **464,630**
    
    
    7,992*Deferred
      Lease Inducements*(Note 7)
    
    
    **8,372**
    
    
    17,849**3,136,680**
    
    
    1,676,768*Commitments
      and Contingencies*(Note 6)**STOCKHOLDERS’
      EQUITY**Common
      stock (Note 8)
    
    
    **5,635**
    
    
    4,884Authorized
      - 20,000,000, Par value $0.001, Issued -**5,635,328**(2004
      - 4,884,271)Preferred
      stock - Authorized - 2,000,000, Par value $0.01, Issued -**nil**
      (2004
      - nil)
    
    
    **-**
    
    
    -Treasury
      stock (Note 8)
    
    
    **(733**
    **)**
    
    (608
    )Additional
      paid-in capital
    
    
    **3,461,554**
    
    
    3,094,441Accumulated
      other comprehensive income
    
    
    **133,694**
    
    
    130,688Accumulated
      deficit
    
    
    **(1,445,779**
    **)**
    
    (2,118,359
    )**2,154,371**
    
    
    1,111,046**$******
    ******5,291,051**
    
    $
    2,787,814

See Notes
to the Consolidated Financial Statements
**NAVTECH,
INC.**
**F-3**

**CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY**
**(In
US Dollars)**


Common
      Stock
    
    
    Paid-In
      Capital
    
    
    Accumulated
      Other
      Comprehensive
      Income
    
    
    Treasury
      Stock
    
    
    Accumulated
      Deficit
    
    
    Total
      Stockholders'
      Equity
    
    
    Total
      Comprehensive
      IncomeShares
    
    
    AmountBalances,
      October 31, 2003
    
    
    4,842,406
    
    $
    4,843
    
    $
    3,080,190
    
    $
    35,759
    
    $
    (608
    )
    $
    (2,512,167
    )
    $
    608,017Stock
      Options exercised
    
    
    41,865
    
    
    41
    
    
    14,251
    
    
    
    
    
    
    
    
    
    
    
    14,292Translation
      adjustments
    
    
    
    
    
    
    
    
    
    
    
    94,929
    
    
    
    
    
    
    
    
    94,929
    
    
    94,929Net
      earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    393,808
    
    
    393,808
    
    
    393,808Balances,
      October 31, 2004
    
    
    4,884,271
    
    $
    4,884
    
    $
    3,094,441
    
    $
    130,688
    
    $
    (608
    )
    $
    (2,118,359
    )
    $
    1,111,046
    
    $
    488,737Stock
      Options exercised
    
    
    626,057
    
    
    626
    
    
    335,488
    
    
    
    
    
    
    
    
    
    
    
    336,114Warrants
      exercised
    
    
    125,000
    
    
    125
    
    
    234,250
    
    
    
    
    
    
    
    
    
    
    
    234,375Treasury
      Stock
    
    
    
    
    
    
    
    
    (202,625
    )
    
    
    
    
    (125
    )
    
    
    
    
    (202,750
    )Translation
      adjustments
    
    
    
    
    
    
    
    
    
    
    
    3,006
    
    
    
    
    
    
    
    
    3,006
    
    
    3,006Net
      earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    672,580
    
    
    672,580
    
    
    672,580Balances,
      October 31, 2005 (1)
    
    
    5,635,328
    
    $
    5,635
    
    $
    3,461,554
    
    $
    133,694
    
    $
    (733
    )
    $
    (1,445,779
    )
    $
    2,154,371
    
    $
    675,586

See Notes
to the Consolidated Financial Statements

(1)Issued
shares at October 31, 2005 include 733,188 shares held in treasury. Total
outstanding shares at October 31, 2005 was 4,902,140.

**NAVTECH,
INC.**
**F-4**

**CONSOLIDATED
STATEMENTS OF CASH FLOWS**
**(In
US Dollars)**

*Year
      Ending October 31,*
    
    
    **2005**
    
    
    2004**OPERATING
      ACTIVITIES**Net
      earnings
    
    **$******
    ******672,580**
    
    $
    393,808Adjustments
      to reconcile net earnings to netcash
      provided by operating activities:Depreciation
    
    
    **237,084**
    
    
    189,327Deferred
      taxes
    
    
    **(25,044**
    **)**
    
    (136,782
    )Provision
      for uncollectible accounts
    
    
    **183,977**
    
    
    91,457Deferred
      lease inducements
    
    
    **5,794**
    
    
    (16,488
    )Changes
      in operating assets and liabilities:Accounts
      receivable
    
    
    **(655,002**
    **)**
    
    (275,482
    )Prepaid
      expenses and other current assets
    
    
    **(1,166,357**
    **)**
    
    (75,172
    )Investment
      tax credits receivable
    
    
    **-**
    
    
    91,866Accounts
      payable
    
    
    **2,275**
    
    
    10,192Accrued
      liabilities
    
    
    **559,367**
    
    
    (11,972
    )Deferred
      revenue
    
    
    **189,270**
    
    
    219,155Income
      taxes payable
    
    
    **-**
    
    
    (11,004
    )Net
      cash flows from operating activities
    
    
    **3,944**
    
    
    468,905**INVESTING
      ACTIVITY**Purchase
      of capital assets
    
    
    **(263,015**
    **)**
    
    (142,436
    )Net
      cash flows from investing activity
    
    
    **(263,015**
    **)**
    
    (142,436
    )**FINANCING
      ACTIVITIES**Repayment
      of capital leases
    
    
    **(76,239**
    **)**
    
    (33,310
    )Repayment
      of loans
    
    
    **-**
    
    
    (26,103
    )Exercise
      of warrants (Note 8)
    
    
    **234,375**
    
    
    -Issuance
      of common shares on exercises under stock option plan (Note
    8)
    
    
    **133,489**
    
    
    14,292Net
      cash flows from financing activities
    
    
    **291,625**
    
    
    (45,121
    )**EFFECT
      OF FOREIGN EXCHANGE RATES ON CASH**
    
    
    **(33,512**
    **)**
    
    25,176*Net
      cash flow*
    
    
    **(957**
    **)**
    
    306,524*Cash,
      beginning of year*
    
    
    **445,309**
    
    
    138,785*Cash,
      end of year*
    
    **$******
    ******444,352**
    
    $
    445,309Supplemental
      disclosure of cash flow information:Cash
      paid during the year for interest
    
    **$******
    ******(29,131**
    ******)**
    $
    (41,574
    )Cash
      received during the year for income taxes
    
    **$******
    ******96,752**
    
    $
    141,685Assets
      acquired through capital leases
    
    **$******
    ******710,976**
    
    $
    -

See Notes
to Consolidated Financial Statements

**NAVTECH,
INC.**
**F-5**

**NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
**(In
US Dollars)**
1.DESCRIPTION
OF THE BUSINESS

Navtech,
Inc. (“Navtech”) was originally incorporated in the State of New York in 1981
and then reincorporated in the State of Delaware in 1987. Navtech Systems
Support Inc. (“Navtech-Canada”), a wholly-owned subsidiary of Navtech, was
incorporated in the Province of Ontario in 1987. Navtech (UK) Limited
(“Navtech-UK”), a wholly-owned subsidiary of Navtech-Canada, was incorporated in
the United Kingdom in 1994.

The
Company develops, markets and supports flight operations and crew management
systems for the commercial aviation industry. The Company’s systems are designed
to assist commercial passenger and cargo air carriers in the dynamic environment
of their daily flight operations.

2.SIGNIFICANT
ACCOUNTING POLICIES

These
financial statements are prepared in accordance with Generally Accepted
Accounting Principles in the United States of America. A summary of significant
accounting policies consistently applied in the preparation of the consolidated
financial statements follows:

*Basis
of presentation*

The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries, Navtech-Canada and Navtech-UK. All significant
intercompany accounts and transactions have been eliminated upon consolidation.

*Foreign
currency translation*

a)Translation
of foreign subsidiaries’ accounts

Assets
and liabilities of the Company’s foreign subsidiaries are translated from their
functional currencies to US dollars at the exchange rate in effect at the
balance sheet date. Revenues and expenditures are translated at the average rate
prevailing during the year. The adjustments resulting from translating the
financial statements of foreign subsidiaries are recorded in accumulated other
comprehensive income as a separate component of stockholders’
equity.

b)Translation
of foreign currency transactions

Transactions
incurred in currencies other than the functional currency are converted to the
functional currency at the transaction date. Monetary assets and liabilities
denominated in a currency other than the functional currency are converted to
the functional currency at the exchange rate in effect at the balance sheet
date. All foreign currency transaction gains and losses have been included in
earnings.

*Capital
assets*

Capital
assets are recorded at cost. Depreciation of capital assets is recorded at the
following rates:

Purchased
      computer software
    40%
    Declining
      balanceComputer
      equipment
    30%
    Declining
      balanceFurniture
      and fixtures
    20%
    Declining
      balanceOffice
      equipment
    20%
    Declining
      balanceComputer
      equipment under capital lease
    30%
    Declining
      balance and straight lineLeasehold
      improvements
    Term
      of lease
    Straight
      line
**NAVTECH,
INC.**
**F-6**

**NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
**(In
US Dollars)***Lease
inducements*

Lease
inducements represent leasehold improvements paid for by the landlord and the
value of rent-free periods. Lease inducements are amortized on a straight-line
basis over the periods of the leases and the amortization is recorded as a
reduction of rent expense.

*Asset
impairment*

The
Company evaluates the carrying value of intangible and other long-lived assets
whenever events or changes in circumstances indicate the carrying value of an
asset may not be recoverable. An impairment loss is recognized when the estimate
of undiscounted future cash flows generated by such assets is less than the
carrying amount. Measurement of the impairment loss is based on the present
value of the expected future cash flows.

*Income
taxes*

The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). SFAS
109 requires the determination of deferred tax assets and liabilities based on
the differences between the financial statement and income tax bases of assets
and liabilities, using estimated tax rates in effect for the year in which the
differences are expected to reverse. The measurement of a deferred tax asset is
adjusted by a valuation allowance, if necessary, to recognize tax benefits only
to the extent that, based on available evidence, it is more likely than not that
they will be realized. In determining the valuation allowance, the Company
considers factors such as the reversal of deferred income tax liabilities,
projected taxable income and the character of income tax assets and tax planning
strategies. A change to these factors could impact the estimated valuation
allowance and income tax expense.

The
Company is subject to audits by taxation authorities of the jurisdictions in
which it operates in the normal course of operations. The Company regularly
assesses the status of these examinations and the potential for adverse outcomes
to determine the adequacy of the provision for income and other taxes.

*Research
and development costs*

The
Company incurs costs related to research and development of its software. To
date, the Company has not capitalized any development costs under Statement of
Financial Accounting Standards No. 86, “Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed” (“SFAS 86”). The Company has
defined the attainment of technological feasibility as completion of a working
model. The costs incurred between the time of establishment of a working model
and the time when the products are marketed are insignificant. Consequently,
costs that are eligible for capitalization are expensed in the period
incurred.

*Investment
tax credits*

Navtech-Canada
qualifies for scientific research and experimental development investment tax
credits on eligible scientific research and development expenditures. Investment
tax credits are recorded as a reduction of income tax expense when it is more
likely than not that the credits will be realized. Investment tax credits not
utilized in the current year can be used to offset income taxes in future years.

*Revenue
recognition*

The
Company’s products and services are generally sold as part of a contract and the
terms of the contracts, taken as a whole, determine the appropriate revenue
recognition methods. Depending upon the terms of the contract and types of
products and services sold, the Company recognizes revenue under American
Institute of Certified Public Accountants Statement of Position (“SOP”) 81-1,
“Accounting for Performance of Construction-Type and Certain Production-Type
Contracts” (“SOP 81-1”), SOP 97-2, “Software Revenue Recognition” (“SOP 97-2”),
and SEC Staff

**NAVTECH,
INC.**
**F-7**

**NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
**(In
US Dollars)**

Accounting
Bulletin (“SAB”) 104, “Revenue Recognition” (“SAB 104”), which was preceded by
SAB 101, “Revenue Recognition in Financial Statements” (“SAB 101”). Revenue is
recognized net of cash discounts and allowances.

Effective
August 1, 2003, for contracts involving multiple deliverables, where the
deliverables are governed by more than one authoritative accounting standard,
Navtech generally applies the FASB Emerging Issues Task Force (“EITF”) Issue No.
00-21, “Revenue Arrangements with Multiple Deliverables”, and evaluates each
deliverable to determine whether it represents a separate unit of accounting
based on the following criteria: (a) whether the delivered item has value to the
customer on a standalone basis, (b) whether there is objective and reliable
evidence of the fair value of the undelivered item(s), and (c) if the contract
includes a general right of return relative to the delivered item, delivery or
performance of the undelivered item(s) is considered probable and substantially
in the control of the Company. If objective and reliable evidence of fair value
exists for all units of accounting in the contract, revenue is allocated to each
unit of accounting or element based on relative fair values. In situations where
there is objective and reliable evidence of fair value for all undelivered
elements, but not for delivered elements, the residual method is used to
allocate the contract consideration. Under the residual method, the amount of
revenue allocated to delivered elements equals the total arrangement
consideration less the aggregate fair value of any undelivered elements. Each
unit of accounting is then accounted for under the applicable revenue
recognition guidance.

Under SAB
104 or SOP 97-2, if evidence of fair value does not exist for any undelivered
element, revenue is not recognized until the earlier of (i) the undelivered
element is delivered or (ii) evidence of fair value of the undelivered element
exists, unless the undelivered element is a service, in which case revenue is
recognized as the service is performed once the service is the only undelivered
element.

The
Company has classified its products and service revenue under the following
categories and revenue recognition policies:

a)
    Service
      fees

Service
fees revenue consists of monthly subscription fees which include monthly
software license, hosting services, customer support and data services.

Substantially
all of the Company’s customers that purchase software rights from the Company
enter into software arrangements where customers pay monthly fees that bundle
software, customer support and data service fees. Under such arrangements, the
software is either implemented at the customer site, or implemented on a
computer environment maintained by the Company.

The
Company recognizes subscription fee revenue as the services are provided on a
monthly basis.

Revenues
related to a hosting arrangement are recognized under SOP 97-2 only if the
customer has the contractual right to take possession of the software at any
time during the hosting period without significant penalty and it is feasible
for the customer to either run the software on its own hardware or contract with
another party unrelated to the vendor to host the software. Hosting arrangements
that do not give the customer such an option are service contracts and are
outside the scope of SOP 97-2 and accordingly, revenue is recognized in
accordance with SEC Staff Accounting Bulletin (“SAB”) 104.

b)
    Professional
      services

Professional
service revenue consists of software configuration and custom programming.

For
customer contracts related to customized software development, where the
customer has the right to, or has possession of the software, revenues are
recognized under American Institute of Certified Public Accountants (“AICPA”)
Statement of Position (“SOP”) 81-1 using the percentage-of-completion method. In
using the percentage-of-completion method, revenues are recorded based on a
measure of the percentage of costs incurred to date on a
**NAVTECH,
INC.**
**F-8**

**NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
**(In
US Dollars)** 
 contract
relative to the estimated total expected contract costs. Profit estimates on
long-term contracts are revised periodically based on changes in circumstances
and any losses on contracts are recognized in the period that such losses become
known. Generally, the terms of long-term contracts provide for progress billing
based on completion of certain phases of work. Contract revenues recognized in
excess of billings are accumulated in deferred expenses included in prepaid
expenses. Billings in excess of revenues recognized to date on long-term
contracts are recorded as deferred revenue.
 
 c)
    Hardware
      revenue
  Hardware
revenue includes arrangements where the Company provides hosting equipment to
its customers.
  In
hosting arrangements that contain specified equipment in which the Company owns
or leases specific assets with which to fulfill the obligation and it is not
economically feasible or practicable for the Company to perform its obligation
through the use of alternative property, plant, or equipment, revenue is
recognized under EITF Issue No. 01-8, “Determining whether an Arrangement
Contains a Lease.” A sale is recorded under a capital lease arrangement when the
conditions meet the definition of a sales-type lease as defined in Statement of
Financial Accounting Standard (“SFAS”) 13 and based on guidance in EITF 01-8 and
a lease receivable is recognized at the time of the sale. Finance revenue is
recognized using the effective interest method.
 
 *Stock-based
compensation*
  Stock-based
compensation arising from the Company’s stock option plan is accounted for by
the intrinsic value method under Accounting Principles Board ("APB") Opinion 25,
"Accounting for Stock Issued to Employees." SFAS 123, "Accounting for
Stock-Based Compensation" encourages, but does not require, the cost of
stock-based compensation arrangements with employees to be measured based on the
fair value of the equity instrument awarded. As permitted by SFAS 123, the
Company applies APB Opinion 25 and related interpretations in accounting for
stock-based compensation awards to employees under its stock option plan (Note
9).
 
 In
December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment to FASB Statement No.
123” (SFAS 148). SFAS 148 requires expanded and more prominent presentation of
the pro forma disclosures previously required by SFAS 123. The new presentation
is required for financial statements for fiscal years ending after December 15,
2002. The Company has adopted the provisions of SFAS 148 effective November 1,
2002.
 
 In
accordance with SFAS 123, compensation expense for stock options is measured as
the fair value of the options at the grant date. Pro forma information regarding
net income and earnings per share is required by SFAS 123, and has been
determined as if the Company accounted for its employee stock options under the
fair value method of that Statement. The fair value for these options was
estimated at the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions:
 
 *Year
      ended October 31,*Assumption
    
    
    **2005**
    
    
    2004Volatility
      factor of expected market price of the Company’s stock
    
    
    **na**
    
    
    167
    %Dividend
      yield
    
    
    **na**
    
    
    0
    %Risk-free
      rate
    
    
    **na**
    
    
    4
    %Weighted
      average expected life of stock options (years)
    
    
    **na**
    
    
    2.4
 
 There are
no assumptions for 2005 as there were no options issued during that year. The
pro forma amounts reflect options issued in 2004.
 
 **NAVTECH,
INC.**
**F-9**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
**(In
US Dollars)**
 
 SFAS 123
requires that, for the pro forma disclosure, the compensation cost based on the
fair values of the options at the grant date be amortized over the vesting
period. If compensation cost for stock options had been determined based on the
fair value at the grant dates consistent with the method described by SFAS 123,
the Company’s net earnings and earnings per share would have been adjusted to
the pro forma amounts indicated below.
  *Year
      ended*
      *October
      31,***2005**
    
    
    2004Net
      earningsNet
      earnings - reported
    
    **$******
    ******672,580**
    
    $
    393,808Pro
      forma stock-based compensation
    
    
    **(69,447**
    **)**
    
    (19,995
    )Net
      earnings - pro forma
    
    **$******
    ******603,133**
    
    $
    373,813Basic
      earnings per share - reported
    
    **$******
    ******0.14**
    
    $
    0.09Diluted
      earnings per share - reported
    
    **$******
    ******0.13**
    
    $
    0.07Pro
      forma stock-based compensation
    
    
    **-**
    
    
    -Basic
      earnings per share - pro forma
    
    **$******
    ******0.13**
    
    $
    0.09Diluted
      earnings per share - pro forma
    
    **$******
    ******0.12**
    
    $
    0.07
 
 *Variable
interest entities*
 
 In
January 2003, the FASB issued Interpretation No. 46R, “Consolidation of Variable
Interest Entities, an interpretation of ARB No. 51” and revised this
interpretation in December 2003 (”FIN 46R”). FIN 46R outlines the application of
consolidation guidance to certain entities in which equity investors do not have
the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support. Reporting entities which have a
variable interest in such an entity and are deemed to be the primary beneficiary
must consolidate the variable interest entity. For public entities, FIN 46R was
applicable immediately to variable interest entities by the end of the first
reporting period ending after December 15, 2004 for enterprises that are small
business issuers. The Company has adopted the provisions of FIN 46R effective
November 1, 2004. The adoption of FIN 46R did not have an impact on the
Company’s results of operations and financial condition as it has not been
involved in any transactions requiring consolidation as prescribed by FIN 46R.
 
 *Use
of estimates*
  The
preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions,
which are evaluated on an ongoing basis, that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of revenues and
expenses during the reported periods. Management bases its estimates on
historical experience and on various other assumptions that it believes are
reasonable at that time, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. In particular, critical estimates and
assumptions include those related to revenue recognition, the allowance for
doubtful accounts, the valuation of long-lived assets, the recognition of
contingencies, realization of investment tax credits, and the valuation
allowance relating to the Company’s deferred tax assets. Actual results could
differ from those estimates or assumptions.
  **NAVTECH,
INC.**
 **F-10**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **(In
US Dollars)**
  ***Recently
issued accounting pronouncements***
 
 *Stock-based
compensation*
 In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment
("SFAS No. 123R"), which is a revision of SFAS No. 123, Accounting for
Stock-Based Compensation ("SFAS 123"), as amended by SFAS No. 148, Accounting
for Stock-Based Compensation-Transition and Disclosure and Amendment of SFAS No.
123 ("SFAS 148"). SFAS No. 123R supersedes Accounting Principles Board Opinion
("APB") No. 25, Accounting for Stock Issued to Employees ("APB 25") and amends
certain provisions of SFAS No. 95, Statement of Cash Flows. SFAS No. 123R
requires all share-based payments to employees, including grants of employee
stock options to be measured at fair value. In addition, SFAS No. 123R will
cause unrecognized expense (based on the amounts in our pro forma footnote
disclosure) related to options vesting after the date of initial adoption to be
recognized as a charge to operations over the remaining vesting period. We are
required to adopt SFAS No. 123R effective October 1, 2006. Under SFAS No. 123R,
we must determine the appropriate fair value model to be used for valuing
share-based payments, the amortization method for compensation cost and the
transition method to be used at the date of adoption. The transition
alternatives include prospective and retroactive adoption methods. Under the
retroactive method, prior periods may be restated either as of the beginning of
the year of adoption or for all periods presented. The prospective method
requires that compensation expense be recorded for all unvested stock options
and share awards at the beginning of the first quarter of adoption of SFAS No.
123R, while the retroactive method would record compensation expense for all
unvested stock options and share awards beginning with the first period
restated.
  In March
2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the
SEC’s interpretation of SFAS 123R and the valuation of share-based payments for
public companies.
  The
Company is evaluating the requirements of SFAS No. 123R and SAB 107 and has not
yet quantified the impact of SFAS No. 123R on the future consolidated
results of operations and earnings per share.
 
 *Exchanges
of non-monetary assets*
 
 In
December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-Monetary Assets”
(“SFAS 153”). SFAS 153 amends Accounting Principle Board Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. This standard is in effect for exchanges
occurring in fiscal years beginning after June 15, 2005. The Company does not
expect that the adoption of this standard will have a significant impact on its
consolidated financial statements.
 
 *Accounting
changes and error corrections*
 
 In May
2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,”
(“SFAS 154”), which replaces Accounting Principles Board Opinion No. 20,
“Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim
Financial Statements - An Amendment of APB Opinion No. 28.” SFAS 154 provides
guidance on the accounting for and reporting of changes in accounting principles
and error corrections. SFAS 154 requires retrospective application to the prior
period’s financial statements of voluntary changes in accounting principle and
changes required by new accounting standards when the standard does not include
specific transition provisions, unless it is impracticable to do so. Certain
disclosures are also required for restatements due to the correction of an
error. SFAS 154 is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005. The impact that the
adoption of SFAS 154 will have on the Company’s results of operations and
financial condition will depend on the nature of future accounting changes and
the nature of transitional guidance provided in future accounting
pronouncements.
  **NAVTECH,
INC.**
**F-11**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
**(In
US Dollars)**
  3.  PREPAID
EXPENSES AND OTHER CURRENT ASSETS
 
 **
    
    
    *Year
      ended October 31,***2005**
    
    
    2004Prepaid
      expenses
    
    **$******
    ******204,592**
    
    $
    141,863Deferred
      acquisition costs (Note 15)
    
    
    **695,171**
    
    
    -Deferred
      expenses
    
    
    **525,082**
    
    
    81,346**$******
    ******1,424,845**
    
    $
    223,209
 
 As
disclosed in Note 2, revenues for customer contracts related to customized
software development are recognized under SOP 81-1 using the
percentage-of-completion method. Costs incurred towards the completion of the
project that are unbilled are accumulated in deferred expenses included with
prepaid expenses and other current assets.
 
 4.  CAPITAL
ASSETS
  *October
      31,***2005**
    
    
    2004CostPurchased
      computer software
    
    **$******
    ******418,945**
    
    $
    745,709Computer
      equipment
    
    
    **997,789**
    
    
    856,873Computer
      and office equipment under capital lease
    
    
    **137,977**
    
    
    109,902Furniture
      and fixtures
    
    
    **128,805**
    
    
    138,425Office
      equipment
    
    
    **231,878**
    
    
    197,197Leasehold
      improvements
    
    
    **304,579**
    
    
    271,470**2,219,973**
    
    
    2,319,576Accumulated
      depreciationPurchased
      computer software
    
    
    **362,308**
    
    
    660,292Computer
      equipment
    
    
    **672,284**
    
    
    617,234Computer
      and office equipment under capital lease
    
    
    **95,903**
    
    
    51,614Furniture
      and fixtures
    
    
    **87,805**
    
    
    96,005Office
      equipment
    
    
    **171,489**
    
    
    142,321Leasehold
      improvements
    
    
    **248,635**
    
    
    204,196**1,638,422**
    
    
    1,771,662**$******
    ******581,551**
    
    $
    547,914
  **NAVTECH,
INC.**
 **F-12**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **(In
US Dollars)**
  5.  OBLIGATION
UNDER CAPITAL LEASES
  The
Company is committed under capital leases for computer and office equipment with
terms expiring at various dates in 2006 and 2008. The future minimum lease
payments under the lease agreements along with the present balance of the
obligation under the capital leases are as follows:
 
 Minimum
      lease payments for year ended October 31,2006
    
    $
    275,9052007
    
    
    267,5852008
    
    
    222,987766,477Less:
      Amounts representing interest
    
    
    59,963Balance
      of obligation
    
    
    706,514Less:
      Current portion
    
    
    241,884Long-term
      portion
    
    $
    464,630
 
 6.  COMMITMENTS
AND CONTINGENCIES
  *Commitments*
  The
Company is committed under non-cancellable operating leases for business
premises and office equipment with terms expiring at various dates in 2006
through 2009.  The future minimum amounts payable under the lease
agreements are as follows:
 
 2006
    
    **$**
    **347,432**2007
    
    
    **121,600**2008
    
    
    **63,745**2009
    
    
    **1,282****$**
    **534,059**
  Rent
expense for the fiscal years ended October 31, 2005 and 2004 was $329,639 and
$240,101, respectively.
 
 *Contingencies*
  The
Company is subject to various legal proceedings, claims and liabilities, which
arise in the ordinary course of its business. In the opinion of management, the
amount of any ultimate liability with respect to these actions will not have a
material adverse effect on the Company’s consolidated results of operations,
cash flows or financial position.
  **NAVTECH,
INC.**
 **F-13**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **(In
US Dollars)**
  7.  DEFERRED
LEASE INDUCEMENTS
  Navtech-Canada
entered into a lease for its premises in Waterloo, Canada that provided for
certain lease inducements, including the provision of a leasehold improvement
allowance and a period of free rent. During the year, Navtech-UK also entered
into a lease for its premises in Gatwick, UK that provided a period of free
rent. The Company has deferred the recognition of these inducements and is
amortizing the inducements over the initial term of the lease set to expire
October 2006 and May 2008, respectively. Annual amortization is charged against
rent expense. Deferred lease inducements as of October 31, 2005 and 2004 are as
follows:
 
 *October
      31,***2005**
    
    2004Deferred
      lease inducements
    
    **$******
    ******217,558**
    
    $
    178,500Less:
      Accumulated amortization
    
    
    **176,425**
    
    
    142,801**41,133**
    
    
    35,699Less:
      Current portion
    
    
    **32,761**
    
    
    17,850**$******
    ******8,372**
    
    $
    17,849
 
 8.  SHARE
CAPITAL
  The
authorized share capital of the Company consists of 20,000,000 common shares
with a par value of $0.001, and 2,000,000 preferred shares with a par value of
$0.01. At October 31, 2005, there were 5,635,328 common shares issued and fully
paid (2004 - 4,884,271) and no preferred shares issued as at October 31, 2005
and 2004.
 
 During
the year, 125,000 common share purchase warrants were exercised (2004 - Nil) at
an exercise price of $1.875 for total proceeds of $234,375. There are no
outstanding common share purchase warrants at October 31, 2005 (2004 -
125,000).
 
 *Year
ended October 31, 2005*
  During
the year, the Company issued 626,057 common shares upon the exercise of options
under the 1999 Stock Option Plan for total proceeds of $336,114.
  Treasury
stock
  During
the year, the Company increased the number of common shares in treasury by
125,459. The shares were received by the Company as consideration in lieu of
cash for the exercise price on the exercise of stock options. The value assigned
to the treasury stock was based on the market price at the date of exercise. At
October 31, 2005, the number of common shares in treasury amounted to
733,188.
 
 *Year
ended October 31, 2004*
  During
the year, the Company issued 41,865 common shares upon the exercise of options
under the 1999 Stock Option Plan for total proceeds of $14,292.
  Treasury
stock
  At
October 31, 2004, the number of common shares in treasury amounted to
607,729.
  **NAVTECH,
INC**
 **F-14**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **(In
US Dollars)**
  9.  STOCK
OPTION PLAN
  In 1999
the Company adopted the 1999 Stock Option Plan (the “1999 Stock Option Plan”),
as approved by the shareholders on January 14, 2000, which provided for the
granting of incentive stock options and non-statutory stock options for the
purchase of a maximum of 1,500,000 shares of the Company’s common stock to
directors, employees, consultants and advisors of the Company. On March 29,
2001, the shareholders approved an amendment to the 1999 Stock Option Plan to
increase the maximum number of options to be granted to 3,000,000. Under the
terms of the 1999 Stock Option Plan, the options, which expire no later than ten
years after grant, are exercisable at a price no less than the fair market value
of the Company’s common stock at the date of the grant and become exercisable in
accordance with terms established at the time of the grant.
 
 A summary
of the activity in the Option Plan is set forth below:
 
 Number
      of
      Shares
    
    
    Weighted
      Average
      Exercise
      PriceBalance
      outstanding at October 31, 2002
    
    
    1,092,015
    
    $
    0.55Granted
    
    
    -
    
    
    -Canceled
      and expired
    
    
    (61,000
    )
    
    0.60Exercised
    
    
    (7,500
    )
    
    0.28Balance
      outstanding at October 31, 2003
    
    
    1,023,515
    
    $
    0.55Granted
    
    
    210,000
    
    
    1.02Canceled
      and expired
    
    
    (47,125
    )
    
    0.64Exercised
    
    
    (41,865
    )
    
    0.34Balance
      outstanding at October 31, 2004
    
    
    1,144,525
    
    $
    0.64Granted
    
    
    -
    
    
    -Canceled
      and expired
    
    
    (87,468
    )
    
    0.98Exercised
    
    
    (626,057
    )
    
    0.54**Balance
      outstanding at October 31, 2005**
    
    
    **431,000**
    
    **$******
    ******0.67**Exercisable
      at October 31, 2004
    
    
    905,838
    
    $
    0.56**Exercisable
      at October 31, 2005**
    
    
    **415,688**
    
    **$******
    ******0.67**
 
 The
following table summarizes information concerning outstanding options at October
31, 2005:
 
 Range
      of Exercise Prices
    
    
    Number
      of Options
      Outstanding
    
    
    Weighted
      Average
      Remaining
      Contractual
      Life
    
    
    Weighted
      Average
      Exercise
      Price
    
    
    Number
      of Options
      Exercisable
    
    
    Weighted
      Average
      Exercise
      Price$0.15
    
    
    100,000
    
    
    6.27years
    
    $
    0.15
    
    
    100,000
    
    $
    0.15$0.37
      - $0.75
    
    
    158,500
    
    
    6.27years
    
    $
    0.58
    
    
    150,219
    
    $
    0.58$0.90
      - $1.1875
    
    
    165,500
    
    
    4.45years
    
    $
    1.05
    
    
    158,469
    
    $
    1.05$1.46875
    
    
    7,000
    
    
    0.25years
    
    $
    1.47
    
    
    7,000
    
    $
    1.47431,000
    
    
    5.28years
    
    $
    0.67
    
    
    415,688
    
    $
    0.67
  **NAVTECH,
INC.**
 **F-15**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **(In
US Dollars)**
  10.  EARNINGS
PER SHARE
 
 Basic and
diluted earnings per share are calculated as follows:
 
 *Year
      ended*
      *October
      31,***2005**
    
    
    2004Numerator:Net
      earnings (A)
    
    **$******
    ******672,580**
    
    $
    393,808Denominator:Denominator
      for basic earnings per share - weighted averagenumber
      of common shares outstanding (B)
    
    
    **4,683,869**
    
    
    4,251,921Effect
      of dilutive securities:Employee
      stock options
    
    
    **431,000**
    
    
    1,007,525Denominator
      for diluted earnings per share - adjusted weightedaverage
      number of common shares outstanding (C)
    
    
    **5,114,869**
    
    
    5,259,446Earnings
      per share - basic (A)/(B)
    
    **$******
    ******0.14**
    
    $
    0.09Earnings
      per share - diluted (A)/(C)
    
    **$******
    ******0.13**
    
    $
    0.07
 
 Dilutive
securities consist of employee stock options and warrants. Specific employee
stock options and warrants are excluded if their effect is
antidilutive.
 
 11.  INCOME
TAXES
  The
components of the recovery of income taxes are as follows:
 
 *Year
      ended October 31,***2005**
    
    
    2004Current:United
      States
    
    **$******
    ******-**
    
    $
    -Canada
    
    
    **4,026**
    
    
    1,663United
      Kingdom
    
    
    **-**
    
    
    -**$******
    **4,026**
    
    **$**
    1,663Deferred:United
      States
    
    **$**
    **-**
    
    **$******
    -Canada
    
    
    **84,580**
    
    
    189,528United
      Kingdom
    
    
    **-**
    
    
    -**84,580**
    
    
    189,528**$******
    ******88,606**
    
    $
    191,191
  **NAVTECH,
INC.**
 **F-16**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **(In
US Dollars)**
 The
components of the net deferred tax assets are as follows:
 *Year
      ended*
      *October
      31,***2005**
    
    
    2004Deferred
      income tax assets:Net
      operating losses carried forward
    
    **$******
    ******307,000**
    
    $
    305,000Unused
      income tax credits
    
    
    **573,000**
    
    
    376,000Allowance
      for doubtful accounts
    
    
    **42,000**
    
    
    31,000Depreciation
    
    
    **35,000**
    
    
    -**957,000**
    
    
    712,000Deferred
      income tax liabilitiesDepreciation
    
    
    **-**
    
    
    19,000**-**
    
    
    19,000Net
      deferred tax assets
    
    
    **957,000**
    
    
    693,000Valuation
      allowance
    
    
    **(480,129**
    **)**
    
    (255,581
    )Deferred
      tax assets, net of valuation allowance
    
    **$******
    ******476,871**
    
    $
    437,419
  The
provision for income taxes varies from the expected provision at the statutory
rates for the following reasons:
 
 *Year
      ended October 31,***2005**
    
    
    2004Combined
      basic statutory rate
    
    
    **40**
    **%**
    
    40
    %Provision
      for (recovery of) income taxes based on the basic statutory
      rate
    
    **$******
    ******233,000**
    
    $
    81,000Increase
      (decrease) in income taxes resulting from the following:Effects
      of differing statutory rates in other countries
    
    
    **(22,000**
    **)**
    
    (7,000
    )Non-deductible
      expenses
    
    
    **9,000**
    
    
    7,000Recognition
      of tax credits and losses from current and prior years
    
    
    **(424,000**
    **)**
    
    (269,000
    )Valuation
      allowance against current year losses incurred
    
    
    **69,000**
    
    
    -Other
    
    
    **46,394**
    
    
    (3,191
    )**$******
    ******(88,606**
    ******)**
    $
    (191,191
    )
 
 The
Company and its subsidiaries have income tax losses available for carry forward
that expire as follows:
 
 Canada
    United
      States
    UnitedExpiry
      Year
    Federal
    Provincial
    Federal
    State
    Kingdom2019
    -
    -
    213,000
    -
    -2020
    -
    -
    228,000
    -
    -2021
    -
    -
    24,000
    -
    -2023
    -
    -
    149,000
    82,000
    -2025
    -
    -
    45,000
    45,000Indefinite
    -
    -
    -
    -
    285,000$-
    $-
    $659,000
    $127,000
    $285,000
 
 The
Company also has $545,000 of tax credits available in Canada that expire between
2012 and 2015.
  **NAVTECH,
INC.**
 **F-17**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **(In
US Dollars)**
  12.  FINANCIAL
INSTRUMENTS
  Financial
instruments are comprised of cash, accounts receivable, accounts payable and
accrued liabilities.
 
 *Credit
Facilities*
  In
February 2005, the Company renewed a banking facility with the Royal Bank of
Canada for an operating line of credit of CAD $1,000,000 or its USD equivalent.
There was no balance outstanding on the facility at October 31, 2005. The
facility is secured by the assets of Navtech-Canada and is due for annual
renewal in February 2006.
 
 The
Company has lease credit facilities in the amount of CAD $839,000 to finance the
acquisition of computer servers and computer equipment and software. The full
amount of the facilities were drawn upon as at October 31, 2005 (2004 - CAD
$47,000). The lease facilities are subject to the same terms and conditions as
the operating line of credit.
 
 *Fair
value of financial instruments*
  At
October 31, 2005 and 2004, the estimated fair value of cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities was
equal to the book value given the short-term maturity of the items.
 
 *Foreign
exchange risk*
  Foreign
exchange risk is the risk that exchange rates will affect the Company’s
operating results. The Company is exposed to foreign exchange risk in that
approximately 77% of the Company’s sales contracts are denominated in the
reporting currency (US dollar) while approximately 77% of the Company’s
expenditures are denominated in currencies other than the reporting currency.
The Company is exposed to foreign exchange risk with respect to net financial
liabilities totaling approximately $751,000 (2004 - $295,000), which are
denominated in currencies other than the reporting currency.
 
 *Credit
risk*
  The
Company is exposed to credit risk through cash and accounts receivable. The
Company holds its cash positions with well-established financial institutions.
Accounts receivable credit risk is mitigated by the fact that the Company is a
supplier of essential services to its customers and through its policy of
invoicing for services one month in advance. Through close monitoring of
accounts receivable on a regular basis, the Company limits the potential
exposure. Bad debt expense for the year ended October 31, 2005 amounted to
$183,977 on revenues of $11,142,788 **** (2004 -
$91,457 on revenues of $7,900,615). For the year ended October 31, 2005, two
customers accounted for 22% of total revenue (2004 - Nil).
 
 
  
   **NAVTECH,
INC.**
 **F-18**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **(In
US Dollars)**
 13.  SEGMENTED
INFORMATION
  The
Company has identified only one reportable segment under Statement of Financial
Accounting Standards No.131, “Disclosures about Segments of an Enterprise and
Related Information” (“SFAS 131”).
  Information
about geographic operations is as follows:
 Total
      RevenueIn
      thousands of dollars
    
    
    **2005**
    
    
    2004United
      States, Mexico, South America and Other
    
    **$******
    ******6,984**
    
    $
    5,476Canada
    
    
    **2,541**
    
    
    1,075Europe,
      Africa, Middle East and Asia Pacific
    
    
    **1,618**
    
    
    1,350**$******
    ******11,143**
    
    $
    7,901
 Revenue
by geographic locations is determined based on the location of the
customer.
 
 Capital
      AssetsIn
      thousands of dollars
    
    
    **2005**
    
    
    2004United
      States
    
    **$******
    ******73**
    
    $
    84Canada
    
    
    **432**
    
    
    434Europe
    
    
    **77**
    
    
    30**$******
    ******582**
    
    $
    548
 
 Deferred
      Tax AssetsIn
      thousands of dollars
    
    
    **2005**
    
    
    2004United
      States
    
    **$******
    ******-**
    
    $
    -Canada
    
    
    **477**
    
    
    437Europe
    
    
    **-**
    
    
    -**$******
    ******477**
    
    $
    437
  14.  LEASE
RECEIVABLE
  As
disclosed in Note 2, the Company’s service arrangements may include a lease
based on the guidance in EITF 01-8.  One arrangement during 2005 included a
sales-type lease based on the criteria found in SFAS 13 resulting in a lease
receivable recognized at the time of the sale.
  Remaining
      minimum lease payments to be received are as follows:2006
    
    $
    186,5422007
    
    
    186,5422008
    
    
    186,5422009
    
    
    186,5422010
    
    
    170,996917,164Less:
      Amounts representing interest
    
    
    169,660Balance
      of lease receivable
    
    
    747,504Less:
      Current portion
    
    
    186,542Long-term
      portion
    
    $
    560,962
 
 For the
year ended October 31, 2005, lease revenue amounted to $854,000 (2004 - NIL) and
was presented as hardware revenue.
  This
lease transaction was a non-cash transaction and therefore has not been
reflected in the consolidated statement of cash flows.
  **NAVTECH,
INC.**
**F-19**
 
 **NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS**
**(In
US Dollars)**
 15.  SUBSEQUENT
EVENTS
  *EAG
Acquisition*
  On
November 22, 2005, a wholly-owned subsidiary of the Company acquired all of the
issued and outstanding shares of European Aeronautical Group AB (“EAG”) from SAS
Group AB.  The estimated purchase price for the EAG Acquisition was SEK
162,000,000 (approximately $20 million USD) in cash and possible future cash
payments to a maximum of SEK 30,000,000 (approximately $3.7 million USD)
conditional on the achievement of certain business performance measures. 
The purchase price is subject to adjustment based on finalization of the working
capital of EAG at closing. A portion of the proceeds of the Preferred Stock
Offering and the Private Placement were used to fund the purchase
price.
 
 *Preferred
Stock Offering*
  On
November 22, 2005, the Company issued 1,600,000 shares of Series A Convertible
Participating Preferred Stock, and warrants to acquire 100,000 shares of the
Company’s common stock with an exercise price of $3.00, for $4,000,000 cash
consideration. The proceeds were used to consummate the EAG
Acquisition.
 
 *Private
Placement*
  On
November 22, 2005, Navtech-Canada entered into a Note Purchase Agreement whereby
Navtech Canada agreed to sell (i) $6,000,000 Senior Subordinated Notes, with an
interest rate of 9.0% and due 2011 and (ii) $15,000,000 Senior Subordinated
Notes, with an interest rate of 12.5% and due 2011. In connection with the sale
of the Senior Subordinated Notes, the Company also issued to the purchaser
warrants to purchase 312,176 shares of common stock with an exercise price of
$0.01. The proceeds received by Navtech-Canada in connection with the Private
Placement were used to consummate the EAG Acquisition.
  16.  COMPARATIVE
FIGURES
  Certain
comparative figures have been reclassified to conform with the presentation
adopted in the current year.





**NAVTECH,
INC.**
**F-20**


**Signatures**





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




**NAVTECH,
      INC.**Date: January 30,
      2006
    By:
    /s/ David
StruckeDavid Strucke,Chief Executive
  Officer
  In
accordance with the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
  **Signatures**
    **Capacity**
    **Date**
      ****/s/
      David Strucke
      David
      Strucke
    President,
      Chief Executive Officer,
      Secretary,
      and Director
      (Principal
      Executive Officer)
    January
      30, 2006/s/
      Gordon Heard
      Gordon
      Heard
    Chief
      Financial Officer
      (Principal
      Financial Officer and
      Principal
      Accounting Officer)
    January
      30, 2006/s/
      Thomas Beynon
      Thomas
      D. Beynon
    Director
    January
      30, 2006/s/
      Michael Jakobowski
      Michael
      Jakobowski
    Director
    January
      30, 2006/s/
      Michael Ueltzen
      Michael
      Ueltzen
    Director
    January
      30, 2006/s/
      John Hunt
      John
      Hunt
    Director
    January
      30, 2006/s/
      Andrew Snyder
      Andrew
      Snyder
    Director
    January
      30, 2006
  NAVTECH,
INC.
 2005
10-KSB
 Page 43