UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
               | X | Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                   FOR THE FISCAL YEAR ENDED OCTOBER 31, 2008
                                       OR
         | _ | Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
                    for the transition period from ___ to ___

                          Commission file number 0-7642

                             PASSUR AEROSPACE, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                  NEW YORK                                       11-2208938
      -------------------------------                        ----------------
      (State or Other Jurisdiction of                        (I.R.S. Employer
       Incorporation or Organization)                       Identification No.)

     47 ARCH STREET, GREENWICH, CT                                 06830
     -----------------------------                                 -----
(Address of Principal Executive Office)                          (Zip Code)

        Registrant's telephone number, including area code: 203-622-4086

                        Securities registered pursuant to
                         Section 12(b) of the Act: NONE

                        Securities registered pursuant to
                            Section 12(g) of the Act:
                     COMMON STOCK, PAR VALUE $0.01 PER SHARE

Indicate by check mark if the registrant is a well-known seasonded issuer, as
defined in Rule 405 of the Securities Act. YES [ ] NO [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. YES [ ] NO [X]

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer
smaller reporting company [X]

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

    The aggregate market value of the voting shares of the Registrant held by
               non-affiliates as of April 30, 2008 was $3,817,000

             The number of shares of common stock, $0.01 par value,
                outstanding as of January 20, 2009 was 4,146,448

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Definitive Proxy Statement for the 2009 Annual
Meeting of Stockholders, to be filed with the Securities and Exchange Commission
within 120 days of October 31, 2008, are incorporated by reference into Part III
of this Form 10-K.


                                                                    Page 1 of 58
<PAGE>

                                     PART I

ITEM 1. BUSINESS

      (A) GENERAL DEVELOPMENT OF BUSINESS

COMPANY BACKGROUND

PASSUR Aerospace, Inc. (the "Company", "we", or "our") is a New York corporation
founded in 1967. The Company conducts its business in the United States, Canada,
Europe, and Japan. The Company's offices are located at 47 Arch Street,
Greenwich, CT, 06830 and 35 Orville Drive, Bohemia, New York, 11716.

The Company's principal business is to provide timely, critical information and
solutions to aviation organizations from its proprietary PASSUR(R) Network of
live, unique flight information, incorporating decision support software,
analytics, as well as web-delivered collaborative decision solutions.

The Company is an information company with a unique aviation database and
private international network of proprietary passive radars located at more than
100 airports world-wide, including all of the top 35 US airports - from which we
derive and sell PASSUR(R) information, analytics, and decision support tools to
improve the operational efficiency of aviation organizations, as well as to
provide safety and security services for government organizations. The passive
radar network currently processes ADS-B as well as Mode A, C, and S messages.

The Company offers unique user-friendly information, as well as decision-support
algorithms, which provide innovative commercial air traffic solutions to over 50
airports (including customers at 8 of the top 10 in the US), dozens of airlines
(including 7 of the top 10 US-based airlines), and more than 200 corporate
aviation airports customers, as well to the US Government. Our customers
acknowledge that the use of PASSUR(R) information and decision tools generate
significant cost savings and helps them make better and more economic decisions.

Our goal is to enhance the efficiency and security of the airspace and save
customers money by providing timely, critical information and solutions to
commercial and government organizations. The Company believes there is a
significant opportunity for PASSUR(R) to become the standard in an industry
where information capabilities are fragmented, standardized information is
lacking, and where only limited means of sharing and communicating information
currently exist.

The Company delivers these tools primarily on "web dashboards," which are
portals which aggregate many different sets of information on one web-accessed
page. Almost all of the PASSUR(R) solutions have a live or real-time component,
but most also include alerts, decision support, collaborative components,
immediate playback or review, and analysis. The PASSUR(R) products are protected
by multiple patents and patent pending applications. More information can be
found on our web site at www.passur.com.

Revenues during Fiscal Year (FY) 2008 increased by approximately 33%, or
$1,874,000, to $7,572,000 from $5,698,000 in FY 2007, while total costs and
expenses in FY 2008 increased by about 38%, or $1,784,000 to $6,478,000 from
$4,694,000 in FY 2007.

FORWARD LOOKING STATEMENTS

The information provided in this Annual Report on Form 10-K (including, without
limitation, "Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Liquidity and Capital Resources", and "Risk Factors",
below) contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 regarding the Company's future plans,
objectives, and expected performance. The words "believe," "may," "will,"
"could," "should," "would," "anticipate," "estimate," "expect," "project,"
"intend," "objective," "seek," "strive," "might," "likely result," "build,"
"grow," "plan," "goal," "expand," "position," or similar words, or the negatives
of these words, or similar terminology, identify forward-looking statements.
These statements are based on assumptions that the Company believes are
reasonable, but are subject to a wide range of risks and uncertainties, and a
number of factors could cause the Company's actual results to differ materially
from those expressed in the forward-looking statements referred to above. These
factors include, among others, the uncertainties related to the ability of the
Company to sell data subscriptions from its PASSUR(R) Network and to make new


                                                                    Page 2 of 58
<PAGE>

sales of its PASSUR(R) and other product lines (due to potential competitive
pressure from other companies or other products), as well as the current
uncertainty in the aviation industry due to terrorist events, the war on terror,
increased fuel costs, and airline bankruptcies and consolidations. Other
uncertainties which could impact the Company are uncertainties with respect to
future changes in governmental regulation and the impact that such changes in
regulation will have on the Company's business. Additional uncertainties are
related to a) the Company's ability to find and maintain the personnel necessary
to sell, manufacture, and service its products, b) its ability to adequately
protect its intellectual property, c) its ability to secure future financing and
d) its ability to maintain the continued support of its significant shareholder.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which relate only to events as of the date on which the statements
are made and which reflect management's analysis, judgments, belief, or
expectation only as of such date. The Company undertakes no obligation to
publicly update any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.

GENERAL

The Company believes financial performance and operational efficiencies in the
aviation industry can be enhanced by more accurate and timely flight information
and analytics, collaboration, and professional services. The Company believes
its business opportunities come from addressing the following specific problem
areas in the aviation industry:

1.    The lack of standardized, timely, accessible, and accurate information in
      the aviation industry. The business community has come to expect a
      sophisticated delivery of rich information in other pace-setting
      industries such as banking, news, and health care.

      In aviation, valuable information exists, but is compartmentalized among
      its various constituencies, including government air traffic regulators,
      airlines, airports, fixed based operators, corporate aviation departments,
      and passengers. As such, any aviation-related organization must contend
      with multiple conflicting sources of information (often within the same
      organization), or a lack of access to the information at all.

      The Company's business opportunities arise from its ability to market
      otherwise hard-to-access or compartmentalized information through the
      unique PASSUR(R) integrated database flight and airspace data. The Company
      believes the information provided by this database is unique, and makes
      available a standardized, comprehensive data set, accessible to all
      aviation constituencies. The PASSUR(R) passive radar network is integral
      to this database.

2.    The aviation industry's lack of a standardized information technology
      platform for accessing information. The Company's Web "dashboard"
      technology creates a single, "one-source" platform for accessing valuable
      information from the PASSUR(R) database. PASSUR(R) Web dashboards can
      include information, decision support, analytical tools, and collaboration
      tools.

3.    The lack of standardized protocols and industry best-practices, and an
      information platform to share those protocols, for collaboration among all
      players to manage the more complex and expensive problems in the aviation
      industry. There are a number of known aviation conditions that are best
      addressed through tested, proven operational protocols, and providing a
      platform for the collaborative implementation of those protocols amongst
      the key partners in aviation operations. These conditions include winter
      deicing operations, summer thunderstorms, air traffic delays, security
      alerts, and aviation incidents and accidents. The Company's web-based
      protocols, which codify practices developed by many leading experts in the
      industry, are communicated to and shared with multiple parties through
      PASSUR(R)'s collaborative solutions resulting in significant cost
      reductions and improved customer service.


                                                                    Page 3 of 58
<PAGE>

4.    The lack of an outcome-based solutions database to ensure that aviation
      organizations are taking the most appropriate and effective actions based
      on measurable, definable past performance metrics. Aviation suffers from a
      lack of an outcome-based, historical database which, when accessed, would
      allow users to take effective actions that are appropriate for the exact
      conditions being experienced. The PASSUR(R) outcomes database allows users
      to immediately determine the right actions at the right time, based on
      actual historical performance and outcomes, to help to ensure that the
      most effective solution is implemented. The outcomes database helps to
      standardize and institutionalize aviation organizations' response to air
      traffic control (ATC) conditions, scenarios and problems which recur
      constantly in the operating environment, eliminating the improvisatory and
      anecdotal character which typifies today's airline-ATC interaction and
      results in significant unnecessary costs. For example, if LaGuardia
      airport has a weather system moving through, the PASSUR(R) outcomes
      database will provide information to the user about the optimal
      configuration of LaGuardia airport to maximize arrivals and departures -
      based on how the airport has performed under the same conditions over the
      previous weeks, months, or years.

5.    The lack of specialized aviation expertise to assimilate, analyze, and
      implement aviation information solutions. Even with the best information
      solutions, aviation organizations often require expertise to help
      implement these solutions into their everyday operating environment. The
      PASSUR(R) Professional Services Program provides experts who are
      specialists in their respective fields, often with decades of experience,
      who assist aviation organizations in a variety of fields, to include
      Landing Fee Management at an airport or Air Traffic Management at an
      airline.

BUSINESS STRATEGY

Over the past several years, PASSUR Aerospace Inc. has been developing and
selling information and software from its unique flight database (powered by the
PASSUR(R) passive radar network) to aviation organizations, and those who serve
aviation. The Company has created and continues to create information, decision
support, and collaborative web-based software that allows all of its customers
to instantly share information to improve individual and joint decision making,
creating additional value for all of the Company's markets. The main objectives
of the Company's business strategy are to:

1.    Lead and continue to develop the industry standard for accurate, timely
      flight information. The Company will continue to build the PASSUR aviation
      database, to ensure that it offers the richest and most critical
      collection of live and archived flight and airspace information from one
      source.

2.    Lead the development of web dashboard applications. The Company will
      continue to lead in the development of web applications which aggregate
      critical information, decision support, analytics and collaborative tools
      onto specialized integrated web pages.

3.    Distribute the Company's services through the PASSUR(R) Distribution
      Network of leading aviation organizations and system integrators. As
      PASSUR Aerospace, Inc. expands into new markets, it sells through its
      internal sales and marketing organization as well as through premium
      distributors.

CUSTOMERS AND HOW THEY USE PASSUR AEROSPACE, INC.'S SERVICES

The Company provides its traditional customer base of more than fifty airports,
including some of the largest in the world, as well as dozens of airlines, and
hundreds of fixed base operators ("FBOs") with the following capabilities:

      DESIGNED TO IMPROVE AND MANAGE REVENUE:

      o     Web-based landing fee tools that enable airports, airlines, and FBOs
            to manage fees with fewer resources, greater accuracy, greater
            transparency and accountability, and generate additional landing fee
            revenue for airports.
      o     Enhanced collaborative decision-making tools that enable airlines to
            maximize schedule completion during irregular operations, thereby
            protecting otherwise lost revenue, and enable airports to realize a
            higher rate of revenue-generating activity, such as landing and
            related handling fees, through higher rates of airport utilization
            during irregular operations.


                                                                    Page 4 of 58
<PAGE>

      o     Web-based marketing tools that allow customers to instantly identify
            new marketing opportunities and determine the most appropriate
            customer pricing by accessing the PASSUR(R) Information Network of
            unique flight information.

DESIGNED TO REDUCE COSTS THROUGH MORE EFFICIENT USE OF RESOURCES (FOR
OPERATIONAL APPLICATIONS):

      o     Accurate arrival data and ETAs for more effective management of
            flight operations. With better arrival information, our customers
            more effectively manage flights during "push," or busy periods.
            PASSUR RightETA(TM) enhances productivity of ground personnel and
            support functions by complementing gate management and staff
            scheduling programs, and has generated significant documented
            financial returns.
      o     Accurate arrival information for airlines and airports at the local
            or "station" level to help manage diversions and connections, and
            reduce the incidence of aircraft arriving at a gate without the
            handling resources in place (so called "gate unmets"). A more
            accurate picture of the terminal airspace, more accurate ETAs, and
            views of current holding patterns also enable airlines to make
            better decisions at the "system" level (airline command centers).
      o     Accurate arrival information for corporate aviation customers to
            help more effectively manage their resources, e.g. security details,
            limousines, line and customer service, etc.
      o     Analytic reporting tools to improve operational performance by
            providing affordable and easily distributed access to the PASSUR(R)
            Information Network of operational information. For example,
            airports use PASSUR(R) web reports to maximize efficient airfield
            utilization; airlines use them to assess on-time performance and
            measure other metrics of operational efficiency.

DESIGNED TO IMPROVE CUSTOMER SERVICE:

      o     The most accurate arrival and ETA information available,
            particularly during irregular operations, to provide the most
            updated flight status to passengers. The ETA information can be
            utilized to provide compliance with the aviation community's stated
            goal of providing timely and accurate flight information to
            customers.
      o     Web-based flight-tracking tools to improve public relations by
            providing the surrounding airport communities with live flight
            traffic and information as part of airport noise mitigation and
            community outreach programs.
      o     Flight information to help enforce the laws and regulations
            regarding noise levels emitted by an aircraft. When used as part of
            an airport noise monitoring system, airport managers and noise
            control officers can correlate noise events in the local community
            with specific airline flight tracks.
      o     Web-based solutions to manage aircraft experiencing extended ground
            delays to enable a collaborative resolution of these events.

DESIGNED TO IMPROVE SAFETY, SECURITY, OR EMERGENCY RESPONSE:

      o     Replay flight events for analysis. The playback of flight tracks and
            safety incidents allows airlines to more thoroughly analyze those
            events, enhancing their programs for improving the efficiency and
            safety of operations.
      o     Real-time situational awareness and an immediate replay capability
            enable airlines and government agencies to be fully informed and
            proactive in responding to emergency events.


                                                                    Page 5 of 58
<PAGE>

PRODUCTS AND SERVICES

1.    Flight data products which feed directly to customers' information systems
      and to PASSUR(R) distributors. These data feeds, which segment different
      portions of the PASSUR(R) Information Network depending on customer needs,
      link directly to customer systems or to customers through third-party data
      integration systems. These feeds are segmented into:
      a.    RightETA(TM), patent pending, which provides ETA and flight status
            feeds for real-time schedule management, landing fee feeds, and
            activity reports for operational analysis.
      b.    FlightSure(TM), patent pending, provides information and software
            for integrated aircraft Noise Operations Monitoring systems (NOMS).
      c.    Pulse Revenue(TM) Data Feed, patent pending, which provides the data
            source for calculating landing fee reports and invoices in airport
            statistical and/or revenue management systems.
      d.    Data feeds for Airport Operational Databases (AODB's). Airports will
            incorporate the PASSUR(R) AODB data feed to power a host of revenue,
            operational, and customer service applications within an airport.

2.    Application software services (most of which are web-delivered and
      web-hosted):
      a.    PASSUR(R) Pulse(TM) Revenue, patent pending, provides a web-based
            live and archived detailed, accurate landing report for airlines,
            airports, and FBOs, creating maximum revenue efficiency, as well as
            transparency and equity in the distribution of landing fees among
            airport users.
      b.    PASSUR(R) Pulse Audit(TM), patent pending, module gives airports
            access to the most complete, accurate and timely activity reports of
            arrivals and departures, based on the PASSUR(R) radar record and
            integrated database of flight information, including detailed
            owner/operator information, maximum certified weights by tail
            number, seat configurations, runway utilization, dwell times, and
            other details in aggregate and by individual flight.
      c.    PASSUR(R) Pulse Proactive Billing(TM) module, patent pending, allows
            airlines to log onto a secure website to view and download their
            landing fee reports, automatically generated by the PASSUR(R)
            database of flight information. The program is hosted by the Company
            and managed through online tools by the airport, including detailed
            reporting and invoicing tools, automatic aircraft weight
            calculations, and detailed owner/operator and aircraft information
            by flight.
      d.    PASSUR(R) Pulse(TM) Operations, patent pending, provides web-based
            access to the PASSUR(R) database of operational information for
            activity reporting and analysis.
      e.    PASSUR(R) inSight(TM), patent pending, is a takeoff-to-landing,
            web-based tool that provides PASSUR(R) terminal area information on
            a national flight tracking platform. PASSUR(R) inSight is packaged
            with other PASSUR(R) web-based applications to provide a premium
            flight tracking "visual" capability.
      f.    AirportMonitor(TM), patented in 2006, is a web-based application
            that provides the communities surrounding an airport with live
            flight tracking and information as part of the airport's public
            relations, community outreach and noise mitigation programs.
      g.    FlightPerform(TM) is a live airspace analysis and awareness system
            using more traditional air traffic-style displays and tools, used by
            airports and airlines for real-time dispatch, arrivals and
            facilities management. FlightPerform is the industry "gold standard"
            for those customers who need the most dependable, reliable
            capability to guide their operations in real time.
      h.    RapidResponse(TM), patent pending, provides the ability to
            immediately replay flight events with a high level of precision,
            specificity, and detail, thereby enabling airlines and airports to
            improve the efficiency and safety of operations. Real-time
            situational awareness and immediate replay enable customers to be
            fully informed and proactive in responding to emergencies. The
            Company believes this product has Homeland Security, Defense, and
            other government applications, and it is being marketed primarily
            through premier government system integrators.
      i.    ATC Portal(TM), patent pending and a new product, provides a delay
            management solution that is designed to reduce the incidence of and
            cost of delays.
      j.    Fuel Portal(TM), patent pending and a new product, provides improved
            methods to price and sell more fuel through data and analytics of
            aircraft fuel requirements.


                                                                    Page 6 of 58
<PAGE>

      k.    PASSUR(R)OPSnet(TM) Stranded module, patent pending, provides the
            ability to be alerted to the presence of aircraft that have been
            "stranded" on the ground for extended periods.

3.    Collaborative Web "portal" tools that provide instant access to critical
      information within organizations, and the ability to receive information
      and share it with those organizations. These organizations form the
      foundation of our PASSUR(R) Customer Network.
      a.    PASSUR(R) Portal(TM), patent pending, provides a dashboard of
            real-time vital information on the status of the airport operation,
            instant two-way communications, and direct access to all other
            PASSUR(R) web-based software tools.
      b.    PASSUR(R) FlightLink(TM), patent pending, is a web-based, wireless,
            flight information display system linking the airport, airline, and
            the traveler, in the terminal and on the Web.
      c.    PASSUR(R) OPSnet(TM), patent pending, is an internet-based
            application designed to improve airport/airline/FAA coordination
            through instant communication, information sharing, and
            collaborative decision making among all parties during all weather
            conditions and especially during costly disruptions caused by
            weather, security and emergencies.
      d.    PASSUR(R) Field Condition Reporting, patent pending, provides the
            most accurate airport field conditions to operators - helping to
            improve operational efficiency and safety of flight.
      e.    FlightNewsLive(TM), patented in 2004, is the first passenger
            information display system (FIDS) with live graphics of terminal and
            en-route airspace traffic, national weather, and automated
            explanations for delays.

HOW PASSUR AEROSPACE, INC. GENERATES REVENUE

The Company generates revenues by selling: (1) subscription-based information
and software products, (2) annual maintenance contracts for PASSUR(R) radar
systems and, (3) consulting and professional services. Under the subscription
model, the customer signs at least a one-year contract for access to the
information services. The agreement also provides that the information from the
PASSUR(R) Information Network cannot be resold, used by others, or used for
unauthorized purposes. Consulting services generally accompany the sale of our
collaborative decision tools.

EMPHASIS ON INFORMATION SECURITY

The Company has incorporated the strictest levels of security with respect to
both the information generated by the PASSUR(R) database and the resulting end
users.

      (B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

      The Company operates as one business segment which provides information
and software services to the aviation industry and organizations that serve, or
are served by, the aviation industry.

      (C) NARRATIVE DESCRIPTION OF BUSINESS

      The Company's principal business is to provide timely, critical
information and solutions to aviation organizations from its proprietary
PASSUR(R) Network of live, unique flight information, incorporating decision
support software, analytics, as well as web-delivered collaborative decision
solutions.

      1. PRODUCTS

      The Company has transitioned from being a supplier of passive surveillance
systems (a capital equipment business) to a provider of subscription-based
information and decision support software products. These products leverage the
extensive passive surveillance data available through the PASSUR(R) Network to
provide application-specific efficiency tools to airlines, airports and related
commercial businesses.


                                                                    Page 7 of 58
<PAGE>

      (I) THE PASSUR(R) SYSTEM

      The PASSUR(R) System, together with associated data and software products,
is a reliable and cost effective source of time-critical and valuable
information about the position and flight path of aircraft. The PASSUR(R)
Network is an important ingredient in the database that drives all present and
future data information and Company solution products. The Company, under an
exclusive license for patented technology owned by a third party together with
its own patents and patents pending, has used its proprietary hardware, data,
and software to develop an enhanced line of products. These PASSUR(R) systems
receive and process aircraft identification from aircraft transponder
transmissions interrogated by existing secondary surveillance radars.

      2. SERVICES

      (I) INFORMATION SERVICES FROM THE PASSUR(R) NETWORK

      Information services include timely, accurate, user-friendly information
important to the efficient operation of airlines, airports and other customers.
The information services leverage the PASSUR(R) Network, and are designed to
address specific customer requirements, many of which can only be satisfied by
information generated from the PASSUR(R) Network. The services provide airline
and airport customers with specific and timely information needed to efficiently
manage their airport, airside, and ground operations. The ETAs generated from
the PASSUR(R) System are an example of information services currently being used
throughout the customer network.

      (II) DECISION SUPPORT SOFTWARE FROM THE PASSUR(R) NETWORK

      Decision support tools and software solutions have been developed to
improve quality and operating efficiency of specific airline and airport
operations. PASSUR(R) OpsNet(TM) is an example of a decision support service.

      (III) MAINTENANCE SERVICES

      The Company offers maintenance services pursuant to contractual
arrangements or on an "on-call" basis. "On-call" services are provided on a time
and material basis.

      3. SOURCES OF RAW MATERIALS

      The Company obtains its raw materials from component distributors and
manufacturers throughout the United States. The Company has multiple sources of
supply for a majority of its components.

      4. DEPENDENCE ON CERTAIN CUSTOMERS

      During the fiscal years ended October 31, 2008, 2007 and 2006, one
customer accounted for approximately 12%, 13%, and 16% of the Company's
revenues, respectively.

      5. BACKLOG FOR SUBSCRIPTION REVENUE AGREEMENTS

      The Company's committed backlog for subscription and maintenance services
at October 31, 2008 amounted to approximately $6,223,000. Of this amount,
$5,081,000 is scheduled for delivery or performance before October 31, 2009 and
the balance of $1,142,000 is scheduled for delivery or performance in subsequent
years. The backlog at October 31, 2007 and 2006 amounted to approximately
$4,754,000 and $3,978,000 respectively. Backlog consists of written purchase
orders or contracts.


                                                                    Page 8 of 58
<PAGE>

      6. COMPETITION

      The PASSUR(R) applications are, to the best of the Company's knowledge,
relatively unique; however there are other forms of flight tracking products.
Depending on the end use of the Company's products, the Company's primary
competitors include Sabre, Inc., Siemens, and SITA. The Company also sells
certain data solutions through systems integrators, including Lochard Pty, LTD,
and Era Corporation, some of whom may also sell products that are competitive
with those offered by the Company. Most of these companies are larger than the
Company, and have larger sales forces and greater financial resources than the
Company.

      7. RESEARCH AND DEVELOPMENT

      The Company's research and development ("R&D") efforts are primarily
focused on continued software and hardware enhancements, as well as maintenance
to the existing PASSUR(R) systems and related suite of software applications.
R&D is also focused on developing and maintaining the new software applications
and decision support products designed to expand the Company's software suite of
products. None of the Company's research and development was customer sponsored.

      During fiscal 2008, research and development expenses charged to the P&L
decreased by approximately $18,000 or 6% as compared to fiscal 2007. This
decrease is primarily due to an increase in the capitalization of costs
associated with software development programs. The Company's research and
development efforts include activities associated with the enhancement,
maintenance, and improvement of the Company's existing hardware, software, and
information products.

      8. ENVIRONMENTAL COSTS

      The Company is not aware of any environmental issues which would have a
material adverse effect on future capital expenditures or current and future
business operations.

      9. EMPLOYEES

      As of October 31, 2008, the Company employed 25 full time employees,
including 7 officers.

      (D) FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

      The following table sets forth the dollar amounts and the percentages
attributable to the sale by the Company of its products and services during the
past three fiscal years in and outside the United States:

NET REVENUES         2008                2007                2006
                  --------------------------------------------------------
Domestic          $7,334,000    97%   $5,457,000    96%   $4,088,000    95%

Foreign              238,000     3%      241,000     4%      226,000     5%
                  ----------   ---    ----------   ---    ----------   ---

Total Revenues:   $7,572,000   100%   $5,698,000   100%   $4,314,000   100%
                  ==========   ===    ==========   ===    ==========   ===

      (E) AVAILABLE INFORMATION

      The Company's internet address is www.passur.com. The Company makes
available on its website under "SEC Filings," via a link to the United States
Securities and Exchange Commission's website, access to its annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 as soon as reasonably practical,
after electronically filing with and/or furnishing such information to the
Securities and Exchange Commission. All such filings on the website are
available free of charge. Unless required to do so by law, the Company assumes
no obligation to update or revise any forward-looking statements in this annual
report on Form 10K, whether as a result of new information, future events, or
otherwise. A copy of this annual report on Form 10-K is available without charge
upon written request to: Investor Relations, PASSUR Aerospace, Inc., 47 Arch
Street, Greenwich, CT 06830.


                                                                    Page 9 of 58
<PAGE>

ITEM 1A. RISK FACTORS

While the Company had net income during fiscal years 2008, 2007, and 2006, it
incurred significant net losses during the previous four fiscal years. The
Company had net income of approximately $495,000, $455,000, and $103,000 for the
fiscal years ended October 31, 2008, 2007 and 2006, respectively. As of October
31, 2008, the Company's accumulated deficit was approximately $8,960,000. The
Company's ability to maintain profitability will depend upon its ability to
generate significant increased revenues through new and existing customer
agreements, additional services, and/or products offered to existing customers
and to control the costs associated with the business operations. There is no
guarantee that the Company will be able to execute on these requirements. If the
Company becomes profitable for a specific reporting period, it still may not be
able to sustain or increase its profits on a quarterly or annual basis in the
future.

If the Company's business plan does not generate sufficient cash-flows from
operations to meet the Company's operating cash requirements, the Company will
attempt to obtain external financing, and if such external financing is not
consummated, the Company has a commitment to receive the necessary continuing
financial support to meet its obligations from its significant shareholder and
Chairman through January 28, 2010. Such continuing financial support may be in
the form of additional loans or advances to the Company, in addition to the
deferral of principal and/or interest payments due on the outstanding loans, if
deemed necessary.

THE COMPANY'S SUCCESS IS DEPENDENT ON THE AVIATION INDUSTRY. IF THE COMPANY DOES
NOT EXECUTE ITS BUSINESS PLAN OR IF THE MARKET FOR ITS SERVICES FAILS TO DEVELOP
DUE TO THE DEPRESSED AVIATION INDUSTRY, ITS RESULTS OF OPERATIONS AND FINANCIAL
RESULTS COULD CONTINUE TO BE ADVERSELY AFFECTED.

      The Company's revenues are solely derived from the aviation industry. The
Company's future revenues and results of operations are dependent on its
continued execution of its subscription-based revenue strategy and development
of new software solutions and applications for the aviation industry. Due to the
depressed aviation industry, it is not assured that the Company will be able to
continue to report growth in its subscription-based business or sustain its
current subscription business. If the Company is unable to sustain and/or
increase its levels of revenues, and it is not successful in reducing costs, its
cash requirements may increase and the results of operations will continue to be
adversely affected.

      Additionally, the aviation industry has been impacted by budgetary
constraints and airline bankruptcies due to the downturn in the current economy,
changes in fuel costs, the terrorist events of September 11, 2001, and the war
on terrorism. The aviation industry is extensively regulated by government
agencies, particularly the FAA and The National Transportation Safety Board. New
air travel regulations have been, and management anticipates will continue to
be, implemented that could have a negative impact on airline and airport
revenues. Since substantially all of the Company's current revenues are derived
from either airports, airlines, or related businesses, continued increased
regulations of the aviation industry or a continued downturn in the economic
situation of the aviation industry could have a material adverse effect on the
Company.


                                                                   Page 10 of 58
<PAGE>

RELIANCE ON THE COMPANY'S QUARTERLY OPERATING RESULTS AS AN INDICATION OF FUTURE
RESULTS IS INAPPROPRIATE DUE TO POTENTIAL SIGNIFICANT FLUCTUATIONS.

      The Company's future revenues and results of operations may fluctuate
significantly due to a combination of factors, including:
o     Delays and/or decreases in the signing and invoicing of new contracts;
o     The length of time needed to initiate and complete customer contracts;
o     Revenues recognized from one-time sales events (selling or upgrading
      systems) versus subscription based sales;
o     The introduction and market acceptance of new and enhanced products and
      services;
o     The costs associated with providing existing and new products and
      services;
o     Economic conditions in the United States and the impact on the aviation
      industry of the terrorist events of September 11, 2001 and continued war
      on terrorism; and
o     The potential of future terrorist acts against the aviation industry.

      Accordingly, quarter-to-quarter comparisons of its results of operations
should not be relied on as an indication of performance. It is possible that in
future periods, results of operations may be below those expected based upon
previous performance.

THE COMPANY MAY BE UNABLE TO RAISE ADDITIONAL FUNDS TO MEET OPERATING CAPITAL
REQUIREMENTS IN THE FUTURE.

      While the Company's operations were cash flow positive as of October 31,
2008, 2007, and 2006, the Company's debt in fiscal year 2008 increased by
$1,200,000 to fund its investment during the year in capitalized software as
well as additions to the PASSUR(R) Network. The Company had an accumulated
deficit of approximately $8,960,000 as of October 31, 2008. The Company has
incurred significant negative cash flows from operations over previous fiscal
years. It has obtained a commitment from its significant shareholder and
Chairman to provide the resources necessary to meet working capital and
liquidity requirements through January 28, 2010. However, future liquidity and
capital requirements are difficult to predict, as they depend on numerous
factors, including the maintenance and growth of existing product lines and
service offerings, as well as the ability to develop, provide, and sell new
products in an industry for which liquidity and resources are already adversely
affected.

      The Company has significant cash requirements, which are expected to
continue in the future. The Company may need to raise additional funds in order
to support discretionary capital expenditures and execute its business plan.
These funds in some cases may be beyond the scope and normal operating
requirements for which the Company has a commitment from its significant
shareholder and Chairman and therefore, may not be approved and/or funded. In
such case, the Company may be required to seek alternate sources of financing
(which may not be available on favorable terms or at all) or abandon such
activities by either: (i) terminating or eliminating certain operating
activities; (ii) terminating personnel; (iii) eliminating marketing activities;
and/or (iv) eliminating research and development programs. If any of the
aforementioned occurs, the Company's ability to expand could become adversely
affected.

A LIMITED NUMBER OF CUSTOMER CONTRACTS ACCOUNTS FOR A HIGH PERCENTAGE OF THE
COMPANY'S REVENUES, AND THE INABILITY TO REPLACE A KEY CUSTOMER CONTRACT COULD
ADVERSELY AFFECT ITS RESULTS OF OPERATIONS, BUSINESS, AND FINANCIAL CONDITION.

      The Company relies on a small number of customer contracts for a large
percentage of its revenues and expects that a significant percentage of its
revenues will continue to be derived from a limited number of customer
contracts. The Company's business plan is to obtain additional customers, but
anticipates that near term revenues and operating results will continue to
depend on large contracts from a small number of customers. Additionally, the
aviation industry, particularly the airline sector, has experienced several
Chapter 11 bankruptcy filings recently. Any Chapter 11 filings by our existing
customers may adversely affect our ability to continue such services and collect
payments due to the Company by such customers. As a result of this concentration
of our customer base, an inability to replace one or more of these large
customer contracts could materially adversely affect our business, financial
condition, operating results and cash flow.


                                                                   Page 11 of 58
<PAGE>

THE SOFTWARE BUSINESS FOR THE AVIATION INDUSTRY IS HIGHLY COMPETITIVE, AND
FAILURE TO ADAPT TO THE CHANGING INDUSTRY NEEDS COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS, BUSINESS, AND FINANCIAL CONDITION.

      The industry in which we compete is marked by rapid and substantial
technology change, the steady emergence of new companies and products, as well
as evolving industry standards and changing customer needs. We compete with many
established companies in the industry we serve, and some of these companies may
have substantially greater financial, marketing, and technology resources,
larger distribution capabilities, earlier access to potential customers, and
greater opportunities to address customers' various information technology
requirements. As the aviation industry seeks to be more cost effective due to
the continued economic downturn, product pricing becomes increasingly important
for our customers. As a result, we may experience increased competition from
certain low-priced competitors. To remain competitive, we continue to develop
new products and continue to enhance existing products. We may be unsuccessful
in our ability to sell new products and/or product releases that meet the needs
of our industry in light of low-cost, less functional alternatives available in
the market. In addition, the pricing of new products or releases of existing
products may be above that required by the market place. Our inability to bring
such new products or enhancements to existing products to the market in a timely
manner or the failure of these products to achieve industry acceptance could
adversely affect our business, financial condition, operating results, and cash
flow.

THE COMPANY DEPENDS UPON CERTAIN KEY PERSONNEL AND MAY NOT BE ABLE TO RETAIN
THESE EMPLOYEES.

      The Company's future performance depends on the continued services of its
key technical and engineering personnel. Significant improvements have been made
in the past year to address such issues, in particular, technical redundancy,
but the Company continues to depend on the efforts of a limited number of key
personnel. The employment of any of the Company's key personnel could cease at
any time, which could have an adverse affect on our business.

THE PASSUR(R) NETWORK COULD EXPERIENCE DISRUPTIONS, WHICH COULD AFFECT THE
DELIVERY OF DATA.

      The Company's network infrastructure is maintained and hosted by AT&T
through an existing frame-relay network. If AT&T experiences system failures or
fails to adequately maintain the frame-relay network, the Company may experience
interruption of delivery of data/software services and customers may terminate
or elect not to continue to subscribe to these services in the future. The
Company's network infrastructure may be vulnerable to computer viruses,
break-ins, denial of service, attacks, and similar disruptive problems. Computer
viruses, break-ins, denial of service attacks or other problems caused by third
parties could lead to interruptions, delays, or cessation in service to
customers. There is currently no existing technology that provides absolute
security. Such incidents could deter potential customers and adversely affect
existing customer relationships.

THE COMPANY MAY BE SUBJECT TO NEW GOVERNMENT REGULATIONS RELATING TO THE
DISTRIBUTION OF FLIGHT-TRACKING DATA.

      The Company currently maintains strict safety regulations for its data in
order to comply with current government regulations. Due to the continued
growing safety needs and concerns of the aviation industry, new government
regulations may be implemented. Such new regulations may, in some cases, hinder
the Company's ability to provide current and/or additional services.

UNAUTHORIZED USE OF THE COMPANY'S INTELLECTUAL PROPERTIES BY THIRD PARTIES MAY
DAMAGE AND/OR ADVERSELY AFFECT OUR BUSINESS.

      We regard our trademarks, trade secrets, and all other intellectual
property as critical to our future success. Unauthorized use of our intellectual
property by third parties may damage and/or impair our business. Our
intellectual property includes exclusive licenses to use patents held by third
parties, as well as Company-owned patents. We rely on trademarks, trade secrets,
patent protection, and contracts, including confidentiality and non-exclusive
license agreements with our customers, employees, consultants, strategic
partners, and others, to protect our intellectual property rights. Despite our
precautions, it may be possible for third parties to obtain and use our
intellectual property without our prior knowledge and/or authorization.
Prosecuting infringers could be time consuming and costly, and, irrespective of
whether or not the Company is successful, could disrupt our business.


                                                                   Page 12 of 58
<PAGE>

      The Company currently has the exclusive license rights to use thirteen
patents in the United States and various foreign countries, relating to the
Company's PASSUR(R) System and related technologies. The licensed patents expire
in various years through 2013.

      We currently own four issued patents, and twenty-one additional patents
are pending with the United States Patent Office, some of which relate to newly
developed internet-based software applications, derived in large part from the
data generated from the Company's PASSUR(R) systems. The issued and allowed
patents expire in various years through 2023. We also intend to seek additional
patents on our products and technological advances and/or software applications,
when appropriate. There can be no assurance that patents will be issued for any
of our pending or future patent applications, or that any claims allowed from
such applications will be of sufficient scope, or provide adequate protection,
or any commercial advantage to the Company. Additionally, our competitors may be
able to design around our patents and possibly affect our commercial interests.

      The Company also owns a federal trademark registration in the mark
PASSUR(R) for use with both the PASSUR(R) hardware system installation and the
software products which use the data derived from the PASSUR(R) Network and
other sources. The PASSUR(R) federal registration will allow the Company to
enforce its rights in the mark in the federal court system. The registration
does not assure that others will be prevented from using similar trademarks in
connection with related products and/or services.

DEFENDING AGAINST INTELLECTUAL PROPERTY CLAIMS COULD POSE SIGNIFICANT LEGAL AND
PROFESSIONAL COSTS, AND IF UNSUCCESSFUL, COULD ADVERSELY AFFECT THE COMPANY.

      We cannot guarantee that our future products, technologies, and software
applications will not inadvertently infringe valid patents or other intellectual
property rights held by third parties. We may be subject to legal proceedings
and claims from time to time relating to the intellectual property of others.
Investigation of any claims from third parties alleging infringement of their
intellectual property, whether with or without merit, can be expensive and could
affect development, marketing, selling, or delivery of our products. Defending
against intellectual property infringement claims could be time consuming and
costly, and, irrespective of whether or not the Company is successful, could
disrupt our business. We may incur substantial expenses in defending against
these third party claims, regardless of their merit. Successful infringement
claims against the Company may result in significant monetary liability and
could adversely affect our business, financial condition, operating results and
cash flow.

ITEM 1B. UNRESOLVED STAFF COMMENTS

      None.

ITEM 2. PROPERTIES

      The Company's research and manufacturing facility is located in part of a
one-story, 36,000 square foot building at 35 Orville Drive, Bohemia, New York.
The building previously was owned by the Company and was sold in October 1999 to
an unaffiliated buyer. The Company leases 12,000 square feet at an annual rental
cost of $96,734.


                                                                   Page 13 of 58
<PAGE>

      The Company's executive offices are located in a three-story office
building at 47 Arch Street, Greenwich, Connecticut. Effective July 1, 2004, the
Company signed a lease with the building owner for $2,500 per month. Beginning
August 1, 2005 the rent for the Company's headquarters located in Greenwich
increased to $3,750 per month. Effective November 1, 2007, the Company signed a
new lease for two floors in the building for $7,500 per month ($90,000 per year)
through June 30, 2009. The Company believes these rates are competitive and are
at or below market rates.

      The Company's research and manufacturing facility and its executive
offices are suitable for its requirements.

ITEM 3. LEGAL PROCEEDINGS

      The Company is not aware of any material pending legal proceedings to
which the Company or any of its subsidiaries is a party or to which any of their
properties are subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      The Company did not submit any matter to a vote of its security holders
during the fourth quarter of fiscal 2008.


                                                                   Page 14 of 58
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

      (A) MARKET INFORMATION

The Company's Common Stock, par value $0.01 per share (the "Common Stock"), is
traded on the over-the-counter bulletin board.

The following table sets forth the reported high and low sales prices for the
Company's common stock for each quarterly period during the Company's last two
fiscal years, as reported by the National Quotation Bureau, Inc.:

               Period                                  Prices*
               ------                                  -------
                                                     High    Low
                                                     ----    ---
               FISCAL YEAR ENDED OCTOBER 31, 2008
                        FIRST QUARTER               $4.15   $3.50
                        SECOND QUARTER               4.50    3.00
                        THIRD QUARTER                4.00    2.50
                        FOURTH QUARTER               3.25    1.55

               Fiscal Year Ended October 31, 2007
                        First Quarter               $3.50   $2.20
                        Second Quarter               3.60    2.50
                        Third Quarter                3.60    2.20
                        Fourth Quarter               3.90    2.25

----------
* The quotations represent prices on the over-the-counter bulletin board between
dealers in securities, do not include retail markup, markdown or commission, and
do not necessarily represent actual transactions.

      (B) HOLDERS

      The number of registered equity security holders of record at January 20,
2009 was 297, as shown in the records of our transfer agent.

      (C) DIVIDENDS

      The Company has never paid cash dividends on its shares. The Company does
not anticipate paying cash dividends in the foreseeable future.


                                                                   Page 15 of 58
<PAGE>

      (D) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

      The following table provides information as of October 31, 2008 with
respect to the securities authorized for issuance under the Company's equity
compensation plans.

<TABLE>
<CAPTION>
                                                                                          NUMBER OF SECURITIES
                                                                                          REMAINING AVAILABLE
                                                                                          FOR FUTURE ISSUANCE
                                          NUMBER OF SECURITIES                                UNDER EQUITY
                                           TO BE ISSUED UPON        WEIGHTED-AVERAGE       COMPENSATION PLANS
                                              EXERCISE OF           EXERCISE PRICE OF          (EXCLUDING
                                          OUTSTANDING OPTIONS,    OUTSTANDING OPTIONS,    SECURITIES REFLECTED
                                          WARRANTS, AND RIGHTS    WARRANTS, AND RIGHTS       IN COLUMN (A))
--------------------------------------------------------------------------------------------------------------
                                                   (A)                     (B)                    (C)
--------------------------------------------------------------------------------------------------------------
<S>                                             <C>                       <C>                   <C>
PLAN CATEGORY

EQUITY COMPENSATION PLAN APPROVED BY
  SECURITY HOLDERS                              1,785,500                 $.75                  381,167

EQUITY COMPENSATION PLANS NOT APPROVED
 BY SECURITY HOLDERS                                   --                   --                       --

TOTAL                                           1,785,500                 $.75                  381,167
</TABLE>


                                                                   Page 16 of 58
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

REVENUES

The Company's principal business is to provide timely, critical information and
solutions to aviation organizations from its proprietary PASSUR(R) Network of
live, unique flight information, incorporating decision support software,
analytics, as well as web-delivered collaborative decision solutions.

Revenues consist primarily of subscription-based revenues and maintenance
revenues from customer owned PASSUR(R) Systems.

Revenues during fiscal 2008 increased by approximately $1,874,000, or 33%, to
$7,572,000 from $5,698,000 in fiscal 2007. Revenues during fiscal 2007 increased
by approximately $1,384,000 or 32%, to $5,698,000 from $4,314,000 in fiscal
2006. These increases were primarily due to the continued development and
deployment of new software applications, increased effectiveness of the
Company's marketing efforts, industry acceptance of the Company's applications,
as well as the wide selection of products which address customers' needs and
ease of delivery through web-based applications. These efforts resulted in an
increased number of new customers subscribing to the Company's suite of software
applications and the increased subscriptions from its suite of applications by
existing customers. This increase was primarily due to the increased focus on
the subscription-based revenue business model.

Management continues to concentrate its efforts on the sale of information and
decision support product applications utilizing data primarily derived from the
PASSUR(R) Information Network. Such efforts include the continued development of
new product applications, as well as enhancements and maintenance of existing
applications. As a result, subscription-based revenues of approximately
$7,078,000 in fiscal 2008 increased $1,832,000, or 35%, compared to
approximately $5,246,000 in fiscal 2007. The Company's subscription-based sales
for fiscal 2006 were approximately $3,842,000.

The Company's business plan is to continue to focus on increasing
subscription-based revenues from the suite of software applications, and to
develop new applications designed to address the needs of the aviation industry.

The Company shipped thirty and installed thirty-two Company-owned PASSUR(R)
Systems during fiscal 2008 (installations include systems shipped in current and
the previous fiscal year). Several units shipped in fiscal 2008 should be
installed during fiscal year 2009. The shipped and installed PASSUR(R) Systems
were capitalized as part of the Company owned "PASSUR(R) Information Network."
The Company will continue to expand the PASSUR(R) Information Network by
shipping and installing additional PASSUR(R) Systems throughout fiscal 2009. The
Company manufactured thirty PASSUR(R) units in fiscal year 2008. The Company is
continuing its manufacturing program in fiscal 2009 and there were thirty
PASSUR(R)'s in work-in-process at the end of fiscal 2008. Management anticipates
that future PASSUR(R) sites will provide increased coverage for the PASSUR(R)
Information Network by increasing the Company's ability to contract with new
customers at such locations and by providing existing customers with additional
data solutions. The Company will continue to market the data generated from the
PASSUR(R) Information Network directly to the aviation industry and
organizations that serve, or are served by, the aviation industry. There were
one hundred and one Company-owned PASSUR(R) Systems located at various airports
worldwide at the end of fiscal 2008.

COST OF REVENUES

Costs associated with subscription and maintenance revenues consist primarily of
direct labor, depreciation of PASSUR(R) Network assets, amortization of software
development costs, communication costs, and allocated overhead costs. Also
included in cost of revenues are costs associated with the upgrades of PASSUR(R)
Systems necessary to make older systems compatible with new software
applications, as well as the ordinary repair and maintenance of existing network
systems. Additionally, cost of revenues in each reporting period is impacted by:
(1) the number of PASSUR(R) units produced, upgraded, shipped, and installed
during the year which are added to the PASSUR(R) Network and (2) capitalized
costs associated with software development projects, collectively referred to as
"Capitalized Assets", which are depreciated and/or amortized over their
respective useful lives and charged to cost of revenues.


                                                                   Page 17 of 58
<PAGE>

During fiscal 2008, cost of revenues increased by approximately $515,000 or 27%,
compared to fiscal 2007, primarily due to an increase in headcount related
costs, data feeds, communication costs, travel and entertainment expenses,
depreciation, as well as amortization of capitalized software assets. This
increase was partially offset by an increase in the number of PASSUR(R) Systems
added to the PASSUR(R) Network, as well as an increase in the capitalization of
software development costs.

During fiscal 2007, cost of revenues increased by approximately $610,000 or 48%,
as compared to fiscal 2006. This increase was primarily due to an increase in
headcount related costs, data feeds, as well as depreciation and amortization of
capitalized software assets, and a decrease in the capitalization of
manufacturing related costs. This increase was partially offset by an increase
in the number of PASSUR(R) Systems added to the PASSUR(R) Network, as well as an
increase in the value of software development projects which were capitalized.

RESEARCH AND DEVELOPMENT

During fiscal 2008, research and development expenses charged to the P&L
decreased by approximately $18,000 or 6%, compared to fiscal 2007. This decrease
is primarily due to an increase in the capitalization of costs associated with
software development programs. The Company's research and development efforts
include activities associated with the enhancement, maintenance and improvement
of the Company's existing hardware, software and information products.

The Company anticipates that it will continue to invest in research and
development to develop, maintain and support the existing and newly developed
applications for its PASSUR(R) customers. There were no customer sponsored
research and development activities during fiscal 2008, 2007, or 2006. Research
and development expenses are funded by current operations.

SELLING, GENERAL AND ADMINISTRATIVE

During fiscal 2008, selling, general and administrative expenses increased by
approximately $1,287,000, or 51%, compared to fiscal 2007. The increase reflects
planned expenditures based on anticipated future demand for our products. This
increase in sales and marketing costs is due to the hiring of five additional
employees and two consultants, executive recruiting fees, sales commissions, as
well as expenditures relating to the introduction of new marketing initiatives.

During fiscal 2007, selling, general and administrative expenses increased by
approximately $460,000, or 22%, as compared to fiscal 2006. The increase was
primarily due to additional sales and marketing personnel and related expenses,
professional fees, and marketing expenses.

The Company does not anticipate the same rate of increase in its sales and
marketing efforts in fiscal 2009 to market new and existing products from the
PASSUR(R) suite of software applications.


                                                                   Page 18 of 58
<PAGE>

OTHER INCOME (EXPENSE)

Interest income and interest expense to/from unrelated parties were not
significant in fiscal 2008, 2007, and 2006.

Interest expense-related party increased by approximately $52,000, or 10%, in
fiscal 2008, compared to fiscal 2007. The increase is due to $1,200,000 in
higher related-party debt during fiscal 2008.

Interest expense-related party increased by approximately $68,000 or 14%, in
fiscal 2007, compared to fiscal 2006. The increase is due to $1,400,000 in
higher related-party debt during fiscal 2007.

INCOME TAXES

The Company's provision for income taxes in each year consists of current state
and local minimum taxes.

At October 31, 2008, the Company has available a federal net operating loss
carry-forward of approximately $12,151,000 for income tax purposes which will
expire in various tax years from 2009 through 2025. The Company has provided a
full valuation allowance on the net deferred tax asset of approximately
$4,571,000 which primarily consists of the net operating loss carry-forwards
which are not considered more likely than not to be realizable.

NET INCOME

The Company earned net income of approximately $495,000, or $.09 per diluted
share, during fiscal 2008, as compared to net income of approximately $455,000,
or $.08 per diluted share, in fiscal 2007.

During fiscal 2008, revenues of approximately $7,572,000 exceeded costs and
expenses of approximately $6,478,000 and resulted in income from operations of
approximately $1,094,000. Revenues increased by 33% in fiscal 2008 and total
costs and expenses increased by approximately $1,784,000, or 38%, as compared to
fiscal 2007.

The Company earned net income of approximately $455,000, or $.08 per diluted
share, during fiscal 2007, as compared to net income of approximately $103,000,
or $.02 per diluted share, in fiscal 2006.

During fiscal 2007, revenues of approximately $5,698,000 exceeded costs and
expenses of approximately $4,694,000 and resulted in income from operations of
approximately $1,004,000. Revenues increased by 32% in fiscal 2007 and total
costs and expenses increased by $958,000, or 26%, as compared to fiscal 2006.


                                                                   Page 19 of 58
<PAGE>

QUARTERLY RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                         -----------------------------------------------------------------------------------------------------
                          OCT. 31,     JULY 31,     APRIL 30,   JANUARY 31,   OCT. 31,     JULY 31,    APRIL 30,    JANUARY 31,
                            2008         2008         2008         2008         2007         2007         2007         2007
                         -----------------------------------------------------------------------------------------------------
<S>                      <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
TOTAL REVENUES           $1,964,633   $1,997,995   $1,903,269   $1,706,484   $1,537,588   $1,466,793   $1,392,175   $1,301,680

INCOME FROM OPERATIONS      240,351      282,365      272,374      298,676      280,280      291,418      245,983      186,240

NET INCOME                   88,530      126,924      127,277      152,091      143,464      142,264      114,973       53,881

NET INCOME PER COMMON
SHARE - BASIC                  $.02         $.03         $.03         $.04         $.04         $.03         $.03         $.01
NET INCOME PER COMMON
SHARE - DILUTED                $.02         $.02         $.02         $.03         $.03         $.03         $.02         $.01
</TABLE>

IMPACT OF INFLATION

In the opinion of management, inflation has not had a material effect on the
operations of the Company including selling prices, capital expenditures and
operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

At October 31, 2008, the Company's current liabilities exceeded current assets
by approximately $1,527,000. The notes payable to a related party of $13,814,880
are due November 1, 2011, thus are included in long-term liabilities at October
31, 2008. At October 31, 2008, the Company's stockholders' deficit was
approximately $6,154,000. For fiscal 2008, the Company had net income of
approximately $495,000.

Management is addressing the working capital and stockholders' deficiencies by
aggressively marketing the Company's PASSUR(R) information capabilities in its
existing product lines, as well as in new products, which are continually being
developed and deployed. The Company intends to increase the size and related
airspace coverage of its owned "PASSUR(R) Network," by continuing to install
PASSUR(R) Systems throughout the United States and certain foreign countries. In
addition, management believes that expanding its existing software suite of
products, which address the wide array of needs of the aviation industry,
through the continued development of new product offerings, will continue to
lead to increased growth in the Company's customer base and subscription-based
revenues. Additionally, if the Company's business plan does not generate
sufficient cash-flows from operations to meet the Company's operating cash
requirements, the Company will attempt to obtain external financing, and if such
external financing is not consummated, the Company has a commitment to receive
the necessary continuing financial support to meet its obligations from its
significant shareholder and Chairman through January 28, 2010. Such continuing
financial support may be in the form of additional loans or advances to the
Company, in addition to the deferral of principal and/or interest payments due
on the outstanding loans, if deemed necessary.

Net cash provided by operating activities for fiscal 2008 was approximately
$2,656,000. Cash flows used in investing activities for fiscal 2008 was
approximately $3,945,000 and consisted primarily of investments in the Company's
PASSUR(R) Network, capitalized software development costs, and capital
expenditures. Cash flows provided by financing activities for fiscal 2008 was
approximately $1,219,000 and consisted of $1,200,000 from notes payable-related
party, and approximately $19,000 of proceeds from the exercise of stock options.
No principal payments on notes payable - related party were made during fiscal
2008.


                                                                   Page 20 of 58
<PAGE>

The Company was profitable in fiscal year 2008. To date, the Company has
experienced increased revenues as a result of its subscription-based revenue
model. The Company is actively addressing the increasing costs associated with
supporting the business, and plans to identify and reduce any unnecessary costs
as part of its cost reduction initiatives. Additionally, the aviation market has
been impacted by budgetary constraints, airline bankruptcies and consolidations
due to the downturn in the current economy, the terrorist events of September
11, 2001, the continued war on terrorism, and increased fuel costs. The aviation
market is extensively regulated by government agencies, particularly the Federal
Aviation Administration and The National Transportation Safety Board, and
management anticipates that new regulations relating to air travel may continue
to be issued. Substantially all of the Company's revenues are derived from
airports, airlines, and organizations that serve, or are served by, the aviation
industry. Any new regulations or changes in the economic situation of the
aviation industry could have an impact on the future operations of the Company,
either positively or negatively.

Interest by potential customers in the information and decision support software
products obtained from the PASSUR(R) Network remains strong, and the Company
anticipates an increase in future revenues. However, the Company cannot predict
if such revenues will materialize. If sales do not increase, losses may occur.
The extent of such profits or losses will be dependent on sales volume achieved
and Company cost reduction initiatives.

o     OFF-BALANCE SHEET ARRANGEMENTS

      None.

CERTAIN RELATED PARTY TRANSACTIONS

During fiscal 2008, G.S. Beckwith Gilbert, the Company's significant shareholder
and Chairman, loaned the Company an additional $1,200,000, of which $600,000 was
loaned to the Company during the three months ended October 31, 2008, bringing
the principal amount of notes due to Mr. Gilbert to $13,814,880 on October 31,
2008 and which mature on November 1, 2011. Interest shall be payable at the
annual rate of 4.5% from November 1, 2008 to January 31, 2009 payable in cash.
Beginning February 1, 2009 through October 31, 2011, the annual interest rate
will be 9% payable as follows: interest at the annual rate of 6% will be payable
in cash plus the remaining interest at the annual rate of 3% will be payable at
the option of the Company in cash or "paid in kind" and added to the principal
of the note. Interest payments shall be made annually at October 31 of each
year. During fiscal 2007, Mr. Gilbert loaned the Company $1,400,000, bringing
the principal amount of notes due to Mr. Gilbert to $12,614,880 on October 31,
2007. During fiscal 2006, Mr. Gilbert loaned the Company $1,225,000, bringing
the principal amount of notes due to Mr. Gilbert to $11,214,880, which, together
with accrued interest of $247,867, resulted in a total of $11,462,747 owed to
Mr. Gilbert on October 31, 2006. The notes payable are classified as long-term
as of October 31, 2008 and 2007. The notes payable-related party are classified
as long-term liabilities because no amounts are due before October 31, 2009. The
Company has a commitment from Mr. Gilbert that if the Company, at any time, is
unable to meet its obligations through January 28, 2010, Mr. Gilbert will
provide the necessary continuing financial support to the Company in order for
the Company to meet such obligations. Such commitment for financial support may
be in the form of additional advances or loans to the Company, in addition to
the deferral of principal and interest payments due on the existing loans, if
deemed necessary. The notes are secured by the Company's assets.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

GENERAL

The Company's discussion and analysis of its financial condition and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosures of
contingent assets and liabilities based upon accounting policies management has
implemented. The Company has identified the policies and estimates below as
critical to its business operations and the understanding of its results of
operations. The impact and any associated risks related to these policies on the
Company's business operations are discussed throughout Management's Discussion
and Analysis of Financial Condition and Results of Operations, where such
policies affect its reported financial results. The actual impact of these
factors may differ under different assumptions or conditions. The Company's
accounting policies that require management to apply significant judgment and
estimates include:


                                                                   Page 21 of 58
<PAGE>

REVENUE RECOGNITION

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
No. 104, "Revenue Recognition in Financial Statements" ("SAB 104"), as codified.
SAB 104 requires that four basic criteria must be met before revenues can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred or services have been rendered; (3) the fee is fixed and determinable;
and (4) collectibility is reasonably assured. The Company also recognizes
revenue in accordance with Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2"), as amended, when applicable.

The Company's revenues are generated from the following: (1) subscription and
maintenance agreements and (2) one-time license fees. Revenues generated from
subscription and maintenance agreements are recognized over the term of such
executed agreements and/or customer's receipt of such data or services. In
accordance with SOP 97-2, we recognize revenue from the licensing of our
software products or performance of maintenance when all of the following
criteria are met: (1) we have evidence of an agreement with a customer; (2) we
deliver the products/services; (3) license or maintenance agreement terms are
deemed fixed or determinable and free of contingencies or uncertainties that may
alter the agreement, such that the sale may not be complete and/or final; and
(4) collection is probable.

The Company records revenues pursuant to individual contracts on a
month-by-month basis, as outlined by the applicable agreement(s). In many cases,
the Company may invoice respective customers in advance of specified period(s),
either quarterly or annually, which coincides with the terms of the agreement.
In such cases, the Company will defer at the close of each month and/or
reporting period, any subscription or maintenance revenues invoiced for which
services have yet to be rendered, in accordance with SOP 97-2.

Our software licenses generally do not include acceptance provisions. An
acceptance provision generally allows a customer to test the software for a
defined period of time before commiting to a binding agreement to license the
software. If a subscription agreement includes an acceptance provision, the
Company will not recognize revenue until the earlier of the receipt of a written
customer acceptance or, if not notified by the customer to cancel the
subscription agreement, the expiration of the acceptance period.

From time to time, the Company will receive one-time payments from customers for
rights, including but not limited to, the rights to use certain data at an
agreed upon location(s) for a specific use and/or for an unlimited number of
users. Such one-time payments are in the form of license fees. These fees are
recognized as revenue ratably over the term of the license agreement or expected
useful life of such license arrangement, whichever is longer, but typically five
years.

Any deferred revenue is classified on the Company's balance sheet as a liability
in the deferred income account until such time as revenue from services is
properly recognized as revenue in accordance with SAB 104 and/or SOP 97-2 and
the corresponding agreement.

RECLASSIFICATIONS

Certain amounts as previously reported have been reclassified to conform to
current year classifications. The Company historically classified certain
components of the PASSUR(R) Network as inventory and based upon its current year
re-evaluation of the use of these assets, the Company has reclassified these
components as part of the PASSUR(R) Network non-current assets. There is no
income statement effect from this reclassification as the amounts previously
classified as inventory were not yet placed into service and thus the costs were
not yet depreciated. For the fiscal year ended October 31, 2007, the
reclassification decreased operating cash flows and short term assets and
increased investing cash flows and long term assets by approximately $369,000
and $367,000, respectively. For the fiscal year ended October 31, 2006 the
reclassification increased operating cash flows and long term assets and
decreased investing cash flows and short term assets by approximately $570,000
and $736,000, respectively.


                                                                   Page 22 of 58
<PAGE>

CAPITALIZED SOFTWARE COSTS

The Company follows the provisions of Statement of Financial Accounting
Standards No. 86, "Accounting for the Costs of Software to be Sold, Leased, or
Otherwise Marketed" ("SFAS 86"). Costs incurred to develop computer hardware and
software products, as well as enhancements to software features of the existing
products to be sold or otherwise marketed, are capitalized after technological
feasibility is established. Once the software products become available for
general release to the public, the Company will begin to amortize such costs to
cost of revenues.

The Company's policy on capitalized software costs determines whether the costs
incurred are classified as capitalized costs (in accordance with SFAS 86) or as
research and development expenses. In cases where the Company capitalizes costs
incurred with development of new hardware/software products, a product
specification is designed and/or a working model of the respective project is
developed as the guideline for the capitalization of costs associated with such
project in accordance with SFAS 86.

Once a product has been made available for sale and/or released for sale to the
general public, the development costs of that product are no longer capitalized
and amortization commences over a five-year period. Any additional costs
incurred to maintain or support such product are expensed as incurred. In some
cases, the Company may capitalize costs incurred in the development of enhanced
versions of already existing products, but will immediately expense any
additional costs incurred to maintain products which were completed and released
to the general public, in accordance with SFAS 86. Management uses judgment in
determining and evaluating whether development costs meet the criteria for
immediate expense or capitalization.

The Company's net capitalized software costs at October 31, 2008 totaled
approximately $1,991,000. The carrying value of the capitalized software costs
is dependent on the forecasted and actual future cash flows generated from such
assets as determined and evaluated by management.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company follows the provisions of Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). At each reporting period, the Company reviews long-lived
assets for impairment to determine if the carrying amount of an asset may not be
recoverable. Impairment is recognized when the sum of the undiscounted estimated
future cash flows expected to result from the use of the asset is less than the
carrying value. The Company evaluates the periods of amortization continually in
determining whether any events or circumstances warrant revised estimates of
useful lives.

The Company's long-lived assets include property, plant, and equipment and the
PASSUR(R) Network, that, at October 31, 2008, approximated $6,904,000, which
accounted for 67% of the Company's total assets. The carrying value of
long-lived assets is dependent on the forecasted and actual financial
performance, as well as future cash flows of such assets, as determined by
management.

At each reporting period, management evaluates the carrying values of the
Company's assets. The evaluation considers the undiscounted cash flows generated
from current contractual revenue sources and the anticipated forecast revenue
derived from each asset. The Company then evaluates these revenues on an overall
basis to determine if any impairment issues exist. As of October 31, 2008, based
upon management's evaluation of the above asset groups, no impairments of these
asset groups exist. If these forecasts are not met, the Company may have to
record impairment charges not previously recorded.


                                                                   Page 23 of 58
<PAGE>

DEPRECIATION AND AMORTIZATION

As of October 31, 2008, the total net property, plant, and equipment
approximated $380,000, the total net PASSUR(R) Network approximated $6,904,000,
and the total net software development costs approximated $1,991,000. The total
depreciation and amortization expense related to capitalized assets at October
31, 2008 approximated $1,382,000. Management's judgment is required in the
determination of the estimated depreciable lives that are used to calculate the
annual depreciation and amortization expense.

Depreciation and amortization is provided on the straight-line basis over the
estimated useful lives of the assets, as follows:

Property, plant and equipment       3 to 10 Years
PASSUR(R) Network                   5 to 7 Years
Software development costs          5 Years

The PASSUR(R) Network costs carried on the Company's Consolidated Balance Sheets
represents PASSUR(R) Systems and the related software workstations used for the
data derived from the PASSUR(R) Systems. The PASSUR(R) Network is comprised of
PASSUR(R) Systems installed and supplying data to the company network, as well
as related workstations with software and/or PASSUR(R) Systems built but not yet
installed in the company network. PASSUR(R) Network assets which are not
installed in the network are carried at cost and no depreciation is recorded.
Once installed, the PASSUR(R) Systems are depreciated over seven years.

All of the Company's capitalized assets are recorded at cost (which may also
include salaries and related overhead costs incurred during production and/or
development) and depreciated and/or amortized over the asset's estimated useful
life for financial statement purposes. The estimated useful life represents the
projected period of time that the asset will be productively employed by the
Company and is determined by management based on many factors, including
historical experience with similar assets, technological life cycles and
industry standards for similar assets (but does not exceed seven years).
Circumstances and events relating to these assets are monitored to ensure that
changes in asset lives or impairments (see "Impairment of Long-Lived Assets"
above) are identified and prospective depreciation expense or impairment expense
is adjusted accordingly.

For the year ended October 31, 2008, total depreciation and/or amortization of
$1,382,000 consisted of $187,000 for property, plant and equipment, $855,000 for
the PASSUR(R) Network, and $340,000 for software development costs.

STOCK-BASED COMPENSATION

The Company follows FASB No. 123R "Share-Based Compensation" which requires
measurement of compensation cost for all stock-based awards at fair value on
date of grant and recognition of compensation over the service period for awards
expected to vest. The fair value of stock options was determined using the
Black-Scholes valuation model, which is consistent with our valuation techniques
previously utilized for stock options in footnote disclosures required under
SFAS No. 123. Such fair value is recognized as expense over the service period,
net of estimated forfeitures. For the years ended ended October 31, 2008, 2007,
and 2006, stock compensation expense of approximately $100,000, $72,000, and
$96,000, respectively, was primarily charged to selling, general and
administrative expense.


                                                                   Page 24 of 58
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued Financial Accounting Standards (SFAS) No.
157, "Fair Value Measurement," which defines fair value, establishes a framework
for measuring fair value and expands disclosures regarding assets and
liabilities measured at fair value. In February 2008, the FASB issued FASB Staff
Position (FSP) 157-1, "Application of FASB Statement No. 157 to FASB Statement
No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements
for Purposes of Lease Classification or Measurement under Statement 13" (FSP
157-1) and FSP 157-2, "Effective Date of FASB Statement No. 157" (FSP 157-2).
FSP 157-1 amends SFAS 157 to remove certain leasing transactions from its scope.
FSP 157-2 delays the effective date of SFAS 157 for all nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually),
until the beginning of the Company's first quarter of fiscal 2010. The
measurement and disclosure requirements related to financial assets and
financial liabilities are effective for the Company's first quarter of fiscal
2009. The Company does not expect that the adoption of SFAS 157 will have a
material impact on its consolidated financial position, results of operations or
cash flows.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities," which gives companies the option to
measure eligible financial assets, financial liabilities and firm commitments at
fair value (i.e., the fair value option), on an instrument-by-instrument basis,
that are otherwise not permitted to be accounted for at fair value under other
accounting standards. The election to use the fair value option is available
when an entity first recognizes a financial asset or financial liability or upon
entering into a firm commitment. Subsequent changes in fair value must be
recorded in earnings. SFAS No. 159 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. The Company does not expect
that the adoption of SFAS 159 will have a material impact on its consolidated
financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS 141 (revised 2007), "Business
Combinations ("SFAS 141R"). SFAS 141R will significantly change the accounting
for business combinations in a number of areas including the treatment of
contingent consideration, contingencies, acquisition costs, IPR&D and
restructuring costs. In addition, under SFAS 141R, changes in deferred tax asset
valuation allowances and acquired income tax uncertainties in a business
combination after the measurement period will impact income tax expense. SFAS
141R is effective for fiscal years beginning after December 15, 2008. The
Company has not yet evaluated the impact, if any, of adopting this
pronouncement.


In December 2007, the FASB issued SFAS 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51" ("SFAS 160").
SFAS 160 will change the accounting and reporting for minority interests, which
will be recharacterized as noncontrolling interests (NCI) and classified as a
component of equity. This new consolidation method will significantly change the
accounting for transactions with minority interest holders. SFAS 160 is
effective for fiscal years beginning after December 15, 2008. The Company has
not yet evaluated the impact, if any, of adopting this pronouncement.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      See Part IV, Item 15(a)(1) of this Annual Report on Form 10-K for the
      Company's annual financial statements.

      See Part II, Item 7 of this Annual Report on Form 10-K for selected
      quarterly financial data.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

      None.


                                                                   Page 25 of 58
<PAGE>

ITEM 9A. CONTROLS AND PROCEDURES

      The Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting. The Company's internal
control over financial reporting is a process designed under the supervision of
its Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of the Company's financial statements for external reporting in accordance with
accounting principles generally accepted in the United States of America.
Management evaluates the effectiveness of the Company's internal control over
financial reporting using the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control--Integrated
Framework. Management, under the supervision and with the participation of the
Company's Chief Executive Officer and Chief Financial Officer, assessed the
effectiveness of the Company's internal control over financial reporting as of
October 31, 2008 and concluded that it is effective.

      This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.

CHANGES IN INTERNAL CONTROLS

      There were no changes in the Company's internal control over financial
reporting identified in connection with the evaluation referred to above that
occurred during the fourth quarter of the fiscal year ended October 31, 2008
that have materially affected, or are reasonably likely to materially affect,
the registrant's internal control over financial reporting.

LIMITATIONS ON THE EFFECTIVENESS CONTROLS

      The Company believes that a control system, no matter how well designed
and operated, cannot provide absolute assurance that the objectives of the
control system are met, and no evaluation of controls can provide absolute
assurance that all controls issues and instances of fraud, if any, within a
Company have been detected. The Company's disclosure controls and procedures are
designed to ensure that information required to be disclosed by the Company in
reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commissions
rules. Based on their evaluation as of the end of the period covered by this
annual report on Form 10-K, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that such controls and procedures are
effective.

ITEM 9B. OTHER INFORMATION

      None.


                                                                   Page 26 of 58
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      (a) Identification of Directors

The following table sets forth the names and ages of the Company's directors, as
well as the year each individual became a director and the position(s) with the
Company, if any, held by each individual.

                                Director   Director Position and Officers
Name                       Age   Since     with Company
---------------------      ---  --------   ------------------------------------
G.S. Beckwith Gilbert      66    1997      Chairman of the Board and a Director

Richard R. Schilling, Jr.  83    1974      Director

John R. Keller             68    1997      Executive Vice President, and a
                                           Director

Bruce N. Whitman           75    1997      Chairman of the Executive Committee
                                           and a Director

Paul L. Graziani           51    1997      Director

James T. Barry             47    2000      President, Chief Executive Officer,
                                           and a Director

James J. Morgan            66    2005      Director

Each director is elected to serve until the succeeding annual meeting of
shareholders and until his successor is duly elected and qualified.


                                                                   Page 27 of 58
<PAGE>

      (b) Identification of Executive Officers

The following table sets forth the names and ages of the Company's executive
officers, as well as the office(s) held by each individual and the year in which
he or she began to serve in such capacity.

                                Officer    Officer Position and Officers
Name                       Age   Since     with Company
---------------------      ---  --------   ------------------------------------
James T. Barry             47    1998      President, Chief Executive
                                           Officer, and a Director

Jeffrey P. Devaney         49    2004      Chief Financial Officer,
                                           Treasurer, and Secretary

John R. Keller             68    1970      Executive Vice President and a
                                           Director

Dr. James A. Cole          68    1988      Senior Vice President of Research &
                                           Development

Matthew H. Marcella        51    2003      Vice President of Software
                                           Development

Ron A. Dunsky              46    2003      Vice President of Marketing

Richard C. Scott           51    2008      Senior Vice President of Sales

Each officer is elected to serve at the discretion of the Board of Directors.

      (c) Identification of Certain Significant Employees

      None.

      (d) Family Relationship

      None.


                                                                   Page 28 of 58
<PAGE>

      (e) Business Experience

The following sets forth the business experience during the past five years of
each director and executive officer:

G.S. Beckwith Gilbert         Mr. Gilbert has continued to serve as the
                              Company's Chairman of the Board since his election
                              in 1997. Mr. Gilbert was appointed Chief Executive
                              Officer in October of 1998 and served as such
                              until his retirement from that post on February 1,
                              2003. In addition, Mr. Gilbert has been President
                              and Chief Executive Officer of Field Point Capital
                              Management Company, a merchant-banking firm, since
                              1988. He is a partner of Wolsey & Co., a
                              merchant-banking firm, and a Director of Davidson
                              Hubeny Brands. Mr. Gilbert is also the Chairman of
                              the Board of Fellows of Harvard Medical School, a
                              trustee of The Rockefeller University, a Director
                              of the Yale Cancer Center, and a trustee of the
                              Williston Northampton School.

Richard R. Schilling, Jr.     Mr. Schilling has been a Director of the Company
                              since 1974. Mr. Schilling is a member of the law
                              firm of Burns, Kennedy, Schilling & O'Shea, New
                              York, New York.

Bruce N. Whitman              Mr. Whitman has been a Director of the Company
                              since 1997. He is the President, CEO, and a
                              Director of FlightSafety International and has
                              held other positions such as Executive Vice
                              President since 1961. He is currently a Director
                              and Chairman of the Executive Committee of PASSUR
                              Aerospace, Inc., Co-Chairman of the Board and
                              Chairman of the Nominating Committee of the
                              Congressional Medal of Honor Foundation, a
                              Director of the General Aviation Manufacturers
                              Association, and a Director of the Wings Club, and
                              a Director Emeritus of the Smithsonian National
                              Air and Space Museum. He is a member of the Board
                              of Governors of the Aerospace Industries
                              Association, The Wings Club, the Civil Air Patrol
                              and a member of its Executive and Audit
                              Committees, a trustee of the Falcon Foundation,
                              the Kent School, and the National World War II
                              Museum.

Paul L. Graziani              Mr. Graziani has been a Director of the Company
                              since 1997. He is the President and Chief
                              Executive Officer of Analytical Graphics, Inc.
                              (AGI), a leading producer of commercially
                              available analysis and visualization software for
                              the aerospace, defense, and intelligence
                              communities. In recent times, Mr. Graziani has
                              been recognized as "CEO of the Year" by the
                              Philadelphia region's Eastern Technology Council
                              and the Chester County Chamber of Business and
                              Industry; "Entrepreneur of the Year" regional
                              winner by Ernst & Young; and "Businessman of the
                              Year" by the local Great Valley Regional Chamber
                              of Commerce. He sits on the Boards of Directors of
                              the United States Geospatial Intelligence
                              Foundation (USGIF) and Federation of Galaxy
                              Explorers (FOGE), and is a member of the boards of
                              governors for the Civil Air Patrol (CAP) and the
                              Aerospace Industries Association (AIA). He serves
                              on the advisory board for Penn State Great Valley
                              and is an associate fellow of the American
                              Institute of Aeronautics and Astronautics (AIAA).
                              After fulfilling his board tenure, he was recently
                              elected to the honorary position of life director
                              of The Space Foundation.


                                                                   Page 29 of 58
<PAGE>

James J. Morgan               Mr. Morgan has been a director of the Company
                              since September 12, 2005. Mr. Morgan is a partner
                              in the New York City based private equity firm
                              Jacobson Partners. In his role at Jacobson
                              Partners, Mr. Morgan serves as a board member of
                              Bertucci's Inc. Mr. Morgan retired in 1997 as
                              President and Chief Executive Officer of Philip
                              Morris Incorporated.

Dr. James A. Cole             Dr. Cole currently serves as Senior Vice President
                              and the Director of Research and Development of
                              the Company. Dr. Cole earned a Ph.D. in physics
                              from Johns Hopkins University in 1966. He is a
                              current member of the American Association for the
                              Advancement of Science, American Physics Society,
                              Association for Computing Machinery, Institute of
                              Electrical and Electronic Engineers and IEEE
                              Computer Society. Dr. Cole has been with the
                              Company since 1974.

John R. Keller                Mr. Keller has been with the Company since its
                              inception in 1967 as one of the co-founders. Mr.
                              Keller received his bachelor's and master degrees
                              in engineering from New York University in 1960
                              and 1962, respectively. Mr. Keller currently
                              serves as Executive Vice President of the Company.

James T. Barry                Mr. Barry was named President of the Company on
                              April 14, 2003 and Chief Executive Officer on
                              February 1, 2003. Since Mr. Barry joined the
                              Company in 1998, he has held the positions of
                              Chief Operating Officer, Chief Financial Officer,
                              Secretary, and Executive Vice President. From 1989
                              to 1998, he was with Dianon Systems, Inc., most
                              recently as Vice President of Marketing. Prior to
                              Dianon, Mr. Barry was an officer in the United
                              States Marine Corps.

Jeffrey P. Devaney            Mr. Devaney joined the Company as Chief Financial
                              Officer, Treasurer, and Secretary on June 14,
                              2004. Prior to joining the Company, Mr. Devaney
                              was the Chief Financial Officer at Cierant
                              Corporation from 2002 to 2004. From 2000 to 2001,
                              he was a Controller at SageMaker, Inc. From 1995
                              to 2000 he was the Controller at Information
                              Management Associates, Inc.

Matthew H. Marcella           Mr. Marcella was named Vice President - Software
                              Development on January 15, 2003. Mr. Marcella
                              joined the Company in 2001 from Cityspree Inc.,
                              where he served as lead software architect from
                              2000 to 2001. From 1999 to 2000, he was a Vice
                              President at Deutsche Bank and Nomura Securities.
                              From 1996 to 1999, he was a technical officer at
                              UBS Securities.

Ron A. Dunsky                 Mr. Dunsky was named Vice President of Marketing
                              on May 21, 2003. Mr. Dunsky joined the Company in
                              2001, and initially served as Director of
                              Marketing and New Product Development. Prior to
                              joining the Company, Mr. Dunsky was a senior
                              aviation producer with the New York bureau of
                              ABCNews.com from 2000 to 2001. Prior to
                              ABCNews.com, he was a senior aviation producer
                              with the New York bureau of CNN from 1995 to 2000.


                                                                   Page 30 of 58
<PAGE>

Richard C. Scott              Mr. Scott joined the Company as Senior Vice
                              President of Sales on May 1, 2008. Prior to
                              joining the Company, Mr. Scott was the Executive
                              Vice President of Sales and Marketing for Antenna
                              Software from 2006 to 2008. From 2003 to 2006, he
                              was the Senior Vice President of North American
                              Sales for Thomson/NETg.

      (f) Involvement in Certain Legal Proceedings

      The Company knows of no event which occurred during the past five years
and which is described in Item 401(f) of Regulation S-K relating to any director
or executive officer of the Company.

      (g) Audit Committee Financial Expert

      Our Board of Directors has determined that Paul L. Graziani, Chairman of
the Company's Audit Committee, meets the Securities and Exchange Commission's
criteria of an "audit committee financial expert" as set forth in item
401(d)(5)(ii) of Regulation S-K. Mr. Graziani acquired the attributes necessary
to meet such criteria by holding positions that provided relevant experience.
Mr. Graziani is independent, as defined under applicable NASD rules.

      (h) Identification of Audit Committee

      Our Board of Directors has appointed an Audit Committee, consisting of
three directors. All of the members of the Audit Committee are independent of
our company and management, as independence is defined under applicable National
Association of Securities Dealers ("NASD") rules. The Audit Committee consists
of Mr. Graziani, Mr. Schilling and Mr. Whitman.

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

      Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers, and 10%
stockholders to file reports of ownership and reports of change in ownership of
the Company's Common Stock and other equity securities with the Securities and
Exchange Commission. Directors, executive officers, and 10% stockholders are
required to furnish the Company with copies of all Section 16(a) forms they
file. Based on a review of the copies of such reports furnished to it, the
Company believes that during the fiscal year ended October 31, 2008, the
Company's directors, executive officers, and 10% stockholders complied with all
Section 16(a) filing requirements applicable to them.

      (j) Board Nominations by Shareholders

      There have not been any material changes to the procedures by which the
Company's shareholders may recommend nominees to the Company's board of
directors as disclosed in the definitive proxy statement on Schedule 14A filed
on February 28, 2008 by the Company with the Securities and Exchange Commission
in connection with the Company's 2008 annual shareholder meeting.

      (k) Code of Ethics

      The Company hereby incorporates by reference into this Item the
information contained under the heading "Code of Ethics" in the Company's
definitive proxy statement that will be filed with the Securities and Exchange
Commission within 120 days of October 31, 2008 (the "2009 Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION

      The Company hereby incorporates by reference into this Item the
information contained under the heading "Executive Compensation" in the 2009
Proxy Statement.


                                                                   Page 31 of 58
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

      The Company hereby incorporates by reference into this Item the
information contained under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the 2009 Proxy Statement. Portions of the
Registrant's Definitive Proxy Statement for the 2009 Annual Meeting of
Stockholders, to be filed with the Securities and Exchange Commission within 120
days of October 31, 2008, are incorporated by reference into Part III of this
Form 10-K.

      For information regarding securities authorized for issuance under the
Company's equity compensation plans, see Item 5(d) above.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      (a) Transactions with related persons.

      During fiscal 2008, G.S. Beckwith Gilbert, the Company's significant
shareholder and Chairman, loaned the Company an additional $1,200,000, of which
$600,000 was loaned to the Company during the three months ended October 31,
2008, bringing the principal amount of notes due to Mr. Gilbert to $13,814,880
on October 31, 2008 and which mature on November 1, 2011. Interest shall be
payable at the annual rate of 4.5% from November 1, 2008 to January 31, 2009
payable in cash. Beginning February 1, 2009 through October 31, 2011, the annual
interest rate will be 9% payable as follows: interest at the annual rate of 6%
will be payable in cash plus the remaining interest at the annual rate of 3%
will be payable at the option of the Company in cash or "paid in kind" and added
to the principal of the note. Interest payments shall be made annually at
October 31 of each year. During fiscal 2007, Mr. Gilbert loaned the Company
$1,400,000, bringing the principal amount of notes due to Mr. Gilbert to
$12,614,880 on October 31, 2007. During fiscal 2006, Mr. Gilbert loaned the
Company $1,225,000, bringing the principal amount of notes due to Mr. Gilbert to
$11,214,880, which, together with accrued interest of $247,867, resulted in a
total of $11,462,747 owed to Mr. Gilbert on October 31, 2006. The notes payable
are classified as long-term as of October 31, 2008 and 2007. The notes
payable-related party are classified as long-term liabilities because no amounts
are due before October 31, 2009. The Company has a commitment from Mr. Gilbert
that if the Company, at any time, is unable to meet its obligations through
January 28, 2010, Mr. Gilbert will provide the necessary continuing financial
support to the Company in order for the Company to meet such obligations. Such
commitment for financial support may be in the form of additional advances or
loans to the Company, in addition to the deferral of principal and interest
payments due on the existing loans, if deemed necessary. The notes are secured
by the Company's assets.

      (b) Director independence.

      The Board of Directors had determined, after considering all the relevant
facts and circumstances, that all named directors, except for Mr. Gilbert, Mr.
Barry, and Mr. Keller, are independent directors, as "independence" is defined
in accordance with the NASD standards.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

      The Company hereby incorporates by reference into this Item the
information contained under the heading "Principal Accounting Fees and Services"
in the 2009 Proxy Statement.


                                                                   Page 32 of 58
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

      (a) List of documents filed as a part
      of this Annual Report on Form 10-K:                               Page

      (1) Index to consolidated financial statements
      Included in Part II of this Report:

            Report of Independent Registered Public
            Accounting Firm - BDO Seidman, LLP                          F-1

            Consolidated balance sheets as of
            October 31, 2008 and 2007                                   F-2

            Consolidated statements of
            income for the years ended
            October 31, 2008, 2007 and 2006                             F-3

            Consolidated statements of
            stockholders' deficit for the years ended
            October 31, 2008, 2007 and 2006                             F-4

            Consolidated statements of cash
            flows for the years ended
            October 31, 2008, 2007 and 2006                             F-5

            Notes to consolidated financial
            statements                                                  F-6

      (2) Index to Financial Statement Schedule:
          Schedule II - Valuation and Qualifying Accounts               S-1

Schedules for which provision is made in the applicable accounting regulation of
the Securities and Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been omitted.


                                                                   Page 33 of 58
<PAGE>

(c) Index to Exhibits

The following exhibits are required to be filed with this Annual Report on Form
10-K by Item 15(a) (3) and (c).

Exhibits

3.1   The Company's composite Certificate of Incorporation, dated as of January
      24, 1990, is incorporated by reference from our Annual Report on Form 10-K
      for the fiscal year ended October 31, 1989.

3.2   The Company's By-laws, dated as of May 16, 1988, are incorporated by
      reference to Exhibit 3-14 to our Annual Report on Form 10-K for the fiscal
      year ended October 31, 1998.

10.1  The Company's 1988 Bonus Pool Plan is incorporated by reference to Exhibit
      10-1 to our Annual Report on Form 10-K for the fiscal year ended October
      31, 1998.

10.2  The Company's 1988 Stock Option Plan is incorporated by reference to
      Exhibit 10-3 to our Annual Report on Form 10-K for the fiscal year ended
      October 31, 1998.

10.3  The Company's Amended 1999 Stock Incentive Plan is incorporated by
      reference to Exhibit 10.3 of our Report on Form 8-K filed on April 17,
      2006.

10.4  Severance Agreement with Yitzhak N. Bachana effective October 2, 1998 is
      incorporated by reference from our Form 8-K, dated October 13, 1998.

10.5  Letter of Agreement for employment services, dated December 28, 1999,
      between the Company and Ken J. McNamara is incorporated by reference to
      Exhibit 10.5 to our Annual Report on Form 10-K for the fiscal year ended
      October 31, 1999.

10.6  Letter of Agreement for employment services, dated September 5, 2002,
      between the Company and Delon Dotson is incorporated by reference to
      Exhibit 99.1 to our Form 8-K, dated September 12, 2002.

10.7  Debt Agreement, dated November 1, 2003, between the Company and G.S.
      Beckwith Gilbert is incorporated by reference to Exhibit 10-1 to our Form
      8-K, dated January 23, 2004.

10.8  Debt Extension Agreement, dated as of November 1, 2004, between the
      Company and G.S. Beckwith Gilbert is incorporated by reference to Exhibit
      10.1 to our Current Report on Form 8-K on February 1, 2005.

10.9  Debt Extension Agreement, made as of November 1, 2005, between the Company
      and G.S. Beckwith Gilbert, is incorporated by reference to Exhibit 10.2 to
      our Current Report on Form 8-K filed on February 6, 2006.

10.10 Debt Extension Agreement, made as of November 1, 2006, between the Company
      and G.S. Beckwith Gilbert, is incorporated by reference to Exhibit 10.2 to
      our Current Report on Form 8-K filed on January 5, 2007.

10.11 Debt Extension Agreement, made as of November 1, 2007 between the Company
      and G.S. Beckwith Gilbert is incorporated by reference to Exhibit 10.3 to
      our Current Report on Form 8-K filed on January 17, 2008.


                                                                   Page 34 of 58
<PAGE>

10.12 Debt Extension Agreement, made as of November 1, 2008 between the Company
      and G.S. Beckwith Gilbert is incorporated by reference to Exhibit 10.2 to
      our Current Report on Form 8-K filed on January 28, 2009.

16    Change in Certifying Accountant is incorporated by reference to our Form
      8-K/A, dated October 28, 1998.

21    List of Subsidiaries is incorporated by reference to our Annual Report on
      Form 10-K report for the fiscal year ended October 31, 1981.

23.1  Consent of Independent Registered Public Accounting Firm

31.1  Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or
      15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.

31.2  Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or
      15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.

32.1  Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.

32.2  Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.


                                                                   Page 35 of 58
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

PASSUR AEROSPACE, INC.

DATED: JANUARY 29, 2009  By: /s/ James T. Barry
                              ----------------------------------------
                              James T. Barry
                              President and Chief Executive Officer

Pursuant to the requirements of 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 date indicated:

DATED: JANUARY 29, 2009       /s/ James T. Barry
                              ----------------------------------------
                              James T. Barry
                              President, Chief Executive Officer and Director
                              (Principal Executive Officer)

DATED: JANUARY 29, 2009       /s/ Jeffrey P. Devaney
                              ----------------------------------------
                              Jeffrey P. Devaney
                              Chief Financial Officer, Treasurer and Secretary
                              (Principal Financial and Accounting Officer)


                                                                   Page 36 of 58
<PAGE>

                             SIGNATURES (CONTINUED)

DATED: JANUARY 29, 2009       /s/ G.S. Beckwith Gilbert
                              ----------------------------------------
                              G.S. Beckwith Gilbert
                              Chairman and Director

DATED: JANUARY 29, 2009       /s/ John R. Keller
                              ----------------------------------------
                              John R. Keller
                              Executive Vice President and Director

DATED: JANUARY 29, 2009       /s/ Richard R. Schilling, Jr.
                              ----------------------------------------
                              Richard R. Schilling, Jr.
                              Director

DATED: JANUARY 29, 2009       /s/ Bruce N. Whitman
                              ----------------------------------------
                              Bruce N. Whitman
                              Chairman of the Executive Committee and Director

DATED: JANUARY 29, 2009       /s/ Paul L. Graziani
                              ----------------------------------------
                              Paul L. Graziani
                              Director

DATED: JANUARY 29, 2009       /s/ James J. Morgan
                              ----------------------------------------
                              James J. Morgan
                              Director


                                                                   Page 37 of 58
<PAGE>

             Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
PASSUR Aerospace, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of PASSUR Aerospace,
Inc. and Subsidiary as of October 31, 2008 and 2007 and the related consolidated
statements of income, stockholders' deficit, and cash flows for each of the
three years in the period ended October 31, 2008. In connection with our audits
of the financial statements, we have also audited the financial statement
schedule as listed in Part IV, Item 15(a)(2). These financial statements and
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of PASSUR Aerospace,
Inc. and Subsidiary at October 31, 2008 and 2007, and the results of its
operations and its cash flows for each of the three years in the period ended
October 31, 2008, in conformity with accounting principles generally accepted in
the United States of America.

Also, in our opinion, the financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

                                                            /s/ BDO Seidman, LLP

Melville, New York
January 28, 2009


                                      F - 1
                                                                   Page 38 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                 OCTOBER 31,
                                                                            2008            2007
                                                                                        (See Note 1)
                                                                        ----------------------------
<S>                                                                     <C>             <C>
ASSETS
Current assets:
   Cash                                                                 $    217,316    $    286,992
   Accounts receivable, net                                                  629,888         794,487
   Prepaid expenses and other current assets                                 146,473          87,123
                                                                        ----------------------------
Total current assets                                                         993,677       1,168,602

Property, plant and equipment, net                                           380,181         327,791
PASSUR(R) Network, net                                                     6,904,158       4,884,487
Software development costs, net                                            1,990,547       1,499,813
Other assets                                                                 101,183          48,611
                                                                        ----------------------------
Total assets                                                            $ 10,369,746    $  7,929,304
                                                                        ============================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable                                                     $    615,639    $    381,262
   Accrued expenses and other current liabilities                            834,132         660,495
   Deferred income, current portion                                        1,070,693         911,394
                                                                        ----------------------------
Total current liabilities                                                  2,520,464       1,953,151

Deferred income, less current portion                                        187,970         128,529
Notes payable--related party                                              13,814,880      12,614,880
                                                                        ----------------------------
                                                                          16,523,314      14,696,560
Commitment and contingencies

Stockholders' deficit:
   Preferred shares - authorized 5,000,000 shares, par value $.01 per
     share; none issued or outstanding                                            --              --
   Common shares--authorized 10,000,000 shares, par value
     $.01 per share; issued 4,842,948 in 2008 and 4,787,948 in 2007           48,429          47,879
   Additional paid-in capital                                              4,381,528       4,263,212
   Accumulated deficit                                                    (8,960,050)     (9,454,872)
                                                                        ----------------------------
                                                                          (4,530,093)     (5,143,781)
Treasury Stock, at cost, 696,500 shares in 2008
    and 2007                                                              (1,623,475)     (1,623,475)
                                                                        ----------------------------
Total stockholders' deficit                                               (6,153,568)     (6,767,256)
                                                                        ----------------------------
Total liabilities and stockholders' deficit                             $ 10,369,746    $  7,929,304
                                                                        ============================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F - 2
                                                                   Page 39 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                              YEARS ENDED OCTOBER 31,
                                                       2008            2007            2006
                                                   --------------------------------------------
<S>                                                <C>             <C>             <C>
Revenues:
   Subscriptions                                   $  7,078,042    $  5,246,468    $  3,842,156
   Maintenance                                          395,438         408,116         419,774
   Other                                                 98,901          43,652          52,292
                                                   --------------------------------------------
   Total revenues                                     7,572,381       5,698,236       4,314,222
                                                   --------------------------------------------
Cost and expenses:
   Cost of revenues                                   2,390,200       1,875,320       1,265,428
   Research and development                             289,609         307,323         419,078
   Selling, general, and administrative expenses      3,798,806       2,511,672       2,051,341
                                                   --------------------------------------------
                                                      6,478,615       4,694,315       3,735,847
                                                   --------------------------------------------
Income from operations                                1,093,766       1,003,921         578,375

Other income (expense):
   Interest income                                        4,970          10,500           6,492
   Interest expense--related party                     (595,068)       (543,179)       (475,263)
                                                   --------------------------------------------
Income before income taxes                              503,668         471,242         109,604
Provision for income taxes                                8,846          16,660           6,689
                                                   --------------------------------------------
Net income                                         $    494,822    $    454,582    $    102,915
                                                   ============================================
Net income per common share - basic                $        .12    $        .11    $        .03
                                                   ============================================
Net income per common share - diluted              $        .09    $        .08    $        .02
                                                   ============================================
Weighted-average number of common shares
   outstanding - basic                                4,130,259       4,091,448       4,091,448
                                                   ============================================
Weighted-average number of common shares
   outstanding - diluted                              5,425,687       5,481,031       5,327,052
                                                   ============================================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F - 3
                                                                   Page 40 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

                Consolidated Statements of Stockholders' Deficit

                  Years Ended October 31, 2008, 2007, and 2006

<TABLE>
<CAPTION>
                                  COMMON
                               SHARES AFTER     COMMON       ADDITIONAL                                       TOTAL
                                DEDUCTING       SHARES        PAID-IN       ACCUMULATED      TREASURY     STOCKHOLDERS'
                              TREASURY STOCK    AMOUNT        CAPITAL         DEFICIT          STOCK         DEFICIT
                              ----------------------------------------------------------------------------------------
<S>                              <C>         <C>            <C>            <C>             <C>            <C>
Balance at October 31, 2005      4,088,115   $     47,846   $  4,094,182   $(10,012,369)   $(1,623,475)   $ (7,493,816)
   Exercise of common stock
   options                           3,333             33            766                                           799
   Stock Based compensation                                       96,316                                        96,316
   Net income                           --                                      102,915                        102,915
                              ----------------------------------------------------------------------------------------
Balance at October 31, 2006      4,091,448         47,879      4,191,264     (9,909,454)    (1,623,475)     (7,293,786)
   Stock Based compensation                                       71,948                                        71,948
   Net income                                                                   454,582                        454,582
                              ----------------------------------------------------------------------------------------
Balance at October 31, 2007      4,091,448         47,879      4,263,212     (9,454,872)    (1,623,475)     (6,767,256)
   Exercise of common stock
   options                          55,000            550         18,400                                        18,950
   Stock Based compensation                                       99,916                                        99,916
   Net income                                                                   494,822                        494,822
                              ----------------------------------------------------------------------------------------
BALANCE AT OCTOBER 31, 2008      4,146,448   $     48,429   $  4,381,528   $ (8,960,050)   $(1,623,475)   $ (6,153,568)
                              ========================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F - 4
                                                                   Page 41 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                     YEARS ENDED OCTOBER 31,
                                                               2008            2007            2006
                                                                           (See Note 1)    (See Note 1)
                                                           --------------------------------------------
<S>                                                        <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                 $    494,822    $    454,582    $    102,915
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                            1,381,744       1,051,446         887,572
     Provision for (recovery of) doubtful accounts
       receivable                                                47,056          (2,068)         32,851
     Non cash stock compensation expense                         99,916          71,948          96,316
     Changes in operating assets and liabilities:
       Accounts receivable                                      117,543        (123,311)       (218,343)
       Prepaid expenses and other current assets                (59,350)         80,782           2,286
       Other assets                                             (52,572)          8,614         (30,800)
       Accounts payable                                         234,377          70,049         (10,024)
       Deferred income                                          218,740         193,194          27,891
          Accrued expenses and other current liabilities        173,637        (284,471)        303,493
                                                           --------------------------------------------
Total adjustments                                             2,161,091       1,066,183       1,091,242
                                                           --------------------------------------------
Net cash provided by operating activities                     2,655,913       1,520,765       1,194,157
                                                           --------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
PASSUR(R) Network                                            (2,874,687)     (1,968,477)     (1,746,719)
Software development costs                                     (831,039)       (585,433)       (468,115)
Capital expenditures                                           (238,813)       (290,414)        (73,971)
                                                           --------------------------------------------
Net cash used in investing activities                        (3,944,539)     (2,844,324)     (2,288,805)
                                                           --------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from  notes payable--related party                   1,200,000       1,400,000       1,225,000
Proceeds from exercise of stock options                          18,950              --             799
Payments on notes payable                                            --          (4,815)         (4,814)
                                                           --------------------------------------------
Net cash provided by financing activities                     1,218,950       1,395,185       1,220,985
                                                           --------------------------------------------
Increase (decrease) in cash                                     (69,676)         71,626         126,337
Cash--beginning of year                                         286,992         215,366          89,029
                                                           --------------------------------------------
Cash--end of year                                          $    217,316    $    286,992    $    215,366
                                                           ============================================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
   Interest-related party                                  $    595,081    $    791,034    $    227,396
   Income taxes                                            $      8,847    $     13,381    $      6,689
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F - 5
                                                                   Page 42 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

                   Notes to Consolidated Financial Statements

                                October 31, 2008

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

PASSUR Aerospace, Inc.'s, (the "Company", "we", or "our") principal business is
to provide timely, critical information and solutions to aviation organizations
from its proprietary PASSUR(R) Network of live, unique flight information,
incorporating decision support software, analytics, as well as web-delivered
collaborative decision solutions.

On April 16, 2008, the Company's shareholders approved an amendment to the
Company's Articles of Incorporation to change the Company's name from Megadata
Corporation to PASSUR Aerospace, Inc. The Company's new ticker symbol is "PSSR".
The amendment to change the Company's name was filed with the Secretary of State
of the State of New York on April 22, 2008.

BASIS OF PRESENTATION

At October 31, 2008, the Company's current liabilities exceeded current assets
by approximately $1,527,000, it had a stockholder's deficit of approximately
$6,154,000, and it earned net income of approximately $495,000 for the year
ended October 31, 2008.

Management is addressing the Company's working capital and stockholders'
deficiency by aggressively marketing the Company's PASSUR(R) information
capabilities in its existing product lines, as well as in new products, which
are continually being developed and deployed. The Company intends to increase
the size and related airspace coverage of its owned "PASSUR(R) Network," by
continuing to install PASSUR(R) Systems throughout the United States and certain
foreign countries. In addition, management believes that expanding its existing
software suite of products, which address the wide array of needs of the
aviation industry, through the continued development of new product offerings,
will continue to lead to increased growth in the Company's customer base and
subscription-based revenues. Additionally, if the Company's business plan does
not generate sufficient cash flows from operations to meet the Company's
operating cash requirements, the Company will attempt to obtain external
financing, and if such external financing is not consummated, the Company has a
commitment to receive additional financial support from its significant
shareholder and Chairman through January 28, 2010. Such commitment for financial
support may be in the form of additional advances or loans to the Company, in
addition to the deferral of principal and interest payments due on the existing
loans, if deemed necessary.

Footnotes have been rounded to the nearest thousand for presentation purposes.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of PASSUR Aerospace,
Inc. and its wholly-owned subsidiary. All significant inter-company transactions
and balances have been eliminated in consolidation.


                                      F - 6
                                                                   Page 43 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION POLICY

The Company follows the provisions of the American Institute of Certified Public
Accountants Statement of Position 97-2, or SOP 97-2, Software Revenue
Recognition, as amended. SOP 97-2 delineates the accounting practices for
software products, maintenance, and support services and consulting revenue.
Under SOP 97-2, the Company recognizes revenue when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is determinable and
collection of the resulting receivable is probable. For arrangements involving
multiple elements (e.g. maintenance, support, and other services), the Company
allocates revenue to each element of the arrangement based on vendor-specific
objective evidence of its fair value, or for products not being sold separately,
the objective and verifiable fair value established by management.

The Company recognizes services and maintenance revenues on a straight-line
basis over the service contract period. Revenues for data subscription services
are recognized on a monthly basis upon the execution of an agreement and the
customer's receipt of the data.

The Company recognizes license fee revenues on a straight-line basis over the
term of the license agreement, which typically does not exceed five years.

The Company recognizes initial set up fee revenues and associated costs on a
straight-line basis over the estimated life of the customer relationship period,
typically five years.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain amounts as previously reported have been reclassified to conform to
current year classifications. Pursuant to the Company's capitalization policy,
approximately $367,000 as of October 31, 2007 has been reclassified to the
PASSUR(R) Network non-current assets from inventory. The Company historically
classified certain components of the PASSUR(R) Network as inventory and based
upon its current year re-evaluation of the use of these assets, the Company has
reclassified these components as part of the PASSUR(R) Network non-current
assets. The Company does not intend to sell the PASSUR(R) systems.There is no
income statement effect due to this reclassification as the amounts previously
classified as inventory related to units that were not yet placed into service,
thus the costs were not yet depreciated. The accompanying consolidated
statements of cash flows and balance sheets have been revised to reflect the
reclassification to the PASSUR(R) Network from inventory. Accordingly, for the
fiscal year ended October 31, 2007, operating cash flows and short term assets
decreased and investing cash flows and long term assets increased by
approximately $369,000 and $367,000, respectively. For the fiscal year ended
October 31, 2006, operating cash flows and long term assets increased and
investing cash flows and short term assets decreased by approximately $570,000
and $736,000, respectively.


                                      F - 7
                                                                   Page 44 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTS RECEIVABLE

The Company uses installment license and/or maintenance agreements as part of
its standard business practice. The Company has a history of successfully
collecting all amounts due under the original payment terms, without making
concessions on payments, software products, maintenance, or other services. Net
accounts receivable are composed of either the monthly, quarterly, or annual
committed amounts due from customers pursuant to the terms of each respective
customer's agreement. These account receivable balances include unearned revenue
attributable to deferred subscription revenues, deferred maintenance revenues,
and unamortized license fee revenues. Deferred revenue amounts represent fees
billed prior to actual performance of services, which will be recognized as
revenue over the respective license agreement term, which typically does not
exceed five years.

Accounts receivable balances also include initial set up fees billed when the
service is performed and revenues are recognized on a straight-line basis over
the estimated life of the customer relationship period, typically five years.

For the fiscal year ended October 31, 2008, the provision for doubtful accounts
was approximately $54,000 compared to approximately $7,000, recorded as of the
fiscal year ended October 31, 2007. The Company monitors its outstanding
accounts receivable balance and believes the $54,000 provision is reasonable.

PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment are recorded at cost and are depreciated on a
straight-line basis over the estimated useful lives of the related assets.
Amortization of leasehold improvements is calculated on a straight-line basis
over the estimated useful life of the improvements or the term of the lease,
including renewal options expected to be exercised, whichever is shorter.
Routine repairs and maintenance are expensed when incurred.

PASSUR(R) NETWORK

The PASSUR(R) Network installations, which include the direct and indirect
production and installation costs incurred for each of the Company-owned
PASSUR(R) Systems (the "PASSUR(R) Network"), are recorded at cost, net of
accumulated depreciation of approximately $4,011,000 and $3,156,000 as of
October 31, 2008 and 2007, respectively. Depreciation is charged to cost of
revenues and is calculated using the straight-line method over the estimated
useful life of the asset, which is estimated at seven years. Units that are not
placed into service are not depreciated until they are placed in service.


                                      F - 8
                                                                   Page 45 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CAPITALIZED SOFTWARE COSTS

The Company follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 86, "Accounting for the Costs of Software to be Sold,
Leased, or Otherwise Marketed." Costs incurred to develop computer software
products as well as significant enhancements to software features of the
existing products to be sold or otherwise marketed, are capitalized, after
technological feasibility is established and ending when the product is
available for release to customers. Once the software products become available
for general release to the public, the Company begins to amortize such costs to
cost of revenues.

Amortization of capitalized software costs is provided on a product-by-product
basis based on the greater of the ratio of current gross revenues to the total
of current and anticipated future gross revenues or the straight-line method
over the estimated economic life of the product beginning at the point the
product becomes available for general release, typically over five years. Costs
incurred to improve and support products after they become available for general
release are charged to expense as incurred. The assessment of recoverability of
capitalized software development costs requires the exercise of judgment by
management. In the opinion of management, all such costs capitalized as of
October 31, 2008 are recoverable through anticipated future sales of such
applicable products. During fiscal 2008 and 2007, the Company capitalized
approximately $831,000 and $585,000, respectively. During fiscal year 2008,
2007, and 2006, the Company recorded approximately $340,000, $284,000, and
$217,000 of amortization related to software development projects, respectively,
of which certain projects were completed and released for sale and certain
projects were still in development as of each year end.

In fiscal 2008 and 2007 the Company did not write off any capitalized software
projects.

LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment when circumstances indicate
the carrying amount of an asset may not be recoverable. Impairment is recognized
to the extent the sum of undiscounted estimated future cash flows expected to
result from the use of the asset is less than the carrying value. Assets to be
disposed of are carried at the lower of their carrying value or fair value, less
costs to sell. The Company evaluates the periods of amortization continually in
determining whether later events and circumstances warrant revised estimates of
useful lives. If estimates are changed, the unamortized costs will be allocated
to the increased or decreased number of remaining periods in the revised life.


                                      F - 9
                                                                   Page 46 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

COST OF REVENUES

The Company has not segregated its cost of revenues between cost of system
revenues and cost of subscription and maintenance revenues, as it is not
practicable to segregate such costs. Costs associated with system revenues
consist primarily of purchased materials, direct labor, and overhead costs.

Costs associated with subscription and maintenance revenues consist primarily of
direct labor, communication costs, depreciation of PASSUR(R) Network assets,
amortization of software development costs, and overhead costs allocations. Also
included in costs of revenues are costs associated with the upgrades of
PASSUR(R) systems necessary to make such systems compatible with new software
applications, as well as the ordinary repair and maintenance of existing
PASSUR(R) Network systems. Additionally, cost of revenues in each reporting
period is impacted by: (1) the number of PASSUR(R) Network units added, which
include the production, shipment, and installation of these assets which are
capitalized to the PASSUR(R) Network; and (2) capitalized costs associated with
software development programs which are expensed in cost of revenues.

INCOME TAXES

The Company and its subsidiary file a consolidated Federal income tax return.
The Company uses the liability method in accounting for income taxes in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred.


                                     F - 10
                                                                   Page 47 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NET INCOME PER SHARE INFORMATION

Basic net income per share is computed based on the weighted average number of
shares outstanding. Diluted net income per share is based on the sum of the
weighted average number of common shares outstanding and common stock
equivalents. Shares used to calculate net income per share are as follows:

                                         2008          2007          2006
                                         ----          ----          ----
Basic weighted average shares          4,130,259     4,091,448     4,091,448
   outstanding

Effect of dilutive stock options       1,295,428     1,389,583     1,235,604
                                       -------------------------------------
Diluted weighted average shares
   outstanding                         5,425,687     5,481,031     5,327,052
                                       =====================================
Weighted average shares which are
   not included in the calculation
   of diluted net income per share
   because their impact is
   anti-dilutive

Stock options                            490,073       325,917       676,771

DEFERRED INCOME

Deferred income includes advances received on subscription services and/or
maintenance agreements, which are derived from the Company's PASSUR(R) Network
and which may be prepaid either annually or quarterly, as well as advanced
one-time payments received for license fees relating to Company software
applications. Revenues from subscription and maintenance services are recognized
as income ratably over the subscription and/or maintenance period that coincides
with the respective agreement.

The Company recognizes license fees revenues on a straight-line basis over the
term of the license agreement, which typically does not exceed five years.

The Company recognizes initial set up fee revenues and associated costs on a
straight-line basis over the estimated life of the customer relationship period,
typically five years.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The recorded amounts of the Company's cash, receivables, accounts payable, and
accrued liabilities approximate their fair values principally because of the
short-term nature of these items. The fair value of related party debt is not
practical to determine.


                                     F - 11
                                                                   Page 48 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION

The Company follows SFAS No. 123R "Share-Based Compensation" which requires
measurement of compensation cost for all stock-based awards at fair value on
date of grant and recognition of compensation over the service period for awards
expected to vest. The fair value of stock options was determined using the
Black-Scholes valuation model, which is consistent with our valuation techniques
previously utilized for stock options in footnote disclosures required under
SFAS No. 123. Such fair value is recognized as expense over the service period,
net of estimated forfeitures. For the fiscal years ended October 31, 2008, 2007,
and 2006, stock compensation expense of $100,000, $72,000, and $96,000,
respectively, was primarily charged to selling, general and administrative
expenses.

The weighted average fair value of options outstanding during the year ended
October 31, 2008 was $.75. These options vest over a period of three and five
years. The fair value for these options was estimated at the date of grant using
a Black-Scholes option pricing model with the following weighted average
assumptions for the fiscal years ended October 31, 2008, 2007, and 2006;
risk-free interest rate of 4.47%, volatility factor of the expected market price
of the Company's common stock of 128% in fiscal year 2008, 142% in fiscal year
2007, and 135% in fiscal year 2006; no dividend yield: and a weighted-average
expected life of the option of 6.5, 6.5, and 6.3 years in fiscal 2008, 2007, and
2006, respectively.

COMPREHENSIVE INCOME

For the fiscal years ended October 31, 2008, 2007, and 2006, the Company's
comprehensive income is equivalent to that of the Company's total net income.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued Financial Accounting Standards (SFAS) No.
157, "Fair Value Measurement," which defines fair value, establishes a framework
for measuring fair value and expands disclosures regarding assets and
liabilities measured at fair value. In February 2008, the FASB issued FASB Staff
Position (FSP) 157-1, "Application of FASB Statement No. 157 to FASB Statement
No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements
for Purposes of Lease Classification or Measurement under Statement 13" (FSP
157-1) and FSP 157-2, "Effective Date of FASB Statement No. 157" (FSP 157-2).
FSP 157-1 amends SFAS 157 to remove certain leasing transactions from its scope.
FSP 157-2 delays the effective date of SFAS 157 for all nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually),
until the beginning of the Company's first quarter of fiscal 2010. The
measurement and disclosure requirements related to financial assets and
financial liabilities are effective for the Company's first quarter of fiscal
2009. The Company does not expect that the adoption of SFAS 157 will have a
material impact on its consolidated financial position, results of operations or
cash flows.


                                     F - 12
                                                                   Page 49 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities," which gives companies the option to
measure eligible financial assets, financial liabilities and firm commitments at
fair value (i.e., the fair value option), on an instrument-by-instrument basis,
that are otherwise not permitted to be accounted for at fair value under other
accounting standards. The election to use the fair value option is available
when an entity first recognizes a financial asset or financial liability or upon
entering into a firm commitment. Subsequent changes in fair value must be
recorded in earnings. SFAS No. 159 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. The Company does not expect
that the adoption of SFAS 159 will have a material impact on its consolidated
financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS 141 (revised 2007), "Business
Combinations ("SFAS 141R"). SFAS 141R will significantly change the accounting
for business combinations in a number of areas including the treatment of
contingent consideration, contingencies, acquisition costs, IPR&D and
restructuring costs. In addition, under SFAS 141R, changes in deferred tax asset
valuation allowances and acquired income tax uncertainties in a business
combination after the measurement period will impact income tax expense. SFAS
141R is effective for fiscal years beginning after December 15, 2008. The
Company has not yet evaluated the impact, if any, of adopting this
pronouncement.


In December 2007, the FASB issued SFAS 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51" ("SFAS 160").
SFAS 160 will change the accounting and reporting for minority interests, which
will be recharacterized as noncontrolling interests (NCI) and classified as a
component of equity. This new consolidation method will significantly change the
accounting for transactions with minority interest holders. SFAS 160 is
effective for fiscal years beginning after December 15, 2008. The Company has
not yet evaluated the impact, if any, of adopting this pronouncement.


                                     F - 13
                                                                   Page 50 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

2. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

                                       ESTIMATED
                                        USEFUL              OCTOBER 31,
                                         LIVES          2008           2007
                                      ----------------------------------------
Leasehold improvements                 3-5 years     $  155,000     $  138,000
Equipment                             5-10 years      2,928,000      2,719,000
Furniture and fixtures                5-10 years        430,000        418,000
                                                     -------------------------
                                                      3,513,000      3,275,000
Less accumulated depreciation and
   amortization                                       3,133,000      2,947,000
                                                     -------------------------
                                                     $  380,000     $  328,000
                                                     =========================

The Company recorded depreciation and amortization expense on the assets
included in property, plant and equipment of $187,000, $108,000, and $57,000 for
the years ended October 31, 2008, 2007, and 2006, respectively.

3. PASSUR(R) NETWORK

The PASSUR(R) Network installations, which include the direct and indirect
production and installation costs incurred for each of the Company-owned
PASSUR(R) Systems (the "PASSUR(R) Network"), are recorded at cost, net of
accumulated depreciation of approximately $4,011,000 and $3,156,000 as of
October 31, 2008 and 2007, respectively. Depreciation is charged to cost of
revenues and is calculated using the straight-line method over the estimated
useful life of the asset, which is estimated at seven years. Units that are not
placed into service are not depreciated until they are placed in service. At
October 31, 2008 these costs approximated $965,000. During fiscal 2008, 2007,
and 2006, the Company capitalized approximately $2,875,000, $1,968,000, and
$1,747,000 of costs related to additions to the PASSUR(R) Network, respectively.
Included in the PASSUR(R) Network are approximately $901,000, $367,000, and
$736,000 of costs pertaining to raw material, work-in-process, and finished
goods components during fiscal 2008, 2007, and 2006, respectively. The Company
incurred depreciation expense related to PASSUR(R) Network installations during
fiscal 2008, 2007, and 2006 of approximately $855,000, $659,000, and $614,000,
respectively. In fiscal 2008 and 2007 the Company did not dispose of any
PASSUR(R) Network assets.

4. SOFTWARE DEVELOPMENT COSTS

Software development costs are comprised of costs incurred to develop computer
software products as well as enhancements to software features of the existing
products to be sold or otherwise marketed, after technological feasibility is
established and which end when the product is available for release to
customers. As of October 31, 2008 and 2007, the Company had approximately
$3,248,000, and $2,417,000 of such costs capitalized, and $1,257,000 and
$917,000 of accumulated amortization, respectively. The average amortization
period of the Company's software development costs as of October 31, 2008 is
approximately 3.1 years.

Amortization expense on these assets for the fiscal years ended October 31,
2008, 2007, and 2006 was approximately $340,000, $284,000, and $217,000,
respectively. Future amortization expense for software development costs
capitalized where amortization has commenced, as of October 31, 2008 for the
years ended October 31, 2009, 2010, 2011, 2012, and 2013 is estimated to
approximate $316,000, $280,000, $260,000, $176,000, and $96,000, respectively.


                                                                   Page 51 of 58
<PAGE>

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

                                                     OCTOBER 31,
                                                  2008         2007
                                                  ----         ----
      Payroll, payroll taxes and benefits       $267,000     $276,000
      Professional fees                          164,000      139,000
      License fees                               220,000       86,000
      Commissions                                 72,000       49,000
      Travel expenses                             22,000       14,000
      Advertising and marketing                       --       21,000
      Other liabilities                           89,000       75,000
                                                ---------------------
                                                $834,000     $660,000
                                                =====================

6. NOTES PAYABLE--RELATED PARTY

During fiscal 2008, G.S. Beckwith Gilbert, the Company's significant shareholder
and Chairman, loaned the Company an additional $1,200,000, of which $600,000 was
loaned to the Company during the three months ended October 31, 2008, bringing
the principal amount of notes due to Mr. Gilbert to $13,814,880 on October 31,
2008 and which mature on November 1, 2011. Interest shall be payable at the
annual rate of 4.5% from November 1, 2008 to January 31, 2009 payable in cash.
Beginning February 1, 2009 through October 31, 2011, the annual interest rate
will be 9% payable as follows: interest at the annual rate of 6% will be payable
in cash plus the remaining interest at the annual rate of 3% will be payable at
the option of the Company in cash or "paid in kind" and added to the principal
of the note. Interest payments shall be made annually at October 31 of each
year. During fiscal 2007, Mr. Gilbert loaned the Company $1,400,000, bringing
the principal amount of notes due to Mr. Gilbert to $12,614,880 on October 31,
2007. During fiscal 2006, Mr. Gilbert loaned the Company $1,225,000, bringing
the principal amount of notes due to Mr. Gilbert to $11,214,880, which, together
with accrued interest of $247,867, resulted in a total of $11,462,747 owed to
Mr. Gilbert on October 31, 2006. The notes payable are classified as long-term
as of October 31, 2008 and 2007. The notes payable-related party are classified
as long-term liabilities because no amounts are due before October 31, 2009. The
Company has a commitment from Mr. Gilbert that if the Company, at any time, is
unable to meet its obligations through January 28, 2010, Mr. Gilbert will
provide the necessary continuing financial support to the Company in order for
the Company to meet such obligations. Such commitment for financial support may
be in the form of additional advances or loans to the Company, in addition to
the deferral of principal and interest payments due on the existing loans, if
deemed necessary. The notes are secured by the Company's assets.

7. LEASES

The Company's research and manufacturing facility is located in Bohemia, New
York, and is subject to a lease that was extended for an additional three years
commencing November 1, 2006 through October 31, 2009. Minimum rent under this
agreement for the period ended October 31, 2008 approximated $97,000. This lease
provides for additional payments of real estate taxes and other operating
expenses over the minimum rental amount. The Company's headquarters located in
Greenwich, CT is rented for the period ending June 30, 2009 at an amount of
$90,000 per year. All other operating leases are under a month-to-month
arrangement.


                                     F - 14
                                                                   Page 52 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

7. LEASES (CONTINUED)

                                            Contractual Obligations Under
Fiscal Year Ended October 31:                      Operating Leases
                                                   ----------------
2009                                                  $166,360
                                                      --------
Total Minimum Contractual Obligations                 $166,360
                                                      ========

8. INCOME TAXES

The Company's provision for income taxes in each year consists of current state
and local minimum taxes.

At October 31, 2008, the Company has available a federal net operating loss
carry-forward of approximately $12,151,000 for income tax purposes which will
expire in various tax years from 2009 through 2025. The Company has provided a
full valuation allowance on the net deferred tax asset of approximately
$4,571,000 which primarily consists of the net operating loss carry-forwards
which are not considered more likely than not to be realizable.

9. STOCK OPTIONS

The Company's stock option plans provide for the granting of stock options for
up to 2,240,000 shares of the Company's common stock. The option price per share
is the fair market value at date of grant, except on the issuance of
non-qualified options in which the option price is not less than 85% of the fair
market value of the common stock. Options granted may be exercised up to a
maximum of ten years from the date of grant; however, individuals who own more
than 10% of the Company's common stock must exercise their options within five
years of the date of the grant and these options are exercisable at 110% of the
fair market value of the common stock at the date of grant.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including expected stock price volatility.

In management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options due to
changes in subjective input assumptions which may materially affect the fair
value estimate and because the Company's employee stock options have
characteristics significantly different from those of traded options.


                                     F - 15
                                                                   Page 53 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

9. STOCK OPTIONS (CONTINUED)

Information with respect to options during the years ended October 31, 2008,
2007, and 2006 is as follows:

<TABLE>
<CAPTION>
                                         2008                   2007                  2006
                                             WEIGHTED               WEIGHTED              WEIGHTED
                                             AVERAGE                AVERAGE               AVERAGE
                                             EXERCISE               EXERCISE              EXERCISE
                                  OPTIONS    PRICE       OPTIONS    PRICE      OPTIONS    PRICE
                                 ----------------------------------------------------------------
<S>                              <C>           <C>      <C>           <C>      <C>          <C>
Options outstanding-beginning
   of year                       1,715,500     $ .51    1,675,500     $ .46    1,561,000    $ .49
Options granted                    145,000      3.88       40,000      2.63      172,000      .47
Options forfeited and expired      (20,000)     3.75           --        --      (54,167)    1.42
Options exercised                  (55,000)      .34           --        --       (3,333)     .24
                                 ----------------------------------------------------------------
Options outstanding-end
   of year                       1,785,500     $ .75    1,715,500     $ .51    1,675,500    $ .46
                                 ================================================================
Options exercisable at end
   of year                       1,570,925     $ .47    1,509,185     $ .46    1,248,130    $ .49
                                 ================================================================
Weighted average fair value
   per share of options
   granted during the year           $3.54                  $2.48                   $.47
                                 =========              =========              =========
</TABLE>

The following table summarizes information about stock options outstanding at
October 31, 2008:

<TABLE>
<CAPTION>
                  OPTIONS                                            OPTIONS
                  OUTSTANDING                                        EXERCISABLE
                  -----------                                        -----------
                              Weighted-Average
                                 Remaining
Range of                         Contractual      Weighted-Average                Weighted-Average
Exercise Prices      Shares         Life           Exercise Price       Shares     Exercise Price
--------------------------------------------------------------------------------------------------
<S>                 <C>           <C>                  <C>             <C>              <C>
 $ .15 - $ .24      323,500       3.6 years            $ .20           323,500          $ .20
 $ .25 - $ .38      514,000       5.4 years              .28           514,000            .28
 $ .40 - $ .55      480,500       5.5 years              .49           422,925            .50
 $ .63 - $ .84      265,000       1.9 years              .79           265,000            .79
 $1.63 - $4.09      202,500       7.8 years             3.40            45,500           2.54
                  1,785,500                                          1,570,925
</TABLE>

As of October 31, 2008 there were 2,166,667 shares of common stock reserved for
future issuance under the Company's stock option plan. For the year ended
October 31, 2008 stock compensation expense of approximately $100,000 was
primarily charged to Selling, General and Administrative expense, consisting of
$47,000 for options granted during fiscal year 2008 and $53,000 for non vested
options granted prior to October 31, 2007. As of October 31, 2008 there was
approximately $477,000 of total unrecognized compensation cost, net of estimated
forfeitures, related to nonvested share-based compensation arrangements, which
is expected to be recognized over a weighted-average period of 3.93 years.


                                     F - 16
                                                                   Page 54 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

9. STOCK OPTIONS (CONTINUED)

Stock option activity during the year ended October 31, 2008, was as follows:

<TABLE>
<CAPTION>
                                                                     Weighted
                                                         Weighted     average
                                                          average    remaining     Aggregate
                                             Number of   exercise    contracted    intrinsic
                                              Options      price    term (years)     value
---------------------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>        <C>
Outstanding at November 1, 2007              1,715,500     $ .51
Options granted                                145,000      3.88
Options exercised                              (55,000)      .34
Options forfeited                              (20,000)     3.75
                                             =========
Options outstanding at October 31, 2008      1,785,500      . 75         4.9       $1,342,000
                                             =========
Options exercisable at October  31, 2008     1,570,925       .47         4.3       $  743,000
</TABLE>

The weighted average grant-date fair value of options granted during fiscal year
2008 was $3.54.

A summary of our non-vested shares as of October 31, 2008 and changes during the
fiscal year are presented below:

                                                        Weighted average
                                      Shares          grant date fair value
---------------------------------------------------------------------------
Nonvested at November 1, 2007         206,315                 $ .83
Granted                               145,000                  3.88
Vested                               (116,740)                  .52
Forfeited                             (20,000)                 3.75
                                      =======
Nonvested at October 31, 2008         214,575                 $2.79
                                      =======

10. MAJOR CUSTOMERS

The Company is a supplier of information and decision support software serving
the needs of the aviation industry, primarily airlines, airports, and other
aviation related companies. The Company performs ongoing credit evaluations of
its customers and generally does not require collateral. Credit losses
historically have been immaterial.

During the year ended October 31, 2008, 2007 and 2006 one customer accounted for
approximately 12%, 13%, and 16% of total revenues, respectively.

The Company had foreign sales of approximately $238,000, $241,000, and $226,000
in fiscal 2008, 2007, and 2006, respectively. All sales, including foreign
sales, are denominated in U.S. dollars.


                                     F - 17
                                                                   Page 55 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

11. RELATED PARTY TRANSACTIONS

For the years ended October 31, 2007 and 2006, the Company paid approximately
$246,000 and $98,000, respectively, to Surf-Tech Manufacturing, Inc. (a
non-public corporation) for materials and labor in connection with the
production of various replacement, new, and upgraded equipment for PASSUR(R)
systems. The Company believes that these rates are competitive and are at or
below market rates. A Company Executive Vice President and Director was a 50%
shareholder of the aforementioned company through July 31, 2007, at which time
such shares were sold and was no longer considered a related party.

12. ROYALTY AGREEMENT

The Company is a party to a license agreement, as amended in fiscal 2001,
whereby the Company is granted the exclusive right and license worldwide to
manufacture and sell PASSUR(R) systems for use with airline dispatch systems and
in other aircraft flight tracking systems. The Company is also granted an
exclusive worldwide license to sell PASSUR(R) Systems and/or data subscriptions
for noise applications, dispatch activites, and new applications based on
modifications to existing designs. The Company pays a royalty based on the
number of PASSUR(R) Systems sold and/or installed and generating subscription
revenues subject to a minimum annual royalty of $75,000. As of October 31, 2008
and 2007, the Company had $220,000 and $86,000 accrued respectively, as a
component of accrued expenses and other accrued liabilities, respectively. This
license agreement is in effect until the date of expiration of the last licensed
patent to expire, which occurs in 2013.

During October 1999, the license agreement was amended primarily with respect to
when additional royalties would be payable by the Company for new installations
of Company-owned systems assuming the minimum annual royalty payment requirement
had been earned. Under the amended agreement, these additional royalties are
payable based only upon a percentage of the revenue received from each
Company-owned installation.

13. QUARTERLY RESULTS OF OPERATIONS

The following table provides unaudited quarterly consolidated results of
operations for each quarter of fiscal years 2008 and 2007. The Company believes
this unaudited information has been prepared substantially on the same basis as
the annual audited financial statements and all necessary adjustments,
consisting of any normal recurring adjustments, have been included in the
amounts stated below to present fairly the Company's results of operations. The
operating results for any quarter are not necessarily indicative of the
operating results for any future period. Certain balances have been reclassified
to conform to the presentation of balances as stated in this Annual Report on
Form 10-K.


                                     F - 18
                                                                   Page 56 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

             Notes to Consolidated Financial Statements (continued)

13. QUARTERLY RESULTS OF OPERATIONS (CONTINUED)

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                         -----------------------------------------------------------------------------------------------------
                            OCT. 31,     JULY 31,    APRIL 30,     JAN. 31,     OCT. 31,     JULY 31,    APRIL 30,     JAN. 31,
                               2008         2008         2008         2008         2007         2007         2007         2007
                         -----------------------------------------------------------------------------------------------------
<S>                      <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
TOTAL REVENUES           $1,964,633   $1,997,995   $1,903,269   $1,706,484   $1,537,588   $1,466,793   $1,392,175   $1,301,680

INCOME FROM OPERATIONS      240,351      282,365      272,374      298,676      280,280      291,418      245,983      186,240

NET INCOME                   88,530      126,924      127,277      152,091      143,464      142,264      114,973       53,881

NET INCOME PER COMMON
SHARE-BASIC                    $.02         $.03         $.03         $.04         $.04         $.03         $.03         $.01
NET INCOME PER COMMON
SHARE-DILUTED                  $.02         $.02         $.02         $.03         $.03         $.03         $.02         $.01
</TABLE>


                                     F - 19
                                                                   Page 57 of 58
<PAGE>

                      PASSUR Aerospace, Inc. and Subsidiary

                 Schedule II - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                BALANCE AT    CHARGED TO    CHARGED                      BALANCE
                                BEGINNING     COSTS AND     TO OTHER                     AT END OF
DESCRIPTION                     OF PERIOD     EXPENSES      ACCOUNTS       DEDUCTIONS    PERIOD
---------------------------------------------------------------------------------------------------
<S>                             <C>           <C>           <C>            <C>           <C>
Year Ended October 31, 2008;
---------------------------------------------------------------------------------------------------
Reserves and allowances
deducted from asset
accounts:
---------------------------------------------------------------------------------------------------
Reserve for estimated
doubtful accounts -
accounts receivable.            $    6,545     $81,974           $ --       $(34,919)    $   53,600
---------------------------------------------------------------------------------------------------
Valuation allowance on
deferred tax asset               4,855,000                   (284,000)(a)                 4,571,000
---------------------------------------------------------------------------------------------------
                                 4,861,545      81,974       (284,000)       (34,919)     4,624,600
---------------------------------------------------------------------------------------------------
Year Ended October 31, 2007;
---------------------------------------------------------------------------------------------------
Reserves and allowances
deducted from asset
accounts:
---------------------------------------------------------------------------------------------------
Reserve for estimated
doubtful accounts -
accounts receivable.                 8,612      32,653                       (34,720)         6,545
---------------------------------------------------------------------------------------------------
Valuation allowance on
deferred tax asset               5,589,000                   (734,000)(a)                 4,855,000
---------------------------------------------------------------------------------------------------
                                 5,597,612      32,653       (734,000)       (34,720)     4,861,545
---------------------------------------------------------------------------------------------------
Year Ended October 31, 2006;
Reserves and allowances
deducted from asset
accounts:
---------------------------------------------------------------------------------------------------
Reserve for estimated
doubtful accounts -
accounts receivable.                 6,275      32,851                       (30,514)         8,612
---------------------------------------------------------------------------------------------------
Valuation allowance on
deferred tax asset               6,365,000                   (776,000)(a)                 5,589,000
                                -------------------------------------------------------------------
                                $6,371,275     $32,851      $(776,000)      $(30,514)    $5,597,612
                                ===================================================================
</TABLE>

(a)   Valuation allowance for deferred tax assets.


                                       S-1
                                                                   Page 58 of 58