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Byrna Technologies Inc.

Byrna Technologies Inc.BYRNEarnings & Financial Report

Nasdaq · Industrials · Miscellaneous Electrical Machinery, Equipment & Supplies

Byrna Technologies Inc. designs, manufactures and markets innovative less-lethal personal safety and self-defense products, including handheld kinetic launchers, specialized non-lethal projectiles and related accessories. Its core customer segments cover individual consumers, law enforcement agencies, private security firms and educational institutions, with primary markets across North America and expanding global distribution networks.

What changed in Byrna Technologies Inc.'s 10-K — 2022 vs 2023

Top changes in Byrna Technologies Inc.'s 2023 10-K

140 paragraphs added · 146 removed · 122 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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The importation of materials of and components we use in manufacturing our products and export of finished goods are also subject to extensive federal and international laws and regulations. The handling of our technical data and the international sale of our products may also be regulated by the U.S. Department of State and Department of Commerce.
The importation of materials and components we use in manufacturing our products and export of finished goods are also subject to extensive federal and international laws and regulations. The handling of our technical data and the international sale of our products may also be regulated by the U.S. Department of State and Department of Commerce.
In addition, through the acquisition of Mission Less Lethal, we now hold exclusive rights to use all of the intellectual property of Kore Outdoor, Inc. (the previous owner of Mission Less Lethal) for non-lethal applications.
In addition, through the acquisition of Mission Less Lethal, we now hold exclusive rights to use all of the intellectual property of Kore Outdoor, Inc. (the previous owner of Mission Less Lethal) for less-lethal applications.
In addition, manufacturers of traditional firearms may introduce products competitive with ours. Many of our existing and potential competitors benefit from strong brand recognition, broad product lines, well-established distribution, loyal resellers and customers and significant financial resources. We expect to encounter new competitors as the non-lethal security market grows and as we enter new markets both domestically and internationally.
In addition, manufacturers of traditional firearms may introduce products competitive with ours. Many of our existing and potential competitors benefit from strong brand recognition, broad product lines, well-established distribution, loyal resellers and customers and significant financial resources. We expect to encounter new competitors as the less-lethal security market grows and as we enter new markets both domestically and internationally.
We seek to fulfill our mission by developing easy-to-use self-defense tools that are designed to allow people to live more safely. We are also focused on providing law enforcement and private security customers with non-lethal alternatives to firearms that are intended to reduce the use of firearms and facilitate trust within the communities they serve.
We seek to fulfill our mission by developing easy-to-use self-defense tools that are designed to allow people to live more safely. We are also focused on providing law enforcement and private security customers with less-lethal alternatives to firearms that are intended to reduce the use of firearms and facilitate trust within the communities they serve.
These agencies can impose civil and criminal penalties, including denying us from exporting our products, for failure to comply with applicable laws and regulations. We believe that existing federal, state, and local legislation relating to the regulation of firearms and ammunition do not have a material adverse effect on our sales of products.
These agencies can impose civil and criminal penalties, including preventing us from exporting our products, for failure to comply with applicable laws and regulations. We believe that existing federal, state, and local legislation relating to the regulation of firearms and ammunition do not have a material adverse effect on our sales of products.
ITEM 1. BUSINESS Overview We are a non-lethal self-defense technology company, specializing in innovative, next generation solutions for security situations that do not require the use of lethal force. Our mantra is Live Safe ®, and our core mission is to empower people to safely embrace life.
ITEM 1. BUSINESS Overview We are a less-lethal self-defense technology company, specializing in innovative, next generation solutions for security situations that do not require the use of lethal force. Our mantra is Live Safe ®, and our core mission is to empower people to safely embrace life.
(“Fusady”) located in Argentina, to expand our operations and presence in South American markets. We hold 51% of the stock in the joint venture entity, Byrna LATAM S.A. (“Byrna LATAM”), and the remaining 49% of stock in Byrna LATAM is held by Fusady. We offer a range of .68 caliber projectiles for different applications.
(“Fusady”) located in Uruguay, to expand our operations and presence in South American markets. We hold 51% of the stock in the joint venture entity, Byrna LATAM S.A. (“Byrna LATAM”), and the remaining 49% of stock in Byrna LATAM is held by Fusady. We offer a range of .68 caliber projectiles for different applications.
Our current marketing strategy includes engaging key influencers in relevant markets to highlight the benefits of our security solutions to their respective networks of followers, engaging in public dialogues about firearm regulation, school safety and the expansion of police programs and training in the use of non-lethal weapons, and expanding our use of targeted digital marketing tools.
Our current marketing strategy includes engaging key influencers in relevant markets to highlight the benefits of our security solutions to their respective networks of followers, engaging in public dialogues about firearm regulation, school safety and the expansion of police programs and training in the use of less-lethal weapons, and expanding our use of targeted digital marketing tools.
Competition Our non-lethal security products compete with manufacturers of: ● conductive energy devices, including Axon Enterprise, Inc., which sells the TASER device; ● other handheld CO2-powered launchers of chemical irritant projectiles, including United Tactical Systems, LLC, which sells products under the PepperBall brand; and ● remote restraint devices, including Wrap Technologies, Inc.
Competition Our less-lethal security products compete with manufacturers of: ● conductive energy devices, including Axon Enterprise, Inc., which sells the TASER device; ● other handheld CO2-powered launchers of chemical irritant projectiles, including United Tactical Systems, LLC, which sells products under the PepperBall brand; and ● remote restraint devices, including Wrap Technologies, Inc.
In the professional market, our products are designed to provide domestic and international law enforcement agencies, corrections and custodial officers, private security professionals, private investigators and other professional security users with a practical, non-lethal option to address threats and resolve conflicts without the need to resort to lethal force.
In the professional market, our products are designed to provide domestic and international law enforcement agencies, corrections and custodial officers, private security professionals, private investigators and other professional security users with a practical, less-lethal option to address threats and resolve conflicts without the need to resort to lethal force.
Our Byrna personal security devices are powerful and effective non-lethal self-defense devices that are powered by CO2 and fire .68 caliber spherical kinetic and chemical irritant projectiles that are designed to disable a threat from a standoff distance of up to 60 feet.
Our Byrna personal security devices are powerful and effective less-lethal self-defense devices that are powered by CO2 and fire .68 caliber spherical kinetic and chemical irritant projectiles that are designed to disable a threat from a standoff distance of up to 60 feet.
In the consumer market, our solutions are designed to provide ordinary civilians with an effective, non-lethal tool to disable, disarm and deter would-be assailants and to escape harm’s way.
In the consumer market, our solutions are designed to provide ordinary civilians with an effective, less-lethal tool to disable, disarm and deter would-be assailants and to escape harm’s way.
Effective December 19, 2019, we dissolved our wholly-owned subsidiary Security Devices International Canada Corp (“SDICC”). We currently have two wholly-owned subsidiaries, Byrna South Africa (Pty) Ltd. (“Byrna South Africa”) and Roboro Industries Pty LTD (“Roboro”). On May 5, 2020, we acquired all of the issued and outstanding equity interests of Roboro and, as a result, Roboro became our wholly-owned subsidiary.
Effective December 19, 2019, we dissolved our wholly-owned subsidiary Security Devices International Canada Corp (“SDICC”). We currently have one wholly-owned subsidary, Byrna South Africa (Pty) Ltd. (“Byrna South Africa”). On May 5, 2020, we acquired all of the issued and outstanding equity interests of Roboro Industries Pty LTD (“Roboro”) and, as a result, Roboro became our wholly-owned subsidiary.
International sales represented 8.2% of revenue in our fiscal year 2021 and 19.1% of revenue in fiscal year 2022; we see the potential to continue increasing our international sales mix as foreign law enforcement customers are showing growing interest in Byrna devices serving as a non-lethal, secondary security device, and the Byrna approach is increasingly seen as a favorable de-escalation solution.
International sales represented 5.8% of revenue in our fiscal year 2023 and 19.1% of revenue in fiscal year 2022; we see the potential to continue increasing our international sales mix as foreign law enforcement customers are showing growing interest in Byrna devices serving as a less-lethal, secondary security device, and the Byrna approach is increasingly seen as a favorable de-escalation solution.
Our design team is comprised of experts in the fields of mechanical design, precision manufacturing and CO2-powered propulsion. We are currently focused on executing the commercial introduction of a series of new launchers, including the Byrna LE and Byrna EP.
Our design team is comprised of experts in the fields of mechanical design, precision manufacturing and CO2-powered propulsion. We are currently focused on executing the commercial introduction of a series of new launchers.
We also conduct long-term testing of our launchers during the development phase. We measure in-field quality by the rate of returns requested by our customers. Our Byrna SD includes 85 distinct parts, including many custom designed parts. We source these components from third-party suppliers in the U.S. and overseas.
We also conduct long-term testing of our launchers during the development phase. We measure in-field quality by the rate of returns requested by our customers. Our Byrna SD and LE include a significant number of distinct parts, including many custom designed parts. We source these components from third-party suppliers in the U.S. and overseas.
However, the regulation of firearms and ammunition may become more restrictive in the future, and any such developments might have a material adverse effect on our business, operating results, financial condition, and cash flows. Human Capital As of November 30, 2022, we had 154 employees, including 1 part-time employee.
However, the regulation of firearms and ammunition may become more restrictive in the future, and any such developments might have a material adverse effect on our business, operating results, financial condition, and cash flows. Human Capital As of November 30, 2023, we had 106 employees.
During the year ended November 30, 2021, we utilized Roboro exclusively as a manufacturing and assembly supplier for our products until such operations were assumed by Byrna South Africa following the acquisition.
During the year ended November 30, 2021, we utilized Roboro exclusively as a manufacturing and assembly supplier for our products until such operations were assumed by Byrna South Africa following the acquisition. On March 10, 2023, the Company dissolved the Roboro legal entity.
Our chemical irritant projectiles include Byrna Max, which contains a pepper and tear gas blend, and Byrna Pepper, which contains a pepper and PAVA blend. These chemical irritant projectiles are designed to intensely burn an assailant’s eyes and skin and impair their respiratory system upon contact, with quick-acting, incapacitating effects.
Our chemical irritant projectiles include Byrna Max, which contains a pepper and tear gas blend, and Byrna Pepper, which contains a pepper and PAVA blend. These chemical irritant projectiles are designed to cause burning sensation on an assailant’s eyes and skin and to temporarily cause a sensation of impairment of their respiratory system upon contact, with quick-acting, incapacitating effects.
On April 27, 2021, we effected a 10-for-1 reverse stock split of our common stock (the “Reverse Stock Split”) with exercise prices for our outstanding warrants and stock options appropriately adjusted. 6
On April 27, 2021, we effected a 10-for-1 reverse stock split of our common stock (the “Reverse Stock Split”) with exercise prices for our outstanding warrants and stock options appropriately adjusted. On January 10, 2023, we created a new joint venture with Fusady S.A., an affiliate of Bersa S.A.
The Byrna SD comes with easily reloadable magazines that can hold five or seven .68 caliber projectiles. The Byrna SD is designed to provide a non-lethal alternative to a firearm, effective at a much safer stand-off distance than pepper spray or conductive energy devices, which have recommended maximum ranges of 10 feet and 20 feet, respectively.
The Byrna SD is designed to provide a less-lethal alternative to a firearm, effective at a much safer stand-off distance than pepper spray or conductive energy devices, which have recommended maximum ranges of 10 feet and 20 feet, respectively. During 2023, we introduced the Byrna LE.
Together, our projectiles, accessories and apparel provide us with an attractive source of ongoing revenue from our base of Byrna owners. Marketing and Sales We sell our products into the consumer market through our Byrna e-commerce store and a network of over 1,300 local, regional and national outdoor and sporting goods stores, either directly or through distributors.
Marketing and Sales We sell our products into the consumer market through our Byrna e-commerce store, Side Hustle dealer program, premier dealers, and a network of over 1,300 local, regional and national outdoor and sporting goods stores, either directly or through distributors. We also sell our products through an Amazon storefront.
We also sell our products through an Amazon storefront. In the professional security market, we seek to drive purchases through our Train the Trainer program developed for police and security officers, with a focus on educating the proper use of force and de-escalation methods.
In the professional security market, we seek to drive purchases through our Train the Trainer program developed for police and security officers, with a focus on educating them on the proper use of force and de-escalation methods. Our international sales are fulfilled primarily by select distribution partners that have expertise in their local markets.
These high-profile events led to significant increases in orders on our e-commerce store and further raised our brand recognition nationally. We believe these events demonstrated the positive and rapid impacts that additional visibility of our products and brand can have on our sales.
We believe these events demonstrated the positive and rapid impacts that additional visibility of our products and brand can have on our sales.
We believe we have a significant opportunity to leverage the Byrna brand to expand our product line, broaden our user base and generate increasing sales from new and existing customers. Our flagship product, the Byrna HD, was updated and improved with the introduction of the Byrna SD in the second half of fiscal year 2021.
We believe we have a significant opportunity to leverage the Byrna brand to expand our product line, broaden our user base and generate increasing sales from new and existing customers. Our flagship product, the Byrna SD is a compact, ergonomically designed, handheld personal security device with the size and form factor of a compact handgun.
We offer selected projectiles in five-count, 25-count, 95-count, and 400-count packages. Additionally, we offer the Byrna Shield, a ballistic-rated backpack that can be fitted with multiple armor panels and utilizes a patented deployment system to protect the wearer from both the front and back.
Additionally, we offer the Byrna Shield, a ballistic-rated backpack that can be fitted with multiple armor panels and utilizes a patented deployment system to protect the wearer from both the front and back. We also market a range of accessories that allow our users to customize, carry, load, power and maintain their Byrna launchers.
It is a compact, ergonomically designed, handheld personal security device with the size and form factor of a compact handgun. It is easy to use, has virtually no recoil and is designed to fire accurately with an effective range of 60 feet. The Byrna SD utilizes our patented technology and more than 60 custom designed parts.
It is easy to use, has virtually no recoil and is designed to fire accurately with an effective range of 50 feet. The Byrna SD utilizes our patented technology and more than 60 custom designed parts. The Byrna SD comes with easily reloadable magazines that can hold five or seven .68 caliber projectiles.
We also market a range of accessories that allow our users to customize, carry, load, power and maintain their Byrna launchers. These accessories include laser sights, flashlight attachments, spare magazines, barrel extensions, holsters and CO2 cartridges. Finally, we offer our customers apparel featuring the Byrna brand and emphasizing our Live Safe motto.
These accessories include laser sights, flashlight attachments, spare magazines, barrel extensions, holsters and CO2 cartridges. Finally, we offer our customers apparel featuring the Byrna brand and emphasizing our Live Safe motto. Together, our projectiles, accessories and apparel provide us with an attractive source of ongoing revenue from our base of Byrna owners.
During 2021, we introduced the Eco-Kinetic line of projectiles which are environmentally safe, fully biodegradable and highly accurate rounds for both safety and recreational uses. In addition, we plan to introduce our patented Fin-Stabilized projectiles that are designed to deliver increased speed and accuracy at up to 150 feet of range, while doubling the payload of our .68 caliber rounds.
During 2021, we introduced the Eco-Kinetic line of projectiles which are environmentally safe, fully biodegradable and highly accurate rounds for both safety and recreational uses.
Our future performance depends significantly upon the continued service of our key engineering, technical and senior management personnel and our continued ability to attract and retain skilled employees. We have taken proactive steps throughout the COVID-19 pandemic to protect the health and safety of our employees.
Our future performance depends significantly upon the continued service of our key engineering, technical and senior management personnel and our continued ability to attract and retain skilled employees. Environmental Compliance Our facilities are subject to federal, state, local and foreign environmental laws and regulations.
In late 2021 we also released the Byrna SD XL, featuring a longer barrel, greater muzzle velocity and compatibility with a standard 12-gram CO2 cartridge. In May 2021, we purchased certain assets of Mission Less Lethal, a U.S. manufacturer of .68 caliber, non-lethal, shoulder-fired launchers for law enforcement and other security professionals.
With a more powerful valve design the LE has a higher average muzzle velocity of 330 feet per second and an effective range of 60 feet. In May 2021, we purchased certain assets of Mission Less Lethal, a U.S. manufacturer of .68 caliber, less-lethal, shoulder-fired launchers for law enforcement and other security professionals.
Removed
Our international sales are fulfilled primarily by select distribution partners that have expertise in their local markets.
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During 2023 we introduced our less lethal 12 gauge kinetic round that uses patented fin-stabilized projectiles designed to be fired from any 12 gauge shotgun with standard cylinder or improved cylinder bore choke with increased speed and accuracy at up to 100 feet of range.
Removed
We expect to continue to implement these measures until we determine that the COVID-19 pandemic is adequately contained for purposes of our business. Environmental Compliance Our facilities are subject to federal, state, local and foreign environmental laws and regulations.
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Commencing in September 2023, we pivoted away from traditional social media channels, some of which prohibited us from advertising, in favor of a more targeted approach via celebrity endorsement, talk radio, and non-social media online advertising efforts. These high-profile events and advertisement strategies led to significant increases in orders in our e-commerce channels and further raised our brand recognition nationally.
Added
(“Fusady”) located in Uruguay, to expand our operations and presence in South American markets. We hold 51% of the stock in the joint venture entity, Byrna LATAM S.A. (“Byrna LATAM”), and the remaining 49% of stock in Byrna LATAM is held by Fusady. 6

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+6 added−4 removed228 unchanged
A loss of any of such third-party relationships would have a material adverse effect on our operating results. ● If we deliver products with defects, we may be subject to product recalls or negative publicity, our credibility may be harmed, market acceptance of our products may decline, and we may be exposed to liability. ● Our business relationships with third parties could cause us to expend significant resources and incur substantial business risk with no assurance of financial return. ● Our business depends on our ability to prevent or mitigate the effects of a cybersecurity attack. ● Conducting a portion of our operations through joint ventures exposes us to risks and uncertainties, many of which are outside of our control, and such risks could have a material adverse effect on our business, financial condition, results of operations and cash flows. ● As we seek to expand our business globally, growth opportunities may be impacted by greater political, economic and social uncertainty and the continuing and accelerating globalization of businesses could significantly change the dynamics of our competition, customer base and product offerings. ● Sales transacted at our retail store may be paid for with cash which increases the risk of theft and related legal liability. 7 ● The markets for security products and non-lethal defense technology are in a state of technological change which could have a material adverse impact on our business, financial condition and results of operations. ● The non-lethal defense technology industry and security products markets are highly competitive and our success depends upon our ability to effectively compete with numerous worldwide business. ● Expansion of sales of our product to schools, law enforcement and other governmental or quasi-governmental entities may require expenditure of resources and lengthen our sale cycle. ● Our performance is influenced by a variety of economic, social, and political factors. ● We are subject to extensive regulation and could incur fines, penalties and other costs and liabilities under such requirements. ● Changes in government policies and legislation could adversely affect our financial result ● Health and safety risks could expose us to potential liability and adversely affect our operating results and financial condition. ● We are exposed to operating hazards and uninsured risks that could adversely impact our operating results and financial condition. ● Failure to comply with the U.S.
A loss of any of such third-party relationships would have a material adverse effect on our operating results. ● If we deliver products with defects, we may be subject to product recalls or negative publicity, our credibility may be harmed, market acceptance of our products may decline, and we may be exposed to liability. ● Our business relationships with third parties could cause us to expend significant resources and incur substantial business risk with no assurance of financial return. ● Our business depends on our ability to prevent or mitigate the effects of a cybersecurity attack. ● Conducting a portion of our operations through joint ventures exposes us to risks and uncertainties, many of which are outside of our control, and such risks could have a material adverse effect on our business, financial condition, results of operations and cash flows. ● As we seek to expand our business globally, growth opportunities may be impacted by greater political, economic and social uncertainty and the continuing and accelerating globalization of businesses could significantly change the dynamics of our competition, customer base and product offerings. ● Sales transacted at our retail store may be paid for with cash which increases the risk of theft and related legal liability. 7 ● The markets for security products and less-lethal defense technology are in a state of technological change which could have a material adverse impact on our business, financial condition and results of operations. ● The less-lethal defense technology industry and security products markets are highly competitive and our success depends upon our ability to effectively compete with numerous worldwide business. ● Expansion of sales of our product to schools, law enforcement and other governmental or quasi-governmental entities may require expenditure of resources and lengthen our sale cycle. ● Our performance is influenced by a variety of economic, social, and political factors. ● We are subject to extensive regulation and could incur fines, penalties and other costs and liabilities under such requirements. ● Changes in government policies and legislation could adversely affect our financial result. ● Health and safety risks could expose us to potential liability and adversely affect our operating results and financial condition. ● We are exposed to operating hazards and uninsured risks that could adversely impact our operating results and financial condition. ● Failure to comply with the U.S.
We have experienced rapid growth in our headcount and operations over the last several years, integration of which will continue to place significant demands on our management and our operational and financial infrastructure. Additional growth in the future could increase that demand. We have only a limited history operating our business at its current scale.
We have experienced rapid growth in our headcount and operations over the last several years, integration of which will continue to place significant demands on our management and our operational and financial infrastructure. Additional growth in the future could increase that demand. We have a limited history operating our business at its current scale.
Our success depends on the value and reputation of our brand, which, in turn, depends on factors such as the quality, design, performance, functionality, and durability of our products, the image of our e-commerce platform and retail presence, our communication activities, including advertising, social media, and public relations, and our management of the customer experience, including direct interfaces through customer service.
Our success depends on the value and reputation of our brand, which, in turn, depends on factors such as the quality, design, performance, functionality, and durability of our products, the image of our e-commerce platform and retail presence, our communication activities, including advertising, social media, brand ambassadors, and public relations, and our management of the customer experience, including direct interfaces through customer service.
Failure of our suppliers to provide sufficient quantities of components on favorable terms, meet quality standards, or deliver components on a timely basis has occurred due to industry shortages of certain raw materials or for reasons related to the COVID-19 pandemic, and could occur in the future for similar or other reasons.
Failure of our suppliers to provide sufficient quantities of components on favorable terms, meet quality standards, or deliver components on a timely basis has occurred in the past due to industry shortages of certain raw materials or for reasons related to the COVID-19 pandemic, and could occur in the future for similar or other reasons.
Though cash receipts are expected to be immaterial in amount and are deposited promptly at a local bank branch, acceptance of cash by our employees and possession of cash on our premises increase the risk of theft and potential related legal liabilities. 9 Risks Related to Our Industry The markets for security products and non-lethal defense technology are in a state of technological change which could have a material adverse impact on our business, financial condition and results of operations.
Though cash receipts are expected to be immaterial in amount and are deposited promptly at a local bank branch, acceptance of cash by our employees and possession of cash on our premises increase the risk of theft and potential related legal liabilities. 9 Risks Related to Our Industry The markets for security products and less-lethal defense technology are in a state of technological change which could have a material adverse impact on our business, financial condition and results of operations.
To remain competitive, we may be required to invest significantly greater resources then currently anticipated in research and development and product enhancement efforts. The non-lethal defense technology industry and security products markets are highly competitive and our success depends upon our ability to effectively compete with numerous worldwide businesses.
To remain competitive, we may be required to invest significantly greater resources then currently anticipated in research and development and product enhancement efforts. The less-lethal defense technology industry and security products markets are highly competitive and our success depends upon our ability to effectively compete with numerous worldwide businesses.
Generally, entities such as schools, law enforcement and other governmental or quasi-governmental entities consider a wide range of issues before committing to purchase non-lethal defense products, including product benefits, training costs, the cost to use our products in addition to, or in place of, other products, budget constraints and product reliability, safety and efficacy.
Generally, entities such as schools, law enforcement and other governmental or quasi-governmental entities consider a wide range of issues before committing to purchase less-lethal defense products, including product benefits, training costs, the cost to use our products in addition to, or in place of, other products, budget constraints and product reliability, safety and efficacy.
As a result, our business may be subject to many of the problems, expenses, delays, and risks inherent in the rapid growth of a relatively new business and the integration of key personnel and infrastructure. We have a history of operating losses and we cannot guarantee that we will be able to sustain profitability.
As a result, our business may be subject to many of the problems, expenses, delays, and risks inherent in the rapid growth of a relatively new business and the integration of key personnel and infrastructure. We have a history of operating losses and we cannot guarantee that we will be able to achieve or sustain profitability.
To the extent that increases in such expenses precede or are not followed by timely increases in our revenues, our business, operating results, margins, growth rates, and financial condition may be materially adversely affected. We may not be able to effectively manage our recent rapid growth or future growth.
To the extent that increases in such expenses precede or are not followed by timely increases in our revenues, our business, operating results, margins, growth rates, and financial condition may be materially adversely affected. We may not be able to effectively manage our future growth.
The markets for security products and non-lethal defense technology, in which our products and services are included, are associated with rapidly changing technology, which could result in product obsolescence or short product life cycles.
The markets for security products and less-lethal defense technology, in which our products and services are included, are associated with rapidly changing technology, which could result in product obsolescence or short product life cycles.
New legislation, regulations, or changes to or new interpretations of existing regulations could impact our ability to manufacture or sell the Byrna SD and our projectiles, or limit their market, which could impact our cost of sales and demand for Byrna products.
New legislation, regulations, or changes to or new interpretations of existing regulations could impact our ability to manufacture or sell products and our projectiles, or limit their market, which could impact our cost of sales and demand for Byrna products.
Ineffective marketing, negative publicity, product diversion to unauthorized distribution channels, product or manufacturing defects, counterfeit products, unfair labor practices, failure to protect the intellectual property rights in our brand, and inability to provide satisfactory customer service experience as we rapidly expand our business, are some of the potential threats to the strength of our brand, and those and other factors could rapidly and severely diminish customer confidence in us.
Ineffective marketing, negative publicity, social media advertising restrictions, product diversion to unauthorized distribution channels, product or manufacturing defects, counterfeit products, unfair labor practices, failure to protect the intellectual property rights in our brand, and inability to provide satisfactory customer service experience as we rapidly expand our business, are some of the potential threats to the strength of our brand, and those and other factors could rapidly and severely diminish customer confidence in us.
Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “ Risk Factors ” and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other filings with the SEC before making an investment decision regarding our common stock. ● We have a limited operating history on which you can evaluate our business. ● We have a history of operating losses and we cannot guarantee that we will be able to sustain profitability. ● If we are unable to successfully implement our business plan for the sale of our products, our revenue growth could be slower than we expect and our business, operating results and financial condition could be adversely affected. ● We may not be able to effectively manage our recent rapid growth or future growth. ● Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop. ● The failure to attract and retain key personnel could have an adverse effect on our operating results. ● We depend on the sale of our personal security devices. ● Sale of our personal security devices and kits depends on the continued availability of our ammunition, some of which is dependent on sole source suppliers. ● Our business depends on maintaining and strengthening our brand and generating and maintaining demand for our products, and a reduction in such demand could harm our results of operations. ● We are dependent on our relationships with key third-party suppliers for our business. ● We are dependent on the quality of parts supplied by and quality controls of our third-party suppliers. ● Higher costs or unavailability of components, freight, materials and accessories, including ammunition, could adversely affect our financial results. ● If we are unable to successfully design and develop or acquire new and appealing products, our business may be harmed. ● Our business could be harmed if we are unable to accurately forecast consumer preferences and retail trends that affect demand for our products. ● We rely on a limited number of third parties for shipping, transportation, logistics, marketing and sales of our products and components.
Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “ Risk Factors ” and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other filings with the SEC before making an investment decision regarding our common stock. ● We have a limited operating history on which you can evaluate our business. ● We have a history of operating losses and we cannot guarantee that we will be able to achieve or sustain profitability. ● If we are unable to successfully implement our business plan for the sale of our products, our revenue growth could be slower than we expect and our business, operating results and financial condition could be adversely affected. ● We may not be able to effectively manage our future growth. ● Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop. ● Restrictions imposed by advertising and social media platforms that we use may result in decreased sales and market presence. ● The failure to attract and retain key personnel could have an adverse effect on our operating results. ● We depend on the sale of our personal security devices. ● Sale of our personal security devices and kits depends on the continued availability of our ammunition, some of which is dependent on sole source suppliers. ● Our business depends on maintaining and strengthening our brand and generating and maintaining demand for our products, and a reduction in such demand could harm our results of operations. ● We are dependent on our relationships with key third-party suppliers for our business. ● We are dependent on the quality of parts supplied by and quality controls of our third-party suppliers. ● Higher costs or unavailability of components, freight, materials and accessories, including ammunition, could adversely affect our financial results. ● If we are unable to successfully design and develop or acquire new and appealing products, our business may be harmed. ● Our business could be harmed if we are unable to accurately forecast consumer preferences and retail trends that affect demand for our products. ● We rely on a limited number of third parties for shipping, transportation, logistics, marketing and sales of our products and components.
Our freight and import costs and the timely delivery of our products could be adversely impacted by a number of factors which could reduce the profitability of our operations, including: higher fuel costs; port closures; theft in transit; permit or customs clearance issues; increased government regulation or changes for imports of foreign products into the United States; delays created by terrorist attacks or threats, public health issues (including new pandemics and epidemics, emergence of more virulent or contagious variants of COVID-19), national disasters or work stoppages; climate change related effects on the availability of raw materials, the operations of our suppliers, or on transportation systems or routes, and other matters.
Our freight and import costs and the timely delivery of our products could be adversely impacted by a number of factors which could reduce the profitability of our operations, including: higher fuel costs; port closures; theft in transit; permit or customs clearance issues; increased government regulation or changes for imports of foreign products into the United States; delays created by terrorist attacks or threats, public health issues (including new pandemics and epidemics), national disasters or work stoppages; climate change related effects on the availability of raw materials, the operations of our suppliers, or on transportation systems or routes, and other matters.
Conversely, new legislation could increase the demand for non-lethal weapons like the Byrna SD beyond our current forecasts and strain or exceed production capability, which could harm our reputation and adversely impact our business. 10 Risks Related to Regulation We are subject to extensive regulation and could incur fines, penalties and other costs and liabilities under such requirements.
Conversely, new legislation could increase the demand for less-lethal weapons beyond our current forecasts and strain or exceed production capability, which could harm our reputation and adversely impact our business. 10 Risks Related to Regulation We are subject to extensive regulation and could incur fines, penalties and other costs and liabilities under such requirements.
The risks of over-hiring (especially given overall macroeconomic risks) or over-compensating employees and the challenges of integrating a rapidly growing employee base into our corporate culture may increase our expenses. We may not be able to hire new employees quickly enough to meet our needs.
The risks of over-hiring or over-compensating employees and the challenges of integrating a rapidly growing employee base into our corporate culture may increase our expenses. We may not be able to hire new employees quickly enough to meet our needs.
There can be no assurance that our revenues or revenue growth can be sustained and revenues are not expected to grow at the exponential rates experienced in the last two years. Revenue growth that we have achieved or may achieve may not be indicative of future operating results.
There can be no assurance that our revenues or revenue growth can be sustained and revenues are not expected to grow at the rates experienced in certain prior years. Revenue growth that we have achieved or may achieve may not be indicative of future operating results.
We depend on the sale of our personal security devices. Although we do sell certain other products and we expect to introduce new products, including products being developed and products acquired in connection with acquisitions, our revenue has been derived mainly from the sale of the Byrna HD and its successor, the Byrna SD.
Although we do sell certain other products and we expect to introduce new products, including products being developed and products acquired in connection with acquisitions, our revenue has been derived mainly from the sale of the Byrna SD and its successor, the Byrna LE.
In addition, if we successfully expand sales of our products to these customers, we could encounter challenges related to funding of law enforcement and other governmental and quasi-governmental entities generally, the economic impact of the COVID-19 pandemic on the operating budgets of agencies, states and municipalities that fund such entities and the recent changes in public sentiment around police funding.
In addition, if we successfully expand sales of our products to these customers, we could encounter challenges related to funding of law enforcement and other governmental and quasi-governmental entities generally, states and municipalities that fund such entities and the recent changes in public sentiment around police funding.
We have experienced product development and production delays, as well as unanticipated costs associated with the development and manufacture of new products and, as a result of the COVID-19 pandemic and its impact on human capital, material and component availability and costs, air freight availability and costs, volatile demand levels related to unexpected publicity and civil unrest, and backlogs and order cancellations due to our inability to timely fulfill orders, and cancellations of orders.
We have experienced product development and production delays, as well as unanticipated costs associated with the development and manufacture of new products and material and component availability and costs, air freight availability and costs, volatile demand levels related to unexpected publicity and civil unrest, and backlogs and order cancellations due to our inability to timely fulfill orders, and cancellations of orders.
We sell complex products including products that are new to the market and without a long performance history. These products may contain certain design and manufacturing defects including defects in materials and components that we purchase from third parties. There can be no assurance we will be able to detect and fix all defects in the products we sell.
These products may contain certain design and manufacturing defects including defects in materials and components that we purchase from third parties. There can be no assurance we will be able to detect and fix all defects in the products we sell.
We have recorded a net loss in all fiscal years since our inception. Our net loss for the years ended November 30, 2022 and 2021 was $7.9 million and $3.3 million, respectively, our accumulated deficit at November 30, 2022 was $61.4 million.
We have recorded a net loss in all fiscal years since our inception. Our net loss for the years ended November 30, 2023 and 2022 was $8.2 million and $7.9 million, respectively, and our accumulated deficit at November 30, 2023 was $69.6 million.
Our historical sales, expense levels, and profitability may not be an appropriate basis for forecasting future results. Our lack of historical data related to new products makes it particularly difficult to make forecasts related to such products.
Our historical sales, expense levels, and profitability may not be an appropriate basis for forecasting future results. Our lack of historical data related to new products makes it particularly difficult to make forecasts related to such products. The lead times and reliability of our suppliers may be affected by global events in the future.
If we overestimate the demand for our products, we could face inventory levels in excess of demand, which could result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would harm our gross margins. For example, driven by strong customer demand and a shortage of product in 2020, we experienced a product backlog.
If we overestimate the demand for our products, we could face inventory levels in excess of demand, which could result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would harm our gross margins.
Delays in delivery caused by industry allocations, material shortages (such as plastic or resins), or obsolescence have occurred in recent years, including as a result of the COVID-19 pandemic, may continue and could occur in the future (due to the COVID-19 pandemic or other reasons).
Delays in delivery caused by industry allocations, material shortages (such as plastic or resins), or obsolescence have occurred in recent years, including as a result of the COVID-19 pandemic, may continue and could occur in the future. Such delays may take weeks or months to resolve and may result in increased costs as well as production and product fulfillment delays.
If we are unable to make these changes quickly or at all our inventory, production and sales may be materially affected. Failure to accurately forecast our results of operations and growth rate could cause us to make operating decisions that we may not be able to correct in a timely manner. Consequently, actual results could be materially different than anticipated.
Failure to accurately forecast our results of operations and growth rate could cause us to make operating decisions that we may not be able to correct in a timely manner. Consequently, actual results could be materially different than anticipated.
The Byrna SD is a relatively new product that may be subject to certain laws and regulations, including those related to CO2 powered launchers, “pepper spray” or “tear gas” devices, and future legislation or regulation.
Our products are relatively new and may be subject to certain laws and regulations, including those related to CO2 powered launchers, “pepper spray” or “tear gas” devices, and future legislation or regulation.
In addition, our ability to maintain our competitive position is dependent to a large degree on the efforts and skills of our senior management team, including Bryan Ganz, our President, Chief Executive Officer and member of the Board of Directors. The loss of the services of one or more of our key personnel could materially and adversely affect our operations.
In addition, our ability to maintain our competitive position is dependent to a large degree on the efforts and skills of our senior management team, including Bryan Ganz, our President, Chief Executive Officer and member of the Board of Directors, and David North, our Chief Financial Officer.
Further, we rely on the ability to attract and retain labor on a cost-effective basis. The availability of labor in the markets in which we operate has declined in recent years and competition for such labor has increased, especially under the economic crises experienced throughout the COVID-19 pandemic.
Further, we rely on the ability to attract and retain labor on a cost-effective basis. The availability of labor in the markets in which we operate has declined in recent years and competition for such labor has increased. Our ability to attract and retain a sufficient workforce on a cost-effective basis depends on several factors.
In the event of increased costs of attracting and retaining a workforce, our profit margins may decline as a result. 13 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We may not be able to attract and retain a sufficient workforce on a cost-effective basis in the future. In the event of increased costs of attracting and retaining a workforce, our profit margins may decline as a result. 13 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Climate change and associated changes to laws and regulations may increase our operating costs and adversely affect our business and financial results Climate change has been identified as resulting in an increase in average temperatures in key places we operate, including in Indiana, Las Vegas, South America, and South Africa.
Climate change has been identified as resulting in an increase in average temperatures in key places we operate, including in Indiana, Las Vegas, South America, and South Africa.
These delays could cause significant delays in manufacturing and loss of sales, leading to adverse effects significantly impacting our financial condition or results of operations and could injure our reputation.
In addition, in some cases, parts obsolescence may require a product re-design to ensure quality replacement components. These delays could cause significant delays in manufacturing and loss of sales, leading to adverse effects significantly impacting our financial condition or results of operations and could injure our reputation.
Loss of, or an adverse effect on, any of these relationships or failure of any of these third parties to perform as expected could have a material and adverse effect on our operations, sales, revenue, margins, liquidity, reputation and financial and operating results If we deliver products with defects, we may be subject to product recalls or negative publicity, our credibility may be harmed, market acceptance of our products may decline, and we may be exposed to liability.
Loss of, or an adverse effect on, any of these relationships or failure of any of these third parties to perform as expected could have a material and adverse effect on our operations, sales, revenue, margins, liquidity, reputation and financial and operating results.
Key members of our management team do not have substantial tenure working together. We may experience difficulties in managing this growth and building the appropriate processes and controls. Continued growth (including our expansion in Ft.
We may experience difficulties in managing this growth and building the appropriate processes and controls. Continued growth (including our expansion in Ft.
Moreover, we have introduced several new products during 2021 and 2022, including product lines acquired through acquisitions and sourced from third-party manufacturers with whom we had no prior experience.
Moreover, we have introduced several new products during the past few years, including product lines acquired through acquisitions and sourced from third-party manufacturers with whom we had no prior experience. Most of our senior management team are relatively new to their positions.
Even if the markets in which we compete expand, we cannot assure you that our business will grow at similar rates, if at all.
Even if the markets in which we compete expand, we cannot assure you that our business will grow at similar rates, if at all. Climate change and associated changes to laws and regulations may increase our operating costs and adversely affect our business and financial results.
In order to maintain and, if required, improve our disclosure controls and procedures, and our internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns and our costs and expenses will increase, which could harm our business and results of operations.
As a result, management’s attention may be diverted from other business concerns and our costs and expenses will increase, which could harm our business and results of operations.
All of the forgoing could negatively impact our financial results. If we are unable to successfully design and develop or acquire new and appealing products, our business may be harmed. To maintain and increase sales we must continue to introduce new products and improve or enhance our existing products or new products.
In addition, due to rapidly increasing demand for our products, we have faced significant challenges, including production backlogs and resulting customer complaints. All of the forgoing could negatively impact our financial results. If we are unable to successfully design and develop or acquire new and appealing products, our business may be harmed.
The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and our internal control over financial reporting.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and our internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures, and our internal control over financial reporting to meet this standard, significant resources and management oversight may be required.
Our recent required compliance with some of these laws, rules, and regulations since our listing on the Nasdaq Capital Market on May 5, 2021 increased our legal and financial compliance costs, made some activities more difficult, time-consuming, or costly, and increased demand on our systems and resources.
Our compliance of these laws, rules, and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming, or costly, and increased demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations.
The lead times and reliability of our suppliers has been inconsistent as a result of the COVID-19 pandemic and may be affected by global events in the future. These corrections of forecast require a very quick pivot and adjustments to the supply chain, production and marketing.
These corrections of forecast require a very quick pivot and adjustments to the supply chain, production and marketing. If we are unable to make these changes quickly or at all our inventory, production and sales may be materially affected.
Removed
Most of our senior management team are relatively new to their positions including our Chief Financial Officer (“CFO”) and Chief People Officer (“CPO”), who have been with us for less than three years and our Chief Marketing and Revenue Officer (“CMO”) who has been with us less than two years and our Vice President of Supply Chain and Operations who has been with us less than one year.
Added
Restrictions imposed by advertising and social media platforms that we use may result in decreased sales and market presence. Our direct-to-consumer sales rely to a significant degree on advertising that we place on advertising platforms, including social media platforms.
Removed
Such delays may take weeks or months to resolve and may result in increased costs as well as production and product fulfillment delays. In addition, in some cases, parts obsolescence may require a product re-design to ensure quality replacement components.
Added
During 2023, advertising and social media platforms prohibited advertising of any Byrna product and imposed significant restrictions on our ability to advertise on certain platforms.
Removed
Significantly, the COVID-19 pandemic has, and may continue to, adversely impact our costs and product delivery timing and the availability and favorable pricing of materials used in our products. In addition, due to rapidly increasing demand for our products, we have faced significant challenges, including production backlogs and resulting customer complaints.
Added
Any prohibitions or restrictions on advertising imposed by these or other platforms, or any changes in the algorithms used by such platforms, may result in reduced direct-to-consumer sales, reduced traffic to our website and a decreased market presence, which could have a material adverse effect on our business, operating results, and financial condition.
Removed
Our ability to attract and retain a sufficient workforce on a cost-effective basis depends on several factors, including the ability to protect staff during the COVID-19 pandemic. We may not be able to attract and retain a sufficient workforce on a cost-effective basis in the future.
Added
The loss of the services of one or more of our key personnel could materially and adversely affect our operations. We depend on the sale of our personal security devices.
Added
To maintain and increase sales we must continue to introduce new products and improve or enhance our existing products or new products.
Added
If we deliver products with defects, we may be subject to product recalls or negative publicity, our credibility may be harmed, market acceptance of our products may decline, and we may be exposed to liability. We sell complex products including products that are new to the market and without a long performance history.

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES Our corporate headquarters is located at 100 Burtt Road, Suite 115, Andover, MA. We also have a manufacturing and distribution center located at 2033 Kelsey Court, Fort Wayne, IN. We have a warehouse distribution center in Melbourne, FL.
ITEM 2. PROPERTIES Our corporate headquarters is located at 100 Burtt Road, Suite 115, Andover, MA. We also have a manufacturing and distribution center located at 2033 Kelsey Court, Fort Wayne, IN.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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All shares of common stock rank equally as to voting and all other matters. Holders On February 1, 2023, there were 53 holders of record of our common stock. Dividends We have not paid any cash dividends on our common shares to date and do not currently intend to pay cash dividends.
All shares of common stock rank equally as to voting and all other matters. Holders On February 1, 2024, there were 170 holders of record of our common stock. Dividends We have not paid any cash dividends on our common shares to date and do not currently intend to pay cash dividends.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded in the United States on the Nasdaq Capital Market under symbol "BYRN" (since May 5, 2021, prior to which date our common stock was listed for quotation on the OTCQB marketplace operated by OTC Markets Group Inc.) and in Canada on the Canadian Securities Exchange (“CSE”) under the symbol “BYRN.” The holders of our common stock are entitled to one vote per share on any matter to be voted upon by the stockholders.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded in the United States on the Nasdaq Capital Market under symbol "BYRN" and in Canada on the Canadian Securities Exchange (“CSE”) under the symbol “BYRN.” The holders of our common stock are entitled to one vote per share on any matter to be voted upon by the stockholders.
See Note 13, "Stockholders’ Equity—Stock Buyback Plan", in the Notes to Consolidated Financial Statements included in Item 8 of this Report for further discussion.
See Note 13, "Stockholders’ Equity—Stock Buyback Plan", in the Notes to Consolidated Financial Statements included in Item 8 of this Report for further discussion. No repurchases were made during the fiscal year ended November 30, 2023. ITEM 6. [RESERVED] 15
Removed
The following table summarizes the treasury stock activity during the three months ended November 30, 2022: Number of Shares Average Cost per Share Total Number of Shares Purchased as Part of Publicly Announces Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs September 2022 — $ — — $ — October 2022 324,992 6.35 324,992 — November 2022 61,037 7.13 61,037 — Total 386,029 6.48 386,029 — ITEM 6. [RESERVED] 15

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Our business strategy is twofold: (1) to fulfill the growing demand for less-lethal products in the law enforcement, correctional services, and private security markets and (2) to provide civilians – including those whose work or daily activities may put them at risk of being a victim – with easy access to an effective, non-lethal way to protect themselves and their loved ones from threats to their person or property.
Our business strategy is twofold: (1) to fulfill the growing demand for less-lethal products in the law enforcement, correctional services, and private security markets and (2) to provide civilians – including those whose work or daily activities may put them at risk of being a victim – with easy access to an effective, less-lethal way to protect themselves and their loved ones from threats to their person or property.
We believe that the following are the more critical judgmental areas in the application of our accounting policies that currently affect our financial position and results of operations: Revenue Recognition Product Sales The Company generates revenue through the wholesale distribution of its products and accessories to dealers/distributors, large end-users such as retail stores, security companies and law enforcement agencies, and through an e-commerce portals to consumers.
We believe that the following are the more critical judgmental areas in the application of our accounting policies that currently affect our financial position and results of operations: Revenue Recognition Product Sales The Company generates revenue through the wholesale distribution of its products and accessories to dealers/distributors, large end-users such as retail stores, security companies and law enforcement agencies, and through e-commerce portals to consumers.
We believe that existing cash and cash expected to be provided by future operating activities, are adequate to satisfy our working capital, capital expenditure requirements and other contractual obligations for at least the next 18 months. 16 OFF-BALANCE SHEET ARRANGEMENTS The Company had no off-balance sheet arrangements as of November 30, 2022 and 2021.
We believe that existing cash and cash expected to be provided by future operating activities, are adequate to satisfy our working capital, capital expenditure requirements and other contractual obligations for at least the next 18 months. 16 OFF-BALANCE SHEET ARRANGEMENTS The Company had no off-balance sheet arrangements as of November 30, 2023 and 2022.
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from November 30, 2019, to the present.
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from November 30, 2020 to the present.
These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of November 30, 2022 and 2021, the Company has not recorded any uncertain tax positions in our consolidated financial statements.
These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of November 30, 2023 and 2022, the Company has not recorded any uncertain tax positions in our consolidated financial statements.
The Company estimates returns using the expected value method, as there will likely be a range of potential return amounts. The Company’s returns under the 14-day money back guarantee for the year ended November 30, 2022 and November 30, 2021 were immaterial.
The Company estimates returns using the expected value method, as there will likely be a range of potential return amounts. The Company’s returns under the 14-day money back guarantee for the year ended November 30, 2023 and November 30, 2022 were immaterial.
The Company recognizes interest and penalties related to income taxes on the income tax expense line in the accompanying Consolidated Statement of Operations and Comprehensive Loss. As of November 30, 2022 and 2021, no accrued interest or penalties related to income taxes are included in the Consolidated Balance Sheets.
The Company recognizes interest and penalties related to income taxes on the income tax expense line in the accompanying Consolidated Statement of Operations and Comprehensive Loss. As of November 30, 2023 and 2022, no accrued interest or penalties related to income taxes are included in the Consolidated Balance Sheets.
Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA is defined as net loss as reported in our consolidated statements of operations and comprehensive loss excluding the impact of (i) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest (income) expense; (iv) stock-based compensation expense; (v) severance/separation expense; (vi) other income (forgiveness of PPP loan); and (vii) other financing expenses.
Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA is defined as net loss as reported in our consolidated statements of operations and comprehensive loss excluding the impact of (i) depreciation and amortization; (ii) income tax provision; (iii) interest (income) expense; (iv) stock-based compensation expense; (v) severance/separation expense; (vi) other income; and (vii) other financing expenses.
We plan to respond to this demand for less-lethal products through the serial production and distribution of the Byrna SD and expansion of the Byrna product line. On January 10, 2023, we created a new joint venture with Fusady located in Argentina, to expand our operations and presence in South American markets.
We plan to respond to this demand for less-lethal products through the production and distribution of the Byrna SD and expansion of the Byrna product line. On January 10, 2023, we created a new joint venture with Fusady S.A. ("Fusady") located in Uruguay, to expand our operations and presence in South American markets.
Therefore, the Company accumulates billings of these transactions on the balance sheet as deferred revenue, to be recognized on a straight-line basis during the second and third year after sale. The Company recognizes an estimated reserve based on its analysis of historical experience, and an evaluation of current market conditions.
Therefore, the Company accumulates billings of these transactions on the balance sheet as deferred revenue, to be recognized on a straight-line basis during the second and third year after sale. The Company recognizes an estimated returns and discounts allowance based on its analysis of historical experience, and an evaluation of current market conditions.
Investing Activities During the fiscal year ended November 30, 2022, $5.1 million was used for investing activities, including $1.9 million paid for the Fox Labs International acquisition and $3.0 million to purchase property and equipment.
In comparison, $5.1 million was used for investing activities during the fiscal year ended November 30, 2022, including $1.9 million paid for the Fox Labs International acquisition and $3.3 million to purchase property and equipment.
Our income tax provision was $0.2 million for the fiscal year ended November 30, 2022 compared to an income tax benefit of $0.2 million for the fiscal year ended November 30, 2021.
Our income tax provision was $0.2 million for the fiscal year ended November 30, 2023 compared to an income tax provision of $0.2 million for the fiscal year ended November 30, 2022.
The Company also has a 14-day money back guarantee, which allows for a full refund of the purchase price, excluding shipping charges, within 14 days from the date of delivery. The right of return creates a variable component to the transaction price and needs to be considered for any possible constraints.
The Company also provides to its e-commerce consumers a 14-day money back guarantee, which allows for a full refund of the purchase price, excluding shipping charges, within 14 days from the date of delivery. The right of return creates a variable component to the transaction price and needs to be considered for any possible constraints.
Significant changes in noncash and working capital activity are as follows: Our non-cash activity adds back several non-cash items to net loss to calculate cash used in operations during the fiscal year ended November 30, 2022.
Significant changes in noncash and working capital activity are as follows: Our non-cash activity adds back several non-cash items to net loss to calculate cash provided by operations during the fiscal year ended November 30, 2023.
We hold 51% of the stock in the joint venture entity, Byrna LATAM, and the remaining 49% of stock in Byrna LATAM is held by Fusady. Refer to Note 22, "Subsequent Events" for additional information.
We hold 51% of the stock in the joint venture entity, Byrna LATAM, and the remaining 49% of stock in Byrna LATAM is held by Fusady. Refer to Note 6, "Investment in Joint Venture" for additional information.
Operating Activities Cash used in operating activities was $13.8 million for the fiscal year ended November 30, 2022, compared to $4.4 million cash used in operating activities for the fiscal year ended November 30, 2021. Net loss was $7.9 million for the fiscal year ended November 30, 2022 compared to $3.3 million for the fiscal year ended November 30, 2021.
Operating Activities Cash provided by operating activities was $3.9 million for the fiscal year ended November 30, 2023, compared to $13.8 million cash used in operating activities for the fiscal year ended November 30, 2022. Net loss was $8.2 million for the fiscal year ended November 30, 2023 compared to $7.9 million for the fiscal year ended November 30, 2022.
Gross profit was $26.3 million for the fiscal year ended November 30, 2022, or 54.7% of net revenue, as compared to gross profit of $22.9 million, or 54.3% of net revenue, in the prior year.
Gross profit was $23.6 million for the fiscal year ended November 30, 2023, or 55.5% of net revenue, as compared to gross profit of $26.3 million, or 54.7% of net revenue, in the prior year.
Stock-Based Compensation The Company accounts for all stock-based payment awards granted to employees and non-employees as stock-based compensation expense at their grant date fair value. The Company’s stock-based payments include stock options and restricted stock units.
At August 31, 2023, the Company determined that there was no impairment of goodwill. Stock-Based Compensation The Company accounts for all stock-based payment awards granted to employees and non-employees as stock-based compensation expense at their grant date fair value. The Company’s stock-based payments include stock options and restricted stock units.
Financing Activities Cash flows used in financing activities was $17.0 million during the fiscal year ended November 30, 2022 compared to cash provided by financing activities totaling $57.3 million during the fiscal year ended November 30, 2021.
Financing Activities Cash flows used in financing activities was $0.4 million during the fiscal year ended November 30, 2023 compared to $17.0 million during the fiscal year ended November 30, 2022.
Included as cost of goods sold are costs associated with the production and procurement of products, such as inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs.
Gross Profit Gross profit is calculated as total revenue less cost of goods sold, and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of products, such as inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs.
In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. 17 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS Reference is made to Pages F-1 through F-28 of this Report. ITEM 9.
In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. 17 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.
Year ended November 30, 2022, as compared to year ended November 30, 2021: Net Revenue Revenues were $48.0 million for the year ended November 30, 2022 which represents an increase of $5.8 million or 13.7% compared to the prior year period revenues of $42.2 million.
Year ended November 30, 2023, as compared to year ended November 30, 2022: Net Revenue Revenues were $42.6 million for the year ended November 30, 2023 which represents a decrease of $5.4 million or 11.2% compared to the prior year period revenues of $48.0 million.
The increase was driven by new customers in South America and Asia. Sales to domestic dealers/distributors, in combination with sales to security companies and law enforcement agencies increased by 24.6% from $6.0 million during November 30, 2021 to $7.6 million for the fiscal year ended November 30, 2022.
Sales to domestic dealers/distributors, in combination with sales to security companies and law enforcement agencies increased by 20.7% from $7.6 million during November 30, 2022 to $9.1 million for the fiscal year ended November 30, 2023.
Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs.
Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Inventory Valuation Inventories, which are principally comprised of raw materials and finished goods, are stated at the lower of cost or market.
The increase in operating expenses resulted in a loss from operations of $7.5 million in the fiscal year ended November 30, 2022 as compared to a loss from operations of $3.3 million in the fiscal year ended November 30, 2021.
Loss from Operations The decrease in revenue, off-set by the decrease in operating expenses resulted in a slight increase of $0.1 million in loss from operations of $7.8 million in the fiscal year ended November 30, 2023 as compared to a loss from operations of $7.7 million in the fiscal year ended November 30, 2022.
During the fiscal year ended November 30, 2022, the growth of the Company was reflected in the use of cash for growing working capital needs. Inventory increased $9.0 million during the fiscal year ended November 30, 2022 compared to $1.5 million during for the fiscal year ended November 30, 2021.
During the fiscal year ended November 30, 2023, the cost and liquidity management of the Company was reflected in the generation of cash for working capital needs. Inventory decreased $0.5 million during the fiscal year ended November 30, 2023 compared to an increase of $9.2 million during the fiscal year ended November 30, 2022.
Thus, direct sales via the Company's website decreased by $6.6 million from $31.7 million for the fiscal year ended November 30, 2021 to $25.1 million for the fiscal year ended November 30, 2022. However, sales through all other channels increased year over year.
Direct sales via the Company's website decreased by $1.5 million from $25.1 million for the fiscal year ended November 30, 2022 to $23.5 million for the fiscal year ended November 30, 2023. However, sales via Amazon increased from $5.4 million during the fiscal year ended November 30, 2022 to $6.4 million for the fiscal year ended November 30, 2023.
In comparison, $5.9 million was used for investing activities during the fiscal year ended November 30, 2021, including $4.0 million paid for acquisitions and $1.7 million to purchase property and equipment.
Investing Activities During the fiscal year ended November 30, 2023, $3.0 million was used for investing activities, including a $1.6 million loan to Byrna LATAM, $0.5 million investment in the joint venture, and $0.9 million to purchase property and equipment.
In addition, Fox Labs, which was acquired on May 25, 2022, added $0.8 million in sales of pepper sprays during the fiscal year ended November 30, 2022. Cost of Goods Sold Cost of goods sold was $21.8 million in the fiscal year ended November 30, 2022 compared to $19.3 million in the fiscal year ended November 30, 2021.
In addition, sales of pepper spray from Fox Labs, which the Company acquired on May 25, 2022, increased to $1.1 million for the fiscal year ended November 30, 2023 compared to $0.8 million during the fiscal year ended November 30, 2022.
The increase in inventory was a planned measure to ensure we have the ability to meet demand. Accounts receivable increased by $4.3 million during the fiscal year ended November 30, 2022 compared to an increase of $0.3 million during the fiscal year ended November 30, 2021 due to a significant increase in international sales to international distributors.
Accounts receivable decreased by $2.2 million during the fiscal year ended November 30, 2023 compared to an increase of $4.3 million during the fiscal year ended November 30, 2022 due to a significant decrease in international sales to international distributors and related accounts receivable.
These include stock-based expenses of $5.4 million during the fiscal year ended November 30, 2022 compared to $3.2 million for the fiscal year ended November 30, 2021 and depreciation and amortization of $0.9 million during the fiscal year ended November 30, 2022 compared to $0.5 million during the fiscal year ended November 30, 2021.
These include stock-based compensation expense of $5.4 million during the fiscal year ended November 30, 2023 compared to $5.4 million for the fiscal year ended November 30, 2022; operating lease costs of $0.7 million during the fiscal year ended November 30, 2023 compared to $0.4 million for the fiscal year ended November 30, 2022; depreciation and amortization of $1.3 million during the fiscal year ended November 30, 2023 compared to $0.9 million during the fiscal year ended November 30, 2022; allowance for bad debt of $0.5 million during the fiscal year ended November 30, 2023 compared to $0.0 million for the fiscal year ended November 30, 2022; provision for inventory of $0.5 million during the fiscal year ended November 30, 2023 compared to $0.2 million for the fiscal year ended November 30, 2022; and loss from joint venture of $0.6 million during the fiscal year ended November 30, 2023 compared to $0.0 million for the fiscal year ended November 30, 2022.
Income Tax (Benefit) Provision Our effective income tax rate was 3.1% for the year ended November 30, 2022, while we recorded a benefit of 4.6% for the year ended November 30, 2021.
Income Tax Provision Our effective income tax rate was 2.06% for the year ended November 30, 2023 compared to an effective income tax rate of 3.1% for the year ended November 30, 2022.
Gross margin profitability remained consistent as an increase in the proportion of lower margin international and dealer/distributor sales was off-set by lower freight costs due to improvements in supply chain management.
Gross margin profitability remained consistent in the proportion of lower margin dealer/distributor sales, which were off-set by lower freight costs due to improvements in supply chain management. Operating Expenses Operating expenses were $31.4 million for the fiscal year ended November 30, 2023, as compared to operating expenses in the prior fiscal year of $34.0 million.
Deferred revenue decreased $0.3 million during the fiscal year ended November 30, 2022 compared to a decrease of $3.8 million during for the fiscal year ended November 30, 2021 due to fulfillment of backlog in 2020.
Accounts payable and accrued liabilities increased $0.6 million for the fiscal year ended November 30, 2023 compared to an increase of $0.7 million for the fiscal year ended November 30, 2022. Deferred revenue decreased $0.4 million during the fiscal year ended November 30, 2023 compared to a decrease of $0.3 million during the fiscal year ended November 30, 2022.
The fiscal year ended November 30, 2022 amount was primarily due to $17.5 million of repurchases of the Company's common stock compared to $56.0 from proceeds from the sale of common stock during the fiscal year ended November 30, 2021. The prior year also included $1.3 million relating to warrant exercises.
The fiscal year ended November 30, 2023 amount was primarily due to tax payments of $0.5 million related to payroll taxes withheld on the vesting of restricted stock units and $0.03 million received from proceeds associated with the sale of common stock compared to $17.5 million of repurchases of the Company's common stock and $0.5 million from proceeds from the sale of common stock during the fiscal year ended November 30, 2022.
However, the majority of revenue continues to be in high margin direct online sales or via Amazon, as e-commerce orders accounted for 63.6% of total net revenue this year. In addition, the Company introduced products from Fox Labs, which the Company acquired at the end of the second quarter of this year.
The majority of revenue continues to be in high margin direct online sales via Amazon and the Company's website, as these e-commerce sales accounted for 70.1% of total net revenue in the current fiscal year and 63.6% of total revenue in the prior fiscal year.
Operating Expenses / Loss from Operations Operating expenses were $33.7 million for the fiscal year ended November 30, 2022, as compared to operating expenses in the prior fiscal year of $26.2 million. This $7.5 million increase is primarily due to three factors.
This decrease in operating expenses offset most of the decrease in gross profit due to the decline in revenue during the fiscal year, so that loss from operations was $7.8 million for the fiscal year November 30, 2023 as compared to $7.7 million for the fiscal year ended November 30, 2022.
These balances represent our contractual obligation to make future payments on our leases, discounted to reflect our cost of borrowing. All leases are for real estate. In the event that we vacate a location, we may be obliged to continue making lease payments. Where possible, we mitigate this risk by including clauses allowing for the termination of lease agreements.
In the event that we vacate a location, we may be obliged to continue making lease payments. Where possible, we mitigate this risk by including clauses allowing for the termination of lease agreements. See Note 17, “Leases”, in the Notes to Consolidated Financial Statements included in Item 8 of this Report for further discussion.
Reconciliation of non-GAAP Adjusted EBITDA to net loss, the most directly comparable GAAP measure, is as follows (in thousands): For the Year Ended November 30, 2022 2021 Net loss $ (7,885 ) $ (3,283 ) Adjustments: Interest (income) expense (201 ) 34 Income tax provision (benefit) 234 (160 ) Depreciation and amortization 855 487 NON-GAAP EBITDA (6,997 ) (2,922 ) Stock-based compensation 5,424 3,150 Severance/separation expense 556 1,300 Other income: forgiveness of PPP loan — (190 ) NON-GAAP adjusted EBITDA $ (1,017 ) $ 1,338 Non-GAAP adjusted net loss and non-GAAP adjusted net loss per share Non-GAAP adjusted net (loss) income is defined as net loss as reported in our consolidated statements of operations and comprehensive loss excluding the impact of (i) stock-based compensation expense; (ii) severance/separation expense (iii) other income (forgiveness of PPP loan); and (iv) other financing expenses.
Reconciliation of non-GAAP Adjusted EBITDA to net loss, the most directly comparable GAAP measure, is as follows (in thousands): For the Year Ended November 30, 2023 2022 Net loss $ (8,192 ) $ (7,885 ) Adjustments: Interest income, net (693 ) (201 ) Income tax provision 165 234 Depreciation and amortization 1,262 855 NON-GAAP EBITDA (7,458 ) (6,997 ) Stock-based compensation 5,375 5,424 Severance/separation expense 82 556 NON-GAAP adjusted EBITDA $ (2,001 ) $ (1,017 ) LIQUIDITY AND CAPITAL RESOURCES Cash Flow Summary Cash and cash equivalents as of November 30, 2023 totaled $20.5 million, an increase of approximately $0.4 million from $20.1 million of cash as of November 30, 2022.
Interest Income/Expense Interest income for the fiscal year ended November 30, 2022 was $0.2 million compared to an expense of $0.03 million for the fiscal year ended November 30, 2021. During the fiscal years ended November 30, 2022 and 2021,the interest income relates to interest income from the Company's money market accounts.
Interest Income/Expense Interest income for the fiscal year ended November 30, 2023 was $0.7 million compared to $0.2 million for the fiscal year ended November 30, 2022. The increase in interest income is primarily due to higher interest rates on the Company's cash and cash equivalents.
Other Expenses Other expenses in the year ended November 30, 2022 includes a loss on disposal of fixed assets of $0.2 million and other financing expenses of $0.1 million. Other expenses in the year ended November 30, 2021 included a loss on disposal of fixed assets of $0.07 million and other financing expenses of $0.01 million.
Other Expenses Other expenses in the year ended November 30, 2023 includes $0.05 million investment losses. Other expenses in the year ended November 30, 2022 included investment losses of $0.06 million.
First, in late 2021, management made the strategic decision to support continued revenue growth through increased marketing expenditure which increased $2.6 million from $2.9 million for fiscal year 2021 as compared to $5.5 million in fiscal year 2022.
This $2.6 million decrease is primarily due to two factors. First, in 2023, management made the strategic decision to reduce marketing expenditures as it evaluated more impactful marketing platforms, resulting in a decrease in marketing expenditure of $0.9 million from $5.5 million for fiscal year 2022 to $4.6 million in fiscal year 2023.
Sales related to Fox Lab branded products totaled $0.8 million during the fiscal year ended November 30, 2022. The Company has maintained gross margin profitability consistent with the prior year. However, over the past year, the Company's growth in sales has driven an increase in variable expenses.
In addition, the Company had experienced growth in its dealer sales channel as well as sales into Canada. Sales of Fox Labs branded products, which the Company acquired at the end of the second quarter of 2022, continued to increase during the fiscal year ended November 30, 2023. The Company maintained gross margin profitability consistent with the prior year.
See Note 12, "Lines of Credit", in the Notes to Consolidated Financial Statements included in Item 8 of this Report for further discussion. MATERIAL CASH REQUIREMENTS FROM CONTRACTUAL OBLIGATIONS Leases As of November 30, 2022, we reported current and long-term operating lease liabilities of $0.8 million and $1.8 million, respectively.
MATERIAL CASH REQUIREMENTS FROM CONTRACTUAL OBLIGATIONS Leases As of November 30, 2023, we reported current and long-term operating lease liabilities of $0.6 million and $1.3 million, respectively. These balances represent our contractual obligation to make future payments on our leases, discounted to reflect our cost of borrowing. All leases are for real estate.
Sales via Amazon increased significantly from $0.9 million during November 30, 2021 to $5.5 million for the fiscal year ended November 30, 2022. International sales increased by 162.9% or $5.7 million from $3.5 million during the fiscal year ended November 30, 2021 to $9.2 million for the fiscal year ended November 30, 2022.
The decrease was primarily due to international sales that decreased by 73.2% or $6.7 million from $9.2 million during the fiscal year ended November 30, 2022 to $2.5 million for the fiscal year ended November 30, 2023. The decrease was driven by sales in South Africa, South America, and Asia, which are characterized by infrequent but very large orders.
This $2.5 million increase is primarily due to the increase in sales volume. Gross Profit Gross profit is calculated as total revenue less cost of goods sold, and gross margin is calculated as gross profit divided by total revenue.
Cost of Goods Sold Cost of goods sold was $19.0 million in the fiscal year ended November 30, 2023 compared to $21.8 million in the fiscal year ended November 30, 2022. This $2.8 million decrease is primarily due to the decrease in sales volume.
Removed
RESULTS OF OPERATIONS Results for the fiscal year ended November 30, 2022 demonstrate a continuing trend of sales growth due to increasing demand for our Byrna SD personal security device and to growth of the production capacity and administrative and control structures necessary to supply that demand.
Added
RESULTS OF OPERATIONS Revenue of $42.6 million during the fiscal year ended November 30, 2023 was $5.4 million lower than prior year revenue of $48.0 mainly due to a decrease in international sales of $6.7 million.
Removed
Revenue increased to $48.0 million during the fiscal year ended November 30, 2022 from $42.2 million during the last year. During the fiscal year ended November 30, 2022, the growth in revenue came from an increased international demand, primarily in South America and Asia.
Added
To offset the decline in revenues, the Company has reduced marketing spend, personnel costs, and professional fees.
Removed
Also, in order to promote and manage continued growth, the Company has increased discretionary marketing spending and stock based compensation expenses. This increase in operating expenses was greater than the increase in gross profit from revenue growth during the fiscal year, resulting in an increased net operating loss for the full year.
Added
Also, the decline in revenues required cost deductions in personnel costs, professional fees, and other operating costs. Total employee compensation costs decreased $0.3 million from $16.2 million for fiscal year 2022 to $15.9 million in fiscal year 2023. Professional fees decreased by $0.7 million from $1.8 million in fiscal year 2022 to $1.1 million for fiscal year 2023.
Removed
It should be noted that the prior year sales included the fulfillment of approximately $4.0 million of backorders received in fiscal year 2020 and a surge in the Company's website sales due to the Company's product being featured on a national news program in June 2020 and April 2021.
Added
Other operating costs, including administrative expenses, decreased by $0.5 million from $6.1 million for fiscal year 2022 to $5.6 million for fiscal year 2023.
Removed
Also, growth in sales volumes resulted in an increase in variable expenses such as freight out, commissions, and Amazon fees, of $1.2 million from $2.1 million for the fiscal year ended November 30, 2021 to $3.3 million for the fiscal year ended November 30, 2022.
Added
Loss from Joint Venture Since the inception of the Byrna LATAM joint venture in January 2023, the Company's proportionate share of Byrna LATAM's losses is 51%. The Company's share of the joint venture’s loss for the fiscal year ended November 30, 2023 is $0.6 million.
Removed
Finally, the structural growth required to manage a larger business with higher sales volumes drove up payroll related costs. Total compensation costs increased $2.5 million from $13.7 million for the fiscal year ended November 30, 2021 to $16.2 million for the fiscal year ended November 30, 2022.
Added
The decrease in inventory was a planned measure to return inventory stock to adequate levels to meet demand needs.
Removed
The increase was mostly due to an increase of $2.2 million in non-cash stock compensation from $3.2 million during 2021 compared to $5.4 million during 2022.
Added
The Company sells to dealers and retailers for whom there is no money back guarantee but who may request a return or credit for unforeseen reasons or who may have agreed discounts or allowances to be netted from amounts invoiced.
Removed
Forgiveness of Paycheck Protection Program Loan Income on extinguishment of debt was $0.2 million for the year ended November 30, 2021 and relates to the forgiveness of the $0.2 million of funding under the Paycheck Protection Program (“PPP”).
Added
The Company reserves for returns, discounts and allowances based on past performance and on agreement terms and reports revenue net of the estimated reserve. The Company's reserve for returns, discounts, and allowances for the fiscal years ended November 30, 2023 and 2022 were immaterial.
Removed
Our non-GAAP adjusted net (loss) income measure eliminates potential differences in performance caused by certain non-cash and one-time costs. We also provide non-GAAP adjusted net (loss) income per share by dividing non-GAAP adjusted net (loss) income by the average basic or diluted shares outstanding for the period.
Added
Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Inventory costs include labor, overhead, subcontracted manufacturing costs and inbound freight costs. The Company reviews inventories for obsolete items to determine adjustments that it estimates will be needed to record inventory at lower of cost or net realizable value.
Removed
Reconciliation of Non-GAAP adjusted (loss) net income to net loss, the most directly comparable GAAP measure, is as follows (in thousands): For the Year Ended November 30, 2022 2021 Net loss $ (7,885 ) $ (3,283 ) Adjustments: Stock-based compensation 5,424 3,150 Severance/separation expense 556 1,300 Other income: forgiveness of PPP loan — (190 ) NON-GAAP ADJUSTED NET (LOSS) INCOME (1,905 ) 977 Preferred stock dividends — (1,043 ) Non-GAAP adjusted net loss available to common shareholders $ (1,905 ) $ (66 ) Non-GAAP adjusted net loss per share — basic and diluted $ (0.09 ) $ (0.00 ) Weighted-average number of common shares outstanding during the year – basic and diluted 22,364,201 19,610,039 LIQUIDITY AND CAPITAL RESOURCES Cash Flow Summary Cash as of November 30, 2022 totaled $20.1 million, a decrease of approximately $36.3 million from $56.4 of cash and restricted cash as of November 30, 2021.
Removed
In addition to cash, the Company has an available $5.0 million revolving line of credit and an available $1.5 million equipment financing line of credit with a bank. As of November 30, 2022, there was no outstanding balance on the revolving line of credit and the Company had not drawn on the nonrevolving equipment line of credit.
Removed
See Note 17, “Leases”, in the Notes to Consolidated Financial Statements included in Item 8 of this Report for further discussion.
Removed
At August 31, 2022, the Company determined that there was no impairment of goodwill. Asset Acquisition Acquisitions of the assets of a business are accounted for at cost based on their allocated fair value.
Removed
The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values at the acquisition dates. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
Removed
Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from the utilization of trade names from a market participant perspective, useful lives and discount rates.
Removed
Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Goodwill is not recognized in accounting for an asset acquisition. Acquisition related expenses are capitalized as part of the cost and allocated with the purchase consideration.
Removed
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 18

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