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What changed in Byrna Technologies Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Byrna Technologies Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+141 added−137 removedSource: 10-K (2025-02-07) vs 10-K (2024-02-14)

Top changes in Byrna Technologies Inc.'s 2024 10-K

141 paragraphs added · 137 removed · 113 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest change(“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
Biggest change(“Byrna LATAM”), a corporate joint venture formed to expand our operations and presence in South American markets. On August 19, 2024, we sold our 51% ownership interest to Fusady S.A., an affiliate of Bersa S.A. (“Fusady”) for $1 (the “LATAM Share Purchase Agreement”) and entered into an exclusive distribution, manufacturing and licensing agreement with Byrna LATAM (the “LATAM Licensing Agreement”).
We believe that our employee relations are good, and that our human capital meets the needs of our business. None of our employees is represented by a collective bargaining agreement and we have never experienced any work stoppage.
We believe that our employee relations are good, and that our human capital meets the needs of our business. None of our employees are represented by a collective bargaining agreement and we have never experienced any work stoppage.
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.
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, 2024, we had 167 employees.
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.
International sales represented 8.0% of revenue in our fiscal year 2024 and 6.8% of revenue in fiscal year 2023; 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.
The Byrna SD is a new product and may be subject to future legislation or regulation. Because it uses CO2, rather than gunpowder or other explosives to launch projectiles, the Byrna SD is not currently a “firearm” regulated by the BATF. It is, however, subject to certain state and local regulations related to “pepper spray” or “tear gas” devices.
Because it uses CO2, rather than gunpowder or other explosives to launch projectiles, the Byrna SD is not currently a “firearm” regulated by the BATF. It is, however, subject to certain state and local regulations related to “pepper spray” or “tear gas” devices.
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.
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. On January 10, 2023, we created a new joint venture with Fusady S.A., an affiliate of Bersa S.A.
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
This has enabled us to continue sales to the law enforcement market while using our ecommerce and dealership channels to offer professional quality chemical irritant self-defense spray to the consumer market under the name Byrna Bad Guy Repellent™. On January 10, 2023, we created a new joint venture with Fusady S.A., an affiliate of Bersa S.A.
This has enabled us to continue sales to the law enforcement market while using our ecommerce and dealership channels to offer professional quality chemical irritant self-defense spray to the consumer market under the name Byrna Bad Guy Repellent™. In January 2023, we acquired a 51% ownership interest in Byrna LATAM S.A.
Such regulations may adversely affect demand for our products by imposing limitations that increase the costs or limit the availability of our products. In order to manufacture, sell, import and export our 40mm products and certain components, we are required to obtain and maintain several Federal Firearms License ("FFL") and Federal Explosive License ("FEL") licenses and permits.
In order to manufacture, sell, import and export our 40mm products and certain components, we are required to obtain and maintain several Federal Firearms License ("FFL") and Federal Explosive License ("FEL") licenses and permits. The Byrna SD is a new product and may be subject to future legislation or regulation.
We are also subject to the rules and regulations of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (“BATF”), and various state and international agencies that regulate the manufacture, export, import, distribution and sale of ammunition and explosives.
We are also subject to the rules and regulations of the U.S. BATF, and various state and international agencies that regulate the manufacture, export, import, distribution and sale of ammunition and explosives. Such regulations may adversely affect demand for our products by imposing limitations that increase the costs or limit the availability of our products.
Removed
(“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.
Added
See Note 6 , "Investment in Joint Venture" for additional information. We offer a range of .68 caliber projectiles for different applications. 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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditional 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.
Biggest changeAdditional 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 during prior periods 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 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 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. 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. ● 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. ● Our directors, executive officers, and significant stockholders may be able to influence us. ● If our analyst coverage decreases or results in negative reports about our business, our stock price and trading volume could decline. ● We do not intend to pay dividends on our common stock for the foreseeable future. ● Any future litigation could have a material adverse impact on our results of operations, financial condition and liquidity. ● Tariffs, sanctions, restrictions on imports or other trade barriers between the United States and various countries, most significantly China, Canada and Mexico, may impact our revenue and results of operations. ● Data privacy and security laws and regulations in the jurisdictions in which we do business could increase the cost of our operations and subject us to possible sanctions and other penalties. ● Substantial future sales, or the perception or anticipation of future sales, of shares of our common stock could cause our stock price to decline. ● The ongoing requirements of being a public company may strain our resources, divert management ’ s attention, and affect our ability to attract and retain executive management and qualified board members. ● Matters relating to the employment market and prevailing wage standards may adversely affect our business. 8 Risk Factors Investing in our common stock involves a high degree of risk.
As a result, these stockholders, acting together, may have the ability to influence the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. In addition, these stockholders, acting together, may be able to influence the management and affairs of our company.
As a result, these stockholders may have the ability to influence the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. In addition, these stockholders, acting together, may be able to influence the management and affairs of our company.
We work closely with third parties who monitor, evaluate and keep us informed about the potential impact of the effective and proposed tariffs as well as other recent changes in foreign trade policy on our supply chain, costs, sales and profitability and seek to implement strategies to mitigate such impact, including reviewing sourcing options and working with our vendors and merchants to seek to minimize product coming from China both in existing and new product development and select suppliers in low cost regions where tariff issues are less challenging.
We work closely with third parties who monitor, evaluate and keep us informed about the potential impact of the effective and proposed tariffs as well as other recent changes in foreign trade policy on our supply chain, costs, sales and profitability and seek to implement strategies to mitigate such impact, including reviewing sourcing options and working with our vendors and merchants to seek to minimize product coming from China and other countries both in existing and new product development and select suppliers in low cost regions where tariff issues are less challenging.
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.
Generally, entities such as 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.
If we cannot successfully compete in our industry and business segments, our business, financial condition and results of operations could suffer. 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.
If we cannot successfully compete in our industry and business segments, our business, financial condition and results of operations could suffer. Expansion of sales of our product to law enforcement and other governmental or quasi-governmental entities may require expenditure of resources and lengthen our sale cycle.
Health and safety issues related to our products may arise that could lead to litigation or other action against us, to regulation of certain of its product components, or to negative publicity. We may be required to modify our technology and may not be able to do so.
Health and safety issues related to our products may arise that could lead to litigation or other action against us, to regulation of certain of our product components, or to negative publicity. We may be required to modify our technology and may not be able to do so.
Our efforts to grow our business depend in part upon access to, and our success in developing, market share and operating profitably in, additional geographic markets including but not limited to the South America, and South Africa.
Our efforts to grow our business depend in part upon access to, and our success in developing, market share and operating profitably in, additional geographic markets including but not limited to South America and South Africa.
We may in the future register shares of common stock that we have issued or may issue under our equity compensation plans and shares of common stock that have been issued upon the conversion of certain convertible securities.
We have registered and may in the future register shares of common stock that we have issued or may issue under our equity compensation plans and shares of common stock that have been issued upon the conversion of certain convertible securities.
Any substantial deterioration in general economic conditions that diminish consumer confidence or discretionary income could reduce our sales and adversely affect our operating results. Political and social factors can affect our performance. Concerns about elections, as well as firearm-related incidents and social reaction thereto, and legislature and policy shifts resulting from those elections can affect the demand for our products.
Any substantial deterioration in general economic conditions that diminish consumer confidence or discretionary income could reduce our sales and adversely affect our operating results. Political and social factors can affect our performance. Concerns about political trends, as well as firearm-related incidents and social reaction thereto, and legislature and policy shifts resulting from elections can affect the demand for our products.
Although we are taking measures to adapt to these changing circumstances, our business, financial condition, results of operations and cash flows could be materially adversely affected should these efforts prove unsuccessful. Sales transacted at our retail store may be paid for with cash which increases the risk of theft and related legal liability.
Although we are taking measures to adapt to these changing circumstances, our business, financial condition, results of operations and cash flows could be materially adversely affected should these efforts prove unsuccessful. Sales transacted at our retail stores may be paid for with cash which increases the risk of theft and related legal liability.
Royalty and licensing agreements, if required, may not be available on terms acceptable to us or at all. 12 Risks Related to our Securities We may not maintain qualification for listing on Nasdaq, which may impair your ability to sell your shares. Our common stock is currently listed on the Nasdaq Capital Market.
Royalty and licensing agreements, if required, may not be available on terms acceptable to us or at all. 12 Risks Related to our Securities We may not maintain qualification for listing on Nasdaq in the future, which may impair your ability to sell your shares. Our common stock is currently listed on the Nasdaq Capital Market.
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.
Our historical sales, expense levels, and profitability may not be an appropriate basis for forecasting future results. Our lack of long-term 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.
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.
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. Some of our senior management team are relatively new to their positions.
While we test 100% of our finished products, we do not test 100% of the components and materials they contain. We use randomized statistical inspection for components and materials and these protocols, while we believe them to be reliable, have inherent limitations and may miss parts that do not meet specifications.
While we test all of our finished products, we do not test all of the components and materials they contain. We use randomized statistical inspection for components and materials and these protocols, while we believe them to be reliable, have inherent limitations and may miss parts that do not meet specifications.
These tariffs currently affect some of the components of our products we import from China, and we may be required to raise our prices on those products due to the tariffs or share the cost of such tariffs with our customers, which could harm our operating performance.
These tariffs currently affect some of the components of our products we import from China and other countries, and we may be required to raise our prices on those products due to the tariffs or share the cost of such tariffs with our customers, which could harm our operating performance.
Sales of the Byrna SD, including it's ammunition and accessories, represents most of our revenue. There can be no assurances of continued demand for the Byrna SD, and any change in the factors that impact demand and sales that are likely to materially and adversely affect our prospects.
Sales of the Byrna SD, including its ammunition and accessories, represents most of our revenue. There can be no assurances of continued demand for the Byrna SD, and any change in the factors that impact demand and sales that are likely to materially and adversely affect our prospects.
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.
Though cash receipts are expected to be immaterial in amount and are deposited promptly, 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.
If one or more of our products or technology, or the parts and components we buy from others, is or becomes subject to the International Traffic in Arms Regulations (the “ITAR”) or national security controls or other controls under the EAR, this could significantly impact our operations, for example by severely limiting our ability to sell, (re-)export, or otherwise transfer our products and technology, or to release controlled technology to foreign person employees or others in the United States or abroad.
If one or more of our products or technology, or the parts and components we buy from others, is or becomes subject to the International Traffic in Arms Regulations (the “ITAR”) or national security controls or other controls under the EAR, this could significantly impact our operations, for example by severely limiting our ability to sell, (re-)export, or otherwise transfer our products and technology, or to release controlled technology to foreign person employees or others in the U.S. or abroad.
We face competition from a number of businesses, including worldwide businesses, many of which have substantially greater financial resources, operating scale, and a broader range of product offerings than we do.
We face competition from a number of businesses, including global businesses, many of which have substantially greater financial resources, operating scale, and a broader range of product offerings than we do.
For example, the development, production, (re-)exportation, importation, and transfer of our products and technology is subject to U.S. and foreign export control, sanctions, customs, import and anti-boycott laws and regulations, including the Export Administration Regulations (the “EAR”) (collectively, “Trade Control Laws”).
For example, the development, production, (re-)exportation, importation, and transfer of our products and technology is subject to U.S. and foreign export control, sanctions, customs, import and anti-boycott laws and regulations, including the EAR (collectively, “Trade Control Laws”).
This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from sales-generating activities to compliance activities.
This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We have invested resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from sales-generating activities to compliance activities.
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.
Conducting our operations through joint ventures could expose 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.
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.
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, and could occur in the future for similar or other reasons.
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.
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 Lauri Kearnes, our Chief Financial Officer.
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.
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 during prior periods and we cannot guarantee that we will be able to sustain profitability.
Our directors, executive officers, and other holders of more than 5% of our common stock, together with their affiliates, currently own, in the aggregate a significant percentage of our outstanding common stock.
Our directors, executive officers, and other holders of more than 5% of our common stock, together with their affiliates, currently own a significant percentage of our outstanding common stock.
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.
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 The failure to attract and retain key personnel could have an adverse effect on our operating results.
Such failures could delay or stop our production, result in possible lost sales and seriously threaten our liquidity and revenues. We are dependent on the quality of parts supplied by and quality controls of our third-party suppliers. The Byrna SD contains over 80 parts and we rely on third-party suppliers to deliver parts and materials that comply with our specifications.
Such failures could delay or stop our production, result in possible lost sales and seriously threaten our liquidity and revenues. We are dependent on the quality of parts supplied by and quality controls of our third-party suppliers. Our products contain numerous parts and we rely on third-party suppliers to deliver parts and materials that comply with our specifications.
There are a number of factors that influence consumer spending, including actual and perceived economic conditions, consumer confidence, disposable consumer income, consumer credit availability, unemployment, and tax rates in the markets where we sell our products.
Therefore, the success of our business depends significantly on economic factors and trends in consumer spending. There are a number of factors that influence consumer spending, including actual and perceived economic conditions, consumer confidence, disposable consumer income, consumer credit availability, unemployment, and tax rates in the markets where we sell our products.
As a result of disclosure of information in filings required of us as a public company, our business and financial condition will become more visible, which could be advantageous to, or harm our relationships with, our competitors, suppliers, manufacturers, retail partners, and customers.
As a result of disclosure of information in filings required of us as a public company, our business and financial condition are publicly available, which could be advantageous to, or harm our relationships with, our competitors, suppliers, manufacturers, retail partners, and customers.
The Nasdaq Capital Market requires listed companies to meet certain listing criteria including total number of stockholders, Board of Directors independence, minimum stock price, total value of public float, and in some cases total stockholders’ equity and market capitalization requirements.
The Nasdaq Capital Market requires listed companies to meet certain listing criteria including total number of stockholders, Board of Directors independence, minimum bid price, total value of publicly held shares, and in some cases total stockholders’ equity and market capitalization requirements.
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.
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, which restrictions largely remain in place.
There can be no assurance that we will not experience net losses in the future and there can be no assurance of continued profitability.
While we have achieved profitability this year, there can be no assurance that we will not experience net losses in the future and there can be no assurance of continued profitability.
Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our business operations and reputation.
Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our business operations and reputation. Our directors, executive officers, and significant stockholders may be able to influence us.
The failure to attract and retain key personnel could have an adverse effect on our operating results. Our success depends substantially on the efforts and abilities of our senior management and key personnel. The competition for qualified management and key personnel is intense.
Our success depends substantially on the efforts and abilities of our senior management and key personnel. The competition for qualified management and key personnel is intense.
The ongoing requirements of being a public company may strain our resources, divert management ’ s attention, and affect our ability to attract and retain executive management and qualified board members.
Accordingly, these shares will be able to be freely sold in the public market upon issuance as permitted by any applicable securities laws and applicable vesting requirements. The ongoing requirements of being a public company may strain our resources, divert management ’ s attention, and affect our ability to attract and retain executive management and qualified board members.
If for any reason our common stock does not maintain eligibility for listing on the Nasdaq Capital Market, we may list our common stock elsewhere, such as one of the OTC markets, which are generally considered less liquid and more volatile than a national securities exchange, and could mean that certain institutional investors could no longer hold or purchase our stock, and as a result, a purchaser of our common stock may find it more difficult to dispose of, or to obtain accurate quotations as to the price of their shares.
If for any reason our common stock does not maintain eligibility for listing on the Nasdaq Capital Market, it could be subject to delisting, in which case our common stock would be quoted elsewhere, such as one of the OTC markets, which are generally considered less liquid and more volatile than a national securities exchange.
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.
If such regulation becomes more expansive in the future, it could have a material adverse effect on our business, operating results, financial condition, and cash flows. 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.
Our continued compliance with present and changing future laws could restrict our ability to sell our products and expand our operations. Changes in government policies and legislation could adversely affect our financial results.
Our continued compliance with present and changing future laws could restrict our ability to sell our products and expand our operations. Changes in government policies and legislation could adversely affect our financial results. The manufacture, sale, purchase, possession and use of weapons, including CO2 powered launchers and chemical irritant devices, are subject to federal, state, local, and foreign laws.
Epidemic and pandemic diseases (including the COVID-19 pandemic) could have a material adverse effect on our business, financial condition, results of operations, cash flows, and ability to comply with regulatory requirements.
Epidemic and pandemic diseases could have a material adverse effect on our business, financial condition, results of operations, cash flows, and ability to comply with regulatory requirements. Outbreaks of epidemic, pandemic, or contagious diseases could cause disruptions in our business and the businesses of third parties who we depend upon for materials and manufacturing, marketing and other services.
With respect to our Byrna LATAM joint venture in South America, any differences in views among the joint venture participants may result in delayed decisions or in failures to agree on major issues. We also cannot control the actions of our joint venture partners, including any nonperformance, default or bankruptcy of our joint venture partners.
With respect to any joint venture that we may enter into in the future, any differences in views among the joint venture participants may result in delayed decisions or in failures to agree on major issues.
Our revenues and profits depend on the level of customer spending for our products, which is sensitive to general economic conditions and other factors. Our products are discretionary items for customers. Therefore, the success of our business depends significantly on economic factors and trends in consumer spending.
Any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash flows. Our revenues and profits depend on the level of customer spending for our products, which is sensitive to general economic conditions and other factors. Our products are discretionary items for customers.
As a result, we may be unable to control the quality of products produced by the joint venture or achieve consistency of product quality as compared with our other operations. In addition to net sales and market share, this may have a material negative impact on our brand and how it is perceived thereafter.
In addition to net sales and market share, this may have a material negative impact on our brand and how it is perceived thereafter.
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.
We have recorded net income for the year ended November 30, 2024. Our net income for the year ended November 30, 2024 was $12.8 million, compared to a net loss of $8.2 million for the year ended November 30, 2023 Our accumulated deficit at November 30, 2024 was $56.8 million.
Outbreaks of epidemic, pandemic, or contagious diseases, such as COVID-19, could cause disruptions in our business and the businesses of third parties who we depend upon for materials and manufacturing, marketing and other services. These disruptions could include disruptions in our ability to receive materials, manufacture our products, distribute our products, market our products, or obtain services.
These disruptions could include disruptions in our ability to receive materials, manufacture our products, distribute our products, market our products, or obtain services.
We recently opened a small retail store within our Las Vegas sales and marketing office. Customers purchasing product at the store may choose to pay in cash.
Customers purchasing products at our retail locations may choose to pay in cash.
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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.
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We would also not be able to control the actions of our joint venture partners, including any nonperformance, default or bankruptcy of our joint venture partners. As a result, we could be unable to control the quality of products produced by any future joint venture or achieve consistency of product quality as compared with our other operations.
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Foreign Corrupt Practices Act or other applicable anti-corruption legislation, and export controls and trade sanctions, could result in fines or criminal penalties if we expand our business abroad. ● If our independent suppliers and manufacturing partners do not comply with ethical business practices or with applicable laws and regulations, our reputation, business, and results of operations would be harmed. ● If we are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial litigation costs to protect our rights. ● We may be subject to intellectual property infringement claims, which could cause us to incur litigation costs and divert management attention from our business. ● We may not maintain qualification for listing on Nasdaq, which may impair your ability to sell your shares. ● The market price of our common stock may be volatile, which could result in substantial losses for purchasers. ● Exercise of options or vesting of restricted stock units may have a dilutive effect on your percentage ownership and may result in a dilution of your voting power and an increase in the number of shares of common stock eligible for future resale in the public market, which may negatively impact the trading price of our shares of common stock. ● Our directors, executive officers, and significant stockholders may be able to influence us. ● If our analyst coverage decreases or results in negative reports about our business, our stock price and trading volume could decline. ● Our charter documents and Delaware law could make it more difficult for a third party to acquire us and discourage a takeover. ● Our Bylaws, as amended, provide exclusive forum provisions applicable to substantially all disputes between us and our stockholders as well as claims brought under the Securities Act of 1933, which could limit our stockholders ’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees. ● We do not intend to pay dividends on our common stock for the foreseeable future. ● Any future litigation could have a material adverse impact on our results of operations, financial condition and liquidity. ● Our business depends on our ability to prevent or mitigate the effects of commercial crime including theft by employees, forgery and electronic crime. ● Epidemic and pandemic diseases (including the COVID-19 pandemic) could have a material adverse effect on our business, financial condition, results of operations, cash flows, and ability to comply with regulatory requirements. ● Our revenues and profits depend on the level of customer spending for our products, which is sensitive to general economic conditions and other factors. ● Tariffs, sanctions, restrictions on imports or other trade barriers between the United States and various countries, most significantly China, may impact our revenue and results of operations. ● Data privacy and security laws and regulations in the jurisdictions in which we do business could increase the cost of our operations and subject us to possible sanctions and other penalties. ● Substantial future sales, or the perception or anticipation of future sales, of shares of our common stock could cause our stock price to decline. ● The ongoing requirements of being a public company may strain our resources, divert management ’ s attention, and affect our ability to attract and retain executive management and qualified board members. ● Our business could be harmed if we are unable to accurately forecast our results of operations. ● Climate change and associated changes to laws and regulations may increase our operating costs and adversely affect our business and financial results. ● Matters relating to the employment market and prevailing wage standards may adversely affect our business. 8 Risk Factors Investing in our common stock involves a high degree of risk.
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Loss of our Nasdaq listing could mean that certain institutional investors could no longer hold or purchase our stock, and as a result, a purchaser of our common stock may find it more difficult to dispose of, or to obtain accurate quotations as to the price of their shares.
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The manufacture, sale, purchase, possession and use of weapons (including CO2 powered launchers and chemical irritant devices), ammunitions, firearms, and explosives are subject to federal, state, local, and foreign laws. If such regulation becomes more expansive in the future, it could have a material adverse effect on our business, operating results, financial condition, and cash flows.
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For example, the current presidential administration has imposed tariffs on goods from a variety of countries, including China, Canada, Mexico and others.
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Exercise of options or vesting of restricted stock units may have a dilutive effect on your percentage ownership and may result in a dilution of your voting power and an increase in the number of shares of common stock eligible for future resale in the public market, which may negatively impact the trading price of our shares of common stock.
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The exercise of some or all of our outstanding options and the vesting of restricted stock units, could result in significant dilution in the percentage ownership interest of our existing stockholders and in a significant dilution of voting rights and earnings per share. Our directors, executive officers, and significant stockholders may be able to influence us.
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Any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
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Additionally, such outbreaks could disrupt our ability to timely file periodic reports required by the Securities and Exchange Commission or the stock exchanges on which our common stock is listed, which may lead to the delisting or downgrading of our common stock on such stock exchanges.
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For example, general trade tensions between the United States and China began escalating in 2018, with multiple rounds of U.S. tariffs on Chinese-made goods taking effect.
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Accordingly, these shares will be able to be freely sold in the public market upon issuance as permitted by any applicable securities laws, applicable vesting requirements, and the lock-up agreements described above to the extent such shares are held by our executive officers and directors.
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Although we have already hired additional employees to comply with these requirements, we will need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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ITEM 1C. CYBERSECURITY We will provide the disclosure required under this Item 1C in our annual report for the year ending November 30, 2024 which is the first annual report for a fiscal year ending on or after December 15, 2023, the date on which disclosure under Item 106 of Regulation S-K is required.
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ITEM 1C. CYBERSECURITY Our business is highly dependent on our information systems, including our ability to operate them effectively and to successfully implement new technologies, methods, and processes, as well as adequate controls and cybersecurity incident recovery plans. We rely on our information systems to manage our business.
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In addition, we must protect the confidentiality and integrity of the data of our business, employees, customers, and other third parties. Our business involves the collection, processing, storage, and transmission of personally identifiable information and other sensitive and confidential information. This data is wide-ranging and relates to our employees, customers, and third parties.
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Our management, led by our Chief Executive Officer, has the overall responsibility for identifying, assessing and managing any material risks from cybersecurity threats, and our Board of Directors, assists in overseeing and monitoring cybersecurity risks and risk management. Our cybersecurity posture is designed to comply with key global financial regulations and cybersecurity laws in the jurisdictions in which we operate.
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This posture includes taking several proactive steps to prepare for attempts to compromise our information systems.
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To provide for the availability of critical data and systems, maintain regulatory compliance, manage our material cybersecurity risks, and protect against, detect, and respond to cybersecurity threats and incidents, we undertake the following activities: ● Closely monitor emerging data protection laws and implement changes to our processes designed to comply; ● Undertake reviews of our consumer-facing and internal policies and statements related to cybersecurity; ● Proactively inform our customers of substantive changes related to customer data handling; ● Conduct annual cybersecurity training for all our employees; ● Conduct regular phishing email simulations for all employees and all contractors with access to corporate email systems to enhance awareness and responsiveness to such possible threats; ● Through policy, practice, and contract (as applicable), require employees, as well as third parties who provide services on our behalf, to treat customer information and data with care; ● Update and assess our cybersecurity technologies to address threats and vulnerabilities; and ● Carry cybersecurity insurance to protect against potential losses from incidents.
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Cybersecurity Risk Assessment Program We do not have a formal cybersecurity risk assessment program. Policies and Procedures for Third-Party Service Providers We do not have specific policies and procedures to oversee, identify, or mitigate the cybersecurity risks associated with our use of third-party service providers, other than relying on SOC 1 Type 2 reports for materially in-scope applications.
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Activities to Prevent, Detect, and Minimize Cybersecurity Incidents We undertake various activities to prevent, detect, and minimize the effects of cybersecurity incidents.
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These activities include: ● ensuring that company data accessed via a desktop or laptop computer is only accessible from company-owned computers ● ensuring that company-owned computers are regularly updated and maintained, are running the latest versions of our Endpoint Detection and Response antivirus software ● ensuring that company-owned computers access the internet through secure connections via our corporate VPN solution ● conducting regular phishing email simulations ● updating and assessing our cybersecurity technologies such as our firewall and various cybersecurity software Impact of Previous Cybersecurity Incidents At this time, we have not identified any risks from known cybersecurity threats, including as a result of prior cybersecurity incidents, that have materially affected us.
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However, we face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us. Impact on Results of Operations or Financial Condition Cybersecurity risks and incidents have not materially affected our results of operations or financial condition.
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However, we face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us. Consideration of Cybersecurity Risks in Business Strategy, Financial Planning, and Capital Allocation Cybersecurity risks are considered as part of our business strategy, financial planning, and capital allocation.
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We regularly review and update our cybersecurity posture to address emerging threats and ensure the protection of our information systems.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSee 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
Biggest changeThe Stock Buyback Program will expire on the sooner of the two-year anniversary of its initiation or until we reach the aggregate limit of $10 million for the repurchases under the program. See Note 14, "Stockholders’ Equity—Stock Buyback Plan", in the Notes to Consolidated Financial Statements included in Item 8 of this Report for further discussion.
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.
All shares of common stock rank equally as to voting and all other matters. Holders On February 1, 2025, there were 58 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.
In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Stock Repurchases On February 15, 2022, our Board of Directors approved a plan to buy back up to $10.0 million worth of shares of our common stock from the open market (“Stock Buyback Plan”).
In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Stock Repurchases In March 2024, 21,905 units were repurchased by the Company for $0.3 million for shares withheld to pay the payroll tax liability of vesting RSUs and treated as treasury stock.
The Stock Buyback Plan was used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. We completed the full $10.0 million for the repurchases under the Stock Buyback Plan during March 2022.
On July 31, 2024, our Board of Directors approved a plan to buy back up to $10 million worth of shares of our common stock (the “Stock Buyback Program”). The Stock Buyback Program is intended to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards.
Removed
On April 28, 2022, our Board of Directors approved a plan to buy back up to an additional $5.0 million worth of shares of our common stock. We completed the full $5.0 million repurchase of shares during May 2022.
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The following table summarizes repurchases made during the fiscal year ended November 30, 2024: Number of Average Cost Shares Cost of Shares per Share Shares purchased - March 2024 21,905 $ 253,003 $ 11.6 Shares purchased - August 2024 291,141 2,994,296 10.3 Shares purchased - September 2024 506 5,695 11.3 Shares purchased - October 2024 35,678 499,997 14.0 Total 349,230 $ 3,752,991 $ 10.7 ITEM 6. [RESERVED] 15
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On October 6, 2022, our Board of Directors approved a plan to buy back up to an additional $2.5 million worth of shares of our common stock. We completed the full $2.5 million repurchase of shares during November 2022.

Item 7. Management's Discussion & Analysis

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

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Biggest changeLoss 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.
Biggest changeThe increase in interest income is primarily due to an increase in the amount of interest-earning funds held in cash and cash equivalents, marketable securities, and accrued interest receivable on loan receivable. 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 were 51%.
Goodwill resulting from a business combination is not amortized but is reviewed for impairment annually or more frequently when events or changes in circumstances occur that would more than likely than not reduce the fair value of a reporting unit below its carrying amount.
Goodwill Goodwill resulting from a business combination is not amortized but is reviewed for impairment annually or more frequently when events or changes in circumstances occur that would more than likely than not reduce the fair value of a reporting unit below its carrying amount.
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.
Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA is defined as net income (loss) as reported in our consolidated statements of operations and comprehensive income (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; and (vii) other financing expenses.
Some of the numbers included herein have been rounded for the convenience of presentation. OVERVIEW Byrna Technologies is a designer, manufacturer, retailer and distributor of innovative technological solutions for security situations that do not require the use of lethal force.
Some of the numbers included herein have been rounded for the convenience of presentation. OVERVIEW Byrna Technologies Inc. is a designer, manufacturer, retailer and distributor of innovative technological solutions for security situations that do not require the use of lethal force.
Stock-based compensation is classified in the accompanying Consolidated Statements of Operations and Comprehensive Loss based on the function to which the related services are provided, which is included in operating expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss. Forfeitures are accounted for as they occur.
Stock-based compensation is classified in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) based on the function to which the related services are provided, which is included in operating expenses in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). Forfeitures are accounted for as they occur.
Shipping and handling costs associated with the distribution of finished products to customers, are recorded in operating expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss and are recognized when the product is shipped to the customer.
Shipping and handling costs associated with the distribution of finished products to customers, are recorded in operating expenses in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) and are recognized when the product is shipped to the customer.
The fair values used in this evaluation are estimated by the Company based upon future discounted cash flow projections for the reporting unit. An impairment charge is recognized for any amount by which the carrying amount of goodwill exceeds its fair value. The Company performs its review for impairment during the third quarter of each year.
The fair values used in this evaluation are estimated by the Company based upon future discounted cash flow projections for the reporting unit. An impairment charge is recognized for any amount by which the carrying amount of goodwill exceeds its fair value. The Company performs its review for impairment during the fourth quarter of each year.
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.
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, 2024 and 2023, 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, 2023 and November 30, 2022 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, 2024 and November 30, 2023 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, 2023 and 2022, 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 Income (Loss). As of November 30, 2024 and 2023, no accrued interest or penalties related to income taxes are included in the Consolidated Balance Sheets.
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.
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, 2024.
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.
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, 2024 and 2023 were immaterial.
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.
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 net realizable value.
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.
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 ("Byrna LATAM") with Fusady S.A., an affiliate of Bersa S.A. (“Fusady”) located in Uruguay, to expand our operations and presence in South American markets.
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.
Accounts payable and accrued liabilities increased $7.0 million for the fiscal year ended November 30, 2024 compared to an increase of $0.6 million for the fiscal year ended November 30, 2023. Deferred revenue decreased $0.1 million during the fiscal year ended November 30, 2024 compared to a decrease of $0.4 million during the fiscal year ended November 30, 2023.
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.
MATERIAL CASH REQUIREMENTS FROM CONTRACTUAL OBLIGATIONS Leases As of November 30, 2024, we reported current and long-term operating lease liabilities of $0.5 million and $2.1 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.
Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide the following additional financial metrics that are not prepared in accordance with GAAP (non-GAAP): non-GAAP adjusted EBITDA, non-GAAP net loss, and non-GAAP net loss per share.
Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide the following additional financial metrics that are not prepared in accordance with GAAP (non-GAAP): non-GAAP adjusted EBITDA.
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.
At November 30, 2024, 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 $0.4 million during the fiscal year ended November 30, 2023 compared to $17.0 million during the fiscal year ended November 30, 2022.
Financing Activities Cash flows used in financing activities was $4.6 million during the fiscal year ended November 30, 2024 compared to $0.4 million during the fiscal year ended November 30, 2023.
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.
In addition, sales of pepper spray from Fox Labs, which we acquired on May 25, 2022, increased to $1.7 million for the fiscal year ended November 30, 2024 compared to $1.1 million during the fiscal year ended November 30, 2023.
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.
Interest Income/Expense Interest income for the fiscal year ended November 30, 2024 was $1.0 million compared to $0.7 million for the fiscal year ended November 30, 2023. The increase in interest income is primarily due to higher interest rates on the Company's cash and cash equivalents and marketable securities.
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.
Other operating costs, including administrative expenses, increased by $0.5 million from $5.6 million for fiscal year 2023 to $6.1 million for fiscal year 2024.
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.
Our income tax benefit was $5.7 million for the fiscal year ended November 30, 2024 compared to an income tax provision of $0.2 million for the fiscal year ended November 30, 2023.
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.
These include stock-based compensation expense of $3.4 million during the fiscal year ended November 30, 2024 compared to $5.4 million for the fiscal year ended November 30, 2023; operating lease costs of $0.8 million during the fiscal year ended November 30, 2024 compared to $0.7 million for the fiscal year ended November 30, 2023; depreciation and amortization of $1.5 million during the fiscal year ended November 30, 2024 compared to $1.3 million during the fiscal year ended November 30, 2023; recovery of allowance for credit losses of $0.2 million during the fiscal year ended November 30, 2024 compared to provision for allowance for credit losses of $0.5 million for the fiscal year ended November 30, 2023; recovery of provision for inventory of $0.2 million during the fiscal year ended November 30, 2024 compared to provision for allowance for inventory of $0.5 million for the fiscal year ended November 30, 2023; and loss from joint venture of less than $0.1 million during the fiscal year ended November 30, 2024 compared to $0.6 million for the fiscal year ended November 30, 2023.
Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
Income Taxes The Company accounts for income taxes under the asset and liability method, recognizing deferred tax assets and liabilities for the expected future tax consequences of events included in the financial statements.
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.
The majority of revenue continues to be in high margin direct online sales via Amazon and our own website, as these e-commerce sales accounted for 76.8% of total net revenue in the current fiscal year and 72.6% of total revenue in the prior fiscal year.
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.
This included $8.9 million for the acquisition of marketable securities and $2.3 million for the purchase of property and equipment. In comparison, $3.0 million was used for investing activities during the fiscal year ended November 30, 2023, including $1.6 million loan to Byrna LATAM, $0.5 million investment in the joint venture, and $0.9 million to purchase property and equipment.
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.
Sales to domestic dealers/distributors, in combination with sales to security companies and law enforcement agencies increased by 48.3% from $8.7 million during November 30, 2023 to $12.9 million for the fiscal year ended November 30, 2024.
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.
In addition, we experienced growth in our 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, 2024. We increased gross margin profitability by 6.1% as compared with the prior year.
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.
The fiscal year ended November 30, 2024 amount was primarily due to tax payments of $0.9 million related to payroll taxes withheld on the vesting of restricted stock units, $0.1 million received in proceeds from stock option exercises and payments of $3.8 million for repurchases of common stock, compared to tax payments of $0.5 million related to payroll taxes withheld on the vesting of restricted stock units and $0.1 million received from proceeds associated with the sale of common stock during the fiscal year ended November 30, 2023.
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.
Income Tax Provision (Benefit) Our effective income tax rate was (80.31)% for the year ended November 30, 2024 compared to an effective income tax rate of 2.06% for the year ended November 30, 2023.
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.
Cost of Goods Sold Cost of goods sold was $33.0 million in the fiscal year ended November 30, 2024 compared to $19.0 million in the fiscal year ended November 30, 2023. This $14.0 million increase is primarily due to the increase in sales volume.
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.
Gross profit was $52.8 million for the fiscal year ended November 30, 2024, or 61.5% of net revenue, as compared to gross profit of $23.6 million, or 55.5% of net revenue, in the prior year.
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.
During the fiscal year ended November 30, 2024, our cost and liquidity management was reflected in the generation of cash for working capital needs. Inventory increased $5.9 million during the fiscal year ended November 30, 2024 compared to a decrease of $0.5 million during the fiscal year ended November 30, 2023.
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.
Profit from Operations The increase in revenue, off-set by the increase in operating expenses resulted in an increase of $14.5 million in profit from operations of $6.7 million in the fiscal year ended November 30, 2024 as compared to a loss from operations of $7.8 million in the fiscal year ended November 30, 2023.
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.
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.
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.
Operating Activities Cash provided by operating activities was $11.7 million for the fiscal year ended November 30, 2024, compared to $3.9 million cash provided by operating activities for the fiscal year ended November 30, 2023.
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.
Due to the increase in revenue during the fiscal year, the increase in operating expenses offset with the increase in gross profit led to a profit from operations of $6.7 million for the fiscal year November 30, 2024 as compared to a loss from operations of $7.8 million for the fiscal year ended November 30, 2023.
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.
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, 2024 2023 Net income (loss) $ 12,792 $ (8,192 ) Adjustments: Interest income, net (1,024 ) (693 ) Income tax provision (5,708 ) 165 Depreciation and amortization 1,491 1,262 NON-GAAP EBITDA 7,551 (7,458 ) Stock-based compensation 3,403 5,375 Severance/Recruitment costs 524 82 NON-GAAP adjusted EBITDA $ 11,478 $ (2,001 ) LIQUIDITY AND CAPITAL RESOURCES Cash Flow Summary Cash and cash equivalents as of November 30, 2024 totaled $16.8 million, a decrease of approximately $3.7 million from $20.5 million of cash as of November 30, 2023.
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.
Accounts receivable increased by $0.2 million during the fiscal year ended November 30, 2024 compared to a decrease of $2.2 million during the fiscal year ended November 30, 2023 due to a significant increase in overall sales.
Our tax rate differs from the statutory rate of 21.0% primarily due to the recording of a valuation allowance against deferred tax assets generated by net operating losses, and also due to the foreign tax rate differential for Byrna South Africa, as well as effects of permanent non-deductible expenses and other effects.
Our tax rate differs from the statutory rate of 21.0% primarily due to the release of the valuation allowance, the impact of stock compensation, as well as state income taxes, tax credits, the foreign tax rate differential for Byrna South Africa, and effects of permanent non-deductible expenses and other effects.
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.
Year ended November 30, 2024, as compared to year ended November 30, 2023: Net Revenue Revenues were $85.8 million for the year ended November 30, 2024 which represents an increase of $43.2 million or 101.1% compared to the prior year period revenues of $42.6 million.
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.
Direct sales via our website increased by $26.7 million from $24.6 million for the fiscal year ended November 30, 2023 to $51.3 million for the fiscal year ended November 30, 2024. Sales via Amazon increased from $6.4 million during the fiscal year ended November 30, 2023 to $14.5 million for the fiscal year ended November 30, 2024.
Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.
Deferred tax assets and liabilities are determined based on differences between the financial statement and tax bases of assets and liabilities, using enacted tax rates for the years in which the differences are expected to reverse. Changes in tax rates affect deferred tax assets and liabilities and are recognized in income in the period of enactment.
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.
RESULTS OF OPERATIONS Revenue of $85.8 million during the fiscal year ended November 30, 2024 was $43.2 million higher than prior year revenue of $42.6 mainly due to an increase in e-commerce sales of $34.9 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.
The carrying value of our investment in the joint venture at November 30, 2024 and November 30, 2023 was $0 in the Consolidated Balance Sheets. Other Income (Expense) Other income (expenses) in the year ended November 30, 2024 includes $0.01 million investment gains. Other income (expenses) in the year ended November 30, 2023 included ($0.05) million investment losses.
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.
We held 51% of the stock in Byrna LATAM, and the remaining 49% of stock in Byrna LATAM was held by Fusady. Under the terms of the joint venture, we did not control the Byrna LATAM.
To offset the decline in revenues, the Company has reduced marketing spend, personnel costs, and professional fees.
With the increase in revenues, we have increased marketing spend, personnel costs, and professional fees.
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.
Total variable selling expenses increased by $3.7 million from $4.1 million in fiscal year 2023 to $7.8 million for fiscal year 2024. Professional fees increased by $0.9 million from $1.1 million in fiscal year 2023 to $2.0 million for fiscal year 2024.
The resolution of tax matters is not expected to have a material effect on the Company’s consolidated financial statements. Business Combination Assets and liabilities acquired in business combinations are accounted for at fair value. The Company records the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values at the acquisition dates.
The resolution of tax matters is not expected to have a material effect on the Company’s consolidated financial statements.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Deferred tax assets are recognized to the extent the Company believes that these assets are more likely than not to be realized.
Deferred tax assets are recognized to the extent the Company believes these assets are more likely than not to be realized. As of November 30, 2024, the Company has evaluated the available evidence regarding the realization of its deferred tax assets in different jurisdictions.
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.
The increase was primarily due to e-commerce sales that increased by 112.8% or $34.9 million from $30.9 million during the fiscal year ended November 30, 2023 to $65.9 million for the fiscal year ended November 30, 2024.
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.
Operating Expenses Operating expenses were $46.1 million for the fiscal year ended November 30, 2024, as compared to operating expenses in the prior fiscal year of $31.4 million. This $14.7 million increase is primarily due to an increase in marketing expenditures, personnel costs, and variable selling expenses.
Removed
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.
Added
On August 19, 2024 we sold our 51% ownership interest to Fusady S.A. for $1 (the “LATAM Share Purchase Agreement”), and entered into an exclusive distribution, manufacturing and licensing agreement with Byrna LATAM (the “LATAM Licensing Agreement”).
Removed
The decrease in inventory was a planned measure to return inventory stock to adequate levels to meet demand needs.
Added
The LATAM Licensing Agreement allows Byrna LATAM to exclusively manufacture the Byrna SD launcher and ammunition in certain South American countries and requires Byrna LATAM to pay us a royalty on Byrna products manufactured. The LATAM Share Purchase Agreement also includes put and call rights based on defined triggers that expire August 19, 2029.
Removed
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.
Added
Gross margin profitability increased primarily due to the increase in the proportion of high margin direct to customer sales (Web/Amazon) from 72.6% of total sales for the fiscal year ended November 30, 2023 to 76.8% of sales for the fiscal year ended November 30, 2024.
Removed
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.
Added
Marketing expenditures increased $7.8 million from $4.6 million for fiscal year 2023 to $12.4 million in fiscal year 2024 Total employee compensation costs increased $1.9 million from $15.9 million for fiscal year 2023 to $17.8 million in fiscal year 2024.
Removed
In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
Added
On August 19, 2024, we sold our 51% ownership interest to Fusady S.A. for $1 pursuant to the LATAM Share Purchase Agreement. Our share of the joint venture’s loss for the fiscal year ended November 30, 2024 was less than $0.1 million.
Removed
If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
Added
Net income was $12.8 million for the fiscal year ended November 30, 2024 compared to a net loss of $8.2 million for the fiscal year ended November 30, 2023.
Removed
The excess, if any, of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. If the fair value of the assets and liabilities acquired exceed the fair value of the purchase consideration, negative goodwill is recognized in the statement of operations.
Added
The increase in inventory was a planned measure to support anticipated growth in demand and to ensure the availability of key products during peak sales periods.
Removed
Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. 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.
Added
Prepaid expenses and other current assets increased by $1.1 million for the fiscal year ended November 30, 2024 compared to a decrease of $0.2 million for the fiscal year ended November 30, 2023. Investing Activities During the fiscal year ended November 30, 2024, $11.2 million was used for investing activities.
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.
Added
See Note 17, “Leases”, in the Notes to Consolidated Financial Statements included in Item 8 of this Report for further discussion. 16 OFF-BALANCE SHEET ARRANGEMENTS The Company had no off-balance sheet arrangements as of November 30, 2024 and 2023.
Removed
During the measurement period, which is not to exceed one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Added
In the United States, the Company has concluded that it is more-likely-than-not that it will realize its net deferred tax assets. This conclusion is based on net income in 2024, projected cumulative three-year income through November 30, 2025, and the expectation of continued profitability due to increased product sales.
Added
As a result, the Company has released its US valuation allowance as of November 30, 2024. Conversely, in South Africa, the Company has determined that it is more-likely-than-not that it will not realize its net deferred tax assets. This determination is based on a cumulative three-year loss position through November 30, 2024, and the forecasted closure of operations in FY2025.
Added
Therefore, a full valuation allowance remains on the deferred tax assets in South Africa as of November 30, 2024. The Company will continue to monitor its cumulative loss position and forecasted income on a quarterly basis, particularly focusing on the US operations, where a cumulative 12-quarter profit position is projected for FY2025.

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