# Byrna Technologies Inc.: Form 10-Q for the period ended Feb 29, 2024

- Company: [Byrna Technologies Inc.](/companies/byrn.md) (CIK 1354866)
- Form: 10-Q
- Filed: 2024-04-05
- Accepted by EDGAR: Apr 5, 2024, 08:00 ET
- Period: 2024-02-29
- Accession: 0001437749-24-011142
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1354866/000143774924011142/byrn20240229_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1354866/000143774924011142/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-02-29.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-12-01 to 2024-02-29 | $16.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-12-01 to 2024-02-29 | $7.0m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-12-01 to 2024-02-29 | $9.6m | us-gaap:GrossProfit |
| Operating income | 3 months, 2023-12-01 to 2024-02-29 | −$164.0k | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-12-01 to 2024-02-29 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-12-01 to 2024-02-29 | $17.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-12-01 to 2024-02-29 | $0.00 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-12-01 to 2024-02-29 | $0.00 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-12-01 to 2024-02-29 | 22,838,827 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-12-01 to 2024-02-29 | $3.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-12-01 to 2024-02-29 | $171.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-02-29 | $24.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-02-29 | $39.0m | us-gaap:AssetsCurrent |
| Total assets | at 2024-02-29 | $52.7m | us-gaap:Assets |
| Current liabilities | at 2024-02-29 | $8.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-02-29 | $9.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-02-29 | $43.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 17,911 characters.

References in this quarterly report on Form 10-Q (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Byrna Technologies Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

### Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” "may," “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important risk factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of our Annual Report on Form 10-K for the year ended November 30, 2023 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 14, 2024 (the “2023 10-K”), the Company’s subsequent filings with the SEC, which can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, including but not limited to our ability to design, introduce and sell new products, services and features, the impact of any regulatory proceedings or litigation, our ability to protect our intellectual property and compete with existing and new products, the impact of stock compensation expense, dividends, warrant exercises and related accounting, impairment expense and income tax expense on our financial results, our ability to manage our supply chain and avoid production delays, shortages or other factors, including product mix, cost of parts and materials and cost of labor that may impact our gross margins, our ability to retain and incentivize key management personnel, product defects, the success of our entry to new markets, customer purchase behavior and negative media publicity or public perception of our brand or products, restrictions or prohibitions imposed by advertising platforms, loss of customer data, breach of security or an extended outage related to our e-commerce storefronts, including a breach or outage by our third party cloud based storage providers, exposure to international operational risks, delayed cash collections or bad debt, determinations or audits by taxing authorities, changes in government regulations, the impact of existing or future regulation by the Bureau of Alcohol, Tobacco, and Firearms, import and export regulators, or other federal or state authority, or changes in international law in key jurisdictions including South America and South Africa or our inability to obtain needed exemptions from such existing or future regulation.

### OVERVIEW

The following discussion and analysis is intended to help you understand us, our operations and our financial performance. It should be read in conjunction with our condensed consolidated financial statements and the accompanying notes, which are included in Item 1 of this report.

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. Our mantra is *Live Safe*, and our core mission is to empower individuals to safely and fully engage in life and adventure. Our design team’s directive is to build easy-to-use self-defense tools to enhance the safety of our customers and their loved ones at home and outdoors. We are also focused on developing tools that can be used instead of firearms by professional law enforcement and private security customers to reduce shootings and facilitate trust between police and the communities they seek to serve. Our strategy is to establish Byrna® as a consumer lifestyle brand associated with the confidence people can achieve by knowing they can protect themselves, their loved ones and those around them. We believe we have a significant opportunity to leverage the Byrna brand to expand our product line, broaden our user base and generate increasing sales from new and existing customers.

Our business strategy is twofold: (1) to fulfill the growing demand for less-lethal products in the law enforcement, correctional services, and private security markets and (2) to provide civilians – including those whose work or daily activities may put them at risk of being a victim – with easy access to an effective, non-lethal way to protect themselves and their loved ones from threats to their person or property.

We believe that the United States, along with many other parts of the world, is experiencing a significant spike in the demand for less-lethal products and that the less-lethal market will be one of the faster growing segments of the security market over the next decade. We plan to respond to this demand for less-lethal products through the serial production and distribution of the Byrna® SD and expansion of the Byrna product line.

On January 10, 2023, the Company created a new joint venture with Fusady S.A. ("Fusady") located in Uruguay, to expand the Company's operations and presence in South American markets. The Company holds 51% of the stock in the joint venture entity, Byrna LATAM, and the remaining 49% of stock in Byrna LATAM is held by Fusady.

### RESULTS OF OPERATIONS

### Three months ended February 29, 2024 as compared to three months ended February 28, 2023:

#### Net Revenue

Revenues were $16.7 million in the first quarter of 2024 which represents an increase of $8.2 million as compared to the prior year period revenues of $8.4 million. Due to transformational shift in our advertising strategy in September 2023, our direct-to-consumer revenues through our website and Amazon for the three months ended February 29, 2024 increased $6.7 million to $12.8 million from $6.1 million in prior year period. Sales to our domestic dealers/distributors for the three months ended February 29, 2024 also increased $0.7 million to $2.2 million from $1.5 million in the prior year period. Sales to customers in Canada also slightly increased $0.1 million to $0.5 million for the three months ended February 29, 2024 from $0.4 million in the prior year period. In addition, Fox Labs, which we acquired on May 25, 2022, increased sales by $0.1 million to 2024for the three months ended February 29, 2024 from $0.3 million in the prior year period. International sales (other than Canada), which are characterized by infrequent but very large orders, increased by $0.6 million to $0.8 million during the first quarter of 2024 from $0.2 million in the prior year period.

#### Cost of Goods Sold

Cost of goods sold was $7.0 million in the first quarter of 2024 compared to $3.2 million in the prior year period. This $3.9 million increase is due to the increase in sales volumes.

#### Gross Profit

Gross profit is calculated as total revenue less cost of goods sold and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of products, such as labor and overhead, inbound freight costs, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $9.6 million in the first quarter of 2024, or 57.9% of net revenue, as compared to gross profit of approximately $5.2 million, or 62.4% of net revenue, in the prior year period. The decrease in gross profit as a percentage of sales is primarily due to the prior year period included a one-time adjustment for higher absorption of fixed costs than our typical quarters.

#### Operating Expenses

Operating expenses were $9.8 million in the first quarter of 2024, an increase of $2.6 million, as compared to the prior year period expenses of $7.2 million. The increase is due to higher marketing expenses of $1.9 million, $0.5 million due to variable expenses which increased in proportion to increase sales volume, $0.4 million of higher accrued bonus expense driven by improved financial performance and $0.3 of higher professional fees. This increase was offset by a $0.5 million decrease in stock-based compensation.

#### Other Income (Expense)

We recorded $0.3 million of interest income during the first quarter of 2024 compared to $0.1 of interest income in the first quarter of 2023. We recorded a loss of less than $0.1 million from our South American joint venture investment during the first quarter of 2024 compared to $0.2 million for the first quarter of 2023.

#### Income Tax Provision

For the three months ended February 29, 2024, the Company recorded a nominal amount of income tax expense. For the three months ended February 28, 2023 the Company recorded an income tax benefit of $0.1 million. For the three months ended February 29, 2024 and February 28, 2023, the effective tax rate was 0.0% and 2.7%, respectively. The Company’s tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, effects of permanent non-deductible expenses, the recording of a valuation allowance against the deferred tax assets generated in the current period, and other effects.

#### Non-GAAP Financial Measures

In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide an additional financial metric that is not prepared in accordance with GAAP (non-GAAP) with presenting non-GAAP adjusted EBITDA. Management uses this non-GAAP financial measure, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance. We believe that this non-GAAP financial measure helps us to identify underlying trends in our business that could otherwise be masked by the effect of certain expenses that we exclude in the calculations of the non-GAAP financial measure.

Accordingly, we believe that this non-GAAP financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.

This non-GAAP financial measure does not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures, because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerning exclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other non-GAAP measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison.

#### Adjusted EBITDA

Adjusted EBITDA is defined as net (loss) income as reported in our condensed consolidated statements of operations and comprehensive (loss) income excluding the impact of (i) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss and (vi) one-time, non-recurring other expenses or income. Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-time and non-cash costs. Reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, is as follows (in thousands):

|  | For the Three Months Ended February 29, 2024 | February 28, 2023 |
| --- | ---: | ---: |
| **Net income (loss)** | $17 | $(2,153) |
| **Adjustments:** |  |  |
| Interest income | (280) | (143) |
| Income tax benefit | — | (59) |
| Depreciation and amortization | 338 | 276 |
| **Non-GAAP EBITDA** | 75 | (2,079) |
| Stock-based compensation expense | 938 | 1,464 |
| Severance/Separation | 163 | — |
| **Non-GAAP adjusted EBITDA** | $1,176 | $(615) |

20

### LIQUIDITY AND CAPITAL RESOURCES

#### Cash Flow Summary

Cash and cash equivalents as of February 29, 2024 totaled $24.2 million, an increase of $3.7 million from $20.5 million of cash and cash equivalents as of November 30, 2023.

#### Operating Activities

Cash provided by operating activities was $3.9 million for the three months ended February 29, 2024 compared to cash used in operations of $3.4 million during the prior year period. Net income was less than $0.1 million compared to net loss of 2.2 million for the three months ended February 29, 2024 and 2023, respectively. Significant changes in noncash and working capital activity are as follows:

Non-cash activity includes stock-based compensation expenses of $0.9 million for the three months ended February 29, 2024 compared to $1.5 million for the three months ended February 28, 2023; operating lease costs of $0.1 million for the three months ended February 29, 2024 compared to $0.4 million for the three months ended February 28, 2023, and less than a $0.1 million of joint venture investment loss in the three months ended February 29, 2024 compared to $0.2 million during the three months ended February 28, 2023.

Inventory decreased during the three months ended February 29, 2024 by $1.8 million compared to increase of $2.9 million for the three months ended February 28, 2023 Accounts receivable decreased by $1.4 million during the three months ended February 29, 2024 as compared to a decrease of $1.5 million for the three months ended February 28, 2023. Accounts payable and accrued liabilities decreased during the three months ended February 29, 2024 by $1.0 million compared to a decrease of $1.8 million for the three months ended February 28, 2023. Prepaid expenses and other current assets increased by $0.3 million during the three months ended February 29, 2024 compared to a decrease of $0.4 million during the three months ended February 28, 2023. Operating lease liabilities decreased by $0.1 million during the three months ended February 29, 2024 compared to a decrease of $0.4 million during the three months ended February 28, 2023. Deferred revenues increased $0.7 million and $0.5 million for the three months ended February 29, 2024, and February 28, 2023, respectively.

#### Investing Activities

Cash used in investing activities was $0.2 million for the three months ended February 29, 2024 compared to $2.3 million for the three months ended February 28, 2023. The prior year period investing activities primarily relates to the investment in the joint venture and the corresponding loan while the current period relates to purchases of property and equipment.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

### RECENT ACCOUNTING PRONOUNCEMENTS

See Note 5, “Recent Accounting Guidance,” in the Notes to condensed consolidated financial statements included in Item 1 of this report for a discussion of recently issued and adopted accounting standards.

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our condensed consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are outlined in Note 4, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of the 2023 Form 10-K. During the three months ended February 29, 2024, there were no significant changes to our critical accounting policies from those described in our 2023 Form 10-K.

## Controls and procedures

As filed, 1,585 characters.

### Evaluation of Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of February 29, 2024 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934. Disclosure controls and procedures are designed to ensure that material information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that material information is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company’s CEO and CFO concluded that as of February 29, 2024, our disclosure controls and procedures were effective.

### Changes in Internal Controls Over Financial Reporting

There were no changes that occurred during the first quarter of 2024 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

## Risk factors

As filed, 375 characters.

Factors that could cause our actual results to differ materially from those in this report include the “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended November 30, 2023, filed with the SEC on February 14, 2024, as amended on March 29, 2024. There have been no material changes to the risk factors disclosed in our 2023 Form 10-K.

Filed Apr 5, 2024.
Source: SEC EDGAR, the filing index for accession 0001437749-24-011142. Last ingested by Listed: Nov 6, 2026, 12:42 ET. No prices; not investment advice.