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Note 10 - Revenue, Deferred Revenue and Accounts Receivable | 9 Months Ended
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Aug. 31, 2025
Notes to Financial Statements |
Revenue, Deferred Revenue and Accounts Receivable [Text Block] |
10. | REVENUE, DEFERRED REVENUE AND ACCOUNTS RECEIVABLE
The Company generates most of its revenue through e-commerce portals to consumers, as well as wholesale distribution of its products and accessories to dealers/distributors and retail stores. The Company also sells products to large end-users such as private security companies and law enforcement agencies. The Company does not manufacture or sell any products regulated by the Bureau of Alcohol, Tobacco, Firearms and Explosives or for military applications. Revenue is recognized upon the transfer of control of goods to the customer, which occurs when the Company has satisfied its performance obligation by making the goods available to the customer’s designated carrier in accordance with the Company’s shipping terms. Under the Company’s standard terms, which are Ex-Works (EXW), title and risk of loss pass to the customer once the goods are picked, packed, and loaded into the carrier’s trailer at the Company’s facility and the order is marked as shipped in the Company’s ERP system. At that point, the Company has a present right to payment, the customer has obtained legal title, and the carrier—acting as the customer’s agent—has physical possession of the goods. Accordingly, revenue is recognized as of the date goods are loaded into the carrier’s trailer, regardless of when the carrier physically removes the trailer from the Company’s premises. Payment terms to customers other than e-commerce customers are generally 30-60 days for established customers, whereas new wholesale and large end-user customers have prepaid terms for their first order. The amount of revenue recognized is net of returns and discounts that the Company offers to its customers. Products purchased include a standard warranty that cannot be purchased separately. This allows customers to return defective products for repair or replacement within one year of sale. The Company also sells an extended warranty for the same terms over three years. The extended 3-year warranty can be purchased separately from the product and is classified as a service warranty. Since a warranty for the first year after sale is included and non-separable from all launcher purchases, the Company considers this extended warranty to represent a service obligation during the second and third years after sale. Therefore, the Company accumulates billings of these transactions on the balance sheet as deferred revenue, to be recognized on a straight-line basis during the second and third year after sale. The Company recognizes an estimated reserve for warranty based on its analysis of historical experience, and an evaluation of current market conditions. During the second quarter of 2025, the Company offered a complimentary five-year extended warranty with the purchase of any launcher during the month of May. The Company determined the standalone selling price of the five-year extended warranty and, in accordance with ASC 606, allocated a portion of the total transaction price to the warranty using the relative standalone selling price method. The amount allocated to the five-year extended warranty is recorded as deferred revenue and is recognized on a straight-line basis over the five-year warranty period. Revenue related to the five and three-year extended warranty was immaterial. The Company offers e-commerce customers a 14-day money-back guarantee, which allows for a full refund of the purchase price, excluding shipping charges, within 14 days from the date of delivery. The right of return creates a variable component to the transaction price and needs to be considered for any possible constraints. The Company estimates returns using the expected value method, as there will likely be a range of potential return amounts. The Company’s reserve for returns under the 14-day money back guarantee for the three and nine months ended August 31, 2025 and 2024 was immaterial. For customer purchases made through Amazon, certain Byrna products are designated as non-returnable, including Byrna launchers, CO₂ tubes, chemical irritant projectiles, and pepper sprays. All other Byrna accessories sold on Amazon are subject to Amazon’s standard return policy, which generally permits returns within 30 days of delivery. The Company evaluates expected returns from Amazon sales using the same expected value method applied to its direct-to-consumer sales. The Company’s reserve for Amazon-related returns for the three and nine months ended August 31, 2025 and 2024 was immaterial. The Company does not offer a money-back guarantee to dealers or retailers. These customers may request a return or credit for unforeseen reasons or may have agreed discounts or allowances to be netted from amounts invoiced. Accordingly, 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 three and nine months ended August 31, 2025 and 2024 was immaterial. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs associated with the distribution of finished products to customers, are recorded in operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income and are recognized when the product is shipped to the customer. 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. The Company has granted Byrna LATAM an exclusive license under the LATAM Licensing Agreement to manufacture, market, sell, and distribute Byrna products within specified territories. Under the LATAM Licensing Agreement, Byrna LATAM is authorized to use the Byrna® trademark and logo for marketing and sales of approved products, subject to the terms outlined in the LATAM Licensing Agreement. In consideration for these rights, Byrna LATAM is required to pay the Company a royalty fee based on quantities and values of licensed products manufactured. The Company recognizes revenue as the licensed products are manufactured as reported to the Company by Byrna LATAM. The LATAM Licensing Agreement establishes minimum revenue requirements for designated countries. There is no minimum guaranteed royalty fee unless otherwise stipulated by the minimum revenue provisions of the LATAM Licensing Agreement. Accounts Receivable The Company records accounts receivables due from dealers/distributors, large end-users such as retail stores, security companies, and law enforcement agencies. Accounts receivable, net of allowances, was $8.9 million, $2.6 mill ion and $2.9 million as of August 31, 2025, November 30, 2024, and November 30, 2023, respectively. Accounts receivable also includes royalty receivables. The amount of royalty receivable included in accounts receivable was $1.1 million, not material, and nil as of August 31, 2025, November 30, 2024, and November 30, 2023, respectively. Allowance for Expected Credit Losses The Company estimates the balance of its allowance for expected credit losses. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status and makes judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions, and reasonable and supportable forecasts of future economic conditions. Account balances are written off against the allowance when it is determined that the receivable will not be recovered. As of August 31, 2025, November 30, 2024, and November 30, 2023, the total allowance for credit losses recorded was less than $0.1 million, $0.3 million and $0.6 million, respectively. Deferred Revenue The balance of deferred revenue, which relate to advance payments, unfulfilled e-commerce orders and amounts to be recognized under extended three-year and five-year service warranty, as of August 31, 2025 and August 31, 2024 was $0.3 million and $0.8 million, respectively, and $1.8 million and $1.9 million as of November 30, 2024 and 2023, respectively.
|  | August 31, |  |  | November 30, |
|  | 2025 |  |  | 2024 |
Deferred revenue balance, beginning of period |  | $ | 1,808 |  |  | $ | 1,936 |
Net additions to deferred revenue during the period |  |  | 49,413 |  |  |  | 66,120 |
Reductions in deferred revenue for revenue recognized during the period |  |  | (50,932 | ) |  |  | (66,248 | )
Deferred revenue balance, end of period |  |  | 289 |  |  |  | 1,808 |
Less current portion |  |  | 249 |  |  |  | 1,791 |
Deferred revenue, non-current |  | $ | 40 |  |  | $ | 17 |
Revenue Disaggregation The Company presents revenues net of returns, allowances, and discounts. The following table presents disaggregation of the Company’s net revenue by distribution channel (in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | August 31, |  |  | August 31, |
Distribution channel |  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Wholesale (dealer/distributors) |  | $ | 11,530 |  |  | $ | 4,781 |  |  | $ | 29,653 |  |  | $ | 13,512 |
E-commerce (direct to consumers) |  |  | 16,335 |  |  |  | 16,073 |  |  |  | 52,096 |  |  |  | 44,265 |
Royalties |  |  | 314 |  |  |  | — |  |  |  | 1,125 |  |  |  | — |
Total |  | $ | 28,179 |  |  | $ | 20,854 |  |  | $ | 82,874 |  |  | $ | 57,777 |
The Company presents revenues net of returns, allowances, and discounts. The following table presents disaggregation of the Company’s net revenue by revenue stream (in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | August 31, |  |  | August 31, |
Revenue type |  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Product |  | $ | 27,865 |  |  | $ | 20,854 |  |  | $ | 81,749 |  |  | $ | 57,777 |
Royalties |  |  | 314 |  |  |  | — |  |  |  | 1,125 |  |  |  | — |
Total |  | $ | 28,179 |  |  | $ | 20,854 |  |  | $ | 82,874 |  |  | $ | 57,777 |

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