What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2025-02-07 compared with 2024-02-14 · 91 added, 84 removed, 167 unchanged (51% of the section changed)

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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”).

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 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.

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.

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.

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.

The 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.

No repurchases were made during the fiscal year ended November 30, 2023.

The following table summarizes repurchases made during the fiscal year ended November 30, 2024:

Cost of Shares

Shares purchased - March 2024

Shares purchased - August 2024

Shares purchased - September 2024

Shares purchased - October 2024

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Some of the numbers included herein have been rounded for the convenience of presentation.

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.

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.

Our mantra is Live Safe , and our core mission is to empower individuals to safely and fully engage in life and adventure.

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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.

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.

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.

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”).

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.

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.

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.

In addition, the Company had experienced growth in its dealer sales channel as well as sales into Canada.

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.

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.

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.

The Company maintained gross margin profitability consistent with the prior year.

To offset the decline in revenues, the Company has reduced marketing spend, personnel costs, and professional fees.

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

We increased gross margin profitability by 6.1% as compared with the prior year.

With the increase in revenues, we have increased marketing spend, personnel costs, and professional fees.

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, 2023 as compared to

November 30, 2024 as compared to a loss from operations of

$7.8 million for the fiscal year ended

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Year ended November 30, 2024, as compared to year ended November 30, 2023:

Revenues were $42.6 million for the year ended November 30, 2023 which represents a decrease of $5.4 million or 11.2% compared to the prior year period revenues of $48.0 million.

The 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.

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.

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.

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.

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.

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, 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.

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 $2.8 million decrease is primarily due to the decrease in sales volume.

This $14.0 million increase is primarily due to the increase in sales volume.

Gross profit is calculated as total revenue less cost of goods sold, and gross margin is calculated as gross profit divided by total revenue.

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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.

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.

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.

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 $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.

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.

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.

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.

This $14.7 million increase is primarily due to an increase in marketing expenditures, personnel costs, and variable selling expenses.

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.

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.

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.

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.

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.

The increase in interest income is primarily due to higher interest rates on the Company's cash and cash equivalents and marketable securities.

The 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 is 51%.

The Company's share of the joint venture’s loss for the fiscal year ended November 30, 2023 is $0.6 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.

Income Tax Provision

Since the inception of the Byrna LATAM joint venture in January 2023, the Company's proportionate share of Byrna LATAM's losses were 51%.

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.

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.

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.

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 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 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.

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.

We are subject to income tax in the U.S., as well as various state and international jurisdictions.

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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 adjusted EBITDA.

Management uses these non-GAAP financial measures, 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.

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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;

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;

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For the Year Ended

Net income (loss)

Interest income, net

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Stock-based compensation

Severance/separation expense

Severance/Recruitment costs

NON-GAAP adjusted EBITDA

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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.

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.

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.

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.

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.

Significant changes in noncash and working capital activity are as follows:

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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;

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.

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.

The decrease in inventory was a planned measure to return inventory stock to adequate levels to meet demand needs.

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.

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.

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.

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.

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.

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.

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, 2023, $3.0 million was used for investing activities, including a $1.6 million loan to Byrna LATAM, $0.5 million investment in the joint venture, and $0.9 million to purchase property and equipment.

In 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.

During the fiscal year ended November 30, 2024, $11.2 million was used for investing activities.

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.

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.

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.

MATERIAL CASH REQUIREMENTS FROM CONTRACTUAL OBLIGATIONS

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See Note 17, “Leases”, in the Notes to Consolidated Financial Statements included in Item 8 of this Report for further discussion.

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.

OFF-BALANCE SHEET ARRANGEMENTS

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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 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.

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.

Inventories, which are principally comprised of raw materials and finished goods, are stated at the lower of cost or net realizable value.

Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method.

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The Company reviews inventories for obsolete items to determine adjustments that it estimates will be needed to record inventory at lower of cost or net realizable value.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

The Company records uncertain tax positions on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

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As of November 30, 2024 and 2023, the Company has not recorded any uncertain tax positions in our consolidated financial statements.

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.

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.

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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 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.

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.

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.

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.

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.

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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 Company performs its review for impairment during the fourth quarter of each year.

The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component.

The Company’s operations constitute a single reporting unit and goodwill is assessed for impairment at the Company as a whole.

At August 31, 2023, the Company determined that there was no impairment of goodwill.

At November 30, 2024, the Company determined that there was no impairment of goodwill.

Stock-Based Compensation

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The measurement date for non-employee awards is the date of grant and stock-based compensation costs for non-employees are recognized as expense over the vesting period on a straight-line basis.

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.

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity