| FINANCIAL INSTRUMENTS [Text Block] |
| 19. |
FINANCIAL INSTRUMENTS |
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The Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them. |
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Currency Risk |
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The Company held its cash balances within banks in Canada in both US dollars and Canadian dollars, with banks in the US in US dollars, and with banks in South Africa in US dollars and South African rand. The Company's operations are conducted in the US, Canada and South Africa. The value of the Canadian dollar and South African rand against the US dollar may fluctuate with the changes in economic conditions. |
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During the year ended November 30, 2019, in comparison to the prior year, the US dollar strengthened in relation to both the Canadian dollar and South African rand, and upon the translation of the Company’s subsidiaries' revenues, expenses, assets and liabilities held in Canadian dollars and South African rand, respectively, the Company recorded a translation adjustment loss of $4,115, which primarily related to the CAD (2018- a loss of $1,673), in other comprehensive loss. The convertible debentures issued by the Company in Canadian currency reflected a currency gain of $17,297 and $46,093 for the years ended November 30, 2019 and 2018, respectively.
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The Company's Canadian and South African subsidiary revenues, cost of goods sold, operating costs and capital expenditures are denominated in Canadian dollars and South African rand, respectively. Consequently, fluctuations in the US dollar exchange rate against the Canadian dollar and South African rand increases the volatility of sales, cost of goods sold and operating costs and overall net earnings when translated into US dollars. The Company is not using any forward and option contracts to fix the foreign exchange rates. Using a 10% fluctuation in the US exchange rate, the impact on the loss and stockholders’ deficit is not material. |
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Credit Risk |
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Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The financial instruments that potentially subject the Company to credit risk consist of cash and accounts receivable. The Company maintains cash with high credit quality financial institutions located in the US, Canada and South Africa. The Company maintains cash and cash equivalent balances with financial institutions in the United States in excess of amounts insured by the Federal Deposit Insurance Corporation. |
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The Company provides credit to its customers in the normal course of its operations. It carries out, on a continuing basis, credit checks on its customers. |
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Revenue Concentration |
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For the year ended November 30, 2019, two customers represented approximately 37% of total revenues as approximately 41% of the Company's 2019 revenues were generated through its directs sales to consumers on its e-commerce platform. (2018 - 65% from two customers). |
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The accounts receivable from two customers represent approximately 77% of accounts receivable as of November 30, 2019 (2018 - 88% from three customers). |
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The Company’s customers are in North America and South Africa. |
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iv) |
Vendor Concentration |
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During 2019, the Company purchased 100% of its BIP inventory from one supplier and Roboro is its exclusive manufacturer/assembler in South Africa of the Byrna® HD and magazines. The Company’s operations rely significantly on these two suppliers. The Company is Roboro’s primary customer. Notwithstanding, the Company can source alternative suppliers.
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