| REVENUE, DEFERRED REVENUE AND ACCOUNTS RECEIVABLE |
| 4. |
REVENUE, DEFERRED
REVENUE AND ACCOUNTS RECEIVABLE |
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The Company generates
revenue primarily from sales of finished products. Revenue is recognized upon the transfer of control of products to the Company’s
customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those products or
services. |
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Product
Sales
The
Company generates revenue through the wholesale distribution of its products and accessories to dealers/distributors,
large end-users such as security companies and law enforcement agencies, and through an e-commerce portal to consumers.
Revenue is recognized upon transfer of control of goods to the customer, which generally occurs when title to goods is
passed and risk of loss transfers to the customer. Depending on the contract terms, transfer of control is upon shipment
of goods to or upon the customer’s pick-up of the goods. 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. The Company’s returns have been immaterial; and the Company will recognize an estimated reserve, if material
and estimable, based on its analysis of historical experience and an evaluation of current market conditions.
The
Company excludes from revenue taxes collected from customers and remitted to government authorities related to sales of
the Company’s products. Shipping and handling costs that occur after control of goods has been transferred to the
customer and that are not billed to the customer are accounted for as fulfillment costs.
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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 selling, general and administrative (“SG&A”) expenses and are recognized
when the product is shipped to the customer. Shipping and handling costs included in SG&A were $13,582 and $20,123
during the six months ended May 31, 2020 and 2019, respectively. Shipping and handling costs were $2,680 and $5,400 during
the three months ended May 31, 2020 and 2019, respectively. Costs to obtain a contract consist of commissions paid to
employees. Commissions included in SG&A were $10,000 in each of the three and six months ended May 31, 2020. Commissions
were $Nil in each of the three and six months ended May 31, 2019.
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Included as cost
of goods sold are costs associated with the production and procurement of products, such as inbound freight costs, manufacturing
depreciation, purchasing and receiving costs, and inspection costs. |
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Deferred
Revenue
Changes
in deferred revenue, which relate to unfulfilled e-commerce orders for the six months ended May 31, 2020, are summarized
below. The associated performance obligations at May 31, 2020 were satisfied during the third quarter of fiscal 2020.
|
| |
|
Six
Months Ended
May 31, 2020 |
|
| Deferred
revenue balance at beginning of period |
|
$ |
10,842 |
|
| Net
additions to deferred revenue during the period |
|
|
155,066 |
|
| Reductions
in deferred revenue for revenue recognized during the period |
|
|
(17,838 |
) |
| Deferred
revenue balance at end of period |
|
$ |
148,070 |
|
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Accounts
Receivable
The
following table presents the Company’s accounts receivable:
|
| |
|
May
31, 2020 |
|
|
November
30, 2019 |
|
| Accounts
receivable |
|
$ |
282,016 |
|
|
$ |
438,255 |
|
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Revenue
Disaggregation
The
following table presents disaggregation of the Company’s revenue by product type and distribution channel:
|
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|
Three
Months Ended
May 31, |
|
|
Six
Months Ended
May 31, |
|
| Product
type |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| Byrna®
HD |
|
$ |
1,099,961 |
|
|
$ |
29,343 |
|
|
$ |
1,227,327 |
|
|
$ |
29,343 |
|
| 40mm |
|
|
90,443 |
|
|
|
76,426 |
|
|
|
111,657 |
|
|
|
87,533 |
|
| Total |
|
$ |
1,190,404 |
|
|
|
105,769 |
|
|
$ |
1,338,984 |
|
|
$ |
116,876 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three
Months Ended
May 31, |
|
|
Six
Months Ended
May 31, |
|
| Distribution
channel |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| Wholesale (dealer/distributors
and large end-users) |
|
$ |
355,990 |
|
|
$ |
105,769 |
|
|
$ |
290,294 |
|
|
$ |
116,876 |
|
| E-commerce |
|
|
834,414 |
|
|
|
— |
|
|
|
1,048,690 |
|
|
|
— |
|
| Total |
|
$ |
1,190,404 |
|
|
$ |
105,769 |
|
|
$ |
1,338,984 |
|
|
$ |
116,876 |
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|