Byrna Technologies, Inc.

Greetings and welcome to the Berna Technologies Fiscal Second Quarter 2021 Earnings Conference Call and Webcast. As a reminder, this conference call is being recorded and all participants are in a listen-only mode. Before turning the call over to Brian Ganz, Berna Technologies Chief Executive Officer, I will read the Safe Harbor Statement. Some discussions made today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Berna's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligations to update forward-looking statements as a result of new information, future events, or otherwise. As this call will include references to non-GAAP results, please see the press release in the investor section of our website, ir.berna.com, for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. I'll now turn the call over to Mr. Brian Gans. Sir, please go ahead.

Thank you very much. Good morning, everyone, and welcome to Berna's second quarterly earnings call for fiscal 2021. The second quarter was a very busy time at Berna, marked by several important milestones. First, we reported record revenues of $13.4 million. Second, we had record production revenues producing a total of 28,000 Burna HD launchers in our Fort Wayne and South African production facilities. Third, this was our first quarter of positive net income on a GAAP basis. We reported GAAP net income of approximately $2 million. Our CFO, David North, will discuss our financial performance in more detail in a few minutes. We reported our third consecutive quarter of non-GAAP adjusted net income of approximately $3 million, up from $421,000 in Q1 and $221,000 in Q4 of last year. In addition to these financial milestones, there were a number of strategic milestones. In May, we completed a strategic acquisition of the assets of Mission Less Lethal, one of the leading US manufacturers of 68-caliber shoulder-fired non-lethal launchers for law enforcement and other security professionals. This acquisition broadens our product offering, opens new markets, and creates cross-selling opportunities. As part of the acquisition, we acquired in perpetuity the exclusive right for use in the non-lethal market of all IP underpinning the assets acquired. This IP, coupled with Burna's existing IP portfolio, creates a meaningful barrier to anyone looking to enter our market segment. On the capital markets front, there were two events of note. In early May, our common stock began trading on the NASDAQ capital market. We expect the NASDAQ listing will help elevate Burna's public profile. It will enable us to expand our shareholder base and, as a result, improve trading liquidity. On Monday, Berna was added to the Russell 3000 and Russell 2000 indices as part of the annual Russell reconstitution. This quarter's accomplishments are the result of extremely hard work and total commitment, unrivaled effort by the entire Berna team, from our factory workers and distribution personnel, our customer service representatives, our R&D team, supply chain professionals, and senior management, All of whom, I will tell you, have made personal sacrifices for the betterment of Berna because they believe in our mission. I would like also to thank the more than 120,000 members of Berna Nation for their enthusiastic support. And finally, I want to thank our loyal investors for their belief in Berna and everything that we do to save lives on a daily basis. Now I'm going to hand the call over to David to discuss our second quarter financial performance. Then I'll come back to discuss some of our new initiatives and recent developments in more detail and to take questions.

Thanks, Brian, and thanks, everyone, for joining us. Now I'd like to review the financial results for the fiscal second quarter ended May 31, 2021, provide an update on the company's liquidity position, and discuss the company's full year 2021 outlook. Revenues for the second quarter 2021 were $13.4 million compared to $1.2 million in the second quarter of 2020. The year-over-year increase was driven by increased demand for our Berna HD personal security device, enhanced market awareness of our brand, and improved production volume following the opening of our manufacturing facility in Fort Wayne, Indiana in October 2020. As for gross profit, second quarter gross profit rose to $7.6 million representing a 56.4% gross profit margin in comparison to the $516,000 gross profit and 43.4% gross profit margin that we reported in the prior year period. The increase in gross profit dollars and margin were driven by the higher sales and production volumes referenced earlier. Gross margin is expected to moderate in the third quarter as we will begin to fulfill more dealer orders, which are lower margin than our e-commerce orders. That being said, we expect gross margin to benefit in the fourth quarter and beyond from introduction of new higher margin products such as the Berna SD, Berna LE, and shoulder-fired launchers acquired in the mission acquisition. Operating expenses for the second quarter were $5.5 million, or roughly 41% of revenues, compared to $1.4 million, or 115% in the prior year period. Year-over-year increase was driven largely by investments in corporate infrastructure necessary to support Berna's growth in sales and production. This includes expanding our management team and administrative staff, and the incremental operational expenses necessary to effectively manage our growth as a public company. Net income for the second quarter of 2021 was $2.0 million, compared with the net loss of $8.1 million in the second quarter of 2020. This represents our first quarter of positive net income on a GAAP basis. Adjusted for approximately $0.9 million of non-recurring costs, non-GAAP net income was approximately $3.0 million, compared with a loss of $0.8 million for the comparable period in the prior year. Non-GAAP-adjusted EBITDA was $3.3 million, compared with a loss of $0.7 million for the first quarter of fiscal 2020. Taking a look at the balance sheet, as of May 31, 2021, we had approximately $4.4 million of available cash and a further $0.9 million of restricted cash from orders that had been placed but not yet fulfilled. We ended the quarter with $1.5 million of current debt and no long-term debt on our balance sheet. We believe that our current liquidity provides us with ample flexibility to execute on our strategic plan, quickly ramp up marketing campaigns, and continue to invest in the research and development of new products. We have continued to balance drawing down cash with stockpiling inventory. We currently have approximately 10,000 finished units in stock and enough raw materials in componentry on hand to build another 10,000 launchers. With our plan of opening an Amazon e-commerce store this summer and our desire to be able to handle a surge in sales, we believe that this has been a prudent approach, particularly considering fulfillment issues we faced in mid-2020 prior to the opening of the Fort Wayne facility. For the full fiscal year of 2021, ending November 30th, we are adjusting our revenue guidance. We now believe that for the full year, we'll generate revenue of approximately $38 to $41 million. Now I'll turn the call back over to Brian, who will discuss some of our new product and sales channel development initiatives.

Thanks, David. Last quarter, we introduced two new products, the Burna Boost and the Burna HDXL, and started taking pre-orders. I have to say we are extremely encouraged by the market response with sales of both the Boost and the Burna XL exceeding expectations. We started shipping both of these products earlier this month. Innovation and new product development have always been at the heart of everything we do here at Burna Technologies. These new products are critical not only to driving sales growth, but to maintaining our position as a technology leader in the less lethal space. I want to take this opportunity to share with you some of the new products we have in the development pipeline. First is the Burna SD. We expect to begin offering the Burna SD in early August. The Burna SD boasts an improved trigger, an enhanced sighting system, and honeycomb grips. And while the Burna SD is essentially an updated version of our current Burna HD, The improvements, when taken together, result in a product that is even more reliable and even easier to operate than our current extremely popular Burna HD. The Burna SD, which is now in production in our Fort Wayne, Indiana manufacturing facility, will be produced exclusively in the U.S. for the U.S. market. The next product release will be the Burna LE or law enforcement version of the Burna HD. This features a completely new valve system, resulting in significantly increased muzzle velocity. It also boasts an improved sighting system, a 7 plus 1 magazine, and extreme cold weather capabilities. We expect to release the Berna LE in Q4 of this year. While the Berna LE will be rolled out first to our law enforcement customers, we will make this product available to consumers as soon as we have built up adequate inventories to support demands. Like the Berna SD, the Berna LE will be produced exclusively in the United States for the U.S. market. We've acquired a lot of technology from mission, from the core with the mission acquisition. Two of the launchers that will be released shortly are the Berna TCR or Tactical Compact Rifle. I teased this launcher a few months ago when we were working on the mission acquisition, and the response was, frankly, overwhelming. Targeted for release in late 2021 or early 2022, the TCR will be an easy-to-use semi-automatic launcher that can fire 19 rounds in rapid succession at more than 325 feet per second. Most importantly, the TCR, unlike all other shoulder-fired launchers, will use a readily available 12-gram CO2 cartridge for propulsion. This will eliminate the need for users to refill compressed air tanks, a process that can be difficult and, frankly, dangerous. The Berna M4. The Berna M4, which is also targeted for introduction in early 2022, will have 120-shot capacity in its law enforcement form. and will be able to use either CO2 cartridges or compressed air for propulsion. In the civilian form, the M4 will come with two 20-round magazines and use CO2 cartridges exclusively for propulsion. Just as a note, we do not plan to offer compressed air-fired versions of our launchers for civilian use due to the risks associated with the use of compressed air tank systems and the difficulty of refilling these compressed air tanks. In addition to the products outlined above, which fire our traditional round ball projectiles, we plan to introduce two new launchers over the next year that are designed to utilize our patented fin tail projectiles. These fin tail rounds, which are designed to spin, stabilize, and flight, are significantly more accurate, carry greater payloads, travel at higher speeds over longer distances than our traditional round ball projectiles. The first launcher we plan to release that uses the fin tail projectile is the pump action launcher or PAL. The PAL operates very much like a pump action shotgun. It is being designed to offer law enforcement the ability to disarm a threat at distances of up to 150 feet without the need to resort to lethal force. Berna recently demonstrated the capabilities of this launcher in Los Angeles County, where representatives of several police departments and sheriff's agencies were able to test fire a prototype PAL. The response was overwhelmingly positive, and we believe that there is a large market for this type of non-lethal weapon. The Berna PE, which will be designed on the same platform as the Berna CP, will fire .49 caliber fin tail projectiles. Both the Burna PE and Burna CP will be designed to provide civilians and security professionals with an easy-to-carry, truly compact handheld launcher. In the case of the Burna PE, users will be able to fire up to 10 highly accurate payload fin tail rounds from a single magazine. In addition to the new launchers, Burna has been working around the clock on the development of new ammunition. I mentioned in the last call our eco-kinetic rounds. For decades, consumers and law enforcement professionals have been leaving millions of pieces of plastic strewn across the American landscape. As part of our ESG commitment, Burna has developed the first truly water-soluble 68-caliber round. Made in the same type of pill press equipment that is used to produce Advil tablets, for The ecokinetic is a completely water-soluble round that will naturally degrade within days of being left outside in the elements. Because these rounds are produced in high-volume pill press machines, Berna can produce millions of rounds a month, which we can sell at prices well below both our current Berna inert and Berna kinetic rounds. We believe that the ecokinetic round will become Berna's biggest seller, largely displacing both the kinetic and inert rounds. The ecokinetic, which pulverizes when it strikes something hard, is ideal for target practice as it leaves a report, like the inert round, but does not ricochet like the kinetic round. More importantly, however, unlike either round, it does not leave any trace remnants in the environment. Once this round is released in July, Burna will feature it prominently as part of our new recreational marketing campaign. Our goal will be to emphasize the family fund side of practicing shooting skills with your burner. Our goals are twofold. First, of course, we want to sell more rounds and more CO2. But perhaps more importantly, we want owners of the burner personal security devices to become proficient with their launchers so that in the event they need to deploy it in a real-world self-defense situation, they are prepared. Payload rounds. One of the risk factors that we've identified in the past is the fact that we have been reliant on a sole source supplier for our payload rounds. To diversify this risk and augment our total production of payload rounds, Berna initiated a project last year to develop the in-house capability to produce payload rounds. I am pleased to report that we produced the first rounds this past month using a manually operated filling and welding system. Our objective was to perfect the process. The results have been encouraging. The new rounds are not only more consistent and of higher quality, but they actually fly faster than the current rounds due to the more exacting tolerances to which they are built. We have ordered the automation equipment and expect to be in production by the end of the current quarter. As our own capacity comes online, we intend to continue to work with our existing suppliers as we believe that we will need both sources of supply in order to keep up with the anticipated growth and demands. The 12-gauge fin tail projectile. Once the pump action launcher and the 68-caliber fin tail projectile are released into serial production, we intend to complete the development of the 12-gauge 68-caliber fin tail round. This round will carry the exact same payload as the 68-caliber fin tail rounds used with the PAL system. but it will be designed to be fired from the more than 100 million 12-gauge shotguns that are in existence around the world. This will allow owners of a 12-gauge shotgun to be able to fire our patented 68-caliber fin-tailed projectile without the need to purchase a $1,000 pump-action launcher. Now I'd like to turn to new markets and new sales channels. We currently sell the Burna HD launchers and ammo accessories directly to consumers via our e-commerce website. Until now, this has represented a lion's share of our sales. With our expanded production capabilities, however, we are now prepared to seriously pursue other markets and other sales channels. As David mentioned, we plan to launch an Amazon digital storefront later this quarter. We have been approved by Amazon and and we are currently building inventory to support our Amazon launch. Well, we don't know what our sales will be through Amazon. Looking at other e-commerce retailers, the split is generally 50-50 between a company's own website and its Amazon store. Needless to say, as we get some historical data, we'll be able to give much better projections as to what we think the Amazon sales channel will yield. We're going to launch the Amazon store with our new Burna SD. This will be an Amazon exclusive until we can build sufficient inventory to introduce it on the Burna website. We will also sell the Burna SD as what we call a bundle package. It will include not only the Burna SD ready kit, but also a 50-count kinetic and later ecokinetic projectiles and a five-count CO2. Since this package will be exclusive to Amazon, it will be difficult to directly compare the pricing on Amazon with the pricing offered on the Berner website. We're also expanding our use of brick-and-mortar dealers. Until very recently, we have limited our shipments to dealers as we work through the consumer backlog. Now, with production ramped up and the backlog more or less behind us, we are increasing our allocation to dealers. Working with large chain stores such as Buy Mart, Cal Ranch, Big R, and Murdoch's, and distributors including Davidson's, Lipsy's, Big Rock Sports, and Sports South, Berna has built a distribution network of approximately 1,500 brick-and-mortar locations spread across the United States. This includes locations that have already purchased Bernas and locations that have signed up to be Berna dealers. The company expects to fulfill initial stocking orders for all of these dealers during the current quarter. Finally, the market for security professionals. With the civil unrest and rising crime rates that are gripping the country, there is an increasing public demand to reform policing. Not by defunding the police, but by giving them the tools and the training needed to de-escalate dangerous situations without the need to resort to lethal force. At Burna, our mission is not only to save lives, but also to preserve the careers of the brave law enforcement professionals that protect all of us by giving them a non-lethal option. To respond to this need, we recently formed a team dedicated to law enforcement and private security. Based in Houston, this division is focused on bringing the Burna suite of non-lethal products to these security professionals. With the acquisition of the mission products, Berna now has the full range of products necessary to support these law enforcement and private security customers. On June 12th, Berna conducted an onboarding and training session for the security forces at Sony Picture Studios in Los Angeles. Sony has decided to equip its private security professionals who are responsible for maintaining the safety of the 53-acre studio in Los Angeles and other shooting locations exclusively with Burna devices. After testing a number of less lethal solutions, Sony selected the Burna HD+, due to its 60-foot effective range, its ease of operation, and ability to fire multiple rounds. We provided a full-day training program, including classroom training and the safe and effective use of our launchers, and practical training in a variety of real-world scenarios. In addition to Sony security officers, the event was attended by representatives of several other large Hollywood studios, three local police departments, and two private security agencies. You can go to our website to see a video of the training day at Sony Motion Picture Studios. In conclusion, I just want to say that I'm extremely proud of the progress that we've made so far in the first half of 2021. And with everything that we're working on, we believe that we're well positioned for continued growth in 2021 and beyond. Now, I'd like to turn it back to the operator, and we'll be happy to take your questions.

Thank you. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Brian Jaswal with Raymond James. Please proceed with your question.

Yeah, good morning. Congrats on the strong quarter. Just a couple of questions. First, Brian, you've got an awful lot of new products out there. Do you have any sense for how you might think the skew distribution works between the various products as we start to think about what the mix looks like in 2022 and 2023. And then I have a couple of follow-ups.

Okay. But thank you very much, Brian. That's a great question. It's something, frankly, we've been grappling with. We do believe that the Berna SD is going to displace the Berna HD over time. We will continue to offer both the HD and SD for some period of time because there'll be a $40 difference in MSRP. But ultimately, we plan to phase out the Berna HD and replace it with the SD. We think that the LE, which will sell for $100 more than the Berna SD, is going to augment our law enforcement penetration. And we think that this will be primarily a law enforcement version of the Berna. And we don't believe it's going to take away much in sales from the Berna SD. The shoulder-fired launchers, the Verna M4, the TCR, ultimately the pump-action launcher, we don't expect these to sell in the same numbers that we're selling the handheld devices because they're much more expensive launchers and designed, frankly, largely for the professional market. but we do think that there'll be a good market for all of these. I don't think we're gonna sell hundreds of thousands of these like we expect to do with the handheld devices, but I do expect that we will sell tens of thousands of these launchers. So we believe that this suite of product gives us the ability to meet for the security professionals all of the various missions that they have to undertake and also to supply our consumers with a broad range of products. If you look at, for example, Remington or Ruger or Glock, they have a wide range of products, you know, all of which sell well. We expect the same thing to be true at Burna.

Great. That's very helpful. I'm wondering also, too, then, if you could kind of think about where the sales come from, and you can go out a couple of years again, is, as the channel strategy matures and evolves with Amazon and others potentially, how might we think the direct-to-channel kind of shapes out, or what's your ideal target? And, again, you can take us out a few years.

You know, we've been obviously asking ourselves that very same question. I'll be frank with you. I have no idea what our sales on Amazon are going to be. I don't know if it's going to be three a day, 30 a day, or 300 a day. But if we look at, let's just say Yeti as an example. This is a well-known brand name. They do about 40% of their business on e-commerce, and about two-thirds of that is through their own website and a third through Amazon, and 60% of their business is done through dealer sales. Although I don't expect us to achieve those metrics in the short term, I think over the longer term, That probably is going to be not too dissimilar from where we end up, particularly where we already have 1,500 brick-and-mortar stores. I think that everybody can recognize the ability to go into the store and physically hold the product makes the purchasing experience that much better. So we think that the brick-and-mortar stores are going to be an important part of our distribution channel. So we think there's going to be a place for Amazon for our own direct DTC, and for the very important brick-and-mortar dealer base.

Great. And then final one for me, and then I'll jump back in the queue. We're pretty excited about the opportunity for ammunition really to grow as the installed base grows, and then certainly with the eco rounds that you've got coming from a new product standpoint. Can you tell us maybe any really early indications of how the installed base is starting to drive ammunition revenue?

We've had such rapid growth of new product sales that we've never gotten to the point where we have a good handle on what the reorders are going to be for the installed base. That said, we can look to a couple of other comps for some guidance. So we purchased the assets of Mission Less Lethal earlier this year. Last year, 55% of their sales came from ammunition and 45% came from launchers. Although Pepperball is a private company, our understanding is they have a very similar mix of 50% from ammunition and 50% from launchers. I think when our growth starts to flatten out, and we hope that doesn't happen for many, many years, But at that point, I think that we'll see something similar. And if you look to the gun industry for guidance, the average gun owner owns three and a half weapons. They usually, over the first 18 months of ownership, will spend as much on ammo and accessories as the initial purchase price of the weapon. And then if they started off with a 9mm, they may buy a .45 or they may buy a revolver. This is also one of the reasons we want to have multiple options. We think that people that have a Burna HD, when we come out with the LE, when we come out with the PE, will also purchase these weapons and go through sort of a re-engagement with the Burna, which will help drive ammo sales. So that was kind of a convoluted answer, but I think in the long term, we expect ammo to be about 50% of our revenues.

Great. That's very helpful. Thanks a lot. I'll jump back into the queue. Thank you, Brian.

Thank you. Our next question comes from John Hickman with Ladenburg Salmon. Please proceed with your question.

Hi. Congratulations from me too, Brian. That was well above my expectations as far as revenues go. Could you talk about with all the growth in new products, etc., could you talk about your expense, your operating expenses? Like, do you have the team in place now that you need? And what can we expect from like OPEX growth going forward?

You know, John, I'm going to turn this over to David North to answer this question.

Yeah, that is a good question. I think, um, the, uh, the last earnings quarterly call, we said that, um, that operating expenses should remain flat. And I think we were asked, do we mean the percentage or dollars? And we kind of said, yeah. Where we are, I think, is that this company has, over the past 18 months, very successfully left a stair riser in corporate growth. We've gone from being a very small company to one with structure, manufacturing facilities and so on. And that has meant building an administrative structure as well with those operating costs. So we've seen a very quick rise in operating expenses as we built that corporate structure. But the structure is in place now. We have the team in place. And so we expect to see that number leveling off. not perfectly, not in dollar terms or in percentage terms, but not growing as fast as it was before. A part of that number is variable, such as freight out to customers or credit card transaction processing fees, and that will grow with the sales line. And a part of it is more fixed in terms of our headcount and payroll costs, which is a major part of our cost structure. And that should be continuing to grow with the company, but as I say, much more slowly. So there isn't an exact answer to your question, but hopefully that gives you some guidance.

Okay. Just quickly, as far as your what do you call it, production capabilities or production line, are there any components that you can't, that you're having a hard time sourcing? And are you still able to, is there still room in your supply chain and production line to eke out some efficiencies there and increase the gross margin?

The answer to that question is, Yes, we really haven't spent a significant amount of time on trying to eke out cost savings and efficiencies in the supply chain because, as I'm sure most people on this call know, there's been a significant disruption to supply chains across the world over the last 18 months. That said, as things are starting to get back to normal, we think that there are significant opportunities to get savings There's significant opportunities in freight alone. Freight costs have been extraordinarily high, unusually high during the pandemic. Now that things are starting to settle down, that airlines are flying again, we're seeing opportunities to reduce freight costs already. In addition, because of the rapid growth, we were putting a lot of pressure on our suppliers to meet increasingly large orders. we think now with this expanded supplier base we'll be able to go back to them and start to negotiate better pricing currently we're running only one shift a day in south africa and in fort wayne and to be honest with you we're not even at full capacity on that one shift so in terms of our own manufacturing capacity we have significant opportunity to expand You know, I don't want to suggest that we can go to a 24-7 four-shift operation, but we could easily go to a two or two and a half shift operation, which would take our production capacity from the sort of 1,000 units a day that we're capable of doing today up to 2,000 or 2,500 units a day. So from our own standpoint, from our own perspective, our own manufacturing capabilities, we have significant upside potential. And I will say we're working with some really outstanding suppliers, increasingly more and more suppliers here in the U.S. And I don't see at this point, and I wish I had some wood to knock on, but I don't see any issues with any current supply.

Okay. Just one last question. I'm intrigued with the ammunition, the new product where you make this, you know, the Burna – projectile available for shotgun owners. How are you going to get the word out to the millions of shotgun owners that this capability exists? What kind of marketing? Can you talk about that for a minute?

Yeah, again, I think it's a little premature before we have the round to discuss the marketing. But clearly, as we've thought about how to go to market with this, we are going to need to partner with one or more ammunition manufacturers because we will not produce the shotgun casing. We are not going to get into that business. There's a lot of manufacturers that do that today, both the large players like Winchester and Federal and Hornady, and to be honest with you, a slew of smaller specialty manufacturers. We are going to provide the 68 caliber fin tail projectile and the wad necessary for them to put it into a shell that they produce. This development will have to be a co-development project because, of course, the speed at which it flies is going to be critical. But we would anticipate that this would be sold under the Berna brand on our own website and likely on Amazon, but would also be sold under the brand of these large manufacturers that have distribution in, you know, 190 countries around the world, because otherwise we wouldn't be able to get to all of the various shotgun owners, you know, scattered across the globe.

So we could look forward to some kind of announcement about a partnership sometime in the future. Correct. Okay. Thanks. That's it for me. And, again, nice quarter.

Thank you, John.

Thank you. Our final question comes from Jeff Vance and Darren with B Riley and company. Please proceed with your question.

Good morning everyone. And let me add my congratulations. Putting aside the shotgun projectiles, just wanted to follow up on overall marketing and advertising plans as you launch other new products. And I guess anything you're doing in that vein around the Amazon launch.

We are working every single day on figuring out how to get the word out. You know, you've heard me say this before, that I don't know whether the market is 1%, 5%, or 10% of homeowners, but it's only 1%, 5%, or 10% of those homeowners we can get in front of. So the issue is how do we get in front of more people? I think we've been very, very lucky you know, that we've had some help from, you know, people like Sean Hannity. But we are also getting more and more smaller influencers that are promoting the burnout. So we're initiating an influencer campaign. We've recently reached an agreement with a couple of different marketing companies that will provide us with 50 smaller influencers that Again, I don't think that we're in a position where we're going to find other Sean Hannity's to promote the product. But clearly, if we can get 50 smaller influencers, that can do the same thing. We're also doing more and more on Facebook and Google. One of the issues that we've had on Facebook and Google is the difficulty with our product. Because it is considered a weapon, we have to be very careful about the ads. That said, we are starting to introduce non-weapon products. One of the things I didn't talk about, but we will be introducing in four weeks, is a high decibel key fob called the Burna Banshee. This is something that we will retail for $25 on our website. We think it will be an ideal back-to-school product for college students. If you yank it, you can put it on your keychain, you can put it on your purse or your belt, and if you yank it loose, it emits a flashing light and 130 decibel siren, personal alarm. We think that these types of products will allow us to advertise more broadly than we can today. So we think that if we can get influencers to help with the promotion of the burner and also use other non-weapon products to get more time on Facebook and Google, it's we'll be able to get in front of a broader audience.

Okay, great. And then just turning to mission for a moment, any more color you can give us on the integration of the mission acquisition? And then any, I guess, can you speak more about sort of the product development or product evolution of some of the legacy mission products and the benefits of having their IPs? Okay.

It's important to understand that the mission acquisition was really an acquisition of a product suite and of IP. Mission last year did $2.6 million in sales. A lot of that was ammo driven by the civil unrest. So they never really had a significant presence in the market. But what they had was the IP from the parent company, which was Tippmann Arms, or Tippmann, rather, and GI Sports, which was reconstituted out of bankruptcy under CORE. So what Berna acquired was the exclusive right to all of this IP for the less lethal market. What that did for us is it created somewhat of a barrier to entry or a moat around this 68-caliber CO2-fired launcher business. because things like the ability to puncture the CO2 cartridge with a pull of the trigger, there are only two patents in the world that cover that. One belongs to us. The other belongs to Tippmann or Core. We now control both patents for the less lethal market, which means that our competitors, like Pepperball, can only pierce the CO2 cartridge by having to screw it in, which makes it not a point-and-shoot weapon. So the real... drive behind this was to sort of pull up the drawbridge behind us. We also got access to some really nice products. That said, we are in the process of what we're calling burnerizing these products. So we think that we can take the Mission 4 and turn it into the Burna M4. We can take the Mission TCR and turn it into the Burna TCR with some minor tweaks utilizing both the IP that we acquired from Mission and the very substantial IP portfolio that Burna has created on its own. So what we didn't want to do was simply go directly to market with these products as they are. We don't want to take any risk of damaging the Burna brand. We think the Burna brand represents quality. And this is why we're not simply selling Mission products today. We're going through the process of burnerizing these products, of putting them into our own quality control system to make sure that we can be proud of what we produce and sell.

Yeah, and I'd say in just a short answer to your question about integration, we see this as an acquisition of assets, not a combination of businesses.

Yeah, in fact, there was only one employee that came over with the acquisition.

Okay, great to hear. Thanks for taking my questions, and best of luck in the next quarter. Thanks, Jeff.

Ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call over to management for closing remarks.

Thank you very much. Again, I want to thank everybody for their support. This has been a very exciting couple of years for us at Berna, and it's – It's gratifying to see things play out as we had planned. We look forward to keeping everybody up to date on our progress going forward. Thank you so much.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.