Byrna Technologies, Inc.

Greetings and welcome to the Berna Technologies Fiscal Year-End 2021 Earnings Conference Call and Webcast. As a reminder, this conference call is being recorded and all participants are on a listen-only mode. Before turning the call over to Brian Gans, 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 will now turn the call over to Mr. Brian Gantz. Thank you, sir. Please go ahead.

Thank you very much. Good morning, everyone. Thank you for joining us for Berna's 2021 fourth quarter and full year earnings call. David North and I will be discussing our Q4 and full year 2021 results. And I will also be taking this opportunity to update everyone on our progress to date this quarter. During 2021, Berna achieved a number of significant milestones. We beat our quarterly and yearly guidance for fiscal year 2021, posting Q4 sales of 11.2 million and full year 2021 sales of 42.2 million. While this was only slightly higher than the same period last year, up just 1.2%, Orders received during the quarter increased by 57.4% to $12 million, up from 7.6 million in fiscal year 2020, as the Q4 2020 results included fulfillment of 3.4 million of orders received in prior quarters. This order flow was driven by increased brand awareness, as evidenced by the almost 2 million web sessions on burner.com during the fourth quarter. up from 1.6 million web sessions in Q3 and just 800,000 web sessions in Q4 2020. For the year, Burna.com had 6.15 million total web visitors, resulting in 88,400 orders, totaling 29.5 million in e-commerce orders. E-commerce sales for the year were 31.7 million, as Burna came into the year with several million dollars of backlog. Berna started selling on Amazon.com late in Q3, and for the year, 187,000 people visited our store on Amazon, resulting in 3,600 orders and $875,000 in sales. In 2021, dealer sales totaled 5.5 million as Berna kicked off its dealer program in earnest. We also started selling to law enforcement in fiscal year 2021, training over 200 agencies and booking over $550,000 in sales. On the new product development front, Burna commenced in-house production of our payload ammunition, including Burna Pepper, Burna Max, and Burna Pro Training. This is a critical milestone as this move significantly reduces the risk of supply chain disruption and ensures the quality of the Burna product. I also have to say it was a major technical accomplishment And without doubt, Berna now produces the finest chemical irritant projectiles on the planet. In conjunction with the development of the eco-kinetic round in Q3 of last year, the only truly environmentally friendly round in the market, Berna has established itself as the premier innovator in this space. Now, I'd like to hand the call over to David to discuss our fourth quarter and full year financial performance. And then I'll come back on to discuss recent developments in more detail and to take questions.

David? Thanks, Brian. And thanks, everyone, for joining us today. Now I'd like to review the financial results for the fiscal fourth quarter and for the full year ended November 30th, 2021. Revenues for the fourth quarter of 2021 were $11.2 million, a slight increase compared to the $11.0 million in last year's fourth quarter. However, as Brian mentioned, orders received during the quarter increased substantially, up 57.4% to $12.0 million this quarter from $7.6 million in the fourth quarter of 2020, when sales included the fulfillment of $3.4 million of back orders received in prior quarters. Gross profit increased by 16.4% to $5.7 million from $4.9 million in last year's fourth quarter. Gross margin improved to 1%. 51.1% from 44.4% in last year's fourth quarter. However, while there was significant year-on-year improvement, this was lower than in the previous two quarters when gross margin was over 56%. The cost of sales was negatively impacted by significant increases in international shipping costs, which reduced gross margin nearly 2%. Year-end holiday promotions and liquidation of Burna HD inventory reduced fourth quarter gross margin further each by approximately 2%. Operating expenses rose to $8.8 million in the fourth quarter of 2021, from $6.2 million in the fourth quarter of 2020, and from $6.7 million in the third quarter of this year. Part of the increase over the third quarter, about a quarter million dollars, was due to variable costs on higher sales volume. However, the main drivers of the increase in operating expenses this quarter were twofold. First, we incurred $1.3 million in one-time severance expenses, about $700,000 of that being non-cash stock compensation, to eliminate highly compensated positions. Second, as part of a strategic campaign to promote growth and brand awareness, advertising spending was increased by just over $1 million. As a combined result of the depressed gross margin with the increase in operating expenses this quarter, net loss for the quarter increased was $3.2 million compared to a net loss of $1.6 million in the same quarter one year earlier. Adjusted for non-cash stock-based compensation costs and one-time severance costs, non-GAAP adjusted net loss was approximately $1.5 million compared with a net loss of $1.1 million in last year's fourth quarter. Non-GAAP adjusted EBITDA was a loss of $1.5 million compared with a loss of $0.7 million in the fourth quarter of fiscal year 2020. For the full year, we've experienced spectacular growth. Revenues increased 154.5% to $42.2 million for the full year 2021 from $16.6 million in 2020. This was driven largely by Berna's continued advertising and marketing efforts designed to introduce the Berna brand to a larger audience. Gross profit rose to $22.9 million, or 54.3% of reported net revenue for the full year of 2021, in line with 53 to 55% guidance, as compared to gross profit of $5.7 million, or 45.3% of net revenue in 2020. The improvement was due to improved operating efficiencies in both of our factories, as well as higher production volumes in Fort Wayne, allowing for improved cost efficiency. Margins also benefited from the introduction of new higher margin products. Nevertheless, increased freight costs caused by the global supply chain crisis had a negative impact on margins, particularly in the fourth quarter of 2021. Operating expenses for the year rose to $26.2 million from $11.8 million in 2020, reflecting the general growth of the company, and its operations, particularly in the area of people costs, where the average headcount approximately doubled from 2020 to 2021. Net loss for 2021 was $3.3 million compared to a net loss of $12.6 million in fiscal year 2020. The net loss in 2020 included a non-operating loss of $6.0 million resulting from extinguishment of debt. Non-GAAP net income for 2021 adjusted for $3.2 million of non-stock and non-cash stock compensation expense, and for $1.3 million of one-time severance expense was $0.9 million compared to non-GAAP adjusted net loss of $3.6 million in the prior year. Non-GAAP adjusted EBITDA, excluding non-cash stock-based compensation and severance costs, was a profit of $1.3 million versus a loss of $2.8 million in 2020. Finally, our balance sheet remains strong with over $56 million of available cash and cash equivalents and no debt. Now I'll turn it back over to Brian.