BYRN 10-K & 10-Q changes, risk factors and insider trading

Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other filings with the SEC before making an investment decision regarding our common stock.

Investing in our common stock involves a high degree of risk. These risks include, but are not limited to, those described below, each of which may be relevant to an investment decision. If any of the following risks or other risks actually occur, our business, financial condition, results of operations, and future prospects could be materially harmed. In that event, the market price of our common stock could decline, and you could lose part or all of your investment. The risks and uncertainties described below are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. TheCertain risksstatements discussedcontained in the risk factors below also includeare forward-looking statements, and our actual results may differ substantiallymaterially from those discussedexpressed inor theseimplied forward-lookingby such statements. See “Cautionary Note Regarding Forward-Looking Statements” above.

We have a limited operating history on which you can evaluate our business. Although our corporate entity has existed since 2005, we have only been manufacturing and selling the Byrna launchers, our largest source of revenue, since April 2019. Moreover, we have introduced several new products during the past few years, including product lines acquired through acquisitions and sourced from third-party manufacturers with whom we had no prior experience. Some of our senior management team are relatively new to their positions. As a result, our business may be subject to many of the problems, expenses, delays, and risks inherent in the rapid growth of a relatively new business and the integration of key personnel and infrastructure.

We have a history of operating losses during prior periodsperiods, and we cannot guarantee that we will be able to sustain profitability.

We have a history of operating losses during prior periods, although we recorded net income for the yearyears ended November 30, 2024.2025, Our net income for the year endedand November 30, 20242024. wasHowever, $12.8we million,have compared to arecorded net losslosses ofduring $8.2prior millionfiscal for the year ended November 30, 2023years. Our accumulated deficit at November 30, 20242025, was $56.8$47.1 million. While we have achieved profitability thisduring year,the two most recently completed fiscal years, there can be no assurance that we will not experience net losses in the future and there can be no assurance of continued profitability.

There can be no assurance that our revenues or revenue growth can be sustained and revenues are not expected to grow at the rates experienced in certain prior years. Revenue growth that we have achieved or may achieve may not be indicative of future operating results. The Byrna line of handheld personal security devices are relatively new products and their long-term adoption by the U.S. consumer market, and by potential other markets including law enforcement, private security, and international markets, remains unknown. We have experienced product development and production delays, as well as unanticipated costs associated with the development and manufacture of new productsproducts, andconstraints on material and component availability and costs,pricing, air freight availability and costs, volatile demand levels related to unexpected publicity and civil unrest, and backlogs and order cancellations due tofrom our inability to timely fulfill orders,orders (and cancellations of orders.orders). Given our limited sales history, number of new products introduced and planned, these types of factors and events may continue to affect the long term success and growth of our business and ability to sustain our revenues or revenue growth. Further, performance failures, new legislation or regulation, competition, or negative publicity could stall or prevent the success of existing and new products in the market and our generation of revenue. In addition, we have increased and may increase further our operating expenses in order to fund increases in our manufacturing, distribution, and sales and marketing efforts and increase our administrative resources in anticipation of future growth. To the extent that increases in such expenses precede or are not followed by timely increases in our revenues, our business, operating results, margins, growth rates, and financial condition may be materially adversely affected.

We have experienced rapid growth in our headcount and operations over the last several years, integration of which will continue to place significant demands on our management and our operational and financial infrastructure. Additional growth in the future could increase that demand. We have a limited history operating our business at its current scale. We may experience difficulties in managing this growth and building the appropriate processes and controls. Continued growth (including our expansion in Ft.Fort Wayne, international expansion, and growth associated with new product introductionintroductions and successful marketing campaigncampaigns) may increase the strain on our resources, and we could experience operating difficulties, including difficulties in sourcing, logistics, recruiting, maintaining internal controls, marketing, designing innovative products, and meeting consumer needs. If we do not adapt to meet these evolving challenges, the strength of our brand may erode, the quality of our products may suffer, we may not be able to deliver products on a timely basis to our customers, and our corporate culture may be harmed.

We must effectively integrate, develop and motivate a large number of new employees in various locations around the country,United in South America,States and in South Africa,internationally, and we must maintain the beneficial aspects of our corporate culture. We intend to continue to make substantial investments in research and development, marketing and sales, our general and administrative organizations, and our international operations. To attract top talent, we have had to offer, and believe we may need to improve and will need to continue to offer, highly competitive compensation packages before we can validate the productivity of those employees. In addition, fluctuations in the price of our common stock can make it more difficult or costly to use equity compensation to motivate, incentivize and retain our employees. We face significant competition for talent from other high-growth companies, which include both publicly traded and privately-held companies. The risks of over-hiring or over-compensating employees and the challenges of integrating a rapidly growing employee base into our corporate culture may increase our expenses. We may not be able to hire new employees quickly enough to meet our needs. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business and operating results could be adversely affected.

Additionally, if we do not effectively manage the growth of our business and operations, the quality of our products and customer service could suffer, which could negatively affect our brand, operating results and overall business. We have made changes in the past, and will make changes in the future, to our features, products and services that our customers or potential customers may not like, find useful or agree with. We may also decide to discontinue certain features, products or services, or charge for certain features, products or services that are currently free or increase fees for any of our features, products or services. If customers or potential customers are unhappy with these changes, they may decrease or end their engagement on our website, or reduce or stop purchasing our products or services. In addition, they may choose to take other types of action against us such as organizing boycotts or protests focused on our company, our products or any of our services, or filing lawsuits against us. Any of these actions could negatively impact our customer growth, engagement and our brand, which would harm our business. To effectively manage this growth, we will need to continue to improve our operational, financial and management controls, and our reporting systems and procedures by, among other things:

Our products are used in activities and situations that inherently involve a risk of personal injury. Our products expose us to potential product liability, warranty liability, and personal injury claims and litigation relating to the use or misuse of our products, including allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product or activities associated with the product, negligence, and strict liability. In addition, our products may be used or alleged to be misused in high-profile incidents involving civilians or law enforcement personnel. Even where such use is lawful or consistent with our product guidelines, these incidents may attract significant media attention, public criticism, or political scrutiny. Such events could lead to calls for increased regulation or bans on our products, loss of consumer or institutional trust, termination of distribution relationships, increased litigation risk, or damage to our brand and reputation, any of which could materially adversely affect our business. If successful, any such claims could have a material adverse effect on our business, operating results, and financial condition. Defects in our products may result in a loss of sales, recall expenses, delay in market acceptance, and damage to our reputation and increased warranty costs, which could have a material adverse effect on our business, operating results, and financial condition. In addition, our reputation may be adversely affected by such claims, whether or not successful, including potential negative publicity about our products.

We maintain general liability insurance that includes product liability coverage in amounts that we believe are reasonable,appropriate for our business, but there is no assurance that we will be able to maintain such insurance on acceptable terms, if at all, in the future and product liability claims may exceed the amount of insurance coverage.

Our direct-to-consumer sales rely to a significant degree on advertising that we place on advertising platforms, including social media platforms. During 2023, certain advertising and social media platforms prohibited or significantly restricted advertising of any Byrna product and imposed significant restrictions on our ability to advertise on certain platforms,products, which restrictions largely remain in place. Any prohibitions or restrictions on advertising imposed by these or other platforms, or any changes in the algorithms used by such platforms, may result in reduced direct-to-consumer sales, reduced traffic to our website and a decreased market presence, which could have a material adverse effect on our business, operating results, and financial conditioncondition. In addition, many of these platforms rely on automated systems, algorithms, or discretionary enforcement practices that may deprioritize, restrict, or remove our content without notice or clear explanation. We often have limited ability to appeal or reverse such decisions. Changes in platform policies, content moderation standards, or algorithms could occur rapidly and without warning, and could disproportionately impact our ability to reach customers, drive traffic to our e-commerce channels, or maintain brand visibility.

In addition, our ability to maintain our competitive position is dependent to a large degree on the efforts and skills of our senior management team, including Bryan Ganz, our President, Chief Executive Officer and member of the Board of Directors, and Lauri Kearnes, our Chief Financial Officer.Officer, and other members of our senior management team. The loss of the services of one or more of our key personnel could materially and adversely affect our operations.

Although we do sell certain other products and we expect to introduce new products, including products being developed and products acquired in connection with acquisitions, our revenue has been derived mainly from the sale of the Byrna SD andSD, its successor, the Byrna LE.LE, and, more recently, the Byrna CL. The sale of such personal security devices is influenced by a variety of economic, social, and political factors, including without limitation the level of confidence of consumers in our products and in the security and reliability of online shopping and e-commerce on which we significantly rely, which may result in volatile sales. Sales of the Byrna SD,SD and Byrna CL, including its ammunition and accessories, representsrepresent most of our revenue. There can be no assurances of continued demand for the Byrna SD,SD and Byrna CL, and any change in the factors that impact demand and sales that are likely to materially and adversely affect our prospects.

Our introductory product is purchased most often as a “kit” including the Byrna SD launcherand CL launchers and samples of our various projectiles. Unavailability of projectiles could delay shipment of kits and materially and adversely affect our operations. Moreover, our “razor/razor blade model” which anticipates future orders of ammunition from the owners of our personal security devices could be materially impacted by the unavailability of projectiles. See "We are dependent on our relationships with key third-party suppliers for our business" below. We have experienced actual and threatened shortages of our projectiles and third-party products due to pandemic related factors that affected our suppliers as well as competition and other business specific considerations. Such situations may require a quick pivot on our packaging or bundling of products, marketing or product mixmix, or,including, evenin certain circumstances, legal action. There are human capital and monetary costs associated with such adaptations, and there is no guarantee that we will be able to successfully meet such challenges in the future or that they will not materially increase costs of production or operations and negatively impact our financial results.

The Byrna name and brand image are integral to the growth of our business, as well as to the implementation of our strategies for expanding our business. Our success depends on the value and reputation of our brand, which, in turn, depends on factors such as the quality, design, performance, functionality, and durability of our products, the image of our e-commerce platform and retail presence, our communication activities, including advertising, social media, brand ambassadors, and public relations, and our management of the customer experience, including direct interfaces through customer service. Maintaining, promoting, and positioning our brand are important to expanding our customer base, and will depend largely on the success of our marketing and merchandising efforts and our ability to provide consistent, high quality customer experiences. We intend to make substantial investments in these areas in order to maintain and enhance our brand, however such investments may not be successful. Ineffective marketing, negative publicity, social media advertising restrictions, product diversion to unauthorized distribution channels, product or manufacturing defects, counterfeit products, unfair labor practices, failure to protect the intellectual property rights in our brand, and an inability to provide satisfactory customer service experience as we rapidly expand our business, are some of the potential threats to the strength of our brand, and those and other factors could rapidly and severely diminish customer confidence in us. Furthermore, these factors could cause our customers to lose the personal connection they feel with the Byrna brand. We believe that maintaining and enhancing our brand image in our current markets and in new markets where we have limited brand recognition is important to expanding our customer base. If we are unable to maintain or enhance our brand in current or new markets, our growth strategy and results of operations could be harmed.

We rely on certain third-party suppliers for our business, including sole source suppliers. Our future operating results depend upon our ability to obtain timely delivery of a sufficient amount and a reliable quality of all components on commercially reasonable terms. Failure of a supplier’s business or consolidation within the industry could further limit our ability to purchase key components at all (in the case of sole source suppliers) or in sufficient quantities and on commercially reasonable terms. Demands of competitors, including those with larger operations and stronger bargaining power or those orthat are willing to pay a higher price or to accept lower standards, could also limit our ability to purchase key components in sufficient quantities on commercially reasonable terms. Failure of our suppliers to provide sufficient quantities of components on favorable terms, meet quality standards, or deliver components on a timely basis has occurred in the past due to industry shortages of certain raw materials, and could occur in the future for similar or other reasons. Such failures could delay or stop our production, result in possible lost sales and seriously threaten our liquidity and revenues.

Our products contain numerous parts and we rely on third-party suppliers to deliver parts and materials that comply with our specifications. While we test all of our finished products, we do not test all of the components and materials they contain. We use randomized statistical inspection for components and materials and these protocols, while we believe them to be reliable, have inherent limitations and may miss parts that do not meet specifications. If those parts pass our completed launcher testing but subsequently cause failures of the products in which they are installed, we may need to undertake product recalls or implement protocols for improved performance or safety, which could negatively impact our reputation and business. Moreover, if any such part failure resulted in a physical injury, it could also subject us to the risks of potential product liability actions and, if our stock price were impacted, securitysecurities class actions.action litigation.

Delays in delivery caused by industry allocations, material shortages (such as plastic or resins), or obsolescence have occurred in recent years, including as a result of the COVID-19 pandemic, and may continue and could occur in the future. Such delays may take weeks or months to resolve and may result in increased costs as well as production and product fulfillment delays. In addition, in some cases, parts obsolescence may require a product re-design to ensure quality replacement components. These delays could cause significant delays in manufacturing and loss of sales, leading to adverse effects significantly impacting our financial condition or results of operations and could injure our reputation.

Our freight and import costs and the timely delivery of our products could be adversely impacted by a number of factors which could reduce the profitability of our operations, including: higher fuel costs; port closures; theft in transit; permit or customs clearance issues; increased government regulation or changes for imports of foreign products into the United States; delays created by terrorist attacks or threats, public health issues (including new pandemics and epidemics), national disasters or work stoppages; climate change related effects on the availability of raw materials, the operations of our suppliers, or on transportation systems or routes, and other matters. Any interruption of supply for any material components of our products could significantly delay the shipment of our products and have a material adverse effect on our revenues, profitability and financial condition. Additional compliance with existing or new regulations related to climate change could increase production costs of our suppliers and indirectly lead to increased cost to us of components, materials, or accessories. International or domestic geopolitical or other events, including the imposition of new or increased tariffs and/or quotas by the U.S. government on any of these raw materials or components, could adversely impact the supply and cost of these raw materials or components, and could adversely impact the profitability of our operations. In addition, due to rapidly increasing demand for our products, we have faced significant challenges, including production backlogs and resulting customer complaints. All of the forgoingforegoing could negatively impact our financial results.

To maintain and increase sales we must continue to introduce new products and improve or enhance our existing products or new products. The success of our new and enhanced products depends on many factors, including anticipating consumer preferences, finding innovative solutions to consumer problems or acquiring new solutions through mergers and acquisitions, differentiating our products from those of our competitors, and maintaining the strength of our brand. The design and development of our products as well as acquisitions of other businesses are costly and we typically have several products in development at the same time. Problems in the design or quality of our products, or delays in product introduction, may harm our brand, business, financial condition, and results of operations.

We rely on a limited number of third parties for shipping, transportation, logistics, marketing and sales of our products and components. A loss of any of such third-party relationshipsrelationship might have a material adverse effect on our operating results.

Our information technology systems, including third-party run e-commerce and payment service systems, may be subject to cyber-attacks, security breaches or computer hacking including a ransomware attack encrypting corporate information technology equipment, a directed attack against us or a data breach or cyber incident happening to a third-party network and affecting us. Regardless of our efforts, there may still be a breach, and the costs to eliminate, mitigate or address the threats and vulnerabilities before or after a cyber-incident could be significant. Any such breaches or attacks could result in interruptions, delays or cessation of operations and loss of existing or potential suppliers or customers. In addition, breaches of our information technology systems or security measures (including those of our third-party partners) and the unauthorized dissemination of sensitive personal, proprietary or confidential information about our business, our business partners, customers or other third parties could expose us to significant potential liability and reputational harm, materially damage our customer and business partner relationships, and subject us to significant reputational, financial, legal, and operational consequences. Moreover, any such breach or attack could result in litigation against us by customers or other third parties whose data is compromised by any such attack. Despite the implementation of security measures and controls, we cannot assure that our cybersecurity risk management program will prevent, detect, or mitigate all cybersecurity incidents. Any such incident could go undetected for a period of time and could result in regulatory investigations, mandatory disclosures, private litigation, disruption of operations, loss of data, or significant remediation and response costs. Any of these outcomes could materially adversely affect our business, financial condition, and results of operations.

Conducting our operations through current or future joint ventures could expose us to risks and uncertainties, many of which are outside of our control, and such risks could have a material adverse effect on our business, financial condition, results of operations and cash flows.

With respect to any joint venture that we may enter into in the future, any differences in views among the joint venture participants may result in delayed decisions or in failures to agree on major issues. We would also not be able to control the actions of ourany future joint venture partners, including any nonperformance, default or bankruptcy of our future joint venture partners. As a result, we could be unable to control the quality of products produced by any future joint venture or achieve consistency of product quality as compared with our other operations. In addition to net sales and market share, this may have a material negative impact on our brand and how it is perceived thereafter. Moreover, if our partners also fail to invest in the joint venture in the manner that is anticipated or otherwise fail to meet their contractual obligations, theany future joint venture may be unable to adequately perform and conduct its operations, requiring us to make additional investments or perform additional services to ensure the adequate performance and delivery of products and/or services to the joint venture’s customers, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our efforts to grow our business depend in part upon access to, and our success in developing, market share and operating profitably in,in additional geographic markets including but not limited to Southinternational Americamarkets andoutside Souththe Africa.United States. In some cases, countries in these regions have greater political and economic volatility, greater vulnerability to infrastructure and labor disruptions and differing local customer product preferences and requirements than our other markets. Operating and seeking to expand business in a number of different regions and countries exposes us to multiple and potentially conflicting cultural practices, business practices and legal and regulatory requirements that are subject to change, including those related to tariffs and trade barriers, investments, property ownership rights, taxation and repatriation of earnings and advanced technologies. Such expansion efforts may also use capital and other of our resources that could be invested in other areas. Expanding business operations globally also increases exposure to currency fluctuations which can materially affect our financial results. Although we are taking measures to adapt to these changing circumstances, our business, financial condition, results of operations and cash flows could be materially adversely affected should these efforts prove unsuccessful.

The less-lethal defense technology industry and security products markets are highly competitivecompetitive, and our success depends upon our ability to effectively compete with numerous worldwide businesses.

ExpansionFurther expansion of sales of our product to law enforcement and other governmental or quasi-governmental entities may require expenditure of resources and lengthen our sale cycle.

Generally, entities such as law enforcement and other governmental or quasi-governmental entities consider a wide range of issues before committing to purchase less-lethal defense products, including product benefits, training costs, the cost to use our products in addition to, or in place of, other products, budget constraints and product reliability, safety and efficacy. Such considerations may result in a sales cycle that is longer than and different from sales process related to dealers and consumers. Adverse publicity surrounding our products or the safety of such products also could lengthen our sales cycle with these customers. In addition, if we successfullycontinue to expand sales of our products to these customers, we could encounter challenges related to funding of law enforcement and other governmental and quasi-governmental entities generally, states and municipalities that fund such entities and theany recentfuture changes in public sentiment around police funding. We may incur substantial selling costs and expend significant effort in connection with the evaluation of our products by such potential customers before they place an order. If these potential customers do not ultimately purchase our products, we will have expended significant resources and received no revenue in return.

Political and social factors can affect our performance. Concerns about political trends, as well as firearm-related incidents, incidents involving less lethal weapons including pepper spray and chemical irritant rounds, and social reaction thereto, and legislature and policy shifts resulting from elections can affect the demand for our products. In addition, speculation about control of firearms, firearm products, and ammunition at the federal, state, and local level and heightened fears of terrorism and crime can affect consumer demand for our products. Often, such concerns result in an increase in near-term consumer demand and subsequent softening of demand when such concerns subside. Inventory levels in excess of customer demand may negatively impact operating results and cash flow.

We are subject to numerous federal, state and local environmental, health and safety legislation and other applicable regulations, laws, and measures relating to the manufacture and sale of our products. There can be no assurance that we will not experience difficulties within our efforts to complycomplying with applicable regulations as they change inover the futuretime, or that our continued compliance efforts (or failure to comply with applicable requirements) will not have a material adverse effect on our results of operations, business, prospects and financial condition. Our continued compliance with present and changing future laws could restrict our ability to sell our products and expand our operations.

The manufacture, sale, purchase, possession and use of devices that may be treated as weapons, including CO2 powered launchers and chemical irritant devices, are subject to federal, state, local, and foreign laws. If such regulation becomes more expansive in the future, it could have a material adverse effect on our business, operating results, financial condition, and cash flows. Our products are relatively new and may be subject to certain laws and regulations, including those related to CO2 powered launchers, “pepper spray” or “tear gas” devices, and future legislation or regulation. New legislation, regulations, or changes to or new interpretations of existing regulations could impact our ability to manufacture or sell products and our projectiles, or limit their market, which could impact our cost of sales and demand for Byrna products. SimilarlySimilarly, changes in laws related to the domestic or international use of chemical irritants by civilians or law enforcement could impact both our cost of sales and the size of the reachableaddressable market.

We may be subject, both directly and indirectly, to the adverse impact of existing and potential future government regulation of our products, technology, operations and markets. For example, the development, production, (re-)exportation, importation, and transfer of our products and technology is subject to U.S. and foreign export control, sanctions, customs, import and anti-boycott laws and regulations, including the EAR (collectively, “Trade Control Laws”). If one or more of our products or technology, or the parts and components we buy from others, isare or becomesbecome subject to the International Traffic in Arms Regulations (the “ITAR”) or national security controls or other controls under the EAR, this could significantly impact our operations, for example by severely limiting our ability to sell, (re-)export, or otherwise transfer our products and technology, or to release controlled technology to foreign person employees or others in the U.S. or abroad. We may not be able to obtain licenses and other authorizations required under the applicable Trade Control Laws. The failure to satisfy the requirements under the Trade Control Laws, including the failure or inability to obtain necessary licenses or qualify for license exceptions, could delay or prevent the development, production, (re-)export, import, and/or in-country transfer of our products and technology, which could adversely affect our revenues and profitability.

Our business is subject to a number of risks and hazards including loss of parts or finished goods in inventory or shipment, labor disputes and changes in the regulatory environment. Such occurrences could delay or halt production or sale of goods, result in damage to equipment, personal injury or death, monetary losses and possible legal liability. Although we currently maintain freight and inventory insurance and general liability insurance in amounts which we consider adequate,appropriate for our busienss, the nature of these risks is such that liabilities might exceed policy limits, the liabilities and hazards might not be insurable, or we may elect in the future not to insure against such liabilities due to high premium costs or other reasons, in which event we could incur significant costs that could have a materially adverse effect upon our financial position.

Our common stock is currently listed on the Nasdaq Capital Market. The Nasdaq Capital Market requires listed companies to meet certain listing criteria including totalcorporate numbergovernance ofrequirements stockholders,(such as Board of DirectorsDirector independence,independence), and quantitative listing standards (such as minimum bid price, total value of publicly held shares, and in some cases total stockholders’ equity and market capitalization requirements.requirements, and other thresholds). If for any reason our common stock does not maintain eligibility for listing on the Nasdaq Capital Market, it could be subject to delisting, in which case our common stock would be quoted elsewhere, such as one of the OTC markets, which are generally considered less liquid and more volatile than a national securities exchange. Loss of our Nasdaq listing could mean that certain institutional investors could no longer hold or purchase our stock, and as a result, a purchaser of our common stock may find it more difficult to dispose of, or to obtain accurate quotations as to the price of their shares. This could materially and adversely affect the liquidity of our common stock.

In addition, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint against us asserting a cause of action arising under the Securities Act of 1933, as amended. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees. Alternatively, if a court were to find the choice of forum provision contained in our Certificategoverning of Incorporation, as amended,documents to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions or multiple jurisdictions, which could result in expensive and protracted litigation with potentially conflicting outcomes that could exhaust our insurance coverage leaving us exposed to substantial legal expenses and judgments, or otherwise harm our business, results of operations, and financial condition.

Outbreaks of epidemic, pandemic, or contagious diseases could cause disruptions in our business and the businesses of third parties who we depend upon for materials and manufacturing, marketing and other services. These disruptions could include disruptions in our ability to receive materials, manufacture our products, distribute our products, market our products, or obtain services. These disruptions have in the past caused, and could causein further,the future cause, closures of our facilities or the facilities of our suppliers, manufacturers and dealers, as well as cancellation of events that present significant marketing opportunities such as industry conventions,conventions and trade shows. Any disruption of the businesses of our suppliers, manufacturers or dealers would likely impact our sales and operating results. In addition, a significant outbreak of epidemic, pandemic, or contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products. Any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Political changes and trends such as populism, protectionism, economic nationalism and sentiment toward internationally operating companies, and resulting tariffs, export controls, trade sanctions, sanctions blocking statutes, or other trade barriers, or changes to tax or other laws and policies, have been and may continue to be disruptive and costly to our business, and these can interfere with our expanding international sales, supply chain, production costs, customer relationships, and competitive position. For example, the currentU.S. presidential administrationgovernment has imposed tariffs on goods from a variety of countries, including China, Canada, Mexico and others. These tariffs currently affect some of the components of our products we import from China and other countries, and we may be required to raise our prices on those products due to the tariffs or share the cost of such tariffs with our customers, which could harm our operating performance. We work closely with third parties who monitor, evaluate and keep us informed about the potential impact of the effective and proposed tariffs as well as other recent changes in foreign trade policy on our supply chain, costs, sales and profitability and seek to implement strategies to mitigate such impact, including reviewing sourcing options and working with our vendors and merchants to seek to minimize product coming from China and other countries both in existing and new product development and select suppliers in low cost regions where tariff issues are less challenging. Notwithstanding these efforts, it is possible that further tariffs may be imposed on our other imports, or that our business will be impacted by retaliatory trade measures taken by China or other countries in response to existing or future tariffs, causing us to raise prices or make changes to our operations, any of which could materially harm our revenue or operating results. Further escalation of specific trade tensions, such as those between the United States and China, or in global trade conflict more broadly could be harmful to global economic growth, and related decreases in confidence or investment activity in the global markets would adversely affect our business performance. We domay businesspursue opportunities in emerging market jurisdictions, such as South Africa and South America, where economic, politicalpolitical, and legal risks aremay be heightened.

In addition, a number of U.S. states have enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of sensitive personal information, such as social security numbers, financial information and other personal information. For example, all 50U.S. states nowhave haveenacted data breach notification laws that require timely notification to individual victims, and at times regulators, if a company has experienced the unauthorized access or acquisition of sensitive personal data. State law developments, which may impose substantial penalties for violations, could impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.

Our stock price could decline as a result of substantial sales of our common stock, or the perception or anticipation that such sales could occur, particularly sales by our directors, executive officers, and significant stockholders, a large number of shares of our common stock becoming available for sale, or the perception in the marketperceptions that holders of a large number of shares intend to sell their shares.sell.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the Nasdaq Capital Market listing standards and other applicable securities laws, rules, and regulations. Our compliance ofwith these laws, rules, and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming, or costly, and increasedincreases demanddemands on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and our internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures, and our internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns and our costs and expenses will increase, which could harm our business and results of operations. Further, because we previously were listed on the Canadian StockSecurities Exchange, we remain subject to the continuing disclosure rules of the Ontario Securities Commission (“OSC”), which requires us to make somewhat duplicative filings related to certain matters on SEDAR and SEDI and pay annual fees in certain Canadian jurisdictions until such time as the OSC releases us from those obligations. These requirements are costly, and increase demand on our management, systems and resources.

We may not be able to accurately forecast our results of operations and growth rate. Forecasts may be particularly challenging as we expand into new markets and geographies and develop and market new products for which we have no or limited historical data. Our historical sales, expense levels, and profitability may not be an appropriate basis for forecasting future results. Our lack of long-term historical data related to new products makes it particularly difficult to make forecasts related to such products. The lead times and reliability of our suppliers may be affected by global events in the future. TheseForecast corrections of forecastmay require arapid very quick pivotpivots and adjustments to theour supply chain, production planning, and marketing. If we are unable to make these changes quickly or at allall, our inventory,inventory productionlevels, production, and sales maycould be materially adversely affected.

Climate change has been identified as resulting in an increase in average temperatures in key places we operate, including in Indiana, Las Vegas, South America,Indiana and South Africa.Nevada. Projected increases in temperature in these locations may impact us in a number of waysways, including increasing the costs of maintaining comfortable working environments, increasing the risk of fires, increasing the risk of illness and absence as well as turnover, and aincreasing correspondingthe risk of severe storm weather that could lead to flooding and damage to our facilities or the homes and commuting routes of our employees. Climate change is also resulting in extreme rainfall variability and droughts in areas in South Africa which may impact the availability of clean water, cause erosion of transportation routes and effect the health of our employees, each of which could have negative impacts on our operations and could require capital investments to protect their health and maintain safe working conditions. Our Nevada facilitylocations is locatedare in a desert environment where water is scarce and the hot temperatures require heavy use of air conditioning. While we have not experienced any shortages of energy or water in the past, we may in the future.

The availability and costs of materials, components, and operating and freight costs of our suppliers and suppliers of third-party manufactured products may be similarly impacted by climate change. Our suppliers may pass down such increased costs by raising the price of goods. Further, whileWhile we docannot notpredict anticipatethe impact of future climate-related laws and regulations on our productionoperations, facilitiessuch beinglaws directlycould affectedincrease bycosts existingfor us and future climate change laws, it is impossible to predict whether future laws may negatively impact our operations and we do anticipate them affecting the operations of suppliers of certain of our components and raw materials. The costs of compliance with such future regulation could materially impact the prices charged by certain of our suppliers and even whether they stay in business.suppliers. Consequential increases in costs of components or materials or reduction of suppliers could materially impact our business and cost of operations.

Byrna Technologies Inc. isdesigns, amanufactures, designer, manufacturer, retailerretails, and distributordistributes ofless‑lethal innovativepersonal technologicalsecurity solutions intended 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 safelyprotect themselves and fullyothers, engageand our product strategy emphasizes ease of use, effectiveness, and reliability in lifeboth consumer and adventure.professional Oursafety designenvironments. team’sWe directivealso isdevelop tools intended to buildserve easy-to-useas self-defense toolsalternatives to enhance the safety of our customers and their loved ones at home and outdoors. We are also focused on developing tools that can be used instead oftraditional firearms by professionalfor law enforcement and private security customerscustomers, towith reducethe shootingsgoal of reducing firearm‑related incidents and facilitatesupporting trustde‑escalation between police and the communities they seek to serve.practices. Our strategy isincludes to establishpositioning Byrna® as a consumer lifestyle brand associated with thepersonal confidence people can achieve by knowing they can protect themselves, their loved ones and thosesafety, aroundwhile them. We believe we have a significant opportunity to leverage the Byrna brand to expandexpanding our product line,portfolio to broaden ourmarket user basereach and generate increasingdrive sales growth from both new and existing customers.

On January 10, 2023, we createdacquired a new51% ownership interest in Byrna LATAM S.A. (“Byrna LATAM”), a corporate joint venture ("Byrna LATAM") with Fusady S.A., an affiliate of Bersa S.A. (“Fusady”) located in Uruguay,formed to expand our operations and presence in South American markets.markets, for $0.5 million. We heldaccounted 51%for ofthis investment using the stockequity inmethod Byrna LATAM, and the remaining 49% of stock in Byrna LATAM was held by Fusady. Under the terms of the joint venture,because we did not have voting control theor substantive participating rights that would give us control over Byrna LATAM. On August 19, 20242024, we sold our 51% ownership interest to Fusady S.A. for $1 (pursuant to the “LATAM Share Purchase Agreement”), and entered into an exclusive distribution, manufacturingmanufacturing, and licensing agreement with Byrna LATAM (the “LATAM Licensing Agreement”). TheUnder LATAMthis Licensing Agreement allowsagreement, Byrna LATAM is authorized to exclusively manufacture the Byrna SD launcher and ammunition in certain South American countries and requiresis Byrna LATAMrequired to pay us a royaltyroyalties on Byrna products manufactured. The LATAM Share Purchase Agreement also includes put and call rights based on defined triggers that expire on August 19, 2029.

We increased grossGross margin profitabilitydeclined by 6.1% as1.0% compared withto the prior year. WithOperating the increase in revenues, we haveexpenses increased due to higher marketing spend,expenditures, personnel‑related costs, and professional fees. DueAlthough torevenue thegrowth increaseresulted in revenuehigher duringgross the fiscal year,profit, the increase in operating expenses partially offset withthese thegains, increaseresulting in gross profit led to a profit from operations of $11.8 million for fiscal year 2025, compared to an operating profit of $6.7 million for the fiscal year November 30,2024. 2024Gross asmargin compareddeclined primarily due to a losshigher from operationsproportion of $7.8 millionWholesale forand theRetail fiscalrevenue, yearwhich ended Novemberare 30,lower‑margin 2023.channels, partially offset by improved cost absorption in manufacturing and lower per‑unit freight costs.

Gross profit is calculated as total revenue less cost of goods sold, and gross margin is calculated as gross profit divided by total revenue. 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. Gross profit was $52.8$71.5 million for the fiscal year ended November 30, 2024,million, or 61.5%60.5% of net revenue, asfor fiscal year 2025, compared to gross profit of $23.6$52.8 million, or 55.5% of net revenue,61.5%, in the prior year. GrossThe decline in gross margin profitabilityresulted from an increased primarilyproportion dueof wholesale revenue relative to theDTC increaserevenue inas well as manufacturing inefficiencies. The broader shift toward Wholesale and Retail channels reduced the proportion of high higher‑margin directDTC revenue, contributing to customerthe salesdecline (Web/Amazon)in fromconsolidated 72.6%gross of total salesmargin for the fiscalyear. yearBecause endedwholesale Novembertransactions 30,generally 2023carry lower average selling prices relative to 76.8%DTC of sales forsales, the fiscalhigher yearwholesale endedmix Novembercontributed 30,to 2024.the decline in consolidated gross margin during the period.

Operating expenses were $46.1$59.6 million for the fiscal year ended November 30, 2024, as2025, compared to operating$46.1 expensesmillion in the prior fiscal yearyear. ofThe $31.4 million. This $14.7$13.5 million increase iswas primarily duedriven toby an increase inhigher marketing expenditures, personnel‑related costs, and variable selling expenses. Marketing expenditures increased $7.8by million$5.5 million, from $4.6 million for fiscal year 2023 to $12.4 million in fiscal year 2024 to $17.9 million in fiscal year 2025. Total employee compensation costs increaseddecreased $1.9by million$0.7 million, from $15.9 million for fiscal year 2023 to $17.8 million in fiscal year 2024.2024 Totalto variable$17.1 million in fiscal year 2025. Variable selling expenses increased by $3.7$3.6 millionmillion, from $4.1$7.8 million in fiscal year 20232024 to $7.8$11.4 million forin fiscal year 2024.2025. Professional fees increased by $0.9$0.1 millionmillion, from $1.1$2.0 million in fiscal year 20232024 to $2.0$2.1 million forin fiscal year 2024.2025. Other operating costs, including administrative expenses, increased by $0.5$2.0 million, from $6.1 million from $5.6 million forin fiscal year 20232024 to $6.1$8.1 million forin fiscal year 2024.2025. The increase was primarily driven by higher insurance costs—including D&O, umbrella, general liability, and cyber coverage—along with increases in facility expenses, repairs and maintenance, depreciation and amortization, and production‑related operating expenses. These increases were partially offset by lower research and development expenses. In addition, the overall increase in operating expenses reflects higher spending on influencer‑marketing programs, expanded creative‑content production to support AI‑assisted advertising initiatives, and initial occupancy and labor costs associated with new Company‑operated retail stores.

The increase in revenue, off-set by the increase in operating expenses resulted in an increase of $14.5$5.1 million in profit from operations of $11.8 million in fiscal year 2025, compared to a 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, 2023.2024.

Interest income for the fiscal year ended November 30, 20242025 was $1.0$0.4 million compared to $0.7$1.0 million for the fiscal year ended November 30, 2023.2024. The increasedecrease in interest income is primarily due to highera interest rates on the Company's cash and cash equivalents and marketable securities. The increase in interest income is primarily due to an increasedecrease in the amount of interest-earning funds held in cash and cash equivalents, marketable securities, and accrued interest receivable on loan receivable.

Our effective income tax rate was 17.49% for the year ended November 30, 2025, compared to an effective income tax rate of (80.31)% for the year ended November 30, 20242024. compared to an effectiveOur income tax rateexpense ofwas 2.06%$2.1 million for the fiscal year ended November 30, 2023.2025 Ourcompared to an income tax benefit wasof $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, 2023.2024. 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.

In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide thenon-GAAP followingadjusted additionalEBITDA, which is a financial metricsmetric that areis not prepared in accordance with GAAP (non-GAAP): non-GAAP adjusted EBITDA.GAAP. Management uses thesethis 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. We believe that these non-GAAP financial measures help us to identify underlying trends in our business that could otherwise be masked by the effect of certain expenses that we exclude in the calculations of the non-GAAP financial measures.

Accordingly, we believe that thesethis non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.

TheseThis non-GAAP financial measures dodoes not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures, because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerning exclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other non-GAAP measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measuresmeasure as tools for comparison.

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; (iv) stock-based compensation expense; (v) severance/separation expense; (vi) other income; and (vii) other financing expenses. Our non-GAAP adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-time and non-cash costs. Reconciliation of non-GAAP Adjusted EBITDA to net loss,income, the most directly comparable GAAP measure, is as follows (in thousands):

Cash providedused byin operating activities was $1.6 million for the fiscal year ended November 30, 2025, compared to cash provided by operations of $11.7 million for the fiscal year ended November 30, 2024,2024. comparedNet toincome $3.9was $9.7 million cash provided by operating activities for the fiscal year ended November 30, 2023.2025, Netcompared income wasto $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, 2023.2024. Significant changes in noncash and working capital activity are asdescribed follows:below.

Our non-cash activity adds back several non-cash items to net lossincome to calculate cash provided by operations during the fiscal year ended November 30, 2024.2025. These include stock-based compensation expense of $3.4$3.1 million during the fiscal year ended November 30, 20242025 compared to $5.4$3.4 million for the fiscal year ended November 30, 20232024; operating lease costs of $0.8$0.7 million during the fiscal year ended November 30, 20242025 compared to $0.7$0.8 million for the fiscal year ended November 30, 20232024; depreciation and amortization of $2.1 million during the fiscal year ended November 30, 2025 compared to $1.5 million during the fiscal year ended November 30, 2024; comparedloss toon $1.3disposal of fixed assets of $2.3 million during the fiscal year ended November 30, 20232025 compared to zero for the fiscal year ended November 30, 2024; recoveryIn addition to the non‑cash activities mentioned above, we recognized a decrease in its deferred tax asset of allowance for credit losses of $0.2$1.7 million during the fiscal year ended November 30, 20242025, compared to provisionan for allowance for credit lossesincrease of $0.5 million for the fiscal year ended November 30, 2023; recovery of provision for inventory of $0.2$5.8 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, 2023.2024.

Cash flows used in financing activities was $1.3 million during the fiscal year ended November 30, 2025, compared to $4.6 million during the fiscal year ended November 30, 2024 compared to $0.4 million during the fiscal year ended November 30, 2023.2024. The fiscal year ended November 30, 20242025 amount was primarily due to tax payments of $0.5 million related to payroll taxes withheld on the vesting of restricted stock units, $0.3 million received in proceeds from stock option exercises and payments of $1.1 million for repurchases of common stock, compared 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, 2023.2024.

Our Consolidated Financial Statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are outlined in Note 4, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of this report. We believe that the following are the more critical judgmental areas in the application of our accounting policies that currently affect our financial position and results of operations:operations.

The Company generates revenue through the wholesale distribution of its products and accessories to dealers/distributors, large end-usersend‑users such as retail stores, security companiescompanies, and law enforcement agencies, and through e-commercee‑commerce portals to consumers. Revenue is recognized upon transfer of control of goods to the customer, which generally occurs when title to the goods is passed and risk of loss transfers to the customer. Depending on the contract terms, transfer of control isoccurs upon shipment of goods to or upon the customer’s pick-uppickup of the goods. Payment terms to customers other than e-commercee‑commerce customers are generally 30-6030–60 days for established customers, whereas new wholesale and large end-userend‑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. Products purchased include a standard warranty that cannot be purchased separately. This allows customers to return defective products for repair or replacement within one year of sale. The Company also sells an extended warranty for the same terms over three years. The extended 3-year warranty can be purchased separately from the product and therefore, must be classified as a service warranty. Since a warranty for the first year after sale is included and non-separable from all launcher purchases, the Company considers this extended warranty to represent a service obligation during the second and third years after sale. Therefore, the Company accumulates billings of these transactions on the balance sheet as deferred revenue, to be recognized on a straight-line basis during the second and third year after sale. The Company recognizes an estimated returns and discounts allowance based on its analysis of historical experience, and an evaluation of current market conditions.

The Company also provides to its e-commercee‑commerce consumers a 14-day14‑day money ‑back guarantee, which allows for a full refund of the purchase price, excluding shipping charges, within 14 days from the date of delivery. TheThis right of return creates a variable component to the transaction price and needs tomust be consideredevaluated for any possible constraints. The Company estimates returns using the expected ‑value method, as there will likely be a range of potential return amounts.method. The Company’s returns under the 14-day14‑day money ‑back guarantee for the yearfiscal years ended November 30, 20242025 and November 30, 20232024 were immaterial.

The Company sells to dealers and retailers for whom there is no money ‑back guaranteeguarantee, but who may request a return or credit for unforeseen reasons or who may have contractually agreed‑upon discountsdiscounts, marketing allowances, cooperative advertising programs, or allowancesother consideration to be netted from amountsinvoiced invoiced.amounts. The Company estimates and reserves for returns, discountsdiscounts, marketing allowances, and allowancesother customer incentives based on pasthistorical performanceexperience, current contractual terms, and onexpectations agreementof termsfuture activity, and reports revenue net of the estimated reserve. The Company's reserve for returns, discounts, marketing allowances, and allowancesother customer incentives for the fiscal years ended November 30, 20242025 and 2023November were30, 2024 was immaterial.

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,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 asin 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.

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, 2024,2025, 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, 2025,2025 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, 2024,2025, and the forecasted closure of manufacturing operations in FY2025.2025. Therefore, a full valuation allowance remains on the deferred tax assets in South Africa as of November 30, 2025 and 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.operations.

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. The Company records uncertain tax positions as liabilities and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of November 30, 20242025 and 2023,2024, the Company has not recorded any uncertain tax positions in ourits 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 Income (Loss).Income. As of November 30, 20242025 and 2023,2024, no accrued interest or penalties related to income taxes are included in the Consolidated Balance Sheets.

Goodwill resulting from a business combination is not amortized but is reviewed for impairment annuallyannually, 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. The Company hasperforms its annual impairment assessment during the optionfourth to perform a qualitative assessment over goodwill when events occur or circumstances change that would, more likely than not, reduce the fair valuequarter of aeach reportingyear. unit.Goodwill Ifis assessed for impairment at the Company concludes, based on the qualitative assessment, that the carrying value of a reporting unit would more likely than not exceed its fair value, a quantitative assessment is performedlevel, which is baseddefined uponas an operating segment or one level below an operating segment (a comparison of the reporting unit’s fair value to its carrying value. The fair values used in this evaluation are estimated by the Company based upon future discounted cash flow projections for the reporting unit. An impairment charge is recognized for any amount by which the carrying amount of goodwill exceeds its fair value.component).

The Company accounts for all stock-based payment awards granted to employees and non-employees as stock-based compensation expense at their grant date fair value. The Company’s stock-based payments include stock options and restricted stock units. The Company values simple restricted stock units (RSUs) at the quoted price on date of grant and RSUs with certain market triggers using the Monte Carlo model for valuation. The Company values stock options using the Black Scholes model. The measurement date for employee awards is the date of grant, and stock-based compensation costs are recognized as expense over the employees’ requisite service period, on a straight-line basis. 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 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).Income. Forfeitures are accounted for as they occur.

Factors that could cause our actual results to differ materially from those in this report include the “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended November 30, 2025, filed with the SEC on February 5, 2026, as amended on March 30, 2026. ThereExcept as set forth below, there have been no material changes to the risk factors disclosed in our 2025 Form 10-K.

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” "may," “estimate,” "opportunity," "could," “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important risk factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of our Annual Report on Form 10-K for the year ended November 30, 2025 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 5, 2026, as amended on March 30, 2026 (the “2025 10-K”), and the Company’s subsequent filings with the SEC, all of which can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, including but not limited to our ability to design, introduce and sell new products, services and features, the impact of any regulatory proceedings or litigation, our ability to protect our intellectual property and compete with existing and new products, the impact of stock compensation expense, dividends, warrant exercises and related accounting, impairment expense and income tax expense on our financial results, our ability to manage our supply chain and avoid production delays, shortages or other factors, including product mix, cost of parts and materials and cost of labor that may impact our gross margins, our ability to retain and incentivize key management personnel, product defects, the success of our entry to new markets, customer purchase behavior and negative media publicity or public perception of our brand or products, restrictions or prohibitions imposed by advertising platforms, loss of customer data, breach of security or an extended outage related to our e-commerce storefronts, including a breach or outage by our third party cloud based storage providers, exposure to international operational risks, delayed cash collections or credit losses, determinations or audits by taxing authorities, changes in government regulations, including environmental and chemical regulation applicable to our chemical irritant products, the impact of existing or future regulation by the Bureau of Alcohol, Tobacco, and Firearms, import and export regulators, or other federal or state authority, or changes in international law in key jurisdictions including South America and South Africa or our inability to obtain needed exemptions from such existing or future regulation.

We believe demand for less-lethal products in the United States and internationally continues to rise and that this category will remain a growing segment of the broader security market. We plan to meet this demand by manufacturing and distributing our Byrna® SD, Byrna LE and most recently our Byrna CL launchers, along with continued expansion of our accessory and ammunition offerings.offerings and our complementary personal safety products, including chemical irritant defense sprays and personal safety alarms.

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 willexpired expireby its own terms on theJuly sooner31, of2026, the two-year anniversary of its initiationinitiation. orAs untilof weits reachexpiration, thean aggregate limit of $100.5 million forshares thehad repurchasesbeen repurchased under the program.program for $5.8 million.

Beginning inwith our Annual Report on Form 10-K for fiscal year 2025, we also reorganizedreport our operations intothrough two reportable sales channels, Direct‑to‑ConsumerDirect-to-Consumer (“DTC”) and Wholesale (dealer/distributor), to align with our expanded omnichannel strategy, the opening of Company‑ operated retail stores, and increased penetration into national retail chains and international distributors.

Three months ended MayAugust 31, 2026 as compared to three months ended MayAugust 31, 2025:

TheWe Company presentspresent revenue net of returns, allowances, and discounts. Net revenues were $16.4$15.3 million in the secondthird fiscal quarter of 2026 which represents a decrease of $12.1$12.9 million, or 42.5%,45.7%, as compared to the prior year period revenues of $28.5$28.2 million. The decrease was primarily driven by lower direct-to-consumerWeb (DTC) sales, via Amazon and the Company's website, which decreased by $5.8$6.3 million, or 34.5%,38.6%, from $16.8$16.3 million in the secondthird fiscal quarter of 2025 to $11.0$10.0 million in the same fiscal quarter of 2026, as well as lower domestic wholesale dealer and distributor sales, which decreased by $6.3$4.3 million, or 53.8%, from $11.7$7.9 million in the secondthird fiscal quarter of 2025 to $5.4$3.7 million in the same fiscal quarter of 2026. SalesInternational to international markets,sales, including Canada,Canada (International (DTC) and International (Wholesale)), decreased from $3.5$2.9 million in the three months ended MayAugust 31, 2025 to $1.2$1.1 million in the three months ended MayAugust 31, 2026,2026. whichIn includesaddition, awe netrecognized reductionno ofroyalty $0.3 millionrevenue related to the reversal of previously recognized royalty revenue under the LATAM Licensing Agreement,Agreement whichin unfavorablythe impactedthird internationalfiscal quarter of 2026, compared to $0.3 million in the prior year period. Revenue by reportable sales channel, discussed below, differs from the Web (DTC) and domestic wholesale amounts above because DTC revenue foralso theincludes period.International (DTC) sales and Company-operated retail store sales, and Wholesale revenue also includes International (Wholesale) sales and royalty revenue.

DTC revenuerevenue, which includes Web (DTC), Company-operated retail store, and International (DTC) sales, decreased to $11.0$11.1 million in the secondthird fiscal quarter of 2026 compared to $16.8$17.4 million in the prior year period, primarily driven by a decline in online conversion rates across the Company's direct-to-consumer channels, including both Amazon and the Company's website.

Cost of goods sold was $14.6$3.1 million in the secondthird fiscal quarter of 2026 compared to $10.9$11.3 million in the prior year period, ana increasedecrease of $3.7$8.1 million, or 33.6%,72.1%, despitecompared to a 42.5%45.7% decline in revenue over the same period. The increasedecrease in cost of goods sold against significantly lower revenue was primarily driven by a $5.9 million inventory write-down and a $3.5 million impairment charge related to the write-off of ammunition production machinery, equipment, and production-specific leasehold improvements, both recorded in the second fiscal quarter of 2026 in connection with the Company's decision to permanently cease in-house ammunition production at its Fort Wayne, Indiana facility. Of the $5.9 million inventory write-down, $3.8 million related to ammunition raw materials associated with the Fort Wayne plant shutdown and the remainder related to launcher components that due to a strategic decision, will either not be reworked and therefore scrapped, or for which expected future demand and marketability had declined, as well as other slow-moving inventory. Excluding the inventory write-down and impairment charge, cost of goods sold decreased compared to the prior year period, driven by lower sales volumes across the Company's web, wholesale, Amazon, and international channels, asthe wellreceipt asof improvedrefunds freightof costspreviously paid tariffs during the period (described below), and lower labor and overhead variances compared to the prior year period, which included elevated air freight usage and tariff impacts, and lower product costs. These favorable impacts were partially offset by lower average selling prices, driven primarily by a shift in sales mix toward lower-priced channels.period. Cost of goods sold attributable to Direct-to-Consumer ("DTC") was $8.1$2.0 million in the secondthird fiscal quarter of 2026, compared to $5.7$5.9 million in the prior year period. Cost of goods sold attributable to Wholesale was $6.5$1.1 million in the secondthird fiscal quarter of 2026, compared to $5.3$5.4 million in the prior year period. During the three months ended MayAugust 31, 2026, the Companywe received tariff refunds of approximately $1.1$2.3 million related to previously paid tariffs, which are reflected as a reduction of cost of goods sold in the current period. The CompanyWe may be entitled to additional tariff refunds for prior period tariff payments; however, as such amounts are not yet determinable or realizable, they have not been recognized in the financial statements. Subsequent to May 31, 2026, the Company received an additional tariff refund of approximately $2.3 million, which will reduce cost of goods sold in the fiscal third quarter of 2026.

We recorded less than $0.1 million of foreign currency transaction gainloss during the three months ended MayAugust 31, 2026, compared to $0.1 million of foreign currency transaction loss during the three months ended MayAugust 31, 2025. We recorded less than $0.1 million of interest income during the three months ended MayAugust 31, 2026, compared to $0.1 million in the three months ended MayAugust 31, 2025.

For the three months ended MayAugust 31, 2026 and MayAugust 31, 2025, we recorded $2.7no million ofmaterial income tax provision or benefit and $0.9$0.6 million of income tax expense, respectively. For the three months ended MayAugust 31, 2026 and 2025, the effective tax rate was 21.2%0.0% and 23.3%,21.9%, respectively. The 0.0% effective tax rate for the three months ended MayAugust 31, 2026 reflects discretethat excessno material income tax benefitsbenefit relatedwas torecognized on the vestingthird ofquarter stock‑basedpre-tax compensationloss, awards,as whichdescribed morein thanNote offset20, taxIncome expense on pre‑tax income.Taxes. Our tax rate differs from the statutory rate of 21.0% due to the effects of state income taxes net of the federal benefit, foreign tax rate differentials related to the Company’s South Africa operations, permanent non deductible expenses, discrete items related to share based compensation, and other items.

Net loss was $10.1$2.9 million for the three months ended MayAugust 31, 2026, a decrease of $12.5$5.1 million compared to net income of $2.4$2.2 million for the three months ended MayAugust 31, 2025.

SixNine months ended MayAugust 31, 2026 as compared to sixnine months ended MayAugust 31, 2025:

TheWe Company presentspresent revenue net of returns, allowances, and discounts. Net revenues were $45.4$60.7 million in the sixnine months ended of MayAugust 31, 2026 which represents a decrease of $9.3$22.1 million, or 16.9%,26.7%, as compared to the prior year period revenues of $54.7$82.9 million. The decrease was driven by lower domestic wholesale dealer and distributor sales, which decreased by $1.7$3.0 million, or 9.4%,15.1%, from $18.0$19.8 million to $16.3$16.8 million. DirectWeb to consumer(DTC) sales, via Amazon and our website, declined in the sixnine months ended MayAugust 31, 2026, decreasing by $7.6$14.2 million, or 20.7%,27.1%, to $29.1$38.1 million from $36.7$52.3 million in the sixnine months ended MayAugust 31, 2025. SalesInternational to international markets,sales, including Canada,Canada (International (DTC), International (Wholesale) and royalties), decreased from $5.5$9.0 million in the sixnine months ended MayAugust 31, 2025 to $2.6$4.0 million in the sixnine months ended MayAugust 31, 2026, which includes a net reduction of less than $0.1 million related to the reversal of previously recognized royalty revenue under the LATAM Licensing Agreement, which unfavorably impacted international revenue for the period.

DTC revenuerevenue, which includes Web (DTC), Company-operated retail store, and International (DTC) sales, decreased to $29.1$41.5 million in the sixnine months ended MayAugust 31, 2026 compared to $36.7$55.2 million in the prior year period, primarily driven by a decline in online conversion rates across the Company'sour direct-to-consumer channels, including Amazon and the Company'sour website.

Cost of goods sold was $26.3$29.4 million in the sixnine months ended MayAugust 31, 20262026, compared to $21.2$32.5 million in the prior year period. This increasedecrease of $5.0$3.1 million, or 23.8%,9.5%, despitecompared to a 16.9%26.7% decline in revenue over the same period. The increasesmaller decrease in cost of goods sold againstrelative significantlyto lowerthe decline in revenue was primarily driven by a $5.9$6.0 million inventory write-down and a $3.5 million impairment charge related to the write-off of ammunition production machinery, equipment, and production-specific leasehold improvements, both recorded in the second fiscal quarter of 2026 in connection with the Company'sour decision to permanently cease in-house ammunition production at its Fort Wayne, Indiana facility. Of the $5.9$6.0 million inventory write-down, $3.8$3.6 million related to ammunition raw materials associated with the Fort Wayne plant shutdown and the remainder related to launcher components that due to a strategic decision, will either not be reworked and therefore scrapped, or for which expected future demand and marketability had declined, as well as other slow-moving inventory. Excluding the inventory write-down and impairment charge, cost of goods sold decreased compared to the prior year period, driven by lower sales volumes across the Company'sour web, international, and wholesale channels, as well as improved freight costs compared to the prior year period, which included elevated air freight usage and tariff impacts, and improved labor and fixed cost absorption. These favorable impacts were partially offset by lower average selling prices, driven primarily by a shift in sales mix toward lower-priced channels. Cost of goods sold attributable to Direct-to-Consumer ("DTC") was $14.4$17.4 million in the sixnine months ended MayAugust 31, 2026, compared to $12.6$18.8 million in the prior year period. Cost of goods sold attributable to Wholesale was $11.9$12.0 million in the sixnine months ended MayAugust 31, 2026, compared to $8.6$13.6 million in the prior year period. During the sixnine months ended MayAugust 31, 2026, the Companywe received tariffcash refunds of approximately $1.1 million related to previously paid tariffs,tariffs of approximately $3.3 million, of which approximately $2.3 million was received during the three months ended August 31, 2026, which are reflected as a reduction of cost of goods sold in the current period.period The(see CompanyNote 11, Inventory). We may be entitled to additional tariff refunds for prior period tariff payments; however, as such amounts are not yet determinable or realizable, they have not been recognized in the financial statements. Subsequent to May 31, 2026, the Company received an additional tariff refund of approximately $2.3 million, which will reduce cost of goods sold in the fiscal third quarter of 2026.

Gross profit is calculated as total revenue less cost of goods sold, and gross margin is calculated as gross profit divided by total revenue. Cost of goods sold includes costs associated with the production and procurement of products, including labor and overhead, inbound freight, manufacturing depreciation, purchasing and receiving costs, and inspection costs. Gross profit was $19.2$31.3 million during the sixnine months ended MayAugust 31, 2026, or 42.2%51.6% of net revenue, compared to gross profit of approximately $33.5$50.4 million, or 61.2%60.8% of net revenue, in the prior-year period. The decrease in gross margin was primarily driven by a $5.9$6.0 million inventory write-down and a $3.5 million impairment charge related to the write-off of ammunition production machinery, equipment, and production-specific leasehold improvements, both recorded in the second fiscal quarter of 2026 in connection with the Company'sour decision to permanently cease in-house ammunition production at its Fort Wayne, Indiana facility. Of the $5.9$6.0 million inventory write-down, $3.6 million related to ammunition raw materials associated with the Fort Wayne plant shutdown and the remainder related to launcher components that due to a strategic decision, will either not be reworked and therefore scrapped, or for which expected future demand and marketability had declined, as well as other slow-moving inventory. These decreases to gross profit were partially offset by a $1.1$3.3 million refundof refunds of previously paid tariffs, recorded as a reduction of cost of goods sold during the period (see Note 11, Inventory). Excluding the inventory write-down and impairment charge, the decrease in gross margin was driven by lower sales volume across the Company'sour web, international, and wholesale channels, as well as a shift in sales mix toward lower-priced wholesale channels and lower average selling prices. These unfavorable impacts were partially offset by improved freight costs compared to the prior year period, which included elevated air freight usage and tariff impacts, and improved labor and fixed cost absorption.

Operating expenses were $31.1$46.2 million in the sixnine months ended MayAugust 31, 2026, an increase of $2.6$3.7 million, as compared to the prior year period expenses of $28.5$42.5 million. The current period includes a $1.0 million charge related to the write-off of deposits for equipment associated with the Fort Wayne ammunition production facility that had not yet been placed in service at the time the Companywe committed to permanently cease in-house ammunition production. Excluding this charge, operating expenses increased by $1.6$2.6 million compared to the prior year period, primarily driven by aan decreaseincrease of $0.9$3.6 million in employeemarketing compensationexpenses, costsprimarily reflecting increased national television, connected TV and aaudio decreaseadvertising and fees for marketing agencies engaged in the third quarter of $0.8fiscal million in variable expenses, which decreased in proportion to sales volume, partially offset by2026, an increase of $2.5$2.0 million in marketingbad expensesdebt toexpense, supportprimarily businessreflecting growthreserves recorded against the remaining trade receivables of the Company's South Africa subsidiary and certain domestic customer receivables, and an increase of $0.8$1.1 million in professional fees largely attributable to higher accounting, audit, legal, and recruitment-related costs.costs, partially offset by a decrease of $1.9 million in variable expenses, which decreased in proportion to sales volume, a decrease of $1.4 million in employee compensation costs, a decrease of $0.3 million in stock-based compensation expense, and a net gain of $0.2 million related to the termination of our Scottsdale, Arizona retail lease.

We recorded $0.2 million and $0.2$0.3 million of foreign currency transaction loss during the sixnine months ended MayAugust 31, 2026 and 2025, respectively. We recorded $0.1$0.2 million of interest income during the sixnine months ended MayAugust 31, 2026 compared to $0.3$0.4 million in the sixnine months ended MayAugust 31, 2025.

For the sixnine months ended MayAugust 31, 2026 and MayAugust 31, 2025, we recorded $2.7 million of income tax benefit and $1.0$1.7 million of income tax expense, respectively. For the sixnine months ended MayAugust 31, 2026 and MayAugust 31, 2025, the effective tax rate was 23.1%17.9% and 17.2%,20.9%, respectively. The effective tax rate for the sixnine months ended MayAugust 31, 2026 reflects discretethe excessincome tax benefitsbenefit relatedrecognized toprimarily on the vestingthird of stock‑based compensation awards, which more than offset tax expense onquarter pre‑tax income.loss, including the impairment and inventory charges described above. Our tax rate differs from the statutory rate of 21.0% due to the effects of state income taxes net of the federal benefit, foreign tax rate differentials related to the Company’sour South Africa operations, permanent non deductible expenses, discrete items related to share based compensation, and other items.

Net loss was $9.3$12.2 million for the sixnine months ended MayAugust 31, 2026, a decrease of $13.4$18.5 million compared to net income of $2.4$6.3 million for the sixnine months ended MayAugust 31, 2025.

Cash and cash equivalents as of MayAugust 31, 2026 totaled $9.4$8.4 million, a decrease of $4.3$5.3 million from $13.7 million of cash and cash equivalents as of November 30, 2025.

CashNet cash used in operating activities was $3.0$3.5 million for the sixnine months ended MayAugust 31, 20262026, compared to cash used in operations of $9.2$11.5 million duringfor the priornine yearmonths period.ended August 31, 2025. Net loss was $9.3$12.2 million for the sixnine months ended MayAugust 31, 2026, compared to net income of $4.1$6.3 million for the sixprior monthsyear ended May 31, 2025.period. Significant changes in noncashnon-cash and working capital activityitems arewere as follows:

Cash flows used in financing activities was $1.1 million for the sixnine months ended MayAugust 31, 2026, compared to cash provided by financing activities of $0.1 million for the sixnine months ended MayAugust 31, 2025. The current year amount was primarily composed of taxes paid on issuances of restricted stock units of $0.2 million and payments of $1.0 million for repurchases of common stock. The prior year amount was primarily composed of proceeds from stock option exercises andof $0.3 million, taxes paid on issuances of restricted stock units.units of $0.1 million, and payments of $0.1 million for repurchases of common stock.

We require significant capital to meet our obligations as they become due. Throughout the next twelve months, we expect to fund our operations primarily from existing cash and cash equivalents and cash generated from operations. The CompanyWe also hashave access to ana existing$5.0 million revolving line of credit facility,under our Credit Agreement, as discussed in Note 24, Credit Facility, which may be used, but is not currently anticipated to be drawn, to provide additional liquidity if needed. The $15.0 million delayed draw term loan under the Credit Agreement may be used only to finance permitted acquisitions, and the Credit Agreement's financial covenants are tested quarterly regardless of amounts outstanding. We may pursue additional equity offerings or debt financings to provide working capital and satisfy debt obligations. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future. We are also evaluating additional sources of liquidity, including a potential asset-based credit facility. In addition, the voluntary reporting of the regulatory matter relating to our chemical irritant defense spray products described in Note 21 to the condensed consolidated financial statements and in Part II, Item 1A of this Quarterly Report may require the use of cash for product reformulation, inventory disposition, penalties or claims in amounts we are not presently able to estimate. If we are required to raise additional capital to support our operations and are unable to secure additional funding, we may be forced to curtail or suspend our business plans.