Byrna Technologies Inc.

BYRNA TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended February 28, 2026 and 2025

Byrna Technologies Inc. (the “Company,” or “Byrna,”) is a less‑lethal defense technology company specializing in next generation solutions for security situations that donot require the use of lethal force. The Company designs, develops, manufactures, and markets a portfolio of personal security devices, kinetic and chemical irritant projectiles, and related accessories for consumer, law enforcement, private security, and other institutional markets. Byrna personal security devices are less-lethal self-defense devices that are powered byCO2 and fire*.61* and*.68* caliber spherical kinetic and chemical irritant projectiles. The Company’s mission is to provide effective, easy‑to‑use, and reliable less‑lethal solutions that enable responsible self‑defense and de‑escalation. The Company sells its products through multiple channels including its e‑commerce website, Amazon storefronts, Company‑operated retail stores, domestic and international dealers and distributors, and direct sales to law enforcement agencies. The Company’s products are manufactured at its facilities in Fort Wayne, Indiana. The Company previously operated a manufacturing facility in Pretoria, South Africa; these operations ceased during thethird quarter of fiscal2025, and the related lease wasnot renewed. In* March 2025,the Company established a wholly owned subsidiary, Byrna Technologies Canada Inc., to support the distribution of Byrna products within the Canadian market. Byrna Canada doesnot* conduct manufacturing activities and doesnot operate any owned or leased facilities; instead, it utilizes a third‑party logistics provider to fulfill customer orders placed through the Company’s Canadian e‑commerce platform.

The Company operates and reports its results throughtwo reportable sales channels: Direct‑to‑Consumer(“DTC”) and Wholesale (dealer/distributors).

As of* February 28, 2026*, the Company had an accumulated deficit of approximately $46.3 million. The Company has historically funded its operations primarily through the issuance of the Company’s common stock, par value $0.001 per share (“Common Stock”). The Company generated net income of $0.8 million for thethree months ended* February 28, 2026*. The Company’s future results will depend on its ability to continue generating sufficient revenue to fund operating expenses and to effectively market its products.

These unaudited condensed consolidated financial statements for thethree months ended* February 28, 2026and2025* include the accounts of the Company and its subsidiaries. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form10-Q and therefore donot include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles in the United States of America (“GAAP”); however, such information reflects all adjustments consisting solely of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. All significant intercompany accounts and transactions have been eliminated in consolidation.

The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto together with management’s discussion and analysis of financial condition and results of operations contained in the Company's annual report on Form10-K for the year ended* November 30, 2025*. In the opinion of management, the accompanying unaudited condensed consolidated financial statements, the results of its operations for thethree months ended* February 28, 2026and2025*, and its cash flows for thethree months ended* February 28, 2026and2025* arenot necessarily indicative of results to be expected for the full year.

Reclassifications

Certain amounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements. These reclassifications hadno impact on previously reported net income, total assets, or cash flows.

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences* may*be material to our condensed consolidated financial statements. Significant estimates include assumptions about reserves for sales returns, allowances, and discounts, stock-based compensation expense, valuation allowance for deferred tax assets, incremental borrowing rate on leases, useful life of long-lived assets, allowance for estimated credit losses, and inventory reserves.

The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs"). ASUsnot discussed below were assessed and determined to be eithernot applicable or are expected to have minimal impact on the financial statements.

Recently Adopted Accounting Pronouncements

Effective* December 1, 2025,the Company early adopted FASB Accounting Standards Update (“ASU”)2025‑05, Financial Instruments—Credit Losses (Topic326*): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient that permits entities to assume that economic conditions existing as of the balance sheet date will remain unchanged when estimating expected credit losses on current trade receivables and contract assets. The Company elected this practical expedient and applied the guidance prospectively. The adoption of ASU2025‑05 didnot have a material impact on the Company’s condensed consolidated financial statements.

Accounting Pronouncements Issued butNot Adopted

In2023, the FASB issued ASU2023-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures. This update standardizes categories for the effective tax rate reconciliation, requires disaggregation of income taxes and additional income tax-related disclosures. This update is required to be effective for the Company for fiscal years beginning after* December 15, 2024,which for the Company will be the year ended November 30, 2026.While the Company anticipates that the adoption of this standard will require additional disclosures, it doesnot* expect it to have a material impact on the Company's financial position or results of operations.

In* March 2024,the Financial Accounting Standards Board (FASB) issued ASU2024*-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses (as clarified by ASU2025-01). This guidance focuses on the disaggregation of income statement expenses. This update requires entities to provide more detailed disclosures about the components of significant expense categories, enhancing the transparency and decision-usefulness of financial statements. The objective is to provide users with a clearer understanding of the nature and variability of expenses reported in the income statement. The standard is effective for annual periods of fiscal years beginning after* December 15, 2026,and interim periods in years beginning after December 15, 2027,with early adoption permitted. While the Company anticipates that the adoption of this standard will require additional disclosures, it doesnot* expect it to have a material impact on the Company's financial position or results of operations.

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Goodwill resulting from a business combination isnot amortized but is reviewed for impairment at least annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit* maybe less than its carrying amount. The Company performs its annual goodwill impairment assessment during thefourth* quarter of each fiscal year. As ofthree months ended* February 28, 2026and2025*, the Company determined that there wereno indicators of goodwill impairment.

Marketable debt securities consist of U.S. Treasury Securities and Corporate Bonds. Management determines the appropriate classification of these securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The Company classifies its investments as available-for-sale pursuant to ASC320, Investments—Debt Securities. Investments are recorded at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive income in stockholders’ equity and a component of total comprehensive income in the consolidated statements of operations and comprehensive income, until realized. Realized gains and losses are included in investment income on a specific-identification basis. The Company estimates expected credit losses for investments when unrealized losses exist. Unrealized losses that are credit related are recognized in net income and unrealized losses that arenot credit related are recognized in accumulated other comprehensive income. For thethree months ended* February 28, 2026*, there were realized gains on investments of less than $0.1 million. There wereno realized gains or losses on investments for thethree months ended* February 28, 2025.For thethree* months ended* February 28, 2026and2025*, there were net unrealized gains on marketable debt securities of less than $0.1 million in both periods.

The following table summarizes our marketable securities and available-for-sale investments as of* February 28, 2026* (in thousands):

The following table summarizes our marketable securities and available-for-sale investments as of* November 30, 2025* (in thousands):

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Fair Value Measurement

The Company follows a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, athree-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

● Level1- Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

● Level2- Inputs (other than quoted prices included in Level1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

● Level3- Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The following table summarizes the fair value of marketable debt securities by level within the fair value hierarchy as of* February 28, 2026*:

The following table summarizes the fair value of marketable debt securities by level within the fair value hierarchy as of* November 30, 2025*:

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On* August 19, 2024,the Company entered into an exclusive distribution, manufacturing and licensing agreement with Byrna LATAM (the “LATAM Licensing Agreement”). This LATAM Licensing Agreement allows Byrna LATAM to exclusively manufacture the Byrna SD launcher and ammunition in certain South American countries and requires Byrna LATAM to pay the Company a royalty on Byrna products manufactured. The amount of royalty earned during thethree* months ended* February 28, 2026* was $0.2 million, and royalties receivable outstanding as of* February 28, 2026* totaled $1.4 million, net of allowance for expected credit losses, and are included in accounts receivable. The amount outstanding as of* November 30, 2025* was $1.1 million.

In* January 2023and as amended in August 2024,the Company loaned $1.6 million to Byrna LATAM. The loan bears an annual rate of interest of 5% per annum. The loan is to be repaid intwelve* equal monthly installments beginning on* August 19, 2025.Interest income related to the loan receivable was less than $0.1 million for thethree* months ended* February 28, 2026and2025*. The interest income is included in interest income in the Condensed Consolidated Statements of Operations and Comprehensive Income. The loan receivable of $1.0 million and $1.1 million was recorded in Prepaid expenses and other current assets in the condensed consolidated balance sheet as of* February 28, 2026* and* November 30, 2025*, respectively.

Subsequent to* February 28, 2026,the Company and Byrna LATAM entered into athird* amendment to the loan agreement, pursuant to which accrued interest from the stub period was capitalized into principal and the outstanding loan balance was restated at approximately $0.6 million. The amended agreement provides for repayment of the restated principal balance, together with interest at 5%, inthirteen equal monthly installments commencing* April 20, 2026and concluding April 20, 2027.*

Advertising costs are expensed as incurred and reported in Operating Expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income, and include costs of advertising, tradeshows, and other activities designed to enhance demand for the Company's products. The Company recorded advertising costs of approximately $5.3 million and $4.0 million for thethree months ended* February 28, 2026and2025*, respectively.

Product Sales

The Company generates revenue through e-commerce portals to consumers, as well as wholesale distribution of its products and accessories to dealers, distributors, retail stores and large end-users such as private security companies and law enforcement agencies. The Company doesnot manufacture or sell any products regulated by the Bureau of Alcohol, Tobacco, Firearms and Explosives or for military applications. Revenue is recognized upon the transfer of control of goods to the customer, which occurs when the Company has satisfied its performance obligation by making the goods available to the customer’s designated carrier in accordance with the Company’s shipping terms. Under these terms, which are Ex-Works (EXW), title and risk of loss pass to the customer once the goods are picked, packed, and loaded into the carrier’s trailer at the Company’s facility and the order is marked as shipped in the Company’s ERP system. At that point, the Company has a present right to payment, the customer has obtained legal title, and the carrier—acting as the customer’s agent—has physical possession of the goods. Accordingly, revenue is recognized as of the date goods are loaded into the carrier’s trailer, regardless of when the carrier physically removes the trailer from the Company’s premises. Payment terms to customers other than e-commerce customers are generally30-60 days for established customers. New wholesale and large end-user customers typically prepay for their initial order. Revenue is recognized net of estimated returns, discounts, and allowances. Products purchased include a standardone-year assurance-type warranty that cannot be purchased separately. This warranty allows customers to return defective products for repair or replacement withinone year of sale. The Company also sells an extended three-year warranty that* maybe purchased separately and is accounted for as a service-type warranty. Because thefirst* year of warranty coverage is included and non-separable from all launcher purchases, the extendedthree-year warranty represents a service obligation during thesecond andthird years after sale. Amounts billed for extended warranties are recorded as deferred revenue and recognized on a straight-line basis during the coverage period. The Company maintains a reserve for expected warranty claims based on historical experience, and current conditions

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During thesecond quarter of2025, the Company offered a complimentary five-year extended warranty with any launcher purchased during* May 2025.The Company determined the standalone selling price of thefive*-year warranty and, in accordance with ASC606, allocated a portion of the transaction price to this separate performance obligation using the relative standalone selling price method. The allocated amount is recorded as deferred revenue and is recognized on a straight-line basis over thefive-year coverage period. Revenue related to both thethree-year andfive-year extended warranties was immaterial for thethree months ended* February 28, 2026and2025*.

The Company offers e-commerce customers a14-day money-back guarantee, which allows for a full refund of the purchase price, excluding shipping charges, within14 days from the date of delivery. The right of return creates a variable component to the transaction price. The Company estimates returns using the expected value method, as a range of potential outcomes* mayexist. Returns under the14*-day money back guarantee for thethree months ended* February 28, 2026and February 28, 2025was immaterial. For purchases made through Amazon, certain Byrna products-including launchers, CO₂ tubes, chemical irritant projectiles, and pepper sprays are designated as non-returnable. Other accessories are subject to Amazon’s standard30*-day return policy. The Company estimates expected Amazon returns using the same expected value method applied to its direct-to-consumer sales. Expected Amazon-related return reserves for thethree months ended* February 28, 2026and2025* was immaterial.

The Company sells to dealers and retailers for whom there isno money-back guarantee but* mayrequest a return or credit for unforeseen reasons or mayhave agreed-upon discounts marketing allowances, cooperative advertising programs, or other promotional incentives to be netted from amounts invoiced. The Company reserves for returns, discounts marketing programs, and allowances based on past performance, contractual terms and expectations of future activity and reports revenue net of the estimated reserve. The Company's reserve for returns, discounts, marketing programs and allowances for thethree* months ended* February 28, 2026and2025* was $0.1 million and immaterial, respectively.

Shipping and handling activities related to contracts with customers are accounted for as costs to fulfill the performance obligation. Shipping and handling costs associated with the distribution of finished products to customers, are recorded in operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income and are recognized when the product is shipped

Included as cost of goods sold are expenses 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.

Royalty Revenue

The Company recognizes royalty revenue associated with the LATAM Licensing Agreement.

Royalty revenue is recognized in accordance with ASC606. Sales based royalties related to licenses of functional intellectual property are recognized when the licensed products are manufactured, provided the amount is fixed or determinable and collection is probable. Accordingly, the Company recognizes royalty revenue when (i) the licensee’s manufacturing activity occurs, (ii) the royalty amount is fixed or determinable under the agreement, and (iii) collection is probable.

Accounts Receivable

The Company records accounts receivables due from dealers/distributors, large end-users such as retail stores, security companies, and law enforcement agencies. Accounts receivable, net of allowances, was $11.6 million, $10.8 million and $2.6 million as of* February 28, 2026*,* November 30, 2025*, and* November 30, 2024*, respectively. Accounts receivable also includes royalty receivables. The amount of royalty receivable included in accounts receivable was $1.4 million, $1.1 million, andnot material as of* February 28, 2026*,* November 30, 2025*, and* November 30, 2024*, respectively.

Allowance for Expected Credit Losses

The Company maintains an allowance for current expected credit losses on trade receivables. Effective* December 1, 2025,the Company early adopted ASU2025‑05* and applied the guidance prospectively. In connection with the adoption, the Company elected the practical expedient that allows entities to assume that economic conditions existing as of the balance sheet date will remain unchanged when estimating expected credit losses on current trade receivables. Under this approach, the Company estimates expected credit losses based on relevant customer‑specific credit risk information and collection patterns without incorporating forward‑looking economic forecasts for these short‑term receivables. Prior to adoption, the Company estimated its allowance for credit losses by considering historical collectability based on past due status, the creditworthiness of customers based on ongoing credit evaluations, current market conditions, and reasonable and supportable forecasts of future economic conditions. Account balances are written off against the allowance when it is determined that the receivable willnot be recovered.

As of* February 28, 2026*,* November 30, 2025*, and* November 30, 2024*, the total allowance for expected credit losses recorded was $0.4 million, $0.1 million, and $0.3 million, respectively.

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Deferred Revenue

The balance of deferred revenue, which relate to advance payments, unfulfilled e-commerce orders and amounts to be recognized under extendedthree-year,five-year, service warranty, was $0.5 million as of* February 28, 2026* and* November 30, 2025* and $1.8 million as of* November 30, 2024*, respectively.

Changes in deferred revenue for thethree months ended* February 28, 2026* and* November 30, 2025* are summarized below (in thousands). The Company recognized warranty revenue totaling less than $0.1 million during each of thethree months ended* February 28, 2026and2025.*

Revenue Disaggregation

The Company presents disaggregated revenue information by reportable sales channel consistent with ASC280, Segment Reporting, as these channels represent the basis on which the Chief Operating Decision Maker evaluates the Company’s performance.

The following table presents disaggregation of the Company’s revenue by market and distribution channel (in thousands):

The following table presents disaggregation of the Company’s revenue by sales channel (in thousands):

The Company presents revenues net of returns, allowances, and discounts. The following table presents disaggregation of the Company’s net revenue by revenue stream (in thousands):

The following table summarizes inventory (in thousands):

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The following table summarizes cost and accumulated depreciation (in thousands):

The Company recognized $0.6 million and $0.4 million in depreciation expense during thethree months ended* February 28, 2026and2025*, respectively. Depreciation expense is presented in the operating expenses and within cost of goods sold in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

At* February 28, 2026* and* November 30, 2025*, the Company had deposits of $1.9 million and $1.5 million, respectively, with vendors primarily for supply of machinery (molds) and equipment where the vendors havenot completed the supply of these assets and is presented as Deposits for equipment in the Condensed Consolidated Balance Sheets.

The components of intangible assets were as follows (in thousands):

The trademarks have an indefinite life and are assessed annually for impairment. All other intangible assets are finite-lived.

Intangible assets amortization expenses are recorded within operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. Total intangible assets amortization expense for thethree months ended* February 28, 2026and2025* were $0.1 million and $0.1 million, respectively.

Estimated future amortization expense related to intangible assets as of* February 28, 2026* are as follows (in thousands):

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The Company’s accounts payable and accrued liabilities consist of the following (in thousands):

Stock Buyback Program

On* July 31, 2024,the Company's Board of Directors approved a plan to buy back up to $10 million worth of shares of Common Stock (the “Stock Buyback Program”). The Company's Stock Buyback Plan 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 will expire on the sooner of thetwo*-year anniversary of its initiation or until the Company reaches the aggregate limit of $10 million for the repurchases under the program. The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method. In thethree months ended* February 28, 2026*, the Company repurchased 58,905 shares of common stock for $1.0 million. No shares were repurchased during thethree months ended* February 28, 2025.As of February 28, 2026*,0.5 million shares of common stock have been repurchased for $5.8 million.

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2020 Plan

In2020, the Board and the stockholders approved the Byrna Technologies Inc.2020 Equity Incentive Plan (the*“2020* Plan”). The aggregate number of shares of common stock available for issuance in connection with options and other awards granted under the2020 Plan is 2,500,000. In2022, the Company’s Board of Directors and the Company's stockholders approved the increase of the number of shares of common stock available for issuance under the2020 Plan by 1,300,000shares to a total of 3,800,000 shares. The2020 Plan is administered by the Compensation Committee of the Board. The Compensation Committee determines the persons to whom options to purchase shares of common stock, stock appreciation rights (“SARs”), restricted stock units (“RSUs”), and restricted or unrestricted shares of common stock* maybe granted. Persons eligible to receive awards under the2020* Plan are employees, officers, directors, consultants, advisors and other individual service providers of the Company. Awards are at the discretion of the Compensation Committee

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, RSUs, and incentive warrants. 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 generally the date the services were completed, resulting in financial reporting period adjustments to stock-based compensation during either the expected term or the contractual term. Stock-based compensation costs for non-employees are recognized as expense over the vesting period on a straight-line basis. Forfeitures are accounted for as they occur.

The fair value of each grant is estimated on the date of grant by using either the Black-Scholes, Binomial Lattice, or the quoted stock price on the date of grant, unless the awards are subject to market conditions in which case the Company uses the Monte Carlo simulation model. Due to the Company’s limited history, the expected term of the Company’s stock options granted to employees has been determined utilizing the method as prescribed by the SEC’s Staff Accounting Bulletin, Topic14. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on Common Stock and doesnot expect to pay any cash dividends in the foreseeable future.

Stock-Based Compensation Expense

Total stock-based compensation expense was $0.5 million and $0.8 million for thethree months ended* February 28, 2026and2025*, respectively. Total stock-based compensation expense was recorded in Operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

Restricted Stock Units

During thethree months ended* February 28, 2026and2025* the Company didnot grant any RSUs or PSUs. Stock-based compensation expense for RSUs and PSUs for thethree months ended* February 28, 2026and2025* was $0.4 million and $0.4 million, respectively.

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As of* February 28, 2026*, there was $2.3 million of unrecognized stock-based compensation cost related to unvested RSUs which is expected to be recognized over a weighted average of 0.6 years.

The following table summarizes the RSU activity during thethree months ended* February 28, 2026*:

Of the 76,861 RSUs that were settled during thethree months ended* February 28, 2026*,12,331 units were withheld by the Company in exchange for the Company paying for the payroll withholding taxes. For thethree months ended* February 28, 2026*, RSUs of 64,530, net, were issued in connection with the settlement of RSUs.

Stock Options

The Company recorded stock-based compensation expense for options granted to its employees and directors of $0.1 million and $0.4 million during thethree months ended* February 28, 2026and2025*, respectively. As of* February 28, 2026*, there was $0.2 million of unrecognized stock-based compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 0.9 years.

The following table summarizes option activity under the2020 Plan during thethree months ended* February 28, 2026*:

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For thethree months ended* February 28, 2026and2025*, the Company recorded net income and, as such, used diluted weighted-average common shares outstanding when calculating diluted income per share for thethree months ended* February 28, 2026and2025*. Stock options and RSUs that could potentially dilute basic earnings per share (“EPS”) in the future are included in the computation of diluted income per share.

The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for thethree months ended* February 28, 2026and2025*:

The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net income per share for the periods indicated because including them would have had an anti-dilutive effect:

The following transactions are in the normal course of operations and are measured at the amount of consideration established and agreed to by related parties. Amounts due to related parties are unsecured, non-interest bearing and due on demand.

The Company subleases office premises at its Massachusetts headquarters to a corporation owned and controlled by the former Chief Executive Officer (“CEO”) of the Company, beginning* July 1, 2020.The sublease is scheduled to terminate on April 30, 2026.Sublease payments received were a nominal amount for thethree* months ended* February 28, 2026and2025*.

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Operating Leases

The Company has operating leases for real estate in the United States and South Africa and doesnot have any finance leases.

In2019, the Company entered into a real estate lease for office space in Andover, Massachusetts. In* August 2021,the lease was amended to include additional space and extend the term of the existing space byone* year. The new lease expiration date is* February**29,* 2028.

The Company leases office and warehouse space in South Africa. The Company has exercised its right to extend the lease for an additional year. The lease, which was originally set to expire in* December 2024,was extended to December 2025.*

Commencing in* July 2024,the Company entered into a new operating lease for warehouse and retail office space located in Fort Wayne, Indiana. The lease term is forfive years, commencing on July 15, 2024and expiring on July 14, 2029.*

The Company also leases office space in Las Vegas, Nevada, which expires on* January 31, 2027.*

Commencing in* August 2024,the Company entered into a new operating lease for retail office space located in Salem, New Hampshire. The lease term is forfive years, commencing on August 22, 2024and expiring on August 21, 2029.*

Commencing in* August 2024,the Company entered into a new operating lease for retail office space located in Scottsdale, Arizona. The lease term is foreight years, commencing on August 27, 2024and expiring on July 31, 2032.*

Commencing in* November 2024,the Company entered into a new operating lease for retail office space located in Franklin, Tennessee. The lease term is forfive and a half years, commencing on November 1, 2024and expiring on April 30, 2030.*

Commencing in* April**2025,* the Company entered into another operating lease for office space located in Las Vegas, Nevada. The lease term is forthree years, commencing on* April 1, 2025and expiring on April 30, 2028.*

Commencing in* October 2025,the Company assumedtwo* operating leases for retail suites located in Santa Clarita, California. The leases each have atwo-year term, commencing on* October 3, 2025,and expiring on September 14, 2027.The Company subleases both suites to athird*-party dealer. The Company remains the primary obligor under the head leases and invoices the subtenant for an equivalent amount of rent withno markup.

Certain of the Company’s leases contain options to renew and extend lease terms and options to terminate leases early. Reflected in the right-of-use asset and lease liability on the Company’s balance sheets are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain tonot exercise.

For thethree months ended* February 28, 2026and2025*, the elements of lease expense were as follows (in thousands):

Future lease payments under non-cancelable operating leases as of* February 28, 2026* are as follows (in thousands):

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For thethree months ended* February 28, 2026*, the Company recorded less than $0.1 million of income tax benefit. For thethree months ended* February 28, 2025*, the Company recorded $0.1 million of income tax expense. For thethree months ended* February 28, 2026and2025*, the effective tax rate was (0.4)% and 6.4%, respectively.

The income tax benefit recorded for thethree months ended* February 28, 2026*, despite pre‑tax income, was primarily attributable to discrete excess tax benefits recognized in connection with the vesting of share‑based compensation awards during the quarter, which more than offset the income tax expense attributable to ordinary income for the period.

The Company’s effective tax rate differs from the statutory federal rate of 21.0% primarily 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.

On* July 4, 2025,the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA amends U.S. tax law including provisions related to domestic research and development expenses and bonus depreciation, among others. The Company has assessed the impact of the OBBBA on its consolidated financial statements and has included the estimated impact of items affecting its forecasted tax rate as part of its income tax expense computed for the quarter ending February 28, 2026*.

Legal Proceedings

In the ordinary course of our business, the Company* maybe involved in various legal actions and claims, including butnot* limited to product liability, consumer, commercial, tax, and governmental matters, which* mayarise from time to time. Currently, the Company is engaged in a number of legal proceedings; however, in the opinion of management, there wasnot* at least a reasonable possibility the Company* mayhave incurred a material loss concerning loss contingencies for asserted legal and other claims. While the Company doesnot* anticipate any adverse outcomes from these proceedings, legal actions inherently carry uncertainties, and an unfavorable ruling could result in monetary damages that* mayimpact the Company’s business, financial position, results of operations, or cash flows. Although the Company maintains specific insurance coverage for certain risks, it may*still face judgments or need to settle claims in the future that could have potential material adverse effects on its business, financial condition, or results of operations.

Restricted Cash

As of* February 28, 2026*, the Company held $0.4 million of restricted cash that was temporarily unavailable for general corporate purposes. The Company expects the restricted amount to be released to unrestricted cash within the nexttwelve months.

Beginning in fiscal2025, the Company manages its operations throughtwo reportable channels: (1) Direct to Consumer (“DTC”) – includes sales through the Company’s e commerce website, Amazon storefronts, and Company operated retail stores, and (2) Wholesale ("dealer/distributor") – includes sales to distributors, law enforcement agencies, retailers, and international distributors.

The CEO, who is also the CODM, evaluates sales channel performance primarily based on sales channel revenue less cost of sales and gross margin. Operating expenses, including marketing and variable expenses, executive compensation, public company costs, certain IT infrastructure costs, share-based compensation, and itemsnot allocable to a specific segment, are reported as Other Items.No segment specific balance sheet information is regularly reviewed by the CODM; therefore, the Company doesnot report segment assets or segment liabilities

The tables below (in thousands) summarize, by geographic region, the Company’s revenue for thethree months ended* February 28, 2026and2025*, respectively, and long-lived assets and total assets as of* February 28, 2026* and* November 30, 2025*, respectively. The Company’s long-lived assets consist of intangible assets, property and equipment, right of use assets, and deposits for equipment:

The table below (in thousands) summarize the Company’s revenue by reportable sales channel as of* February**28,* 2026:

The table below (in thousands) summarize the Company’s revenue by reportable sales channel as of* February**28,* 2025:

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The Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them.

The Company held cash balances with banks in the United States denominated in U.S. dollars and with banks in South Africa denominated in U.S. dollars and South African rand, and with banks in Canada denominated in Canadian dollars. The South African rand and the Canadian dollar* may*fluctuate against the U.S. dollar based on changes in economic conditions.

During thethree months ended* February 28, 2026*, in comparison to the prior year period, the U.S. dollar on average was stronger in relation to the South African rand, and upon the translation of the Company’s subsidiaries’ assets, liabilities, and certain operating expenses denominated in South African rand. The Company recorded a translation adjustment gain of approximately $0.3 million and a translation adjustment loss of $0.1 million related to the South African rand during thethree months ended* February 28, 2026and2025*, respectively. The translation adjustment related to the Company’s Canadian subsidiary, which was established in2025, was immaterial for the period.

The Company’s South African subsidiary incurs operating costs denominated in South African rand. Consequently, fluctuations in the U.S. dollar exchange rate against the South African rand increases the volatility of sales, cost of goods sold and operating costs and overall net earnings when translated into U.S. dollars. The Company isnot using any forward or option contracts to fix the foreign exchange rates. Using a 10% fluctuation in the U.S. exchange rate, the impact on the income and stockholders’ equity isnot material.

The Company’s Canadian subsidiary’s revenues, cost of goods sold, operating costs, and capital expenditures are denominated in Canadian dollars. Consequently, fluctuations in the U.S. dollar exchange rate against the Canadian dollar* mayincrease the volatility of reported sales, cost of goods sold, operating costs, and net earnings when translated into U.S. dollars. The Company doesnot* currently use forward contracts, options, or other derivative instruments to manage foreign‑currency exchange risk. Management believes that the impact of reasonably possible changes in foreign‑currency exchange rates on the Company’s loss and stockholders’ equity isnot material.

Credit risk is the risk thatone party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, marketable debt securities, accounts receivable, and the loan receivable from Byrna LATAM. The Company maintains cash and cash equivalents with high credit quality financial institutions located in the US, Canada, and South Africa. The Company maintains cash and cash equivalents balances along with marketable securities with financial institutions in the US in excess of amounts insured by the Federal Deposit Insurance Corporation.

The Company provides credit to its customers in the normal course of its operations. It carries out, on a continuing basis, credit checks on its customers. As of* February 28, 2026*, two of the Company's customers accounted for approximately 50% of total accounts receivable. As of* November 30, 2025,*two of the Company's customers accounted for approximately 47% of total accounts receivable.

The Company loaned $1.6 million to Byrna LATAM in* January 2023 (see Note8*). The Company determines if an estimate for a credit loss on this loan is needed by considering the financial position of Byrna LATAM, the current economic environment, collections on our accounts receivable balances with Byrna LATAM, as well reasonable and supportable forecasts to support the payment of this loan. The Company reviews these factors quarterly to determine if any adjustments are needed.

The Company’s marketable debt securities consist of U.S. Treasury Securities, and Corporate Bonds. The Company’s investment policy limits the amounts the Company* mayinvest in anyone* type of investment and requires all investments held by the Company to be at least AA-/Aa3 rated, thereby reducing credit risk exposure.

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On* February 3, 2026,the Company entered into a credit agreement with Texas Capital Bank (the “Credit Agreement”). The Credit Agreement provides for a total committed credit facility of $20.0 million, consisting of (i) a $5.0 million revolving line of credit and (ii) a $15.0 million delayed draw term loan. The Credit Agreement has afive‑year term and matures on February 3, 2031.*Borrowings under the Credit Agreement bear interest at Term SOFR plus a margin ranging from 2.50% to 2.75%, depending on certain financial ratios. The Credit Agreement is secured by substantially all of the Company’s assets.

The revolving line of credit is available for general corporate purposes, including working capital, subject to customary borrowing conditions. The delayed draw term loan is available during a24‑month availability period beginning* February 4, 2026,subject to satisfaction of certain conditions precedent at the time of each borrowing, including the absence of an event of default, compliance with applicable financial covenants on a pro forma basis, and restrictions limiting the use of proceeds to permitted acquisitions. Amounts borrowed under the delayed draw term loan may**not* be reborrowed once repaid.

In connection with the Credit Agreement, the Company incurred debt issuance costs, which were immaterial to the condensed consolidated financial statements. The portion of debt issuance costs expected to be amortized over the nexttwelve months is included in Prepaid assets and other current assets, with the remaining balance included in Other assets on the condensed consolidated balance sheet.

As of* February 28, 2026*, the Company hadno borrowings outstanding under the Credit Agreement. The Company had $5.0 million available under the revolving line of credit and $15.0 million of committed delayed draw term loan capacity during the availability period, subject to the conditions and restrictions described above.

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