Byrna Technologies Inc.
For the period ended May 31, 2026. Filed Jul 9, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
May 31, 2026 · Filed Jul 9, 2026
BYRN$3.83+2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-02-28; filed 2026-04-09.
0001437749-26-011820
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-05-31; filed 2026-07-09.
0001437749-26-023100
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 82 current paragraphs.
37 unchanged; 15 reworded; 24 added; 4 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
DTC revenue decreased to $11.0 million in the second fiscal quarter of 2026 compared to $16.8 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.
Current report
Wholesale revenue decreased to $5.7 million in the second fiscal quarter of 2026 compared to $10.9 million in the prior year period, primarily reflecting elevated dealer and distributor stocking orders and new store load-in orders in the second fiscal quarter of 2025 associated with the launch of the Byrna CL, which did not repeat in the current year period.
Current report
Cost of goods sold was $14.6 million in the second fiscal quarter of 2026 compared to $10.9 million in the prior year period, an increase of $3.7 million, or 33.6%, despite a 42.5% decline in revenue over the same period. The increase 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, as well as improved freight costs 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. Cost of goods sold attributable to Direct-to-Consumer ("DTC") was $8.1 million in the second fiscal quarter of 2026, compared to $5.7 million in the prior year period. Cost of goods sold attributable to Wholesale was $6.5 million in the second fiscal quarter of 2026, compared to $5.3 million in the prior year period. During the three months ended May 31, 2026, the Company received tariff refunds of approximately $1.1 million related to previously paid tariffs, which are reflected as a reduction of cost of goods sold in the current period. The Company 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.
Current report
Net Loss
Current report
Net loss was $10.1 million for the three months ended May 31, 2026, a decrease of $12.5 million compared to net income of $2.4 million for the three months ended May 31, 2025.
Current report
Six months ended May 31, 2026 as compared to six months ended May 31, 2025:
Current report
Net Revenue
Current report
The Company presents revenue net of returns, allowances, and discounts. Net revenues were $45.4 million in the six months ended of May 31, 2026 which represents a decrease of $9.3 million, or 16.9%, as compared to the prior year period revenues of $54.7 million. The decrease was driven by lower wholesale dealer and distributor sales, which decreased by $1.7 million, or 9.4%, from $18.0 million to $16.3 million. Direct to consumer sales, via Amazon and our website, declined in the six months ended May 31, 2026, decreasing by $7.6 million, or 20.7%, to $29.1 million from $36.7 million in the six months ended May 31, 2025. Sales to international markets, including Canada, decreased from $5.5 million in the six months ended May 31, 2025 to $2.6 million in the six months ended May 31, 2026, which includes a net reduction of $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.
Current report
Segment Results
Current report
Direct‑to‑Consumer (DTC)
Current report
Wholesale (Dealer/Distributor)
Current report
Wholesale revenue decreased to $16.3 million in the six months ended May 31, 2026 compared to $18.0 million in the prior year period, primarily reflecting elevated dealer and distributor stocking orders and new store load-in orders in the second fiscal quarter of 2025 associated with the launch of the Byrna CL, which did not repeat in the current year period.
Current report
Cost of Goods Sold
Current report
Cost of goods sold was $26.3 million in the six months ended May 31, 2026 compared to $21.2 million in the prior year period. This increase of $5.0 million, or 23.8%, despite a 16.9% decline in revenue over the same period. The increase 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, 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 million in the six months ended May 31, 2026, compared to $12.6 million in the prior year period. Cost of goods sold attributable to Wholesale was $11.9 million in the six months ended May 31, 2026, compared to $8.6 million in the prior year period. During the six months ended May 31, 2026, the Company received tariff refunds of approximately $1.1 million related to previously paid tariffs, which are reflected as a reduction of cost of goods sold in the current period. The Company 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.
Current report
Gross Profit
Current report
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 million during the six months ended May 31, 2026, or 42.2% of net revenue, compared to gross profit of approximately $33.5 million, or 61.2% of net revenue, in the prior-year period. The decrease in gross margin 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, $3.6 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 million refund 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's 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.
Current report
Operating Expenses
Current report
Operating expenses were $31.1 million in the six months ended May 31, 2026, an increase of $2.6 million, as compared to the prior year period expenses of $28.5 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 Company committed to permanently cease in-house ammunition production. Excluding this charge, operating expenses increased by $1.6 million compared to the prior year period, primarily driven by a decrease of $0.9 million in employee compensation costs and a decrease of $0.8 million in variable expenses, which decreased in proportion to sales volume, partially offset by an increase of $2.5 million in marketing expenses to support business growth and an increase of $0.8 million in professional fees largely attributable to higher accounting, audit, legal, and recruitment-related costs.
Current report
Other Income (Expense)
Current report
Income Tax Provision
Current report
Net Loss
Current report
Net loss was $9.3 million for the six months ended May 31, 2026, a decrease of $13.4 million compared to net income of $2.4 million for the six months ended May 31, 2025.
Current report
Non-GAAP Financial Measures
Current report
Adjusted EBITDA
Removed paragraphs (4)
Previous report
Wholesale revenue increased to $10.7 million in the first fiscal quarter of 2026 compared to $6.3 million in the prior year period, reflecting (i) expanded relationships with national and regional retailers, (ii) enhanced engagement with distributors, and (iii) increased law‑enforcement interest.
Previous report
Cost of goods sold was $11.6 million in the first fiscal quarter of 2026 compared to $10.3 million in the prior year period. This increase of $1.3 million, or 12.6%, is primarily due to the increase in sales volumes. Cost of goods sold attributable to Direct‑to‑Consumer (“DTC”) was $6.3 million in the first fiscal quarter of 2026, compared to $7.0 million in the prior year period. Cost of goods sold attributable to Wholesale was $5.3 million in the first fiscal quarter of 2026, compared to $3.3 million in the prior year period.
Previous report
Net Income
Previous report
Net income was $0.8 million for the three months ended February 28, 2026, a decrease of $0.9 million compared to $1.7 million for the three months ended February 28, 2025.
Reworded paragraphs (15)
Previous wording
The Company operates primarily in the United States and Canada through wholly owned subsidiaries.
Current wording
The Company operates primarily in the United States, South Africa and Canada through wholly owned subsidiaries.
Previous wording
The Company presents revenue net of returns, allowances, and discounts. Net revenues were $29.0 million in the first fiscal quarter of 2026 which represents an increase of $2.8 million, or 10.7%, as compared to the prior year period revenues of $26.2 million. The increase was primarily driven by higher wholesale dealer and distributor sales, which increased by $4.4 million. Direct to customer sales, via Amazon and our website, decreased by $1.8 million, or 8.9%, from $19.9 million in the first fiscal quarter of 2025 to $18.1 million in the same fiscal quarter of 2026. Sales to domestic dealers and retailers improved in the three months ended February 28, 2026, increasing by 114.9% to $10.1 million from $4.7 million in the three months ended February 28, 2025. Sales to international markets, including Canada, decreased from $2.0 million in the three months ended February 28, 2025 to $1.3 million in the three months ended February 28, 2026, which includes $0.2 million in royalty revenue related to the LATAM Licensing Agreement during the first fiscal quarter of 2026.
Current wording
The Company presents revenue net of returns, allowances, and discounts. Net revenues were $16.4 million in the second fiscal quarter of 2026 which represents a decrease of $12.1 million, or 42.5%, as compared to the prior year period revenues of $28.5 million. The decrease was primarily driven by lower direct-to-consumer sales, via Amazon and the Company's website, which decreased by $5.8 million, or 34.5%, from $16.8 million in the second fiscal quarter of 2025 to $11.0 million in the same fiscal quarter of 2026, as well as lower wholesale dealer and distributor sales, which decreased by $6.3 million, or 53.8%, from $11.7 million in the second fiscal quarter of 2025 to $5.4 million in the same fiscal quarter of 2026. Sales to international markets, including Canada, decreased from $3.5 million in the three months ended May 31, 2025 to $1.2 million in the three months ended May 31, 2026, which includes a net reduction of $0.3 million related to the reversal of previously recognized royalty revenue under the LATAM Licensing Agreement, which unfavorably impacted international revenue for the period.
Previous wording
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 $17.4 million during the first fiscal quarter of 2026, or 59.9% of net revenue, compared to gross profit of approximately $15.9 million, or 60.8% of net revenue, in the prior‑year period. The decrease in gross margin was primarily driven by a shift in sales mix toward Wholesale and Retail channels, which generally carry lower average selling prices than Direct‑to‑Consumer (“DTC”) sales, as well as higher manufacturing costs recognized in cost of goods sold during the period related to production variances.
Current wording
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 $1.8 million during the second fiscal quarter of 2026, or 10.9% of net revenue, compared to gross profit of approximately $17.6 million, or 61.6% of net revenue, in the prior-year period. The decrease in gross margin 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, $3.6 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 million refund 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's web, wholesale, Amazon, and international channels, as well as a shift in sales mix toward lower-priced wholesale channels. These unfavorable impacts were partially offset by lower product costs and improved freight costs compared to the prior year period, which included elevated air freight usage and tariff impacts.
Previous wording
Operating expenses were $16.5 million in the first fiscal quarter of 2026, an increase of $2.3 million, as compared to the prior year period expenses of $14.2 million. The increase is due to an increase of $1.3 million in marketing expenses, as the company incurred additional marketing costs to support business growth, an increase of $0.2 million in variable expenses, which increased in proportion to sales volume, an increase of $0.7 million in professional fees, largely attributable to higher accounting, audit, legal, and recruitment‑related costs, a $0.3 million increase in employee compensation costs, and an increase in credit losses of $0.4 million related to a higher allowance for certain customer receivables recorded during the quarter.
Current wording
Operating expenses were $14.6 million in the second fiscal quarter of 2026, a decrease of $0.4 million, as compared to the prior year period expenses of $14.2 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 Company committed to permanently cease in-house ammunition production. Excluding this charge, operating expenses decreased by $1.3 million compared to the prior year period, primarily driven by lower variable expenses and employee compensation costs, partially offset by an increase of $1.2 million in marketing expenses to support business growth and an increase of $0.2 million in professional fees largely attributable to higher accounting, audit, legal, and recruitment-related costs.
Previous wording
For the three months ended February 28, 2026 and February 28, 2025, we recorded less than $0.1 million ofincome tax benefit and$0.1 millionof income tax expense, respectively. For the three months ended February 28, 2026 and February 28, 2025, the effective tax rate was (0.4)% and 6.4%, respectively. The effective tax rate for the three months ended February 28, 2026 reflects discrete excess tax benefits related to the vesting of stock‑based compensation awards, which more than offset tax expense on pre‑tax income. Our tax rate differs from the statutory rate of 21.0% due to the effects of state taxes net of federal benefit, the foreign tax rate differential as a result of Byrna South Africa, permanent non-deductible expenses, and discrete items related to stock‑based compensation.
Current wording
For the three months ended May 31, 2026 and May 31, 2025, we recorded $2.7 million ofincome tax benefit and$0.9 millionof income tax expense, respectively. For the three months ended May 31, 2026 and 2025, the effective tax rate was 21.2% and 23.3%, respectively. The effective tax rate for the three months ended May 31, 2026 reflects discrete excess tax benefits related to the vesting of stock‑based compensation awards, which more than offset tax expense on pre‑tax income. 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.
Previous wording
Adjusted EBITDA is defined as net income as reported in our Condensed Consolidated Statements of Operations and Comprehensive Income excluding the impact of (i) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss and (vi) one-time, non-recurring other expenses or income. Our 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 Adjusted EBITDA to net income, the most directly comparable GAAP measure, is as follows (in thousands):
Current wording
Adjusted EBITDA is defined as net (loss) income as reported in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income excluding the impact of (i) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss and (vi) one-time, non-recurring other expenses or income. Our 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 Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, is as follows (in thousands):
Previous wording
DTC revenue decreased to $18.1 million in the first fiscal quarter of 2026 compared to $19.9 million in the prior year period, primarily driven by a decline in direct‑to‑customer sales through the Company’s online channels, including Amazon and the Company’s website.
Current wording
DTC revenue decreased to $29.1 million in the six months ended May 31, 2026 compared to $36.7 million in the prior year period, primarily driven by a decline in online conversion rates across the Company's direct-to-consumer channels, including Amazon and the Company's website.
Previous wording
We recorded $0.2 million and $0.1 million of foreign currency transaction loss during the three months ended February 28, 2026 and 2025, respectively. We recorded $0.1 million of interest income during the three months ended February 28, 2026 compared to $0.2 million in the three months ended February 28, 2025.
Current wording
We recorded $0.2 million and $0.2 million of foreign currency transaction loss during the six months ended May 31, 2026 and 2025, respectively. We recorded $0.1 million of interest income during the six months ended May 31, 2026 compared to $0.3 million in the six months ended May 31, 2025.
Previous wording
Cash and cash equivalents as of February 28, 2026 totaled $7.5 million, a decrease of $6.2 million from $13.7 million of cash and cash equivalents as of November 30, 2025.
Current wording
Cash and cash equivalents as of May 31, 2026 totaled $9.4 million, a decrease of $4.3 million from $13.7 million of cash and cash equivalents as of November 30, 2025.
Previous wording
Cash used in operating activities was $4.4 million for the three months ended February 28, 2026 compared to cash used in operations of $3.8 million during the prior year period. Net income was $0.8 million compared to $1.7 million for the three months ended February 28, 2026 and February 28, 2025, respectively. Significant changes in noncash and working capital activity are as follows:
Current wording
Cash used in operating activities was $3.0 million for the six months ended May 31, 2026 compared to cash used in operations of $9.2 million during the prior year period. Net loss was $9.3 million for the six months ended May 31, 2026, compared to net income of $4.1 million for the six months ended May 31, 2025. Significant changes in noncash and working capital activity are as follows:
Previous wording
Non-cash activity includes stock-based compensation expense of $0.5 million for the three months ended February 28, 2026, compared to $0.8 million for the three months ended February 28, 2025; and depreciation and amortization expense of $0.6 million for the three months ended February 28, 2026, compared to $0.4 million for the three months ended February 28, 2025; In addition to the non-cash activities mentioned above, the Company recognized a deferred tax asset of less than $0.1 million for the three months ended February 28, 2026, compared to $0.4 million for the three months ended February 28, 2025.
Current wording
Non-cash activity includes stock-based compensation expense of $1.4 million for the six months ended May 31, 2026, compared to $1.6 million for the six months ended May 31, 2025; depreciation and amortization expense of $1.4 million for the six months ended May 31, 2026, compared to $1.0 million for the six months ended May 31, 2025; a $3.5 million impairment charge related to the write-off of ammunition production machinery, equipment, and production-specific leasehold improvements and a $1.0 million write-off of deposits for equipment, both recorded in connection with the Company's decision to permanently cease in-house ammunition production at its Fort Wayne, Indiana facility; and a $5.9 million inventory write-down, of which $3.8 million related to ammunition raw materials associated with the Fort Wayne plant shutdown and the remainder related to a reserve for slow-moving and excess inventory. In addition to the non-cash activities mentioned above, the Company recognized a deferred tax asset of $3.3 million for the six months ended May 31, 2026, compared to a tax provision of $1.0 million for the six months ended May 31, 2025.
Previous wording
Inventory increased during the three months ended February 28, 2026 by $0.3 million compared to an increase of $3.2 million for the three months ended February 28, 2025. Accounts receivable increased by $0.9 million during the three months ended February 28, 2026 as compared to an increase of $0.3 million for the three months ended February 28, 2025. Accounts payable and accrued liabilities decreased during the three months ended February 28, 2026 by $5.1 million compared to a decrease of $1.9 million for the three months ended February 28, 2025. Prepaid expenses and other current assets increased by $0.4 million during the three months ended February 28, 2026 compared to an increase of $0.5 million during the three months ended February 28, 2025. Operating lease liabilities decreased by $0.2 million during the three months ended February 28, 2026 compared to a decrease of $0.1 million during the three months ended February 28, 2025. Deferred revenues decreased $0.1 million during the three months ended February 28, 2026 compared to a decrease of $1.3 million for the three months ended February 28, 2025.
Current wording
Inventory used cash of $3.6 million during the six months ended May 31, 2026, reflecting net inventory purchases during the period after excluding non-cash inventory reserves and impairment charges recorded in connection with the Company's decision to permanently cease in-house ammunition production at its Fort Wayne, Indiana facility and reserves for slow-moving and excess inventory, compared to a use of cash of $12.3 million for the six months ended May 31, 2025, with the significant decrease in cash used driven by lower inventory purchasing activity in the current period. Accounts receivable decreased by $6.1 million during the six months ended May 31, 2026 as compared to an increase of $3.9 million for the six months ended May 31, 2025. Accounts payable and accrued liabilities decreased during the six months ended May 31, 2026 by $6.8 million compared to an increase of $1.3 million for the six months ended May 31, 2025. Prepaid expenses and other current assets decreased by $0.7 million during the six months ended May 31, 2026 compared to an increase of $0.6 million during the six months ended May 31, 2025. Operating lease liabilities decreased by $0.4 million during the six months ended May 31, 2026 compared to a decrease of $0.2 million during the six months ended May 31, 2025. Deferred revenues decreased $0.2 million during the six months ended May 31, 2026 compared to a decrease of $1.5 million for the six months ended May 31, 2025.
Previous wording
Cash flows used in investing activities was $0.6 million for the three months ended February 28, 2026 compared to $5.3 million cash used for the three months ended February 28, 2025. The prior year period investing activities primarily relates to the purchases of property and equipment and marketable securities while the current period relates to purchases of property and equipment. Property and equipment increased during the three months ended February 28, 2026 by $0.6 million compared to purchases of $2.6 million for the three months ended February 28, 2025. During the three months ended February 28, 2025, the Company purchased $2.7 million of marketable debt securities. There were no purchases of marketable debt securities during the three months ended February 28, 2026.
Current wording
Cash flows used in investing activities was $0.4 million for the six months ended May 31, 2026 compared to $0.6 million cash used for the six months ended May 31, 2025. The prior year period investing activities primarily relates to purchases of property and equipment, acquisition of Federal Firearms Licenses, and proceeds from sale of marketable securities while the current period relates to purchases of property and equipment and proceeds from the sale of marketable debt securities. Purchases of property and equipment during the six months ended May 31, 2026 amounted to $1.1 million, as compared to $3.6 million during the six months ended May 31, 2025. Sales of marketable debt securities amounted to $0.8 million during the six months ended May 31, 2026 compared to $3.0 million during the six months ended May 31, 2025.
Previous wording
Cash flows used in financing activities was $1.0 million for the three months ended February 28, 2026, compared to cash provided by financing activities of $0.1 million for the three months ended February 28, 2025. The current year amount was primarily composed of taxes paid on issuances of restricted stock units of less than $0.1 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 and taxes paid on issuances of restricted stock units.
Current wording
Cash flows used in financing activities was $1.1 million for the six months ended May 31, 2026, compared to cash provided by financing activities of $0.1 million for the six months ended May 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 and taxes paid on issuances of restricted stock units.
Previous wording
Our unaudited condensed 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 the 2025 10-K. During the three months ended February 28, 2026, there were no significant changes to our critical accounting policies from those described in our 2025 10-K.
Current wording
Our unaudited condensed 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 the 2025 10-K. During the three and six months ended May 31, 2026, there were no significant changes to our critical accounting policies from those described in our 2025 10-K.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
We recorded less than $0.1 million of foreign currency transaction gain during the three months ended May 31, 2026, compared to $0.1 million of foreign currency transaction loss during the three months ended May 31, 2025. We recorded less than $0.1 million of interest income during the three months ended May 31, 2026, compared to $0.1 million in the three months ended May 31, 2025.
Current report — wording carried from elsewhere
For thesix months ended May 31, 2026 and May 31, 2025, we recorded $2.7 million ofincome tax benefit and$1.0 millionof income tax expense, respectively. For thesix months ended May 31, 2026 and May 31, 2025, the effective tax rate was 23.1% and 17.2%, respectively. The effective tax rate for the six months ended May 31, 2026 reflects discrete excess tax benefits related to the vesting of stock‑based compensation awards, which more than offset tax expense on pre‑tax income. 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.
Current report — wording carried from elsewhere
In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide an additional financial metric that is not prepared in accordance with GAAP (non-GAAP) with presenting non-GAAP adjusted EBITDA. Management uses this non-GAAP financial measure, 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 this non-GAAP financial measure helps 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 measure.
Current report — wording carried from elsewhere
Accordingly, we believe that this non-GAAP financial measure reflects 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.
Current report — wording carried from elsewhere
This non-GAAP financial measure does 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 measure as a tool for comparison.
Current report — wording carried from elsewhere
Adjusted EBITDA is defined as net (loss) income as reported in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income excluding the impact of (i) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss and (vi) one-time, non-recurring other expenses or income. Our 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 Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, is as follows (in thousands):