Byrna Technologies Inc.

BYRNA TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended August 31, 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 launchers are less-lethal self-defense devices that are powered byCO2 and fire*.61* and*.68* caliber spherical kinetic and chemical irritant projectiles. The Company also offers complementary personal safety products, including chemical irritant defense sprays and personal safety alarms. 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 launchers are manufactured at its facilities in Fort Wayne, Indiana. Since ceasing in-house ammunition production during thesecond quarter of fiscal2026 (see Note12), the Company has sourced its ammunition from athird-party contract manufacturer. Chemical irritant defense sprays and personal safety alarms are produced bythird-party contract manufacturers. 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 athird-party logistics provider to fulfill customer orders placed through the Company's Canadian e-commerce platform. In* August 2026,the Company acquired substantially all of the assets of Hero Defense Systems, LLC, a designer and seller of less-lethal defense products, in a transaction accounted for as a business combination (see Note6*).

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

As of* August 31, 2026*, the Company had an accumulated deficit of approximately $59.3 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 also has a $5.0 million revolving line of credit, which was undrawn and available for general corporate purposes, including working capital, as of* August 31, 2026*. The Company's $15.0 million delayed draw term loan* maybe used only to finance permitted acquisitions and isnot* available to fund operations. Both facilities are subject to financial covenants, including a maximum leverage ratio and a minimum fixed charge coverage ratio, which are tested quarterly regardless of amounts outstanding (see Note24, Credit Facility). The Company generated a net loss of $12.2 million and used $3.5 million of cash in operations for thenine months ended* August 31, 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.

In accordance with ASC205-40, Presentation of Financial Statements—Going Concern, management evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern withinone year after the date the condensed consolidated financial statements are issued. In performing this evaluation, management considered the Company's net loss of*$12.2* million for thenine months ended* August 31, 2026,which included approximately $10.5 million of non-cash impairment and inventory charges, substantially all of which were recorded in connection with the cessation of in-house ammunition production and the rationalization of certain launcher components, and net cash used in operating activities of$3.5* million. Management also considered the Company's liquidity and absence of outstanding borrowings, the reduction in inventory purchasing during thethird quarter, the Company's inventory on hand, and projected cash flows, which reflect the seasonally strongerfourth fiscal quarter and donot assume additional tariff refunds, a recurrence of the decrease in accounts receivable, or borrowings under the Credit Agreement. Based on this evaluation, management concluded thatno conditions or events exist that, when considered in the aggregate, raise substantial doubt about the Company's ability to continue as a going concern withinone year after the date the condensed consolidated financial statements are issued.

These unaudited condensed consolidated financial statements for thethree andnine months ended* August 31, 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 andnine months ended* August 31, 2026and2025*, and its cash flows for thenine months ended* August 31, 2026and August 31, 2025* 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 net cash flows from operating, investing, or financing activities.

7

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, the acquisition-date fair values of assets acquired and contingent consideration in business combinations, the subsequent measurement of contingent consideration, valuation allowance for deferred tax assets, incremental borrowing rate on leases, useful life of long-lived assets, impairment 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 (Loss) 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.

8

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.

During thethree months ended* May 31, 2026,the Company identified the cessation of ammunition production at its Fort Wayne, Indiana facility as a triggering event requiring an interim assessment of goodwill for impairment. In accordance with ASC350*-20-35-3A, the Company performed a qualitative assessment of relevant events and circumstances — including the nature and financial impact of the Fort Wayne cessation, the Company's overall financial performance, industry and market conditions, and other entity-specific factors — to determine whether it was more likely thannot that the fair value of the reporting unit was less than its carrying amount. Based on this qualitative assessment, the Company concluded that it wasnot more likely thannot that the fair value of the reporting unit was less than its carrying amount, and thereforeno quantitative impairment test was required andno impairment charge was recorded. As of* November 30, 2025*, the Company determined there wereno indicators of goodwill impairment.

During thethree months ended* August 31, 2026,the Company evaluated whether events or changes in circumstances, including the continued decline in net revenue, the net loss for the period, and the decline in the Company's stock price, indicated that it was more likely thannot* that the fair value of its reporting unit was less than its carrying amount. As part of this evaluation, the Company compared its market capitalization of approximately $84.5 million as of* August 31, 2026,based on the closing price of its common stock of $3.61 per share and 23,404,754 shares outstanding, to the carrying amount of its stockholders' equity of $55.1 million, which market capitalization exceeded by approximately 53%. Based on this evaluation, the Company concluded that it wasnot* more likely thannot that the fair value of its reporting unit was less than its carrying amount as of* August 31, 2026,andno impairment charge was recorded. The Company will perform its annual goodwill impairment test during thefourth* quarter of fiscal2026. A continued decline in the Company's results of operations or stock price could result in an impairment of goodwill in future periods.

Goodwill increased from $2.3 million as of* November 30, 2025to $2.7 million as of August 31, 2026*as a result of $0.5 million of goodwill recognized in connection with the Hero Acquisition described below.

Hero Defense Systems Acquisition

On* July 7, 2026,the Company entered into an Asset Purchase Agreement (the "Hero APA") with Hero Defense Systems, LLC, a Nevada limited liability company ("Hero"), pursuant to which the Company acquired substantially all of the assets used in or related to Hero's business of designing, developing, manufacturing, marketing, and selling less-lethal defense products and related accessories, including intellectual property, inventory, and equipment, tooling, and molds (the "Hero Acquisition"). The Hero Acquisition closed on August 6, 2026 (the "Hero Acquisition Date"). The Company didnot* assume any liabilities or contracts of Hero. The Hero Acquisition was accounted for as a business combination under ASC Topic805, Business Combinations, using the acquisition method of accounting.

The contractual purchase price was $1.25 million, plus the contingent royalty payments described below, consisting of (i) $0.625 million in cash, of which $0.5 million was paid at closing and $0.125 million was held back for up toeighteen months as security for Hero's indemnification obligations, and (ii) $0.625 million payable in shares of the Company's common stock, with the number of shares determined based on the volume-weighted average price of the Company's common stock over the60 trading days preceding closing, subject to a cap of 104,000 shares. At closing, the Company issued 104,000 shares of common stock, which had an acquisition-date fair value of $0.5 million based on the closing price of the Company's common stock of $4.36 per share on the Hero Acquisition Date. The shares issued as stock consideration are unregistered, subject to customary transfer restrictions, and subject to asix-month lock-up period following closing. The holdback consideration is included in accounts payable and accrued liabilities in the condensed consolidated balance sheet as of* August 31, 2026.*

As additional consideration, the Company will pay Hero a royalty equal to 3.5% of net sales of certain existing and successor products over a royalty term, subject to a guaranteed minimum aggregate royalty of $0.25 million, payable infive equal annual installments of $0.05 million, and subject to an overall cap equal to the earlier of $5.0 million in aggregate royalty payments or thefifth anniversary of closing. The Company recognized a contingent consideration liability for the royalty at its acquisition-date fair value of $0.6 million, determined as the present value of expected royalty payments using a probability-weighted expected cash flow model acrossthree net sales scenarios for the acquired and successor products. The measurement was based upon Hero's future performance expectations and prior operating experience. In determining the probability of achieving certain net sales levels, the Company considered the operating history of Hero, current and expected revenue from existing and future customers, and a range of potential outcomes based on management's experience. Significant judgment was employed in determining the appropriateness of these assumptions as of the acquisition date. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration recorded. The liability consists of (i) the present value of the guaranteed minimum royalty of $195 thousand, discounted at approximately 8.35%, which is treated as fixed deferred consideration and accreted through interest expense, and (ii) the present value of expected royalty payments in excess of the guaranteed minimum of $454 thousand, discounted at approximately 14.0%. The fair value measurement of the contingent component is based on significant inputsnot observable in the market and therefore represents a Level3 measurement. Becauseno royalty payment is due withintwelve months of* August 31, 2026,the entire $0.6 million liability is classified as non-current in the condensed consolidated balance sheet as of August 31, 2026.The contingent component will be remeasured to fair value at each reporting date, with changes in fair value recognized in operating expenses in the condensed consolidated statements of operations and comprehensive (loss) income. The amount payable under the contingent royalty arrangement is based on 3.5% of net sales of certain existing and successor products over the royalty term, which ends on the earlier of the date aggregate royalty payments reach $5.0 million or thefifth* anniversary of closing. As of the Hero Acquisition Date and* August 31, 2026,the range of undiscounted amounts the Company could be required to pay under the arrangement was $0.25 million, representing the guaranteed minimum aggregate royalty, to $5.0 million, representing the aggregate royalty cap. See Note7* for additional information regarding the fair value measurement of the contingent consideration liability.

The total acquisition-date fair value of consideration transferred was $1.7 million, consisting of cash paid at closing of $0.5 million, holdback consideration of $0.1 million, stock consideration of $0.5 million, and contingent royalty consideration of $0.6 million. The preliminary allocation of the purchase price to the assets acquired consisted of inventory of $0.1 million, property and equipment of $0.1 million, identifiable intangible assets of $1.1 million, and goodwill of $0.5 million. No liabilities were assumed. Identifiable intangible assets consist of trademarks and trade names of $0.1 million, which will be amortized over aone-year useful life, patents and patent applications of $0.9 million, which will be amortized over aten-year useful life, and domain names of less than $0.1 million. No customer relationship intangible asset was recognized because Hero's sales were generated principally through marketplace and direct-to-consumer channels characterized by transactional consumer purchases, andno customer or supplier contracts were acquired. The acquired technology is reflected in the patents and patent applications recognized. Theone-year useful life assigned to the acquired trademarks and trade names reflects the Company's plan to phase out the acquired trade names in connection with a planned product relaunch in fiscal2027 (see Note13). Acquired equipment, tooling, and molds will be depreciated over an estimated remaining useful life of 15 months, beginning* September 2026.*Goodwill represents the excess of consideration transferred over the fair value of the net identifiable assets acquired and is primarily attributable to the processes and know-how of Hero's founders accessed through the transition consulting arrangements described below, expected synergies from integrating Hero's products into the Company's existing distribution, marketing, and dealer network, and the acceleration of the Company's product development timeline.

The purchase price allocation is preliminary and subject to change as the Company finalizes the valuation of the acquired assets and the contingent consideration and the related income tax analysis, which is expected to be completed within theone-year measurement period. A portion of the goodwill is expected to be deductible for income tax purposes. Acquisition-related costs werenot material. In connection with the Hero Acquisition, the Company engaged Hero'stwo founders under separate consulting agreements to provide transition services forthree months following the Hero Acquisition Date at $10,000 per founder per month. These payments are for post-combination services, are recognized as compensation expense as the services are rendered, and arenot included in consideration transferred. The results of operations of Hero have been included in the Company's condensed consolidated financial statements from the acquisition date and werenot material. Pro forma results of operations havenot been presented because the effects of the Hero Acquisition werenot material to the Company's condensed consolidated financial statements.

The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level3) for thenine months ended* August 31, 2026* (in thousands):

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 loss in stockholders’ equity and a component of total comprehensive (loss) income in the consolidated statements of operations and comprehensive (loss) 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 (loss) income and unrealized losses that arenot credit related are recognized in accumulated other comprehensive loss. For thethree andnine months ended* August 31, 2026and2025*, both unrealized and realized gains on marketable debt securities were immaterial. During thenine months ended* August 31, 2026,*the Company's corporate bond matured and was redeemed at par for $0.75 million. The resulting realized gain of less than $0.1 million was reclassified from accumulated other comprehensive loss to other income.

The following table summarizes our marketable securities and available-for-sale investments as of* August 31, 2026* (in thousands):

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

The marketable debt securities mature withinone year as of* August 31, 2026* and* November 30, 2025*.

9

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* August 31, 2026*:

The following table summarizes the fair value of liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of* August 31, 2026*:

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

10

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 Company recognizedno royalty revenue during thethree* andnine months ended* August 31, 2026*, and gross royalties receivable outstanding as of* August 31, 2026* totaled $0.8 million. As of* August 31, 2026*, the Company recorded an allowance for expected credit losses for the full amount of the royalties receivable from Byrna LATAM. The amount of royalty earned during thethree andnine months ended* August 31, 2025* was $0.3 million and $1.1 million, respectively. The amount outstanding as of* November 30, 2025* was $1.1 million and are included in accounts receivable in the condensed consolidated balance sheet.

In* January 2023and as amended from time to time, the Company loaned $1.6 million to Byrna LATAM. The loan bears interest at a fixed annual rate of 5% per annum. In April 2026,the Company and Byrna LATAM entered into athird* amendment to the loan agreement, pursuant to which accrued interest of less than $0.1 million from the period between the last scheduled payment date under the prior repayment schedule and the effective date of thethird amendment (the "stub period") was capitalized into the outstanding principal balance of approximately $0.6 million, resulting in a restated principal balance of approximately $0.6 million. On* June 23, 2026,the Company and Byrna LATAM entered into afourth* amendment to the loan agreement (the "Fourth Amendment"), which supersedes thethird amendment in its entirety. Pursuant to the Fourth Amendment, accrued interest of approximately $0.1 million was capitalized into the outstanding principal balance, resulting in a restated principal balance of approximately $0.7 million, which is repayable, together with interest at a fixed annual rate of 5% per annum, infourteen equal monthly installments of approximately $0.1 million commencing* May 20, 2026and concluding June 20, 2027.Interest income related to the loan receivable was less than $0.1 million for each of thethree* andnine months ended* August 31, 2026and2025*, and is included in interest income in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The loan receivable of $0.6 million and $1.1 million was recorded in Prepaid expenses and other current assets in the condensed consolidated balance sheet as of* August 31, 2026* and* November 30, 2025*, respectively.

The Company evaluated the loan receivable from Byrna LATAM for expected credit losses as of* August 31, 2026*. The Company and Byrna LATAM have agreed that, in the near term, amounts due under Byrna LATAM's commercial invoices, which consist primarily of royalties,* maybe settled through the Company's acceptance of inventory manufactured by Byrna LATAM, the value of which will be applied against the outstanding invoices when the inventory is received. Because the Company is still evaluating the inventory it will accept, and the value and timing of any such settlement are uncertain, the Company recorded an allowance for expected credit losses for the full amount of the commercial invoices. The loan receivable isnot* subject to this arrangement. Byrna LATAM has committed to repay the loan in cash in accordance with the Fourth Amendment, and the outstanding balance of the loan decreased from $1.1 million as of* November 30, 2025* to $0.6 million as of* August 31, 2026*. Based on this evaluation, the Company concluded thatno allowance for expected credit losses on the loan receivable was required as of* August 31, 2026*. The Company will continue to evaluate the collectability of the loan receivable each reporting period.

Advertising costs are expensed as incurred and reported in Operating Expenses in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) 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 $5.2 million and $15.5 million for thethree andnine months ended* August 31, 2026*, respectively. The Company recorded advertising costs of approximately $4.0 million and $11.9 million for thethree andnine months ended* August 31, 2025*, respectively. The increase in advertising costs for thethree andnine months ended* August 31, 2026* primarily reflects increased national television, connected TV and audio advertising and, beginning in thethird quarter of fiscal year2026, fees for marketing agencies engaged by the Company.

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’s personal security launchers and projectiles arenot firearms or ammunition regulated as such by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Company doesnot sell products 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.

11

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 andnine months ended* August 31, 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* August 31, 2026* were 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 andnine months ended* August 31, 2026and2025* were 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* andnine months ended* August 31, 2026* was less than $0.1 million for each period. The Company's reserve for returns, discounts, and allowances for thethree andnine months ended* August 31, 2025* was immaterial.

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 (Loss) 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.

During thenine months ended* August 31, 2026,the Company recorded a net reversal of previously accrued royalty revenue of $0.3 million, all of which was recorded during thethree* months ended* May 31, 2026.This adjustment resulted from revised reporting received from LATAM related to its royalty obligations. The Company reviewed and reconciled these reports on a month-by-month basis dating back to the inception of the arrangement, resulting in the reversal. This reconciliation reflected updated production and sales information provided by LATAM, which differed from amounts previously reported and used as the basis for the Company's royalty accrual estimates. As a result, the Company determined that royalty revenue had been over-accrued in prior periods and recorded a corresponding reversal during thesecond* fiscal quarter of2026. The Company will continue to monitor royalty accruals as additional information from LATAM becomes available and will true-up such accruals as necessary in future periods.

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 $2.5 million, $10.8 million and $2.6 million as of* August 31, 2026*,* November 30, 2025*, and* November 30, 2024*, respectively. Accounts receivable also includes royalty receivables. The gross amount of royalty receivable included in accounts receivable was $0.8 million, $1.1 million, andnot material as of* August 31, 2026*,* November 30, 2025*, and* November 30, 2024*, respectively. The royalty receivable as of* August 31, 2026* was fully reserved through the allowance for expected credit losses.

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* August 31, 2026*,* November 30, 2025*, and* November 30, 2024*, the total allowance for expected credit losses recorded was $2.1 million, $0.1 million, and $0.3 million, respectively. The increase in the allowance for expected credit losses during thenine months ended* August 31, 2026was primarily due to the Company recording a full reserve against the royalty receivable from Byrna LATAM and against the outstanding receivables oftwo* other customers.

12

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 $0.2 million, $0.5 million, and $1.8 million as of* August 31, 2026*,* November 30, 2025*,* November 30, 2024*, respectively.

Changes in deferred revenue for thenine months ended* August 31, 2026* and the year ended* November 30, 2025* are summarized below (in thousands). The Company recognized warranty revenue totaling less than $0.1 million during each of thethree andnine months ended* August 31, 2026and2025*.

Revenue Disaggregation

The Company presents disaggregated revenue information by reportable sales channel in accordance with ASC606-10-50-5, Revenue from Contracts with Customers, which requires disaggregation of revenue into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The categories presented are consistent with the reportable sales channels evaluated by the Chief Operating Decision Maker (see Note22).

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):

Inventory consists of raw materials, work-in-process, and finished goods, and is stated at the lower of cost or net realizable value. Costs included in inventory consist of materials, direct labor, and manufacturing overhead. The Company imports certain items that are subject to customs duties and tariffs. Import duties and tariffs that are directly attributable to the acquisition of inventory are capitalized as part of the cost of inventory and are subsequently recognized in cost of goods sold as the related inventory is sold. From time to time, the Company* maybecome entitled to refunds of previously paid tariffs as a result of governmental actions, legal proceedings, administrative rulings, or approved refund claims. Consistent with ASC450*-30, Gain Contingencies, the Company doesnot recognize a tariff refund until the gain is realized or realizable — generally upon receipt of funds, or when a refund claim has been approved and quantified by the applicable governmental authority such that realization is assured. Amounts recognized are recorded as a reduction of the carrying value of inventory to the extent the related inventory remains on hand, or as a reduction of cost of goods sold to the extent the related inventory has already been sold.

During thenine months ended* August 31, 2026,the Company received refunds of previously paid tariffs of approximately $3.3 million in cash, which were recorded as a reduction of cost of goods sold in the period received, as all of the related inventory had already been sold. Of this amount, approximately $2.3 million was received and recognized during thethree* months ended* August 31, 2026.*

Potential tariff refunds that remain contingent upon future events, unresolved legal or administrative proceedings, or pending governmental approval arenot recognized until the applicable recognition criteria have been met. The Company evaluates outstanding refund claims each reporting period and provides disclosure of significant contingencies and subsequent developments, as appropriate.

The Company periodically reviews its inventory for excess, slow-moving, and obsolete items and records a reserve when the carrying value of inventory exceeds its estimated net realizable value. During thenine months ended* August 31, 2026,the Company recorded inventory write-downs and reserves totaling $6.0 million, substantially all of which were recorded during thethree* months ended* May 31, 2026,and are included in cost of goods sold in the condensed consolidated statements of operations and comprehensive (loss) income. Of this amount, $3.6 million related to the write-down of raw materials, work-in-process, and finished goods inventory associated with the cessation of ammunition production operations at the Company's Fort Wayne, Indiana facility (see Note12,* Property and Equipment), as such inventory was determined to have limited orno recoverable value following the decision to cease production.

The majority of the remaining $2.4 million related to launcher components that due to a strategic decision, will eithernot be reworked and therefore scrapped or for which expected future demand and marketability had declined, resulting in an incremental reserve to reduce the carrying value of such inventory to its estimated net realizable value. The remaining reserve balance of $0.3 million was due to the Company's review of inventory aging, turnover rates, and updated demand forecasts, conducted in connection with an evaluation of product line strategy and sales priorities undertaken during thesecond fiscal quarter of2026.

The following table summarizes inventory (in thousands):

13

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

The Company recognized $1.6 million and $1.4 million in depreciation expense during thenine months ended* August 31, 2026and2025*, respectively. The Company recognized $0.4 million and $0.6 million in depreciation expense during thethree months ended* August 31, 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 (Loss) Income.

During thesecond fiscal quarter of2026, the Company committed to a plan to permanently cease in-house ammunition production operations at its Fort Wayne, Indiana facility. Going forward, ammunition will be sourced from athird-party contract manufacturer. In connection with this decision, the Company performed an impairment assessment of the long-lived assets associated with the ammunition production function under ASC360, Property, Plant, and Equipment.

The ammunition production machinery, equipment, and production-specific leasehold improvements were determined to constitute an abandoned asset group, as these assets haveno alternative use within the Company's remaining operations. The fair value of the production equipment was determined to approximate zero, as expected scrap and salvage proceeds werenot material after considering costs to dismantle and remove the equipment. Accordingly, the Company recognized a total impairment loss of approximately $3.5 million during thethree months ended* May 31, 2026,*comprised of $3.5 million related to the write-off of ammunition production machinery and equipment and less than $0.1 million related to the write-off of production-specific leasehold improvements. The impairment loss is included in cost of goods sold in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

In addition, during thethree months ended* May 31, 2026,the Company wrote off approximately $1.0 million of deposits for equipment associated with the Fort Wayne ammunition production facility. These assets hadnot* yet been placed in service at the time the decision to cease production was made and therefore haveno recoverable value. The write-off is reflected in operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

At* August 31, 2026* and* November 30, 2025*, the Company had deposits of $0.2 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 Company's trademarks, other than those acquired in the Hero Acquisition, have an indefinite life and are assessed annually for impairment. The trademarks acquired in the Hero Acquisition (see Note6, Goodwill) are finite-lived and will be amortized over aone-year useful life beginning in* September 2026,reflecting the Company's plan to phase out the acquired trade names in connection with a planned product relaunch in fiscal2027.* 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 (Loss) Income. Total intangible assets amortization expense for thenine months ended* August 31, 2026and2025* was $0.2 million in each period. Total intangible assets amortization expense for thethree months ended* August 31, 2026and2025* was less than $0.1 million in each period.

Estimated future amortization expense related to intangible assets as of* August 31, 2026* are as follows (in thousands):

14

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 was approved to 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 Stock Buyback Program expired by its terms on* July 31, 2026.The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method. In thenine* months ended* August 31, 2026*, the Company repurchased 58,905 shares of common stock for $1.0 million. No shares were repurchased during thethree months ended* August 31, 2026*. As of* August 31, 2026*,0.5 million shares of common stock have been repurchased for $5.8 million.

15

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 1,300,000 shares 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

Stock-based compensation costs are recognized as expense over the employee's requisite service period, on a straight-line basis. Total stock-based compensation expense was $0.6 million and $0.7 million for thethree months ended* August 31, 2026and2025*, respectively, and $2.0 million and $2.3 million for thenine months ended* August 31, 2026and2025*, respectively. Total stock-based compensation expense was recorded in Operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

Restricted Stock Units

During thenine months ended* August 31, 2026,the Company granted performance-based restricted stock units ("PSUs") to certain employees. The number of PSUs that mayultimately vest is contingent upon the achievement of specified GAAP revenue targets for the fiscal year2027* performance period (* December 1, 2026through November 30, 2027),as well as the participant's continued employment through November 30, 2028.The actual number of shares that maybe earned ranges from 0% to 200% of the target award, depending on the level of achievement of the performance goals. Any earned PSUs will vest on November 30, 2028,subject to continued service through such date. Compensation expense is recognized for PSUs only to the extent that it is probable the performance conditions will be achieved. During thethree* months ended* August 31, 2026,the Company granted 69,007 time-based RSUs. During thenine* months ended* August 31, 2026,the Company granted 431,368 RSUs, consisting of 269,271 time-based RSUs,132,297 performance-based RSUs, and 29,800 market-based PSUs (described below). Stock-based compensation expense for the RSUs for thethree* andnine months ended* August 31, 2026*was $0.6 million and $1.8 million, respectively.

In connection with the appointment of the Company's Chief Executive Officer ("CEO") effective* March 2, 2026,the Company also granted a separate new-hire performance-based equity award consisting of PSUs with a grant-date value of $250,000. This award vests in full, if at all, on thetwo-year anniversary of the grant date, subject to the achievement of a market-based performance condition requiring that the volume-weighted average price ("VWAP") of the Company's common stock over the final90* days of thetwo-year performance period equals or exceeds 156% of the closing stock price on the grant date, and subject to the CEO's continued employment through the vesting date. If the market condition isnot satisfied on the vesting date, the award will be forfeited in its entirety withno partial vesting. Because this award is subject to a market condition, compensation expense is recognized on a straight-line basis over the requisite service period regardless of whether the market condition is ultimately achieved.

In connection with the promotion of the Company's then-President effective* March 17, 2026,the Company granted a promotion retention equity award consisting of 20,810 RSUs in the aggregate, comprised of 10,405 time-based RSUs and 10,405 PSUs. The PSU portion of this award cliff vests on theone-year anniversary of the grant date, subject to the achievement of a market-based performance condition requiring that the VWAP of the Company's common stock over the final90* days of theone-year performance period equals or exceeds 125% of the closing stock price on* March 16, 2026,and subject to the President's continued employment through the vesting date. If the performance condition isnot* satisfied on the vesting date, the PSUs will be forfeited in their entirety withno partial vesting. Because this award is subject to a market condition, compensation expense was recognized on a straight-line basis over the requisite service period regardless of whether the market condition is ultimately achieved. On* June 13, 2026,Mr. Pham separated from the Company. In accordance with the terms of the award agreements, the termination of Mr. Pham's employment without Cause withintwelve* months of the grant date resulted in the full acceleration of all 20,810 RSUs comprising this award, with all vesting conditions, including the market-based performance condition, deemed satisfied as of the separation date. Settlement of these units is subject to asix-month delay required under Section409A of the Internal Revenue Code. All other unvested equity awards held by Mr. Pham were forfeited as of the separation date, including 7,990 PSUs and approximately 5,327 unvested time-based RSUs granted* May 2, 2025.In connection with the separation, the Company also agreed to provide Mr. Pham with cash severance equal toone* times his annual base salary of $380,000, payable overtwelve months, reimbursement of COBRA premiums for up totwelve months, and a pro-rata short-term incentive payment of $145,170, in each case subject to the terms of the separation agreement.

The grant-date fair value of PSU awards subject to market conditions was determined using a Monte Carlo simulation model, as the market-based vesting conditions preclude the use of a standard option pricing model. The Monte Carlo simulation estimates the probability of satisfying the market condition by simulating future stock price paths using Geometric Brownian Motion over the requisite performance period. For the CEO new-hire PSU award granted* March 2, 2026,*the following assumptions were used: a grant-date stock price of $12.89, a VWAP threshold of 156% of the grant-date stock price, a performance period of 2.0 years, a risk-free interest rate of 3.44%, expected volatility of 80.0%, and an expected dividend yield of 0.0%, resulting in a grant-date fair value of approximately $7.69 per unit. Expected volatility was based on the Company's historical equity volatility over a lookback period commensurate with the remaining term to the vesting date. The risk-free interest rate was based on the interpolated continuous U.S. Treasury yield commensurate with the remaining term to the vesting date as of the grant date. The Company doesnot currently pay dividends and doesnot anticipate paying dividends during the performance period.

16

As of* August 31, 2026,*there was $3.1 million of unrecognized stock-based compensation cost related to unvested RSUs which is expected to be recognized over a weighted average of 2.1 years.

No PSUs were granted during thethree months ended* August 31, 2026.The weighted average grant-date fair value of PSUs granted during thenine* months ended* August 31, 2026was $10.09 per unit. The weighted average grant-date fair value of RSUs granted during thethree* andnine months ended* August 31, 2026*was $4.01 and $6.56 per unit, respectively

The following table summarizes the RSU activity during thenine months ended* August 31, 2026*:

Of the 696,854 RSUs that were settled during thenine months ended* August 31, 2026*,15,910 units were withheld by the Company in exchange for the Company paying for the payroll withholding taxes. For thenine months ended* August 31, 2026*, RSUs of 680,944, net, were issued in connection with the settlement of RSUs. Beginning in thesecond quarter of fiscal year2026, executive officers are required to satisfy tax withholding obligations upon RSU settlement in cash rather than through share withholding. RSUs outstanding as of* August 31, 2026,include 33,473 units that had vested but hadnot* yet been settled, consisting of 23,473 units held by the Company's former President, of which 20,810 units will be settled following thesix-month delay required under Section409A of the Internal Revenue Code, and 10,000 market-based units that vested on* August 31, 2026.*

Stock Options

The Company recorded stock-based compensation expense for options granted to its employees and directors of $0.2 million and $0.9 million during thenine months ended* August 31, 2026and2025*, respectively, and less than $0.1 million and $0.2 million for thethree months ended* August 31, 2026and2025*, respectively. As of* August 31, 2026*, there was $0.1 million of unrecognized stock-based compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 0.4 years.

The following table summarizes option activity under the2020 Plan during thenine months ended* August 31, 2026*:

17

For thethree andnine months ended* August 31, 2026*, the Company recorded a net loss and, as such, diluted loss per share is the same as basic loss per share, as the inclusion of any potentially dilutive securities would be antidilutive. Stock options, RSUs, and PSUs that could potentially dilute basic earnings per share ("EPS") in the future were excluded from the computation of diluted loss per share because their effect would be antidilutive. RSUs excluded from the computation of diluted loss per share for thethree andnine months ended* August 31, 2026* include 92,935 PSUs subject to performance conditions and 19,395 PSUs subject to market conditions, which are contingently issuable upon the satisfaction of conditions that hadnot been satisfied as of* August 31, 2026.For thethree* andnine months ended* August 31, 2025*, the Company recorded net income and, as such, used diluted weighted-average common shares outstanding when calculating diluted income per share for thethree andnine months ended* August 31, 2025*. 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 andnine months ended* August 31, 2025*:

The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net (loss) 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 subleased office premises at its Massachusetts headquarters to a corporation owned and controlled by the former CEO of the Company from* July 1, 2020through April 30, 2026,at which point the sublease terminated. Sublease income recognized was a nominal amount for thenine* months ended* August 31, 2026* and for thethree andnine months ended* August 31, 2025*. No sublease income was recognized for thethree months ended* August 31, 2026*.

18

Operating Leases

The Company has operating leases for real estate in the United States 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 leased an office and warehouse space in South Africa. The lease, which was originally set to expire in* December 2024,was extended to December 2025andnot* renewed.

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 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* 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 an operating lease for retail office space located in Scottsdale, Arizona. The lease term was foreight years, commencing on August 27, 2024and was originally scheduled to expire on July 31, 2032.On July 6, 2026,the Company entered into a Sublease Termination and Mutual Release Agreement with the landlord, pursuant to which the landlord agreed to pay the Company a termination payment of $0.3 million and return the Company's security deposit of less than $0.1 million in exchange for the Company's early termination of the lease and surrender of the premises, which occurred on August 15, 2026.The termination payment and security deposit were received in cash during thethree* months ended* August 31, 2026.Upon termination, the Company derecognized the related right-of-use asset of $0.5 million and operating lease liability of $0.6 million and wrote off leasehold improvements and other property and equipment associated with the Scottsdale retail location with a net book value of $0.3 million. The resulting net gain of $0.2 million is included in operating expenses in the condensed consolidated statements of operations and comprehensive (loss) income for thethree* andnine months ended* August 31, 2026.*

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* October 2025,the Company assumedtwo* operating leases for retail suites located in Santa Clarita, California, each with atwo-year term expiring on* September 14, 2027.The Company had subleased both suites to athird*-party dealer. In* May 2026,the subtenant notified the Company of its intent to exit the subleased premises, and the sublease terminated effective June 30, 2026.As a result of the sublease termination, the Company recognized an immaterial impairment loss on the associated right-of-use assets during thenine* months ended* August 31, 2026.The Company remains the primary obligor under the head leases and will bear the remaining lease obligations through September 2027.*

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.

19

For thethree andnine months ended* August 31, 2026and2025*, the elements of lease expense were as follows (in thousands):

Future lease payments under non-cancelable operating leases as of* August 31, 2026* are as follows (in thousands):

20

For thethree months ended* August 31, 2026*, the Company didnot record a material income tax provision or benefit. For thethree months ended* August 31, 2025,the Company recorded $0.6 million of income tax expense. For thethree* months ended* August 31, 2026and2025,* the effective tax rate was 0.0% and 21.9%, respectively. For thenine months ended* August 31, 2026*, the Company recorded $2.7 million of income tax benefit. For thenine months ended* August 31, 2025*, the Company recorded $1.7 million of income tax expense. For thenine months ended* August 31, 2026and2025,* the effective tax rate was 17.9% and 20.9%, respectively.

The Company records income taxes for interim periods by applying its estimated annual effective tax rate to year-to-date ordinary income (loss), adjusted for discrete items, in accordance with ASC740-270, Income Taxes—Interim Reporting. Jurisdictions with ordinary losses for whichno tax benefit can be recognized, including the Company's South Africa subsidiary, are excluded from the estimated annual effective tax rate. The income tax benefit for thenine months ended* August 31, 2026was recognized substantially during thethree* months ended* May 31, 2026.The year-to-date income tax benefit computed as of August 31, 2026,based on the Company's updated full-year forecast, was substantially unchanged from the benefit recognized through May 31, 2026,primarily due to a lower estimated annual effective tax rate for the Company's U.S. and Canadian operations, which decreased from approximately 23% as of May 31, 2026to approximately 20% as of August 31, 2026* based on the Company's updated full-year forecast. The estimated annual effective tax rate includes both federal and state income taxes; however,no current state income tax benefit was recognized for thethree months ended* August 31, 2026,given the Company's forecasted state taxable loss for the year. As a result, the Company didnot* recognize a material income tax benefit on its pre-tax loss for thethree months ended* August 31, 2026*, resulting in an effective tax rate of 0.0%. The decrease in the Company's net deferred tax asset from $7.4 million as of* May 31, 2026to $6.9 million as of August 31, 2026* reflects a reclassification of $0.5 million between deferred tax assets and income taxes payable in connection with the Company'sthird quarter income tax provision, which hadno effect on income tax expense.

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, changes in the valuation allowance on deferred tax assets, discrete items related to share-based compensation, and other items.

The Company evaluates the realizability of its deferred tax assets each reporting period by assessing all available positive and negative evidence, including cumulative results in recent years, projected future taxable income, the expected reversal of existing taxable temporary differences, and available tax planning strategies. As of* August 31, 2026*, notwithstanding its year-to-date pre-tax loss, the Company remains in a cumulativethree-year pre-tax income position in the United States and continues to conclude that it is more likely thannot that its U.S. deferred tax assets will be realized, other than the deferred tax asset related to a capital loss carryforward against which a valuation allowance was previously established. During thethree months ended* August 31, 2026*, as a result of the year-to-date pre-tax loss and the change in Massachusetts to single sales factor apportionment, the Company established a valuation allowance of $0.2 million, net of federal benefit, against the portion of its deferred tax asset for Massachusetts research and development tax credits that isnot expected to be utilized before expiration. The Company continues to maintain a full valuation allowance against the deferred tax assets of its South Africa subsidiary. If the Company's U.S. operations continue to generate pre-tax losses such that the Company enters a cumulativethree-year loss position, the Company* may*be required to establish a valuation allowance against some or all of its U.S. deferred tax assets, which could have a material adverse effect on its results of operations.

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. The Company is currently a party to a number of legal proceedings. In the opinion of management, it isnot* reasonably possible that the Company will incur a material loss with respect to 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.

Regulatory Matters

In* September 2026,the Company determined that certain of its Fox Labs branded oleoresin capsicum defense sprays are formulated by the Company'sthird*-party contract filler with trichloroethylene, a solvent whose processing and distribution for consumer use is prohibited under a rule issued by the U.S. Environmental Protection Agency ("EPA") under the Toxic Substances Control Act. The Company has suspended shipments of the affected products, has instructed its dealers and distributors to suspend sales of them, and expects to reformulate the affected products. Additionally, on* October 6, 2026,the Company voluntarily disclosed the matter to the EPA under the EPA's Audit Policy, and also intends to separately file a report with the Consumer Product Safety Commission (the “CPSC”). The carrying value of finished goods inventory of the affected Fox Labs products as of August 31, 2026was approximately $0.2 million. Because the regulatory prohibition was in effect as of August 31, 2026,the Company evaluated the net realizable value of the affected inventory as of that date and has recorded an appropriate inventory reserve for the affected inventory. The Company maybe subject to civil penalties from this event, and mayincur costs to reformulate, relabel or replace products. The Company isnot* able to estimate the amount or range of any loss that* mayresult from these matters at this time, andno* accrual has been recorded. See Note25, Subsequent Events.

Beginning with its Annual Report on Form10-K for the year ended* November 30, 2025*, the Company manages and reports 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. Prior to that time, including in its Quarterly Report on Form10-Q for the quarter ended* August 31, 2025,the Company reported a single operating and reportable segment. The prior-year reportable sales channel information presented below has been recast to conform to the current presentation and wasnot* previously reported in this form.

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 andnine months ended* August 31, 2026and2025*, respectively, and long-lived assets and total assets as of* August 31, 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:

21

Wholesale revenue presented in the reportable sales channel tables below includes royalty revenue, which is presented separately as Royalties in the revenue disaggregation tables in Note10.

The table below (in thousands) summarizes the Company’s revenue by reportable sales channel for thethree andnine months ended* August 31, 2026*:

The tables below (in thousands) summarize the Company’s revenue by reportable sales channel for thethree andnine months ended* August 31, 2025*:

22

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 thenine months ended* August 31, 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 gain of less than $0.1 million related to the South African rand during thenine months ended* August 31, 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 (loss) 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* August 31, 2026*, three of the Company's customers accounted for approximately 42% 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*). As described in Note8, the Company recorded a full allowance for expected credit losses against the royalty receivable from Byrna LATAM as of* August 31, 2026*, and separately evaluated the loan receivable from Byrna LATAM for expected credit losses based on Byrna LATAM's payment history under the amended repayment schedule and other available information regarding its financial condition. The Company reviews these factors quarterly.

The Company’s marketable debt securities consist of U.S. Treasury Securities. 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.

23

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.

The Credit Agreement containstwo financial covenants, tested quarterly regardless of amounts outstanding: (i) a maximum Leverage Ratio (total debt to EBITDA) of 1.50 to1.00 (which* mayincrease to 1.75 to1.00* for a limited period following certain permitted acquisitions), and (ii) a minimum Fixed Charge Coverage Ratio of 1.25 to1.00. The Credit Agreement also contains customary affirmative and negative covenants, including restrictions on the incurrence of additional indebtedness, liens, mergers, restricted payments, investments, and dispositions of assets, subject to customary exceptions and baskets, as well as events of default customary for financings of this type, including a default triggered by the lender's determination that a material adverse effect has occurred with respect to the Company's business, operations, or financial condition. As of* August 31, 2026*, the Company hadno borrowings outstanding under the Credit Agreement and was in compliance with all applicable covenants.

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* August 31, 2026*, 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.

Subsequent to* August 31, 2026,the Company identified the regulatory matter relating to its chemical irritant defense spray products described in Note21,* Commitments and Contingencies, suspended shipments of the affected Fox Labs products, instructed its dealers and distributors to suspend sales of them, and on* October 6, 2026,the Company voluntarily disclosed the matter to the EPA. The Company also intends to file a voluntary disclosure report with the CPSC. The Company has evaluated the effect of this matter on the condensed consolidated financial statements as of and for the periods ended August 31, 2026as described in Note21.*

24