Financial Analysis

24. CREDIT FACILITY 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 a five -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 Companys 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 a 24-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 contains two financial covenants, tested quarterly regardless of amounts outstanding: (i) a maximum Leverage Ratio (total debt to EBITDA) of 1.50 to 1.00 (which may increase to 1.75 to 1.00 for a limited period following certain permitted acq …

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Three Months Ended Six Months Ended May 31, May 31, Geographical Market 2026 2025 2026 2025 U.S./Mexico $ 15,190 $ 25,037 $ 42,869 $ 49,155 South Africa 1 283 1 458 Europe/South America/Asia 555 2,872 1,200 4,178 Canada 641 313 1,366 904 Total $ 16,387 $ 28,505 $ 45,436 $ 54,695 Three Months Ended Six Months Ended May 31, May 31, Distribution channel 2026 2025 2026 2025 Wholesale (dealer/distributors) $ 5,670 $ 10,857 $ 16,370 $ 17,181 E-commerce (direct to consumers) 10,999 16,840 29,120 36,703 Royalties (282 ) 808 (54 ) 811 Total $ 16,387 $ 28,505 $ 45,436 $ 54,695 Three Months Ended Six Months Ended May 31, May 31, Sales channel 2026 2025 2026 2025 Web (DTC) $ 10,427 $ 16,574 $ 28,074 $ 35,967 International (DTC) 572 266 1,046 736 DTC Subtotal $ 10,999 $ 16,840 $ 29,120 $ 36,703 Byrna Dedicated Dealers (Wholesale) 3,993 7,504 12,992 11,760 Law Enforcement / Schools / Pvt Security (Wholesale) 54 61 128 86 Retail Stores (Wholesale) 621 777 1,330 1,078 International (Wholesale) 1,002 2,515 1,920 4,257 Wholesale Subtotal $ 5,670 $ 10,857 $ 16,370 $ 17,181 Royalties $ (282 ) $ 808 $ (54 ) $ 811 Total $ 16,387 $ 28,505 $ 45,436 $ 54,695 Three Months Ended Six Months Ended May 31, May 31, Revenue type 2026 2025 2026 2025 Product $ 16,669 $ 27,697 $ 45,490 $ 53,884 Royalties (282 ) 808 (54 ) 811 Total $ 16,387 $ 28,505 $ 45,436 $ 54,695

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"16. STOCK-BASED COMPENSATION 2020 Plan In 2020, 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 the 2020 Plan is 2,500,000. In 2022, the Companys Board of Directors and the Company's stockholders approved the increase of the number of shares of common stock available for issuance under the 2020 Plan by 1,300,000 shares to a total of 3,800,000 shares. The 2020 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 may be granted. Persons eligible to receive awards under the 2020 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 Companys 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 peri …

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20. INCOME TAXES For the three months ended May 31, 2026 , the Company recorded $2.7 million of income tax benefit. For the three months ended May 31, 2025 , the Company recorded $0.9 million of income tax expense. For the three months ended May 31, 2026 and 2025 , the effective tax rate was 21.2% and 23.3%, respectively. For the six months ended May 31, 2026 , the Company recorded $2.7 million of income tax benefit. For the six months ended May 31, 2025 , the Company recorded $1.0 million of income tax expense. For the six months ended May 31, 2026 and 2025 , the effective tax rate was 23.1% and 17.2%, respectively. The Companys 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 Companys South Africa operations, permanent non-deductible expenses, discrete items related to share-based compensation, and other items. …

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19. LEASES Operating Leases The Company has operating leases for real estate in the United States and does not have any finance leases. In 2019, 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 by one 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 2025 and not 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 for five years, commencing on July 15, 2024 and 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 for three years, commencing on April 1, 2025 and 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 for five years, commencing on August 22, 2024 and expiring on August 21, 2029 . Commencing in August 2024, the Company entered into a new operating lease for retail office space located in Scottsdale, Arizona. The leas …

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Recently Adopted Accounting Pronouncements Effective December 1, 2025, the Company early adopted FASB Accounting Standards Update (ASU) 2025-05, Financial InstrumentsCredit Losses (Topic 326 ): 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 ASU 2025-05 did not have a material impact on the Companys condensed consolidated financial statements. Accounting Pronouncements Issued but Not Adopted In 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): 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 does not 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 ASU 20 …

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18. RELATED PARTY TRANSACTIONS 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, 2020 through April 30, 2026, at which point the sublease terminated. Sublease income recognized was a nominal amount for the three and six months ended May 31, 2026 and 2025 .

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"22. SEGMENT AND GEOGRAPHICAL DISCLOSURES Beginning in fiscal year 2025, the Company manages its operations through two reportable channels: ( 1 ) Direct to Consumer (DTC) includes sales through the Companys e commerce website, Amazon storefronts, and Company operated retail stores, and ( 2 ) Wholesale (""dealer/distributor"") includes sales to distributors, law enforcement agencies, retailers, and international distributors. The CEO, who is also the CODM, evaluates sales channel performance primarily based on sales channel revenue less cost of sales and gross margin. Operating expenses, including marketing and variable expenses, executive compensation, public company costs, certain IT infrastructure costs, share-based compensation, and items not 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 does not report segment assets or segment liabilities The tables below (in thousands) summarize, by geographic region, the Companys revenue for the three and six months ended May 31, 2026 and 2025 , respectively, and long-lived assets and total assets as of May 31, 2026 and November 30, 2025 , respectively. The Companys long-lived assets consist of intangible assets, property and equipment, right of use assets, and deposits for equipment: Revenue: Three Months Ended U.S./Mexico South Africa Europe/South America/Asia Canada Total May 31, 2026 $ 15,190 $ 1 $ 555 $ 641 $ 16 …

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15. STOCKHOLDERS' EQUITY Stock Buyback Program On July 31, 2024, the Company's Board of Directors approved a plan to buy back up to $10 million worth of shares of Common Stock (the Stock Buyback Program). The Company's Stock Buyback Plan is intended to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. The Stock Buyback Program will expire on the sooner of the two -year anniversary of its initiation or until the Company reaches the aggregate limit of $10 million for the repurchases under the program. The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method. In the six months ended May 31, 2026 , the Company repurchased 58,905 shares of common stock for $1.0 million. No shares were repurchased during the three months ended May 31, 2026 . As of May 31, 2026 , 0.5 million shares of common stock have been repurchased for $5.8 million. Number of Shares Cost of Shares Average Cost per Share Shares purchased - December 2025 27,388 $ 453,035 $ 16.5 Shares purchased - January 2026 31,517 499,996 15.9 Total 58,905 $ 953,031 $ 16.2 …

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"25. Subsequent Events The Company has evaluated subsequent events through July 9, 2026, the date the condensed consolidated financial statements were available to be issued, in accordance with ASC Topic 855, Subsequent Events . Asset Purchase Agreement Hero Defense Systems 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 agreed to acquire 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, customer and vendor relationships, assumed contracts, inventory, equipment, tooling, and books and records (the ""Hero Acquisition""). The Company will assume only certain limited liabilities specified in the Hero APA and will not assume any other liabilities of Hero, including pre-closing product liability, warranty, or tax liabilities. The aggregate purchase price is $1.25 million, plus contingent royalty payments described below, consisting of (i) $0.625 million in cash, subject to a $0.125 million holdback to be placed in escrow for up to eighteen months as security for indemnification obligations, and (ii) $0.625 million 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 ove …

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