Byrna Technologies Inc. (BYRN) - 10-Q Summary
Business Context and Reporting Period
Company: Byrna Technologies Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: May 31, 2026 (Second Quarter of Fiscal Year 2026)
Business Overview: Byrna designs, manufactures, and markets less-lethal defense technology, including personal security devices and projectiles, for consumer, law enforcement, and private security markets. Operations are reported through two channels: Direct-to-Consumer (DTC) and Wholesale.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Revenue | $16,387 | $28,505 | $45,436 | $54,695 |
| Gross Profit | $1,783 | $17,564 | $19,184 | $33,488 |
| Gross Margin % | 10.9% | 61.6% | 42.2% | 61.2% |
| Operating Loss | $(12,846) | $3,326 | $(11,918) | $5,022 |
| Net Loss | $(10,088) | $2,427 | $(9,287) | $4,089 |
| Cash and Equivalents (End of Period) | $9,436 | $7,001 | $9,436 | $7,001 |
| Operating Cash Flow (6 Months) | $(3,034) | $(9,235) | $(3,034) | $(9,235) |
Material Changes vs. Prior Period
- Revenue Decline: Net revenue decreased 42.5% in Q2 2026 compared to Q2 2025, driven by a 34.5% drop in DTC sales and a 53.8% drop in wholesale sales. International sales also declined significantly.
- Margin Compression: Gross margin collapsed from 61.6% to 10.9% in Q2 2026. This was primarily due to non-recurring charges totaling approximately $9.4 million, including a $5.9 million inventory write-down and a $3.5 million impairment charge on property and equipment.
- Strategic Shift: The Company permanently ceased in-house ammunition production at its Fort Wayne, Indiana facility, transitioning to third-party contract manufacturing. This decision triggered the aforementioned asset impairments and inventory write-downs.
- Profitability: The Company swung from a net income of $2.4 million in Q2 2025 to a net loss of $10.1 million in Q2 2026.
Guidance, Outlook, and Risks
- Outlook: Management expects to fund operations primarily through cash generated from operations and an existing credit facility. No specific forward-looking revenue guidance was provided in this filing.
- Liquidity: As of May 31, 2026, the Company held $9.4 million in cash. It has access to a $20.0 million credit facility ($5.0 million revolving line and $15.0 million delayed draw term loan) with no borrowings outstanding.
- Subsequent Events:
- Acquisition: Entered into an agreement to acquire Hero Defense Systems for $1.25 million plus contingent royalties.
- Tariff Refund: Received an additional $2.3 million tariff refund subsequent to the period end, to be recognized in Q3 2026.
- Executive Departure: The President, Luan Pham, separated from the Company in June 2026, triggering severance and equity acceleration.
- Risks: Key risks include the ability to generate sufficient revenue to fund operations, reliance on third-party manufacturers for ammunition, foreign currency fluctuations, and potential legal proceedings.
Investor Verification Checklist
- Inventory Valuation: Verify the remaining inventory levels and the sufficiency of reserves following the $5.9 million write-down related to the ammunition production shutdown.
- Third-Party Manufacturing: Assess the terms, capacity, and cost structure of the new third-party ammunition contract manufacturer to ensure margin recovery.
- Revenue Trends: Monitor DTC conversion rates and wholesale order volumes to determine if the revenue decline is a temporary correction or a structural shift.
- Liquidity Runway: Evaluate the burn rate against the $9.4 million cash balance and the $20 million credit facility to assess the need for future capital raises.
- Executive Stability: Review the impact of the President's departure and the new CEO's performance-based equity awards on future strategic execution.