Byrna Technologies Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended August 31, 2026; unaudited. Unless otherwise noted, dollar amounts are in millions. Comparisons are with the corresponding 2025 periods or November 30, 2025 balance-sheet amounts.
Business context
Byrna designs, manufactures and sells less-lethal personal security products, including launchers, projectiles and related accessories, through direct-to-consumer (DTC) and wholesale channels. In fiscal 2026, it ceased in-house ammunition production at its Fort Wayne facility and began sourcing ammunition from a third-party manufacturer. In August 2026, Byrna acquired substantially all operating assets of Hero Defense Systems for total fair-value consideration of approximately $1.7 million.
Financial performance
| Metric | Three months ended Aug. 31, 2026 | Three months ended Aug. 31, 2025 | Nine months ended Aug. 31, 2026 | Nine months ended Aug. 31, 2025 |
|---|---|---|---|---|
| Revenue | $15.3 | $28.2 | $60.7 | $82.9 |
| Gross profit / margin | $12.2 / 79.5% | $16.9 / 60.1% | $31.3 / 51.6% | $50.4 / 60.8% |
| Operating expenses | $15.1 | $14.1 | $46.2 | $42.5 |
| Operating income (loss) | $(2.9) | $2.9 | $(14.8) | $7.9 |
| Net income (loss) | $(2.9) | $2.2 | $(12.2) | $6.3 |
| Adjusted EBITDA (non-GAAP) | $(1.4) | $4.1 | $0.2 | $11.7 |
- Revenue fell 45.7% in the quarter and 26.7% year to date. DTC revenue was $11.1 million for the quarter and $41.5 million for nine months; wholesale revenue was $4.2 million and $19.2 million, respectively. Management attributed declines chiefly to lower online conversion and weaker dealer, distributor and international sales. The prior-year quarter included approximately $3.2 million of national-chain shipments that did not recur.
- Quarterly gross margin rose year over year, largely because $2.3 million of tariff refunds reduced cost of goods sold, contributing approximately 15 percentage points of margin. Nine-month margin declined, reflecting $6.0 million in inventory write-downs and reserves and a $3.5 million impairment of ammunition-production equipment, partly offset by $3.3 million of tariff refunds.
- Adjusted EBITDA included tariff-refund benefits of approximately $2.3 million for the quarter and $3.3 million year to date, plus a $0.2 million lease-termination gain. Excluding those nonrecurring benefits, management reported adjusted EBITDA losses of approximately $3.8 million and $3.3 million, respectively. Adjusted EBITDA is non-GAAP and should be considered alongside GAAP results.
Cash, liquidity and balance sheet
- Cash and cash equivalents were $8.4 million at August 31, down $5.3 million from November 30, 2025. Marketable debt securities were $1.0 million; cash plus those securities totaled approximately $9.4 million.
- Operating activities used $3.5 million of cash in the nine months, compared with $11.5 million used in the prior-year period. The company reported $12.2 million of net loss. Lower receivables and $3.3 million of tariff refunds supported cash flow; management cautioned that these benefits are not expected to recur at comparable levels.
- Total assets were $64.6 million, total liabilities $9.5 million and stockholders’ equity $55.1 million. Inventory was $30.0 million, including $15.1 million of finished goods; inventory days increased to approximately 292 from 228 in the prior-year period. Accounts receivable, net, was $2.5 million, including a fully reserved $0.8 million Byrna LATAM royalty receivable.
- No borrowings were outstanding under the credit agreement. The company reported $5.0 million available on its revolving line for general purposes and $15.0 million of delayed-draw term-loan capacity restricted to permitted acquisitions. Both facilities have quarterly financial covenants, including when undrawn; the company reported covenant compliance at August 31.
Outlook, risks and unusual items
- Management expects to fund the next 12 months primarily from existing cash and operating cash generation. Its going-concern assessment concluded that substantial doubt was not raised, considering liquidity, inventory, reduced purchasing and projected cash flows that include a seasonally stronger fourth quarter. The projections do not assume additional tariff refunds or credit-facility borrowings.
- In September 2026, Byrna identified that certain Fox Labs sprays were formulated with trichloroethylene, whose processing and distribution for consumer use is prohibited under an EPA rule. Byrna suspended shipments and instructed dealers and distributors to stop sales, voluntarily disclosed the matter to the EPA on October 6, and intends to report it to the CPSC. Affected products represented approximately 1.3% of nine-month revenue. The company expects reformulation but cannot estimate potential penalties, claims or related costs; no accrual was recorded. A reserve was recorded against approximately $0.2 million of affected finished-goods inventory.
- The Fort Wayne production shutdown drove substantial inventory and equipment charges. Management also reported a $1.0 million write-off of equipment deposits in operating expenses. Ammunition is now sourced externally.
- Hero acquisition purchase-price allocation remains preliminary. The transaction includes a royalty arrangement with a $0.25 million guaranteed minimum and a $5.0 million cap; its Level 3 valuation depends on sales assumptions and other significant estimates.
- Management reported no material expected loss from existing legal proceedings, while noting that outcomes are inherently uncertain. It also cited risks from customer collections, demand, inventory, marketing effectiveness, product regulation, supply chain execution and the ability to obtain additional financing if needed.
- No specific revenue or earnings guidance was provided. Management’s outlook references a seasonally stronger fourth fiscal quarter, not a quantified forecast.
Important facts for investors to verify
- Whether sales and online conversion stabilize, and whether the fourth-quarter seasonal improvement supports management’s cash-flow expectations.
- How much of reported gross-margin improvement depends on tariff refunds, and the effect of inventory charges, product mix and lower sales volume on sustainable margins.
- Inventory sell-through, finished-goods levels and the collectability of receivables, particularly from Byrna LATAM and other reserved customers.
- The timing, cost and regulatory outcome of reformulating or replacing affected Fox Labs products, including any penalties, claims or further inventory charges.
- Compliance with quarterly credit covenants and available liquidity, given operating cash use and the restricted purpose of the delayed-draw loan.
- The final Hero purchase-price allocation and future royalty liability, and whether the acquisition delivers expected sales and distribution benefits.