Byrna Technologies (BYRN) posts Q2 2026 loss after revenue and margin reset
Rhea-AI Filing Summary
Byrna Technologies reported a weak fiscal Q2 2026, swinging to a loss as revenue and margins declined sharply. Net revenue fell to $16.4 million from $28.5 million, a 43% drop driven by softer e-commerce demand and slower dealer and retail reorders after heavy Q1 restocking.
GAAP gross profit fell to $1.8 million, or 10.9% margin, including a $5.9 million inventory write-down and $3.5 million equipment impairment, partially offset by a $1.1 million tariff refund. Excluding these items, adjusted gross profit was $10.1 million with a roughly 61.8% margin.
The company posted a net loss of $10.1 million versus $2.4 million profit a year earlier, reflecting $10.4 million in non-cash impairment and inventory charges tied to closing its Fort Wayne ammunition facility and product rationalization. Adjusted EBITDA was a slight loss of $0.6 million compared with $4.3 million profit in Q2 2025.
Cash, cash equivalents and marketable securities were $10.4 million as of May 31, 2026, down from $15.5 million at November 30, 2025, while inventory remained elevated at $30.4 million. Management is cutting production capacity, exiting in-house ammo manufacturing, and emphasizing programs like “try before you buy” and new marketing partnerships to revive demand. They now expect fiscal 2026 will not be a revenue-growth year, planning around the lower sales baseline while aiming for better performance in the second half.
Positive
- None.
Negative
- Sharp revenue and profitability deterioration: Q2 2026 net revenue fell to $16.4 million from $28.5 million (about 43% lower), and results swung from a $2.4 million profit to a $10.1 million net loss, indicating a material reset in demand and earnings power.
- Large non-cash charges and weaker balance sheet: The quarter included $10.4 million of impairment and inventory write-downs, while cash and marketable securities declined to $10.4 million and inventory remained elevated at $30.4 million, pointing to restructuring stress and working-capital risk.
- Downgraded outlook for 2026: Management now expects fiscal 2026 will not be a revenue-growth year and is planning around the lower sales baseline, which may weigh on near-term growth expectations and valuation.
Insights
Byrna’s quarter shows a sharp demand reset, heavy charges, and lowered 2026 revenue expectations.
Byrna’s Q2 2026 revenue dropped to $16.4M, down about 43% year over year, mainly from weaker e-commerce and slower retail reorders. GAAP gross margin collapsed to 10.9% as the company recorded large inventory and asset impairment charges tied to restructuring.
Those non-cash items totaled $10.4M, driving a net loss of $10.1M and pushing Adjusted EBITDA to a modest loss of $0.6M. Cash and marketable securities fell to $10.4M as of May 31, 2026, while inventory remained high at $30.4M, underscoring working-capital pressure.
Management cut production capacity, exited internal ammunition manufacturing, and highlighted early traction in a "try before you buy" program with roughly 30% conversion. However, they explicitly state fiscal 2026 will not be a revenue-growth year, instead positioning this as a reset period with expected improvement in the second half as holiday demand and marketing initiatives scale.
8-K Event Classification
Key Figures
Key Terms
Adjusted EBITDA financial
inventory write-down financial
impairment loss financial
non-GAAP adjusted gross profit margin financial
working capital efficiency financial
forward-looking statements regulatory
Earnings Snapshot
Management expects fiscal 2026 will not be a revenue-growth year and plans around the lower post-reset demand baseline, while anticipating better results in the second half as retail and marketing initiatives ramp.
FAQ
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(Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description |
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99.1 | Press Release of Byrna Technologies Inc. dated July 9, 2026 |
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BYRNA TECHNOLOGIES INC. | |||
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Date: July 9, 2026 | By: | /s/ Laurilee Kearnes | |
Name: Laurilee Kearnes Title: Chief Financial Officer | |||
Exhibit 99.1
Byrna Technologies Reports Fiscal Second Quarter 2026 Results
ANDOVER, Mass., July 9, 2026 - Byrna Technologies Inc. (“Byrna” or the “Company”) (Nasdaq: BYRN), a personal defense technology company specializing in the development, manufacture, and sale of innovative less-lethal personal security solutions, today reported select financial results for its fiscal second quarter (“Q2 2026”) ended May 31, 2026.
Fiscal Second Quarter 2026 and Recent Operational Highlights
| ● | Entered into a binding agreement to purchase HERO Defense Systems, LLC, a complementary less-lethal self-defense company, expanding Byrna’s product portfolio across additional price points and everyday-carry form factors. |
| ● | Initiated and recently expanded its “try before you buy” pilot program, following early results achieving an approximately 30% conversion rate among participating customers who received a demo unit, with most conversions occurring in the second week of the two-week trial period. |
| ● | Generated over 150,000 responses on the “Find the Right Launcher” guided shopping experience on Byrna.com since it was introduced in April. Customers who used the product education tool converted at approximately twice the conversion rate of the overall website. |
| ● | Reduced launcher assembly operations from four lines at the end of fiscal Q1 to two lines by May and ceased in-house ammunition manufacturing to better align production with current demand, improve cost efficiency, and support the reduction of finished goods inventory over time. |
| ● | Activated its Fox Sports media partnership through iHeartMedia in June, expanding Byrna’s reach to a broad, highly engaged sports audience across radio and digital platforms. |
| ● | Realigned sales and marketing functions and initiated a search for dedicated leaders to support retail growth and brand expansion. |
| ● | Appointed HLK as agency of record to strengthen brand messaging, customer acquisition, and product education initiatives. |
| ● | Appointed Acceleration Partners as its influencer and affiliate marketing agency to build a broader social creator program, relaunch Byrna’s affiliate marketing program and improve the Company’s ability to measure customer acquisition across its e-commerce channels. |
| ● | Promoted industry veteran Matthew Campagni to Chief Strategy Officer to lead the Company’s strategic planning initiatives and support cross-functional execution. |
Fiscal Second Quarter 2026 Financial Results
Results compare Q2 2026 to the 2025 fiscal second quarter ended May 31, 2025, unless otherwise indicated.
Net revenue for Q2 2026 was $16.4 million, compared to $28.5 million in the fiscal second quarter of 2025 (“Q2 2025”). The approximately 43% year-over-year decrease was driven primarily by a decrease in e-commerce sales and slower reorder activity from dealers and chain stores following substantial restocking in fiscal Q1 and slower-than-expected sell-through.
Gross profit for Q2 2026 was $1.8 million (11% of net revenue), down from $17.6 million (62% of net revenue) in Q2 2025. Reported gross margin included a one-time $5.9 million inventory write-down and a $3.5 million impairment of equipment, this was partially offset by a $1.1 million tariff refund recorded in cost of goods sold. Excluding these items, adjusted gross profit was $10.1 million, representing adjusted gross margin of approximately 62%.
Operating expenses for Q2 2026 were $14.6 million, compared to $14.2 million for Q2 2025, an increase of 2.7%. The increase primarily reflected an impairment charge of $1 million as well as continued investment in marketing, partially offset by the change in variable selling expenses associated with a decrease in sales.
Net income (loss) for Q2 2026 was $(10.1) million, compared to $2.4 million for Q2 2025. Net loss included non-cash impairment and inventory write-down charges of $10.4 million related to the shutdown of our ammunition manufacturing facility in Fort Wayne and strategic product rationalization. A tax benefit of $2.7 million was also recorded for the quarter.
Adjusted EBITDA1, a non-GAAP metric reconciled below, for Q2 2026 totaled $(0.6) million, compared to $4.3 million in Q2 2025.
Cash, cash equivalents and marketable securities as of May 31, 2026 totaled $10.4 million, compared to $15.5 million at November 30, 2025. Inventory on May 31, 2026 totaled $30.4 million, compared with $32.7 million on November 30, 2025. The Company is focused on lowering inventory over time and improving working capital efficiency.
Management Commentary
“Our second quarter results did not reflect the level of performance we believe Byrna can deliver,” said Byrna CEO Conn Davis. “We expected the quarter to begin a transition period, but continued softness in our direct-to-consumer channel as well as a slower pace of reorders across retail partners led to a steeper reset than we initially expected.
“In e-commerce, web traffic remained weak, and while conversion rates showed modest improvement as a result of our website changes, overall conversion levels and average order value were below where we expected. In retail, our partners entered the quarter with elevated inventory levels following meaningful post-holiday restocking in Q1. Sell-through during the quarter did not occur at a pace that supported consistent reorder activity, which impacted revenue across both dealer and big box channels.
“From an operational standpoint, we took actions during the quarter to better align production and operating costs with current demand. We reduced production capacity in our launcher facility and exited in-house ammo manufacturing where we were not cost competitive. These actions reduce costs, operating complexity, and establish a more balanced operating baseline that should allow us to work down physical inventory through the second half of the year.
“We also advanced a number of initiatives designed to improve demand over both the near and longer term. Our top operational priority is improving customer conversion and retail productivity across all channels.
“We are seeing encouraging early results from our “try before you buy” program, which is attracting new customers to the brand and generating conversion rates of approximately 30%. This represents a meaningful improvement versus traditional e-commerce and provides a scalable pathway to reaccelerate direct-to-consumer growth over time.
“On the retail side, we are focused on continuing our store expansion while also working closely with our partners to improve customer discovery and sell-through. Initiatives such as in-store training, enhanced merchandising, including end-cap displays, and expanded demo experiences are producing stronger results in the locations where they have been implemented. Our focus now is applying those learnings more consistently across the wider footprint.
1 See non-GAAP financial measures at the end of this press release for a reconciliation and a discussion of non-GAAP financial measures.
“In parallel, our messaging pivot is underway, as we work to broaden our reach and engage a wider set of customer segments. This includes partnerships such as Fox Sports, along with new social and influencer programs designed to introduce Byrna to previously underpenetrated audiences while continuing to build on the existing foundation with our core customers. We believe this approach will expand our addressable market while supporting more consistent and durable demand over time. We are also in the process of bringing on experienced leaders across marketing and retail to strengthen execution, improve accountability and support the next phase of growth.
“Based on current expectations, fiscal 2026 will not be a revenue-growth year. Q2 reset the revenue baseline, and we are planning the business around current demand trends rather than assuming a quick return to prior growth rates. We expect improvement from the first half of the fiscal year to the second half, as retailers prepare for the holidays and more of our marketing, conversion and customer-acquisition initiatives enter the market.
“We are building from a more realistic baseline, with the opportunity to improve as these initiatives begin to contribute. Our focus is on improving website traffic and conversion, strengthening retail sell-through and reorder cadence, reducing inventory and improving working capital efficiency. We believe the actions underway position Byrna to finish fiscal 2026 on stronger footing and enter fiscal 2027 with a business capable of delivering more consistent growth.”
Conference Call
The Company’s management will host a conference call today, July 9, 2026, at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss these results, followed by a question-and-answer period.
Toll-Free Dial-In: 877-709-8150
International Dial-In: +1 201-689-8354
Confirmation: 13761119
Please call the conference telephone number 5-10 minutes prior to the start time of the conference call. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860.
The conference call will be broadcast live and available for replay here and via the Investor Relations section of Byrna’s website.
About Byrna Technologies Inc.
Byrna is a personal defense technology company specializing in the development, manufacture, and sale of innovative less-lethal personal security solutions. For more information on the Company, please visit the corporate website here or the Company’s investor relations site here. The Company is the manufacturer of the Byrna® CL, Byrna® LE and Byrna® SD personal security devices, state-of-the-art handheld CO2 powered launchers designed to provide a less-lethal alternative to a firearm for the consumer, private security, and law enforcement markets. To purchase Byrna products, visit the Company’s e-commerce store.
Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the federal securities laws. All statements contained in this news release, other than statements of current and historical fact, are forward-looking statements. Often, but not always, forward-looking statements can be identified by the general use of words such as "plans," "expects," "intends," "anticipates," and "believes" and statements that certain actions, events or results "may," "could," "would," "should," "might," "occur," or "be achieved," or "will be taken." Forward-looking statements in this news release include but are not limited to our statements related to our expected net revenue and top-line performance during the transition period and in future periods, and our expectation that our operating results will continue to reflect the transition we are working through; our expectation that the operational and cost actions taken during the quarter, including the reduction of launcher assembly from four lines to two and the decision to cease in-house ammunition manufacturing, will reduce costs, operating complexity, and finished goods inventory over time and establish a more balanced and cash-efficient operating baseline; our plans to reduce inventory levels over time and improve working capital efficiency, including our expectation of working down physical inventory during the second half of fiscal 2026; the anticipated benefits and integration of our recently completed acquisition, including the expansion of the Company’s price points and product form factors; the early results, conversion rates, and scalability of our “try before you buy” program, and its potential to reaccelerate direct-to-consumer growth over time; the anticipated impact of our “Find the Right Launcher” guided shopping experience on website conversion; our plans to improve customer conversion, retail productivity, and sell-through across our e-commerce, dealer, and big-box channels, including through in-store training, enhanced merchandising and end-cap displays, and expanded demonstration experiences, and our intention to apply those initiatives more consistently across our retail footprint; our continued retail store expansion and our ability to collaborate with retail partners and grow productivity per store; our brand and messaging pivot and related marketing initiatives intended to broaden our reach and expand our addressable market, including our Fox Sports partnership activated through iHeartMedia, the appointment of HLK as our agency of record, and the engagement of Acceleration Partners for our influencer and affiliate marketing programs; our ability to attract, onboard, and retain experienced marketing and retail leaders, including the contributions of Matthew Campagni as Chief Strategy Officer, and to align the organization around near-term execution priorities while building toward our long-term strategic vision; brand awareness of Byrna and continued acceptance of the less-lethal personal defense market; our expectation that meaningful operational changes currently underway in demand generation, website conversion, retail productivity, and internal forecasting will, over time, result in improved operating performance; our expectation that we will emerge from this transition year with a more scalable and cash-efficient operating model; and, Byrna’s positioning for sustained and durable growth in future fiscal years. Forward-looking statements are not, and cannot be, a guarantee of future results or events. Forward-looking statements are based on, among other things, opinions, assumptions, estimates, and analyses that, while considered reasonable by the Company at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies, and other factors that may cause actual results and events to be materially different from those expressed or implied.
Any number of risk factors could affect our actual results and cause them to differ materially from those expressed or implied by the forward-looking statements in this news release, including, but not limited to, disappointing market responses to current or future products or services; prolonged, new, or exacerbated disruption of our supply chain; the further or prolonged disruption of new product development; production or distribution disruption or delays in entry or penetration of sales channels due to inventory constraints, competitive factors, increased transportation costs or interruptions, including due to weather, flooding or fires; prototype, parts and material shortages, particularly of parts sourced from limited or sole source providers; determinations by third party controlled distribution channels, including Amazon, not to carry or reduce inventory of the Company’s products; determinations by advertisers or social media platforms, or legislation that prevents or limits marketing of some or all Byrna products; the loss of marketing partners; challenges arising from the transition to the new executive leadership and execution of new strategic priorities by the Company’s new management team; the risk that the anticipated benefits of our recently completed acquisition are not realized, or that we are unable to integrate the acquired business on the anticipated timeline or at all; the risk that our decision to cease in-house ammunition manufacturing increases our reliance on third-party ammunition suppliers, disrupts supply, or does not achieve anticipated cost savings; the risk that our “try before you buy” program does not convert participants at anticipated rates, is not scalable, or does not prove economically accretive; the risk that our planned reductions in inventory do not materialize on the anticipated timeline or result in additional inventory write-downs or reserves; investments in e-commerce enhancements or digital capabilities, including improvements to Byrna.com, do not yield anticipated improvements in conversion rates, customer acquisition, or revenue; the risk that efforts to broaden brand messaging or expand into new customer segments do not achieve anticipated market penetration or revenue results; increases in marketing expenditure may not yield expected revenue increases; potential cancellations of existing or future orders including as a result of any fulfillment delays, introduction of competing products, negative publicity, or other factors; product design or manufacturing defects or recalls; litigation, enforcement proceedings or other regulatory or legal developments; changes in consumer or political sentiment affecting product demand; regulatory factors including the impact of commerce and trade laws and regulations; changes in domestic or international trade policy, including the imposition of new or increased tariffs, export controls or other trade restrictions, that could result in an increase in the cost of materials, components or finished goods used or sold by the Company, and/ or that could disrupt the Company’s supply chain, or otherwise adversely affect the Company’s costs, revenues, or results of operations; the risk that price increases implemented in the first quarter are not sustained, are reversed in response to market or competitive conditions, or otherwise fail to contribute to gross margin improvement as anticipated; the risk that anticipated manufacturing efficiency improvements do not materialize or are offset by increases in input, labor, or overhead costs; the risk that planned retail store launches, including the targeted addition of up to 250 new retail locations, are delayed, reduced in scope, or not executed by retail partners on the anticipated timeline; and, future restrictions on the Company’s cash resources, increased costs and other events that could potentially reduce demand for the Company’s products or result in order cancellations. The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive; accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. Investors should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, ("Risk Factors") in the Company’s most recent Form 10-K, and should understand it is impossible to predict or identify all such factors or risks, and should not consider the foregoing list, or the risks identified in the Company’s SEC filings, to be a complete discussion of all potential risks or uncertainties, and should not place undue reliance on forward-looking information. The Company assumes no obligation to update or revise any forward-looking information, except as required by applicable law.
Investor Contact:
Tom Colton and Alec Wilson
Gateway Group, Inc.
949-574-3860
BYRN@gateway-grp.com
-Financial Tables to Follow-
BYRNA TECHNOLOGIES INC.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Amounts in thousands except share and per share data)
(Unaudited)
| | For the Three Months Ended | | | For the Six Months Ended | |
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| | May 31 | | | May 31 | |
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| | 2026 | | | 2025 | | | 2026 | | | 2025 | |
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Net revenue | | $ | 16,387 | | | $ | 28,505 | | | $ | 45,436 | | | $ | 54,695 | |
Cost of goods sold | | | 14,604 | | | | 10,941 | | | | 26,252 | | | | 21,207 | |
Gross profit | | | 1,783 | | | | 17,564 | | | | 19,184 | | | | 33,488 | |
Operating expenses | | | 14,629 | | | | 14,238 | | | | 31,102 | | | | 28,466 | |
INCOME FROM OPERATIONS | | | (12,846 | ) | | | 3,326 | | | | (11,918 | ) | | | 5,022 | |
OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | |
Foreign currency transaction loss | | | 41 | | | | (135 | ) | | | (197 | ) | | | (215 | ) |
Interest income | | | 42 | | | | 116 | | | | 130 | | | | 303 | |
Other income | | | 13 | | | | 18 | | | | 32 | | | | 17 | |
INCOME BEFORE INCOME TAXES | | | (12,750 | ) | | | 3,325 | | | | (11,953 | ) | | | 5,127 | |
Income tax benefit (expense) | | | 2,662 | | | | (898 | ) | | | 2,666 | | | | (1,038 | ) |
NET INCOME (LOSS) | | $ | (10,088 | ) | | $ | 2,427 | | | $ | (9,287 | ) | | $ | 4,089 | |
| | | | | | | | | | | | | | | | |
Foreign currency translation adjustment for the period | | | (91 | ) | | | 76 | | | | 245 | | | | (54 | ) |
Unrealized gain on marketable securities | | | (3 | ) | | | 17 | | | | 16 | | | | 77 | |
COMPREHENSIVE INCOME (LOSS) | | $ | (10,182 | ) | | $ | 2,520 | | | $ | (9,026 | ) | | $ | 4,112 | |
| | | | | | | | | | | | | | | | |
Basic net income (loss) per share | | $ | (0.44 | ) | | $ | 0.11 | | | $ | (0.41 | ) | | $ | 0.18 | |
Diluted net income (loss) per share | | $ | (0.44 | ) | | $ | 0.10 | | | $ | (0.41 | ) | | $ | 0.17 | |
| | | | | | | | | | | | | | | | |
Weighted-average number of common shares outstanding - basic | | | 22,686,895 | | | | 22,668,546 | | | | 22,677,477 | | | | 22,628,270 | |
Weighted-average number of common shares outstanding - diluted | | | 22,686,895 | | | | 23,951,297 | | | | 22,677,477 | | | | 24,021,948 | |
BYRNA TECHNOLOGIES INC.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
| | May 31 | | | November 30, | |
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| | 2026 | | | 2025 | |
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| | Unaudited | | | | | |
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ASSETS | | | | | | | | |
CURRENT ASSETS | | | | | | | | |
Cash and cash equivalents | | $ | 9,436 | | | $ | 13,727 | |
Marketable Securities | | | 1,002 | | | | 1,754 | |
Accounts receivable, net | | | 4,437 | | | | 10,840 | |
Inventory, net | | | 30,445 | | | | 32,694 | |
Prepaid expenses and other current assets | | | 4,009 | | | | 4,679 | |
Total current assets | | | 49,329 | | | | 63,694 | |
LONG TERM ASSETS | | | | | | | | |
Deposits for equipment | | | 541 | | | | 1,495 | |
Right-of-use-asset, net | | | 1,714 | | | | 2,042 | |
Property and equipment, net | | | 4,047 | | | | 7,726 | |
Intangible assets, net | | | 2,956 | | | | 3,085 | |
Goodwill | | | 2,258 | | | | 2,258 | |
Deferred tax asset | | | 7,395 | | | | 4,135 | |
Other assets | | | 177 | | | | 51 | |
TOTAL ASSETS | | $ | 68,417 | | | $ | 84,486 | |
| | | | | | | | |
LIABILITIES | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 9,033 | | | $ | 15,864 | |
Operating lease liabilities, current | | | 777 | | | | 734 | |
Deferred revenue, current | | | 334 | | | | 496 | |
Total current liabilities | | | 10,144 | | | | 17,094 | |
LONG TERM LIABILITIES | | | | | | | | |
Deferred revenue, non-current | | | 20 | | | | 25 | |
Operating lease liabilities, non-current | | | 1,270 | | | | 1,612 | |
Total liabilities | | | 11,434 | | | | 18,731 | |
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STOCKHOLDERS’ EQUITY | | | | | | | | |
Preferred stock | | | — | | | | — | |
Common stock | | | 25 | | | | 25 | |
Additional paid-in capital | | | 137,075 | | | | 135,870 | |
Treasury stock | | | (23,308 | ) | | | (22,355 | ) |
Accumulated deficit | | | (56,383 | ) | | | (47,096 | ) |
Accumulated other comprehensive loss | | | (426 | ) | | | (689 | ) |
| | | | | | | | |
Total Stockholders’ Equity | | | 56,983 | | | | 65,755 | |
| | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 68,417 | | | $ | 84,486 | |
Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide an additional financial metric that is not prepared in accordance with GAAP (non-GAAP) with presenting non-GAAP adjusted EBITDA. Management uses this non-GAAP financial measure, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance. We believe that this non-GAAP financial measure helps us to identify underlying trends in our business that could otherwise be masked by the effect of certain expenses that we exclude in the calculations of the non-GAAP financial measure.
Accordingly, we believe that this non-GAAP financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.
This non-GAAP financial measure does not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures, because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerning exclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other non-GAAP measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison.
Adjusted EBITDA
Adjusted EBITDA is defined as net (loss) income as reported in our condensed consolidated statements of operations and comprehensive (loss) income excluding the impact of (I) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss, and (vi) one time, non-recurring other expenses or income. Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-time and non-cash costs. Reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, is as follows (in thousands):
| | For the Three Months Ended | | | For the Six Months Ended | |
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| | May 31 | | | May 31 | |
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| | 2026 | | | 2025 | | | 2026 | | | 2025 | |
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Net Income (Loss) | | $ | (10,088 | ) | | $ | 2,427 | | | $ | (9,287 | ) | | $ | 4,089 | |
| | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | |
Interest income | | | (42 | ) | | | (116 | ) | | | (130 | ) | | | (303 | ) |
Income tax expense | | | (2,662 | ) | | | 898 | | | | (2,666 | ) | | | 1,038 | |
Depreciation and amortization | | | 727 | | | | 252 | | | | 1,362 | | | | 437 | |
Non-GAAP EBITDA | | $ | (12,065 | ) | | $ | 3,461 | | | $ | (10,721 | ) | | $ | 5,261 | |
| | | | | | | | | | | | | | | | |
Stock-based compensation expense | | | 836 | | | | 722 | | | | 1,371 | | | | 1,562 | |
Impairment loss | | | 4,506 | | | | - | | | | 4,506 | | | | - | |
Write-down of ammunition inventory | | | 3,605 | | | | - | | | | 3,605 | | | | - | |
Inventory reserve - strategic product rationalization | | | 2,324 | | | | - | | | | 2,324 | | | | - | |
Severance/Leadership transition | | | 189 | | | | 116 | | | | 521 | | | | 246 | |
Non-GAAP adjusted EBITDA | | $ | (605 | ) | | $ | 4,299 | | | $ | 1,606 | | | $ | 7,069 | |
Adjusted Cost of goods sold and gross profit
Adjusted cost of goods sold is defined as cost of goods sold as reported in our condensed consolidated statements of operations and comprehensive (loss) income excluding the impact of (i)impairment loss; (ii) write down of ammunition inventory; (iii) inventory reserve due to strategic product rationalization, and (iv) refunds of previously paid tariffs. Our Adjusted cost of goods sold measure eliminates potential differences in performance caused by certain one-time or unusual events. Adjusted gross profit is defined as revenue as reported in our condensed consolidated statement of operations and comprehensive (loss) income less Adjusted cost of goods sold. Reconciliation of Adjusted cost of goods sold to Cost of goods sold, as well as a reconciliation of Adjusted Gross profit to Gross profit, the most directly comparable GAAP measures, are as follows (in thousands):
| | For the Three Months Ended | | | For the Six Months Ended | |
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| | May 31 | | | May 31 | |
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| | 2026 | | | 2025 | | | 2026 | | | 2025 | |
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Net revenue | | $ | 16,387 | | | $ | 28,505 | | | $ | 45,436 | | | $ | 54,695 | |
Cost of goods sold | | | 14,604 | | | | 10,941 | | | | 26,252 | | | | 21,207 | |
Gross profit | | | 1,783 | | | | 17,564 | | | | 19,184 | | | | 33,488 | |
Gross profit margin | | | 10.9 | % | | | 61.6 | % | | | 42.2 | % | | | 61.2 | % |
| | | | | | | | | | | | | | | | |
Cost of goods sold | | | 14,604 | | | | 10,941 | | | | 26,252 | | | | 21,207 | |
Adjustments: | | | | | | | | | | | | | | | | |
Impairment loss | | | (3,488 | ) | | | - | | | | (3,488 | ) | | | - | |
Tariff refund | | | 1,067 | | | | - | | | | 1,067 | | | | - | |
Write-down of ammunition inventory | | | (3,605 | ) | | | - | | | | (3,605 | ) | | | - | |
Inventory reserve - strategic product rationalization | | | (2,324 | ) | | | - | | | | (2,324 | ) | | | - | |
Non-GAAP adjusted cost of goods sold | | | 6,254 | | | | 10,941 | | | | 17,902 | | | | 21,207 | |
| | | | | | | | | | | | | | | | |
Non-GAAP adjusted gross profit | | | 10,133 | | | | 17,564 | | | | 27,534 | | | | 33,488 | |
Non-GAAP adjusted gross profit margin | | | 61.8 | % | | | 61.6 | % | | | 60.6 | % | | | 61.2 | % |