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 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 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 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, Topic 14. 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 does not 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 $0.8 million and $0.7 million for the three months ended May 31, 2026 and 2025, respectively, and $1.4 million and $1.6 million for the six months ended May 31, 2026 and 2025, 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 the three and six months ended May 31, 2026, the Company granted performance-based restricted stock units ("PSUs") to certain employees. The number of PSUs that may ultimately vest is contingent upon the achievement of specified GAAP revenue targets for the fiscal year 2027 performance period ( December 1, 2026 through November 30, 2027), as well as the participant's continued employment through November 30, 2028. The actual number of shares that may be 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 the three and six months ended May 31, 2026 the Company granted 362,361 RSUs consisting of 230,064 time-based RSUs and 132,297 performance-based RSUs. Stock-based compensation expense for the RSUs for the three and six months ended May 31, 2026 was $0.8 million and $1.2 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 the two-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 final 90 days of the two-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 is not satisfied on the vesting date, the award will be forfeited in its entirety with no 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 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 the one-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 final 90 days of the one-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 is not satisfied on the vesting date, the PSUs will be forfeited in their entirety with no 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. Subsequent to May 31, 2026, these awards vested in full upon Mr. Pham's separation from the Company; see Note 25, Subsequent Events.

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 does not currently pay dividends and does not anticipate paying dividends during the performance period.

As of  May 31, 2026, there was $4.2 million of unrecognized stock-based compensation cost related to unvested RSUs which is expected to be recognized over a weighted average of 1.4 years. 

The weighted average grant-date fair value of PSUs and RSUs granted during the three and six months ended May 31, 2026 was $10.09 and $7.30 per unit, respectively.

The following table summarizes the RSU activity during the six months ended May 31, 2026:

Of the 88,545 RSUs that were settled during the six months ended May 31, 2026, 14,999 units were withheld by the Company in exchange for the Company paying for the payroll withholding taxes. For the six months ended May 31, 2026, RSUs of 73,546, net, were issued in connection with the settlement of RSUs.

Stock Options

The Company recorded stock-based compensation expense for options granted to its employees and directors of $0.2 million and $0.7 million during the six months ended May 31, 2026 and May 31, 2025, respectively, and less than $0.1 million and $0.3 million for the three months ended May 31, 2026 and 2025, respectively. As of May 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 0.7 years.

The following table summarizes option activity under the 2020 Plan during the six months ended May 31, 2026: