On August 19, 2024, the Company entered into an exclusive distribution, manufacturing and licensing agreement with Byrna LATAM (the "LATAM Licensing Agreement"). This LATAM Licensing Agreement allows Byrna LATAM to exclusively manufacture the Byrna SD launcher and ammunition in certain South American countries and requires Byrna LATAM to pay the Company a royalty on Byrna products manufactured. The Company recognized no royalty revenue during the three and nine months ended August 31, 2026, and gross royalties receivable outstanding as of August 31, 2026 totaled $0.8 million. As of August 31, 2026, the Company recorded an allowance for expected credit losses for the full amount of the royalties receivable from Byrna LATAM. The amount of royalty earned during the three and nine months ended August 31, 2025 was $0.3 million and $1.1 million, respectively. The amount outstanding as of November 30, 2025 was $1.1 million and are included in accounts receivable in the condensed consolidated balance sheet.

In January 2023 and as amended from time to time, the Company loaned $1.6 million to Byrna LATAM. The loan bears interest at a fixed annual rate of 5% per annum. In April 2026, the Company and Byrna LATAM entered into a third amendment to the loan agreement, pursuant to which accrued interest of less than $0.1 million from the period between the last scheduled payment date under the prior repayment schedule and the effective date of the third amendment (the "stub period") was capitalized into the outstanding principal balance of approximately $0.6 million, resulting in a restated principal balance of approximately $0.6 million. On June 23, 2026, the Company and Byrna LATAM entered into a fourth amendment to the loan agreement (the "Fourth Amendment"), which supersedes the third amendment in its entirety. Pursuant to the Fourth Amendment, accrued interest of approximately $0.1 million was capitalized into the outstanding principal balance, resulting in a restated principal balance of approximately $0.7 million, which is repayable, together with interest at a fixed annual rate of 5% per annum, in fourteen equal monthly installments of approximately $0.1 million commencing May 20, 2026 and concluding June 20, 2027. Interest income related to the loan receivable was less than $0.1 million for each of the three and nine months ended August 31, 2026 and 2025, and is included in interest income in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The loan receivable of $0.6 million and $1.1 million was recorded in Prepaid expenses and other current assets in the condensed consolidated balance sheet as of August 31, 2026 and November 30, 2025, respectively.

The Company evaluated the loan receivable from Byrna LATAM for expected credit losses as of August 31, 2026. The Company and Byrna LATAM have agreed that, in the near term, amounts due under Byrna LATAM's commercial invoices, which consist primarily of royalties, may be settled through the Company's acceptance of inventory manufactured by Byrna LATAM, the value of which will be applied against the outstanding invoices when the inventory is received. Because the Company is still evaluating the inventory it will accept, and the value and timing of any such settlement are uncertain, the Company recorded an allowance for expected credit losses for the full amount of the commercial invoices. The loan receivable is not subject to this arrangement. Byrna LATAM has committed to repay the loan in cash in accordance with the Fourth Amendment, and the outstanding balance of the loan decreased from $1.1 million as of November 30, 2025 to $0.6 million as of August 31, 2026. Based on this evaluation, the Company concluded that no allowance for expected credit losses on the loan receivable was required as of August 31, 2026. The Company will continue to evaluate the collectability of the loan receivable each reporting period.