The following table summarizes cost and accumulated depreciation (in thousands):

The Company recognized $1.2 million and $0.9 million in depreciation expense during the six months ended May 31, 2026 and 2025, respectively. The Company recognized $0.7 million and $0.5 million in depreciation expense during the three months ended May 31, 2026 and 2025, respectively. Depreciation expense is presented in the operating expenses and within cost of goods sold in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

During the second fiscal quarter of 2026, the Company committed to a plan to permanently cease in-house ammunition production operations at its Fort Wayne, Indiana facility. Going forward, ammunition will be sourced from a third-party contract manufacturer. In connection with this decision, the Company performed an impairment assessment of the long-lived assets associated with the ammunition production function under ASC 360, Property, Plant, and Equipment.

The ammunition production machinery, equipment, and production-specific leasehold improvements were determined to constitute an abandoned asset group, as these assets have no alternative use within the Company's remaining operations. The fair value of the production equipment was determined to approximate zero, as expected scrap and salvage proceeds were not material after considering costs to dismantle and remove the equipment. Accordingly, the Company recognized a total impairment loss of approximately $3.5 million during the three months ended May 31, 2026, comprised of $3.5 million related to the write-off of ammunition production machinery and equipment and less than $0.1 million related to the write-off of production-specific leasehold improvements. The impairment loss is included in cost of goods sold in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

In addition, during the three and six months ended May 31, 2026, the Company wrote off approximately $1.0 million of deposits for equipment associated with the Fort Wayne ammunition production facility. These assets had not yet been placed in service at the time the decision to cease production was made and therefore have no recoverable value. The write-off is reflected in operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

At May 31, 2026 and November 30, 2025, the Company had deposits of $0.5 million and $1.5 million, respectively, with vendors primarily for supply of machinery (molds) and equipment where the vendors have not completed the supply of these assets and is presented as Deposits for equipment in the Condensed Consolidated Balance Sheets.