Core Insights - AXIL Brands has launched the XCOR SE™ hearing protection and enhancement earbuds in over 300 Costco stores nationwide, significantly expanding its market presence and accessibility for consumers [1][3] - The XCOR SE™ features advanced technology with a 26 SNR (Signal-to-Noise Ratio) and up to 4x hearing enhancement, making it suitable for various loud environments [2][3] - The partnership with Costco reflects AXIL's commitment to innovation and operational excellence, aiming to meet the rising demand for premium hearing solutions [3] Product Details - The XCOR SE™ earbuds are equipped with Bluetooth 5.2 connectivity and are designed to be water- and sweat-resistant, catering to users in diverse settings such as gyms, shooting ranges, and concerts [2] - The product is positioned as a premium offering in the hearing protection market, building on the success of previous XCOR models and collaborations with industry leaders [3] Company Overview - AXIL Brands is an emerging global consumer products company, specializing in premium hearing enhancement and protection products, as well as hair and skincare products [5] - The company operates in multiple regions, including the United States, Canada, the European Union, and Asia, indicating a broad market reach [5]

Core Viewpoint - AXIL Brands, Inc. experienced a decline in revenue and net income for fiscal 2025, but management highlighted improvements in cash flow and strategic initiatives aimed at long-term growth [12]. Financial Performance - AXIL reported net sales of $26.3 million for fiscal 2025, down 4.5% from $27.5 million a year earlier [1] - Net income decreased significantly to $0.9 million in fiscal 2024 from $2 million a year earlier, resulting in basic earnings per share (EPS) of 13 cents compared to 57 cents in the previous year [2] - Adjusted EBITDA rose 21.3% to $2.4 million, representing 9.3% of sales versus 7.3% a year earlier [2] - Operating cash flow improved markedly, generating $1.9 million versus only $3 thousand in fiscal 2024 [2] Key Business Metrics - Cash on hand rose to $4.8 million at the end of May 2025 from $3.3 million in the prior year [3] - Inventory declined to $2.5 million from $3.4 million, reflecting improved working capital management [3] - Accounts receivable nearly doubled to just more than $1 million, indicating stronger sales momentum or extended collection cycles [3] Operating Efficiency - Operating expenses represented 66.6% of sales in fiscal 2025, improving from 67.9% a year earlier [4] - Reduced sales and marketing expenses fell to $11.7 million from $13.4 million, contributing to efficiency gains [4] - Higher professional and consulting costs rose to $3.3 million from $2.7 million, partially offsetting the efficiency improvements [4] Management Insights - CEO Jeff Toghraie described fiscal 2025 as "a pivotal year" for AXIL, marking its third consecutive year of profitability despite global trade challenges [5] - Management emphasized the robust gross margin of 71% and significant improvements in operating cash flow as evidence of financial discipline [6] - The company is reshaping its supply chain by relocating manufacturing to the U.S. to mitigate tariff exposure [6] Factors Influencing Results - Revenue decline was partly due to global trade challenges, including tariffs and supply-chain disruptions [7] - Improved cost structure with lower marketing outlays and tighter expense controls helped sustain profitability [7] - The decision to advance U.S.-based manufacturing played a role in offsetting tariff-related cost pressures [7] Brand Diversification - AXIL continued to diversify its brand portfolio, with early momentum in its Reviv3 hair and skin care division supported by new leadership hires [8] Future Guidance - For fiscal 2026, management projected strong momentum driven by a major wholesale agreement with a large membership-based retailer, expected to enhance revenues and brand visibility [9] - This partnership is anticipated to expand AXIL's national reach and support long-term growth [9] Strategic Developments - AXIL launched Sharper Vision Marketing, a subsidiary aimed at monetizing internal digital marketing expertise and reducing customer acquisition costs [11] - The company advanced its operational realignment efforts, emphasizing the transition of its supply chain to the U.S. [11] - A key leadership appointment was made to bolster the Reviv3 segment, signaling intent to accelerate growth in the hair and skin care market [11]

Core Insights - AXIL Brands, Inc. reported solid financial results for fiscal year ended May 31, 2025, achieving a net income of $0.9 million and a 21% increase in Adjusted EBITDA year-over-year, despite global trade challenges [4][7] - The company is focusing on relocating a significant portion of its manufacturing to the United States to reduce tariff exposure and enhance operational stability [5] - A major wholesale partnership with a leading national retailer is expected to drive top-line growth starting in fiscal 2026, expanding brand visibility and market reach [6] Financial Highlights - Net sales for fiscal 2025 were $26.3 million, a decrease from $27.5 million in fiscal 2024 [7] - Gross profit margin was 71.0% in fiscal 2025, down from 73.4% in the prior year [7] - Operating expenses improved to 66.6% of net sales in fiscal 2025 from 67.9% in fiscal 2024 [7] - Adjusted EBITDA for fiscal 2025 was $2.4 million, reflecting a 21.3% increase from $2.0 million in fiscal 2024 [7][12] - Cash on hand increased to $4.8 million as of May 31, 2025, up from $3.3 million in the previous year [7] Operational Developments - The company appointed a veteran contractor to lead its hair and skin care division, aiming to accelerate brand growth [6] - AXIL launched Sharper Vision Marketing, a subsidiary to leverage internal digital marketing expertise and reduce customer acquisition costs [8] - The supply chain transition plan is on track, with advancements in domestic manufacturing to mitigate tariff pressures [8] Market Positioning - AXIL Brands is recognized in military publications, enhancing its reputation in the hearing protection market [7] - The company is positioned to scale its multi-channel distribution and product innovation to create long-term shareholder value [10]

[Company Overview & Fiscal Year 2025 Highlights](index=1&type=section&id=1.%20Company%20Overview%20%26%20Fiscal%20Year%202025%20Highlights) [Company Introduction](index=1&type=section&id=1.1.%20Company%20Introduction) AXIL Brands, Inc. is an emerging global consumer products company specializing in AXIL® hearing protection and enhancement products and Reviv3® haircare and skincare products, with its fiscal year financial and operational results for the period ended May 31, 2025, announced on August 21, 2025 - AXIL Brands, Inc. is a global consumer products company with two main brands: **AXIL®** (hearing protection and enhancement products) and **Reviv3®** (haircare and skincare products)[1](index=1&type=chunk)[21](index=21&type=chunk) - The company announced its fiscal year financial and operational results for the period ended May 31, 2025[1](index=1&type=chunk) [Fiscal Year 2025 Financial Highlights](index=1&type=section&id=1.2.%20Fiscal%20Year%202025%20Financial%20Highlights) AXIL Brands reported mixed FY2025 financial results, with net sales decreasing to $26.3 million, yet achieved its third consecutive year of profitability with $0.9 million net income and a 21.3% Adjusted EBITDA increase to $2.4 million, alongside improved operating efficiency and cash flow from operations FY2025 Financial Performance Highlights | Metric | FY2025 | FY2024 | Change (YoY) | | :-------------------------------- | :------------- | :------------- | :------------- | | Net sales | $26.3 million | $27.5 million | -4.4% | | Gross profit as % of sales | 71.0% | 73.4% | -2.4 pp | | Operating expenses as % of net sales | 66.6% | 67.9% | -1.3 pp | | Net income | $0.9 million | $2.0 million | -55.0% | | Adjusted EBITDA | $2.4 million | $2.0 million | +21.3% | | Net cash provided by operating activities | $1.9 million | $3 thousand | Substantial increase | | Cash on hand (as of May 31) | $4.8 million | $3.3 million | +45.5% | | Basic EPS | $0.13 | $0.57 | -77.19% | | Diluted EPS | $0.10 | $0.21 | -52.38% | [Recent Business Highlights](index=1&type=section&id=1.3.%20Recent%20Business%20Highlights) During FY2025, AXIL Brands secured a significant wholesale agreement with a leading national membership retailer, appointed new leadership for its haircare and skincare division, advanced its supply chain transition to domestic manufacturing, established Sharper Vision Marketing, and received media recognition for its hearing protection products - A significant wholesale agreement was signed with a leading national membership retailer, with initial purchase orders issued in **Q1 FY2026**, expanding retail reach and consumer access[4](index=4&type=chunk)[7](index=7&type=chunk) - An experienced contractor was appointed to lead the haircare and skincare division, aiming to accelerate brand growth[4](index=4&type=chunk)[9](index=9&type=chunk) - Supply chain transformation initiatives are on track, accelerating domestic manufacturing development and operational adjustments to mitigate tariff risks and build long-term resilience[4](index=4&type=chunk)[6](index=6&type=chunk)[8](index=8&type=chunk) - Sharper Vision Marketing, a wholly-owned subsidiary, was established to monetize internal digital marketing expertise as an external revenue stream while reducing internal customer acquisition costs[4](index=4&type=chunk)[8](index=8&type=chunk) - Featured in leading military publications like Military Times, highlighting brand innovation in hearing protection and solidifying its position among tactical and professional users[5](index=5&type=chunk) [Management Discussion and Outlook](index=2&type=section&id=2.%20Management%20Discussion%20and%20Outlook) [CEO's Review of FY2025 Performance](index=2&type=section&id=2.1.%20CEO's%20Review%20of%20FY2025%20Performance) CEO Jeff Toghraie highlighted FY2025 as a pivotal year for AXIL, achieving its third consecutive year of profitability with $0.9 million net income and a 21% Adjusted EBITDA increase despite global trade challenges, emphasizing disciplined growth, optimized expenses, a 71% gross margin, and significantly improved operating cash flow - FY2025 was a pivotal year for AXIL, achieving its **third consecutive year of profitability** with **$0.9 million net income**[5](index=5&type=chunk) - Adjusted EBITDA increased by **21% year-over-year**, reflecting the company's disciplined approach to growth and optimized marketing and operating expenses[5](index=5&type=chunk) - Core business remained resilient with a **71% gross margin** and significantly improved operating cash flow[5](index=5&type=chunk) [Strategic Initiatives and Future Outlook](index=2&type=section&id=2.2.%20Strategic%20Initiatives%20and%20Future%20Outlook) Management is accelerating the relocation of most manufacturing and operations to the US to mitigate tariff risks and enhance stability, anticipating significant long-term benefits, while a key wholesale partnership is expected to drive revenue growth and brand awareness from FY2026, and the new Sharper Vision Marketing subsidiary aims to generate external revenue and reduce internal customer acquisition costs, with the Reviv3® haircare and skincare division poised for increased growth under new leadership, entering FY2026 with strong momentum, a robust balance sheet, and investment flexibility without external capital reliance - Accelerating the relocation of most manufacturing and operations to the US to mitigate tariff risks and enhance stability, anticipating significant long-term benefits[6](index=6&type=chunk)[8](index=8&type=chunk) - A significant wholesale partnership was established with one of the nation's largest membership retailers, projected to drive substantial revenue growth and brand awareness starting in **FY2026**[7](index=7&type=chunk) - Sharper Vision Marketing, a wholly-owned subsidiary, was launched to convert internal digital marketing expertise into an external revenue stream while reducing internal customer acquisition costs[8](index=8&type=chunk) - The Reviv3® haircare and skincare division added experienced leadership, with the segment expected to become an increasingly important contributor to the company's growth story[9](index=9&type=chunk) - The company enters **FY2026** with strong momentum, a robust balance sheet, and flexibility to invest in growth without relying on external capital, focusing on expanding multi-channel distribution and product innovation to drive sustainable long-term shareholder value[10](index=10&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=3.%20Non-GAAP%20Financial%20Measures) [Explanation of Non-GAAP Measures](index=3&type=section&id=3.1.%20Explanation%20of%20Non-GAAP%20Measures) The company utilizes non-GAAP financial measures, specifically EBITDA and Adjusted EBITDA, to offer insights into financial trends and operational performance, with EBITDA calculated by adjusting GAAP net income for income taxes, interest, depreciation, and amortization, and Adjusted EBITDA further adjusting for stock-based compensation, which management considers important for business evaluation but cautions against using as a sole financial metric due to potential differences in calculation methods compared to other companies - EBITDA is calculated as GAAP net income plus provision (benefit) for income taxes, interest income or expense, and depreciation and amortization[11](index=11&type=chunk) - Adjusted EBITDA further adjusts EBITDA for stock-based compensation expenses[11](index=11&type=chunk) - The company believes these non-GAAP measures provide useful information regarding its financial condition and operating performance, and management considers them important metrics for evaluating the company's business[11](index=11&type=chunk) - Investors should not rely on any single financial measure to evaluate the company's business, as these non-GAAP measures exclude significant expenses and income required to be recorded under GAAP and may not be comparable for all purposes[11](index=11&type=chunk) [Consolidated EBITDA and Adjusted EBITDA Reconciliation](index=3&type=section&id=3.2.%20Consolidated%20EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) For FY2025, the company reported GAAP net income of $854,988 and total EBITDA of $1,321,399, with total Adjusted EBITDA increasing to $2,430,333 from $2,002,889 in FY2024 after adjusting for stock-based compensation, improving Adjusted EBITDA as a percentage of net sales from 7.3% in FY2024 to 9.3% Consolidated EBITDA and Adjusted EBITDA Reconciliation | Metric | FY2025 | FY2024 | | :------------------------------------- | :------------- | :------------- | | Net income (GAAP) | $854,988 | $2,003,134 | | Provision (benefit) for income taxes | $453,828 | $(220,205) | | Interest income, net | $(135,915) | $(177,833) | | Depreciation and amortization | $148,498 | $130,610 | | **Total EBITDA (Non-GAAP)** | **$1,321,399** | **$1,735,706** | | Stock-based compensation | $1,108,934 | $267,183 | | **Total Adjusted EBITDA (Non-GAAP)** | **$2,430,333** | **$2,002,889** | | Sales, net (GAAP) | $26,257,522 | $27,498,539 | | Adjusted EBITDA as a percentage of Sales, net | 9.3% | 7.3% | [Consolidated Financial Statements](index=4&type=section&id=4.%20Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=4&type=section&id=4.1.%20Consolidated%20Balance%20Sheets) As of May 31, 2025, total assets increased to $12.87 million from $10.97 million in FY2024, primarily driven by higher cash and accounts receivable, while total liabilities slightly decreased to $3.21 million, and total stockholders' equity significantly rose to $9.66 million due to increased retained earnings and additional paid-in capital Consolidated Balance Sheet Highlights (as of May 31) | Metric | 2025 | 2024 | Change | | :-------------------------- | :------------- | :------------- | :------------- | | Total Current Assets | $9,255,648 | $7,966,860 | +16.18% | | Cash | $4,769,854 | $3,253,876 | +46.6% | | Accounts receivable, net | $1,003,945 | $509,835 | +96.9% | | Inventory, net | $2,533,658 | $3,394,023 | -25.35% | | Total Assets | $12,869,795 | $10,974,361 | +17.27% | | Total Current Liabilities | $2,462,824 | $2,798,045 | -12.0% | | Total Liabilities | $3,210,087 | $3,278,575 | -2.09% | | Total Stockholders' Equity | $9,659,708 | $7,695,786 | +25.52% | | Retained Earnings (Accumulated deficit) | $720,718 | $(134,270) | Shift to positive | [Consolidated Statements of Operations](index=6&type=section&id=4.2.%20Consolidated%20Statements%20of%20Operations) For FY2025, net sales decreased to $26.26 million from $27.50 million in FY2024, with gross profit falling to $18.64 million and gross margin declining from 73.4% to 71.0%, while operating expenses decreased to $17.48 million, resulting in operating income dropping to $1.16 million, and net income significantly decreased to $0.85 million from $2.00 million in FY2024, primarily due to lower sales and increased income tax expense, with basic EPS falling to $0.13 and diluted EPS to $0.10 Consolidated Statements of Operations Highlights | Metric | FY2025 | FY2024 | Change (YoY) | | :-------------------------------- | :------------- | :------------- | :------------- | | Sales, net | $26,257,522 | $27,498,539 | -4.51% | | Cost of sales | $7,615,954 | $7,321,838 | +4.02% | | Gross profit | $18,641,568 | $20,176,701 | -7.51% | | Gross profit as % of sales | 71.0% | 73.4% | -2.4 pp | | Total Operating Expenses | $17,480,203 | $18,673,321 | -6.49% | | Income from operations | $1,161,365 | $1,503,380 | -22.75% | | Income before provision for income taxes | $1,308,816 | $1,782,929 | -26.6% | | Provision (benefit) for income taxes | $453,828 | $(220,205) | Significant increase in tax expense | | NET INCOME | $854,988 | $2,003,134 | -57.32% | | Basic EPS | $0.13 | $0.57 | -77.19% | | Diluted EPS | $0.10 | $0.21 | -52.38% | [Consolidated Statements of Cash Flows](index=7&type=section&id=4.3.%20Consolidated%20Statements%20of%20Cash%20Flows) In FY2025, cash flow from operating activities significantly increased to $1.93 million from $2,677 in FY2024, driven by higher net income, increased stock-based compensation, and positive changes in inventory, while cash used in investing activities rose to $394,298 due to increased purchases of intangible assets and property and equipment, and cash used in financing activities substantially decreased to $18,385, primarily due to the absence of preferred stock repurchases from the prior year, resulting in an overall cash increase of $1.52 million and an ending cash balance of $4.77 million Consolidated Statements of Cash Flows Highlights | Metric | FY2025 | FY2024 | Change (YoY) | | :------------------------------------- | :------------- | :------------- | :------------- | | Net cash provided by operating activities | $1,928,661 | $2,677 | Substantial increase | | Net cash used in investing activities | $(394,298) | $(160,525) | +145.63% (increased outflow) | | Net cash used in financing activities | $(18,385) | $(1,420,958) | -98.71% (reduced outflow) | | Net increase (decrease) in cash | $1,515,978 | $(1,578,806) | Shift from decrease to increase | | Cash - End of year | $4,769,854 | $3,253,876 | +46.6% | [Additional Information](index=8&type=section&id=5.%20Additional%20Information) [About AXIL Brands](index=8&type=section&id=5.1.%20About%20AXIL%20Brands) AXIL Brands is an emerging global consumer products company that manufactures and sells premium hearing enhancement and protection products under the AXIL® brand, along with premium haircare and skincare products under its Reviv3® brand, with products sold across the United States, Canada, the European Union, and Asia - AXIL Brands manufactures and sells premium hearing enhancement and protection products under the **AXIL®** brand, including earplugs, earmuffs, and earbuds[21](index=21&type=chunk) - The company also sells premium haircare and skincare products under its in-house **Reviv3®** brand[21](index=21&type=chunk) - Products are sold across the United States, Canada, the European Union, and Asia[21](index=21&type=chunk) [Forward-Looking Statements](index=8&type=section&id=5.2.%20Forward-Looking%20Statements) This section contains forward-looking statements, identified by words such as 'anticipate,' 'believe,' and 'expect,' based on currently available information and management's expectations, which are subject to significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including the company's ability to grow sales, obtain financing, implement cost savings, compete effectively, manage customer concentration, adapt to regulatory changes (taxes, tariffs), execute acquisitions, accelerate supply chain transformation, and navigate volatile market and economic conditions (inflation, recession, geopolitical events, supply chain disruptions), with no obligation to update these statements - Forward-looking statements are based on currently available information and management's beliefs, forecasts, and current expectations[22](index=22&type=chunk) - These statements are subject to numerous significant risks and uncertainties, many beyond management's control, which could cause the company's results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by these forward-looking statements[22](index=22&type=chunk) - Factors that could cause actual results to differ materially from forward-looking statements include the company's ability to grow net sales and operations, obtain financing, implement cost savings and efficiency measures, compete effectively, manage customer concentration, adapt to changes in laws and regulations (taxes, tariffs, trade policies, or product safety), undertake acquisitions, investments, collaborations, strategic alliances, or dispositions, successfully accelerate its supply chain transformation strategy and realize anticipated benefits, and the impact of volatile market and macroeconomic conditions (inflation, recession, geopolitical events, supply chain disruptions and restrictions, labor shortages)[22](index=22&type=chunk) - The company undertakes no obligation to update or revise these forward-looking statements, except as required by law[22](index=22&type=chunk) [Investor Relations](index=8&type=section&id=5.3.%20Investor%20Relations) Investor relations contact information is provided, including contact name Todd McKnight, phone number, and email address - Investor Relations contact: **Todd McKnight**, Phone: **+1 (917) 349-2175**, Email: **investors@goaxil.com**[23](index=23&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MAY 31, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission file number: 001-41958 AXIL BRANDS, INC. (Exact name of registrant as specified in its charter) Delaware 47-4125218 (State or other jurisdiction of incorporation or ...

LOS ANGELES, Aug. 13, 2025 (GLOBE NEWSWIRE) -- AXIL Brands, Inc. ("AXIL," "we," "us," "our," or the "Company") (NYSE American: AXIL), an emerging global consumer products company for AXIL® hearing protection and enhancement products and Reviv3® hair and skin care products, today announced a significant new wholesale partnership with a prominent U.S. membership-based retail chain. Under this partnership, AXIL® hearing protection products are expected to be available in approximately 300 retail locations nati ...

Core Insights - AXIL Brands, Inc. has announced a strategic partnership with JuiceCo Pro Agency to enhance the global distribution and visibility of its Reviv3 hair and skin care products [1][4] - The partnership aims to leverage JuiceCo's expertise in brand development and market penetration to secure key distribution partnerships and elevate Reviv3's profile among beauty professionals and consumers [2][3] Company Overview - AXIL Brands, Inc. is an emerging global consumer products company that manufactures and markets premium hearing enhancement and protection products under the AXIL brand, as well as hair and skincare products under the Reviv3 Procare brand [6] - Reviv3 Procare specializes in hair and skin care products that focus on clean ingredients and professional-grade performance, trusted by salons and consumers worldwide [7] Leadership and Expertise - Jack Ingraham, founder of JuiceCo Pro Agency, brings over 25 years of experience in brand development and product marketing, having previously served as Chief Commercial Officer for SalonCentric Canada and General Manager for Redken Canada [3][4] - The Board of Directors of Reviv3 Procare expressed confidence in Ingraham's strategic insight and commitment to excellence, viewing his leadership as a key asset for the company's global growth [4][5] Market Strategy - The partnership is expected to strengthen Reviv3 Procare's professional partnerships and expand its global footprint, contributing to a more meaningful financial impact from this segment under Ingraham's leadership [5] - The company aims to continue focusing on its AXIL branded hearing protection products while also enhancing the growth of the Reviv3 Procare segment [5]

AXIL’s cutting-edge hearing solutions draw acclaim for innovation and performanceLOS ANGELES, May 30, 2025 (GLOBE NEWSWIRE) -- AXIL Brands, Inc. (“AXIL” or the “Company”)(NYSE American: AXIL), a leader in innovative hearing protection, hearing enhancement, and wireless technology, is proud to announce its recent recognition in esteemed military and technology media outlets. Renowned publications including Military Times, Marine Corps Times, Air Force Times and Navy Times spotlighted AXIL’s groundbreaking pr ...

Core View - AXIL Brands, Inc. has experienced a significant decline in stock performance, with a 2.2% drop since the third quarter results, contrasting with a 7.8% increase in the S&P 500 index during the same period [1] Financial Performance - In Q3 of fiscal 2025, AXIL reported revenues of $6.92 million, a 7% increase from $6.47 million in the same quarter last year [2] - Net income decreased by 26.1% to $0.6 million from $0.8 million a year earlier, with diluted EPS at 7 cents, down from 4 cents [2] - Adjusted EBITDA improved to $0.9 million, a significant turnaround from a negative $11,052 in the prior year, indicating enhanced operational efficiency [2] Operating Metrics & Business Segments - The hearing enhancement and protection segment was the primary revenue driver, contributing $6.45 million, or approximately 93% of total revenues, up from $5.99 million last year [3] - The hair and skin care segment reported flat revenues of $0.5 million, with a gross profit of $0.3 million [3] - Total assets increased to $12.95 million from $10.97 million as of May 31, 2024 [3] Profitability and Costs - Gross profit rose to $4.97 million from $4.62 million, with a margin expansion to 71.7% from 71.5% [4] - Operating expenses decreased by 7.3% to $4.38 million, attributed to lower advertising costs and a shift to targeted marketing [5] - Stock-based compensation increased significantly to $0.3 million from $59,099 a year earlier [5] Cash Flow and Financial Position - Cash position improved to $4.74 million from $3.25 million at the end of the previous fiscal year [6] - Operating cash flow for the nine months ended February 28, 2025, rose sharply to $1.73 million from $339,323 in the prior-year period [6] Management Insights - Management noted that reduced advertising spending in earlier quarters impacted direct-to-consumer sales but highlighted stronger performance in Q3 due to post-Thanksgiving sales and expanded distribution [7] - CEO Jeff Toghraie expressed confidence in navigating market challenges and emphasized initiatives for geographic expansion and cost efficiency [7] Strategic Developments - AXIL Brands incurred approximately $195,000 in consulting fees related to geographic expansion and new product lines [8] - The company completed a reverse stock split at a ratio of 1-for-20 and converted 3.36 million shares of Series A Preferred Stock into 168,000 shares of common stock, streamlining its capital structure [13] Supply Chain Strategy - AXIL accelerated its supply-chain transition strategy in response to elevated tariffs and geopolitical risks, relocating manufacturing leadership to the U.S. and establishing domestic facilities [14]

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward%20Looking%20Statements) This section outlines that the report contains forward-looking statements subject to various risks and uncertainties, advising careful evaluation - This report contains forward-looking statements regarding future events, financial performance, liquidity, capital needs, operational plans, and industry outlook, which are subject to various risks and uncertainties[9](index=9&type=chunk) - Actual results may differ due to factors such as unstable market conditions, economic downturns, geopolitical events, financial performance, capital access, international market risks, regulatory changes, and competition[10](index=10&type=chunk) - The company does not assume an obligation to update forward-looking statements, except as required by law, and advises careful evaluation of described factors[12](index=12&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for AXIL Brands, Inc. and its subsidiary, covering the balance sheets, statements of operations, changes in stockholders' equity, and cash flows for the periods ended February 28, 2025, and February 29, 2024, along with accompanying condensed notes [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's consolidated balance sheets, detailing assets, liabilities, and equity for the specified periods | Metric | Feb 28, 2025 (Unaudited) | May 31, 2024 | | :-------------------------------- | :----------------------- | :----------- | | **ASSETS** | | | | Total Current Assets | $9,251,172 | $7,966,860 | | Total Other Assets | $3,699,775 | $3,007,501 | | **TOTAL ASSETS** | **$12,950,947** | **$10,974,361** | | **LIABILITIES & EQUITY** | | | | Total Current Liabilities | $2,449,751 | $2,798,045 | | Total Long Term Liabilities | $844,330 | $480,530 | | **Total Liabilities** | **$3,294,081** | **$3,278,575** | | Total Stockholders' Equity | $9,656,866 | $7,695,786 | | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | **$12,950,947** | **$10,974,361** | - **Total assets increased by $1,976,586 (18.0%)** from May 31, 2024, to February 28, 2025, driven by increases in cash, accounts receivable, property and equipment, intangible assets, and right-of-use assets[16](index=16&type=chunk) - **Total current liabilities decreased by $348,294 (12.4%)** primarily due to decreases in customer deposits, contract liabilities, income tax liability, and other current liabilities, partially offset by an increase in lease liability[16](index=16&type=chunk) - **Total stockholders' equity increased by $1,961,080 (25.5%)** mainly due to net income, stock options expense, stock-based compensation, and preferred shares converted to common stock, leading to a positive retained earnings balance[16](index=16&type=chunk)[17](index=17&type=chunk) [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's consolidated statements of operations, detailing revenues, expenses, and net income for the specified periods | Metric | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | 9 Months Ended Feb 28, 2025 | 9 Months Ended Feb 29, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Sales, net | $6,922,367 | $6,469,343 | $20,506,213 | $20,997,289 | | Cost of sales | $1,955,939 | $1,845,017 | $5,888,090 | $5,467,458 | | Gross profit | $4,966,428 | $4,624,326 | $14,618,123 | $15,529,831 | | Total Operating Expenses | $4,383,319 | $4,728,205 | $13,502,845 | $14,196,041 | | Income (Loss) From Operations | $583,109 | $(103,879) | $1,115,278 | $1,333,790 | | Net Income | $576,662 | $781,091 | $1,100,563 | $1,953,618 | | Basic EPS | $0.09 | $0.13 | $0.17 | $0.33 | | Diluted EPS | $0.07 | $0.04 | $0.13 | $0.11 | - For the three months ended February 28, 2025, **net sales increased by 7.0%** YoY, **gross profit increased by 7.4%** YoY, and the company reported **income from operations of $583,109** compared to a loss of **$(103,879)** in the prior year[18](index=18&type=chunk) - For the nine months ended February 28, 2025, **net sales decreased by 2.3%** YoY, **gross profit decreased by 5.9%** YoY, and **income from operations decreased by 16.4%** YoY[18](index=18&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in the company's stockholders' equity, including net income, stock-based compensation, and share conversions | Metric | Feb 28, 2025 (9 Months) | Feb 29, 2024 (9 Months) | | :-------------------------------- | :---------------------- | :---------------------- | | Balance, May 31 | $7,695,786 | $6,671,959 | | Stock options expense | $416,935 | $153,320 | | Stock based compensation / Restricted stock awards | $443,582 | $7,994 | | Preferred shares converted to common | $0 | $0 | | Net income | $1,100,563 | $1,953,618 | | Balance, End of Period | $9,656,866 | $8,786,891 | - **Total stockholders' equity increased from $7,695,786** as of May 31, 2024, to **$9,656,866** as of February 28, 2025, primarily driven by net income and significant stock-based compensation expenses[21](index=21&type=chunk)[22](index=22&type=chunk) - **During the nine months ended February 28, 2025, 14,478,250 preferred shares were converted into 723,913 common shares**[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's consolidated cash flow statements, categorizing cash movements from operating, investing, and financing activities | Cash Flow Activity | 9 Months Ended Feb 28, 2025 | 9 Months Ended Feb 29, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net Cash Provided by Operating Activities | $1,734,230 | $339,323 | | Net Cash Used in Investing Activities | $(255,778) | $(80,192) | | Net Cash Provided by (Used in) Financing Activities | $11,142 | $(204,246) | | Net Increase in Cash | $1,489,594 | $54,885 | | Cash - End of period | $4,743,470 | $4,887,567 | - **Net cash provided by operating activities significantly increased to $1,734,230** for the nine months ended February 28, 2025, from **$339,323** in the prior year, primarily due to inventory management and accounts payable forgiveness[25](index=25&type=chunk)[170](index=170&type=chunk) - **Net cash used in investing activities increased to $255,778** (from **$80,192** in prior year) due to purchases of intangibles and property and equipment[25](index=25&type=chunk)[171](index=171&type=chunk) - **Net cash provided by financing activities was $11,142** (compared to **$204,246** used in prior year), primarily from related party advances partially offset by note payable repayments[25](index=25&type=chunk)[172](index=172&type=chunk) [Condensed Notes to Unaudited Consolidated Financial Statements](index=13&type=section&id=Condensed%20Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited consolidated financial statements, explaining accounting policies and specific financial items [Note 1 – Organization](index=13&type=section&id=Note%201%20%E2%80%93%20Organization) This note describes AXIL Brands, Inc.'s rebranding, NYSE American uplisting, and its business segments in hearing protection and hair/skin care - The Company changed its name from Reviv3 Procare Company to AXIL Brands, Inc. effective **February 14, 2024**[26](index=26&type=chunk) - **AXIL Brands, Inc. is engaged in the manufacturing, marketing, sale, and distribution of high-tech hearing and audio enhancement/protection products and professional quality hair and skin care products**[26](index=26&type=chunk) - The Company successfully uplisted from the over-the-counter (OTC) markets to the NYSE American stock exchange on **February 14, 2024**[26](index=26&type=chunk) [Note 2 – Basis of Presentation and Summary of Significant Accounting Policies](index=13&type=section&id=Note%202%20%E2%80%93%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note details the basis of preparing financial statements, including a reverse stock split, revenue recognition, and other key accounting policies - A **1-for-20 reverse stock split** was effected on **January 16, 2024**, with retroactive effect on all periods presented in the financial statements[28](index=28&type=chunk) - Revenue recognition follows **ASC 606**, a five-step process, with revenue for products recognized upon shipment and for services (extended warranty) recognized ratably over the warranty period[38](index=38&type=chunk)[45](index=45&type=chunk) - Contract liabilities, primarily for unfulfilled warranty services and customer right of return, amounted to **$1,148,322** as of **February 28, 2025**, with expected recognition over one to three years[46](index=46&type=chunk) - Stock-based compensation is accounted for under **ASC 718**, with fair value estimated using the Black-Scholes model and recognized on a straight-line basis over the vesting period[67](index=67&type=chunk)[106](index=106&type=chunk) - The company adopted **ASC 842 (Leases)** effective **June 1, 2019**, recognizing right-of-use assets and lease liabilities for operating leases with terms greater than **12 months**[72](index=72&type=chunk) [Note 3 – Accounts Receivable, net](index=22&type=section&id=Note%203%20%E2%80%93%20Accounts%20Receivable,%20net) This note details the composition of net accounts receivable, including customer and merchant processor receivables and the allowance for credit losses | Component | Feb 28, 2025 | May 31, 2024 | | :-------------------------- | :----------- | :----------- | | Customers receivable | $776,313 | $524,730 | | Merchant processor receivable | $117,156 | $78,417 | | Less: Allowance for credit losses | $(92,079) | $(93,312) | | **Accounts receivables, net** | **$801,390** | **$509,835** | - **The provision for credit losses decreased significantly for both the three-month period ($3,880 vs. $79,068 YoY)** and the nine-month period (**$31,834 vs. $143,395 YoY**) ended February 28, 2025[79](index=79&type=chunk) [Note 4 – Inventory, net](index=22&type=section&id=Note%204%20%E2%80%93%20Inventory,%20net) This note details the composition of net inventory, including finished goods, raw materials, and the obsolescence reserve | Component | Feb 28, 2025 | May 31, 2024 | | :---------------- | :----------- | :----------- | | Finished Goods | $2,728,309 | $3,190,344 | | Raw Materials | $16,127 | $203,679 | | **Inventory** | **$2,744,436** | **$3,394,023** | | Inventory at third party locations | $322,012 | $58,242 | | Inventory in-transit | $127,750 | $15,738 | | Obsolescence reserve | $23,448 | $46,895 | - **The obsolescence reserve on slow-moving inventory decreased from $46,895 to $23,448**[80](index=80&type=chunk) [Note 5 – Property and Equipment](index=22&type=section&id=Note%205%20%E2%80%93%20Property%20and%20Equipment) This note details the company's property and equipment, including additions, categories, and accumulated depreciation | Category | Feb 28, 2025 | May 31, 2024 | | :-------------------------- | :----------- | :----------- | | Promotional display racks | $39,565 | $30,709 | | Furniture and Fixtures | $67,653 | $5,759 | | Computer Equipment | $18,558 | $22,130 | | Plant Equipment | $351,078 | $264,168 | | Office equipment | $8,838 | $8,838 | | Automobile | $24,347 | $24,347 | | Less: Accumulated Depreciation | $(135,004) | $(95,003) | | **Total Property, plant and equipment, net** | **$375,035** | **$260,948** | - **Depreciation expense for the three months ended February 28, 2025, was $18,703**, up from **$8,237** in the prior year. For the nine months, it was **$40,001**, up from **$25,508**[81](index=81&type=chunk) [Note 6 – Intangible Assets](index=23&type=section&id=Note%206%20%E2%80%93%20Intangible%20Assets) This note details the company's intangible assets, including licensing rights, customer relationships, trade names, and goodwill | Category | Feb 28, 2025 | May 31, 2024 | | :-------------------------- | :----------- | :----------- | | Licensing Rights | $22,080 | $34,024 | | Customer Relationships | $70,000 | $70,000 | | Trade Names | $275,000 | $275,000 | | Website | $100,000 | $100,000 | | Product Certification Testing | $101,690 | $- | | Less: Accumulated Amortization | $(210,977) | $(169,920) | | **Intangible assets, net** | **$357,793** | **$309,104** | | Goodwill | $2,152,215 | $2,152,215 | - **Amortization expense for the three months ended February 28, 2025, was $26,963**, up from **$19,375** in the prior year. For the nine months, it was **$53,000**, down from **$58,126**[83](index=83&type=chunk) [Note 7 – Other Current Liabilities](index=23&type=section&id=Note%207%20%E2%80%93%20Other%20Current%20Liabilities) This note details the composition of other current liabilities, including sales tax payable and accrued expenses | Component | Feb 28, 2025 | May 31, 2024 | | :-------------------- | :----------- | :----------- | | Credit Cards | $245 | $5,734 | | Royalty Payment Accrual | $- | $3,376 | | Sales Tax Payable | $197,536 | $231,283 | | Accrued expenses | $12,898 | $92,543 | | **Total other current liabilities** | **$210,679** | **$332,936** | [Note 8 – Notes Payable](index=23&type=section&id=Note%208%20%E2%80%93%20Notes%20Payable) This note details the company's outstanding notes payable, specifically the EIDL loan, its balance, interest rate, and repayment terms - **Outstanding balance of the EIDL loan was $140,958** as of **February 28, 2025**, down from **$146,594** as of May 31, 2024[86](index=86&type=chunk) - **Interest expense for the three months ended February 28, 2025, was $1,271**, and for the nine months, it was **$2,567**[85](index=85&type=chunk) [Note 9 – Stockholders' Equity](index=24&type=section&id=Note%209%20%E2%80%93%20Stockholders'%20Equity) This note details the company's authorized capital, preferred and common stock, and equity incentive plan, including stock option grants and restricted awards - **Authorized capital consists of 450,000,000 common shares and 300,000,000 preferred shares**, both with **$0.0001** par value[88](index=88&type=chunk) - **During the nine months ended February 28, 2025, 14,478,250 preferred shares were converted into 723,913 common shares**. As of **February 28, 2025, 27,773,500 Series A Preferred Stock shares were outstanding**[95](index=95&type=chunk) - **The 2022 Equity Incentive Plan was amended to increase authorized shares for issuance to 2,050,000**. **Stock options granted during the nine months ended February 28, 2025, totaled 634,000 shares**, **with a weighted average exercise price of $4.17**[100](index=100&type=chunk)[101](index=101&type=chunk)[113](index=113&type=chunk) - **Stock options expense for the nine months ended February 28, 2025, was $416,935**. **Restricted stock awards and expense totaled $443,582** for the same period, including grants to non-employee directors and a former officer/consultant[113](index=113&type=chunk)[118](index=118&type=chunk) [Note 10 – Commitments and Contingencies](index=30&type=section&id=Note%2010%20%E2%80%93%20Commitments%20and%20Contingencies) This note outlines the company's lease commitments, operating lease costs, and management's assessment of legal contingencies - The company entered into two new lease agreements during the nine months ended February 28, 2025, for a warehouse and new corporate headquarters, with expiration dates in **September 2027** and **January 2029**[73](index=73&type=chunk)[123](index=123&type=chunk) | Lease Metric | Feb 28, 2025 | May 31, 2024 | | :-------------------------- | :----------- | :----------- | | Operating lease assets, net | $672,221 | $36,752 | | Total lease liability, net | $710,260 | $36,752 | | Current portion | $(227,418) | $(36,752) | | Non-current portion | $482,842 | $- | - **Operating lease costs for the three months ended February 28, 2025, were $66,108** (up from **$18,659** YoY), and for the nine months, they were **$133,847** (up from **$55,976** YoY)[124](index=124&type=chunk) - **During the nine months ended February 28, 2025, $218,699 previously due in relation to royalties was forgiven** and included in Sales and marketing expenses[127](index=127&type=chunk) - Management believes that the ultimate liability from legal proceedings is not expected to have a material adverse effect on results of operations, financial position, or cash flows[128](index=128&type=chunk) [Note 11 – Related Party Transactions](index=32&type=section&id=Note%2011%20%E2%80%93%20Related%20Party%20Transactions) This note details transactions with related parties, including consulting fees and advances involving entities associated with the CEO and CFO - **Intrepid Global Advisors (managed by the CEO) was paid approximately $178,000** in consulting fees for the nine months ended February 28, 2025[129](index=129&type=chunk) - **Amounts payable to Intrepid were $28,576** as of **February 28, 2025**, compared to **$11,798** as of May 31, 2024[129](index=129&type=chunk) - **BZ Capital Strategies (controlled by the CFO/COO) was paid $100,000** in consulting fees for the nine months ended February 28, 2025[129](index=129&type=chunk) [Note 12 – Concentrations](index=32&type=section&id=Note%2012%20%E2%80%93%20Concentrations) This note addresses concentrations of credit risk, revenue, geographic sales, accounts receivable, and key suppliers - **The company held approximately $3,993,470** in cash in excess of federally insured limits (**$250,000**) as of **February 28, 2025**[130](index=130&type=chunk) - **No single customer accounted for greater than 10%** of consolidated net sales for the three and nine months ended February 28, 2025[131](index=131&type=chunk) - **Approximately 92.8%** of consolidated net sales for the three months ended February 28, 2025, and **91.1%** for the nine months, were to U.S. customers[132](index=132&type=chunk)[133](index=133&type=chunk) - As of **February 28, 2025, two customers accounted for 38.9%** of accounts receivable[134](index=134&type=chunk) - **The two largest manufacturing vendors accounted for 68.3% and 26.2%** of all purchases for the three months ended February 28, 2025, and **65.1% and 26.5%** for the nine months[135](index=135&type=chunk) [Note 13 – Business Segment and Geographic Area Information](index=33&type=section&id=Note%2013%20%E2%80%93%20Business%20Segment%20and%20Geographic%20Area%20Information) This note provides financial information by business segment (hair/skin care, hearing protection) and geographic area, detailing sales and gross profit | Segment | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | 9 Months Ended Feb 28, 2025 | 9 Months Ended Feb 29, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | **Sales, net** | | | | | | Hair care and skin care | $472,302 | $476,864 | $1,308,356 | $1,022,458 | | Hearing enhancement and protection | $6,450,065 | $5,992,479 | $19,197,857 | $19,974,831 | | **Total net sales** | **$6,922,367** | **$6,469,343** | **$20,506,213** | **$20,997,289** | | **Segment gross profit** | | | | | | Hair care and skin care | $255,968 | $247,859 | $685,964 | $641,966 | | Hearing enhancement and protection | $4,710,460 | $4,376,467 | $13,932,159 | $14,887,865 | | **Total segment gross profit** | **$4,966,428** | **$4,624,326** | **$14,618,123** | **15,529,831** | | **Consolidated total assets** | **$12,950,947** | **$12,713,718** | **$12,950,947** | **$12,713,718** | - **The hearing enhancement and protection segment's sales increased by 7.6%** for the three months ended February 28, 2025, but decreased by **3.9%** for the nine months compared to the prior year[137](index=137&type=chunk) - **The hair care and skin care segment's sales slightly decreased by 1.0%** for the three months but increased by **28.0%** for the nine months ended February 28, 2025[137](index=137&type=chunk) [Note 14 – Income Taxes](index=34&type=section&id=Note%2014%20%E2%80%93%20Income%20Taxes) This note details the company's income tax expense or benefit and its exposure to IRS examination for prior tax returns | Period | Income Tax Expense (Benefit) | | :-------------------------- | :-------------------------- | | 3 Months Ended Feb 28, 2025 | $53,085 | | 3 Months Ended Feb 29, 2024 | $(827,436) | | 9 Months Ended Feb 28, 2025 | $120,335 | | 9 Months Ended Feb 29, 2024 | $(397,054) | - **The company has no uncertain tax positions** and its corporate income tax returns for **2021, 2022, 2023, and 2024** are subject to IRS examination[141](index=141&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's Discussion and Analysis provides an overview of AXIL Brands, Inc.'s business, strategic initiatives, and a detailed analysis of its financial performance for the three and nine months ended February 28, 2025. It covers net sales, gross profit, operating expenses, net income, and non-GAAP measures like EBITDA and Adjusted EBITDA, along with discussions on liquidity, cash flows, and critical accounting policies [Overview](index=35&type=section&id=Overview) This section provides an overview of AXIL Brands, Inc.'s business, strategic initiatives, and potential divestiture of its hair and skin care segment - **AXIL Brands, Inc. operates in two reportable segments**: high-tech hearing and audio enhancement/protection products and professional quality hair and skin care products[145](index=145&type=chunk)[146](index=146&type=chunk) - **The company's strategy focuses on expanding market share** through direct-to-consumer campaigns, optimizing e-commerce, building sales teams for distribution channels, strategic partnerships, and expanding offline retail presence and international markets[147](index=147&type=chunk) - **The company is exploring options for its hair care and skin care business**, including a potential divestiture, though there is no assurance of timely completion or benefits[148](index=148&type=chunk) [Business Update](index=35&type=section&id=Business%20Update) This section details AXIL's supply chain transition strategy, including domestic manufacturing and mitigation of tariff-related cost increases - In response to U.S. trade policy changes and tariffs, **AXIL has accelerated its supply chain transition strategy**, including relocating senior manufacturing leadership to the United States and establishing domestic manufacturing capabilities[149](index=149&type=chunk)[150](index=150&type=chunk) - **The company anticipates some near-term product cost increases due to tariffs** but expects to mitigate this through current inventory levels, supply chain optimization, pricing strategies, and sourcing adjustments, aiming for enhanced resilience and competitiveness long-term[151](index=151&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including net sales, gross profit, operating expenses, and net income for the specified periods [Three Months Ended February 28, 2025 Compared to February 29, 2024](index=37&type=section&id=For%20the%20Three%20Months%20Ended%20February%2028,%202025%20Compared%20to%20the%20Three%20Months%20Ended%20February%2029,%202024) For the three months ended February 28, 2025, net sales increased by 7.0% to $6.92 million, driven by direct-to-consumer sales and strengthened distribution channels. Gross profit rose by 7.4% to $4.97 million, with a stable gross margin of 71.7%. Operating expenses decreased by 7.3% due to lower advertising costs, leading to an income from operations of $0.58 million, a significant improvement from a loss in the prior year. Adjusted EBITDA increased substantially to $0.89 million | Metric | 3 Months Ended Feb 28, 2025 | 3 Months Ended Feb 29, 2024 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Net sales | $6,922,367 | $6,469,343 | $453,024 | 7.0% | | Gross profit | $4,966,428 | $4,624,326 | $342,102 | 7.4% | | Gross profit as % of sales | 71.7% | 71.5% | 0.2% | - | | Total operating expenses | $4,383,319 | $4,728,205 | $(344,886) | (7.3%) | | Income (loss) from operations | $583,109 | $(103,879) | $686,988 | - | | Net income | $576,662 | $781,091 | $(204,429) | (26.2%) | | Adjusted EBITDA (Non-GAAP) | $890,546 | $(11,052) | $901,598 | - | | Adjusted EBITDA as % of Sales | 12.9% | (0.2%) | 13.1% | - | - The increase in sales was primarily due to a shift of post-Thanksgiving holidays into the third quarter of fiscal year **2025**, strengthened distribution channels for AXIL products, and increased distributor sales of hair and skin care products[155](index=155&type=chunk) - Operating expenses decreased due to lower advertising costs, reflecting a more targeted and efficient advertising approach, despite incurring approximately **$195,000** in consulting fees for new geographic market expansion (including **$116,000** in stock-based compensation)[158](index=158&type=chunk) [Nine Months Ended February 28, 2025 Compared to February 29, 2024](index=37&type=section&id=For%20the%20Nine%20Months%20Ended%20February%2028,%202025%20Compared%20to%20the%20Nine%20Months%20Ended%20February%2029,%202024) For the nine months ended February 28, 2025, net sales decreased by 2.3% to $20.51 million, mainly due to reduced advertising in earlier quarters. Gross profit declined by 5.9% to $14.62 million, with gross margin decreasing to 71.3% due to higher cost of sales from increased distributor sales. Operating expenses decreased by 4.9%, but income from operations decreased by 16.4% due to higher non-cash stock-based compensation. Adjusted EBITDA, however, increased by 23.8% to $2.08 million, benefiting from strong Q3 performance, accounts payable forgiveness, and reduced advertising | Metric | 9 Months Ended Feb 28, 2025 | 9 Months Ended Feb 29, 2024 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Net sales | $20,506,213 | $20,997,289 | $(491,076) | (2.3%) | | Gross profit | $14,618,123 | $15,529,831 | $(911,708) | (5.9%) | | Gross profit as % of sales | 71.3% | 74.0% | (2.7%) | - | | Total operating expenses | $13,502,845 | $14,196,041 | $(693,196) | (4.9%) | | Income from operations | $1,115,278 | $1,333,790 | $(218,512) | (16.4%) | | Net income | $1,100,563 | $1,953,618 | $(853,055) | (43.7%) | | Adjusted EBITDA (Non-GAAP) | $2,076,821 | $1,677,058 | $399,763 | 23.8% | | Adjusted EBITDA as % of Sales | 10.1% | 8.0% | 2.1% | - | - **The decrease in net sales was primarily due to reduced advertising expenditure** affecting direct-to-consumer sales in the first and second quarters, partially offset by strong third-quarter performance[162](index=162&type=chunk) - Gross profit margin decreased due to an increase in cost of sales as a percentage of revenue, attributable to increased sales to distributors in both segments, which bear lower margins[163](index=163&type=chunk)[164](index=164&type=chunk) - Operating expenses decreased due to a net decrease in advertising expenses and a **$220,000** forgiveness of accounts payable, partially offset by a **$699,203** increase in stock-based compensation and higher professional and consulting fees[165](index=165&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its financial obligations, its capital needs, and strategies for revenue growth - **The company expects current cash balances and anticipated cash flow from operating activities to be sufficient** to meet working capital requirements for at least one year from the issuance date of the financial statements[169](index=169&type=chunk) - **Management is focused on growing existing product lines**, introducing new products, and expanding the customer base to increase revenues[169](index=169&type=chunk) - **The company may require additional capital in the future** through equity or debt financing, which may not be available on favorable terms, and failure to secure such financing could materially affect growth strategy and financial performance[174](index=174&type=chunk) [Cash Flows](index=39&type=section&id=Cash%20Flows) This section analyzes the company's cash flows from operating, investing, and financing activities, highlighting significant changes and drivers - **Net cash provided by operating activities significantly improved to $1,734,230** for the nine months ended February 28, 2025, from **$339,323** in the prior year, driven by inventory management and accounts payable forgiveness[170](index=170&type=chunk) - **Net cash used in investing activities increased to $255,778** (from **$80,192** in prior year) due to purchases of intangibles and property and equipment[171](index=171&type=chunk) - **Net cash provided by financing activities was $11,142** (compared to **$204,246** used in prior year), primarily from related party advances partially offset by note payable repayments[172](index=172&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms that the company did not have any material off-balance sheet arrangements as of February 28, 2025 - **As of February 28, 2025, the company did not have any material off-balance sheet arrangements**[175](index=175&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) This section outlines the company's critical accounting policies, emphasizing the use of significant estimates and assumptions in financial reporting - **Critical accounting policies involve significant estimates and assumptions**, including revenue recognition, impairment of intangible and long-lived assets, inventory valuation, stock compensation, and evaluation of contingencies[177](index=177&type=chunk) - **Actual results could materially differ from these estimates** if future events or circumstances lead to unanticipated consequences[178](index=178&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, AXIL Brands, Inc. is exempt from providing specific quantitative and qualitative disclosures about market risk - **The company is not required to provide quantitative and qualitative disclosures about market risk** as it qualifies as a smaller reporting company[179](index=179&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's CEO and CFO concluded that its disclosure controls and procedures were effective as of February 28, 2025. There have been no material changes in internal control over financial reporting during the fiscal quarter - **The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of February 28, 2025**[180](index=180&type=chunk) - **No changes in internal control over financial reporting occurred during the fiscal quarter ended February 28, 2025**, that have materially affected or are reasonably likely to materially affect internal control over financial reporting[181](index=181&type=chunk) [PART II - OTHER INFORMATION](index=42&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various lawsuits and legal proceedings in the ordinary course of business. While the outcome cannot be predicted with certainty, management believes the ultimate liability will not have a material adverse effect on its financial condition or results of operations - **The company is involved in various lawsuits and legal proceedings that arise in the ordinary course of business**[184](index=184&type=chunk) - **Management records a liability when a loss is probable and estimable**, and believes that the ultimate liability from these matters is not expected to have a material adverse effect on the company's results of operations, financial position, or cash flows[185](index=185&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, AXIL Brands, Inc. is not required to provide specific risk factor disclosures - **The company is not required to provide risk factor information** as it qualifies as a smaller reporting company[186](index=186&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the conversion of Series A Preferred Stock into common stock, exempt from registration under Section 4(a)(2) of the Securities Act - **During the third quarter of fiscal year 2025, 3,360,000 shares of Series A Preferred Stock were converted into 168,000 shares of common stock**[187](index=187&type=chunk) - **The issuance of these securities was deemed exempt from registration pursuant to Section 4(a)(2) of the Securities Act**[187](index=187&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - **There were no defaults upon senior securities during the reporting period**[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - **Mine Safety Disclosures are not applicable to the company**[189](index=189&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) During the quarter ended February 28, 2025, no director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement - **No director or officer adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended February 28, 2025**[190](index=190&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate organizational documents, the Amended and Restated 2022 Equity Incentive Plan, various certifications (CEO, CFO), and XBRL financial statements - **Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Amended and Restated 2022 Equity Incentive Plan, Form of Restricted Stock Award Agreement, CEO and CFO certifications (Sarbanes-Oxley Act), and iXBRL formatted financial statements**[191](index=191&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report's accuracy - **The report is duly signed on April 8, 2025**, by **Jeff Toghraie, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)**, and **Jeff Brown, Chief Financial Officer, Chief Operating Officer and Director (Principal Financial Officer and Principal Accounting Officer)**[194](index=194&type=chunk)[196](index=196&type=chunk)