UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2024 OR ☐ 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 | | -- ...

Financial Performance - Revenue for the second quarter ended November 30, 2024, was $7.7 million, a decrease from $8.4 million in the prior year period [8] - Gross profit as a percentage of sales was 71.1% in 2Q25, down from 74.3% in the prior year period [8] - Operating expenses as a percentage of sales increased to 62.4% in 2Q25 from 59.3% in the prior year period [8] - Net income for 2Q25 was $0.6 million, compared to $1.0 million in the prior year period [8] - Adjusted EBITDA for 2Q25 was $1.0 million, down from $1.4 million in the prior year period [8] Operational Strategy - The company is diversifying its distribution strategy for hearing protection and enhancement products beyond online sales, establishing relationships with international distributors [4] - AXIL is making significant inroads into the retail channel, with products available in over 1,000 retail locations, including Bass Pro Shops and select Walmart stores [5] - Plans to launch a successor series to the TRACKR earmuffs in the first half of calendar year 2025, focusing on technological leadership and improved product functionality [6] Financial Position - The company reported a solid cash position of $5.2 million at the end of 2Q25, allowing for internal financing of strategic growth plans [7] - Net cash provided by operating activities for the six months ended November 30, 2024, was $1.9 million, compared to $1.3 million for the prior year period [8] Market Presence - AXIL Brands operates in the United States, Canada, the European Union, and throughout Asia, focusing on premium hearing enhancement and protection products as well as hair and skincare products [18]

Core Insights - AXIL Brands, Inc. has launched the 'X Series' Earplugs, which aim to provide superior hearing protection while maintaining comfort and style [1][2] - The earplugs are designed for various lifestyles and activities, addressing the needs of over two-thirds of Americans who require consistent hearing protection [2][3] Product Features - The 'X Series' includes two models: X20 Passive Earplugs and X30i Dynamic Sound-Filtered Earplugs, both featuring innovative designs and superior comfort [4][5] - X20 Passive Earplugs are made from hypoallergenic silicone, fitting over 95% of ear sizes, and come in eight dynamic colors [4] - X30i Dynamic Sound-Filtered Earplugs feature advanced acoustic filters and an easy toggle switch for users to switch between hearing modes [5] Market Availability - The 'X Series' Earplugs will be available for purchase starting November 21, 2024, on AXIL's website and select global retailers [6] 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 [7]

Core Insights - AXIL Brands, Inc. has signed a distribution agreement with Terrang MP-Sec France for exclusive rights to distribute its hearing protection products in several European countries [1][2][3] - The agreement aims to strengthen AXIL's distribution network within the EU and support its global presence, with expectations for growth and enhanced customer support in the region [3] Company Overview - AXIL is an emerging global e-commerce consumer products company that manufactures and markets premium hearing enhancement and protection products, as well as hair and skincare products [4] - The company operates under the AXIL® brand for hearing products and Reviv3® for hair and skincare, selling in the United States, Canada, the European Union, and Asia [4] Distribution Agreement Details - Terrang MP-Sec France will distribute AXIL's product portfolio in France, Belgium, Netherlands, Luxembourg, Denmark, Spain, Portugal, Sweden, Finland, Italy, and Switzerland [2] - The product lineup includes AXIL's hearing performance systems such as GS Extreme 2.0®, XCOR®, XCOR Digital®, and the Trackr™ series [2] Strategic Goals - The CEO of AXIL emphasized that the agreement is part of a strategy to diversify revenue channels in the international market [3] - The collaboration with Terrang MP-Sec France leverages their strong relationships in military, police, and security sectors, enhancing AXIL's distribution capabilities [3]

Financial Performance - Net sales for the first quarter of fiscal 2025 were $5.85 million, a decrease of 4.1% compared to $6.1 million in the prior year period[2] - Gross profit margin decreased to 71% in the first quarter of fiscal 2025 from 76.1% in the prior year period[2] - Operating expenses as a percentage of sales were 73.4%, slightly up from 73.3% in the prior year period[2] - The company reported a net loss of $109,805 for the first quarter of fiscal 2025, compared to a net income of $154,452 in the prior year period[2] - Net income for the three months ended August 31, 2023, was $154,452, while for the same period in 2024, it reported a net loss of $109,805[9] Cash Flow and Assets - Net cash provided by operating activities increased to $897,318 from $397,172 in the prior year period[2] - The company generated net cash provided by operating activities of $897,318 for the three months ended August 31, 2024, compared to $397,172 in 2023, representing a 126.4% increase[9] - Total cash at the end of the period for August 31, 2024, was $4,148,724, down from $5,061,723 in 2023, indicating a decrease of 18%[9] - Total current assets increased to $8.34 million from $7.97 million as of the previous quarter[4] - Total liabilities increased to $3.47 million from $3.28 million in the prior quarter[5] Shareholder Value and Expenses - Weighted average diluted shares decreased to 6,172,379 from 18,622,597 in the prior year period[2] - Stock-based compensation increased significantly to $297,864 in 2024 from $51,107 in 2023, reflecting a 482% rise[9] Operational Strategy and Market Focus - The company emphasized its commitment to innovation and expanding into new channels for future growth[3] - AXIL Brands is focused on operational excellence and delivering value to shareholders amid ongoing market challenges[3] - AXIL is focused on expanding its product offerings in hearing enhancement and protection, as well as hair and skincare products, targeting markets in the U.S., Canada, EU, and Asia[10] - The company anticipates growth in net sales and operations, including the development of new products and international expansion, despite facing significant risks and uncertainties[11] - The company is actively engaging in strategic partnerships and expanding its distribution channels to enhance market presence and competitiveness[11] Inventory and Receivables Management - The company reported a change in accounts receivable of $(108,100) in 2024, compared to $(91,736) in 2023, indicating a worsening in collection efficiency[9] - Inventory changes showed an increase of $120,603 in 2024, contrasting with a significant decrease of $(758,104) in 2023, suggesting a shift in inventory management strategy[9] Investment Activities - AXIL's cash flows from investing activities showed a net cash used of $(41,840) in 2024, compared to $(50,960) in 2023, indicating a slight improvement in investment efficiency[9]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 AXIL Brands, Inc. (Exact Name of Registrant as Specified in Its Charter) | Delaware | 47-4125218 | | --- | --- | | (State or Other Jurisdiction of | (I.R.S. Employer | | Incorporation or Organization) | Identification No.) | FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITI ...

Core Insights - AXIL Brands, Inc. is experiencing substantial revenue growth but is facing challenges related to rising costs and margin compression as it scales its operations [1][11] Fiscal 2024 Results - AXIL Brands reported earnings per share of 21 cents for fiscal 2024, up from 10 cents the previous year [2] - Year-over-year net sales grew by 17%, reaching $27.5 million compared to $23.5 million in the prior year, primarily driven by marketing initiatives in the hearing protection segment [2] Key Business Metrics - The company’s sales growth reflects effective strategic initiatives, particularly in expanding distribution and retail channels, despite rising costs compressing margins [3] - Gross profit increased to $20.2 million from $17.7 million, with a slight narrowing of gross margin to 73.4% from 75.3% due to expansion costs [4] Profitability and Income - AXIL Brands achieved a net income of $2 million, up from $1.8 million a year earlier, with net income available to common shareholders increasing to $3.3 million due to a gain on the redemption of preferred shares [4] - Operating income was $1.5 million, down from $2 million in the prior year, with a net profit margin of 7.3%, slightly lower than the previous year's 7.8% [5] Cost Analysis - The cost of sales rose by 26% to $7.3 million from $5.8 million, driven by increased branding and marketing expenses [6] - Operating expenses increased by 19% year-over-year to $18.7 million, reflecting higher marketing, selling expenses, and general administrative costs [6] Cash Flow and Financial Position - Net cash provided by operating activities decreased to $2,677 from $2.9 million in the prior year, indicating strain on cash flow [7] - Cash reserves fell to $3.25 million from $4.83 million, reflecting ongoing investments and preferred stock repurchases [7] Liabilities and Financial Discipline - Total liabilities slightly decreased to $3.28 million from $3.5 million, indicating some financial discipline amid rising expenses [8] Management Strategy - Management is focused on expanding global presence and strategic partnerships, aiming for sustainable growth in dynamic markets [9] Shareholder Developments - The weighted average outstanding shares on a fully diluted basis dropped by 49% to 8.3 million shares, primarily due to the redemption of preferred shares [10]

Core Insights - AXIL Brands, Inc. reported a record revenue of $27.5 million for fiscal year 2024, reflecting a 17% increase compared to $23.5 million in the previous year, driven by enhanced marketing and sales initiatives in the hearing protection segment [3][5] - The company experienced a 26% increase in cost of sales, amounting to $7.3 million, primarily due to increased branding and marketing efforts [3] - Gross profit margin decreased to 73.4% from 75.3% year-over-year, attributed to costs associated with expansion into new retail and distribution channels [3] - Operating expenses as a percentage of net revenues rose to 68.0% from 66.9%, mainly due to higher marketing, selling expenses, and increased compensation [3] - Net income per common share on a fully diluted basis was $0.21, up from $0.10 in the prior year, while basic net income per share increased to $0.57 from $0.32 [3][10] Financial Performance - Consolidated net sales increased by 17% to $27.5 million for the fiscal year ended May 31, 2024, compared to $23.5 million in the prior year [3] - Cost of sales increased by $1.5 million, resulting in a cost of sales percentage of 26.6% for the fiscal year, compared to 24.7% in the previous year [3] - Gross profit for the fiscal year was $20.2 million, with a gross profit margin of 73.4% [9] - Operating expenses totaled $18.7 million, leading to an income from operations of $1.5 million [9] - The company reported a net income of $2.0 million for the fiscal year, compared to $1.8 million in the previous year [9] Shareholder Information - The weighted average outstanding shares on a diluted basis for 2024 were 16,168,181, a reduction of 49% from the previous year [4][10] - The company’s strategic initiatives for 2025 focus on enhancing global presence and forming strategic partnerships to drive sustainable growth [5]

Core Insights - AXIL Brands, Inc. reported a record revenue of $27.5 million for fiscal year 2024, marking a 17% increase compared to $23.5 million in the previous year, driven by enhanced marketing and sales initiatives in the hearing protection segment [3][9] - The company's cost of sales rose by 26% to $7.3 million, influenced by increased branding and marketing efforts, resulting in a cost of sales percentage of 26.6% of net revenues, up from 24.7% in the prior year [4][5] - Operating expenses as a percentage of net revenues increased to 68.0% from 66.9% year-over-year, primarily due to higher marketing, compensation, and administrative expenses [6] Financial Performance - Gross profit margin decreased to 73.4% from 75.3% year-over-year, attributed to costs related to expansion into new retail and distribution channels [5] - Net income per common share on a fully diluted basis was $0.21, up from $0.10 in the previous year, while basic net income per share increased to $0.57 from $0.32 [7][14] - The company reported a net income of $2.0 million for the fiscal year, compared to $1.8 million in the prior year [13] Shareholder Information - The weighted average outstanding shares on a diluted basis decreased by 49% to approximately 8.29 million as of August 13, 2024, from 16.17 million [8][9] - Total stockholders' equity increased to $7.7 million from $6.7 million year-over-year, reflecting a reduction in accumulated deficit [12][15] Strategic Initiatives - The company aims to enhance its global presence and foster strategic partnerships, focusing on international expansion to strengthen its competitive position [9] - AXIL Brands emphasizes maintaining the quality of revenue and optimizing existing partnerships while establishing new ones [9]

Revenue Segmentation - For the fiscal year ended May 31, 2024, the hearing enhancement and protection segment accounted for approximately 95.0% of total revenue, while the hair care and skin care segment accounted for 5.0%[13] - Approximately 91% of sales in the hearing enhancement and protection segment were direct-to-consumer via Shopify and Amazon for the fiscal year ended May 31, 2024[26] Product Development - The company produced 22 products with 38 different SKUs in the hearing enhancement and protection segment, and plans to continue expanding the product lines[16] - The hair care and skin care segment currently produces 8 products with 16 SKUs and plans to expand its product lines in the foreseeable future[21] - The company is exploring new revenue opportunities, including co-branding and private-label manufacturing in the hair care and skin care segment[22] Market Trends - The global hearing protection devices market is growing due to increased awareness of hearing loss, with 53% of noise-exposed workers not wearing hearing protection according to the CDC[19] - The beauty and personal care market is projected to generate a revenue of $646.20 billion in 2024, growing at an annual rate of 3.33% from 2024 to 2028[25] Vendor Relationships - For the hearing enhancement and protection segment, 87% of total purchases were from one vendor, while for the hair care and skin care segment, 97% of total purchases were from two vendors[27] Strategic Focus - The company is focusing on expanding its market share through e-commerce strategies and strategic partnerships[14] - The company is in the early stages of executing geographic expansion into new markets while prioritizing technological improvements in the hearing enhancement sector[14] Intellectual Property - As of May 31, 2024, the company held 3 active U.S. patents and had 3 pending U.S. patent applications, with patents expiring between 2035 and 2038[33] - The company has 3 federally registered trademarks considered material to its business, all in good standing with the U.S. Patent & Trademark Office[33] - The company has a commitment to protecting its intellectual property through various means, including patents and trademarks[32] - The company does not anticipate any material impact on its business from the expiration of patents in the coming years[33] - The company intends to renew its trademark registrations as necessary for the foreseeable future[33] Workforce and Culture - The company employs 14 individuals, all based in the United States, with no employees covered by collective bargaining agreements[36] - The company emphasizes diversity and inclusion in its hiring practices, striving to maintain a diverse workforce[39] Safety and Economic Impact - The company aims to achieve a level of work-related injuries as close to zero as possible through continuous investment in its safety program[38] - The company has no substantial seasonal fluctuations in its business, although lower sales may occur in difficult economic scenarios[35] Corporate Information - The company maintains its corporate office in Alhambra, California, and was incorporated in Delaware on May 21, 2015[40]