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]

[Fiscal Year 2024 Financial Results](index=1&type=section&id=Fiscal%20Year%202024%20Financial%20Results) AXIL Brands achieved record net sales and significant EPS growth in fiscal year 2024, driven by strategic expansion despite slight margin compression [Financial Highlights](index=1&type=section&id=Highlights%20for%20Fiscal%20Year%20Ended%20May%2031%2C%202024) AXIL Brands reported record net sales of **$27.5 million** for fiscal year 2024, a **17% increase** year-over-year, driven by marketing and sales initiatives in its hearing protection segment, while gross margin slightly decreased to **73.4%** from **75.3%**, and net income per diluted share more than doubled to **$0.21** from **$0.10** Fiscal Year 2024 Key Financial Metrics (vs. FY 2023) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $27.5M | $23.5M | +17% | | Gross Profit Margin | 73.4% | 75.3% | -1.9 p.p. | | Operating Expense % of Revenue | 68.0% | 66.9% | +1.1 p.p. | | Diluted EPS | $0.21 | $0.10 | +110% | - The decrease in gross profit margin was primarily attributed to costs associated with expansion into new retail and distribution channels[3](index=3&type=chunk) - The increase in operating expenses as a percentage of revenue was mainly due to higher marketing and selling expenses, increased compensation, and costs related to the NYSE American exchange listing[3](index=3&type=chunk) - The company significantly reduced its weighted average outstanding shares on a diluted basis by **49%** as of August 13, 2024, compared to the weighted average for fiscal year 2024[4](index=4&type=chunk)[5](index=5&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management highlighted successful strategic execution leading to record revenue, with a fiscal year 2025 focus on international expansion, strategic partnerships, and product adaptation for broader market reach and sustainable growth - The CEO, Jeff Toghraie, stated that strategic initiatives for 2025 are focused on enhancing global presence, fostering strategic partnerships, and adapting offerings to diverse market needs[5](index=5&type=chunk) - The CFO, Jeff Brown, noted that the **17% revenue growth** was largely driven by expanding distribution and retail channels[5](index=5&type=chunk) - The hearing protection and enhancement segment accounted for approximately **95% of total revenue** for fiscal year 2024, with no single customer representing more than **10% of sales**[5](index=5&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position and performance, showing total assets grew to **$11.0 million**, total liabilities decreased to **$3.3 million**, and stockholders' equity strengthened to **$7.7 million**, while net income was **$2.0 million** and operating cash flow was minimal at **$2,677** due to a substantial increase in inventory [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of May 31, 2024, AXIL's total assets increased to **$11.0 million** from **$10.2 million** in the prior year, primarily driven by a significant rise in inventory to **$3.4 million**, while total liabilities decreased to **$3.3 million** from **$3.5 million**, and total stockholders' equity strengthened to **$7.7 million** from **$6.7 million** Selected Balance Sheet Items (as of May 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total Assets | $10,974,361 | $10,169,314 | | Total Liabilities | $3,278,575 | $3,497,355 | | Total Stockholders' Equity | $7,695,786 | $6,671,959 | - Inventory, net, more than doubled to **$3,394,023** from **$1,311,864** in the prior year[7](index=7&type=chunk) - Cash decreased to **$3,253,876** from **$4,832,682** in the prior year[7](index=7&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the fiscal year ended May 31, 2024, the company achieved net sales of **$27.5 million**, a **17% increase** from **$23.5 million** in 2023, with gross profit growing to **$20.2 million**, but income from operations decreased to **$1.5 million** from **$2.0 million** due to higher operating expenses, while net income rose to **$2.0 million**, up from **$1.8 million** in the prior year Consolidated Statements of Operations (for the years ended May 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Sales, net | $27,498,539 | $23,521,027 | | Gross profit | $20,193,937 | $17,710,811 | | Income from operations | $1,503,380 | $1,984,211 | | Net income | $2,003,134 | $1,824,575 | - Sales and marketing expenses increased to **$13.4 million** from **$11.7 million**, and professional and consulting fees rose to **$2.6 million** from **$1.4 million**, contributing to higher total operating expenses[10](index=10&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS%27%20EQUITY) Stockholders' equity increased from **$6.7 million** at the end of fiscal 2023 to **$7.7 million** at the end of fiscal 2024, driven by net income of **$2.0 million**, partially offset by a preferred stock buyback that cost approximately **$1.25 million** - Total Stockholders' Equity increased from **$6,671,959** at the end of FY2023 to **$7,695,786** at the end of FY2024[12](index=12&type=chunk)[13](index=13&type=chunk) - The company executed a preferred stock buyback, which reduced equity by **$1,246,490**[12](index=12&type=chunk)[13](index=13&type=chunk) - Net income of **$2,003,134** contributed positively to the accumulated deficit and overall equity[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For fiscal year 2024, net cash provided by operating activities was only **$2,677**, a sharp decline from **$2.9 million** in the prior year, primarily due to a **$2.1 million** increase in inventory, while net cash used in investing activities was **$160,525**, and financing activities used **$1.4 million**, largely for a preferred stock repurchase, resulting in a net decrease in cash of **$1.6 million**, with the year-end cash balance at **$3.3 million** Summary of Cash Flows (for the years ended May 31) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $2,677 | $2,918,136 | | Net Cash from Investing Activities | ($160,525) | $1,000,764 | | Net Cash from Financing Activities | ($1,420,958) | $540,051 | | **Net Decrease in Cash** | **($1,578,806)** | **$4,458,951** | | **Cash - End of year** | **$3,253,876** | **$4,832,682** | - The significant decrease in operating cash flow was mainly driven by a **$2,129,054** cash outflow for inventory buildup[13](index=13&type=chunk) - The primary use of cash in financing activities was a **$1,246,490** repurchase of preferred stock[13](index=13&type=chunk) [Company Overview and Outlook](index=10&type=section&id=Company%20Overview%20and%20Outlook) AXIL is a global consumer products company specializing in hearing enhancement/protection products under the AXIL® brand and hair/skincare products under the Reviv3 Procare brand, with forward-looking statements highlighting strategic goals such as international expansion and new partnerships, while acknowledging risks including competition, customer concentration, regulatory changes, and macroeconomic instability - AXIL is a global e-commerce company manufacturing and marketing premium hearing products (AXIL®) and hair/skincare products (Reviv3 Procare)[15](index=15&type=chunk) - Forward-looking statements emphasize a focus on international growth, strategic partnerships, and expanding distribution channels[16](index=16&type=chunk) - The company identifies several risks, including competition, ability to grow sales, reliance on key customers, regulatory changes, and the impact of unstable economic conditions[16](index=16&type=chunk)

In terms of valuation, AXIL Brands' stock performance has been mixed compared to industry benchmarks. The stock is currently trading at levels below its historical median, which indicates undervaluation. This also reflects the market's cautious stance on the company's prospects, given the existing challenges. AXIL's expansion into global markets such as the EU, Canada and Asia reduces its dependence on any single market and positions the company to capitalize on growth opportunities across different regions ...

AXIL Brands, Inc. Reports Third Quarter Fiscal Year 2024 Financial Results Highlights for the Quarter Ended February 29, 2024 Key Updates Since AXIL's Last Quarterly Earnings Release LOS ANGELES, April 9, 2024 (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 financial and operational results for th ...

Financial Performance - Net sales for the three months ended February 29, 2024, were $6.47 million, a 14.4% increase from $5.66 million in the same period last year[18]. - Net income for the nine months ended February 29, 2024, was $1.95 million, a significant increase from $1.06 million for the same period in 2023, reflecting an 83.3% growth[18]. - Net income for the three months ended February 29, 2024, was $781,091, compared to $162,048 for the same period in 2023, representing a year-over-year increase of approximately 382%[73]. - For the nine months ended February 29, 2024, net sales increased by $4,371,471 or 26.3% to $20,997,289 compared to $16,625,818 for the same period in 2023, driven by increased marketing spend and stronger sales channels[162]. - Gross profit for the nine months ended February 29, 2024 was $15,529,831, up from $12,540,173 in the prior year, reflecting a significant increase in sales[161]. Assets and Liabilities - Total assets increased to $12.71 million as of February 29, 2024, up from $10.17 million on May 31, 2023, representing a growth of 25.1%[15]. - Total stockholders' equity rose to $8.79 million as of February 29, 2024, compared to $6.67 million on May 31, 2023, marking a 31.7% increase[16]. - Total liabilities increased to $3.93 million as of February 29, 2024, from $3.50 million on May 31, 2023, an increase of 12.4%[16]. - As of February 29, 2024, the company reported an accumulated deficit of $1,513,374, highlighting ongoing financial challenges despite recent profitability[31]. Cash Flow and Operating Activities - Cash provided by operating activities decreased significantly to $339,323 from $2,319,976 year-over-year, indicating a decline of about 85.3%[25]. - Cash and cash equivalents at the end of the period increased to $4,887,567 from $4,180,332, reflecting a net increase of $54,885[25]. - The company expects to generate sufficient cash flow from operations to meet its working capital requirements for at least one year from the date of the financial statements[31]. Expenses - Operating expenses for the three months ended February 29, 2024, were $4.73 million, up from $4.00 million in the same period last year, indicating an 18.2% increase[18]. - Operating expenses increased by $3,056,852 or 27.4%, totaling $14,196,041 for the nine months ended February 29, 2024, with operating expenses as a percentage of net sales at 67.6% compared to 67.0% in the prior year[165]. - Depreciation and amortization expenses increased to $83,634 from $66,944, reflecting a rise of approximately 25%[25]. Inventory and Receivables - Accounts receivable increased to $719,504 as of February 29, 2024, from $417,016 on May 31, 2023, representing a 72.5% rise[15]. - Inventory levels rose to $3.44 million as of February 29, 2024, compared to $1.31 million on May 31, 2023, reflecting a 162.5% increase[15]. - Inventory net as of February 29, 2024, was $3,443,293, representing a significant increase of 162.3% from $1,311,864 on May 31, 2023[80]. Stock and Equity - The company completed a reverse stock split at a ratio of 1-for-20 effective January 16, 2024, aimed at improving its stock price and market perception[29]. - The Company issued 250,000,000 shares of non-voting Series A Preferred Stock valued at $3,100,000 during the fiscal year ended May 31, 2023[91]. - As of February 29, 2024, 5,878,939 shares of common stock were issued and outstanding[95]. Legal and Compliance - The company settled a legal dispute with Jacksonfill, LLC for $125,000, resulting in a gain on settlement of $79,182 recorded in fiscal year 2024 other income[120]. - The company does not expect ongoing legal proceedings to have a material adverse effect on its financial condition or cash flows[194]. - The internal control over financial reporting was also assessed as ineffective as of February 29, 2024, based on established criteria[190]. Business Operations and Strategy - The acquisition of Axil & Associated Brands in June 2022 is anticipated to continue generating cash for operational needs, including debt payments[32]. - The company is utilizing Axil & Associated Brands' assets to expand into the hearing enhancement business through a newly incorporated subsidiary[128]. - Direct-to-consumer sales accounted for 88.4% of AXIL's sales during the three months ended February 29, 2024[137].

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, 2023 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: 000-56351 Reviv3 Procare Company (Exact Name of Registrant as Specified in Its Charter) (Registrant's Telephone N ...