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]

Financial Performance - Net sales for the three months ended August 31, 2024, were $5,851,272, a decrease of 4.2% compared to $6,106,269 in the same period of 2023[18]. - Gross profit for the three months ended August 31, 2024, was $4,153,648, down 10.6% from $4,647,566 in 2023[18]. - The company reported a net loss of $109,805 for the three months ended August 31, 2024, compared to a net income of $154,452 in the same period of 2023[18]. - For the three months ended August 31, 2024, total net sales were $5,851,272, a decrease of 4.2% from $6,106,269 in the same period of 2023[133]. - The hearing enhancement and protection segment generated $5,299,763 in sales, down from $5,791,416 in the prior year, while the hair care and skin care segment increased sales to $551,509 from $314,853[133]. - Gross profit for the hearing enhancement and protection segment was $3,897,159, compared to $4,426,042 in the previous year, reflecting a decline of 11.9%[133]. - Operating expenses decreased by $179,459 or 4% to $4,294,350 for the three months ended August 31, 2024, primarily due to reduced advertising and marketing expenses[150]. - Gross profit for the three months ended August 31, 2024, was $4,153,648, representing a gross profit margin of 71%, down from 76.1% in the same period in 2023[149]. Cash Flow and Assets - Cash provided by operating activities for the three months ended August 31, 2024, was $897,318, an increase from $397,172 in 2023[24]. - The Company generated cash from operations due to the acquisition of A&A's assets in June 2022, which is expected to continue supporting operational needs for at least one year[28]. - The company’s total assets increased to $11,356,739 as of August 31, 2024, compared to $10,886,566 in the previous year[133]. - The company expects to earn net income during the fiscal year ending May 31, 2025, supported by current cash balances and anticipated cash flow from operations[153]. Liabilities and Equity - Total liabilities rose to $3,472,894 as of August 31, 2024, compared to $3,278,575 as of May 31, 2024[15]. - Stockholders' equity increased to $7,883,845 as of August 31, 2024, up from $7,695,786 as of May 31, 2024[15]. - As of August 31, 2024, the outstanding balance of the loan was $144,257, down from $146,594 as of May 31, 2024, indicating a reduction of approximately 1.6%[84]. Operational Changes - The company completed a name change from Reviv3 Procare Company to AXIL Brands, Inc. effective February 14, 2024, as part of its rebranding efforts[25]. - The company successfully uplisted from the OTC markets to the NYSE American stock exchange on February 14, 2024[25]. - The company renewed its lease for its corporate headquarters and signed a new lease for a warehouse and office, indicating ongoing operational expansion[71]. - The company entered into a lease agreement in Draper, Utah, with a base rent of $0 for the first three months and $7,684 per month thereafter, starting October 1, 2024[137]. Stock and Compensation - 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[89]. - The Company repurchased 207,748,250 shares of Series A Preferred Stock for $1,246,490, resulting in a credit of $1,329,588 to retained earnings[92]. - The Company recorded stock-based compensation expense of $51,107 for stock options during both the three months ended August 31, 2024 and 2023[106]. - The total number of shares authorized for issuance under the amended 2022 Equity Incentive Plan increased from 500,000 to 1,250,000 shares[98]. - The Company utilized the Black-Scholes option pricing model to estimate the fair value of share-based compensation, with the aggregate grant date fair value of certain options being $477,000[105]. Legal and Compliance - Legal proceedings are ongoing, but management believes that the ultimate liability will not have a material adverse effect on the Company's financial position[170]. - The Company has not recorded any accruals for legal matters where a loss is not probable or the amount is not estimable[170]. - The Company conducted an evaluation of its disclosure controls and procedures as of August 31, 2024, concluding that they were effective[165]. - The Company has hired additional accounting personnel and maintains sufficient controls over segregation of duties, with no material changes in internal control over financial reporting identified[166].

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)

Core Viewpoint - AXIL Brands is currently undervalued in the market despite its growth initiatives and strong revenue performance, facing challenges such as rising operating expenses and high customer concentration risks [1][4]. Group 1: Financial Performance - AXIL Brands' stock is trading below its historical median, indicating potential undervaluation [1]. - The company reported a 14.4% year-over-year revenue growth in the third quarter of fiscal 2024, reflecting effective sales strategies [9]. - As of February 29, 2024, AXIL holds strong current assets of $9.96 million, including $4.89 million in cash and cash equivalents [5]. Group 2: Market Position and Strategy - AXIL is expanding its global presence in markets such as the EU, Canada, and Asia, reducing dependence on any single market [2][3]. - Recent agreements with Racing Electronics and Kinsey's are expected to drive revenue growth and enhance market position [2][9]. - The company has a modest market capitalization of $37 million and is focusing on premium audio enhancement and protection products, which contributed 93% to total revenues for the fiscal year ended May 31, 2023 [7][8]. Group 3: Challenges and Risks - AXIL faces challenges including rising operating expenses, declining gross profit margins, and inventory management issues [4]. - High customer concentration risks are evident, with three customers accounting for 94% of net sales [4]. - Increased accounts payable and reduced cash flow from operating activities highlight cash flow volatility [4].