AXIL Brands(AXIL) - 2024 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended November 30, 2023, were $8,421,677, a 25.1% increase compared to $6,731,999 for the same period in 2022[18]. - Gross profit for the six months ended November 30, 2023, was $10,905,505, up 31.1% from $8,321,688 in the same period of 2022[18]. - Net income for the three months ended November 30, 2023, was $1,018,075, a 39.9% increase from $726,900 in the same period in 2022[18]. - The company reported a net income of $1,172,527 for the six months ended November 30, 2023, compared to $902,427 for the same period in 2022, reflecting a 30% increase[18]. - Consolidated operating income for the six months ended November 30, 2023, was $1,437,669, representing a 21% increase from $1,184,396 in the same period of 2022[135]. - Net income for the six months ended November 30, 2023, was $1,172,527, an increase of $270,100 compared to $902,427 in the same period in 2022[162]. - Net income for the three months ended November 30, 2023, was $1,018,075, an increase of $291,175 or 40.1% compared to $726,900 for the same period in 2022[168]. Assets and Liabilities - Total assets increased to $13,126,009 as of November 30, 2023, up from $10,169,314 as of May 31, 2023, representing a growth of 29.5%[15][16]. - Total current liabilities rose to $4,476,884 as of November 30, 2023, compared to $2,854,661 as of May 31, 2023, indicating a 57% increase[15]. - Total stockholders' equity increased to $7,946,701 as of November 30, 2023, from $6,671,959 as of May 31, 2023, representing a growth of 19.1%[16]. - The company’s accumulated deficit decreased to $(2,294,465) as of November 30, 2023, from $(3,466,992) as of May 31, 2023, indicating an improvement in financial health[19]. - As of November 30, 2023, contract liabilities amounted to $1,608,183, an increase from $1,433,048 as of May 31, 2023[43]. Cash Flow - Cash and cash equivalents increased to $5,962,431 as of November 30, 2023, from $4,832,682 as of May 31, 2023, marking a growth of 23.4%[15]. - Cash provided by operating activities for the six months ended November 30, 2023, was $1,252,113, down from $2,196,195 in the prior year[25]. - Total cash at the end of the period was $5,962,431, compared to $4,018,170 at the end of the same period in 2022, indicating a 48.5% increase[25]. - Net cash flows used in investing activities for the six months ended November 30, 2023, was $70,845 due to the purchase of property and equipment for the AXIL business[172]. - Net cash flows used in financing activities for the six months ended November 30, 2023, was $51,519, primarily for repayment of equipment financing and note payable[173]. Expenses - Marketing and selling expenses for the three months ended November 30, 2023, were $3,672,780, up 18.5% from $3,098,898 in the same period of 2022[18]. - Operating expenses for the six months ended November 30, 2023, were $9,467,836, an increase of $2,330,544 or 32.7% year-over-year, primarily due to increased marketing and advertising expenses[159]. - Operating expenses for the three months ended November 30, 2023, were $4,994,027, a 14.0% increase compared to the same period in 2022[165]. Acquisitions and Business Development - The company acquired AXIL's hearing protection and ear bud business for a total consideration of $4,007,480, with goodwill of $2,152,215 recognized[118]. - The acquisition of AXIL's business is expected to generate sufficient cash for operational needs for at least one year[28]. - The company has focused on growing existing products and introducing new products to increase revenues[28]. Stock and Shareholder Information - The company plans to increase authorized shares under its Plan by an additional 15,000,000 shares, totaling 25,000,000 shares available[141]. - A potential reverse stock split is being considered, with a range of one-for-three to one-for-twenty-five shares[142]. - 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[87]. - As of November 30, 2023, the company had 117,076,949 shares of common stock issued and outstanding[91]. 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 the current quarter[112]. - The Chief Executive Officer and Chief Financial Officer provided certifications pursuant to the Sarbanes-Oxley Act of 2002, ensuring the accuracy of the financial statements[31.1][31.2]. - The company is committed to compliance with the Securities Exchange Act of 1934, as evidenced by the signatures of the CEO and CFO on the report[200]. Future Outlook - Management expects to earn net income and positive cash flows from operations during the fiscal year ending May 31, 2024[28]. - The company is seeking to list its shares on the NYSE American Stock Exchange, although no assurance can be given regarding acceptance[151]. - Management believes that existing cash and anticipated cash flow will be sufficient to meet working capital requirements for at least one year[169].