AXIL Brands(AXIL) - 2025 Q1 - Quarterly Report

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].