Axil Brands Inc.

04/10/2024 | News release | Archived content

AXIL Brands, Inc. Reports Third Quarter Fiscal Year 2024 Financial Results

Highlights for the Quarter Ended February 29, 2024

  • Net Sales (revenue) increased 14.4% to approximately $6.47 million in the third quarter, as compared to the prior year period.

  • Gross profit as a percentage of sales was 71.5% in the third quarter, as compared to 74.6% for the prior year period.

  • Operating expenses as a percentage of net revenue were 73.1% in the third quarter, compared to 70.7% for the prior year period.

  • Loss before provision for income taxes was $46,345 and benefit provision from income taxes was $827,436 in the third quarter.

  • Reported third quarter net income of $781,091 or $0.04 on a fully diluted basis compared to $162,048 or $0.01 for the prior year period.

Key Updates Since AXIL's Last Quarterly Earnings Release

  • As part of our rebranding the Company changed its name to AXIL Brands, Inc. and stock ticker symbol to "AXIL".

  • Completed uplist to the NYSE American Stock Exchange.

  • In March 2024, AXIL repurchased 207,748,250 shares of Series A preferred stock equivalent, in the aggregate, to 10,387,413 shares of the Company's common stock on an as converted basis resulting in the reduction of approximately 83% of the Company's outstanding Series A preferred shares or approximately 55% of the Company's total outstanding shares on a fully diluted basis.

"We are extremely pleased with our business performance and the significant objectives achieved during this quarter. Our successful listing on the NYSE American stock exchange and recent repurchase of our Series A preferred shares enhances our ability to execute our enterprise growth strategy and unlock value for our shareholders." Commented Jeff Toghraie, Chairman and Chief Executive Officer. "Looking ahead, we remain committed to expansion into new markets, optimizing operations and creating sustainable long term growth."

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

February 29, 2024

May 31, 2023

(Unaudited)

ASSETS

CURRENT ASSETS:

Cash

$

4,887,567

$

4,832,682

Accounts receivable, net

719,504

417,016

Inventory, net

3,443,293

1,311,864

Due from related party

18,536

-

Prepaid expenses and other current assets

656,328

801,360

Deferred tax asset

234,161

-

Total Current Assets

9,959,389

7,362,922

OTHER ASSETS:

Property and equipment, net

212,146

157,463

Intangible assets, net

324,549

382,674

Right of use asset

53,224

101,845

Other assets

12,195

12,195

Goodwill

2,152,215

2,152,215

Total Other Assets

2,754,329

2,806,392

TOTAL ASSETS

$

12,713,718

$

10,169,314

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

1,890,844

$

908,606

Customer deposits

37,140

183,688

Equipment payable, current

-

2,200

Contract liabilities, current

880,450

827,106

Notes payable, current

3,310

172,588

Due to related party

-

158,072

Lease Liability, current

54,322

65,824

Income Tax Liability

68,019

230,913

Other current liabilities

307,794

305,664

Total Current Liabilities

3,241,879

2,854,661

LONG TERM LIABILITIES:

Notes payable, long term

143,840

-

Lease liability, long term

-

36,752

Contract liabilities, long term

541,108

605,942

Total Long Term Liabilities

684,948

642,694

Total Liabilities

3,926,827

3,497,355

Commitments and contingencies (see Note 11)

-

-

STOCKHOLDERS' EQUITY:

Preferred stock, $0.0001 par value; 300,000,000 shares authorized; 250,000,000 shares issued and outstanding as of February 29, 2024 and May 31, 2023, respectively

25,000

25,000

Common stock, $0.0001 par value: 450,000,000 shares authorized; 5,878,939 and 5,863,939 shares issued, and outstanding as of February 29, 2024 and May 31, 2023, respectively

588

586

Additional paid-in capital

10,274,677

10,113,365

Accumulated deficit

(1,513,374

)

(3,466,992

)

Total Stockholders' Equity

8,786,891

6,671,959

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

12,713,718

$

10,169,314

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

For the Three Months Ended

For the Nine Months Ended

February 29,

February 28,

February 29,

February 28,

2024

2023

2024

2023

Sales, net

$

6,469,343

$

5,656,461

$

20,997,289

$

16,625,818

Cost of sales

1,845,017

1,437,976

5,467,458

4,085,645

25

%

26

%

25

%

Gross profit

4,624,326

4,218,485

15,529,831

12,540,173

75

%

74.0

%

75

%

OPERATING EXPENSES:

Sales and marketing

3,398,949

3,173,383

10,278,570

8,250,257

Compensation and related taxes

228,869

360,802

713,504

1,214,213

Professional and consulting

552,922

216,687

1,471,025

832,958

General and administrative

547,465

251,025

1,732,942

841,761

Total Operating Expenses

4,728,205

4,001,897

14,196,041

11,139,189

71

%

68

%

67

%

(LOSS) INCOME FROM OPERATIONS

(103,879

)

216,588

1,333,790

1,400,984

OTHER INCOME (EXPENSE):

Gain on debt settlement

-

-

79,182

50,500

Other income

6,114

-

19,138

-

Interest income

52,915

6,721

129,233

13,262

Interest expense and other finance charges

(1,495

)

(1,714

)

(4,779

)

(4,927

)

Other Income, Net

57,534

5,007

222,774

58,835

(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES

(46,345

)

221,595

1,556,564

1,459,819

(Benefit) Provision for income taxes

(827,436

)

59,547

(397,054

)

395,344

NET INCOME

$

781,091

$

162,048

$

1,953,618

$

1,064,475

NET INCOME PER COMMON SHARE:

Basic

$

0.13

$

0.03

$

0.33

$

0.19

Diluted

$

0.04

$

0.01

$

0.11

$

0.06

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

5,863,939

5,849,501

5,863,939

5,574,312

Diluted

18,576,914

18,629,501

18,569,140

17,497,737

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)

For the nine months ended February 29, 2024

Common Stock

Additional

Total

Preferred Stock

Issued/Issuable

Paid-in

Accumulated

Stockholders'

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balance, May 31, 2023

250,000,000

$

25,000

5,863,939

$

586

$

10,113,365

$

(3,466,992

)

$

6,671,959

Stock options expense

-

-

-

-

153,320

-

153,320

Restricted stock awards

-

-

15,000

2

7,992

-

7,994

Net income

-

-

-

-

-

1,953,618

1,953,618

Balance, February 29, 2024

250,000,000

$

25,000

5,878,939

$

588

$

10,274,677

$

(1,513,374

)

$

8,786,891

For the three months ended February 29, 2024

Common Stock

Additional

Total

Preferred Stock

Issued/Issuable

Paid-in

Accumulated

Stockholders'

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balance, November 30, 2023

250,000,000

$

25,000

5,863,939

$

586

$

10,215,580

$

(2,294,465

)

$

7,946,701

Stock options expense

-

-

-

-

51,105

-

51,105

Restricted stock awards

-

-

15,000

2

7,992

-

7,994

Net income

-

-

-

-

-

781,091

781,091

Balance, February 29, 2024

250,000,000

$

25,000

5,878,939

$

588

$

10,274,677

$

(1,513,374

)

$

8,786,891

For the nine months ended February 28, 2023

Common Stock

Additional

Total

Preferred Stock

Issued/Issuable

Paid-in

Accumulated

Stockholders'

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balance, May 31, 2022

-

$

-

2,107,385

$

211

$

5,476,068

$

(5,291,567

)

$

184,712

Shares issued for acquisition of business

250,000,000

25,000

3,659,195

366

3,982,115

-

4,007,481

Stock options expense

-

-

-

-

155,067

-

155,067

Shares to be issued for cash

-

-

97,359

9

447,840

-

447,849

Net income

-

-

-

-

-

1,064,475

1,064,475

Balance, February 28, 2023

250,000,000

$

25,000

5,863,939

$

586

$

10,061,090

$

(4,227,092

)

$

5,859,584

For the three months ended February 28, 2023

Common Stock

Additional

Total

Preferred Stock

Issued/Issuable

Paid-in

Accumulated

Stockholders'

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balance, November 30, 2022

250,000,000

$

25,000

5,837,899

$

583

$

9,910,371

$

(4,389,140

)

$

5,546,814

Stock options expense

-

-

-

-

30,922

-

30,922

Shares to be issued for cash

-

-

26,040

3

119,797

-

119,800

Net income

-

-

-

-

-

162,048

162,048

Balance, February 28, 2023

250,000,000

$

25,000

5,863,939

$

586

$

10,061,090

$

(4,227,092

)

$

5,859,584

AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

For the Nine Months Ended

February 29,

February 28,

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

1,953,618

$

1,064,475

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

83,634

66,944

Bad debts

143,395

13,782

Stock based compensation

161,314

155,067

Gain on settlement

(79,182

)

(50,500

)

Provision (benefit) for deferred income taxes

(397,054

)

-

Change in operating assets and liabilities:

Accounts receivable

(445,883

)

(134,622

)

Inventory

(2,131,429

)

297,213

Prepaid expenses and other current assets

145,032

(296,787

)

Deposits

-

(3,810

)

Accounts payable and accrued expenses

1,061,420

87,879

Other current liabilities

(144,052

)

860,973

Contract liabilities

(11,490

)

259,362

NET CASH PROVIDED BY OPERATING ACTIVITIES

339,323

2,319,976

CASH FLOWS FROM INVESTING ACTIVITIES

Cash acquired on business acquisition

-

1,066,414

Purchases of property and equipment

(80,192

)

(65,650

)

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

(80,192

)

1,000,764

CASH FLOWS FROM FINANCING ACTIVITIES

Cash raised for common stock to be issued

-

447,850

Repayment of equipment financing

(2,200

)

(2,200

)

Repayment of note payable

(25,438

)

(22,797

)

Advances (repayments) to/from a related party

(176,608

)

63,008

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

(204,246

)

485,861

NET INCREASE IN CASH

54,885

3,806,601

CASH - Beginning of period

4,832,682

373,731

CASH - End of period

$

4,887,567

$

4,180,332

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

4,681

$

3,173

Income taxes

$

-

$

-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Stock issued for asset purchase agreement

$

-

$

4,007,480

Right of use assets recognized as lease liability

$

-

$

131,970

Tangible assets (excluding cash) acquired in business combination

$

-

$

1,740,729

Intangible assets acquired in business combination

$

-

$

456,945

Goodwill acquired in business combination

$

-

$

2,152,215

Liabilities assumed in business combination

$

-

$

1,408,823

About AXIL

AXIL (NYSE American) is an emerging global e-commerce consumer products company. The Company is a manufacturer and marketer of premium hearing enhancement and protection products, including ear plugs, earmuffs, and ear buds, under the AXIL® brand and premium hair and skincare products under its in-house Reviv3 Procare brand - selling products in the United States, Canada, the European Union and throughout Asia. To learn more, please visit the Company's website at www.reviv3.com and, for the AXIL® brand, visit www.axilbrands.com.

Forward-Looking Statements

This press release contains a number of forward-looking statements within the meaning of the federal securities laws. The use of words such as "believe," "expect," "continue," "will," "prepare," "should," and "focus," among others, generally identify forward-looking statements. These forward-looking statements are based on currently available information, and management's beliefs, projections, and current expectations, and are subject to a number of significant risks and uncertainties, many of which are beyond management's control and may cause the Company's results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward- looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things: (i) the Company's ability to grow net sales as anticipated and perform in accordance with guidance; (ii) our ability to generate sufficient revenue to support the Company's operations and to raise additional funds or obtain other forms of financing as needed on acceptable terms, or at all; (iii) potential difficulties or delays the Company may experience in implementing its cost savings and efficiency initiatives, including integrating the AXIL® brand; (iv) the Company's ability to compete effectively with other hair and skincare companies and hearing enhancement and protection companies; (v) the concentration of the Company's customers, potentially increasing the negative impact to the Company by changing purchasing or selling patterns; (vi) changes in laws or regulations in the United States and/or in other major markets, such as China, in which the Company operates, including, without limitation, with respect to taxes, tariffs, trade policies or product safety, which may increase the Company product costs and other costs of doing business, and reduce the Company's earnings; and (vii) the impact of unstable market and general economic conditions on the Company's business, financial condition and stock price, including inflationary cost pressures, the possibility of an economic recession and other macroeconomic factors, geopolitical events, and uncertainty, decreased discretionary consumer spending, supply chain disruptions and constraints, labor shortages, ongoing economic disruption, including the effects of the Ukraine-Russia conflict and the Israel-Hamas conflict, and other downturns in the business cycle or the economy. There can be no assurance as to any of these matters, and potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. Other important factors that may cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's filings with the U.S. Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. Except as required by law, the Company does not assume any obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Investor Relations:
AXIL Investor Relations Team
(888) 638-8883
[email protected]