LOS ANGELES, Jan. 08, 2025 (GLOBE NEWSWIRE) -- AXIL Brands, Inc. (“AXIL” 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, announces its financial and operational results for the second quarter ended November 30, 2024 (2Q25).
Financial Highlights for the Quarter Ended November 30, 2024
Revenue in 2Q25 was $7.7 million, as compared to $8.4 million in the prior year period
Gross profit as a percentage of sales was 71.1% in 2Q25, as compared to 74.3% for the prior year period
Operating expenses as a percentage of sales were 62.4% in 2Q25, as compared to 59.3% for the prior year period
Net income in 2Q25 was $0.6 million, as compared to $1.0 million in the prior year period
Adjusted EBITDA in 2Q25 was $1.0 million, as compared to $1.4 million in the prior year period
Net cash provided by operating activities for the six months ended November 30, 2024 was $1.9 million, as compared to $1.3 million for the prior year period
Cash as of November 30, 2024 was $5.2 million, as compared to $3.3 million as of May 31, 2024
Weighted average dilutive shares for 2Q25 was 8,168,657, as compared to 18,632,689 in the prior year period
“The second quarter of our fiscal year is seasonally strong due to the holiday shopping season. However, the 2Q25 period was slightly different than 2Q24 from a timing and reporting standpoint, as Cyber Monday and the day before Cyber Monday in calendar year 2024 fell into our fiscal third quarter, whereas the full holiday weekend from Black Friday to Cyber Monday was part of our second quarter of fiscal 2024. Consequently, a significant portion of these sales will be recognized in the third quarter of this fiscal year,” commented AXIL Chairman and Chief Executive Officer Jeff Toghraie.
“We continue to take steps to diversify our distribution strategy for our hearing protection and enhancement products beyond our online presence. Over the last six months, we have announced relationships with international distributors that we expect to contribute in a more meaningful way going forward. Moreover, we also expect to establish additional international distribution agreements that will allow us to expand the AXIL brand to incremental targeted markets.
“Domestically, we are making strong inroads into the retail channel. We are in over 1,000 retail locations, including Bass Pro Shops, Scheel’s, and select Walmart stores. Ultimately, we would like to expand our retail presence by an order of magnitude, and given our financial discipline, we expect to be able to recognize a healthy margin contribution that is comparable to what we recognize in our online channels. A core corporate value at AXIL is achieving efficient profitability. We prioritize sustainable growth and avoid pursuing revenue expansion solely for top-line growth if it compromises operating leverage.
“In addition to our planned diversification of distribution channels, we aim to give consumers compelling reasons to choose AXIL-branded hearing safety and enhancement products. We intend to achieve this by maintaining our technological leadership and introducing both new and enhanced hearing products with improved functionality and ergonomics across various price points. Accordingly, we expect to launch the successor series to our TRACKR earmuffs in the first half of calendar year 2025.
“Finally, our solid cash position of $5.2 million at the end of 2Q25 enables us to internally finance our strategic growth plans, with no anticipated reliance on external market funding. We believe our dual strategies of distribution channel diversification and continued product innovation, which should all be able to be funded internally, will generate sustainable shareholder value. I extend my gratitude to our shareholders for their continued support and remain confident that AXIL's greatest achievements are still to come,” concluded Mr. Toghraie.
Use of Non-GAAP Financial Measures
The Company calculates EBITDA by taking net income calculated in accordance with accounting principles generally accepted in the United States (“GAAP”), and adjusting for income taxes, interest income or expense, and depreciation and amortization. The Company calculates adjusted EBITDA as EBITDA, further adjusted for stock-based compensation. Adjusted EBITDA is also presented as a percentage of revenue, which is calculated by dividing the non-GAAP Adjusted EBITDA for a period by revenue for the same period. Other companies may calculate EBITDA and adjusted EBITDA differently, limiting the usefulness of these measures for comparative purposes. The Company believes that these non-GAAP measures of financial results provide useful information regarding certain financial and business trends relating to the Company’s financial condition and results of operations, and management considers EBITDA and adjusted EBITDA important indicators in evaluating the Company’s business on a consistent basis across various periods for trend analyses. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements and are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Investors should not rely on any single financial measure to evaluate our business. A reconciliation of EBITDA and Adjusted EBITDA to the most comparable financial measure, net loss, calculated in accordance with GAAP is included in a schedule to this press release.
AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED EBITDA and ADJUSTED EBITDA
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2024 AND 2023
For the Three Months Ended
For the Six Months Ended
November 30,
November 30,
2024
2023
2024
2023
Net income (GAAP)
$
633,706
$
1,018,075
$
523,901
$
1,172,527
Income taxes
67,250
364,393
67,250
430,382
Interest (income) expense, net
(26,044
)
(36,185
)
(54,675
)
(73,034
)
Depreciation and amortization
34,440
27,785
47,335
56,022
Total EBITDA (Non-GAAP)
709,352
1,374,068
583,811
1,585,897
Adjustments:
Stock-based compensation
304,600
51,108
602,464
102,215
Total Adjusted EBITDA (Non-GAAP)
$
1,013,952
$
1,425,176
$
1,186,275
$
1,688,112
Sales, net (GAAP)
$
7,732,574
$
8,421,677
$
13,583,846
$
14,527,946
Adjusted EBITDA as a percentage of Sales, net (Non-GAAP)
13.1
%
16.9
%
8.7
%
11.6
%
AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
November 30, 2024
May 31, 2024
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash
$
5,213,897
$
3,253,876
Accounts receivable, net
1,444,218
509,835
Inventory, net
2,664,489
3,394,023
Prepaid expenses and other current assets
724,778
809,126
Total Current Assets
10,047,382
7,966,860
OTHER ASSETS:
Property and equipment, net
305,433
260,948
Intangible assets, net
324,907
309,104
Right of use asset
737,251
36,752
Deferred tax asset
121,791
231,587
Other assets
20,720
16,895
Goodwill
2,152,215
2,152,215
Total Other Assets
3,662,317
3,007,501
TOTAL ASSETS
$
13,709,699
$
10,974,361
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$
1,619,252
$
967,596
Customer deposits
496,404
154,762
Contract liabilities, current
956,022
905,311
Notes payable
143,342
146,594
Due to related party
178,520
11,798
Lease liability, current
207,077
36,752
Income tax liability
67,250
242,296
Other current liabilities
331,395
332,936
Total Current Liabilities
3,999,262
2,798,045
LONG TERM LIABILITIES:
Lease liability
531,081
—
Contract liabilities
357,205
480,530
Total Long Term Liabilities
888,286
480,530
Total Liabilities
4,887,548
3,278,575
Commitments and contingencies
—
—
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value; 300,000,000 shares authorized; 31,133,500 and 42,251,750 shares issued and outstanding as of November 30, 2024 and May 31, 2024, respectively
3,113
4,225
Common stock, $0.0001 par value: 450,000,000 shares authorized; 6,466,852 and 5,908,939 shares issued, issuable and outstanding as of November 30, 2024 and May 31, 2024, respectively
647
591
Additional paid-in capital
8,428,760
7,825,240
Retained Earnings/(Accumulated deficit)
389,631
(134,270
)
Total Stockholders' Equity
8,822,151
7,695,786
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
13,709,699
$
10,974,361
AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2024 AND 2023
(UNAUDITED)
For the Three Months Ended
For the Six Months Ended
November 30,
November 30,
2024
2023
2024
2023
Sales, net
$
7,732,574
$
8,421,677
$
13,583,846
$
14,527,946
Cost of sales
2,234,527
2,163,738
3,932,151
3,622,441
Gross profit
5,498,047
6,257,939
9,651,695
10,905,505
OPERATING EXPENSES:
Sales and marketing
3,377,760
3,672,780
6,047,231
6,879,621
Compensation and related taxes
276,674
204,646
467,322
484,635
Professional and consulting
736,169
694,258
1,684,018
1,303,288
General and administrative
434,573
422,343
920,955
800,292
Total Operating Expenses
4,825,176
4,994,027
9,119,526
9,467,836
INCOME FROM OPERATIONS
672,871
1,263,912
532,169
1,437,669
OTHER INCOME (EXPENSE):
Gain on settlement
—
79,182
—
79,182
Other income
2,041
3,189
4,307
13,024
Interest income
27,340
37,825
55,971
76,318
Interest expense and other finance charges
(1,296
)
(1,640
)
(1,296
)
(3,284
)
Other income (expense), net
28,085
118,556
58,982
165,240
INCOME BEFORE PROVISION FOR INCOME TAXES
700,956
1,382,468
591,151
1,602,909
Provision for income taxes
67,250
364,393
67,250
430,382
NET INCOME
$
633,706
$
1,018,075
$
523,901
$
1,172,527
NET INCOME PER COMMON SHARE:
Basic
$
0.10
$
0.17
$
0.08
$
0.20
Diluted
$
0.08
$
0.05
$
0.06
$
0.06
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
6,450,226
5,863,939
6,303,002
5,863,939
Diluted
8,168,657
18,632,689
8,194,882
18,632,689
AXIL BRANDS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2024 AND 2023
(UNAUDITED)
November 30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
523,901
$
1,172,527
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
47,335
56,022
Bad debts
27,954
64,327
Stock-based compensation
602,464
102,215
Gain on settlement
—
(79,182
)
Gain on forgiveness of account payable
(218,699
)
—
Deferred income taxes
109,796
—
Change in operating assets and liabilities:
Accounts receivable
(962,337
)
(600,626
)
Inventory
729,534
(1,040,351
)
Prepaid expenses and other current assets
80,524
(267,407
)
Accounts payable
870,357
1,092,735
Other current liabilities
165,959
576,718
Contract liabilities
(72,614
)
175,135
NET CASH PROVIDED BY OPERATING ACTIVITIES
1,904,174
1,252,113
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangibles
(41,840
)
—
Purchase of property and equipment
(65,783
)
(70,845
)
NET CASH USED IN INVESTING ACTIVITIES
(107,623
)
(70,845
)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of equipment financing
—
(1,650
)
Repayment of note payable
(3,252
)
(24,657
)
Advances (payments) from a related party
166,722
(25,212
)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
163,470
(51,519
)
NET INCREASE IN CASH
1,960,021
1,129,749
CASH - Beginning of period
3,253,876
4,832,682
CASH - End of period
$
5,213,897
$
5,962,431
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest
$
2,908
$
3,284
Income taxes
$
132,500
$
—
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Initial recognition of right of use assets recognized as lease liability
$
767,269
$
—
About AXIL Brands
AXIL Brands (NYSE American: AXIL) is an emerging global 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® brand - selling products in the United States, Canada, the European Union, and throughout Asia.
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 “anticipate,” “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 its net sales and operations, including developing new and improved products, diversifying its distribution channels, and expanding internationally, and perform in accordance with any guidance; (ii) the Company’s 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; (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; (vii) the Company’s ability to engage in strategic partnerships and expand its distribution and retail channels; and (viii) 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.
