Axil Brands Swings to Profit on Strong Sales Growth

TL;DR

**AXIL's Q3 profit swing is a strong buy signal, but watch that cash burn and rising liabilities.**

AI Summary

Axil Brands, Inc. (AXIL) reported a significant turnaround for the three months ended August 31, 2025, achieving a net income of $334,294, a substantial improvement from a net loss of $109,805 in the same period last year. This positive shift was driven by a 17.18% increase in net sales, reaching $6,856,218 compared to $5,851,272 in Q3 2024. Gross profit also rose by 11.59% to $4,634,934. Operating expenses decreased by 1.66% to $4,223,196, primarily due to lower professional and consulting fees, which dropped from $947,849 to $799,514. The company's cash balance decreased by 14.33% to $4,086,624 from $4,769,854 at May 31, 2025, largely due to increased investments in accounts receivable and inventory. Total assets grew by 19.33% to $15,355,888, while total liabilities increased by 60.83% to $5,162,674, mainly driven by a surge in accounts payable to $2,391,752 from $866,573. The company continues to focus on high-tech hearing and audio enhancement products and professional hair and skin care products, with a new subsidiary, Sharper Vision Marketing Inc., incorporated on May 5, 2025.

Why It Matters

This turnaround is crucial for investors, signaling Axil Brands' ability to generate profit after a prior-year loss, which could boost investor confidence and potentially impact its NYSE American LLC listing. The substantial increase in accounts receivable and inventory, while supporting sales growth, also indicates higher working capital needs, which could affect short-term liquidity. For customers, the continued investment in product lines like high-tech hearing protection and professional hair care suggests ongoing innovation and availability. Competitively, Axil's sales growth of over 17% outpaces many in the consumer goods sector, potentially allowing it to gain market share in its niche segments.

Risk Assessment

Risk Level: medium — The company reported a net cash outflow from operating activities of $(739,194) for the three months ended August 31, 2025, a significant decline from the $897,318 provided by operations in the prior year. This, coupled with a 60.83% increase in total liabilities to $5,162,674, primarily due to a 175.99% jump in accounts payable, indicates potential liquidity pressures despite the net income.

Analyst Insight

Investors should closely monitor Axil Brands' cash flow from operations and working capital management in upcoming quarters. While the return to profitability is positive, the negative operating cash flow and increased liabilities suggest a need for improved cash generation to sustain growth without relying heavily on financing.

Financial Highlights

debt To Equity

0.51

revenue

$6,856,218

operating Margin

N/A

total Assets

$15,355,888

total Debt

$5,162,674

net Income

$334,294

eps

$0.05

gross Margin

67.62%

cash Position

$4,086,624

revenue Growth

+17.18%

Key Numbers

• $334,294 — Net Income (Swung from a net loss of $109,805 in Q3 2024 to a net income in Q3 2025.)
• $6,856,218 — Net Sales (Increased by 17.18% from $5,851,272 in Q3 2024.)
• $4,634,934 — Gross Profit (Increased by 11.59% from $4,153,648 in Q3 2024.)
• $(739,194) — Net Cash Used in Operating Activities (Shifted from $897,318 provided in Q3 2024, indicating increased working capital needs.)
• $2,391,752 — Accounts Payable (Increased by 175.99% from $866,573 at May 31, 2025, contributing to higher current liabilities.)
• $2,778,751 — Accounts Receivable, net (Increased by 176.79% from $1,003,945 at May 31, 2025, impacting cash flow.)
• $3,889,462 — Inventory, net (Increased by 53.51% from $2,533,658 at May 31, 2025, impacting cash flow.)
• $4,086,624 — Cash (Decreased by 14.33% from $4,769,854 at May 31, 2025.)
• $0.05 — Basic Net Income Per Common Share (Improved from a basic net loss of $(0.02) per share in Q3 2024.)
• 6,757,717 — Common Shares Outstanding (As of October 2, 2025.)

Key Players & Entities

• Axil Brands, Inc. (company) — Registrant
• SEC (regulator) — Securities and Exchange Commission
• NYSE American LLC (regulator) — Stock exchange where AXIL is listed
• Axil Distribution Company (company) — Subsidiary of Axil Brands, Inc.
• Sharper Vision Marketing Inc. (company) — Newly incorporated subsidiary of Axil Brands, Inc.
• $334,294 (dollar_amount) — Net income for the three months ended August 31, 2025
• $109,805 (dollar_amount) — Net loss for the three months ended August 31, 2024
• $6,856,218 (dollar_amount) — Net sales for the three months ended August 31, 2025
• $5,851,272 (dollar_amount) — Net sales for the three months ended August 31, 2024
• $4,086,624 (dollar_amount) — Cash balance as of August 31, 2025

FAQ

Industry Context

Axil Brands operates in the competitive markets for high-tech hearing and audio enhancement products, and professional hair and skin care products. The company's strategy includes expanding its product offerings and market reach, as evidenced by the incorporation of a new subsidiary, Sharper Vision Marketing Inc. Growth in these sectors is often driven by technological innovation and consumer demand for specialized personal care and audio solutions.

Regulatory Implications

As a publicly traded company, Axil Brands is subject to SEC regulations and reporting requirements. The company's financial reporting, including the disclosures in this 10-Q, must adhere to GAAP. Any misstatements or non-compliance could lead to regulatory scrutiny and penalties.

What Investors Should Do

1. Monitor working capital management
2. Analyze the impact of Sharper Vision Marketing Inc.
3. Evaluate the sustainability of expense reductions

Key Dates

• 2025-08-31: End of Q3 2025 — Reported net income of $334,294, a significant turnaround from a net loss of $109,805 in the prior year's quarter.
• 2025-05-05: Incorporation of Sharper Vision Marketing Inc. — Indicates expansion into new product areas or markets, potentially driving future growth.
• 2025-05-31: End of Q2 2025 — Previous period balance sheet data for comparison, showing a cash balance of $4,769,854 and total liabilities of $3,210,087.

Glossary

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. (Increased by 11.59% to $4,634,934, indicating improved efficiency in production or pricing power.)

Operating Expenses

The costs a business incurs for its normal business operations, excluding cost of goods sold and interest and taxes. (Decreased by 1.66% to $4,223,196, primarily due to lower professional and consulting fees, contributing to improved net income.)

Accounts Payable

Money owed by a company to its suppliers for goods or services purchased on credit. (Surged by 175.99% to $2,391,752, a significant driver of the increase in total liabilities and a potential indicator of extended payment terms or increased purchasing.)

Accounts Receivable, net

Money owed to a company by its customers for goods or services delivered or used but not yet paid for. (Increased by 176.79% to $2,778,751, suggesting higher sales on credit or slower customer payments, impacting cash flow.)

Inventory, net

The cost of goods that a company has on hand and is available for sale. (Increased by 53.51% to $3,889,462, indicating investment in stock to meet anticipated demand or potential overstocking.)

Retained Earnings

The cumulative amount of net income that a company has retained over time, rather than distributing to shareholders as dividends. (Increased to $1,055,012 from $720,718, reflecting the positive net income generated in the current period.)

Year-Over-Year Comparison

Axil Brands has demonstrated a significant turnaround in the three months ended August 31, 2025, compared to the same period last year. Net sales increased by 17.18% to $6,856,218, and the company swung from a net loss of $109,805 to a net income of $334,294. While gross profit rose by 11.59%, operating expenses saw a reduction of 1.66%. However, liabilities increased substantially by 60.83%, driven by a surge in accounts payable and accounts receivable, leading to a decrease in cash despite overall asset growth.

Key Financial Figures

• $0.0001 — nge on which registered Common Stock, $0.0001 par value per share AXIL The NYSE A
• $701,881 — for a period of two and three years was $701,881 and $841,771, respectively; and contrac
• $841,771 — of two and three years was $701,881 and $841,771, respectively; and contract liabilities
• $205,750 — ions for customers' right of return was $205,750 and $117,560, respectively. Our contrac
• $117,560 — omers' right of return was $205,750 and $117,560, respectively. Our contract liabilities
• $667,816 — one year to three years. Approximately $667,816 is expected to be recognized

Filing Documents

• axil-20250831_10q.htm (10-Q) — 643KB
• axil-20250831_10qex31z1.htm (EX-31.1) — 12KB
• axil-20250831_10qex31z2.htm (EX-31.2) — 12KB
• axil-20250831_10qex32z1.htm (EX-32.1) — 6KB
• axil-20250831_10qex32z2.htm (EX-32.2) — 6KB
• image_001.jpg (GRAPHIC) — 4KB
• 0001520138-25-000299.txt ( ) — 4607KB
• axil-20250831.xsd (EX-101.SCH) — 38KB
• axil-20250831_cal.xml (EX-101.CAL) — 59KB
• axil-20250831_def.xml (EX-101.DEF) — 114KB
• axil-20250831_lab.xml (EX-101.LAB) — 298KB
• axil-20250831_pre.xml (EX-101.PRE) — 247KB
• axil-20250831_10q_htm.xml (XML) — 612KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 1 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 2 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 6 Item 4.

Controls and Procedures

Controls and Procedures 6

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 7 Item 1A.

Risk Factors

Risk Factors 7 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 7 Item 3. Defaults Upon Senior Securities 7 Item 4. Mine Safety Disclosures 7 Item 5. Other Information 7 Item 6. Exhibits 8

Signatures

Signatures 9 -i- CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q, and in particular Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains certain "forward-looking Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements represent our expectations, beliefs, intentions or strategies concerning future events, including, but not limited to, any statements regarding our assumptions about financial performance; the continuation of historical trends; the sufficiency of our cash balances for future liquidity and capital resource needs; the expected impact of changes in accounting policies on our results of operations, financial condition or cash flows; anticipated problems and our plans for future operations, including expected growth; and the economy in general or the future of the beauty and hair care industry and the hearing protection and ear bud business, all of which are subject to various risks and uncertainties. There are a number of factors that could cause our actual results to differ from those indicated in the forward-looking statements, many of which are outside of our control. They include: the impact of unstable market and general economic conditions on our business, financial condition and stock price, including inflationary cost pressures, increased tariffs and other trade restrictions and barriers, interest rate changes, unemployment rates, decreased discretionary consumer spending, supply chain disruptions and constraints, labor shortages, ongoing economic disruption, the possibility of an economic recession and other macroeconomic factors, geopolitical events and uncertainty, including the effects of the U.S. federal government shutdown, the Ukraine-Russia conflict and conflic

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS

Financial Statements

Financial Statements: Consolidated Balance Sheets - As of August 31, 2025 (Unaudited) and May 31, 2025 F-1 Consolidated Statements of Operations - For the three months ended August 31, 2025 and 2024 (Unaudited) F-2 Consolidated Statements of Changes in Stockholders' Equity - For the three months ended August 31, 2025 and 2024 (Unaudited) F-3 Consolidated Statements of Cash Flows – For the three months ended August 31, 2025 and 2024 (Unaudited) F-4 Condensed Notes to Unaudited Consolidated Financial Statements F-5 -1- AXIL BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS August 31, 2025 May 31, 2025 (Unaudited) ASSETS CURRENT ASSETS: Cash $ 4,086,624 $ 4,769,854 Accounts receivable, net 2,778,751 1,003,945 Inventory, net 3,889,462 2,533,658 Due from related party - 222 Prepaid expenses and other current assets 935,679 947,969 Total Current Assets 11,690,516 9,255,648 OTHER ASSETS: Property and equipment, net 395,857 412,261 Intangible assets, net 452,405 403,591 Right of use asset 521,993 579,121 Deferred tax asset 122,182 46,239 Other assets 20,720 20,720 Goodwill 2,152,215 2,152,215 Total Other Assets 3,665,372 3,614,147 TOTAL ASSETS $ 15,355,888 $ 12,869,795 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,391,752 $ 866,573 Customer deposits 209,942 67,412 Contract liabilities- current 755,736 757,355 Notes payable - current 3,459 3,574 Due to related party 151,269 - Lease liability, current 207,929 212,543 Income tax liability 501,370 310,369 Other current liabilities 294,394 244,998 Total Current Liabilities 4,515,851 2,462,824 LONG TERM LIABILITIES: Lease liability, long term 352,475 404,669 Note payable, long term 135,740 136,655 Contract liabilities- long term 158,608 205,939 Total Long Term Liabilities 646,823 747,263

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