Axil Brands, Inc. — Form 10-Q Summary
Reporting period: Fiscal first quarter ended August 31, 2026; financial statements are unaudited. Axil sells hearing enhancement and protection products, hair and skin care products, and marketing services.
Financial results and liquidity
| Metric | Three months ended Aug. 31, 2026 | Prior-year quarter | Change |
|---|---|---|---|
| Net revenue | $6.09 million | $6.86 million | Down 11.2% |
| Gross profit / margin | $5.03 million / 82.6% | $4.63 million / 67.6% | Gross profit up 8.6% |
| Operating income | $437,027 | $411,738 | Up 6.1% |
| Net income | $420,571 | $334,294 | Up 25.8% |
| Net income attributable to Axil shareholders | $421,592 | $334,294 | Up 26.1% |
| Basic / diluted EPS | $0.06 / $0.05 | $0.05 / $0.04 | Higher |
| Operating cash flow | $3.76 million | $(739,194) | Improved |
- Cash and cash equivalents were $7.93 million at August 31, versus $4.46 million at May 31. Working capital was $10.28 million. Management reported no outstanding borrowings and believes current cash and expected operating cash flows are sufficient for at least 12 months, while noting financing is not assured if needed.
- Cash from operations benefited mainly from collection of receivables related to large retail orders near fiscal year-end. Investing cash outflow was $165,213; financing cash outflow was $130,999, primarily net repayments to a related party.
- Total liabilities were $4.70 million, including $352,476 of operating lease liabilities. Accounts payable was $2.44 million and income tax liability was $958,744.
- Sales and marketing expense was $2.84 million; research and development was $459,631, with no comparable prior-year expense. Total operating expenses rose 8.8% to $4.59 million.
Material changes and unusual items
- Revenue fell mainly because a large big-box retail order fulfilled in the prior-year quarter did not recur, and first-generation XCOR sales slowed ahead of the XCOR II launch. Hearing segment revenue declined to $5.76 million from $6.58 million; hair and skin care revenue rose to $308,338 from $276,552. Marketing services generated $20,000, versus none reported in the prior-year quarter.
- Gross margin benefited materially from $550,929 of IEEPA tariff refunds on goods already sold. Including related inventory and interest amounts, total cash refunds were $907,067: $321,059 reduced inventory and $35,079 was recorded as other income. No IEEPA refund claims remain outstanding. Excluding the cost-of-revenue benefit, gross margin was 73.6%, versus 67.6% reported a year earlier. The filing describes the benefit as non-recurring.
- On August 25, Axil issued 25.002% of subsidiary Reviv3 to three service providers, retaining a 74.998% controlling interest. The issuance produced a $137,511 non-cash compensation charge in general and administrative expense and established a noncontrolling interest.
- Adjusted EBITDA was reported as $826,841, compared with $674,355. The filing gives conflicting current-quarter adjusted EBITDA margins: 13.6% in its reconciliation table and 14.1% in the discussion. Investors should verify the correct percentage.
Outlook, risks and other disclosures
- Management expects fiscal 2027 revenue and net income to grow versus fiscal 2026, with growth becoming more evident from the second quarter. Drivers cited include XCOR II, expanded retail and wholesale coverage, and the planned Reviv3 relaunch. This is not a guarantee; order timing, demand, fulfillment, tariffs and execution could affect results.
- XCOR II became available September 15, 2026, after quarter-end. Initial partner orders exceeded $2.8 million; by September 30, orders exceeded $3.6 million, with most pre-orders and backlog fulfilled. Continued demand and order conversion remain uncertain.
- Management cites changing tariffs, inflation and other macroeconomic conditions, consumer spending, supply-chain and competitive risks, and uncertainty around retail-order timing. The largest vendor represented 92% of purchases in the quarter. Approximately $7.18 million of cash exceeded FDIC-insured limits at one institution.
- Routine legal matters were disclosed; management does not expect them to have a material adverse effect, though outcomes are uncertain. No material changes to previously disclosed risk factors were reported. Management concluded disclosure controls were effective, with no material quarter-specific changes to internal control over financial reporting.
Key facts for investors to verify
- Reconcile the disclosed adjusted EBITDA margin discrepancy (13.6% versus 14.1%).
- Assess earnings and gross-margin performance excluding the non-recurring tariff-refund benefit, and distinguish cash refunds from accounting reductions to inventory and cost of revenues.
- Track whether XCOR II orders convert into sustained sales and whether retail orders become more consistent.
- Monitor Reviv3 relaunch execution and the economic implications of the subsidiary’s 25.002% noncontrolling interest.
- Evaluate exposure to the 92%-concentrated supplier, changing tariffs, and cash balances above FDIC-insured limits.