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What changed in Axil Brands, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Axil Brands, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+107 added−99 removedSource: 10-K (2024-08-15) vs 10-K (2023-08-21)

Top changes in Axil Brands, Inc.'s 2024 10-K

107 paragraphs added · 99 removed · 76 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe are also continuing our focus on direct-to-consumer marketing programs through our own e-commerce site and various third-party online platforms. In addition, we are exploring other revenue channels such as co-branding and private-label manufacturing. Hair Care and Skin Care Marketing and Sales : Reviv3 stands for skin health and benefits of healthy scalp and hair follicles.
Biggest changeOur primary focus in the hair and skin care segment is to expand our distribution and salon sales through new and existing domestic and international distributors. We are maintaining our emphasis on direct-to-consumer marketing through our e-commerce site and various third-party online platforms. Additionally, we are exploring new revenue opportunities, including co-branding and private-label manufacturing.
In order to ensure that sufficient quality of service is provided, we use a customer service platform that integrates all of our systems to provide complete and timely data, tracks all support tickets and conversations with customers. Our customer service manager performs regular monthly reviews of performance metrics and reviews processes.
In order to ensure that sufficient quality of service is provided, we use a customer service platform that integrates all of our systems to provide complete and timely data and tracks all support tickets and conversations with customers. Our customer service manager performs regular monthly reviews of performance metrics and reviews processes.
Hearing Enhancement and Protection Segment Following the June 16, 2022 AXIL acquisition and u nder the AXIL and related brands, we create high-tech, innovative hearing and audio enhancement and protection products to provide cutting-edge solutions for people with varied applications across many industries, including ear plugs, ear muffs and ear buds.
Hearing Enhancement and Protection Segment Following the June 16, 2022 A&A acquisition and u nder the AXIL and related brands, we create high-tech, innovative hearing and audio enhancement and protection products to provide cutting-edge solutions for people with varied applications across many industries, including ear plugs, ear muffs and ear buds.
Some of the products incorporate Bluetooth technology that we continually developed to enhance the hearing experience while protecting the ears. AXIL engages product design services to align consumer preferences with the brand image, ensuring that all product lines will correlate. The majority of sales occur through direct-to-consumer via www.goaxil.com, third party platforms, dealers and distributors.
Some of the products incorporate Bluetooth technology that we continually develop to enhance the hearing experience while protecting the ears. AXIL engages product design services to align consumer preferences with the brand image, ensuring that all product lines will correlate. The majority of sales occur through direct-to-consumer via www.goaxil.com, third party platforms, dealers and distributors.
Our target markets include industrial, construction, farm and agriculture, aviation, forestry, and recreational markets (such as fitness, hiking, biking, auto racing, target shooting, hunting, power sports, power tools, motorcycling, stadium and concert events). Hearing Enhancement and Protection Marketing and Sales : AXIL is growing the business as it continues to enter into new distribution and licensing agreements.
Our target markets include industrial, construction, farm and agriculture, aviation, forestry, and recreational markets (such as fitness, hiking, biking, auto racing, target shooting, hunting, power sports, power tools, motorcycling, stadium and concert events). Hearing Enhancement and Protection Marketing and Sales : The Company is growing the business as it continues to enter into new distribution and licensing agreements.
Available Information We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Our filings with the SEC are available on the SEC’s website at www.sec.gov. We also maintain a website at reviveprocare.com and www.goaxil.com.
Available Information We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Our filings with the SEC are available on the SEC’s website at www.sec.gov. We also maintain websites at reviveprocare.com and www.goaxil.com.
Our products in this segment include GS Xtreme® sound enhancement and hearing protection ear buds, XCOR® True Wireless, digital ear buds with touch control, TRACKR™ Blu advanced sound enhancement, hearing protection, and Bluetooth audio earmuffs and X-PRO passive ear protection. -1- Table of Contents Our hearing protection and enhancement segment continues to grow as it enters into new distribution and licensing agreements.
Our products in this segment include GS Extreme® sound enhancement and hearing protection ear buds with Bluetooth functionality, XCOR® True Wireless, digital ear buds with touch control, TRACKR™ Blu advanced sound enhancement, hearing protection, and Bluetooth audio earmuffs and X-PRO passive ear protection. -1- Table of Contents Our hearing protection and enhancement segment continues to grow as it enters into new distribution and licensing agreements.
ITEM 1. DESCRIPTION OF BUSINESS. General Reviv3 is engaged in the manufacturing, marketing, sale and distribution of high-tech, innovative hearing and audio enhancement and protection products that provide cutting-edge solutions for people with varied applications across many industries and professional quality hair and skin care products under various trademarks and brands.
ITEM 1. BUSINESS. General AXIL is engaged in the manufacturing, marketing, sale and distribution of high-tech, innovative hearing and audio enhancement and protection products that provide cutting-edge solutions for people with varied applications across many industries and professional quality hair and skin care products under various trademarks and brands.
In addition, all employees and third-party product development consultants agree not to disclose any private or confidential information relating to our technology, trade secrets or intellectual property. At May 31, 2023, we held 3 active U.S. patents and had 2 pending U.S. patent applications covering various aspects of our technology.
In addition, all employees and third-party product development consultants agree not to disclose any private or confidential information relating to our technology, trade secrets or intellectual property. At May 31, 2024, we held 3 active U.S. patents and had 3 pending U.S. patent applications covering various aspects of our technology.
Overall, we consider our employee relations to be good and believe our culture to be central to the success of the Company. -4- Table of Contents Health and Safety : The health and safety of our employees is of utmost importance to us. We are enhancing our safety program with additional training and internal risk and hazard assessments.
Overall, we consider our employee relations to be good and believe our culture to be central to the success of the Company. -4- Table of Contents Health and Safety : The health and safety of our employees is of utmost importance to us. We are continuing to enhance our safety program with additional training and internal risk and hazard assessments.
Currently, through our hearing protection and enhancement segment we produce 22 products with 32 different stock keeping unit (“SKUs”) and have plans to continue expanding the product lines. The product line includes ear buds, ear muffs, ear plugs, outdoor speakers and ear care items.
Currently, through our hearing protection and enhancement segment, we produce 22 products with 38 different stock keeping unit (“SKUs”) and have plans to continue expanding the product lines. The product line includes ear buds, ear muffs, ear plugs, and outdoor speakers.
Our U.S. patents expire at various times beginning in 2035 and extending through 2038. During the fiscal year ended May 31, 2023, no U.S. patents were issued and no U.S. patents expired. We do not anticipate any expiration of any of our patents in the future years will have a material impact on our business.
Our U.S. patents expire at various times beginning in 2035 and extending through 2038. During the fiscal year ended May 31, 2024, no new U.S. patents were issued to us and no U.S. patents expired. We do not anticipate any expiration of any of our patents in the future years will have a material impact on our business.
Hair Care and Skin Care Segment Prior to the AXIL acquisition, our business consisted solely of manufacturing, marketing, sale and distribution of professional quality hair and skin care products under various trademarks and brands and has adopted and used trademarked products for distribution throughout the U.S., Canada, Europe and Asia pursuant to the terms of 12 exclusive distribution agreements with various parties throughout our targeted markets.
Hair Care and Skin Care Segment Our hair care and skin care business consists of manufacturing, marketing, sale and distribution of professional quality hair and skin care products under various trademarks and brands and has adopted and used trademarked products for distribution throughout the U.S., Canada, Europe and Asia pursuant to the terms of 12 exclusive distribution agreements with various parties throughout our targeted markets.
Many of our competitors in this market have more broadly diversified product lines, well established supply and distribution systems, loyal customer bases and significant financial, marketing, research and development and other resources. We believe our principal competitive advantages include product quality, online marketing, and a drug-free solution to thinning hair.
Many of our competitors in this market have more broadly diversified product lines, well established supply and distribution systems, loyal customer bases and significant financial, marketing, research and development and other resources. We believe our principal competitive advantages include product quality, online marketing, and drug-free solutions for healthy scalp and hair.
Our intellectual property portfolio in this segment includes 3 active patents globally. For more information about our intellectual property see “—Intellectual Property” below .
Our intellectual property portfolio in this segment includes 2 trademarks and 3 active patents globally. For more information about our intellectual property see “Intellectual Property” below .
The Company is not, and has not been at any time, a shell company. On June 16, 2022 we completed the acquisition of substantially all of the assets of Axil & Associated Brands Corp. (“AXIL”), a leader in hearing and audio enhancement and protection . We operate on a fiscal year ending May 31.
The Company is not, and has not been at any time, a shell company. On June 16, 2022 we completed the acquisition of substantially all of the assets of Axil & Associated Brands Corp. (“A&A”), a leader in hearing and audio enhancement and protection .
Compensation and Benefits : Our compensation and benefits program is designed to attract and reward individuals who demonstrate the ability and desire to enhance our workplace culture, support our values, drive our operational and strategic goals, and create long-term value for our stockholders.
Compensation and Benefits : Our compensation and benefits program is designed to attract and reward individuals who demonstrate the ability and desire to enhance our workplace culture, support our values, drive our operational and strategic goals, and create long-term value for our stockholders. Our Office and Corporate History Our principal executive office is located at 901 S.
BOOST is designed to deliver nutrients and increase circulation to the scalp, MEND Deep Hair Repair Mask for added moisture and PROTECT, a heat protectant product to prevent damage from irons and dryers.
Currently we have 3 products in our treatment and repair line. BOOST is designed to deliver nutrients and increase circulation to the scalp, MEND Deep Hair Repair Mask is designed for added moisture and PROTECT is a heat protectant product to prevent damage from irons and dryers.
Our Office and Corporate History Our principal executive office is located at 901 Fremont Avenue, Unit 158, Alhambra, California, 91803. Our telephone number is (888) 638-8883. Reviv3 was incorporated in the State of Delaware on May 21, 2015 as a reorganization of Reviv3 Procare, LLC, which was organized on July 31, 2013.
Fremont Avenue, Unit 158, Alhambra, California 91803. Our telephone number is (888) 638-8883. Axil Brands, Inc. was incorporated in the State of Delaware on May 21, 2015 as a reorganization of Reviv3 Procare, LLC, which was organized on July 31, 2013.
Key Customers For the hearing enhancement and protection segment, no customers accounted for more than 10% of our net sales in the fiscal year ended May 31, 2023. Approximately 97% of our sales was direct-to-consumer via Shopify and Amazon for the fiscal year ended May 31, 2023.
Key Customers For the hearing enhancement and protection segment which accounts for approximately 95% of total revenue, no customers accounted for more than 10% of our net sales in the fiscal year ended May 31, 2024. Approximately 91% of our sales were direct-to-consumer via Shopify and Amazon for the fiscal year ended May 31, 2024.
Copies of such documents are available in print at no charge to any stockholder who makes a request. Such requests should be made to our corporate secretary at our corporate headquarters, 901 Fremont Avenue, Unit 158, Alhambra, California, 91803.
Any reference to our websites in this Form 10-K is intended to be an inactive textual reference only. Copies of such documents are available in print at no charge to any stockholder who makes a request. Such requests should be made to our corporate secretary at our corporate headquarters, 901 S. Fremont Avenue, Unit 158, Alhambra, California 91803.
The hearing protection and enhancement segment competes with ISOtunes, Walkers, Surefire, SordinAB and others. Many of our competitors in this market have more broadly diversified product lines, well established supply and distribution systems, loyal customer bases and significant financial, marketing, research and development, and other resources.
Many of our competitors in this market have more broadly diversified product lines, well established supply and distribution systems, loyal customer bases and significant financial, marketing, research and development, and other resources.
There is focus on public safety and security markets, as well as entertainment venues. AXIL’s sales are primarily driven through paid advertising and growth is expected to continue. The Company continues to expand our marketing footprint in organic social, affiliate, and search engine optimization. In addition to online sales, there is opportunity to increase distribution and retail sales.
There is focus on public safety and security markets, as well as entertainment venues. Sales are primarily driven by paid advertising, the expansion of our distribution network, and strategic partnerships, with continued growth expected. The Company continues to expand our marketing footprint in organic social, affiliate, and search engine optimization.
We also have a stand-alone Thickening Spray for giving hair more volume and body. -2- Table of Contents Reviv3 is focused on expanding its business-to-business salon sales through its network of domestic and international distributors. We are also continuing our focus on direct-to-consumer marketing programs through our own ecommerce site and various third-party online platforms.
We also have a stand-alone Thickening Spray for giving hair more volume and body. -2- Table of Contents Our hair care and skin care unit is focused on expanding our distribution and salon sales through new and existing domestic and international distributors. We are maintaining our emphasis on direct-to-consumer marketing through our e-commerce site and various third-party online platforms.
Our Segments Following the AXIL acquisition, we conduct our business through two operating segments: hearing enhancement and protection, and hair care and skin care. See Note 15 to our Consolidated Financial Statements in this report for financial information for these segments. We concentrate on attracting new customers and retaining existing customers to increase our total revenue.
See Note 15 to our Consolidated Financial Statements in this report for financial information for these segments. We concentrate on attracting new customers and retaining existing customers to increase our total revenue.
Currently, we sell our hair and skincare products under the Reviv3 brand which includes 7 distinct products. Our Reviv3 System is a series of products which are meant to be used together or on a stand-alone basis. The hair care products consist of PREP shampoo, PRIME conditioner, and TREAT maintenance care.
Our Reviv3 Procare System is a series of products which are meant to be used together or on a stand-alone basis. The hair care products consist of PREP shampoo, PRIME conditioner, and TREAT maintenance care. We also sell an introductory kit which includes all three Reviv3 Procare products. In addition, we have products dedicated to hair treatment and repair.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
None of our employees are covered by collective bargaining agreements or work councils. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
As is customary in the industry, none of our customers is under any obligation to continue purchasing products from us in the future.
As is customary in the industry, none of our customers is under any obligation to continue purchasing products from us in the future. Key Suppliers Similar to other specialty retailers, we purchase a significant portion of our total inventory from a limited number of vendors.
As a result, the business is currently allocating resources and intends to increase the sales team depending on available capital performance and opportunities. Hearing Enhancement and Protection Competition : The hearing enhancement and protection products are in a distinct market that overlaps between the consumer electronics and the hearing protection device sectors.
Hearing Enhancement and Protection Competition : The hearing enhancement and protection products are in a distinct market that overlaps between the consumer electronics and the hearing protection device sectors. We believe the global hearing protection devices market is growing due to the greater awareness of hearing loss.
For the fiscal year ended May 31, 2023, the hearing protection and enhancement segment and the hair care and skin care segment accounted for 93.0% and 7.0% of our revenue, respectively. Our Strategy The Company’s overall business strategy is to establish market awareness of our products through our direct-to-consumer campaigns.
For the fiscal year ended May 31, 2024, the hearing enhancement and protection segment and the hair care and skin care segment accounted for approximately 95.0% and 5.0% of our revenue, respectively. Our Strategy The Company's strategy centers on driving growth by expanding market share within existing channels and developing new ones through both online and traditional platforms.
Human Capital Management As of May 31, 2023, we had 15 employees, all of whom were employed in the United States and none employed outside the United States. None of our employees are covered by collective bargaining agreements or work councils.
We may experience lower sales in difficult economic scenarios, but we do not foresee the seasonality of our products to be a significant factor. Human Capital Management As of May 31, 2024, we had 14 employees all of whom were employed in the United States and none employed outside the United States.
We believe the global hearing protection devices market is growing due to the greater awareness of hearing loss and published statistics stating that 46% of workers in the manufacturing and industrial sector have been exposed to hazardous noises. Demand for innovative products for hearing protection is rising as consumers seek devices that are both comfortable and offer superior hearing protection.
According to the Center for Disease Control and Prevention, 53% of noise-exposed workers report not wearing hearing protection. Demand for innovative products for hearing protection is rising as consumers seek devices that are both comfortable and offer superior hearing protection. The hearing protection and enhancement segment competes with ISOtunes, Walker’s, SureFire, Sordin and others.
Our intellectual property portfolio in this segment includes no patents and 1 trademark globally. For more information about our intellectual property see “—Intellectual Property” below. Our hair and skin care segment is focused on expanding its business-to-business salon sales through its network of domestic and international distributors.
Our manufacturing operations are outsourced and fulfilled through our co-packers and manufacturing partners. Currently, we produce 8 products with 16 SKUs and plan to expand our product lines in the foreseeable future. Our intellectual property portfolio in this segment includes no patents and 1 trademark globally. For more information about our intellectual property see “Intellectual Property” below.
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We believe the increase in awareness will allow the Company to increase distribution and gain customers through our distribution partners’ retail establishments, with the goal of helping us achieve growth in market share and diversify our sales channels.
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Effective February 14, 2024, the Company changed its name from “Reviv3 Procare Company” to “AXIL Brands, Inc.” We operate on a fiscal year ending May 31. Our Segments Following the A&A acquisition, we conduct our business through two operating segments: hearing enhancement and protection, and hair care and skin care.
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Our manufacturing operations are outsourced and fulfilled through our co-packers and manufacturing partners. Approximately 95% of purchased inventories and products are sourced from 3 vendors totaling approximately $298,000 during the fiscal year ended May 31, 2023. Currently, we produce 8 products with 16 SKUs and plan to expand our product lines over the next 12 months.
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The Company’s primary focus is optimizing its e-commerce strategies, building sales teams to meet the needs of distribution channels, and enhancing value through strategic partnerships. The Company is in the early stages of executing its geographic expansion into new markets. The Company’s innovation strategy continues to prioritize technological improvements in the hearing enhancement and protection sector.
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We also sell an introductory kit which includes all three Reviv3 System products. In addition, we have products dedicated to hair treatment and repair. Currently we have 3 products in our treatment and repair line.
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The Company is researching and analyzing potential new verticals to identify and prioritize product investments that will support our expansion into new markets while continuing to serve our existing target markets effectively.
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In addition, we are exploring other revenue channels such as co-branding and private-label manufacturing. Hair Care and Skin Care Competition : The personal care product industry boasts roughly 750 companies that generate a combined annual revenue of more than $40 billion. The 50 largest companies comprise almost 70% of the entire revenue.
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The Company has increased its focus on opportunities in domestic and international distribution and retail sales and is allocating resources to expand its sales team, based on capital performance and available opportunities.
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Still, we believe the market will bear competition from small companies able to offer specialized products or cater to particular niche markets. Makeup, deodorant and nail products comprise 33% of health and beauty care industry revenue. Hair care products generate 25% of personal care product revenue, while creams and lotions comprise 21%.
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Hair Care and Skin Care Marketing and Sales : The Reviv3 Procare brand stands for skin health and benefits of healthy scalp and hair follicles. Currently, we sell our hair and skincare products under the Reviv3 Procare brand which includes 8 distinct products.
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Perfumes, mouthwashes, shaving preparations and other products make up the remaining revenue for beauty skin care product revenues. The hair care and skin car segment competes with Keranique, Zenagen, Revita and others.
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Additionally, we are exploring new revenue opportunities, including co-branding and private-label manufacturing. Hair Care and Skin Care Competition : According to Statista, the Beauty & Personal Care market worldwide is projected to generate a revenue of $646.20 billion in 2024. The market is projected to grow at an annual rate of 3.33% from 2024 to 2028.
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For the hair care and skin care segment, three customers accounted for 61%, 12% and 21%, respectively, of our net sales in the fiscal year ended May 31, 2023. No other individual customer accounted for 10% or more of our net sales in the fiscal year ended May 31, 2023.
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The largest segment within this market is Personal Care, which is expected to reach a market volume of $282.80 billion in 2024. The hair care and skin care segment competes with Keranique, Zenagen, Revita and others.
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We expect that these three customers along with a small number of other customers will, in the aggregate, continue to account for a large portion of our hair care and skin care segment net sales in the future.
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During fiscal year 2024, for our hearing enhancement and protection segment, 87% of our total purchases were from one vendor, and for our hair care and skin care segment, 97% of our total purchases were from two vendors, including 77% from one and 20% from another.
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We may experience lower sales in difficult economic scenarios, but we do not foresee the seasonality of our products to be a significant factor. In the future, seasonality trends could however have a material impact on our financial condition and results of operations, but we are not currently aware of the total impact that could affect our business.
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The loss of any one or more of these key vendors or our failure to establish and maintain relationships with these and other vendors could have a material adverse effect on our results of operations and financial condition. Our relationships with our vendors allowed us to maintain a competitive in-stock position.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAXIL operates on a month to month lease with current monthly base rent of $4,330. We believe AXIL’s office and warehouse are in good condition and satisfy AXIL’s operational requirements.
Biggest changeWe also lease office and warehouse space at 120 E. 13065 S. #101, Draper, Utah 84020 of approximately 2,750 square feet, on a month to month lease with current monthly base rent of $4,330, which is used by the hearing protection and enhancement segment. We believe this office and warehouse are in good condition and satisfy our operational requirements.
Our current monthly base rent is $6,098. We believe these facilities are in good condition and satisfy our operational requirements. We intend to seek additional leased space, which will include some warehouse facilities, as our business grows. AXIL leases office and warehouse space at 120 E. 13065 S. #101, Draper, Utah, 84020 of approximately 2,750 square feet.
Our current monthly base rent is $6,342. We believe these facilities are in good condition and satisfy our operational requirements. We intend to seek additional leased space, which we expect will include some warehouse facilities, as our business grows.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are currently not aware of any such pending or threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our financial statements.
Biggest changeWhere it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our financial statements.
However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.
As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.
ITEM 3. LEGAL PROCEEDINGS. From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.
ITEM 3. LEGAL PROCEEDINGS. From time to time, we become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. While the ultimate resolution is unknown, we do not expect that these lawsuits will individually, or in the aggregate, have a material adverse effect to our results of operations, financial condition, or cash flows.
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On November 23, 2020, the Company was served a copy of a complaint filed by Jacksonfill, LLC in the Fourth Circuit Court for Duval County, Florida. The complaint alleges breach of Agreement for non-payments for certain products against the Company. The allegations arise from alleged discrepancies discovered by the Company in the manufacturing of certain product.
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However, the outcome of any litigation is inherently uncertain, and there can be no assurance that any expense, liability, or damages that may ultimately result from the resolution of these matters will be covered by our insurance or will not be in excess of amounts recognized or provided by insurance coverage.
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The Company has retained counsel, has asserted a counterclaim against Jacksonfill, LLC, and intends to vigorously defend the allegations. Other than as disclosed herein, there have been no material developments in this matter through August 12, 2023. Please see Note 11—Commitments and Contingencies to our financial statements included herein for additional information about this matter.
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In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing, the availability of insurance, and the severity of any potential loss. We reevaluate and update accruals as matters progress over time.
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However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. -7- Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny future determination to pay dividends on our common stock will be at the discretion of our Board of Directors (the “Board”) and will depend on our financial condition, results of operations, capital requirements, applicable restrictions in our Articles of Incorporation, applicable restrictions in our Bylaws, contractual limitations, and other factors that our Board deems relevant. -7- Table of Contents Recent Sales of Unregistered Securities On November 1, 2022, the Company issued to a former executive officer options to purchase 300,000 shares, of which 75,000 vested and the remaining were forfeited when the former executive officer resigned on April 21, 2023.
Biggest changeAny future determination to pay dividends on our common stock will be at the discretion of our Board and will depend on our financial condition, results of operations, capital requirements, applicable restrictions in our Articles of Incorporation, applicable restrictions in our Bylaws, contractual limitations, and other factors that our Board deems relevant.
Securities outstanding and holders of record On May 31, 2023, the total common shares issued and outstanding were 117,076,949 and we had 212 stockholders of record of our common stock. Dividend Policy We have never paid any cash dividends on our common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future.
Dividend Policy We have never paid any cash dividends on our common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future.
These options were issued pursuant to an exemption from the registration requirements of the Securities Act, as provided by Rule 701, Regulation D and/or Section 4(a)(2) of the Securities Act, as applicable. ITEM 6. [RESERVED]
The issuances of the securities described above were deemed to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act, including Regulation D and Rule 506 promulgated thereunder, as transactions by the Company not involving a public offering.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. As of May 31, 2023, the Company’s common stock was quoted on the OTCQB operated by OTC Markets Group, Inc. under the symbol “RVIV.” The trading volume for our common stock is relatively limited.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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An active trading market may not continue to provide adequate liquidity for our existing stockholders or for persons who may acquire our common stock in the future. No assurance can be given that an active trading market for the Company’s common stock will develop or be maintained.
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Our common stock commenced trading on the NYSE American on February 14, 2024, under the symbol “AXIL.” Prior to that date, our common stock was quoted on the OTCQB tier of the OTC Markets Group Inc. under the symbol “RVIV.” Securities outstanding and holders of record On August 6, 2024, the total common shares issued and outstanding were 6,393,939 and we had 225 stockholders of record of our common stock.
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The range of high and low closing bid quotations for the Company’s common stock during each quarter of the calendar years ended May 31, 2023, and 2022, is shown below, as quoted on the OTCQB . Prices are inter-dealer quotations, without retail mark-up, markdown or commissions and may not represent actual transactions.
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Recent Sales of Unregistered Securities Under the terms of the Company’s non-employee director compensation arrangements and pursuant to the 2022 Equity Incentive Plan (as amended, the “Plan”), on February 14, 2024, the Company granted each of its three non-employee Board members 5,000 shares of restricted stock for an aggregate of 15,000 shares of the Company’s common stock that will vest on the one-year anniversary of the grant, subject to the respective director’s continued service as a member of the Board.
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Stock Quotations Quarter Ended High Low August 31, 2021 0.5275 0.2001 November 30, 2021 0.325 0.1011 February 28, 2022 0.20 0.10 May 31, 2022 0.30 0.0551 August 31, 2022 0.30 0.20 November 30, 2022 0.30 0.20 February 28, 2023 0.450 0.271 May 31, 2023 0.60 0.285 The future sale of the Company’s presently outstanding “unregistered” and “restricted” common stock by present members of management and persons who own more than five percent of the Company’s outstanding voting securities may have an adverse effect on the trading price of the Company’s common stock.
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Effective May 28, 2024, a former officer entered into a Separation Agreement and Release (the “Release”), which includes a standard release of claims and confidentiality and non-disparagement provisions.
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As consideration for signing the Release, the Company entered into a Consulting Agreement, dated May 28, 2024, with the former officer (the “ Consulting Agreement”), pursuant to which the former officer agreed to provide transition services to the Company through October 31, 2024, unless the Consulting Agreement is terminated earlier.
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Pursuant to the Consulting Agreement, as compensation for services as a consultant, the former officer was granted 30,000 shares of restricted common stock, which vested upon grant. In addition, during the first quarter of fiscal year 2025, 10,000,000 shares of the Company’s Series A Preferred Stock were converted into 500,000 shares of common stock.
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Issuer Repurchases On March 5, 2024, the Company entered into repurchase agreements with certain stockholders of the Company to purchase in the aggregate 207,748,250 shares of Series A Preferred Stock of the Company (equivalent, in aggregate, to 10,387,413 shares of the Company’s common stock on an as converted basis) for aggregate cash consideration of $1,246,490.
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This repurchase was approved by the Board. The Company funded the repurchase through cash on hand.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIf we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws. -11- Table of Contents Off-Balance Sheet Arrangements As of May 31, 2023, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.
Biggest changeOff-Balance Sheet Arrangements As of May 31, 2024, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors. -12- Table of Contents Critical Accounting Policies Our discussion and analysis of our results of operations, liquidity and capital resources are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
On September 8, 2022, the Company and AXIL entered into an amendment to the Asset Purchase Agreement which eliminated the provision in the Asset Purchase Agreement requiring the Company to effectuate a reverse stock split of our Common Stock and preferred stock pursuant to the Asset Purchase Agreement within a certain period of time.
On September 8, 2022, the Company and A&A entered into an amendment to the Asset Purchase Agreement which eliminated the provision in the Asset Purchase Agreement requiring the Company to effectuate a reverse stock split of our common stock and preferred stock pursuant to the Asset Purchase Agreement within a certain period of time.
Future business demands, including those resulting from the purchase of AXIL ’s assets in June 2022, may lead to cash utilization at levels greater than recently experienced. The Company cannot provide any assurance that it will be able to raise additional capital or obtain necessary financing on acceptable terms, or at all.
Future business demands, including those resulting from the purchase of A&A ’s assets in June 2022, may lead to cash utilization at levels greater than recently experienced. The Company cannot provide any assurance that it will be able to raise additional capital or obtain necessary financing on acceptable terms, or at all.
As of May 31, 2023, we had the following secured loan outstanding, administered pursuant to the CARES Act: an Economic Injury Disaster Loan (“EIDL”) in the principal amount of $150,000. The Company continues to pay interest on the loan.
As of May 31, 2024, we had the following secured loan outstanding, administered pursuant to the CARES Act: an Economic Injury Disaster Loan (“EIDL”) in the principal amount of $150,000. The Company continues to pay interest on the loan.
On May 1, 2022, we entered into an Asset Purchase Agreement dated May 1, 2022 and amended on June 15, 2022 and September 8, 2022 with AXIL, a Delaware corporation, and a leader in hearing protection and enhancement products, for the acquisition of both the hearing protection business of AXIL consisting of ear plugs and ear muffs, and AXIL’s ear bud business.
On May 1, 2022, we entered into an Asset Purchase Agreement dated May 1, 2022 and amended on June 15, 2022 and September 8, 2022 with A&A, a Delaware corporation, and a leader in hearing protection and enhancement products, for the acquisition of both the hearing protection business of A&A consisting of ear plugs and ear muffs, and A&A’s ear bud business.
As a result of the acquisition of AXIL ’s assets, we have generated and expect we will continue to generate sufficient cash for our operational needs, including any required debt payments, for at least one year from the date of issuance of the accompanying consolidated financial statements.
As a result of the acquisition of A&A’s assets, we have generated and expect we will continue to generate sufficient cash for our operational needs, including any required debt payments, for at least one year from the date of issuance of the accompanying consolidated financial statements.
We believe the increase in awareness will allow the Company to increase distribution and gain customers through our distribution partners’ retail establishments, with the goal of helping us achieve growth in market share and diversify our sales channels. -8- Table of Contents Results of Operations For the fiscal years ended May 31, 2023 and 2022 Our results of operations are summarized below.
We believe the increase in awareness will allow the Company to increase distribution and gain customers through our distribution partners’ retail establishments, with the goal of helping us achieve growth in market share and diversify our sales channels. -9- Table of Contents Results of Operations For the fiscal years ended May 31, 2024 and 2023 Our results of operations are summarized below.
Financing Activities For the Fiscal Years ended May 31, 2023 and 2022 Net cash provided by financing activities for the fiscal year ended May 31, 2023 was $540,051 primarily attributable to the cash proceeds of $447,850 for the common stock issuance and $132,620 advances from related party, offset by repayments of equipment financing and repayment of note payable that totaled $40,419.
Net cash provided by financing activities for the fiscal year ended May 31, 2023 was $540,051 primarily attributable to the cash proceeds of $447,850 for the common stock issuance and $132,620 advances from a related party, partially offset by repayments of equipment financing and repayment of note payable that totaled $40,419.
Based on this information, the Company reserves a percentage of product sale revenue and accounts for the estimated impact as a reduction in the transaction price. Allocate the transaction price to the performance obligations in the contract .
Based on this information, the Company reserves a percentage of product sale revenue and accounts for the estimated impact as a reduction in the transaction price. -13- Table of Contents Allocate the transaction price to the performance obligations in the contract .
These businesses constituted substantially all of the business operations of AXIL. The acquisition was completed subsequently on June 16, 2022.
These businesses constituted substantially all of the business operations of A&A. The acquisition was completed subsequently on June 16, 2022.
The offset by non-cash items such as depreciation and amortization expense of $95,179 due to assets and intangibles acquired on acquisition, bad debts of $76,969 as related to the greater number of customers from the AXIL brand sales, inventory changes of $353,985 as higher levels from the new business line, stock-based compensation of $207,342, favorable changes in accounts payable, contract and current liabilities of $1,235,788 and increase in non-cash gain on debt settlement of $50,500.
This was augmented by non-cash items such as depreciation and amortization expense of $95,179 due to assets and intangibles acquired on acquisition, bad debts of $76,969 as related to the greater number of customers from the AXIL brand sales, inventory changes of $353,985 as higher levels from the new business line, stock-based compensation of $207,342, favorable changes in accounts payable, contract and current liabilities of $1,235,788.
Although we earned a net income in the fiscal year ended May 31, 2023, we have incurred operating losses in the past. We currently expect to earn net income during the current fiscal year ending May 31, 2024.
Although we earned net income in the fiscal years ended May 31, 2024 and 2023, we have incurred operating losses in the past. We currently expect to continue to earn net income during the current fiscal year ending May 31, 2025.
Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes the 30-days and 60-days right of return that applies to AXIL and Reviv3 products, respectively. To estimate product returns, the Company analyzes historical return levels, current economic trends, and changes in customer demand.
Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes the 30-days and 60-days right of return that applies to the hearing protection and enhancement segment and hair care and skin care segment products, respectively. To estimate product returns, the Company analyzes historical return levels, current economic trends, and changes in customer demand.
Investing Activities For the Fiscal Years ended May 31, 2023 and 2022 The Company invested $65,650 in the purchase of property and equipment and acquired $1,066,414 of cash as part of the AXIL asset acquisition during the fiscal year ended May 31, 2023.
The Company invested $65,650 in the purchase of property and equipment and acquired $1,066,414 of cash as part of the A&A asset acquisition during the fiscal year ended May 31, 2023.
During June 2022, we made an acquisition of a business, AXIL, a leader in hearing protection and enhancement products for the acquisition of both the hearing protection business of AXIL consisting of ear plugs and ear muffs, and AXIL’s ear bud business. We purchased the business pursuant to issuances of common stock and preferred stock.
During June 2022, we acquired assets of A&A, a leader in hearing protection and enhancement products, including the acquisition of both the hearing protection business of A&A, consisting of ear plugs and ear muffs, and A&A’s ear bud business. We purchased the business pursuant to issuances of common stock and preferred stock.
Operating expenses for the fiscal years ended May 31, 2023 and 2022 were $15,726,600 and $1,719,074, respectively. Operating expenses as a percentage of net revenues for the fiscal year ended May 31, 2023 were 66.9% as compared to 73.6% for the comparable period in 2022.
Operating expenses for the fiscal years ended May 31, 2024 and 2023 were $18,690,557 and $15,726,600, respectively. Operating expenses as a percentage of net revenues for the fiscal year ended May 31, 2024 were 68.0% as compared to 66.9% for the comparable period in 2023.
Cash Flows For the Fiscal Years ended May 31, 2023 and 202 2 The following table provides detailed information about our net cash flows: For the Fiscal Year Ended May 31, 2023 For the Fiscal Year Ended May 31, 2022 Cash Flows Net cash provided by (used in) operating activities $ 2,918,136 $ (126,055 ) Net cash provided by investing activities 1,000,764 — Net cash provided by financing activities 540,051 2,849 Net increase (decrease) $ 4,458,951 $ (123,206 ) -10- Table of Contents Operating Activities For the Fiscal Years ended May 31, 2023 and 2022 Net cash provided by operating activities for the fiscal year ended May 31, 2023 was $2,918,136, attributable to a net income of $1,824,575 which was primarily driven by the AXIL acquisition and increased product revenues.
Cash Flows For the Fiscal Years ended May 31, 2024 and 2023 The following table provides detailed information about our net cash flows: For the Fiscal Year Ended May 31, 2024 For the Fiscal Year Ended May 31, 2023 Cash Flows Net cash provided by operating activities $ 2,677 $ 2,918,136 Net cash provided by (used in) investing activities (160,525 ) 1,000,764 Net cash provided by (used in) financing activities (1,432,756 ) 540,051 Net increase (decrease) $ (1,590,604 ) $ 4,458,951 Operating Activities For the Fiscal Years ended May 31, 2024 and 2023 Net cash provided by operating activities for the fiscal year ended May 31, 2024 was $2,677, attributable to a net income of $2,003,134 which was primarily driven by product revenues.
The Company recognizes revenue for the agreed upon sales price when a purchase order is received from the customer and subsequently the product is shipped to the customer, which satisfies the performance obligation.
The Company recognizes revenue for the agreed upon sales price when a purchase order is received from the customer and subsequently the product is shipped to the customer, which satisfies the performance obligation. Consideration paid to the customer to promote and sell the Company’s products is typically recorded as a reduction in revenues.
By their nature, estimates are subject to an inherent degree of uncertainty. Actual results that differ from our estimates could have a significant adverse effect on our operating results and financial position. We believe that the following significant accounting policies and assumptions may involve a higher degree of judgment and complexity than others.
By their nature, estimates are subject to an inherent degree of uncertainty. Actual results that differ from our estimates could have a significant adverse effect on our operating results and financial position.
Cost of sales as a percentage of net revenues for the fiscal year ended May 31, 2023 was 24.7% as compared to 35.5% for the comparable period in 2022.
Cost of sales as a percentage of net revenues for the fiscal year ended May 31, 2024 was 26.6% as compared to 24.7% for the comparable period in 2023. Gross profit, as a percentage of sales, for the fiscal years ended May 31, 2024 and 2023 was 73.4% and 75.3%, respectively.
Accounts receivable and allowance for doubtful accounts The Company has a policy of providing an allowance for doubtful accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable.
We believe that the following significant accounting policies and assumptions may involve a higher degree of judgment and complexity than others: Accounts receivable and allowance for doubtful accounts The Company has a policy of providing an allowance for doubtful accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable.
Through our hair care and skin care segment, we manufacture, market, sell, and distribute professional quality hair and skin care products. The Company’s overall business strategy is to establish market awareness of our products through our direct-to-consumer campaigns.
The Company’s overall business strategy is to establish market awareness of our products through our direct-to-consumer campaigns.
Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans, and/or financial guarantees.
If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans, and/or financial guarantees.
If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations.
If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
As a result of the acquisition of AXIL ’s assets, the Company has two reportable segments: hair care and skin care, and hearing enhancement and protection. Through our hearing enhancement and protection segment, we design, innovate, engineer, manufacture, market and service specialized systems in hearing enhancement, hearing protection, wireless audio, and communication.
Through our hearing enhancement and protection segment, we design, innovate, engineer, manufacture, market and service specialized systems in hearing enhancement, hearing protection, wireless audio, and communication. Through our hair care and skin care segment, we manufacture, market, sell, and distribute professional quality hair and skin care products.
The increase in gross profit, as a percentage of sales, is primarily attributable to our continued increased focus on the direct sales to consumer channels, which have higher margins, which include the AXIL product sales contribution. Operating expenses are costs related to marketing and selling expenses, compensation and related taxes, professional and consulting fees, and general and administrative costs.
The decrease in gross profit, as a percentage of sales, was primarily attributable to costs associated with expansion into new retail and distribution channels. Operating expenses are costs related to marketing and selling expenses, compensation and related taxes, professional and consulting fees, and general and administrative costs.
The increase of $2,007,478 for the fiscal year ended May 31, 2023 was related to the AXIL product sales and revenue growth attributable to that business. Liquidity and Capital Resources We are currently engaged in our product sales and development.
The increase of $178,559 for the fiscal year ended May 31, 2024 was primarily related to the tax benefits recognized in relation to the utilization of accumulated tax losses. -10- Table of Contents Liquidity and Capital Resources We are currently engaged in our product sales and development.
Fiscal Year Ended May 31, 2023 Fiscal Year Ended May 31, 2022 Net sales $ 23,521,027 $ 2,336,257 Cost of sales $ 5,810,216 $ 828,586 Gross profit $ 17,710,811 $ 1,507,671 Total operating expenses $ 15,726,600 $ 1,719,074 Income (Loss) from operations $ 1,984,211 $ (211,403 ) Net income (loss) after tax $ 1,824,575 $ (182,903 ) Net sales increased by $21,184,770 or 907% for the fiscal year ended May 31, 2023, as compared to the fiscal year ended May 31, 2022, primarily due to the increase in sales of the new line of AXIL products post-acquisition.
Fiscal Year Ended May 31, 2024 Fiscal Year Ended May 31, 2023 Net sales $ 27,498,539 $ 23,521,027 Cost of sales $ 7,304,602 $ 5,810,216 Gross profit $ 20,193,937 $ 17,710,811 Total operating expenses $ 18,690,557 $ 15,726,600 Income from operations $ 1,503,380 $ 1,984,211 Net income after tax $ 2,003,134 $ 1,824,575 Net sales increased by $3,977,512 or 17% for the fiscal year ended May 31, 2024, as compared to the fiscal year ended May 31, 2023, primarily due to the increase in sales initiatives in our hearing protection and enhancement segment.
The net decrease in cash was increased by a net decrease in operating assets and liabilities of $825,203 primarily due to increase in prepaid expenses, accounts receivable and decrease in customer deposits.
The net cash provided by operating activities was offset by a decrease in operating assets and liabilities of $2,302,317 primarily due to an increase in inventory, prepaid expenses, and accounts receivable and decrease in contract liabilities and a non-cash gain on debt settlement of $79,182.
Revenue for services (extended warranty) is recognized over time on a ratable basis over the warranty period.
Revenue for services (extended warranty) is recognized over time on a ratable basis over the warranty period. As of May 31, 2024 and May 31, 2023, contract liabilities amounted to $1,385,841 and $1,433,048, respectively.
For the fiscal year ended May 31, 2023, the overall cost of sales increased by $4,981,630 or 601%, as compared to the comparable period in 2022 also due to the acquisition of the AXIL business and sales of those products.
Cost of sales includes primarily the cost of products and freight-in costs. For the fiscal year ended May 31, 2024, the overall cost of sales increased by $1,494,386 or 26%, as compared to the comparable period in 2023 due to increases in our branding and marketing initiatives which increased our sales, thereby leading to an increased cost of sales.
Consideration paid to the customer to promote and sell the Company’s products is typically recorded as a reduction in revenues. -12- Table of Contents The five steps for revenue recognition are as follows: Identify the contract with a customer.
The five steps for revenue recognition are as follows: Identify the contract with a customer .
The year over year increase in income from operations of $2,195,614 was primarily driven from the sales of the AXIL products introduced after acquisition. Net income after tax for the fiscal year ended May 31, 2023 was $1,824,575 and a loss of $182,903 for the fiscal year ended May 31, 2022.
The year over year increase in other income of $208,272 was primarily driven by an increase in interest income of $175,756 and an increase in gain on debt settlement of $28,682. Net income after tax for the fiscal years ended May 31, 2024 and 2023 was $2,003,134 and $1,824,575, respectively.
Operating expenses increased by $14,007,526 or 814.8% due to an increase in advertising and marketing expenses by $10,903,316 in the AXIL spend for displaying our products through various advertising platforms and the remaining $3,104,210 of other business operating expenses that are primarily attributed to the AXIL brand operations.
Operating expenses increased by $2,963,957 or 18.8% due to an increase in marketing and selling expenses of $1,773,848 as a result of costs for displaying our products through various advertising platforms.
Removed
The net sales increase was attributed to the AXIL segment of the business. Cost of sales includes primarily the cost of products and freight-in costs.
Added
As part of the Company’s ongoing rebranding efforts, the Company changed its name from Reviv3 Procare Company to AXIL Brands, Inc. effective February 14, 2024. In addition, on February 14, 2024, the Company successfully completed efforts to uplist from the over-the-counter, or OTC, markets to the NYSE American stock exchange.
Removed
The overall decrease in cost of sales, as a percentage of sales, is primarily attributable to the Company’s increased efficiencies in procurement and manufacturing systems, reduction in product cost, and the sales of higher margin AXIL products. -9- Table of Contents Gross profit, as a percentage of sales, for the fiscal years ended May 31, 2023 and 2022 was 75.3% and 64.5%, respectively.
Added
Effective as of January 16, 2024, the Company effected a reverse stock split of the Company’s issued shares of common stock at a ratio of 1-for-20.
Removed
Other than an increase in advertising costs, which were aimed at procuring more customers, and reduction in consulting costs, the other operating expenses also decreased for the Reviv3 products. Income from operations for the fiscal year ended May 31, 2023 was $1,984,211 and loss of $211,403 for the fiscal year ended May 31, 2022.
Added
The reverse stock split did not affect the total number of shares of common stock that the Company is authorized to issue, and any fractional shares remaining after the reverse stock split were rounded up to the nearest whole share.
Removed
Net cash used in operating activities for the fiscal year ended May 31, 2022 was $126,055, attributable to a net loss of $182,903 offset by non-cash items such as depreciation expense of $7,871, bad debts of $6,941, inventory write-off of $71,481, stock-based compensation of $21,967 and increase in non-cash gain on debt settlement of $35,000.
Added
The accompanying consolidated financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented, unless otherwise specified. As a result of the acquisition of A&A ’s assets, the Company has two reportable segments: hair care and skin care, and hearing enhancement and protection.
Removed
The net loss was increased by a net decrease in operating assets and liabilities of $16,411 primarily due to increase in accounts receivable and decrease in customer deposits offset by a decrease in inventory purchases.
Added
The remaining $1,190,109 increase was attributable to an increase in professional and consulting expenses of $1,168,506, including expenses related to our listing on NYSE American, partially offset by a decrease of $381,908 in compensation and general and administrative expenses. Income from operations for the fiscal years ended May 31, 2024 and 2023 was $1,503,380 and $1,984,211, respectively.
Removed
The Company did not make any material investments in the purchase of property and equipment during the fiscal year ended May 31, 2022.
Added
The year over year decrease in income from operations of $480,831 was primarily driven by increased operational expenses relating to the listing on NYSE American. Other income for the fiscal years ended May 31, 2024 and 2023 was $279,549 and $71,277, respectively.
Removed
Net cash provided by financing activities for the fiscal year ended May 31, 2022 was $2,849 primarily attributable to the cash proceeds of $35,000 of grants received from US Small Business Administration pursuant to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), offset by payments to a related party of $28,851 and repayment of equipment financing of $3,300.
Added
This was augmented by non-cash items such as depreciation and amortization expense of $130,610, bad debts of $25,471, inventory obsolescence of $46,895, stock-based compensation of $267,183, and favorable changes in accounts payable and other current liabilities of $142,470.
Removed
If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. In addition, pursuant to a voting agreement, effective June 16, 2022, with AXIL and Intrepid Global Advisors, we are subject to certain limitations on our ability to sell our capital stock until June 2024.
Added
Net cash provided by operating activities for the fiscal year ended May 31, 2023 was $2,918,136, attributable to a net income of $1,824,575 which was primarily driven by the A&A asset acquisition and increased product revenues.
Removed
Critical Accounting Policies Our discussion and analysis of our results of operations, liquidity and capital resources are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Added
The net cash provided by operating activities was offset by a net decrease in operating assets and liabilities of $825,203 primarily due to an increase in prepaid expenses and accounts receivable and decrease in customer deposits and a non-cash gain on debt settlement of $50,500. -11- Table of Contents Investing Activities For the Fiscal Years ended May 31, 2024 and 2023 The Company invested $138,445 in the purchase of property and equipment and $22,080 in the purchase of intangibles during the fiscal year ended May 31, 2024.
Added
Financing Activities For the Fiscal Years ended May 31, 2024 and 2023 Net cash used in financing activities for the fiscal year ended May 31, 2024 was $1,432,756 primarily attributable to the cash paid for the repurchase of preferred stock of $1,246,490 and repayment of the equipment loan, note payable and related party loan of $186,266.
Added
Contract liabilities associated with product invoiced but not received by customers at the balance sheet date was $0 and $0, respectively; contract liabilities associated with unfulfilled performance obligations for warranty services offered for a period of one to three years was $1,251,710 and $1,320,401, respectively, and contract liabilities associated with unfulfilled performance obligations for customers’ right of return was $130,201 and $112,647, respectively.
Added
Our contract liabilities amounts are expected to be recognized over a period of one year to three years. Approximately $771,180 is expected to be recognized in year 1, $420,630 is expected to be recognized in year 2, and $59,900 is expected to be recognized in year 3. Contract liabilities associated with gift cards purchased by customers amounted to $3,930.

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