AXIL 10-Q
Axil Brands, Inc. (AXIL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
For the quarterly period ended
OR
For the transition period from _____________ to _____________
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| (Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
| The |
Indicate by check mark whether the registrant: (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of October 2, 2026, there were shares of the registrant’s common stock, $0.0001 par value, outstanding.
AXIL BRANDS, INC. AND SUBSIDIARIES
INDEX
| -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 statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and 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 and future outlook; 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; our plans for future operations, including expected growth and expansion into new products, services and markets, including the marketing services business; and the economy in general or the future of the beauty and hair care industry, the hearing protection and ear bud business, and the marketing services 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, potentially materially, from those indicated in the forward-looking statements, many of which are difficult to predict and are outside of our control. They include, but are not limited to: the impact of unstable market and general economic conditions on our business, financial condition and stock price, including inflationary cost pressures, the impact of 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 Ukraine-Russia conflict and conflicts in the Middle East, and other downturns in the business cycle or the economy; our financial performance and liquidity, including our ability to successfully generate sufficient revenue to support our operations; guidance provided by management, which may differ from our actual operating and business results; continued uncertainty with respect to U.S. trade policies and tariffs; our expectations regarding our financing arrangements and our ability to obtain additional capital if and as needed, including potential difficulties of obtaining financing due to market conditions resulting from geopolitical conditions and other economic factors; risks related to our operations and international markets, such as fluctuations in currency exchange rates, different regulatory environments, trade barriers and sanctions, exchange controls, and social and political instability; changes in the regulatory environment in which we operate, including environmental, health and safety regulations, including those related to sustainability; our ability to protect and defend our intellectual property; continuity and security of information technology infrastructure and the potential impact of cybersecurity breaches or disruptions to our management information systems; widespread outages, interruptions or other failures of operational, communication, and other systems; competition; our ability to retain our management and employees and the potential impact of labor shortages; demands on management resources; availability and cost of the raw materials we use to manufacture our products, including the impacts of inflationary cost pressures, tariffs, and ongoing supply chain disruptions and constraints, which have been, and may continue to be, exacerbated by the Russia-Ukraine conflict, the conflicts in the Middle East and other geopolitical conflicts; additional tax expenses or exposures; product liability claims; the potential outcome of any legal or regulatory proceedings, including ongoing litigation, the disposition of which may have an adverse effect upon our business, financial condition, or results of operations; our ability to engage in acquisitions, investments, partnerships, strategic alliances or dispositions when desired; global or regional catastrophic events, including the effects of natural disasters, which may be worsened by the impact of climate change; effectiveness of our marketing strategy, demand for and market acceptance of our products, as well as our ability to successfully anticipate consumer trends and to realize anticipated benefits from our efforts to expand into new geographic markets and product lines and into offline sales, as well as our expansion into marketing services; the success of the XCOR II launch, including our ability to fulfill orders and the conversion of orders into net revenues, which may be affected by order cancellations and returns; the success of the planned relaunch of the Reviv3 brand; which we may be unable to complete in a timely manner, or at all, and, if complete, we may not realize the anticipated benefits of such relaunch; labor relations; the potential impact of sustainability matters; implementation of environmental remediation matters; our ability to maintain effective internal control over financial reporting; and risks related to our common stock, including our ability to maintain our stock exchange listing.
When used in this Quarterly Report on Form 10-Q and other reports, statements, and information we have filed with the Securities and Exchange Commission (the “SEC”), in our press releases, presentations to securities analysts or investors, or in oral statements made by or with the approval of an executive officer, the words or phrases “believes,” “can,” “may,” “will,” “expect,” “should,” “could,” “would,” “continue,” “anticipate,” “intend,” “likely,” “estimate,” “project,” “propose,” “plan,” “design,” “potential,” “focus” or similar expressions and variations thereof are intended to identify such forward-looking statements. However, any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We caution that these statements by their nature involve risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict.
We do not assume the obligation to update any forward-looking statement, except as required by applicable law. You should carefully evaluate such statements in light of factors described in this Quarterly Report on Form 10-Q. The terms “we,” “us,” “our,” “AXIL,” and “the Company” refer to AXIL Brands, Inc. and, where applicable, its consolidated subsidiaries.
| -ii- |
AXIL BRANDS, INC. AND SUBSIDIARIES
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| -1- |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| August 31, 2026 | May 31, 2026 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Due from related party | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| OTHER ASSETS: | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right of use assets | ||||||||
| Deferred tax asset | ||||||||
| Other assets | ||||||||
| Goodwill | ||||||||
| Total Other Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | $ | ||||||
| Contract liabilities, current | ||||||||
| Due to related party | ||||||||
| Lease liabilities, current | ||||||||
| Income tax liability | ||||||||
| Other current liabilities | ||||||||
| Total Current Liabilities | ||||||||
| LONG TERM LIABILITIES: | ||||||||
| Lease liabilities | ||||||||
| Contract liabilities | ||||||||
| Total Long Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (see Note 9) | ||||||||
| EQUITY: | ||||||||
| Series A Preferred Stock, $ par value; shares designated; and shares issued and outstanding as of August 31, 2026 and May 31, 2026, respectively | ||||||||
| Common stock, $ par value: shares authorized; and shares issued and outstanding as of August 31, 2026 and May 31, 2026, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained Earnings | ||||||||
| Total stockholders' equity attributable to AXIL Brands, Inc. | ||||||||
| Noncontrolling interests | ||||||||
| Total Equity | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
See accompanying condensed notes to these unaudited consolidated financial statements.
| F-1 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED AUGUST 31, 2026 AND 2025
(UNAUDITED)
| For the Three Months Ended August 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues, net | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| OPERATING EXPENSES: | ||||||||
| Sales and marketing | ||||||||
| Compensation and related taxes | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Total Operating Expenses | ||||||||
| INCOME FROM OPERATIONS | ||||||||
| OTHER INCOME (EXPENSE): | ||||||||
| Other income | ||||||||
| Interest income | ||||||||
| Interest expense and other finance charges | ( | ) | ||||||
| Other income, net | ||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | ||||||||
| Provision for income taxes | ||||||||
| NET INCOME | $ | $ | ||||||
| Less: Net loss of subsidiary attributable to noncontrolling interests | ( | ) | ||||||
| Net income attributable to the stockholders of the Company | $ | $ | ||||||
| NET INCOME PER COMMON SHARE: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
See accompanying condensed notes to these unaudited consolidated financial statements.
| F-2 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED AUGUST 31, 2026 AND 2025
(UNAUDITED)
For the three months ended August 31, 2026
| Series A
Preferred Stock | Common Stock Issued | Additional Paid-in | Retained | Noncontrolling | Total | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Interests | Equity | |||||||||||||||||||||||||
| Balance, May 31, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Stock option expense | — | — | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||
| Issuance of subsidiary common stock for services and initial recognition of noncontrolling interest | — | — | ( | ) | ||||||||||||||||||||||||||||
| Net income (loss) for the three months ended August 31, 2026 | — | — | ( | ) | ||||||||||||||||||||||||||||
| Balance, August 31, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
For the three months ended August 31, 2025
| Series A
Preferred Stock | Common Stock Issued | Additional Paid-in | Retained | Noncontrolling | Total | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Interests | Equity | |||||||||||||||||||||||||
| Balance, May 31, 2025 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Stock option expense | — | — | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||
| Net income for the three months ended August 31, 2025 | — | — | ||||||||||||||||||||||||||||||
| Balance, August 31, 2025 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
See accompanying condensed notes to these unaudited consolidated financial statements.
| F-3 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2026 AND 2025
(UNAUDITED)
| For the Three Months Ended | ||||||||
| August 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Provision (Recovery) for credit losses | ( | ) | ( | ) | ||||
| Stock-based compensation and stock option expense | ||||||||
| Deferred income taxes | ( | ) | ( | ) | ||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Other current liabilities | ( | ) | ||||||
| Contract liabilities | ( | ) | ( | ) | ||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of intangibles | ( | ) | ( | ) | ||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayment of note payable | ( | ) | ||||||
| Advances from a related party | ||||||||
| Repayments to a related party | ( | ) | ( | ) | ||||
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | ( | ) | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS - Beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS - End of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
See accompanying condensed notes to these unaudited consolidated financial statements.
| F-4 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 1 – Organization
AXIL Brands, Inc. (together with its subsidiaries, the “Company,” “we,” “us” or “our”) is a Delaware corporation headquartered at 9150 Wilshire Boulevard, Suite 245, Beverly Hills, California 90212. The Company is engaged in the manufacturing, marketing, sale, and distribution of high tech hearing and audio enhancement and protection products, professional quality hair and skin care products, and the delivery of marketing services. These offerings are sold or provided throughout the United States, Canada, Europe and Asia.
The Company changed its name from Reviv3 Procare Company to AXIL Brands, Inc. effective February 14, 2024 and concurrently uplisted to the NYSE American stock exchange. The Company operates through its subsidiaries, including AXIL Distribution Company (formerly Reviv3 Acquisition Corporation) and Sharper Vision Marketing Inc., which was incorporated on May 5, 2025.
In February 2026, the Company formed Reviv3 ProCare Company, a Delaware subsidiary that was wholly owned until August 25, 2026 and in which the Company held a 74.998% controlling interest thereafter (see Note 8 - Equity), to support the strategic development of its Reviv3 hair and skin care business.
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of August 31, 2026 and for the three months ended August 31, 2026 and 2025, have been made. Those adjustments consist of normal and recurring adjustments. Certain information and note disclosures normally included in our annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been omitted. The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended May 31, 2026 filed on August 18, 2026. The results of operations for the three months ended August 31, 2026, are not necessarily indicative of the results to be expected for the fiscal year ending May 31, 2027. The unaudited consolidated financial statements include the Company and its wholly owned and majority owned subsidiaries, including Reviv3 ProCare Company, in which the Company holds a controlling financial interest. All significant intercompany balances and transactions have been eliminated upon consolidation. The equity interest of outside shareholders in a majority-owned subsidiary is presented as “noncontrolling interests” in equity in the consolidated balance sheets, and the noncontrolling interests’ share of the subsidiary’s net income or loss is presented as “net loss of subsidiary attributable to noncontrolling interests” in the consolidated statements of operations. See Note 8 - Equity for additional information regarding the Company’s noncontrolling interest in Reviv3 ProCare Company.
Use of estimates
The preparation of the unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP” or “U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Estimates made by management include, but are not limited to, the allowance for credit losses, inventory valuations and classifications, the useful life of property and equipment, valuation of goodwill and intangible assets, the valuation of deferred tax assets, the value of stock based compensation, contract liability, allowance on sales returns, valuation of lease liabilities and related right of use assets, and the fair value of shares issued by a subsidiary for services.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported net income, equity or net cash flows. For the three months ended August 31, 2025, $ was reclassified from sales and marketing expenses to compensation and related taxes relating to stock-based compensation expense, $ was reclassified from professional and consulting expenses to compensation and related taxes relating to stock-based compensation expense, and $ was reclassified from professional and consulting expenses to general and administrative expenses relating to other professional and consulting expenses. As a result, professional and consulting expenses are no longer presented as a separate line item. These reclassifications had no impact on total operating expenses or income from operations for the three months ended August 31, 2025.
| F-5 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
Cash and cash equivalents
The Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents. The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. (See Note 11 - Concentrations).
Accounts receivable and allowance for credit losses
Accounts receivable are comprised of receivables from customers and receivables from merchant processors. The Company has a policy of providing an allowance for credit losses based on its best estimate of the amount of expected credit losses over the contractual life of its accounts receivable in accordance with Accounting Standards Codification (“ASC”) 326, considering historical loss experience, current conditions and, as permitted by Accounting Standards Update (“ASU”) 2025-05, the assumption that current conditions as of the balance sheet date remain unchanged over the remaining life of the receivables. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
Prepaid expenses and other current assets
Prepaid expenses and other current assets consist
primarily of cash prepayments to vendors for inventory, operational and corporate expenditure, and prepayments for trade shows and marketing
events which will be utilized within a year, and prepayments on credit cards and other current assets relating to the right to recover
assets (for the cost of goods sold) associated with the right of returns for products sold. Prepayments to vendors for inventory were
$
Inventory
The Company values inventory, consisting of finished goods and raw materials, at the lower of cost and net realizable value. Cost is determined using an average cost method. The Company reduces inventory for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its net realizable value. The Company evaluates its current level of inventory considering historical sales and other factors and, based on this evaluation, classifies inventory markdowns in the statement of operations as a component of cost of goods sold. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations. The Company continuously evaluates the levels of inventory held and any inventory held above the expected level of sales in the next twelve months, is classified as non-current inventory.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed, and any resulting gains or losses are included in the statement of operations.
| F-6 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
Product warranty
The Company provides a standard limited warranty,
on its hearing enhancement and hearing protection products. This warranty is considered an assurance-type warranty and is not accounted
for as a separate performance obligation. The Company records the costs of repairs and replacements related to these warranties as incurred
within cost of revenues. Based on historical experience, warranty claims have not been material, and accordingly,
The Company also sells separately priced two-year or three-year extended warranties on its hearing enhancement and hearing protection products. These extended warranties are considered distinct performance obligations, and the associated revenue is deferred and recognized on a straight-line basis over the warranty period.
Revenue recognition
The Company follows ASC 606, “Revenue from Contracts with Customers.” This revenue recognition standard has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied.
The Company generates revenue from the sale of electronic hearing and enhancement products, hair and skin care products, marketing services, and extended warranties. Revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring goods or services to customers. Product revenue is recognized at a point in time when control of the product transfers to the customer, which generally occurs upon shipment. Revenue from marketing services and extended warranties is recognized over time as the related services are performed. Consideration paid to customers to promote and sell the Company’s products is recorded as a reduction of revenue.
Revenue recognized over time, consisting of marketing
services and extended warranties, was $
The five steps for revenue recognition are as follows:
Identify the contract with a customer. The Company generally considers completion of a sales order (which requires customer acceptance of the Company’s click-through terms and conditions for website sales and authorization of payment through credit card or another form of payment for sales made over the phone) or purchase orders from non-consumer customers as a customer contract provided that collection is considered probable. For payments that are not made upfront by credit card, the Company assesses customer creditworthiness based on credit checks, payment history, and/or other circumstances. For payments involving third party financier payors, the Company validates customer eligibility and reimbursement amounts prior to shipping the product.
Identify the performance obligations in the contract. Performance obligations include the delivery of products, delivery of marketing services and, when purchased separately, extended warranty services. Marketing services represent distinct services that are satisfied over time. Extended warranties are distinct performance obligations. Standard product warranties are assurance-type warranties and are not separate performance obligations.
The Company does not assess promised goods or services as separate performance obligations if they are immaterial in the context of the contract.
| F-7 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
Determine the transaction price and allocation to performance obligations. The transaction price in the Company’s customer contracts consists of both fixed and variable consideration. Fixed consideration includes amounts contractually billed to customers. Variable consideration primarily relates to estimated product returns, as customers are generally provided with rights of return of up to 30 days for the hearing protection and enhancement segment and up to 60 days for the hair and skin care segment.
The Company estimates variable consideration using historical return rates, current economic trends, and changes in customer demand, and includes such amounts in the transaction price only to the extent that it is probable that a significant reversal of revenue will not occur. Estimated returns are recorded as a reduction to revenue, with a corresponding refund liability included in other current liabilities on the consolidated balance sheets.
For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation based on relative standalone selling prices.
Recognize revenue when or as the Company satisfies a performance obligation. Revenue for products is recognized at a point in time, which is generally upon shipment. Revenue from extended warranties is recognized on a straight-line basis over the warranty period. Revenue from marketing services is recognized over time as services are performed, consistent with the pattern of transfer of control.
The following table presents the activity in the Company’s contract liabilities for three months ended August 31, 2026. Revenue recognized during the period includes amounts that were included in the contract liability balance at the beginning of the period.
| Contract Liabilities | Beginning Balance, May 31, 2026 | Cash Received in Advance | Revenue Recognized | Ending Balance, August 31, 2026 | ||||||||||||
| Customer deposits | $ | $ | $ | ( | ) | $ | ||||||||||
| Deferred warranty revenue | ( | ) | ||||||||||||||
| Gift cards | ( | ) | ||||||||||||||
| Total contract liabilities | $ | $ | $ | ( | ) | $ | ||||||||||
The following table summarizes the expected recognition of contract liabilities as of August 31, 2026:
| Fiscal year ending May 31, | ||||
| 2027 (nine months remaining) | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total | $ | |||
| F-8 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
Cost of Revenues
The components of cost of revenues include the cost of the product and service fees, shipping fees, customs duties, and depreciation of equipment used to bring inventory to its saleable condition.
Shipping and Handling Costs
The Company accounts for shipping and handling fees
in accordance with ASC 606. While amounts charged to customers for shipping products are included in revenues, the related costs of shipping
products to customers are classified in sales and marketing as incurred. Shipping costs included in sales and marketing were $
Marketing, selling and advertising
Sales, marketing and advertising costs are expensed
as incurred. Advertising expense totaled $
Compensation and related taxes
Compensation and related taxes consist primarily of salaries, wages, bonuses, payroll taxes, stock-based compensation and other employee-related costs.
Research and development
Research and development costs consist primarily of payroll and related costs for employees and independent contractors engaged in the research and development of the Company’s products, and are expensed as incurred in accordance with ASC 730, "Research and Development."
General and administrative
General and administrative expenses consist primarily of public company related costs, professional fees, insurance, rent and other corporate overhead costs.
Fair value measurements and fair value of financial instruments
The Company accounts for assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
| Level 1: | Observable inputs such as quoted market prices in active markets for identical assets or liabilities. |
| Level 2: | Observable market-based inputs or unobservable inputs that are corroborated by market data. |
| Level 3: | Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. |
| F-9 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The estimated fair value of certain financial instruments, including prepaid expenses, deposits, accounts payable and accrued expenses are carried on a historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
Goodwill
Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. The Company tests goodwill for impairment for its reporting units on an annual basis, or when events occur, or circumstances indicate the fair value of a reporting unit is below its carrying value.
The Company performs its annual goodwill impairment assessment on May 31st of each year or as impairment indicators dictate.
When evaluating the potential impairment of goodwill, management first assesses a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the quantitative impairment testing methodology primarily using the income approach (discounted cash flow method).
Under the quantitative method we compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined by its estimated discounted cash flows. If the carrying value of a reporting unit exceeds its fair value, then the amount of impairment to be recognized is the amount by which the carrying amount exceeds the fair value.
When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results.
Income Taxes
The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Income Taxes” (“ASC 740-10”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.
The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.
| F-10 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying unaudited consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.
The Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed.
Impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment loss during the three months ended August 31, 2026 and 2025.
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718, “Compensation — Stock Compensation” (“ASC 718”), which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
For non-employee stock option based awards, the Company follows ASU 2018-07, which substantially aligns share-based compensation for employees and non-employees.
Noncontrolling interests
The Company follows ASC 810,
“Consolidation,” governing the accounting for and reporting of noncontrolling interests (sometimes referred to as
“NCI”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this
standard indicate, among other things, that NCI be treated as a separate component of equity, not as a liability, that increases and
decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than step
acquisitions or dilution gains or losses, and that losses of a partially-owned subsidiary be allocated to noncontrolling interests
even when such allocation might result in a deficit balance. The net loss of subsidiary attributed to NCI was separately designated
in the accompanying unaudited consolidated statements of operations. Losses attributable to NCI in a subsidiary may exceed
NCI’s interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. NCI shall
continue to be attributed their share of losses even if that attribution results in a deficit NCI balance. Net loss of subsidiary
attributable to NCI for the three months ended August 31, 2026 was $
Basic net income per share is computed by dividing net income attributable to the stockholders of the Company by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares and potentially dilutive securities outstanding during the period. Net income attributable to the stockholders of the Company excludes the portion of net income or loss for the period attributable to noncontrolling interests.
Dilutive common stock equivalent shares consist of stock options and restricted stock awards, which are computed under the treasury stock method using the average market price during the period, and Series A Convertible Preferred Stock, which is computed under the if-converted method as if converted at the beginning of the period. Unvested restricted stock awards are excluded from the weighted average number of common shares outstanding used in computing basic net income per share.
| F-11 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
The following table sets forth the computations of basic and diluted net income per common share:
| For the Three Months Ended | ||||||||
| August 31, | August 31, | |||||||
| 2026 | 2025 | |||||||
| Net income attributable to the stockholders of the Company | $ | $ | ||||||
| Weighted average basic shares | ||||||||
| Dilutive securities: | ||||||||
| Convertible preferred stock | ||||||||
| Stock options | ||||||||
| Restricted stock awards | ||||||||
| Weighted average dilutive shares | ||||||||
| Earnings per share: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
Lease Accounting
The Company accounts for leases in accordance with ASC 842, “Leases,” which requires recognition of right-of-use (“ROU”) assets and lease liabilities for substantially all leases.
The Company treats a contract as a lease when it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For all leases with terms greater than 12 months, the Company recognizes a ROU asset and a corresponding lease liability at the lease commencement date. The lease liability is measured at the present value of the lease payments not yet paid, discounted using the Company’s incremental borrowing rate. The ROU asset is measured as the lease liability adjusted for any initial direct costs, prepaid rent, or lease incentives.
The Company’s incremental borrowing rate reflects the rate of interest it would have to pay to borrow on a collateralized basis over a similar lease term and for an asset of similar value. The implicit rate in the lease is used when it is readily determinable.
ROU assets represent the Company’s right to use the leased asset over the lease term, while lease liabilities represent the obligation to make lease payments. Lease expense is recognized on a straight-line basis over the lease term. Variable lease payments, which depend on factors such as usage or future events, are expensed as incurred and do not result in remeasurement of the lease liability.
The Company reviews ROU assets for impairment consistent with the policy for long-lived assets. Recoverability is assessed whenever events or changes in circumstances indicate the carrying value of the asset may not be recoverable. The review is based on estimated future undiscounted cash flows expected from the use of the asset.
The Company’s lease agreements do not include residual value guarantees or restrictive covenants. The Company does not act as a lessor and does not have any finance leases at this time.
Segment Reporting
The Company follows the provisions of ASC Topic 280, “Segment Reporting.” Operating segments are defined as components of the business for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker (“CODM”) to assess performance and allocate resources. The Company’s Chief Executive Officer serves as the CODM.
| F-12 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
The Company has determined that it operates in three reportable segments: (i) the sale of hearing protection and hearing enhancement products, (ii) the sale of hair and skin care products, and (iii) marketing services.
During fiscal year 2025, the Company formed a new legal entity, Sharper Vision Marketing Inc., which provides marketing services. Beginning in the three months ended February 28, 2026, the Company determined that this business meets the criteria for separate disclosure as a reportable segment due to increased activity and the availability of discrete financial information reviewed by the CODM. Accordingly, the Company has presented this business as a separate reportable segment for the current period. Prior to this change, the results of this business were included within “All Other.”
The Company also provides disclosures of revenue, significant segment expense categories, and long-lived assets by geographic area, in accordance with ASC 280 and ASU 2023-07. See Note 12 – Business Segment and Geographic Area Information for additional information.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements.
In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer, which clarifies the accounting for share-based payment awards granted by an entity as consideration payable to its customer. The amendments revise the definition of a “performance condition” to include vesting conditions based on the volume, monetary amount, or timing of a customer’s purchases of goods or services from the grantor, as well as purchases made by parties that acquire the grantor’s goods or services from its customers. The amendments also clarify that such awards are measured in accordance with Topic 718 both before and after the grant date, that the guidance in Topic 606 on constraining estimates of variable consideration does not apply to share-based consideration payable to a customer, and that the policy election to account for forfeitures as they occur is not available for such awards. This pronouncement is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. Entities may adopt the amendments on either a modified retrospective or a fully retrospective basis. The Company does not currently have share-based consideration payable to customers and does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes references to software development project stages and requires capitalization to begin when management has authorized and committed to funding the project and it is probable that the project will be completed. The amendments are effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted. The Company is evaluating the effect of ASU 2025-06 on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the form and content of interim financial statements and notes and adds a principle requiring disclosure of events since the end of the last annual reporting period that have a material impact on the entity. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the effect of ASU 2025-11 on its interim disclosures.
Recently Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The practical expedient permits entities to assume that current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts used to estimate expected credit losses. The amendments also provide an accounting policy election, available to entities other than public business entities, to consider certain subsequent collection activity when estimating expected credit losses. The amendments are effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted, and are required to be applied prospectively. The Company adopted this standard effective June 1, 2026, the beginning of its fiscal year 2027. The adoption of ASU 2025-05 did not have a material impact on the Company’s unaudited consolidated interim financial statements.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
| F-13 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 3 – Accounts Receivable, net
Accounts receivable, net consisted of the following:
| August 31, 2026 | May 31, 2026 | |||||||
| Customer receivables | $ | $ | ||||||
| Merchant processor receivable | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
The following table presents the activity in the allowance for credit losses related to accounts receivable for the three months ended August 31, 2026:
| Amount | ||||
| Beginning balance as of May 31, 2026 | $ | |||
| Recovery of credit losses | ( | ) | ||
| Other adjustments | ( | ) | ||
| Ending balance as of August 31, 2026 | $ | |||
Note 4 – Inventory, net
Inventory, net consisted of the following:
| August 31, 2026 | May 31, 2026 | |||||||
| Finished Goods | $ | $ | ||||||
| Raw Materials | ||||||||
| Total Inventory | $ | $ | ||||||
At August 31, 2026 and May 31, 2026, inventory held
at third party locations amounted to $
Note 5 – Property and Equipment
Property and equipment, stated at cost, consisted of the following:
| Estimated Life | August 31, 2026 | May 31, 2026 | ||||||||
| Promotional display racks | $ | $ | ||||||||
| Furniture and fixtures | ||||||||||
| Computer equipment | ||||||||||
| Plant equipment | ||||||||||
| Office equipment | ||||||||||
| Automobile | ||||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||||
| Property and equipment, net | $ | $ | ||||||||
Depreciation expense totaled $
| F-14 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 6 – Intangible Assets
The intangible assets consisted of the following:
| Estimated Life | August 31, 2026 | May 31, 2026 | ||||||||
| Licensing rights | $ | $ | ||||||||
| Customer relationships | ||||||||||
| Trade names | ||||||||||
| Website | ||||||||||
| Internally developed software | ||||||||||
| Product certification testing | ||||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||||
| Total Intangible assets, net | $ | $ | ||||||||
Amortization expense amounted to $
As of August 31, 2026, estimated future amortization expense for intangible assets is as follows:
| Fiscal year ending May 31, | Amount | |||
| 2027 (nine months remaining) | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| Total | $ | |||
Goodwill was $
Intellectual Property
As of August 31, 2026, the Company held three active U.S. patents and one pending U.S. patent application relating to its core technologies. These patents expire at various times between 2035 and 2038. The Company also owns six federally registered trademarks in the United States and twelve trademarks pending, which it considers to be of material importance to its business. All registered trademarks are currently in good standing and are renewed as required.
The Company historically has not capitalized costs associated with internally developed patents or trademarks, as they did not meet the criteria for capitalization under U.S. GAAP. As such, no intangible assets related to intellectual property or trademarks have been recorded on the accompanying unaudited consolidated balance sheets.
| F-15 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 7 – Other Current Liabilities
Other current liabilities were comprised of the following:
| August 31, 2026 | May 31, 2026 | |||||||
| Pending refunds | $ | $ | ||||||
| Sales tax payable | ||||||||
| Accrued expenses | ||||||||
| Total other current liabilities | $ | $ | ||||||
Note 8 –Equity
Shares Authorized
As of August 31, 2026 and May 31, 2026, the authorized capital of the Company consisted of shares of common stock, par value $ per share and shares of preferred stock, par value $ per share.
On April 8, 2025, the Board of Directors approved,
and the holders of a majority of
Preferred Stock
The preferred stock may be issued from time to time in one or more series. The Board is expressly authorized to provide for the issuance of all or any of the shares of the preferred stock in one or more series, and to fix the number of shares and to determine or alter, for each such series, such voting powers, full or limited, or no voting powers and such designations, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution adopted by the Board providing the issuance of such shares. The Board is also expressly authorized to increase or decrease the number of shares of any series subsequent to the issue of shares of that series. In case the number of shares of any such series shall be so decreased, the decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.
During the fiscal year ended May 31, 2023, the Company
issued shares of non-voting Series A Preferred Stock, which, following the January 2024 reverse stock split of the
Company’s common stock, are convertible into shares of the Company’s common stock at a twenty-to-one ratio. These shares
of non-voting Series A Preferred Stock were valued at the fair market value of $
| F-16 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 8 – Equity (continued)
The holders of shares of Series A Preferred Stock have no rights to dividends with respect to such shares. No dividends or other distributions shall be declared or paid on the common stock unless and until dividends at the same rate shall have been paid or declared and set apart upon the Series A Preferred Stock, based upon the number of shares of common stock into which the Series A Preferred Stock may then be converted. Upon the dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, the holders of the Series A Preferred Stock are entitled to receive out of the assets of the Company the sum of $0.0001 per share before any payment or distribution shall be made on our shares of common stock. The Series A Preferred Stock shall not be subject to redemption at the option, election or request of the Company or any holder or holders of the Series A Preferred Stock. The shares of Series A Preferred Stock are convertible at the option of the holder thereof, into one fully paid and nonassessable share of common stock for each 20 shares of Series A Preferred Stock; provided, however, that the holder may not convert that number of shares of Series A Preferred Stock which would cause the holder to become the beneficial owner of more than 5% of the Company’s common stock as determined in accordance with Sections 13(d) and (g) of the Exchange Act and the applicable rules and regulations thereunder.
Effective March 24, 2025, the Company’s board of directors ratified certain past actions which provided that all shares of preferred stock that were repurchased by the Company along with those that were converted into shares of common stock would be considered retired. The Company retired Series A preferred shares that were previously repurchased by the Company or converted into shares of common stock prior to such date.
As of August 31, 2026 and May 31, 2026, shares of Series A Preferred Stock were issued and outstanding.
Common Stock
As of August 31, 2026 and May 31, 2026, shares of common stock were issued and outstanding.
Stock Options
Effective February 14, 2024, the Board amended the Company’s original 2022 Equity Incentive Plan (as amended, the “Plan”), which was originally approved on March 21, 2022. The effective date of the amended Plan was October 31, 2023. The amendment and restatement of the Plan became effective December 18, 2024, following shareholder approval.
Under the Plan, equity-based awards may be made to employees, officers, directors, non-employee directors and consultants of the Company and its Affiliates (as defined in the Plan) in the form of (i) Incentive Stock Options (to eligible employees only); (ii) Nonqualified Stock Options; (iii) Restricted Stock; (iv) Stock Awards; (v) Performance Shares; or (vi) any combination of the foregoing. The Plan will terminate upon the close of business on March 20, 2032, unless terminated earlier in accordance with the terms of the Plan. The Board serves as the Plan administrator and may amend or terminate the Plan without stockholder approval, subject to certain exceptions.
| F-17 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 8 –Equity (continued)
The total number of shares initially authorized for issuance under the Plan was shares. The Plan has since been amended to increase the number of shares authorized for issuance under the Plan to shares of common stock. The Plan provides for an annual increase on April 1 of each calendar year, beginning in 2022 and ending in 2031, subject to Board approval prior to such date. Such potential increase may be equal to the lesser of (i) 4% of the total number of shares of the Company’s common stock outstanding on May 31 of the immediately preceding fiscal year and (ii) such smaller number of shares as determined by the Board. The number of shares authorized for issuance under the Plan will not change unless the Board affirmatively approves an increase in the number of shares authorized for issuance prior to April 1 of the applicable year. Shares surrendered or withheld to pay the exercise price of a stock option or to satisfy tax withholding requirements will not be added back to the number of shares available under the Plan. To the extent that any shares of common stock awarded or subject to issuance or purchase pursuant to awards under the Plan are not delivered or purchased, or are reacquired by the Company, for any reason, including a forfeiture of restricted stock or failure to earn performance shares, or the termination, expiration or cancellation of a stock option, or any other termination of an award without payment being made in the form of shares of common stock will be added to the number of shares available for awards under the Plan. The number of shares available for issuance under the Plan will be adjusted for any increase or decrease in the number of outstanding shares of common stock resulting from payment of a stock dividend on common stock, a stock split or subdivision or combination of shares of common stock, or a reorganization or reclassification of common stock, or any other change in the structure of shares of common stock, as determined by the Board. Shares available for awards under the Plan will consist of authorized and unissued shares.
Two types of options may be granted under the Plan: (1) Incentive Stock Options, which may only be issued to eligible employees of the Company and are required to have exercise price of the option not less than the fair market value of the common stock on the grant date, or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110% of the fair market value of the common stock on the grant date; and (2) Non-qualified Stock Options, which may be issued to participants under the Plan and which may have an exercise price less than the fair market value of the common stock on the grant date, but not less than par value of the stock.
The Board may grant or sell restricted stock to participants (i.e., shares that are subject to restrictions or limitations as to the participant’s ability to sell, transfer, pledge or assign such shares) under the Plan. Except for these restrictions and any others imposed by the Board, upon the grant of restricted stock, the recipient generally will have rights of a stockholder with respect to the restricted stock. During the applicable restriction period, the recipient may not sell, exchange, transfer, pledge or otherwise dispose of the restricted stock. The Board may also grant awards of common stock to participants under the Plan, as well as awards of performance shares, which are awards for which the payout is subject to achievement of such performance objectives established by the Board. Performance shares may be settled in cash.
Each equity-based award granted under the Plan will be evidenced by an award agreement that specifies the terms of the award and such additional limitations, terms and conditions as the Board may determine, consistent with the provisions of the Plan.
Subject to the Plan’s terms, the Board has full power and authority to determine whether, to what extent and under what circumstances any outstanding award will be terminated, canceled, forfeited or suspended. Awards that are subject to any restriction or have not been earned or exercised in full by the recipient will be terminated and canceled if such recipient is terminated for cause, as determined by the Board in its sole discretion.
The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term and expected dividend yield rate over the expected option term. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award.
| F-18 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 8 –Equity (continued)
The Company utilizes the simplified method to estimate the expected term of stock options granted to employees, as permitted under SEC Staff Accounting Bulletin No. 107. Under this method, the expected term is calculated as the midpoint between the vesting date and the contractual term of the award. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on historical volatility. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.
During the three months ended August 31, 2026 and 2025, the Company did not issue stock options.
The following table summarizes the activities for the Company’s stock option activity for the three months ended August 31, 2026:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Term | Intrinsic Value (1) | |||||||||||||
| Outstanding as of May 31, 2026 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised/Forfeited | ||||||||||||||||
| Outstanding as of August 31, 2026 | ||||||||||||||||
| Outstanding and Exercisable at August 31, 2026 | $ | $ | ||||||||||||||
| (1) |
During the three months ended August 31, 2026, the Company expensed $ with respect to options, which was included in Compensation and related taxes in the accompanying unaudited consolidated statements of operations. During the three months ended August 31, 2025, the Company expensed $ with respect to options, which was included in Compensation and related taxes in the accompanying unaudited consolidated statements of operations.
Restricted Stock Awards
The Company’s non-employee directors participate
in the Company’s non-employee director compensation arrangements. Under the terms of those arrangements and pursuant to the Plan,
on January 15, 2026, the Company granted each of its three non-employee director Board members 5,000 restricted stock awards for an aggregate
of 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, with a total grant date fair value of $
The fair value of the stock grants is recorded over the term of service related to each grant. During the three months ended August 31, 2026, the Company expensed $ related to restricted stock awards of which $ was included in Compensation and related taxes in the accompanying unaudited consolidated statements of operations, and $ in General and administrative, in the accompanying unaudited consolidated statements of operations. During the three months ended August 31, 2025, the Company expensed $ related to restricted stock awards which was included in Compensation and related taxes in the accompanying unaudited consolidated statements of operations.
| F-19 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 8 –Equity (continued)
As of August 31, 2026, there were unvested restricted stock awards outstanding with a weighted-average grant-date fair value of $, all of which are expected to vest within one year. As of August 31, 2026, unrecognized share-based compensation cost related to unvested restricted stock awards totaled $, which is expected to be recognized over a weighted-average period of less than one year.
The following table summarizes the unvested restricted stock awards for the three months ended August 31, 2026:
| Number of Award Shares | Weighted-Average Grant Date Fair Value | |||||||
| Unvested at May 31, 2026 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Unvested at August 31, 2026 | $ | |||||||
Reviv3 ProCare Company – Issuance of Subsidiary Shares to Noncontrolling Interests
On August 25, 2026, Reviv3 ProCare Company ("Reviv3"), a subsidiary of the Company, entered into share agreements with three service providers whereby the service providers agreed to perform services and the Company agreed to issue an aggregate of shares of Reviv3’s common stock ($0.0001 par value per share) valued at $ per share, upon execution of the share agreements, as consideration for the services to be provided totaling $. As a result of the August 25, 2026 issuance, the Company’s effective ownership of Reviv3 was reduced to 74.998%, with the service providers holding a noncontrolling interest of in Reviv3 in the aggregate.
Because the Company retained control of Reviv3
following the issuance, the transaction was accounted for as an equity transaction in accordance with ASC 810-10-45-23,
"Consolidation." The initial carrying amount of the noncontrolling interest was $
The Reviv3 shares were issued in exchange for
services to be provided to Reviv3. Because the share agreements did not impose a substantive future service or vesting condition on
the recipients, the Company recognized the full grant-date fair value of $
Note 9 – Commitments and Contingencies
Leases
On October 12, 2024, the Company entered into a lease
in Beverly Hills, California for a term beginning November 1, 2024 and ending January 31, 2029. The base rent is $
On September 10, 2024, the Company entered into a sublease in American Fork, Utah for a three-year term beginning October 1, 2024 and continues through September 30, 2027. The base rent was $0 for the first three months and $7,684 per month for the next nine months. The rent shall increase for each twelve-month period, thereafter. An additional amount of $1,210 shall be due each month for additional overhead. The Company previously leased warehouse space in Utah under a month-to-month lease agreement.
The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. The Company’s lease agreements do not have an explicit renewal option, and the termination options are available in the event of material breaches. Both leases are classified as operating leases under ASC 842.
The Company computed an initial lease liability of
$
The weighted average remaining term and discount rate
for the Company’s operating leases as of August 31, 2026, was
| F-20 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 9 – Commitments and Contingencies (continued)
Supplemental balance sheet information related to leases was as follows:
| Assets | August 31, 2026 | May 31, 2026 | ||||||
| Right of use assets | $ | $ | ||||||
| Accumulated reduction | ( | ) | ( | ) | ||||
| Operating lease assets, net | $ | $ | ||||||
| Liabilities | ||||||||
| Lease liabilities | $ | $ | ||||||
| Accumulated reduction | ( | ) | ( | ) | ||||
| Total lease liabilities, net | ||||||||
| Current portion | ( | ) | ( | ) | ||||
| Non-current portion | $ | $ | ||||||
Maturities of operating lease liabilities were as follows as of August 31, 2026:
| Operating Lease (fiscal year-end) | ||||
| 2027 (nine months remaining) | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total | $ | |||
| Less: Imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
Tariff matters (IEEPA duties)
On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs, invalidating duties previously collected on imports subject to IEEPA-based tariff orders. Following that decision, the U.S. Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection (“CBP”) to implement a refund process for all affected importers. In response, CBP developed the Consolidated Administration and Processing of Entries (“CAPE”) system, a phased automated refund mechanism that became operational on April 20, 2026.
As of May 31, 2026, the refund process remained subject to significant legal and administrative uncertainty. The Company had applied a gain contingency model in accordance with ASC 450-30, “Gain Contingencies” to account for potential recoveries of previously paid IEEPA tariffs. Under this model, a gain contingency is not recognized in the financial statements until the gain is realized or realizable. Any refunds, when recognized, are reflected as a reduction of Inventories on the consolidated balance sheets to the extent the related goods remain on hand, or as a reduction of cost of goods sold in the consolidated statements of operations for amounts related to goods already sold.
During the three months ended August 31, 2026, the
| F-21 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 9 – Commitments and Contingencies (continued)
Contingencies
From time to time, we become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. 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. 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. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we do not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, our ultimate liability in connection with these matters is not expected to have a material adverse effect on our results of operations, financial position or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are 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. 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.
Note 10 – Related Party Transactions
The Company’s Chairman and Chief Executive Officer,
Jeff Toghraie, is the managing director of Intrepid Global Advisors (“Intrepid”). Intrepid has, from time to time, provided
advances to the Company for working capital purposes and has historically been paid consulting fees. The Company recorded and paid
Intrepid $
The Company’s Board Member, Chief Financial
Officer, and Chief Operating Officer is the co-owner, Chairman and Chief Financial Officer of, and has a controlling interest in BZ Capital
Strategies. The Company recorded and paid $
| F-22 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 11 – Concentrations
Concentration of Credit Risk
Financial instruments that potentially subject the
Company to concentration of credit risk consist primarily of trade accounts receivable and cash deposits, investments and cash equivalents
instruments. The Company maintains its cash in bank deposits accounts. The Company’s account at this institution is insured by the
Federal Deposit Insurance Corporation (“FDIC”) up to $
Concentration of Revenue, Accounts Receivable, Product Line, and Supplier
During the three months ended August 31, 2026, there
was no customer representing more than 10% of consolidated net sales. During the three months ended August 31, 2025, there was one customer
representing
During the three months ended August 31, 2026, approximately
As of August 31, 2026, no customer represented more
than 10% of gross accounts receivable. As of May 31, 2026, gross accounts receivable from customers that accounted for more than 10% of
consolidated gross accounts receivables were from two customers amounting to
Manufacturing is outsourced primarily overseas via
a number of third-party vendors. The largest vendor accounted for
Note 12 – Business Segment and Geographic Area Information
Business Segments
The Company operates in three reportable segments: Hearing Enhancement and Protection, Hair and Skin Care, and Marketing Services. The segments are determined based on the nature of the products and services provided and how the business is managed.
On May 5, 2025, the Company incorporated a new wholly owned subsidiary, Sharper Vision Marketing Inc., which provides marketing services. Beginning in the three months ended February 28, 2026, the Company determined that this business meets the criteria for separate disclosure as a reportable segment due to increased activity and the availability of discrete financial information reviewed by the Chief Operating Decision Maker (“CODM”).
The CODM is the Company’s Chief Executive Officer. The CODM evaluates segment performance and allocates resources based primarily on a segment profit measure referred to as Segment non-cash operating income, which the Company has concluded is the measure of segment profitability. This non-GAAP measure is defined as operating income from segment operations before depreciation and amortization, stock-based compensation expense, and corporate expenses. Corporate expenses primarily include insurance, expenses related to operating as a public company—including fees paid to related parties for executive management services—corporate office rent, and stock-based compensation for management.
| F-23 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 12 – Business Segment and Geographic Area Information (continued)
The CODM reviews Segment non-cash operating income for each segment regularly to assess performance and to make decisions regarding the allocation of resources. Segment cost of sales excludes depreciation of equipment used to bring inventory to its saleable condition; all depreciation and amortization is deducted in the reconciliation of Segment non-cash operating income to income from operations below.
A reconciliation of Segment non-cash operating income to the most directly comparable measure under U.S. GAAP, Income from Operations, is included in the table below.
| For the Three Months Ended, | ||||||||||||||||||||||||||||
| August 31, 2026 | August 31, 2025 | |||||||||||||||||||||||||||
| Hearing enhancement and protection | Hair and skin care | Marketing Services | Consolidated | Hearing enhancement and protection | Hair and skin care | Consolidated | ||||||||||||||||||||||
| Revenues, net | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Cost of revenues(1) | ||||||||||||||||||||||||||||
| Gross profit | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Operating expenses (Adjusted for non-cash items): | ||||||||||||||||||||||||||||
| Sales and marketing | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Compensation and related taxes | ||||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||||
| Total segment expenses adjusted for non-cash items | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Segment non-cash operating income (loss) | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock-based compensation | ( | ) | ( | ) | ||||||||||||||||||||||||
| Corporate expenses(2) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Income from operations | $ | $ | ||||||||||||||||||||||||||
| Payments for property and equipment and intangible assets | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| (1) | |
| (2) |
Geographic Area Information
During the three months ended August 31, 2026 and
2025, approximately
| F-24 |
AXIL BRANDS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
Note 12 – Business Segment and Geographic Area Information (continued)
Disaggregation of Revenue
The following table disaggregates revenue from contracts with customers by sales channel and by reportable segment, which the Company has determined depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Direct-to-consumer revenue comprises sales through the Company’s owned e-commerce sites and third-party online marketplaces. Retail and wholesale revenue comprises sales to national retail chains, specialty retailers, dealers, distributors and international distribution partners. Marketing services revenue comprises fee-based performance marketing services provided to third-party clients. The table below reconciles disaggregated revenue to the segment revenue presented above and to revenues, net in the consolidated statements of operations.
| Hearing enhancement and protection | Hair and skin care | Marketing services | Consolidated | |||||||||||||
| For the three months ended August 31, 2026 | ||||||||||||||||
| Direct-to-consumer | $ | $ | $ | $ | ||||||||||||
| Retail and wholesale | ||||||||||||||||
| Marketing services | ||||||||||||||||
| Total revenues, net | $ | $ | $ | $ | ||||||||||||
| For the three months ended August 31, 2025 | ||||||||||||||||
| Direct-to-consumer | $ | $ | $ | $ | ||||||||||||
| Retail and wholesale | ||||||||||||||||
| Total revenues, net | $ | $ | $ | $ | ||||||||||||
Note 13 – Income Taxes
We calculated our interim tax provision in accordance with ASC 270, “Interim Reporting,” and ASC 740, “Accounting for Income Taxes.” At the end of each interim quarterly period, we estimate our annual effective tax rate and apply that rate to our ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects of other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.
We recorded income tax expense of $
The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2022, 2023 and 2024 Corporate Income Tax Returns are subject to IRS examination.
| F-25 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with, and is qualified in its entirety by, the unaudited consolidated financial statements and related notes thereto included in Item 1 in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended May 31, 2026 filed with the SEC on August 18, 2026. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations contains not only statements that are historical facts, but also statements that are forward-looking.
Although the forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us herein and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects. Please see “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q for additional information.
Overview
The Company 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, professional quality hair and skin care products under various trademarks and brands, and the delivery of marketing services to support both its owned brands and third-party clients.
Since the three months ended February 28, 2026, we operate in three reportable segments: (i) hearing enhancement and protection, (ii) hair and skin care, and (iii) marketing services.
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 and skin care segment, we manufacture, market, sell, and distribute professional quality hair and skin care products. Our hair and skin care segment is operated through our majority-owned subsidiary, Reviv3 ProCare Company (“Reviv3”). Our marketing services segment is conducted through our wholly owned subsidiary, Sharper Vision Marketing Inc., which was formed to leverage our direct-to-consumer expertise in support of both our internal brands and third-party clients. This segment is focused on delivering performance-driven marketing solutions and represents an expansion of our capabilities to drive growth and enhance brand visibility.
Our overall business strategy centers on building strong market awareness of our products across multiple sales channels. We primarily drive revenue and brand recognition through targeted online marketing and advertising campaigns. This awareness is designed to create a multiplier effect. By expanding the number of points of sale both online and offline we aim to capture more sales and customers for every dollar spent on advertising. We aim to optimize customer acquisition by converting the market awareness generated through paid campaigns into purchases across a broader range of retail and distribution locations.
In addition to growing our overall distribution and retail footprint, the Company has reached a significant milestone in its wholesale channel strategy by securing several strategic supply agreements with big box retail chains. These agreements generated multiple purchase orders in fiscal 2026. While there can be no assurance that additional purchase orders will be received or regarding the timing or volume of fulfillment of any such orders, we expect this expanded national retail presence to drive meaningful revenue growth and significantly enhance brand visibility among a much wider customer base.
| -2- |
Business Update
On August 26, 2026, we announced the launch of the XCOR II, the next-generation successor to our flagship AXIL wireless earbud line, which became available on September 15, 2026. The XCOR II introduces several product enhancements over its predecessor, including advanced active noise reduction, an enhanced immersive soundstage, a redesigned lower-profile form factor, and a charging case supporting four full charges. As of the announcement date, August 26, 2026, we had secured initial orders exceeding $2.8 million from retail and distribution partners, and shipments commenced in September 2026. As of September 30, 2026, orders for the XCOR II exceeded $3.6 million, and we had fulfilled the majority of pre-orders and backlog. We expect the XCOR II launch to be a meaningful driver of net sales in future periods; however, there can be no assurance that initial order volume will translate into sustained demand, and actual results may be affected by risks related to our ability to fulfill orders, competitive dynamics, and broader market and economic conditions.
Reviv3 ProCare strategic partnership. On August 25, 2026, we entered into agreements to issue shares of Reviv3, the subsidiary through which we are driving the strategic development and planned relaunch of our Reviv3 hair and skin care business, to three strategic partners. Reviv3 issued an aggregate of 12,501 shares of its common stock to these partners in exchange for services provided to Reviv3. This brings experienced partners directly into the business at what we view as a pivotal moment, as we prepare for the rebranding and relaunch of the Reviv3 brand and the onboarding of additional distributors and retailers in selected domestic and international markets. Because our partners are compensated with an ownership stake, their success is tied directly to the success of the brand, aligning their incentives with the performance of the brand. The structure also allowed us to secure this expertise while preserving cash for growth investments, and AXIL retains a 74.998% controlling interest in Reviv3 and continues to consolidate its results. The noncontrolling holders hold a 25.002% equity interest in Reviv3 and will share in that percentage of Reviv3’s future results. Reviv3 does not currently intend to pay dividends, and any distributions to its stockholders are at the discretion of Reviv3’s board of directors, which the Company controls. As a result, we expect the noncontrolling holders to realize the value of their interest principally upon sale of Reviv3 or another liquidity event. We recorded a non-cash compensation charge of $137,511 in the quarter for the value of the shares issued, as discussed under “Results of Operations” below. In accordance with ASC 810-10-45-23, the carrying amount of the noncontrolling interest was also adjusted to reflect the Company’s new ownership percentage of Reviv3’s net assets, with the difference recognized as an increase to the Company’s additional paid-in capital; this equity adjustment did not affect net income. See Note 8 - Equity to the condensed consolidated financial statements. There can be no assurance that this partnership, or the rebranding efforts, will result in increased sales or profitability of Reviv3 or the Company.
Recovery of IEEPA tariff duties and ongoing tariffs. As previously disclosed in our Annual Report on Form 10-K, as of May 31, 2026 we had paid approximately $900,000 of duties under the International Emergency Economic Powers Act (“IEEPA”) on imported goods, and following the U.S. Supreme Court’s February 2026 decision that IEEPA does not authorize such tariffs, U.S. Customs and Border Protection (“CBP”) developed a refund process. During the three months ended August 31, 2026, we received aggregate refunds of $907,067 in cash from CBP, including interest. Of this amount, $550,929 related to customs duties previously charged to cost of revenues on goods sold as of the refund date and was recognized as a reduction of cost of revenues in the first quarter of fiscal 2027, $321,059 related to customs duties capitalized in inventory that remained on hand and was recorded as a reduction of Inventories, and $35,079 related to interest, which is included in other income, net. See Note 9 – Commitments and Contingencies to the condensed consolidated financial statements. No IEEPA refund claims remain outstanding. These refunds are non-recurring and are not indicative of our underlying operating performance.
Separately, following the U.S. Supreme Court’s February 2026 decision, a tariff surcharge of at least 10% on all imports, subject to certain exceptions, was imposed under Section 122 of the Trade Act of 1974, effective February 24, 2026. Effective upon the expiration of these tariffs in July 2026, new tariff rates generally ranging from 10% to 12.5% on most imports from certain countries, with higher rates on certain imports, were imposed pursuant to Section 301 of the Trade Act of 1974. The scope and duration of current and future tariff measures remain uncertain and could continue to impact the Company’s cost of goods and results of operations.
Retail distribution. Our relationships with big box retail chains and other retail partners continue to broaden, and we continue to receive purchase orders from these partners. Orders in this channel are placed on our customers' own timelines rather than a fixed calendar, so their size and timing can vary from quarter to quarter and results in any one period may not be indicative of future periods.
Fiscal 2027 outlook. We expect fiscal 2027 to reflect growth in both net revenues and net income compared to fiscal 2026, with the impact becoming more evident beginning in the second quarter of fiscal 2027. This expectation is based primarily on (i) the launch of the XCOR II, which became available on September 15, 2026; (ii) anticipated continued expansion of our retail and wholesale coverage, which we expect to reduce the effect that the timing of any single order has on our quarterly results; and (iii) the planned relaunch of the Reviv3 brand and onboarding of additional distributors and retailers in selected domestic and international markets. These expectations are forward-looking statements and are subject to risks and uncertainties, including demand for our products, the timing and size of retail orders, our ability to fulfill orders, tariffs and other macroeconomic conditions, our ability to successfully complete the relaunch of the Reviv3 brand and achieve the expected benefits, and the other factors described under "Cautionary Note Regarding Forward-Looking Statements." Actual results may differ materially.
Results of Operations
Our results of operations are summarized below.
| Three months ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Revenues, net | $ | 6,090,383 | $ | 6,856,218 | ||||
| Cost of revenues | 1,058,654 | 2,221,284 | ||||||
| Gross profit | 5,031,729 | 4,634,934 | ||||||
| Total operating expenses | 4,594,702 | 4,223,196 | ||||||
| Income from operations | 437,027 | 411,738 | ||||||
| Net income | $ | 420,571 | $ | 334,294 | ||||
We calculate 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. We calculate 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. We believe that these non-GAAP measures of financial results provide useful information regarding certain financial and business trends relating to our financial condition and results of operations, and management considers EBITDA and adjusted EBITDA important indicators in evaluating our 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 our 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 review the reconciliation of these non-GAAP financial measures to the comparable GAAP financial measure included below. Investors should not rely on any single financial measure to evaluate our business.
| -3- |
| For the Three Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Net income (GAAP) | $ | 420,571 | $ | 334,294 | ||||
| Provision for income taxes | 99,590 | 115,058 | ||||||
| Interest income, net | (81,251 | ) | (36,296 | ) | ||||
| Depreciation and amortization | 65,538 | 62,087 | ||||||
| Total EBITDA (Non-GAAP) | 504,448 | 475,143 | ||||||
| Adjustments: | ||||||||
| Stock-based compensation | 322,393 | 199,212 | ||||||
| Total adjusted EBITDA (Non-GAAP) | $ | 826,841 | $ | 674,355 | ||||
| Revenues, net (GAAP) | $ | 6,090,383 | $ | 6,856,218 | ||||
| Adjusted EBITDA as a percentage of Revenues, net (Non-GAAP) | 13.6 | % | 9.8 | % | ||||
For the three months ended August 31, 2026 compared to the three months ended August 31, 2025
Net revenues decreased by $765,835 or 11.2%, from $6,856,218 for the three months ended August 31, 2025 to $6,090,383 for the three months ended August 31, 2026. The decrease was primarily attributable to a material order from a big box retail chain in our hearing enhancement and protection segment that was fulfilled in the three months ended August 31, 2025 that did not recur during the three months ended August 31, 2026. In addition, orders for our first-generation XCOR product slowed during the quarter as customers prepared for the launch of the XCOR II. We believe our relationships with big box retail chains are well established and will continue to grow, supported by the strategic supply agreements we secured and the expanded retail placement we achieved during fiscal 2026. We expect revenues from big box retail chains to fluctuate from quarter to quarter, and we believe period-over-period comparisons in this channel are best viewed over a longer horizon than a single quarter.
We disaggregate net revenues into three sales channels, which correspond to the way management evaluates commercial performance and to the categories presented in Note 12 – Business Segment and Geographic Area Information to our consolidated financial statements: (i) Direct-to-consumer (“DTC”), comprising sales through our owned e-commerce sites and third-party online marketplaces; (ii) retail and wholesale, comprising sales to national retail chains, specialty retailers, dealers, distributors and international distribution partners; and (iii) marketing services, comprising fee-based performance marketing services provided to third-party clients through Sharper Vision Marketing Inc.
| Revenue Channel | For the three months ended August 31, 2026 | % of Segment | For the three months ended August 31, 2025 | % of Segment | ||||||||||||
| Hearing enhancement and protection | ||||||||||||||||
| Direct-to-consumer | $ | 3,848,288 | 66.8 | % | $ | 3,876,014 | 58.9 | % | ||||||||
| Retail and wholesale | 1,913,757 | 33.2 | % | 2,703,652 | 41.1 | % | ||||||||||
| Total segment revenues, net | 5,762,045 | 100.00 | % | 6,579,666 | 100.00 | % | ||||||||||
| Hair and skin care | ||||||||||||||||
| Direct-to-consumer | 60,500 | 19.6 | % | 65,037 | 23.5 | % | ||||||||||
| Retail and wholesale | 247,838 | 80.4 | % | 211,515 | 76.5 | % | ||||||||||
| Total segment revenues, net | 308,338 | 100.00 | % | 276,552 | 100.00 | % | ||||||||||
| Marketing services | ||||||||||||||||
| Marketing services | 20,000 | 100.00 | % | — | — | |||||||||||
| Consolidated | ||||||||||||||||
| Direct-to-consumer | 3,908,788 | 64.2 | % | 3,941,051 | 57.5 | % | ||||||||||
| Retail and wholesale | 2,161,595 | 35.5 | % | 2,915,167 | 42.5 | % | ||||||||||
| Marketing services | 20,000 | 0.3 | % | — | n/a | |||||||||||
| Total revenues, net | $ | 6,090,383 | 100.00 | % | $ | 6,856,218 | 100.00 | % | ||||||||
| -4- |
Cost of revenues primarily includes the cost of products, freight-in costs, customs duties, and depreciation related to fixed assets that are used in the production and distribution process to bring goods to their saleable condition and location. For the three months ended August 31, 2026, cost of revenues decreased by $1,162,630, or 52.3%, compared to the three months ended August 31, 2025. Cost of revenues as a percentage of net revenues for the three months ended August 31, 2026 was 17.4%, as compared to 32.4% for the three months ended August 31, 2025. The decrease was attributable in part to the $550,929 benefit recognized in the three months ended August 31, 2026 from the recovery of previously paid IEEPA customs duties, as discussed above and in Note 9 – Commitments and Contingencies to the condensed consolidated financial statements. Excluding this benefit, cost of revenues would have been $1,609,583, or 26.4% of net revenues. The remaining decrease reflects lower retail and wholesale volume and a higher mix of direct-to-consumer sales.
Gross profit increased by $396,795, or 8.6%, from $4,634,934 in the three months ended August 31, 2025 to $5,031,729 for the three months ended August 31, 2026. Gross profit as a percentage of sales for the three months ended August 31, 2026 was 82.6%, as compared to 67.6% for the three months ended August 31, 2025 primarily as a result of the recovery of previously paid IEEPA customs duties of $550,929. Excluding this benefit, gross profit as a percentage of net revenues was 73.6%.
Operating expenses increased by $371,506, or 8.8%, from $4,223,196 in the three months ended August 31, 2025 to $4,594,702 in the three months ended August 31, 2026. Operating expenses as a percentage of net revenues for the three months ended August 31, 2026 was 75.4%, compared to 61.6% for the three months ended August 31, 2025. Included in operating expenses were non-cash stock-based compensation and stock option expense of $322,393 and $199,212 in the three months ended August 31, 2026 and 2025, respectively. The amount for the three months ended August 31, 2026 includes a $137,511 non-cash charge related to the Reviv3 share issuance described above, which was included in general and administrative expenses. Employee-related compensation costs increased during the three months ended August 31, 2026, primarily due to our Chief Executive Officer beginning to receive a salary near the end of the three months ended August 31, 2025 and an increase in our Chief Financial Officer’s compensation, partially offset by a reduction in compensation costs attributable to employees whose work during the three months ended August 31, 2026 related to the research and development of our products and was classified accordingly. Costs for independent contractors decreased, as work performed by these contractors during the three months ended August 31, 2026 that related to the research and development of our products was likewise classified as research and development expense. As a result, we recognized $459,631 of research and development expenses in the three months ended August 31, 2026, for which there was no comparable expense in the prior-year period. The overall increase in operating expenses was primarily attributable to the increase in sales and marketing expenses related to the launch of XCOR II, the Reviv3 share issuance charge described above, and increases in compensation partially offset by decreases in other general and administrative costs.
Income from operations for the three months ended August 31, 2026 was $437,027, compared to $411,738 for the three months ended August 31, 2025. The increase in income from operations of $25,289, or 6.1%, was primarily related to customs refunds received, partially offset by lower revenues due to timing of orders by big box retail chains and higher operating expenses related to the increase in sales and marketing related to the launch of XCOR II, the Reviv3 share issuance charge described above, and increases in fees for management.
For the three months ended August 31, 2026, provision for income tax expense was $99,590, compared to $115,058 for the three months ended August 31, 2025, representing effective tax rates of 19.1% and 25.6%, respectively. The decrease in the effective tax rate was primarily due to increased tax exemptions related to research and development.
As a result of the above, we reported net income of $420,571 for the three months ended August 31, 2026, compared to net income of $334,294 for the three months ended August 31, 2025, an increase of $86,277, or 25.8%.
Of the $420,571 of net income for the three months ended August 31, 2026, a net loss of $1,021 was attributable to the noncontrolling interest in Reviv3 arising from the share issuance described above, resulting in net income attributable to the Company of $421,592, an increase of $87,298, or 26.1%, compared to net income attributable to the Company of $334,294 for the three months ended August 31, 2025, which reflected no noncontrolling interest.
Adjusted EBITDA increased by $152,486, or 22.6%, from $674,355 for the three months ended August 31, 2025 to $826,841 for the three months ended August 31, 2026. Adjusted EBITDA as a percentage of net revenues for the three months ended August 31, 2026 and 2025 was 14.1% and 9.8%, respectively. Adjusted EBITDA increased primarily due to the custom refunds received partially offset by lower revenues due to timing of orders from big box retail chains.
Basic and diluted earnings per share for the three months ended August 31, 2026 were $0.06 and $0.05, respectively, compared to basic and diluted earnings per share of $0.05 and $0.04, respectively, for the three months ended August 31, 2025.
Liquidity and Capital Resources
We are currently engaged in product sales and development and services. Although we earned net income in the fiscal years ended May 31, 2026 and 2025, we have experienced operating losses in prior periods. We expect to continue generating net income and to generate positive cash flow in the fiscal year ending May 31, 2027, although we cannot provide any assurance.
As of August 31, 2026, we had cash and cash equivalents of $7,928,587, working capital of $10,275,401 and no outstanding borrowings. We plan to manage expenses relative to expected revenue and may reinvest near-term cash to support revenue growth. In recent years, we have generated sufficient cash to support our operations, and we expect this to continue, although we cannot provide any assurance. Management remains focused on expanding product lines and our customer base to drive revenue. However, future cash demands may exceed historical levels. If needed, we may seek additional capital, although there is no assurance that financing will be available on acceptable terms or at all. Subject to these uncertainties, based on our current cash balances and anticipated operating cash flows, we believe we have sufficient capital and liquidity to fund operations and meet working capital needs for at least one year from the issuance date of the accompanying unaudited consolidated financial statements.
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Cash Flows for the three months ended August 31, 2026 and 2025
Operating Activities
Net cash provided by operating activities for the three months ended August 31, 2026, was $3,762,759 compared to net cash used in operating activities of $739,194 for the three months ended August 31, 2025. The increase was related to receivables from material orders from a big-box retail chain at the end fiscal 2026 which were subsequently paid in the first quarter of fiscal 2027.
Investing Activities
Net cash flows used in investing activities for the three months ended August 31, 2026 was $165,213 due to the purchase of intangibles and property and equipment for our business. For the three months ended August 31, 2025, net cash flows used in investing activities was $94,497, primarily attributable to the cash used in the purchase of intangibles relating to our expansion into new product lines.
Financing Activities
Net cash flows used in financing activities for the three months ended August 31, 2026 was $130,999 and related to net payments made to a related party. Net cash provided by financing activities for the three months ended August 31, 2025 was $150,461 primarily related to net advances from a related party of $151,491.
We are dependent on our product sales and services to fund our operations and may require additional capital in the future, such as pursuant to the sale of additional common stock, preferred stock, debt securities or entering into credit agreements or other borrowing arrangements with institutions or private individuals, to maintain operations, which may not be available on favorable terms, or at all, and could require us to sell certain assets or discontinue or curtail our operations. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, 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. We have no present plan or commitment to obtain additional financing, and we anticipate that our existing cash and cash equivalents and cash expected to be provided by operations will be sufficient to meet our working capital requirements for at least the next twelve months. However, if the need arises for additional cash, there can be no assurance that we will be able to raise the capital we need for our operations on favorable terms, or at all. We may not be able to obtain additional capital or generate sufficient revenues to fund our operations. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon our business plans.
Off-Balance Sheet Arrangements
As of August 31, 2026, we did 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 of operations, liquidity, capital expenditures or capital resources that is material to investors.
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Critical Accounting Policies and Estimates
Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates.
Accounts receivable and allowance for credit losses
The Company estimates an allowance for expected credit losses over the contractual life of its accounts receivable in accordance with ASC 326. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
Revenue recognition
We recognize revenue in accordance with ASC 606, “Revenue from Contracts with Customers.” Revenue is recognized when control of the product is transferred to the customer, typically upon shipment. In determining the transaction price, we consider discounts, promotional incentives, and expected returns. These estimates require judgment based on historical experience and current market conditions. Changes in customer behavior or promotional strategies could impact the timing and amount of revenue recognized.
Goodwill
Goodwill represents the excess of the consideration paid over the fair value of net assets acquired in a business combination. We evaluate goodwill for impairment at least annually during the fourth quarter, or more frequently if circumstances or events suggest potential impairment. Throughout the year, we monitor for indicators that might trigger an interim impairment review. Our testing may begin with a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If a quantitative test is performed, fair value is estimated based on the amount a market participant would pay in a hypothetical sale of the reporting unit. When the fair value exceeds the carrying value, goodwill is considered to be not impaired. If the carrying value exceeds fair value, an impairment charge is recorded for the amount of the excess, limited to the total carrying amount of goodwill.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide the information required by this Item 3.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”), who serves as our Principal Executive Officer, and Chief Financial Officer (“CFO”), who serves as our Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation, under the supervision and with the participation of our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of August 31, 2026. Based on this evaluation of disclosure controls and procedures as of August 31, 2026, our CEO and CFO concluded that our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Exchange Act that occurred during the fiscal quarter ended August 31, 2026 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.
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. 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. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we do not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, our ultimate liability in connection with these matters is not expected to have a material adverse effect on our results of operations, financial position or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are 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. 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 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended May 31, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There were no unregistered securities issued by the Company during the first quarter of fiscal year 2027.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended August 31, 2026, no director or officer of the
Company
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ITEM 6. EXHIBITS
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AXIL BRANDS, INC. | ||
| Date: October 6, 2026 | ||
| By: | /s/ Jeff Toghraie | |
| Jeff Toghraie | ||
| Chief Executive Officer and Chairman of the Board of Directors | ||
| (Principal Executive Officer) | ||
| By: | /s/ Jeff Brown | |
| Jeff Brown | ||
| Chief Financial Officer, Chief Operating Officer and Director | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
| -11- |
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeff Toghraie, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Axil Brands, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: October 6, 2026 | By: | /s/ Jeff Toghraie | ||||||||
|
Name: Title: |
Jeff Toghraie Chief Executive Officer (Principal Executive Officer) | |||||||||
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeff Brown, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Axil Brands, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: October 6, 2026 | By: | /s/ Jeff Brown | |||||||
|
Name: Title: |
Jeff Brown Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Axil Brands, Inc. (the “Company”) for the quarter ended August 31, 2026 (the “Report”), I, Jeff Toghraie, Chief Executive Officer, certify as follows:
| A) | the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and |
| B) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report. |
This statement is authorized to be attached as an exhibit to the Report so that this statement will accompany the Report at such time as the Report is filed with the Securities and Exchange Commission, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. Pursuant to Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any registration statement of the Company filed under Securities Act of 1933, as amended, except to the extent that the Company specifically incorporates it by reference. A signed original of this written statement by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: October 6, 2026 | By: | /s/ Jeff Toghraie | |||||||
|
Name: Title: |
Jeff Toghraie Chief Executive Officer (Principal Executive Officer) | ||||||||
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Axil Brands, Inc. (the “Company”) for the quarter ended August 31, 2026 (the “Report”), I, Jeff Brown, Chief Financial Officer, certify as follows:
| A) | the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and |
| B) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report. |
This statement is authorized to be attached as an exhibit to the Report so that this statement will accompany the Report at such time as the Report is filed with the Securities and Exchange Commission, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. Pursuant to Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any registration statement of the Company filed under Securities Act of 1933, as amended, except to the extent that the Company specifically incorporates it by reference. A signed original of this written statement by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: October 6, 2026 | By: | /s/ Jeff Brown | |||||||
|
Name: Title: |
Jeff Brown Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||||||||
Exhibit 99.1
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. THERE ARE FURTHER RESTRICTIONS ON THE TRANSFERABILITY OF THE SHARES DESCRIBED HEREIN.
THE ACQUISITION OF THE SHARES INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.
SHARE AGREEMENT
This SHARE AGREEMENT (this “Agreement”), dated as of August 25, 2026, is entered into by and among ____________ (“Service Provider”) and Reviv3 ProCare Company, a Delaware corporation (“Company”).
WHEREAS, the Board of Directors of the Company has authorized the issuance of _______ shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), to the Service Provider as compensation for consulting services to be provided to the Company by the Service Provider; and
WHEREAS, the Company and the Service Provider agree that the Shares shall be issued to the Service Provider on the terms and subject to the conditions set forth herein and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
NOW, THEREFORE, the parties hereby agree as follows:
1.
Issuance of Shares. Subject to the terms and conditions set forth in this Agreement, at the Closing (as defined below), the Company agrees to issue to the Service Provider, and the Service Provider agrees to accept, the Shares, in lieu of cash, as compensation for consulting services to be provided to the Company by the Service Provider, at a price per Share of $11.00, for an aggregate value of $_______. The Service Provider acknowledges that the Shares will be subject to restrictions on transfer as set forth in this Agreement.
2.
The Closing. The closing of the issuance of the Shares shall take place remotely via the exchange of documents and signatures (the “Closing”) on the date of this Agreement, or at such other time and place as the Company may designate by notice to the Service Provider.
3.
Payment for Shares. Payment for the Shares shall be in the form of consulting services to be provided by the Service Provider to the Company. The Company shall deliver certificates representing the Shares to the Service Provider at the Closing bearing an appropriate legend referring to the fact that the Shares were issued in reliance upon an exemption from registration under the Securities Act.
4.
Representations and Warranties of the Company. As of the Closing, the Company represents and warrants that:
(a)
The Company has been duly incorporated and is validly existing under the laws of Delaware, with full power and authority to conduct its business as it is currently being conducted and to own its assets.
(b)
The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Agreement, will be validly issued, fully paid and nonassessable.
5.
Representations and Warranties of the Service Provider. The Service Provider hereby represents and warrants to and covenants with the Company that:
(a)
General.
(i)
The Service Provider has all requisite authority (and in the case of an individual, the capacity) to accept and acquire the Shares, enter into this Agreement and to perform all the obligations required to be performed by the Service Provider hereunder, and such acceptance and acquisition will not contravene any law, rule, or regulation binding on the Service Provider or any investment guideline or restriction applicable to the Service Provider.
(ii)
The Service Provider is a resident of the state set forth on the signature page hereto and is not acquiring the Shares as a nominee or agent or otherwise for any other person.
(iii)
The Service Provider will comply with all applicable laws and regulations in effect in any jurisdiction in which the Service Provider purchases, or otherwise acquires, or sells, or otherwise disposes of, Shares and obtain any consent, approval or permission required for such acquisitions or dispositions under the laws and regulations of any jurisdiction to which the Service Provider is subject or in which the Service Provider makes such acquisitions or dispositions, and the Company shall have no responsibility therefor.
(b)
Information Concerning the Company.
(i)
The Service Provider understands and accepts that the acquisition of the Shares involves various risks. The Service Provider represents that it is able to bear any loss associated with an investment in the Shares.
(ii)
The Service Provider confirms that it is not relying on any communication (written or oral) of the Company or any of its affiliates, as investment or tax advice or as a recommendation to acquire the Shares. It is understood that information and explanations related to the terms and conditions of the Shares provided by the Company or any of its affiliates shall not be considered investment or tax advice or a recommendation to acquire the Shares, and that neither the Company nor any of its affiliates is acting or has acted as an advisor to the Service Provider in deciding to accept and acquire the Shares. The Service Provider acknowledges that neither the Company nor any of its affiliates has made any representation regarding the proper characterization of the Shares for purposes of determining the Service Provider’s authority to accept and acquire the Shares.
(iii)
The Service Provider is familiar with the business and financial condition and operations of the Company. The Service Provider has had access to such information concerning the Company and the Shares as the Service Provider deems necessary to enable the Service Provider to make an informed investment decision concerning the acceptance and acquisition of the Shares.
(iv)
The Service Provider understands that, unless the Service Provider notifies the Company in writing to the contrary at or before the Closing, each of the Service Provider’s representations and warranties contained in this Agreement will be deemed to have been reaffirmed and confirmed as of the Closing, taking into account all information received by the Service Provider.
(v)
The Service Provider understands that no federal or state agency has passed upon the merits or risks of an investment in the Shares or made any finding or determination concerning the fairness or advisability of this investment.
| 2 |
(c)
Non-Reliance.
(i)
The Service Provider represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company, as investment advice or as a recommendation to purchase or otherwise accept and acquire the Shares.
(ii)
The Service Provider confirms that the Company has not (A) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Shares or (B) made any representation to the Service Provider regarding the legality of an investment in the Shares under applicable legal investment or similar laws or regulations. In deciding to accept and acquire the Shares, the Service Provider is not relying on the advice or recommendations of the Company and the Service Provider has made its own independent decision that the investment in the Shares is suitable and appropriate for the Service Provider.
(d)
Status of Service Provider.
(i)
The Service Provider has such knowledge, skill and experience in business, financial and investment matters that the Service Provider is capable of evaluating the merits and risks of an investment in the Shares. With the assistance of the Service Provider’s own professional advisors, to the extent that the Service Provider has deemed appropriate, the Service Provider has made its own legal, tax, accounting, and financial evaluation of the merits and risks of an investment in the Shares and the consequences of this Agreement. The Service Provider has considered the suitability of the Shares as an investment in light of its own circumstances and financial condition and the Service Provider is able to bear the risks associated with an investment in the Shares, and it is authorized to invest in the Shares.
(ii)
The Service Provider is an “accredited investor” as defined in Rule 501(a) under the Securities Act. The Service Provider agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the issuance of the Shares. The Service Provider acknowledges that the Service Provider has completed the Investor Questionnaire contained in Appendix A and that the information contained therein is complete and accurate as of the date thereof and is hereby affirmed as of the date hereof. Any information that has been furnished or that will be furnished by the Service Provider to evidence its status as an accredited investor is accurate and complete, and does not contain any misrepresentation or material omission.
(e)
Restrictions on Transfer or Sale of Shares.
(i)
The Service Provider is acquiring the Shares solely for the Service Provider’s own beneficial account, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the Shares. The Service Provider understands that the Shares have not been registered under the Securities Act or any state securities laws by reason of specific exemptions under the provisions thereof which depend in part upon the investment intent of the Service Provider and of the other representations made by the Service Provider in this Agreement. The Service Provider understands that the Company is relying upon the representations and agreements contained in this Agreement (and any supplemental information) for the purpose of determining whether this transaction meets the requirements for such exemptions.
(ii)
The Service Provider understands that the Shares are “restricted securities” under applicable federal securities laws and that the Securities Act and the rules of the U.S. Securities and Exchange Commission (the “Commission”) provide in substance that the Service Provider may dispose of the Shares only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, and the Service Provider understands that the Company has no obligation or intention to register any of the Shares or the offering or sale thereof, or to take action so as to permit offers or sales pursuant to the Securities Act or an exemption from registration thereunder (including pursuant to Rule 144 thereunder). Accordingly, the Service Provider understands that under the Commission’s rules, the Service Provider may dispose of the Shares only in “private placements” which are exempt from registration under the Securities Act, in which event the transferee will acquire “restricted securities,” subject to the same limitations that apply to the Shares in the hands of the Service Provider. Consequently, the Service Provider understands that the Service Provider must bear the economic risks of the investment in the Shares for an indefinite period of time.
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(iii)
The Service Provider agrees: (A) that the Service Provider will not sell, assign, pledge, give, transfer, or otherwise dispose of the Shares or any interest therein, or make any offer or attempt to do any of the foregoing, unless the transaction is registered under the Securities Act and complies with the requirements of all applicable state securities laws, or the transaction is exempt from the registration provisions of the Securities Act and all applicable requirements of state securities laws; (B) that the certificate(s) representing the Shares will bear a legend making reference to the foregoing restrictions; and (C) that the Company and its affiliates shall not be required to give effect to any purported transfer of such Shares, except upon compliance with the foregoing restrictions.
(iv)
The Service Provider acknowledges that neither the Company nor any other person offered to sell or otherwise issue the Shares to it by means of any form of general solicitation or advertising, including but not limited to: (A) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or (B) any seminar or meeting whose attendees were invited by any general solicitation or general advertising.
6.
Conditions to Obligations of the Service Provider and the Company. The obligations of the Company to issue the Shares, and of the Service Provider to accept the Shares, are subject to the satisfaction at or prior to the Closing of the following conditions precedent: the representations and warranties of the Company contained in Section 4 hereof and of the Service Provider contained in Section 5 hereof shall be true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made on and as of the Closing.
7.
Obligations Irrevocable. The obligations of the Service Provider shall be irrevocable.
8.
Legend. The certificates representing the Shares sold pursuant to this Agreement will be imprinted with a legend in substantially the following form:
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR SUCH OTHER APPLICABLE LAWS.”
9.
Waiver, Amendment. Neither this Agreement nor any provisions hereof shall be modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.
10.
Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or the Service Provider without the prior written consent of the other party, and any attempted assignment without such prior written consent shall be void.
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11.
Waiver of Jury Trial. THE SERVICE PROVIDER IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
12.
Submission to Jurisdiction. With respect to any suit, action, or proceeding relating to any offers, purchases or other acquisitions, or sales of the Shares by the Service Provider (“Proceedings”), the Service Provider irrevocably submits to the jurisdiction of the federal and state courts located in the Borough of Manhattan in New York City, which submission shall be exclusive, unless none of such courts has lawful jurisdiction over such Proceedings.
13.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
14.
Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
15.
Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.
16.
Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and emailed, mailed or delivered to each party as follows:
(i) If to the Company:
Reviv3 ProCare Company
9150 Wilshire Boulevard, Unit 245
Beverly Hills, California 90212
Attention: Chief Executive Officer
Email: [***]
(ii) If to the Service Provider, such address set forth on the signature page hereto;
(iii) or such other address as may be designated in writing hereafter, in the same manner, by such person.
(iv) Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via email at the email address specified in this Section prior to 5:00 p.m. (New York time) on a business day, (b) the next business day after the date of transmission, if such notice or communication is delivered via email at the email address specified in this Section on a day that is not a business day or later than 5:00 p.m. (New York time) on any date and earlier than 11:59 p.m. (New York time) on such date, (c) the business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.
17.
Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors, and assigns.
18.
Notification of Changes. The Service Provider hereby covenants and agrees to notify the Company upon the occurrence of any event prior to Closing pursuant to this Agreement which would cause any representation, warranty, or covenant of the Service Provider contained in this Agreement to be false or incorrect.
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19. Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
SERVICE PROVIDER:
| By: | ||
| Name: | ||
| Title: | ||
| Address: | ||
COMPANY:
Reviv3 ProCare Company
| By: | ||
| Name: Jeff Toghraie | ||
| Title: Chief Executive Officer | ||
[Signature Page to Share Agreement]
APPENDIX A
REVIV3 PROCARE COMPANY
ACCREDITED INVESTOR QUESTIONNAIRE
This Questionnaire is for use by potential investors (each, “Investor”) in Reviv3 ProCare Company (the “Company”). The purpose of this Questionnaire is to assure the Company that each Investor will meet the standards imposed by the Securities Act of 1933, as amended (the “1933 Act”), and the appropriate exemptions of applicable securities laws. The Company will rely on the information contained in this Questionnaire for the purposes of such determination. The securities will not be registered under the 1933 Act in reliance upon the exemption from registration afforded by Section 4(a)(2) and/or Regulation D of the 1933 Act. This Questionnaire is not an offer of the securities or any other securities of the Company in any state other than those specifically authorized by the Company.
All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, each Investor agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the 1933 Act or applicable state securities law, of exemption from registration in connection with the sale of the Securities hereunder.
The Investor covenants, represents and warrants to the Company that it satisfies one or more of the categories of “Accredited Investors,” as defined by Rule 501 of Regulation D promulgated under the 1933 Act, as indicated below:
(Please initial in the space provided those categories, if any, of an “Accredited Investor” which the Investor satisfies.)
| _______ | Category 1 | An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust, partnership or limited liability company, not formed for the specific purpose of acquiring the securities, with total assets in excess of $5,000,000. |
| _______ | Category 2 | A natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, on the date of purchase exceeds $1,000,000 (excluding equity in a personal residence). |
| _______ | Category 3 | A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. |
| _______ | Category 4 | A “bank” as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an investment adviser registered pursuant to Section 203 of the Investment Advisers Act of 1940 (United States) or registered pursuant to the laws of a state; an investment adviser relying on the exemption from registering with the SEC under Section 203(l) or (m) of the Investment Advisers Act of 1940 (United States); an insurance company as defined in Section 2(a)(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a Rural Business Investment Company as defined in section 384A of the Consolidated Farm and Rural Development Act (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors. |
| _______ | Category 5 | A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States). |
| _______ | Category 6 | A director or executive officer of the Company. |
| _______ | Category 7 | A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act. |
| _______ | Category 8 | An entity in which all of the equity owners satisfy the requirements of one or more of the categories herein. |
| _______ | Category 9 | Any entity, of a type not listed in Categories 1, 4, 5, 7, or 8, not formed for the specific purpose of acquiring the securities offered, owning investments in excess of $5,000,000. For purposes of this category, “investments” means investments as defined in Rule 2a51-1(b) under the Investment Company Act of 1940 (United States). |
| _______ | Category 10 | A family office, as defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (United States), that (i) has assets under management in excess of $5,000,000; (ii) is not formed for the specific purpose of acquiring the securities; and (iii) has a person directing the prospective investment who has such knowledge and experience in financial and business matters so that the family office is capable of evaluating the merits and risks of the prospective investment. |
| _______ | Category 11 | A family client, as defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (United States), of a family office meeting the requirements of Category 10 above and whose prospective investment in the Company is directed by that family office pursuant to clause (iii) of Category 10 above. |
| _______ | Category 12 | I am a natural person who holds, in good standing, one of the following professional licenses: the General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82), or the Investment Adviser Representative license (Series 65). |
[SIGNATURE PAGE FOLLOWS]
Prospective Investors claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Company with a balance sheet, prior years’ federal income tax returns or other appropriate documentation to verify and substantiate the Investor’s status as an Accredited Investor.
The Investor hereby certifies that the information contained in this Questionnaire is complete and accurate and the Investor will notify the Company promptly of any change in any such information. If this Questionnaire is being completed on behalf of a corporation, partnership, trust or estate, the person executing on behalf of the Investor represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the _____ day of ________________ 20__.
| If a Corporation, Partnership or Other Entity: | If an Individual: | ||
| Print or Type Name of Entity | Signature | ||
| Signature of Authorized Signatory | Print or Type Name | ||
| Name and Title of Authorized Signatory | Tax I.D. No. | ||
| Type of Entity | Address | ||
| Tax I.D. No. | Email Address | ||
| Address | Telephone Number | ||
| Email Address | |||
| Telephone Number |