UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2026

☐

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-41958

AXIL Brands, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		47-4125218
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

9150 Wilshire Boulevard, Suite 245, Beverly Hills, California		90212
(Address of Principal Executive Offices)		(Zip Code)

(888) 638-8883

(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
Common Stock, $0.0001 par value per share		AXIL		The NYSE American LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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	☐
Non-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 ☐ No ☒

As of April 3, 2026, there were 6,817,717 shares of the registrant’s common stock, $0.0001 par value, outstanding.

AXIL BRANDS, INC. AND SUBSIDIARIES

INDEX

		Page
Cautionary Note Regarding Forward Looking Statements		ii

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8

Item 4.	Controls and Procedures	8

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	9

Item 1A.	Risk Factors	9

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9

Item 3.	Defaults Upon Senior Securities	9

Item 4.	Mine Safety Disclosures	9

Item 5.	Other Information	9

Item 6.	Exhibits	10

Signatures		11

-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; anticipated problems and our plans for future operations, including expected growth, the new marketing services business, and potential strategic alternatives for the hair and skin care business; and the economy in general or the future of the beauty and hair care industry and the hearing protection and ear bud business, all of which are subject to various risks and uncertainties.

There are a number of factors that could cause our actual results to differ from those indicated in the forward-looking statements, many of which are outside of our control. They include: the impact of unstable market and general economic conditions on our business, financial condition and stock price, including inflationary cost pressures, the impact of 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 results; continued uncertainty with respect to U.S. trade policies and tariffs and potential tariff refunds; 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; our review of strategic alternatives for the hair and skin care business and the timing of any action taken as a result of such review; 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; 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. In this Quarterly Report on Form 10-Q, AXIL Brands, Inc. (“AXIL Brands, Inc.,” “AXIL,” the “Company,” “we,” “us,” and “our”) has identified material factors that could cause actual results to differ from expected or historic results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete list of all potential risks or uncertainties.

-ii-

AXIL BRANDS, INC. AND SUBSIDIARIES

INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Financial Statements:

Consolidated Balance Sheets - As of February 28, 2026 (Unaudited) and May 31, 2025	F-1

Consolidated Statements of Operations - For the three and nine months ended February 28, 2026 and 2025 (Unaudited)	F-2

Consolidated Statements of Changes in Stockholders’ Equity - For the three months ended February 28, 2026 and 2025 (Unaudited)	F-3

Consolidated Statements of Changes in Stockholders’ Equity - For the nine months ended February 28, 2026 and 2025 (Unaudited)	F-4

Consolidated Statements of Cash Flows – For the nine months ended February 28, 2026 and 2025 (Unaudited)	F-5

Condensed Notes to Unaudited Consolidated Financial Statements	F-6

-1-

AXIL BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	February 28, 2026		May 31, 2025
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,518,989	$	4,769,854
Accounts receivable, net		1,348,467		1,003,945
Inventory, net		3,929,499		2,533,658
Due from related party		—		222
Prepaid expenses and other current assets		958,502		947,969

Total Current Assets		11,755,457		9,255,648

OTHER ASSETS:
Property and equipment, net		413,191		412,261
Intangible assets, net		427,540		403,591
Right of use asset		411,903		579,121
Deferred tax asset		—		46,239
Other assets		20,720		20,720
Goodwill		2,152,215		2,152,215

Total Other Assets		3,425,569		3,614,147

TOTAL ASSETS	$	15,181,026	$	12,869,795

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	1,231,200	$	866,573
Contract liabilities, current		527,458		707,207
Notes payable, current		4,405		3,574
Due to related party		169,203		—
Lease liabilities, current		208,673		212,543
Income tax liability		610,477		310,369
Other current liabilities		456,292		362,558

Total Current Liabilities		3,207,708		2,462,824

LONG TERM LIABILITIES:
Lease liabilities		249,897		404,669
Note payable		134,054		136,655
Contract liabilities		126,833		205,939

Total Long Term Liabilities		510,784		747,263

Total Liabilities		3,718,492		3,210,087

Commitments and contingencies (see Note 10)

STOCKHOLDERS' EQUITY:
Series A Preferred stock, $0.0001 par value; 28,000,000 shares authorized; 24,873,500 and 27,773,500 shares issued and outstanding as of February 28, 2026 and May 31, 2025, respectively		2,487		2,777
Common stock, $0.0001 par value: 15,000,000 shares authorized; 6,817,717 and 6,657,717 shares issued and outstanding as of February 28, 2026 and May 31, 2025, respectively		682		666
Additional paid-in capital		9,496,424		8,935,547
Retained Earnings		1,962,941		720,718

Total Stockholders' Equity		11,462,534		9,659,708

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	15,181,026	$	12,869,795

See accompanying condensed notes to these unaudited consolidated financial statements.

F-1

AXIL BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 28, 2026 AND 2025

(UNAUDITED)


	For the Three Months Ended						For the Nine Months Ended
	February 28,						February 28,
	2026			2025			2026			2025

Sales, net	$	7,294,030		$	6,922,367		$	22,285,107		$	20,506,213

Cost of sales		2,252,209			1,955,939			7,072,115			5,888,090

Gross profit		5,041,821			4,966,428			15,212,992			14,618,123

OPERATING EXPENSES:
Sales and marketing		3,371,228			2,994,052			9,282,367			9,041,283
Compensation and related taxes		421,766			200,156			963,284			667,478
Professional and consulting		601,583			796,689			2,077,827			2,480,707
General and administrative		433,005			392,422			1,360,466			1,313,377
Total Operating Expenses		4,827,582			4,383,319			13,683,944			13,502,845

INCOME FROM OPERATIONS		214,239			583,109			1,529,048			1,115,278

OTHER INCOME (EXPENSE):
Other income		21,816			3,718			26,880			8,025
Interest income		32,732			44,191			102,796			100,162
Interest expense and other finance charges		(1,435	)		(1,271	)		(4,022	)		(2,567	)

Other income, net		53,113			46,638			125,654			105,620

INCOME BEFORE PROVISION FOR INCOME TAXES		267,352			629,747			1,654,702			1,220,898

Provision for income taxes		64,306			53,085			412,479			120,335

NET INCOME	$	203,046		$	576,662		$	1,242,223		$	1,100,563

NET INCOME PER COMMON SHARE:
Basic	$	0.03		$	0.09		$	0.18		$	0.17
Diluted	$	0.02		$	0.07		$	0.15		$	0.13

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		6,795,384			6,516,852			6,725,631			6,373,502
Diluted		8,258,341			8,202,402			8,244,572			8,196,605

See accompanying condensed notes to these unaudited consolidated financial statements.

F-2

AXIL BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED FEBRUARY 28, 2026 AND 2025

(UNAUDITED)

For the three months ended February 28, 2026


									Additional				Total
	Preferred Stock				Common Stock				Paid-in		Retained		Stockholders'
	Shares		Amount		Shares		Amount		Capital		Earnings		Equity
Balance, November 30, 2025		24,873,500	$	2,487		6,802,717	$	681	$	9,316,056	$	1,759,895	$	11,079,119

Stock options expense		—		—		—		—		158,454		—		158,454

Stock-based compensation		—		—		15,000		1		21,914		—		21,915

Net income for the three months ended February 28, 2026		—		—		—		—		—		203,046		203,046

Balance, February 28, 2026		24,873,500	$	2,487		6,817,717	$	682	$	9,496,424	$	1,962,941	$	11,462,534

For the three months ended February 28, 2025

											Additional				Total
	Preferred Stock						Common Stock				Paid-in		Retained		Stockholders'
	Shares			Amount			Shares		Amount		Capital		Earnings		Equity
Balance, November 30, 2024		31,133,500		$	3,113			6,466,852	$	647	$	8,428,760	$	389,631	$	8,822,151

Stock options expense		—			—			—		—		205,880		—		205,880

Stock-based compensation		—			—			15,000		3		52,170		—		52,173

Preferred shares converted to common stock		(3,360,000	)		(336	)		168,000		16		320		—		—

Net income for the three months ended February 28, 2025		—			—			—		—		—		576,662		576,662

Balance, February 28, 2025		27,773,500		$	2,777			6,649,852	$	666	$	8,687,130	$	966,293	$	9,656,866

See accompanying condensed notes to these unaudited consolidated financial statements.

F-3

AXIL BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2026 AND 2025

(UNAUDITED)

For the nine months ended February 28, 2026

											Additional				Total
	Preferred Stock						Common Stock				Paid-in		Retained		Stockholders'
	Shares			Amount			Shares		Amount		Capital		Earnings		Equity
Balance, May 31, 2025		27,773,500		$	2,777			6,657,717	$	666	$	8,935,547	$	720,718	$	9,659,708

Stock options expense		—			—			—		—		493,485		—		493,485

Stock-based compensation		—			—			15,000		1		67,117		—		67,118

Preferred shares converted to common stock		(2,900,000	)		(290	)		145,000		15		275		—		—

Net income for the nine months ended February 28, 2026		—			—			—		—		—		1,242,223		1,242,223

Balance, February 28, 2026		24,873,500		$	2,487			6,817,717	$	682	$	9,496,424	$	1,962,941	$	11,462,534

For the nine months ended February 28, 2025

													Retained
							Common Stock				Additional		Earnings/			Total
	Preferred Stock						Issued/Issuable				Paid-in		(Accumulated			Stockholders'
	Shares			Amount			Shares		Amount		Capital		Deficit)			Equity
Balance, May 31, 2024		42,251,750		$	4,225			5,908,939	$	591	$	7,825,240	$	(134,270	)	$	7,695,786

Stock options expense		—			—			—		—		416,935		—			416,935

Stock-based compensation		—			—			17,000		3		443,579		—			443,582

Preferred shares converted to common stock		(14,478,250	)		(1,448	)		723,913		72		1,376		—			—

Net income for the nine months ended February 28, 2025		—			—			—		—		—		1,100,563			1,100,563

Balance, February 28, 2025		27,773,500		$	2,777			6,649,852	$	666	$	8,687,130	$	966,293		$	9,656,866

See accompanying condensed notes to these unaudited consolidated financial statements.

F-4

AXIL BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2026 AND 2025

(UNAUDITED)


	For the Nine Months Ended February 28,
	2026			2025

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,242,223		$	1,100,563
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		183,971			93,001
Provision for credit losses		47,958			31,834
Reversal of inventory obsolescence		—			(23,448	)
Stock-based compensation		560,603			860,517
Gain on forgiveness of account payable		—			(218,699	)
Deferred income taxes		46,239			109,796
Change in operating assets and liabilities:
Accounts receivable		(392,480	)		(323,389	)
Inventory		(1,395,841	)		673,034
Prepaid expenses and other current assets		(10,533	)		(156,574	)
Accounts payable		364,627			147,472
Other current liabilities		452,566			(322,358	)
Contract liabilities		(309,003	)		(237,519	)

NET CASH PROVIDED BY OPERATING ACTIVITIES		790,330			1,734,230

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangibles		(130,144	)		(101,690	)
Purchase of property and equipment		(78,706	)		(154,088	)

NET CASH USED IN INVESTING ACTIVITIES		(208,850	)		(255,778	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of note payable		(1,770	)		(5,636	)
Repayments to a related party		(4,549,984	)		(5,584,759	)
Advances from a related party		4,719,409			5,601,537

NET CASH PROVIDED BY FINANCING ACTIVITIES		167,655			11,142

NET INCREASE IN CASH AND CASH EQUIVALENTS		749,135			1,489,594

CASH AND CASH EQUIVALENTS - Beginning of period		4,769,854			3,253,876

CASH AND CASH EQUIVALENTS - End of period	$	5,518,989		$	4,743,470

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	3,757		$	2,567
Income taxes	$	70,862		$	132,500

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Initial recognition of right of use assets recognized as lease liability	$	-		$	767,269

See accompanying condensed notes to these unaudited consolidated financial statements.

F-5

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

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 wholly owned Delaware subsidiary, to support the potential separation and strategic development of its Reviv3 hair and skin care business. As of February 28, 2026 no assets or operations have been transferred to the subsidiary.

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 the management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of February 28, 2026 and February 28, 2025, and for the periods then ended, 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, 2025, filed on August 21, 2025. The results of operations for the three and nine months ended February 28, 2026, are not necessarily indicative of the results to be expected for the fiscal year ending May 31, 2026. The unaudited consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.

Use of estimates

The preparation of the unaudited consolidated financial statements in conformity with accounting principles generally accepted (“GAAP”) in the United States (“U.S.”) 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, 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 non-cash common stock issuances.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported consolidated assets, stockholder’s equity, net income or net cash flows.

The Company made the following reclassifications:

Certain amounts were reclassified from contract liabilities-current to other current liabilities to present refund obligations separately.

Certain amounts were reclassified from contract liabilities to other current liabilities to present refund obligations separately.

In the financing section of the accompanying consolidated statements of cash flows, advances from and repayments to related parties are presented on a gross basis to conform to current period presentation.

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 12 - Concentrations).

F-6

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Accounts receivable and allowance for credit losses

Accounts receivables 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 probable credit losses in its existing accounts receivable. 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 charged to provision for credit losses and included in 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 $539,797 and $643,131 as of February 28, 2026 and May 31, 2025, respectively.

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.

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 sales. Based on historical experience, warranty claims have not been material, and accordingly, no warranty liability has been recorded as of February 28, 2026 and May 31, 2025.

The Company also offers a two-year or three-year limited warranty on its hearing enhancement and hearing protection products, which are sold separately. 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 Accounting Standards Codification (“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.

F-7

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

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 a purchase order is received from the customer and subsequently the product is shipped to the customer, which satisfies the performance obligation. 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.

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.

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.

Contract liabilities represent payments received from customers prior to the Company satisfying the related performance obligations. These balances primarily relate to unredeemed gift cards, deferred warranty revenue associated with extended service warranties, and advance payments from customers.

F-8

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

The following table presents the activity in the Company’s contract liabilities for the nine months ended February 28, 2026. Revenue recognized during the period includes amounts that were included in the contract liability balance at the beginning of the period.

Schedule of contract liabilities
	Beginning Balance, May 31, 2025		Cash Received in Advance		Revenue Recognized			Ending Balance, February 28, 2026
Customer deposits	$	67,412	$	127,897	$	(67,412	)	$	127,897
Deferred warranty revenue		841,771		236,607		(558,797	)		519,581
Gift cards		3,963		3,725		(875	)		6,813
Total contract liabilities	$	913,146	$	368,229	$	(627,084	)	$	654,291

The following table summarizes the expected recognition of deferred warranty revenue as of February 28, 2026:

Schedule of deferred warranty revenue
	Amount
2026 (three months remaining)	$	140,435
2027		298,588
2028		73,917
2029		6,641
Total	$	519,581

Cost of Sales

The components of cost of sales include the cost of the product, 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 marketing and selling expenses as incurred. Shipping costs included in marketing and selling expense were $319,491 and $253,573 for the three months ended February 28, 2026 and February 28, 2025, respectively. Shipping costs included in marketing and selling expense were $724,872 and $768,625 for the nine months ended February 28, 2026 and February 28, 2025, respectively.

Marketing, selling and advertising

Sales, marketing and advertising costs are expensed as incurred.

F-9

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

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.

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.

F-10

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Income Taxes

The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for 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.

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 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.

We recorded an income tax expense of $64,306 for the three months ended February 28, 2026 and $53,085 income tax expense for the three months ended February 28, 2025. We recorded an income tax expense of $412,479 for the nine months ended February 28, 2026 and $120,335 income tax expense for the nine months ended February 28, 2025.

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.

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 and nine months ended February 28, 2026 and February 28, 2025.

Stock-based compensation

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 2018-7, which substantially aligns share-based compensation for employees and non-employees.

F-11

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Net income per share of common stock

Basic net income per share is computed by dividing the net income by the weighted average number of common shares 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.

The dilutive common stock equivalent shares consist of preferred stock, stock options, and restricted stock awards and were computed under the treasury stock method, using the average market price during the period.

The following table sets forth the computations of basic and diluted net income per common share:

Schedule of net loss per share
	For the Three Months Ended				For the Nine Months Ended
	February 28,		February 28,		February 28,		February 28,
	2026		2025		2026		2025

Net income	$	203,046	$	576,662	$	1,242,223	$	1,100,563

Weighted average basic shares		6,795,384		6,516,852		6,725,631		6,373,502
Dilutive securities:
Convertible preferred stock		1,243,675		1,494,008		1,305,122		1,633,277
Stock options		219,282		178,875		200,462		177,221
Unvested restricted stock awards		—		12,667		13,357		12,605
Weighted average dilutive shares		8,258,341		8,202,402		8,244,572		8,196,605

Earnings per share:
Basic	$	0.03	$	0.09	$	0.18	$	0.17
Diluted	$	0.02	$	0.07	$	0.15	$	0.13

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, including those previously classified as operating 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.

F-12

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

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.

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 13 – “Business Segment and Geographic Area Information” for additional information.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require enhanced annual income tax disclosures, including more detailed information about the effective tax rate reconciliation and disaggregation of income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and must be applied on a prospective basis with the option for retrospective application.

The Company adopted this standard effective June 1, 2025, the beginning of its fiscal year 2026. The adoption of ASU 2023-09 did not have a material impact on the Company’s consolidated financial statements but will result in expanded income tax disclosures in the Company’s annual financial statements for the fiscal year ending May 31, 2026.

In December 2025, the FASB issued ASU 2025-05, which simplifies the measurement of expected credit losses for current accounts receivable and contract assets under ASC 326 by permitting the use of historical experience and current conditions without requiring forecasts of future economic conditions.

The Company is currently evaluating the impact of this standard on its consolidated financial statements.

F-13

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 3 – Accounts Receivable, net

Accounts receivable, net consisted of the following:

Schedule of accounts receivable
	February 28, 2026			May 31, 2025
Customer receivables	$	1,341,697		$	922,616
Merchant processor receivable		143,521			185,719
Less: Allowance for credit losses		(136,751	)		(104,390	)
Total Accounts receivables, net	$	1,348,467		$	1,003,945

The following table presents the activity in the allowance for credit losses related to accounts receivable for the nine months ended February 28, 2026:

Schedule of allowance for credit losses
	Amount
Beginning balance as of May 31, 2025	$	104,390
Provision for credit losses		47,958
Other adjustments		(15,597	)
Ending balance as of February 28, 2026	$	136,751

During the three months ended February 28, 2026 and 2025, the Company recognized a provision for credit losses of $9,979 and $3,880, respectively. During the nine months ended February 28, 2026 and 2025, the Company recorded a provision for credit losses of $47,958 and $31,834, respectively.

Note 4 – Inventory, net

Inventory, net consisted of the following:

Schedule of inventory
	February 28, 2026		May 31, 2025
Finished Goods	$	3,846,636	$	2,509,840
Raw Materials		82,863		23,818
Total Inventory	$	3,929,499	$	2,533,658

As of February 28, 2026 and May 31, 2025, inventory held at third party locations amounted to $1,231,932 and $109,706, respectively. As of February 28, 2026 and May 31, 2025, inventory in-transit amounted to $256,817 and $174,564, respectively.

F-14

AXIL BRANDS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2026

(Unaudited)

Note 5 – Property and Equipment, net

Property and equipment, stated at cost, consisted of the following:

Schedule of property and equipment
	Estimated Life	February 28, 2026			May 31, 2025
Promotional display racks	2 years	$	62,944		$	62,944
Furniture and fixtures	5 years		88,373			57,137
Computer equipment	3 years		18,558			18,558
Plant equipment	5-10 years		437,499			390,028
Office equipment	5-10 years		8,838			8,838
Automobile	5 years		24,347			24,347
Less: Accumulated depreciation			(227,368	)		(149,591	)
Total Property and equipment, net		$	413,191		$	412,261

Depreciation expense amounted to $27,285 and $18,703 for the three months ended February 28, 2026 and February 28, 2025, respectively. Depreciation expense amounted to $77,776 and $40,001 for the nine months ended February 28, 2026 and February 28, 2025, respectively.

Note 6 – Intangible Assets, net

The intangible assets consisted of the following:

Schedule of intangible assets
	Estimated Life	February 28, 2026		May 31, 2025
Licensing rights	3 years	$	44,160	$	22,080
Customer relationships	3 years		70,000		70,000
Trade names	10 years		275,000		275,000
Website	5 years		100,000		100,000
Product certification testing	3 years

SEC Form 10-Q filed by AXIL Brands Inc.