Axil Brands, Inc. Segments Disclosure

Note 13 – Business Segment and Geographic Area Information

 

Business Segments

 

The Company operates in two reportable segments: Hearing Enhancement and Protection and Hair and Skin Care. The segments are determined based on the nature of the products sold and how the business is managed. On May 5, 2025, the Company incorporated a new wholly owned subsidiary, Sharper Vision Marketing Inc., which did not have any material activity for the year ended May 31, 2025.

 

The Chief Operating Decision Maker (“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.

 

The CODM reviews Segment non-cash operating income for each segment regularly to assess performance and to make decisions regarding the allocation of resources.

 

A reconciliation of Segment non-cash operating income to the most directly comparable measure under U.S. GAAP is Income from Operations and is included in the table below.

 

The Company’s segment information is as follows:

 

Schedule of segment information
		For the years ended,
		May 31, 2025												May 31, 2024
		Hearing enhancement and protection				Hair and skin care				Consolidated				Hearing enhancement and protection				Hair and skin care				Consolidated
Sales, net		$	24,735,101			$	1,522,421			$	26,257,522			$	26,115,662			$	1,382,877			$	27,498,539
Cost of sales			6,928,245				687,709				7,615,954				6,814,190				507,648				7,321,838
Gross profit		$	17,806,856			$	834,712			$	18,641,568			$	19,301,472			$	875,229			$	20,176,701
Operating expenses (Adjusted for non-cash items):
Sales and marketing		$	11,000,206			$	452,136			$	11,452,342			$	12,962,298			$	486,756			$	13,449,054
Compensation and related taxes			814,603				32,547				847,150				753,383				44,278				797,661
Professional and consulting			2,012,612				8,685				2,021,297				2,284,246				154,128				2,438,374
General and administrative			467,540				184,284				651,824				585,566				7,336				592,902
Total segment expenses adjusted for non-cash items		$	14,294,961			$	677,652			$	14,972,613			$	16,585,493			$	692,498			$	17,277,991
Segment non-cash operating income		$	3,511,895			$	157,060			$	3,668,955			$	2,715,979			$	182,731			$	2,898,710
Depreciation and amortization											148,498												130,610
Stock-based compensation											1,108,934												267,183
Corporate expenses (1)											1,250,158												997,537
Income from Operations										$	1,161,365											$	1,503,380
Total Assets (2)		$	8,109,272			$	4,760,523			$	12,869,795			$	7,802,282			$	3,172,079			$	10,974,361
Payments for property and equipment and intangible assets		$	392,428			$	1,870			$	394,298			$	160,525			$	—			$	160,525
Depreciation and amortization		$	144,955			$	3,543			$	148,498			$	125,057			$	5,553			$	130,610

  

(1)	For the year ended May 31, 2025, compensation paid to the CFO for operational responsibilities within the business is excluded from corporate expenses and include in the respective segment costs.

 

For the year ended May 31, 2024, the former CFO's compensation related solely to public company responsibilities and is therefore entirely included in corporate expenses.

 

(2)	As of May 31, 2025, Total Assets in the Company's Hearing enhancement and protection segment includes $10,000 related to cash held by the Company’s recently incorporated subsidiary.

 

Geographic Area Information

 

During the fiscal years ended May 31, 2025 and 2024, approximately 93% and 95%, respectively, of our consolidated net sales were to customers located in the U.S. (based on the customer’s shipping address). All Company assets are located in the U.S.