AXIL

MKT CAP $38.9MP/E 17.3DIV YIELD —FCF YIELD -0.23%REV TTM $30.8M +17.5%NET INCOME $2.7M +215.7%NET CASH $4.3M52W 4.75 – 8.69SEC XBRL · TTM TO Invalid Date

How AXIL rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

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These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future.
If any of the following risks materialize, our business, financial condition, operating results, or prospects could be materially and adversely affected.
References to past events are provided by way of examples only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
You should carefully consider the risks described below, together with all of the other information contained in this Annual Report on Risks Related to Our Business and Operations Our future operations and growth depends on successful execution of our strategic initiatives and market acceptance of our products.
Our ability to grow depends on our ability to execute our growth strategy, which includes expanding into retail channels and international markets and expanding our sales team.
We generate a significant portion of our sales from a limited number of customers.
For our hearing enhancement and protection segment, one customer accounted for 23% of consolidated net revenues and 69% of segment accounts receivable for fiscal year 2026.
While we are working to grow our retail and wholesale channel, we expect that sales of our products to a limited number of customers will continue to account for a high percentage of our net revenues for the foreseeable future.
The concentration of our customer base increases risks related to the financial condition of our customers, and the deterioration in financial condition of a single customer or the failure of a single customer to perform their obligations could have a material adverse effect on our results of operations and cash position.
If any such customers change their business requirements or focus, vendor selection, or purchasing behavior, they may delay, suspend, reduce or cancel their purchases of our products or services and our business, financial condition, and results of operations may be adversely affected.
We are highly dependent on a small number of personnel.
As of May 31, 2026, we had thirteen full-time employees and two part-time employees.
We rely on a limited number of executive officers and key personnel, including Jeff Toghraie, our Chief Executive Officer and Chairman, and Jeff Brown, our Chief Financial Officer, Chief Operating Officer, and Director, to run our business.
The loss of services of either of these executives or other key personnel could materially impair our ability to meet reporting obligations, maintain effective internal controls, manage liquidity, or conduct operations.
Because of our limited personnel structure, the unexpected departure or unavailability of key personnel could have a disproportionately adverse impact on our financial condition and ability to continue operations. - 6 - Risks Related to Our Supply Chain and Cost Structure We are subject to inflationary pressures and supply chain risks.
Recalls or the voluntary removal of our products could result in lost sales, potential harm to our reputation, increased customer service costs, and legal expenses.
Non-compliance with any of these laws could result in fines, product recalls, or reputational damage, which could have a material adverse effect on our business, results of operations, and financial condition. - 7 - Changes in U.S. and international trade policies, including tariffs and import rules, could increase our costs and disrupt operations.
The current trade environment remains highly fluid and uncertain.
The U.S. government has imposed, modified, and in certain cases temporarily suspended significant tariffs on goods imported from China and other countries, and further changes to tariff policy may occur with limited notice.
Due to the uncertainty surrounding the ultimate scope and duration of applicable tariffs, during fiscal year 2026 the Company reversed charges only on those tariff costs for which it received refunds.
Subsequent to fiscal year end, the Company received approximately $910,000, the full amount of refunds of duties previously paid under the International Emergency Economic Powers Act (“IEEPA”), including interest.
Future tariff increases, the imposition of reciprocal tariffs or trade restrictions by other countries, the elimination of existing exemptions, or adverse changes to trade agreements could materially increase our landed costs, compress margins, and require us to raise prices or absorb additional expenses.
If we cannot secure funding on acceptable terms, or at all, we may be forced to delay growth or other strategic initiatives, which could have an adverse effect on our business, financial condition, and results of operations.
Conversions of these preferred shares into common stock, or the issuance of shares in connection with other convertible securities that we may issue in the future, could significantly dilute common stockholders and negatively affect the market price of our common stock.
Our stock price has been and may continue to be volatile due to a variety of factors, many of which are beyond our control, including, but not limited to, the following: · our actual or anticipated financial performance; · changes in the supply or demand of our products; · our ability to execute our growth strategy; - 8 - · speculation about our business in the press or investor community; · the degree of trading liquidity in our common stock, including our ability to remain listed on the NYSE American; · stock market price and volume fluctuations of other publicly traded companies, and in particular, companies that are in our industry; · investor perceptions of our industry or our prospects; · macroeconomic trends and conditions; · announcements by us or our competitors of new product offerings, significant acquisitions, or strategic partnerships; or · additions and departures of key personnel.
In addition, the stock market in general may experience significant price and volume fluctuations, which may be unrelated to the operating performance of particular companies but could cause declines in the market price of our common stock.
The price of our common stock could fluctuate based upon factors that have little or nothing to do with our Company or its performance.
Risks Related to Technology and Cybersecurity A failure of our IT systems or a cybersecurity breach could disrupt our business.
In addition, as artificial intelligence capabilities improve and are increasingly adopted, they may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks, and vulnerabilities may be introduced from the use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers.
While we have implemented various security measures, we cannot guarantee that such measures will be effective or sufficient to prevent a cyberattack, and future cyberattacks could still occur and could go undetected and persist for an extended period of time.
In addition, any such breach, or any material failure on our part to comply with applicable laws, could subject us to litigation, government investigation or enforcement actions or other regulatory sanctions, regulatory penalties or fines, or costly response measures. - 9 - Risks Related to Macroeconomic and External Conditions Economic downturns or shifts in consumer behavior may reduce consumer demand for our products.
These factors include, but are not limited to, economic uncertainty, including potential recession, inflation, , interest rate uncertainty, tariffs, supply chain and labor disruptions, unemployment rates, labor and materials shortages, banking instability, political and social unrest, geopolitical events and uncertainty, foreign currency exchange rate fluctuations, and changing tax rates and policies.

Gone since FY2025

If any of the following risks actually occur, our business, financial condition, operating results, or prospects could be materially and adversely affected.
You should carefully consider the risks described below, together with all of the other information contained in this Annual Report on Form 10-K and our other filings with the SEC, before making an investment decision.
Risks Related to Our Business and Operations Our future growth depends on successful execution of our strategic initiatives and market acceptance of our products.
Our ability to grow depends on our ability to execute our growth strategy, which includes expanding into retail channels and international markets.
Risks Related to Our Supply Chain and Cost Structure We are subject to inflationary pressures and supply chain risks.
Recalls or the voluntary removal of our products can result in lost sales, potential harm to our reputation, increased customer service costs, and legal expenses.
Non-compliance with any of these laws could result in fines, product recalls, or reputational damage, which could have a material adverse effect on our business, results of operations, and financial condition. - 5 - Changes in U.S. and international trade policies, including tariffs and import rules, could increase our costs and disrupt operations.
U.S. and international trade policy is subject to ongoing changes, including adjustments to tariff rates, enforcement practices, and import rules and regulations.
For example beginning August 29, 2025, all inbound shipments, regardless of value, may be subject to tariffs, duties, and customs processing fees.
These changes could result in higher landed costs for our products, increased administrative burden, and potential supply chain delays.
If we cannot secure funding on acceptable terms, or at all, we may be forced to delay growth initiatives, which could have an adverse effect on our business, financial condition, and results of operations.
Conversions of these preferred shares into common stock, or the issuance shares in connection with other convertible securities that we may issue in the future, could significantly dilute common stockholders and negatively affect the market price of our common stock.
Our stock price has been and may continue to be volatile due to a variety of factors, many of which are beyond our control, including, but not limited to, the following: · our actual or anticipated financial performance; · changes in the supply or demand of our products; · our ability to execute our growth strategy; · speculation about our business in the press or investor community; · the degree of trading liquidity in our common stock, including our ability to remain listed on the NYSE American; · stock market price and volume fluctuations of other publicly traded companies, and in particular, companies that are in our industry; · investor perceptions of our industry or our prospects; · macroeconomic trends and conditions; · announcements by us or our competitors of new product offerings, significant acquisitions, or strategic partnerships; or · additions and departures of key personnel.
In addition, the stock market may experience significant price and volume fluctuations, which may be unrelated to the operating performance of particular companies but could cause declines in the market price of our common stock.
The price of our common stock could fluctuate based upon factors that have little or nothing to do with our Company or its performance. - 6 - Risks Related to Technology and Cybersecurity A failure of our IT systems or a cybersecurity breach could disrupt our business.
In addition, any such breach, or any material failure on our part to comply with applicable laws, could subject us to litigation, government investigation or enforcement actions or other regulatory sanctions, regulatory penalties or fines, or costly response measures.
Risks Related to Macroeconomic and External Conditions Economic downturns or shifts in consumer behavior may reduce consumer demand for our products.
These factors include, but are not limited to, economic uncertainty, including potential recession, inflation, tariffs, supply chain disruptions, foreign currency exchange rate fluctuations, and changing tax rates and policies.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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