Axil Brands, Inc. Liquidation Value

Axil Brands, Inc. (AXIL) is a consumer products company operating in hearing enhancement/protection, hair and skin care, and a newly reportable marketing services segment. The liquidation analysis as of February 28, 2026 produces a modestly positive gross recovery to equity when book values are haircut under standard liquidation assumptions, but the margin is thin and narrows materially once intangibles and goodwill are zeroed.

Asset recovery estimate: Cash of $5.52M receives 100% recovery ($5.52M). Net accounts receivable of $1.35M (gross $1.48M, net of $137K allowance) at 90% yields approximately $1.21M. Inventory of $3.93M at 60% yields approximately $2.36M. PP&E net of $413K at 60% yields approximately $248K. Intangibles net of $428K and goodwill of $2.15M are assigned zero recovery. Operating lease ROU asset of $412K is excluded (offset by corresponding lease liability). Prepaid and other current assets of $979K receive a 50% haircut yielding approximately $490K. Total estimated asset recovery: approximately $9.83M.

Liability stack at face value: Total liabilities per the balance sheet are $3.72M, consisting of $3.21M current (accounts payable $1.23M, deferred revenue $527K current portion, operating lease current $209K, other current liabilities $456K including accrued sales tax $217K, EIDL current $4K) and $511K non-current (operating lease non-current $250K, EIDL non-current $134K, deferred revenue non-current $127K). In a wind-down, remaining lease payments through 2029 total $649K undiscounted; the full undiscounted commitment (not the ASC 842 present value) would be the face-value liability, adding approximately $190K above the recorded $459K PV. IEEPA duties embedded in inventory ($321K in inventory, balance expensed) are already absorbed; no incremental contingency is recorded, consistent with ASC 450 gain contingency treatment.

Estimated residual to equity: Approximately $9.83M recovered assets less approximately $3.91M adjusted liabilities (adding $190K undiscounted lease excess over PV) yields approximately $5.9M gross recovery. Stated book equity is $11.46M. The liquidation haircut reduces that by approximately $5.5M, confirming MFFAIS's operating liquidation value estimate of $5.85M is directionally consistent.

Key changes versus prior filing (Q2, November 30, 2025): Inventory increased materially (from approximately $2.53M to $3.93M) driven by a large retail channel purchase; this directly increases the haircut quantum. Cash increased from approximately $4.77M to $5.52M on modest operating cash flow. Deferred revenue declined (a liability reduction). The IEEPA tariff disclosure is new this period: approximately $900K paid since April 2025, with $321K still in inventory. No receivable recognized. The marketing services segment became separately reportable. A related-party (Intrepid) payable of $169K appeared where a $222 receivable existed at May 31, 2025 — a directional shift in the related-party balance worth noting for liquidity but immaterial at the recovery level. Goodwill is unchanged at $2.15M and continues to carry zero liquidation value.