Luvu Brands (LUVU) presents a deeply negative liquidation recovery posture at December 31, 2025. MFFAIS-computed CLV of negative $7.4M and LLV of negative $5.9M are consistent with the balance sheet construct: total assets of $11.1M carry significant haircuts against liabilities held at face value of $9.6M, leaving book equity of only $1.5M before any liquidation adjustments. Applying standard liquidation haircuts to the disclosed asset base yields an estimated recovery pool materially below total liabilities. Cash of $1.1M recovers at par. AR net of $1.5M recovers at ~90-95% (~$1.4M). Inventory net of $3.4M (gross $3.6M, reserve $232K) recovers at ~60% (~$2.0M). PP&E net of $1.4M (gross $5.9M, accumulated depreciation $4.5M) recovers at 50-70% (~$700K-$1.0M). The ROU asset of $3.6M carries zero liquidation value. Against these haircut assets, the liability stack includes: current debt of $1.9M, current operating lease liability of $595K, current trade payables of $1.7M, other current accruals of $657K, long-term operating lease liability of $3.0M, deferred tax liability of $932K (arising from new lease recognition), long-term debt of $765K, and other non-current items. The operating lease obligation is the single most impactful liability change this period: a new facility lease commencing November 7, 2025 expiring June 30, 2030 added a ROU asset of $3.6M and total lease liability of $3.6M ($595K current, $3.0M non-current) with undiscounted future payments of $3.98M. The new lease also triggered recognition of a $813K deferred tax liability, driving the $897K GAAP net loss for the six-month period despite positive operating income of $168K. Secured notes payable increased to $481K (from $453K at June 30, 2025) following a new $250K secured note originated September 26, 2025 at 19.2% annualized rate; this partially offset paydown on the June 2025 $250K note. Unsecured notes at 13.5% totaling $400K were restructured: two notes previously current were extended to 2027 maturities and reclassified as long-term. The asset-based revolving line of credit drew to $1.24M (from $1.10M at June 30, 2025) against its $1.2M hard cap, indicating near-full utilization. The preferred stock carries an aggregate liquidation preference of $1.0M senior to common equity, further reducing common equity recovery. Filing does not separately XBRL-tag the deferred tax liability breakout attributable to the lease versus other components; the $932K DeferredTaxAndOtherLiabilitiesNoncurrent tag captures the aggregate. On a liquidation basis, equity recovery to common is negative by a substantial margin.
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