UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, ~~2023~~2024

☐	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: 000-53314

Luvu Brands, Inc.

(Exact name of registrant as specified in its charter)

Florida		59-3581576
(State or other jurisdiction of incorporationor organization)		(IRS Employer Identification No.)
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2745 Bankers Industrial Drive, Atlanta, Georgia		30360
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (770) 246-6400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

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 during the preceding twelve 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,"” “non-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 checkmark 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 has filed a report on or attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ ~~Yes~~ YES ☒ No NO

The aggregate market value of the voting and non-voting common equity held by non−affiliates computed by reference to the price at which the common equity was last sold, or the average of the bid and asked price of such common equity, on December 3029, ~~2022~~2023, the last trading day of the registrant’s most recently completed second fiscal quarter, was $76,~~916~~123,~~117~~814.

The number of shares of Common Stock, $0.01 par value, outstanding as of the close of business on ~~October~~September 1230, ~~2023~~2024 was 76,~~547~~642,~~672~~628.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None.

Luvu Brands, Inc.

Index to Annual Report on Form 10-K

PART I
ITEM 1.	Business.	~~Business.~~	1	5
ITEM 1A.	Risk Factors.	~~Risk Factors.~~	6	10
ITEM 1B.	Unresolved Staff Comments.	~~Unresolved Staff Comments.~~	7	11
ITEM 2.		Properties.		12
ITEM 1C.	Cybersecurity		7
ITEM 3.		Legal Proceedings.		12
ITEM 2.	Properties.		7
ITEM 4.		Mine Safety Disclosures.		12
ITEM 3.	Legal Proceedings.		7
PART II
ITEM 4.	Mine Safety Disclosures.		7
ITEM 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.		13
PART II
ITEM 6.		[Reserved].		13
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.		8
ITEM 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.		13
ITEM 6.	[Reserved].		9
ITEM 7A.		Quantitative and Qualitative Disclosures about Market Risk.		19
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		9
ITEM 8.		Financial Statements and Supplementary Data.		F-1
ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk.		14
ITEM 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.		20
ITEM 8.	Financial Statements and Supplementary Data.		15
ITEM 9A.		Controls and Procedures.		20
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.		16
ITEM 9B.		Other Information.		20
ITEM 9A.	Controls and Procedures.		16
PART III
ITEM 9B.	Other Information.		17
ITEM 10.		Directors, Executive Officers and Corporate Governance.		21
ITEM 9C.	Disclosure Regarding Foreign Jurisdiction that Prevent Inspection		17
ITEM 11.		Executive Compensation.		23
PART III
ITEM 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.		24
ITEM 10.	Directors, Executive Officers and Corporate Governance.		18
ITEM 13.		Certain Relationships and Related Transactions, and Director Independence.		25
ITEM 11.	Executive Compensation.		20
ITEM 14.		Principal Accounting Fees and Services.		26
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.		21
PART IV
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence.		23
ITEM 15.		Exhibits, Financial Statement Schedules.		27
ITEM 14.	Principal Accounting Fees and Services.		23
ITEM 16.		Form 10-K Summary.		27
PART IV
ITEM 15.	Exhibits, Financial Statement Schedules.		24
ITEM 16.	Form 10-K Summary.		24

~~2 Table of Contents~~i

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“Annual Report”) for Luvu Brands, Inc. (“Luvu Brands” the “Company” “we” “our” or “us”) may contain forward-looking statements, which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “expects,” “anticipates,” “intends,” “plan,” “believes,” “predicts”, “estimates” or similar expressions. In addition, any statement concerning future financial performance, ongoing business strategies or prospects and possible future actions are also forward-looking statements. Forward-looking statements are based upon current expectations and projections about future events and are subject to risks, uncertainties, and the accuracy of assumptions concerning the Company, the performance of the industry in which they do business, and economic and market factors, among other things. These forward-looking statements are not guarantees of future performance. You should not place undue reliance on forward-looking statements.

Forward-looking statements speak only as of the date of this report, presentation or filing in which they are made. Except to the extent required by federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our forward-looking statements in this report include, but are not limited to:

	·	Statements relating to our business strategy;
	·	Statements relating to our business objectives; and
	·	Expectations concerning future operations, profitability, liquidity and financial resources.

These forward-looking statements are subject to risks, uncertainties, and assumptions about us and our operations, ~~that~~which are subject to change based on various important factors, some of which are beyond our control. The following factors, among others, could cause our financial performance to differ significantly from the goals, plans, objectives, intentions and expectations expressed in our forward-looking statements:

· anAn anticipated worsening US deficit and a possible further rise in inflation in coming years ~~that~~ would put additional stress on consumer spending;

· competition from other websites, including Amazon, mass market and specialty e-tailers, and ~~from~~ sexual wellness retailers and adult-oriented websites;

· our ability to satisfy, extend, renew, or refinance our existing debt;

the loss of one or more significant customers;

· our ability to generate significant sales revenue from internet, print, and radio advertising;

our plan to make continued investments in advertising and marketing;

our ability to protect our trademarks, brand image, or other intellectual property rights;

· any decline in consumer spending, including due to negative impact from economic conditions;

our ability to successfully adapt to consumer shopping preferences;

· systems interruptions that impair customer access to our sites or other performance failures in our technology infrastructure, including significant disruptions of or breach in security of information technology systems and violation of data privacy laws;ii

Systems interruptions that impair customer access to our sites or other performance failures in our technology infrastructure, including significant disruptions of or breach in security of information technology systems and violation of data privacy laws;

our ability to attract, develop, motivate and maintain well-qualified associates;

our history of operating losses and the risk of incurring additional losses in the future;

3 Table of Contents

our ability to maintain our brand image, engage new and existing customers and gain market share;

changes in U.S. trade policies could significantly increase the costs of certain raw materials, parts or components used in our products and our sales;

· ~~our~~Our ability to ~~improve~~renew ~~manufacturing~~our ~~efficiency~~current atoperating lease for our ~~production~~manufacturing facility at a reasonable rate;

unfavorable changes to government regulation of the Internet and ecommerce;

the impact of increases in demand for, or the price of, raw materials used to manufacture our products, and any disruption in the supply of those raw materials;

changes in government laws affecting our business;

our dependence on the experience and competence of our executive officers and other key employees;

risks associated with currency fluctuations; and

other risks or uncertainties described elsewhere in this report and in other periodic reports previously and subsequently filed by the Company with the Securities and Exchange Commission.

~~4 Table of Contents~~iii

PART I.

ITEM 1. Business.

General

Luvu Brands, Inc. designs, manufactures and markets a portfolio of consumer lifestyle brands through the Company’s websites, online mass merchants, and specialty retail stores worldwide. Brands include: Liberator®, a brand category of iconic products for enhancing sensuality and intimacy; Avana®, Top-of-Bed Comfort products and inclined bed therapy products, assistive in relieving medical conditions associated with acid reflux, surgery recovery, and chronic pain; and Jaxx®, a diverse range of casual fashion daybeds, sofas and beanbags made from virgin and re-purposed polyurethane foam. These products are sold through the Company’s websites, online mass merchants, and retail stores worldwide. Many of our products are offered flat-packed and either roll or vacuum -compressed to save on shipping and reduce our carbon footprint.

Headquartered in Atlanta, Georgia, the Company occupies a 140,000 -square -foot vertically- integrated manufacturing facility.

The Company’s e-commerce websites include: liberator.com, jaxxbeanbags.com, and avanacomfort.com.

Unless the context requires otherwise, all references in this report to the “Company,” “Luvu Brands,” “we,” “our,” and “us” refers to Luvu Brands, Inc. and its subsidiaries.

Our executive offices are located at 2745 Bankers Industrial Dr., Atlanta, GA 30360; our telephone number is +1-770-246-6400.

Our corporate website is www.LuvuBrands.com. There we make available copies of Luvu Brands documents, news releases and our filings with the U.S. Securities and Exchange Commission, the “SEC”, including financial statements.

Unless specifically set forth to the contrary, the information that appears on our websites or our various social media platforms is not part of this annual report.

Corporate History

The Company was incorporated in the State of Florida on February 25, 1999, under the name of WES Consulting, Inc. On October 19, 2009, the Company entered into a Merger and Recapitalization Agreement (the “Merger Agreement”) with Liberator, Inc., a Nevada corporation (“Old Liberator”). Pursuant to the Merger Agreement, Old Liberator merged with and into the Company, with the Company surviving as the sole remaining entity. On February 28, 2011, the Company name was changed from WES Consulting, Inc. to Liberator, Inc. Effective November 5, 2015, the Company changed its corporate name from Liberator, Inc. to Luvu Brands, Inc. to reflect its broader offering of wellness and lifestyle products designed for mass market channels.

Overview of our Facilities and Operations

Since inception we have used a vertically integrated business model, with manufacturing, distribution, product development, advertising and marketing performed in-house. We believe this allows us to create new products with reduced lead times at a lower cost while enabling us to quickly respond to market and customer demands for our existing products.

For our wholesale accounts and international distributors, being able to fulfill large orders with shorter turnaround times allows us to capture business during December and February when wholesale customers make just-in-time holiday purchases.

Our 140,000 square foot facility on eight acres is located in a suburb of metro Atlanta, Georgia and includes manufacturing and distribution, sales and marketing, product development, customer service and administrative staff. All of the Liberator, Jaxx and Avana branded products are designed, produced and marketed from our facility in Atlanta, Georgia.

Our Atlanta-based manufacturing operation has two CAD controlled fabric cutters, one CAD controlled wood cutter, two CAD controlled foam contouring machines and two state-of-the-art conveyor unit production sewing systems.

51 Table of Contents

Our sewing equipment is also highly automated with conveyor-based lines leading into vacuum and roll compression packaging of finished products. We believe that our in-house manufacturing capabilities have enabled us to achieve greater efficiencies and cost savings, as well as strict control over the entire manufacturing cycle including raw material procurement, finished goods production and logistics optimization. In addition to providing us with greater production flexibility, our in-house manufacturing provides us with the opportunity to improve fulfillment response time, reduces the risk of out-of-stock situations, limits finished goods obsolescence and improves overall operating margins.

Because fabric cutting, sewing, foam contouring, assembly and vacuum packaging are performed in-house, we believe we can exercise greater control over product quality and respond faster to changing customer demands, which gives us a competitive advantage over companies that utilize only out-sourced sewing services. In addition to our in-house sewing capabilities, we outsource the sewing of certain high-volume products to a contract sewing facility in Mexico.

We source raw materials from multiple domestic and foreign suppliers and we have supply contracts ~~in place~~ to produce our specialty fabrics under specific quality control and performance standards with just-in-time deliveries. We also repurpose over 4,000 pounds of polyurethane foam trim ~~each day~~daily, primarily for Jaxx bean bags, ~~which~~giving ~~gives~~ us a cost and quality competitive advantage.

In July 2022 and in July 2023, we acquired and installed two new automated sewing conveyor systems for increased capacity and flexibility. This resulted in increased throughput and lower production costs in these operations, which have been partially offset by increased raw material costs and wages.

All business activity of the Company is done through our wholly-owned subsidiary, OneUp Innovations, Inc. (“OneUp”). OneUp was organized in 2000 and began operations in 2002.

Business Strategy

~~Our~~We ~~goals~~aim ~~are~~ to achieve long-term growth and profitability by expanding our distribution channels and customer base for Liberator, Jaxx, and Avana. We create ongoing collections of innovative products ~~that~~with ~~have both~~ good design and price -to -value that ship flat-packed and vacuum -compressed. By running our own websites and aligning ourselves with both mass market and specialty retailers, we leave less room for importers and copy-cats to compete. We believe that marketing directly to the customer is the best way to build brands, and by doing so we create value for our customers and wealth for our shareholders.

· Manufacturing. To improve our business results, we constantly look for ways to manage the impact of rising raw material and labor costs by improving the productivity of our Lean manufacturing processes. As demand for certain high-volume products continues to increase, we plan to shift more of the sewing of those products to a contract facility in Mexico. · Sustainability. We believe that sustainable operations are both financially and operationally beneficial to our business, and critical to our future success. We are acutely focused on waste reduction efforts: repurposing 98% of our foam trim to other products, compressing all of our foam products to reduce freight costs and corrugated use, improving manufacturing processes to reduce waste overall, finding new ways to repurpose certain waste streams and establishing local recycling partnerships to divert waste from landfills. · Eco-Packaging. We maintain vacuum -compressed packaging to reduce our carbon footprint, make our products more convenient for the consumer and easier to display for the retailer, and reduce our outbound shipping costs. · Wholesale Operations. Our goal is to increase consumer demand through advertising and public relations while our wholesale operations expand our offering to distributors, retailers, and e-tailers across every channel of adult, mass market, drug, and specialty accounts. For wholesalers thinking about adding Sexual Wellness products to their retail or online store, our Liberator product line is typically one of the first “safer” products presented, as it can be promoted as an assistive aid to sexual positioning. As the mainstream demand for Sexual Wellness products grows, our sales staff is training and educating new resellers on how to get started in this category. For retail display, we offer mainstream packaging in a variety of sizes and price points to meet their customers’ particular demographic. We offer all our brands for sale through various e-tailers, and for these customers we maintain brand continuity by providing rich product content, photography and instructional videos for use on their websites. We also provide fulfillment services and can drop-ship orders directly to their customer, frequently the same day the order is received.

62 Table of Contents

Products, Principal Markets and Methods of Distribution

Liberator Products

We developed a patented brand category ~~which~~called ~~we call~~ “Liberator Bedroom Adventure Gear”®. The products in this collection are designed to elevate, create motion, and create surfaces and textures that expand the sexual repertoire and make the act of love more exciting. Liberator Bedroom Adventure Gear combines functional design with sensuous textures that transform ordinary bedrooms into supportive landscapes for intimacy. Liberator products present angles, elevations, curves, and motion that help people of all sizes, including those with back injuries and other medical conditions, find comfortable ways to connect intimately while assisting their stamina and performance.

Liberator foam-based products (called “Liberator Shapes”) are manufactured in a variety of heights and widths to accommodate variations in the human body. They consist of differently shaped cushions and props that are available in an assortment of fabric colors to add to the visual excitement. Each of the product profiles of the Liberator Shapes is unique, designed to introduce positions to the sexual experience that were previously difficult to achieve or impossible to achieve with standard pillows or cushions. Liberator Shapes are manufactured from structured polyurethane foam, and cut at various angles, platforms, and profiles. The foam base is encased in a tight, fluid -resistant polyester shell, helping the cushions to maintain their shape. Liberator Shapes that are designed to be used in tandem are covered in a proprietary microfiber cover that ~~allow~~allows the “Shapes” to adhere to each- other without slipping loose. This allows for positioning freedom.

We have also developed vacuum -compressed large profile designs ~~that are~~ commonly ~~referred~~called ~~to as~~ “Love Loungers or Tantric / Yoga Chaises”. Most of the sex furniture pieces are made from contoured polyurethane foam and covered in a variety of fabrics and colors. These items are marketed as the Esse® Chaise, Equus Wave®, and Prelude® Bench, all in a variety of sizes. Larger designs include products based on shredded polyurethane foam trim encased in a wide range of fabric types and colors and sold under our Zeppelin ® product offering. The Liberator larger profile designs can also be used as lounge seating when not being used for relaxed interaction and creative intimacy. Newer styles are now flat packed with wooden bases and maple feet.

We conduct our wholesale business for Liberator sexual wellness products through four primary channels: (1) adult and female -friendly retailers and specialty boutiques, (2) e-tailers who sell our products through adult, mass market, drug, and other sites offering sexual wellness products, (3) mail order catalogers, and (34) wholesale distributors of adult / sexual wellness products. These wholesale accounts have approximately 1,000 retail locations and~~/or~~ websites in the United States and Canada. We have a growing number of retailers who have added a dedicated Liberator exhibition concept to their merchandising space. We also sell our products in Europe through a Germany -based exclusive distributor.

Jaxx Casual Seating

The Company manufactures a line of contemporary casual indoor and outdoor seating under the Jaxx® brand. Jaxx bean bags are an offshoot from Liberator manufacturing as it provides additional revenue from repurposing our polyurethane foam trim into shredded bean bag fill.

The Jaxx indoor beanbag collection includes an offering of adult and children size beanbags in a variety of fabrics, faux-furs and vinyl. The Jaxx product line also includes solid foam indoor furniture collections and outdoor furniture collections that use polystyrene bead filling. The Jaxx product line and accessory products are sold through the following wholesale channels: (1) modern furniture e-tailers, (2) mass marketers, (3) mail order catalogers, (4) interior designers, (45) schools and daycare centers, and (56) retail furniture stores. We also offer Jaxx private label and custom designs for large regional and national furniture chains. The Company also owns and manages a website under the URLs www.JaxxBeanBags.com and www.JaxxLiving.com for direct-to-consumer sales of Jaxx products.

Avana^® Top-of-Bed Comfort Products

The Company sells a unique collection of comfort products that aid in sleep, meditation, and relaxation under the Avana^® brand. These products include a diverse offering of top-of-bed support cushions and props, many of which are assistive in relieving medical conditions associated with acid reflux, surgery recovery, and chronic pain.

7The ~~Table~~Avana product line is sold through e-merchants (including Amazon.com, Walmart.com, medical product distributors and specialty e-tailers), mail order catalogers and through our website under the URL www.AvanaComfort.com. We believe that our Avana products compete effectively on the basis of ~~Contents~~good design, through offering a wide-range of designer colors and fabrics and supported by thousands of 5-star product reviews.

~~The~~3 ~~Avana~~Table product line is sold through e-merchants (including Amazon.com, Walmart.com, medical product distributors and specialty e-tailers) and through our website under the URL www.AvanaComfort.com. We believe that our Avana products compete effectively on the basis of ~~good design, through offering a wide-range of designer colors and fabrics and supported by thousands of 5-star product reviews.~~Contents

Products Purchased for Resale

We import high-quality pleasure objects from around the world for sale on our direct-to-consumer website Liberator.com.

Sales and Distribution

Our sales management team is organized by market channel and by customer type. We have sales personnel who routinely visit sexual wellness retailers to assist in product training, merchandising and stocking of selling areas. Through our in-house wholesale sales organization, we engage e-merchants and retailers directly and then either ship to them on a wholesale basis or provide fulfillment services by drop-shipping directly to their customers. In international markets, the Company has a direct sales model with a US-based salesperson. This salesperson is responsible for wholesale sales, marketing operations and customer service in Canada and the European Union and other international markets. For European customers, orders are filled from our exclusive Germany-based distributor or directly from our facilities in Atlanta.

As is customary in the sexual wellness and casual furniture industry, sales to customers are generally made pursuant to purchase orders, and we do not have long-term or exclusive contracts with any of our retail customers or wholesale distributors. We believe that our continuing relationships with our customers are based upon our ability to provide a wide selection and reliable source of sexual wellness and casual furniture products, combined with our expertise in marketing and new product introduction.

Internet Websites

We design and operate our websites using in-house development teams and our creative group using all media and social platforms to promote visibility and sales conversions. We also maintain a B-to-B website allowing wholesalers to both place orders and track delivery schedules.

Liberator.com is promoted as a direct B-to-C website, and entertainment and educational venue, where consumers can watch product demonstration videos, peruse ezine blog content on sexual wellness topics, and watch non-pornographic videos on the many facets of human sexuality and erotic expression.

Jaxxbeanbags.com offers a collection of contemporary indoor and outdoor fashion seating, daybeds, children’s play couches and modular Panelist wall mounted headboards.

AvanaComfort.com presents our collection of top-of-bed comfort products, specialty pillows and mattress elevators proven effective in controlling reflux and GERD symptoms during sleep.

Sources and Availability of Raw Materials

We obtain all of the raw materials and component parts used to produce our products from outside sources without long term supply contracts. A number of components, including certain fabrics and polyurethane foam are sourced from suppliers who currently serve as our sole or primary source of supply. We believe we can obtain these raw materials and components from other sources of supply, although we could experience some short-term disruption in our ability to fulfill orders in the event of an unexpected loss of supply from one of the primary suppliers. We utilize dual sourcing on most fabrics and components when effective.

Changes in U.S. trade policy, including tariffs on certain goods imported into the United States from China, have increased the costs of certain raw materials, parts or components used in our products. Such an increase may materially and adversely affect our sales and our business, as we may increase the selling prices of our products. If any increase in costs of goods cannot be passed on to our customers, our business and gross profit may be materially and adversely affected.

84 Table of Contents

Major Customers

Sales to (and through) Amazon accounted for 36% of our net sales during the year ended June 30, ~~2023~~2024 and 3136% of our net sales for the year ended June 30, ~~2022~~2023. The loss of, or a significant adverse change in our relationship with, any of our largest customers could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows.

Competition

We compete with other marketers of sexual wellness, lifestyle and casual seating products both within and outside the U.S. The sexual wellness, bean bag and comfort products are highly fragmented and competition for the sale of such products comes from many types of e-tailers and retailers across diverse channels.

For Liberator products, ~~we believe that~~ our primary competitive advantage is consumer recognition of our iconic brand. Due to the strength of our brand, we have ~~limited~~some direct competition for the majority of our Liberator branded products. In fact, many e-commerce websites refer to Liberator as a product category and not as a generic sex furniture listing. And since we sell through multiple sales channels, we provide consumers with the ability to shop for Liberator intimacy products in an environment or website that they are most comfortable in. We also believe that we differentiate ourselves from conventional sexual wellness products based on our utility of design and overall customer satisfaction as it relates to enhanced intimacy.

For Jaxx and Avana products, we believe our primary competitive advantage is good designs, our offering of a wide range of designer colors and fabrics, good price to value, and our positive consumer reviews.

For our pleasure products purchased for Resale, competition among retailers of adult products and web-based marketers is high. Although we compete with retail and internet businesses and now mass and drug retailers that sell sexual wellness products including vibrators, pleasure objects, accessories and similar merchandise, we believe that this opens new channels of distribution for our Liberator products and that we are able to compete favorably as our Liberator products are unique, are couple-centric, and are assistive devices for couples with sexual limitations and issues.

For the Liberator e-commerce website, other competitive factors include the effectiveness of our electronic customer mailing lists, maintaining natural search listing, advertising response rates, website design and functionality. The broad range of designs, color choice, fabrics and accessories that we offer helps to differentiate us and allows us to compete favorably against many other adult or sexual wellness websites. Liberator.com also competes against numerous mainstream websites, many of which have a greater volume of web traffic, greater financial strength and marketing resources.

We believe competition in our industries is based on, among other things, the ability to deliver the right product at the right time, product quality and safety, innovation, customer service and price. We believe we compete favorably with other companies because of our ability to provide a broad product offering for customers, our vertically integrated manufacturing operation which allows us to quickly respond to customer demand, our commitment to quality and safety, and our commitment to minimizing our environmental impact.

Government Regulation

We are subject to customs, truth-in-advertising and other laws, including consumer protection regulations that regulate the promotion and sale of merchandise and the operation of warehouse facilities. We monitor changes in these laws and believe that we are in material compliance with applicable laws.

Intellectual Property

The Liberator trademark is registered with the United States Patent and Trademark office and with the registries of many foreign countries. In addition, we were issued approximately 20 other product name trademarks and trade names including: “Bedroom Adventure Gear”^®, Ramp^®, Wedge^®, Stage^®, Esse^®, Zeppelin^®, Hipster^®, Wing^®, Equus^®, Jaxx^®, Avana^®, and Bonbon^®. In August 2005, we were issued utility patent number US 6,925,669 “Support Cushion and System of Cushions.” We believe our trademarks and patent have significant value and we intend to continue to vigorously protect them against infringement.

95 Table of Contents

Human Capital and Resources

As of June 30, ~~2023~~2024, we had ~~207~~192 employees. The Company’s employment levels may change seasonally based on current and anticipated order levels. Additional staffing is typically required to support the peak holiday period through Valentine’s Day. None of our employees are represented by a union. We have had no labor-related work stoppages, and we believe our relationships with our employees are good. Human capital management is critical to our ongoing business success, which requires investing in our people. Our aim is to create a highly engaged and motivated workforce where employees are inspired by leadership, ~~engaged~~involved in purpose-driven, meaningful work, and have opportunities for growth and development. We are committed to creating and maintaining a work environment inwhere ~~which~~ employees are treated with respect and dignity. We value our diverse employees and provide career and professional development opportunities that foster the success of our company. An effective approach to human capital management requires that we invest in talent, development, culture, and employee engagement. We aim to create an environment where our employees are encouraged to ~~make~~contribute ~~positive~~positively ~~contributions~~ and fulfill their potential. We emphasize our core values of innovation, encouragement, motivation, and curiosity with our employees to instill our culture and create an environment of growth and positivity.

Additional information

We file annual and quarterly reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information with the Securities and Exchange Commission (“SEC” or the “Commission”). The Commission also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.

Other information about the Company can be found on our website www.luvubrands.com. Reference in this document to that website address does not constitute incorporation by reference of the information contained on the website.

ITEM 1A. Risk Factors.

This section describes circumstances or events that could have a negative effect on our financial results or operations or that could change, for the worse, existing trends in our businesses. The occurrence of one or more of the circumstances or events described below could have a material adverse effect on our financial condition, results of operations and cash flows or on the trading prices of our common stock. The risks and uncertainties described in this Annual Report on Form 10-K are not the only ones facing us. Additional risks and uncertainties that currently are not known to us or that we currently believe are immaterial also may adversely affect our businesses and operation. Although we have attempted to list comprehensively these important factors, we caution you that other factors may in the future prove to be important in affecting our results of operations. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

We have been adversely affected by the effects of inflation and a potential recession.

Inflation has adversely affected our liquidity, business, financial condition, and results of operations by increasing our overall cost structure, and such ~~affects~~effects will be further exacerbated if we are unable to achieve commensurate increases in the prices we charge our customers. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor, weakening exchange rates, and other similar effects. As a result of inflation, we have experienced and may continue to experience, cost increases. In addition, poor economic and market conditions, including a potential recession, may negatively impact market sentiment, decreasing the demand for our products, which would adversely affect our operating income and results of operations. If we are unable to take effective measures in a timely manner to mitigate the impact of inflation, as well as a potential recession, our business, financial condition, and results of operations could be adversely affected.

10Competition ~~Table~~from other brands may hinder the development of ~~Contents~~our business.

~~Competition~~Increased ~~from~~competitor consolidations, marketplace competition, and competitive product and pricing pressures could impact our earnings, market share, and volume growth. If, due to such pressure or other competitive threats, we are unable to maintain or develop our sales sufficiently, we may be unable to achieve our current revenue and financial targets. As a means of maintaining and expanding our sales revenues, we intend to introduce additional products. We may not be successful in doing this, or it may take us longer than anticipated to achieve market acceptance of these new brands, if at all. Other companies may ~~hinder~~be more successful in this regard over the ~~development~~long ofterm. Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our ~~business~~existing markets, as well as on our ability to expand the market for our products.

~~Increased~~Our ~~competitor~~reliance ~~consolidations,~~on ~~marketplace~~logistics ~~competition~~service providers, ~~and~~distributors, ~~competitive~~ecommerce ~~product~~ and ~~pricing~~social ~~pressures~~media ~~could~~platforms ~~impact our earnings, market share~~ and ~~volume~~retailers ~~growth.~~could ~~If,~~affect ~~due to such pressure or other competitive threats, we are unable to sufficiently maintain or develop~~ our ~~sales,~~ability ~~we may be unable~~ to ~~achieve~~efficiently ~~our current revenue~~ and ~~financial~~profitably ~~targets. As a means of maintaining and expanding our sales revenues~~promote, ~~we intend to introduce additional products. We may not be successful in doing this~~sell, ordistribute itand ~~may take us longer than anticipated to achieve~~ market ~~acceptance~~our ~~of these new~~ products, ifmaintain at all. Other companies may be more successful in this regard over the long term. Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our existing markets, asand ~~well~~expand ~~as on~~ our ~~ability~~business tointo ~~expand~~other ~~the~~geographic ~~market for our products~~markets.

Our ~~reliance~~ability to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to establish and maintain successful relationships with reliable logistics service providers, distributors, ecommerce and social media platforms and retailers ~~could~~strategically ~~affect~~positioned ~~our~~to ~~ability~~serve tothose ~~efficiently~~areas. Most of our distributors and ~~profitably~~retailers promote, sell, and distribute ~~and~~competing ~~market~~products, and our products may represent a small portion of their businesses. The success of our distribution network depends on the performance of the logistics service providers, ~~maintain~~distributors, ecommerce and social media platforms and retailers in our ~~existing~~network. ~~markets~~There is a risk they may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities that may not be receptive to our product. Our ability to incentivize and ~~expand~~motivate distributors to manage and sell our ~~business~~products ~~into~~is affected by competition from other ~~geographic~~companies ~~markets~~who have greater resources than we do. To the extent that our distributors and retailers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, our sales and results of operations could be adversely affected. Furthermore, such third parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities.

~~Our~~6 ~~ability~~Table to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to establish and maintain successful relationships with reliable logistics service providers, distributors, ecommerce and social media platforms and retailers strategically positioned to serve those areas. Most of our distributors and retailers promote, sell and distribute competing products, and our products may represent a small portion of their businesses. The success of our distribution network depends on the performance of the logistics service providers, distributors, ecommerce and social media platforms and retailers in our network. There is a risk they may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities that may not be receptive to our product. Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition from other companies who have greater resources than we do. To the extent that our distributors and retailers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, our sales and results of operations could be adversely affected. Furthermore, such third parties’ financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities. Contents

We ~~will~~are be dependent on our suppliers and do not have supply agreements with our suppliers. Events adversely affecting our suppliers, manufacturers and contractors would adversely affect us.

If we experience significant increased sales, and since we do not have supply agreements to ensure ~~our~~sufficient ~~requirements~~reserves of materials, there can be no assurance that additional materials for our products will be available when required or on terms that are favorable to us, or that a supplier would allocate sufficient materials for our products to us in order to meet our requirements or fill our orders in a timely manner which could lead to delays to our customers, which could hurt our relationships with our customers, result in negative publicity, damage our brand and adversely affect our business, prospects and operating results.

We intend to maintain a full supply chain for the provision of our products. Suppliers, manufacturers, service providers and contractors may elect, at any time, to decline or withdraw services necessary for our operations. Loss of these suppliers, manufacturers, service providers and contractors may have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, any significant interruption, negative change in the availability or economics of the supply chain or increase in the prices for the production of our products provided by any such third-party suppliers, manufacturers, service providers and contractors could materially impact our business, financial condition, results of operations and prospects. Any inability to secure required supplies or to do so on appropriate terms could have a materially adverse impact on our business, financial condition, results of operations and prospects.

ITEM 1B. Unresolved Staff Comments.

None.

11ITEM ~~Table~~1C. ~~of Contents~~Cybersecurity

ITEM 2. Properties.

We are headquartered in Atlanta, Georgia as 2745 Bankers Industrial Drive, Atlanta, GA 30360. We lease a 140,000 square feet building on eight acres, which we believe allows for expansion when needed. Our facility houses manufacturing, distribution and fulfillment, call center, in-house advertising and creative departments, product design group, and administrative offices. On November 2, 2020, the Company entered into an agreement with its landlord on a new lease for the current facilities for six years and two months, beginning January 1, 2021. The new lease included two months of rent abatement totaling $103,230. Under the lease, the monthly rent on the facility is $51,615 with annual escalations of 3% with the final two months of rent at $61,605. In addition, the Company pays the landlord a 2% property management fee. The rent expense under this lease for the 12 months ended June 30, ~~2023~~2024 was $652,752. The rent expense under this lease for the 12 months ended June 30, ~~2022~~2023 was $652,752.

Our facilities are currently adequate for their intended purposes and are adequately maintained.

ITEM 3. Legal Proceedings.

As of the date of this annual report, there are no material pending legal or governmental proceedings relating to our company or properties to which we are a party, and to our knowledge, there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which have a material interest adverse to us.

ITEM 4. Mine Safety Disclosures.

None.

127 Table of Contents

PART II.

Market Information

~~Our~~The ~~common~~Company’s ~~stock~~Common isStock ~~quoted~~trades on the ~~OTC~~OTCQB ~~Markets~~Tier ~~Group~~of on the ~~OTCQB~~OTC ~~tier~~Markets ~~(“OTCQB”)~~ under the symbol “LUVU”. On ~~October~~September 620, ~~2023~~2024, the last ~~reported~~ sale price of ~~our~~the ~~common~~Common ~~stock~~Stock, as reported on the OTCQB, was $0.08627 per share. ~~Any~~The ~~over~~following table sets forth for the periods indicated, high and low bid prices of the Common Stock as reported by the OTCQB. Any over-the-counter market ~~quotation~~quotations ~~reflects~~reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Fiscal Year Ended June 30, 2024	HIGH		LOW
Fourth Quarter	$	0.10	$	0.05
Third Quarter	$	0.10	$	0.07
Second Quarter	$	0.11	$	0.05
First Quarter	$	0.19	$	0.07

Fiscal Year Ended June 30, 2023	HIGH		LOW
Fourth Quarter	$	0.17	$	0.08
Third Quarter	$	0.20	$	0.11
Second Quarter	$	0.25	$	0.08
First Quarter	$	0.15	$	0.09

Stockholders

As of ~~October~~June 1030, ~~2023~~2024, we had 8386 stockholders of record of our common stock. This amount does not reflect persons or entities that hold our securities in nominee or “street” name through various brokerage firms.

Dividend Policy

We have not paid dividends and we plan to retain all earnings generated by our operations, if any, for use in our business. We do not anticipate paying any cash dividends to our shareholders in the foreseeable future. The payment of future dividends on the common stock and the rate of such dividends, if any, and when not restricted, will be determined by our board of directors in light of our earnings, financial condition, capital requirements, and other factors. Additionally, under the terms of our credit facility, we are precluded from paying a dividend and we may in the future issue preferred stock and/or other securities that provides for preferences over holders of common stock in the payment of dividends.

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Table of Contents

ITEM 6. [RESERVED].

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion summarizes the significant factors affecting the results of operations and financial condition of the Company during the fiscal years ended June 30, ~~2023~~2024 and ~~2022~~2023 and should be read in conjunction with our financial statements and accompanying notes thereto included elsewhere herein. Certain information contained in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are “forward-looking statements.” Statements that are not historical in nature and which may be identified by the use of words like “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could be” and other words of similar meaning, are forward-looking statements. These statements are based on management’s expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Our actual results may differ materially from the results discussed in this section because of various factors, including those set forth elsewhere herein. See “Forward-Looking Statements” included in this report.

13 Table of Contents

Results of Operations

Overview

The following table sets forth, for the periods indicated, information derived from our Consolidated Financial Statements, expressed as a percentage of net sales. The discussion that follows the table should be read in conjunction with our Consolidated Financial Statements.

	Year EndedJune 30, 2023			Year EndedJune 30, 2022
	Year EndedJune 30,2024			Year EndedJune 30,2023
Net sales		100	%		100	%
Cost of goods sold		7573	%		7775	%
Gross profit		2527	%		2325	%
Selling, General and Administrative Expenses		2026	%		1920	%
Operating income		51	%		45	%

Fiscal Year ended June 30, ~~2023~~2024 Compared to the Fiscal Year Ended June 30, ~~2022~~2023

Net sales. The net sales ~~increase~~decrease of 1116% in fiscal ~~2023~~2024 from fiscal ~~2022~~2023 consists of a 4823% ~~increase~~decrease in sales of Liberator products, offset, in part, by a 163% ~~decrease~~increase in Jaxx products, a 2316% ~~decrease~~increase in sales of Avana products, and 2815% decrease in products purchased for resale. Sales of Liberator products ~~increased~~decreased 4823% from the prior year to approximately $1713.86 million during fiscal ~~2023~~2024. Sales of Jaxx products ~~decreased~~increased 163% during fiscal ~~2023~~2024 to approximately $67.91 million. Sales of Avana products ~~decreased~~increased 2316% to $2.26 million during fiscal ~~2023~~2024. Sales of all products through the Wholesale sales channel in fiscal ~~2023~~2024 ~~increased~~decreased 9by 13% from the prior year, while the Direct sales channel ~~increased~~decreased by approximately 1622% from the prior year. The Wholesale sales channel includes branded products and resale products sold to brick-and-mortar retailers and e-merchants, including, but not limited to, Amazon, Overstock, and Wayfair. The Wholesale sales channel also includes contract manufacturing services, which ~~consists~~consist of specialty items that are manufactured in small quantities for certain customers, and which, to date, ~~has~~have not been a material part of our business. The Direct sales channel consists of consumer sales through our three websites. The ~~increase~~decrease in sales through the Direct channel was due to ~~higher~~lower ~~sales~~site oftraffic ~~products~~to ~~sold~~our ~~through~~Liberator.com ~~our~~and Liberatorstore.com websites. Efforts to increase traffic through additional spending on Google Adwords proved to be ineffective.

Gross profit. Gross profit, derived from net sales less ~~the~~than ~~cost of~~ product sales, includes the cost of materials, direct labor, manufacturing overhead, and depreciation. Total gross profit as a percentage of sales for the year ended June 30, ~~2023~~2024 increased to 2527% from 2325% in the prior year. Gross profit dollars ~~increased~~decreased to $76,~~192~~526,~~000~~367 from $67,~~001~~192,~~000~~330 in the prior year, ~~and~~representing ~~represented~~ a 219% ~~increase~~decrease. The Company also continued to implement cost reduction strategies like transitioning the sewing of certain high-volume Jaxx and Avana products to a contract facility in Mexico which, during fiscal ~~2023~~2024, produced approximately 304% of our sewn products and reduced our total cost of production for those products.

~~Operating~~9 ~~expenses.~~Table ~~Excluding depreciation expense, total operating expenses for the year ended June 30, 2023 were 18%~~ of net sales, or $5,294,000, compared to 18% of net sales, or $4,749,000, for the year ended June 30, 2022. The 11% increase in operating expenses from the prior year was primarily due to higher advertising and promotion expenses which were incurred in an effort to increase sales, higher occupancy costs, and higher personnel related costs.Contents

~~Other~~ITEM ~~income (expense)~~7. ~~Other~~Management’s ~~expense~~Discussion ~~decreased~~and toAnalysis ~~($262,000) from expense~~ of ~~($342,000)~~Financial inCondition ~~the~~and ~~prior~~Results ~~fiscal~~of ~~year~~Operations (continued).

~~Net~~Operating ~~income~~expenses. WeExcluding ~~had~~depreciation ~~a net income from operations of $1~~expense,~~282,000,~~ ortotal ~~$0.02~~operating ~~per~~expenses ~~diluted share,~~ for the year ended June 30, ~~2023~~2024, ~~compared~~were ~~with~~24% of net ~~income~~sales, ~~from~~or ~~operations~~$5,940,178, compared to 18% of ~~$604~~net sales,~~000~~ or $~~0.01 per diluted share~~5,294,191, for the year ended June 30, ~~2022 due~~2023. toThe 13% increase in ~~net~~operating ~~sales~~expenses ~~and~~from ~~improvement~~the inprior ~~gross~~year ~~profit~~was ~~margin,~~primarily ~~partially~~due ~~offset~~to byhigher ~~increase~~advertising inexpenses ~~operating~~and ~~expenses.~~personnel-related costs.

14Other ~~Table~~income (expense). Other expense increased to ($411,165) from expense of ~~Contents~~($355,676) in the prior fiscal year.

~~Financial~~ Income ~~Information~~tax ~~about~~expense. Income ~~Our~~tax ~~Business~~expenses ~~Sales~~increased ~~Channels~~to ($162,000) from a benefit of $10,000 in the prior fiscal year. The expense was mainly related to prior years’ deferred tax adjustments, which we had not previously recorded.

WeNet ~~conduct~~Income/(loss) ~~our~~income. ~~business~~We ~~through~~had ~~two~~a ~~primary~~net ~~sales~~loss ~~channels:~~from ~~Direct~~operations ~~(consisting~~ of ~~our~~$398,602 ~~Internet~~or ~~websites)~~$0.01 ~~and~~per ~~Wholesale~~diluted ~~(consisting~~share, offor ~~our~~the ~~stocking~~year ~~reseller,~~ended ~~drop-ship~~June 30, ~~contract~~2024 ~~manufacturing~~compared ~~and~~with ~~distributor~~net ~~accounts).~~income ~~During~~from ~~our~~operations ~~last~~of ~~two years~~$1,199,000 ~~substantially~~or ~~all~~$0.02 ofper ~~our~~diluted ~~revenue~~share, ~~was~~for ~~generated~~the ~~within~~year ~~North~~ended ~~America~~June 30, ~~and~~2023 ~~all~~due ofto ~~our~~decrease ~~long-lived~~in ~~assets~~net ~~are~~sales ~~located~~and ~~within~~increase ~~the~~in ~~United~~operating ~~States.~~expenses ~~The~~related ~~following~~to issales aand ~~summary~~marketing. ~~of our revenues:~~

(Dollars in thousands)	Fiscal 2023		Fiscal 2022
Direct	$	8,255	$	7,136
Wholesale		20,260		18,546
Other		704		661
Total Net Sales	$	29,219	$	26,343

Financial Information about Our Business Sales Channels

~~Net~~We conduct our business through two primary sales inchannels: ~~the~~Direct ~~Other~~(consisting ~~channel~~of ~~consists~~our ~~primarily~~Internet websites) and Wholesale (consisting of ~~shipping~~our stocking reseller, drop-ship, contract manufacturing, and ~~handling~~distributor ~~fees~~accounts). ~~derived~~During ~~from~~the last two years, substantially all of our ~~Direct~~revenue ~~business~~has been generated within North America, and all of our long-lived assets are located in the United States. The following is a summary of our revenues:

Direct

*(Dollars in thousands)*	Fiscal 2024		Fiscal 2023
Direct	$	6,475	$	8,255
Wholesale		17,558		20,260
Other		541		704
Total Net Sales	$	24,574	$	29,219

~~The~~Net ~~following~~sales isin athe ~~summary~~Other ofchannel ~~our~~consist ~~Direct~~primarily ~~business~~of ~~net~~shipping ~~sales~~ and ~~the~~handling ~~percentage~~fees ~~relationship~~derived tofrom ~~total~~our ~~revenues:~~Direct business.

(Dollars in thousands)	Fiscal 2023			Fiscal 2022
Direct sales channel net sales	$	8,255		$	7,136
Direct net sales as a percentage of total revenues		28	%		27	%

Direct

~~Wholesale~~The following is a summary of our Direct business net sales and the percentage relationship to total revenues:

The following is a summary of our net sales to Wholesale customers and the percentage relationship to total revenues:

(Dollars in thousands)

Fiscal

2024

Fiscal

2023

Direct sales channel net sales

6,475

8,255

Direct net sales as a percentage of total revenues

(Dollars in thousands)	Fiscal 2023			Fiscal 2022
Wholesale sales channel net sales	$	20,260		$	18,546
Wholesale net sales as a percentage of total revenues		69	%		70	%

Wholesale

AsThe offollowing ~~June 30,~~is ~~2023,~~a ~~the~~summary ~~Company~~of ~~has~~our ~~over~~net ~~950~~sales ~~active~~to ~~wholesale~~Wholesale ~~accounts,~~customers ~~most~~and ofthe ~~which~~percentage ~~are~~relationship ~~located~~to intotal ~~the United States.~~revenues:

Sales by Product Type

(Dollars in thousands)

Fiscal

2024

Fiscal

2023

Wholesale sales channel net sales

17,558

20,260

Wholesale net sales as a percentage of total revenues

~~The~~As ~~following~~of ~~table~~June 30, ~~represents~~2024, the ~~dollars~~Company ~~and~~has ~~percentage~~over 323 active wholesale accounts, most of ~~net~~which ~~sales~~are bylocated ~~product~~in ~~type:~~the United States.

(Dollars in thousands)	Year EndedJune 30, 2023				Year EndedJune 30, 2022
Net sales:
Liberator	$	17,744	61	%	$	11,978	45	%
Jaxx		6,923	24	%		8,293	32	%
Avana		2,219	7	%		2,893	11	%
Products purchased for resale		1,165	4	%		1,615	6	%
Other		1,168	4	%		1,564	6	%
Total Net Sales	$	29,219	100	%	$	26,343	100	%

Table of Contents

15ITEM 7. ~~Table~~Management’s Discussion and Analysis of ~~Contents~~Financial Condition and Results of Operations (continued).

~~Liberator~~Sales ~~- Liberator products consist of items that are manufactured~~ by usProduct ~~and~~The ~~are~~following ~~intended~~table ~~for~~represents ~~sale in~~ the ~~sexual~~dollars ~~health~~ and ~~wellness~~percentage ~~market. Liberator products are sold to e-merchants, retailers and distributors as well as directly through our e-commerce site. Net sales~~ of ~~Liberator~~net ~~products increased 48% during the year ended June 30, 2023, from the comparable year earlier period. This increase is primarily related to higher~~ sales ~~through~~by ~~our~~product ~~e-commerce site, Liberator.com.~~type:

Jaxx - Jaxx products are contemporary seating products manufactured by us and sold under the Jaxx brand. Jaxx products are sold to e-merchants and retailers as well as directly through our e-commerce site. Net sales of Jaxx products decreased 16% during the year ended June 30, 2023, compared to the prior year. This decrease is primarily due to lower sales of Jaxx indoor and outdoor products.

*(Dollars in thousands)*	Year Ended June 30, 2024				Year Ended June 30, 2023
Net sales:
Liberator	$	13,620	55	%	$	17,744	61	%
Jaxx		7,126	29	%		6,923	24	%
Avana		2,577	11	%		2,219	7	%
Products purchased for resale		987	4	%		1,165	4	%
Other		265	1	%		1,168	4	%
Total Net Sales	$	24,575	100	%	$	29,219	100	%

~~Avana~~Liberator - ~~The~~Liberator ~~Avana~~products ~~product~~consist ~~line~~of isitems athat ~~unique~~we ~~collection~~manufacture ~~of top-of-bed~~ and ~~comfort~~sell ~~products that aid~~ in ~~sleep,~~the ~~meditation,~~sexual health and ~~relaxation~~wellness market. ~~Avana~~Liberator products are sold ~~through~~to e-merchants, ~~mail~~retailers ~~order~~and ~~catalogers~~distributors ~~and~~as well as directly through our e-commerce site. Net sales of ~~Avana~~Liberator products decreased 23% ~~during~~from the prior year, which ended June 30, ~~2023,~~2024. ~~compared~~This decrease is primarily related to reduced sales following the prior year’s product sales boosted as they related to Netflix’s “How to Build a sex room”. ~~The~~In ~~decrease~~fiscal year 2023, Liberator product sales experienced a boost in sales ~~was~~associated ~~due~~with ~~primarily~~the tosuccess ~~increased~~of ~~competition~~the ~~from~~Netflix ~~lower~~show. ~~priced~~At ~~products~~this ~~from~~time, ~~China~~the show has not been renewed, and ~~other~~the ~~countries~~additional marketing exposure related to that show has resulted in a 23% decline in Liberator-related products.

~~Products~~Jaxx ~~purchased~~- ~~for~~Jaxx ~~resale~~products ~~– Products purchased for resale~~ are ~~other~~contemporary ~~branded~~seating products ~~that~~manufactured weby ~~purchase~~us ~~from~~and ~~others~~sold atunder ~~wholesale~~the orJaxx ~~distributor~~brand. ~~prices~~Jaxx ~~and~~products ~~resell~~are ~~through~~sold ~~our sales channels~~ to e-merchants, and retailers, oras ~~through~~well ~~one~~as ofdirectly through our e-commerce ~~sites~~site. ~~Sales~~Net sales of ~~these~~Jaxx products ~~decreased~~increased 283% during the year ended June 30, ~~2023 from the prior year~~2024, ~~due~~compared to ~~consumer demand shrinkage across~~ the ~~industry~~prior year. ~~Sales~~This ofincrease ~~these products~~ is ~~increasingly~~primarily ~~competitive~~due ~~and, as a result, the Company has elected~~ to ~~only~~Jaxx ~~offer~~outdoor aproduct ~~more~~sales ~~curated~~having ~~selection~~increased ofdistribution ~~products~~by ~~that~~adding ~~typically~~new ~~have~~online ~~a higher gross profit~~accounts.

~~Other~~Avana- The Avana product line is a unique collection of top-of-bed ~~Other~~and comfort products ~~include~~that ~~sales~~aid ~~from~~in ~~contract~~sleep, ~~manufacturing~~meditation, and ~~fulfillment~~relaxation. ~~services~~Avana products are sold through e-merchants, mail order catalogers and through our e-commerce site. Net sales of Avana products increased 16% during the year ended June 30, ~~2023~~2024, ~~decreased~~compared ~~25%~~to ~~from~~ the prior year. The increase in sales was due primarily to increased distribution into schools.

~~Variability~~Products purchased for resale – Products purchased for resale are other branded products that we buy from others at wholesale or distributor prices and resell through our sales channels to e-merchants, retailers, or through one of ~~Results~~our e-commerce sites. Sales of these products decreased 15% during the year ended June 30, 2024, from the prior year due to consumer demand shrinkage across the industry. Sales of these products are increasingly competitive, and, as a result, the Company has elected only to offer a more curated selection of products that typically have a higher gross profit.

WeOther ~~have~~- ~~experienced~~Other ~~significant~~products ~~quarterly~~include ~~fluctuations~~sales infrom ~~operating~~contract ~~results~~manufacturing and ~~anticipate~~fulfillment ~~that these fluctuations may continue in future periods~~services. ~~Operating~~Net ~~results have fluctuated as a result of changes in~~ sales ~~levels~~during ~~to consumers and wholesalers, competition,~~ the ~~COVID-19~~year ~~pandemic~~ended ~~aftereffects,~~June ~~seasonality costs associated with new product introductions~~30, ~~and~~2024 ~~increases~~decreased in77% ~~raw material costs. In addition, future operating results may fluctuate as a result of factors beyond our control such as raw material cost increases, labor cost increases resulting~~ from the ~~current~~prior ~~labor~~year ~~shortage,~~due foreign exchange fluctuation, changes in government regulations, and economic changes in the regions in which we operate and sell. A portion of our operating expenses are relatively fixed and the timing of increases in expense levels is based in large part on forecasts of future sales. Therefore, if net sales are below expectations in any given period, the adverse impact on results of operations may be magnified by our inability to ~~meaningfully~~reduced ~~adjust~~contract ~~spending in certain areas, or the inability to adjust spending quickly enough, as in personnel and administrative costs, to compensate for a~~ sales ~~shortfall~~. ~~We may also choose to increase spending in response to market conditions, and these decisions may have a material adverse effect on financial condition and results of operations.~~

~~Liquidity~~Variability ~~and~~of ~~Capital Resources~~Results

The following table summarizes our cash flows:	Year ended June 30,
	2023			2022
	(in thousands)
Cash flow data from continuing operations:
Cash provided by operating activities	$	661		$	387
Cash used in investing activities	$	(115	)	$	(52	)
Cash used in financing activities	$	(364	)	$	(453	)

We have experienced significant quarterly fluctuations in operating results and anticipate that these fluctuations may continue in future periods. Operating results have fluctuated due to changes in sales levels to consumers and wholesalers, competition, seasonality costs associated with new product introductions, and increases in raw material costs. In addition, future operating results may fluctuate as a result of factors beyond our control, such as raw material cost increases, labor cost increases resulting from the current labor shortage, foreign exchange fluctuation, changes in government regulations, and economic changes in the region in which we operate and sell. A portion of our operating expenses are relatively fixed and the timing of expense level increases is largely based on future sales forecasts. Therefore, if net sales are below expectations in any given period, the adverse impact on the results of operations may be magnified by our inability to adjust spending in certain areas meaningfully or the inability to adjust spending quickly enough, as in personnel and administrative costs, to compensate for a sales shortfall. We may also choose to increase spending in response to market conditions, and these decisions may adversely affect the financial condition and results of operations.

As11 ofTable ~~June 30, 2023, our cash and cash equivalents totaled $1,041,310 compared to $858,870 in cash and cash equivalents as~~ of ~~June 30, 2022.~~Contents

~~Operating~~ITEM 7. ~~Activities~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).

~~Net~~Liquidity ~~cash provided by operating activities primarily consists of the net income adjusted for certain non-cash items, including depreciation, stock-based compensation,~~ and ~~the~~Capital effect of changes in operating assets and liabilities. Net cash provided by operating activities increased from the prior year due to the net income from operations, offset, in part, by an increase in inventory.Resources

16 Table of Contents

	Year ended
The following table summarizes our cash flows:	June 30,
	2024			2023
	(in thousands)
Cash flow data from continuing operations:
Cash provided by operating activities	$	475		$	661
Cash used in investing activities	$	(71	)	$	(115	)
Cash used in financing activities	$	(416	)	$	(364	)

~~Investing~~As ~~Activities~~of June 30, 2024, our cash and cash equivalents totaled $1,028,448 compared to $1,041,310 in cash and cash equivalents as of June 30, 2023.

~~Cash~~Operating ~~used in investing activities in the year ended June 30, 2023 and June 30, 2022 was primarily for production equipment purchases and software development work.~~Activities

~~Financing~~Net ~~Activities~~cash provided by operating activities primarily consists of the net loss adjusted for certain non-cash items, including depreciation, stock-based compensation, and the effect of changes in operating assets and liabilities. Net cash provided by operating activities increased from the prior year due to the decrease in net inventory.

~~Cash~~Investing used in financing activities in the year ended June 30, 2023 and June 30, 2022 was primarily due to repayment of secured and unsecured notes payable and equipment notes payable offset in part by borrowings through unsecured notes payable.Activities

~~Inflation~~Cash used in investing activities in the year ended June 30, 2024 and June 30, 2023 was primarily for production equipment purchases.

~~During~~Financing fiscal 2022 and 2023, we experienced increases in various raw material costs and increases in labor costs. We believe these pricing pressures have not stabilized and will continue to increase throughout fiscal 2024, although there is no assurance this will occur. Inflation can harm our margins and profitability if we are unable to increase prices or improve productivity enough to offset the effects of inflation in our cost base. Furthermore, if our customers reduce their levels of spending in response to increases in retail prices and/or we are unable to pass such cost increases to our customers, our revenues and our profit margins may decrease. Activities

~~Capital~~Cash ~~Resources~~used in financing activities in the year ended June 30, 2024 and June 30, 2023 was primarily due to repayment of secured and unsecured notes payable and equipment notes payable offset partly by borrowings through unsecured notes payable.

WeCapital expect total capital expenditures for fiscal 2024 to be less than $150,000 and to be funded by equipment loans and, to a lesser extent, anticipated operating cash flows and borrowings under the line of credit with Advance Financial Corporation. This includes capital expenditures in support of our normal operations.Resources

IfWe ~~our~~expect ~~business~~total ~~plans~~capital ~~and~~expenditures ~~cost estimates are inaccurate and our operations require additional cash or if we deviate from our current plans, we could be required to seek additional debt financing~~ for ~~particular~~fiscal ~~projects~~2025 ~~or for ongoing operational needs. This indebtedness could harm our business if we are unable~~ to ~~obtain~~be ~~additional~~less ~~financing~~than ~~on reasonable terms. In addition~~$100,000 ~~any~~and ~~indebtedness we incur in the future could subject us~~ to ~~restrictive~~be ~~covenants~~funded ~~limiting~~by ~~our~~equipment ~~flexibility~~loans ~~in planning for~~and, ~~or reacting~~ to ~~changes~~a inlesser extent, ~~our~~anticipated ~~business. If~~operating wecash doflows ~~not~~and ~~comply~~borrowings ~~with~~under ~~such~~the ~~covenants,~~line ~~our lenders could accelerate repayment~~ of ~~our~~credit ~~debt~~with orAdvance ~~restrict~~Financial ~~our~~Corporation. ~~access~~This toincludes ~~further~~capital ~~borrowings,~~expenditures ~~which~~ in ~~turn~~support ~~could~~of ~~restrict~~ our ~~operating~~normal ~~flexibility and endanger our ability to continue~~ operations.

~~Off-Balance~~If ~~Sheet~~our ~~Arrangements~~business plans and cost estimates are inaccurate and our operations require additional cash or if we deviate from our current plans, we could be required to seek further debt financing for particular projects or ongoing operational needs. This indebtedness could harm our business if we cannot obtain additional financing on reasonable terms. In addition, any indebtedness we incur in the future could subject us to restrictive covenants limiting our flexibility in planning for or reacting to changes in our business. If we do not comply with such covenants, our lenders could accelerate repayment of our debt or restrict our access to further borrowings, which in turn could limit our operating flexibility and endanger our ability to continue operations.

We12 doTable ~~not use off-balance sheet arrangements with unconsolidated entities or related parties, nor do we use other forms~~ of off-balance sheet arrangements. Accordingly, our liquidity and capital resources are not subject to off-balance sheet risks from unconsolidated entities. As of June 30, 2023, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.Contents

WeITEM 7. ~~have~~Management’s ~~entered~~Discussion ~~into operating leases primarily for certain equipment~~ and ~~our~~Analysis ~~facilities in the normal course~~ of ~~business.~~Financial ~~These~~Condition ~~arrangements~~and ~~are~~Results ~~often referred to as a form~~ of ~~off-balance-sheet~~Operations ~~financing~~(continued). Future minimum lease payments under our operating leases as of June 30, 2023 are detailed in the section entitled “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements.

~~Effect~~Off-Balance ofSheet ~~Recently Issued Accounting Standards and Estimates~~Arrangements

We do not ~~believe~~use ~~that~~off-balance ~~any~~sheet ~~recently~~arrangements ~~issued,~~with ~~but~~unconsolidated ~~not~~entities ~~yet~~or ~~effective~~related parties, ~~accounting~~nor ~~standards,~~do ifwe ~~currently~~use ~~adopted,~~other ~~will~~forms ~~have~~of aoff-balance ~~material~~sheet ~~effect~~arrangements. onAccordingly, our ~~consolidated~~liquidity ~~financial~~and ~~position,~~capital ~~results~~resources are not subject to off-balance sheet risks from unconsolidated entities. As of ~~operations~~June 30, or2024, ~~cash~~we ~~flows~~did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

17We ~~Table~~have entered into operating leases primarily for certain equipment and our facilities in the normal course of ~~Contents~~business. These arrangements are often referred to as a form of off-balance-sheet financing. Future minimum lease payments under our operating leases as of June 30, 2024 are detailed in the section entitled “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements.

~~Application~~Effect of ~~Critical~~Recently Issued Accounting ~~Policies~~Standards and Estimates

Our consolidated financial statements included under Item 8 in this report have been prepared in accordance with GAAP. Our significant accounting policies are described in the notes to our consolidated financial statements. The preparation of financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the amounts reported in our financial statements and their accompanying notes. We ~~have~~do ~~identified~~not ~~certain~~believe ~~policies~~ that weany ~~believe~~recently ~~are~~issued, ~~important~~but tonot ~~the~~yet ~~portrayal of our financial condition and results of operations. These policies require the application of significant judgment by our management. We base our estimates on our historical experience~~effective, ~~industry~~accounting standards, ~~and~~if ~~various~~currently ~~other~~adopted, ~~assumptions~~will ~~that~~have wea ~~believe~~material ~~are reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. An adverse~~ effect on our ~~financial~~consolidated ~~condition, changes in~~ financial ~~condition~~position, ~~and~~ results of operations, ~~could occur if circumstances change that alter the various assumptions~~ or ~~conditions~~cash ~~used in such estimates or assumptions~~flows. ~~Our critical accounting policies include those listed below.~~

~~Revenue~~Application ~~Recognition~~ of Critical Accounting Policies and Estimates

WeOur ~~record~~consolidated ~~revenue~~financial ~~based~~statements onincluded ~~the~~under ~~five-step~~Item ~~model~~8 ~~which~~in ~~includes:~~this ~~(1)~~report ~~identifying~~have ~~the~~been ~~contract~~prepared in accordance with ~~the~~GAAP. ~~customer;~~Our ~~(2)~~significant ~~identifying~~accounting ~~the~~policies ~~performance~~are ~~obligations~~described in the ~~contract;~~notes ~~(3)~~to ~~determining~~our ~~the~~consolidated ~~transaction~~financial ~~price;~~statements. ~~(4)~~Preparing ~~allocating~~financial ~~the~~statements ~~transaction~~in ~~price~~accordance towith ~~the~~GAAP ~~performance~~requires ~~obligations;~~that ~~and~~we ~~(5)~~make ~~recognizing~~estimates ~~revenue~~and ~~when~~assumptions ~~the~~that ~~performance~~affect ~~obligations~~the ~~are~~amounts ~~satisfied.~~reported ~~Substantially~~in ~~all of~~ our ~~revenue~~financial isstatements ~~generated~~and bytheir ~~fulfilling~~accompanying ~~orders~~notes. ~~for~~We ~~the~~have ~~purchase~~identified ofcertain ~~manufactured~~policies ~~products~~that ~~and~~we ~~product~~believe ~~purchased~~are ~~for~~important ~~resale~~ to ~~retailers,~~the ~~wholesalers,~~portrayal orof ~~direct~~our tofinancial ~~consumers~~condition ~~via~~and ~~online~~results ~~channels,~~of ~~with~~operations. ~~each~~These ~~order~~policies ~~considered~~require tothe beapplication aof ~~distinct~~significant ~~performance~~judgment ~~obligation. These~~by ~~orders~~our ~~may~~management. beWe ~~formal~~base ~~purchase~~our ~~orders,~~estimates ~~verbal~~on ~~phone~~our ~~orders~~historical experience, ~~e-mail~~industry ~~orders~~standards, ~~or orders received online. Shipping~~ and ~~handling~~various ~~activities~~other ~~for~~assumptions ~~which~~that we believe are ~~responsible~~reasonable under the ~~terms~~circumstances. ~~and~~Actual ~~conditions~~results ofcould ~~the~~differ ~~order~~from ~~are~~these ~~not~~estimates ~~accounted~~under ~~for~~different asassumptions ~~performance~~or ~~obligations~~conditions. ~~but~~An asadverse ~~fulfillment~~effect ~~costs. These~~on ~~activities~~our ~~are~~financial ~~required~~condition, tochanges ~~fulfill~~in ~~our~~financial ~~promise~~condition, toand ~~transfer~~results ~~the~~of ~~goods~~operations ~~and~~could ~~are~~occur ~~expensed~~if ~~when~~circumstances ~~revenue~~change isthat ~~recognized. The~~alter ~~impact~~the ofvarious ~~this~~assumptions ~~policy~~or ~~election~~conditions isused ~~insignificant~~in assuch itestimates ~~aligns~~or ~~with~~assumptions. ~~our~~Our ~~current~~critical ~~practice~~accounting policies include those listed below.

Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling a performance obligation. We have elected to exclude sales, use and similar taxes from the measurement of the transaction price. The impact of this policy election is insignificant, as it aligns with our current practice. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, which includes costs for trade promotion programs, coupons, returns, and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the end of each reporting period and the impact of any adjustments are recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, we consider the customer's ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on the date of transfer of control of the products to the customer. Revenue is recognized at the point in time that control of the ordered products is transferred to the customer. Generally, this occurs when the product is delivered, or in some cases, picked up from one of our distribution centers by the customer. Recognition

~~Allowance~~We record revenue based on the five-step model which includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when the performance obligations are satisfied. Substantially all of our revenue is generated by fulfilling orders for ~~Doubtful~~the ~~Accounts~~purchase of manufactured products and product purchased for resale to retailers, wholesalers, or direct to consumers via online channels, with each order considered to be a distinct performance obligation. These orders may be formal purchase orders, verbal phone orders, e-mail orders or orders received online. Shipping and handling activities for which we are responsible under the terms and conditions of the order are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill our promise to transfer the goods and are expensed when revenue is recognized. The impact of this policy election is insignificant as it aligns with our current practice.

WeRevenue ~~maintain~~is anmeasured ~~allowance~~as ~~for~~the ~~doubtful~~net ~~accounts~~amount of consideration expected to ~~reflect~~be ~~our~~received ~~estimate~~to offulfill ~~current~~a performance obligation. We have elected to exclude sales, use and ~~past~~similar ~~due~~taxes ~~receivable~~from ~~balances~~the ~~that~~measurement ~~may~~of ~~not~~the betransaction ~~collected~~price. The ~~allowance~~impact ~~for~~of ~~doubtful~~this ~~accounts~~policy election is ~~based~~insignificant, ~~upon~~as it aligns with our ~~assessment~~current ofpractice. ~~the~~The ~~collectability~~amount of ~~specific~~consideration ~~customer~~expected ~~accounts~~to be received and revenue recognized includes variable consideration estimates, including costs for trade promotion programs, coupons, returns, and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the ~~aging~~end of ~~accounts~~each ~~receivable~~reporting period and ~~our~~the ~~history~~impact of ~~bad~~any ~~debts.~~adjustments Weare ~~believe~~recognized ~~that~~in the ~~allowance~~period ~~for~~the ~~doubtful~~adjustments ~~accounts~~are identified. In assessing whether collection of consideration from a customer is ~~adequate~~probable, we consider the customer’s ability and intent to ~~cover~~pay ~~anticipated~~that ~~losses~~amount of consideration when it is due. Payment of invoices is due as specified in the ~~receivable~~underlying ~~balance~~customer ~~under~~agreement, ~~current~~typically ~~conditions.~~30 ~~However~~days from the invoice date, ~~significant~~which ~~deterioration~~occurs inon the ~~financial~~date ~~condition~~of transfer of ~~our~~control ~~customers,~~of ~~resulting~~the products to the customer. Revenue is recognized at the point in antime ~~impairment~~that control of ~~their~~the ~~ability~~ordered products is transferred to ~~make~~the ~~payments~~customer. Generally, ~~could~~this ~~materially~~occurs ~~change~~at ~~these~~the ~~expectations~~time ~~and~~of anthe ~~additional~~shipment ~~allowance~~from ~~may~~our bewarehouse. ~~required~~or in some cases, picked up from one of our distribution centers by the customer.

~~Inventories~~Allowance for Doubtful Accounts

We ~~value~~maintain ~~inventory at the lower of cost or net realizable value on~~ an ~~item-by-item~~allowance ~~basis~~for ~~and~~doubtful ~~establish~~accounts ~~reserves equal~~ to ~~all~~reflect orour aestimate ~~portion~~ of ~~the~~current ~~related~~and ~~inventory~~past todue ~~reflect~~receivable ~~situations~~balances inthat ~~which~~may ~~the cost of the inventory is~~ not ~~expected to~~ be ~~recovered~~collected. ~~This~~The ~~requires~~allowance usfor todoubtful ~~make~~accounts ~~estimates~~is ~~regarding~~based ~~the~~upon ~~net realizable value of~~ our ~~inventory, including an~~ assessment ~~for~~of ~~excess~~the ~~and~~collectability ~~obsolete~~of ~~inventory.~~specific ~~Once~~customer ~~we establish an inventory reserve amount in a fiscal period~~accounts, the ~~reduced~~aging ~~inventory value is maintained until the inventory is sold or otherwise disposed~~ of. Inaccounts ~~evaluating~~receivable ~~whether~~and ~~inventory~~our ishistory ~~stated at the lower~~ of ~~cost~~bad ordebts. ~~net~~We ~~realizable~~believe ~~value,~~that ~~management considers such factors as~~ the ~~amount~~allowance offor ~~inventory~~doubtful ~~on-hand,~~accounts ~~the~~is ~~estimated~~adequate ~~time required~~ to ~~sell~~cover ~~such~~anticipated ~~inventory,~~losses in the ~~foreseeable~~receivable ~~demand~~balance ~~within~~under ~~a specified time horizon and~~ current ~~and expected market~~ conditions. ~~Based on this evaluation~~However, wesignificant ~~record~~deterioration ~~adjustments~~in tothe ~~cost~~financial condition of ~~goods~~our ~~sold~~customers, toresulting ~~adjust~~in ~~inventory~~an toimpairment ~~its~~of ~~net~~their ~~realizable~~ability ~~value.~~to ~~These~~make ~~adjustments are estimates~~payments, ~~which~~ could ~~vary~~materially ~~significantly,~~change ~~either~~these ~~favorably or unfavorably, from actual requirements if future economic conditions, customer demand or other factors differ from~~ expectations~~. Finished~~ ~~goods~~ and ~~goods~~an inadditional ~~process~~allowance ~~include~~may abe ~~provision for manufacturing overhead, including depreciation~~required.

~~18 Table of Contents~~Inventories

~~Accounting~~We value inventory at the lower of cost or net realizable value on an item-by-item basis and establish reserves equal to all or a portion of the related inventory to reflect situations in which the cost of the inventory is not expected to be recovered. This requires us to make estimates regarding the net realizable value of our inventory, including an assessment for ~~Income~~excess ~~Taxes~~and obsolete inventory. Once we establish an inventory reserve amount in a fiscal period, the reduced inventory value is maintained until the inventory is sold or otherwise disposed of. In evaluating whether inventory is stated at the lower of cost or net realizable value, management considers such factors as the amount of inventory on-hand, the estimated time required to sell such inventory, the foreseeable demand within a specified time horizon and current and expected market conditions. Based on this evaluation, we record adjustments to cost of goods sold to adjust inventory to its net realizable value. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions, customer demand or other factors differ from expectations. Finished goods and goods in process include a provision for manufacturing overhead, including depreciation.

We13 ~~utilize~~Table ~~the asset and liability method~~ of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. If we determine in the future that it is more likely than not that we will realize all or a portion of our deferred tax assets, we will adjust our valuation allowance in the period we make the determination. We expect to provide a full valuation allowance on our future tax benefits until we can sustain a level of profitability that demonstrates our ability to realize these assets. At June 30, 2023, we carried a valuation allowance of $1.3 million against our net deferred tax assets.Contents

~~Impairment~~ITEM 7. Management’s Discussion and Analysis of ~~Long-Lived~~Financial ~~Assets~~Condition and Results of Operations (continued).

WeAccounting ~~assess~~for ~~the~~Income impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flows the asset or asset group is expected to generate. If an asset or asset group is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized.Taxes

InWe ~~fiscal~~utilize ~~year~~the ~~2022~~asset and ~~2023,~~liability wemethod ~~did~~of ~~generate~~accounting ~~positive~~for ~~cash~~income ~~flows~~taxes. ~~from~~We ~~operations~~recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. ~~However,~~We ifregularly assess the likelihood that our ~~long-term~~deferred tax assets will be recovered from future ~~results~~taxable doincome. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to ~~yield~~carry ~~positive~~a ~~cash~~full ~~flows~~valuation inallowance ~~excess~~against ofour gross deferred tax assets that will not reverse against deferred tax liabilities within the ~~carrying~~scheduled ~~amount~~reversal period. If we determine in the future that it is more likely than not that we will realize all or a portion of our ~~long-lived~~deferred tax assets, we ~~would~~will ~~anticipate~~adjust ~~possible~~our valuation allowance in the period we make the determination. We expect to provide a full valuation allowance on our future ~~impairments~~tax benefits until we can sustain a level of ~~those~~profitability that demonstrates our ability to realize these assets. At June 30, 2024, we carried a valuation allowance of $1.4 million against our net deferred tax assets.

~~Considerable~~Impairment ~~management judgment is necessary in estimating future cash flows and other factors affecting the valuation~~ of ~~long~~Long-~~lived~~Lived assets, including the operating and macroeconomic factors that may affect them. We use historical financial information, internal plans and projections and industry information in making such estimates.Assets

~~Non~~We assess the impairment of long-~~GAAP~~lived ~~Financial~~assets ~~Measures~~whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flows the asset or asset group is expected to generate. If an asset or asset group is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. If the estimated fair value is less than the book value, the asset is written down to the estimated fair value, and an impairment loss is recognized.

~~Reconciliation~~In offiscal ~~net~~years ~~income~~2023 and 2024, we generated positive cash flows from operations. However, if our long-term future results do not continue to ~~Adjusted~~yield ~~EBITDA~~positive ~~for~~cash flows in excess of the ~~years~~carrying ~~ended~~amount ~~June 30~~of our long-lived assets, ~~2023~~we ~~and~~would ~~2022:~~ anticipate possible future impairments of those assets.

	Year ended June 30,
	2023		2022
	(in thousands)
Net income	$	1,199	$	604
Plus interest expense, financing costs and income tax		348		342
Plus depreciation and amortization expense		354		306
Plus stock-based compensation expense		46		24
Adjusted EBITDA	$	1,947	$	1,276

Considerable management judgment is necessary in estimating future cash flows and other factors affecting the valuation of long-lived assets, including operating and macroeconomic factors that may affect them. We use historical financial information, internal plans and projections, and industry information to make such estimates.

~~As used herein, Adjusted EBITDA represents net income before interest income, interest expense and financing costs, depreciation, and stock~~Non-~~based compensation expense. We have excluded the non-cash expenses and stock-based compensation expense as they do not reflect the cash-based operations of the Company. Adjusted EBITDA is a non-~~GAAP ~~financial~~Financial measure which is not required by or defined under GAAP. The presentation of this financial measure is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP, including the net income of the Company or net cash provided by operating activities.Measures

~~Management~~Reconciliation ~~recognizes that non-GAAP financial measures have limitations in that they do not reflect all~~ of ~~the items associated with the Company’s~~ net ~~income~~loss asto ~~determined~~Adjusted inEBITDA ~~accordance with GAAP, and are not a substitute~~ for ~~or a measure of~~ the ~~Company’s~~years ~~profitability~~ended orJune ~~net earnings. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance and liquidity~~30, ~~and~~2024 ~~because it is less susceptible to variances in actual performance resulting from depreciation~~ and ~~amortization and non-cash charges for stock-based compensation expense and loss on disposal of assets.~~2023:

	Year ended June 30,
	2024			2023
	(in thousands)
Net income (loss)	$	(399	)	$	1,199
Plus interest expense, financing costs and income tax		578			348
Plus depreciation and amortization expense		412			354
Plus stock-based compensation expense		20			46
Adjusted EBITDA	$	611		$	1,947

As used herein, Adjusted EBITDA represents net income before interest income, interest expense and financing costs, depreciation, and stock-based compensation expense. We have excluded the non-cash expenses and stock-based compensation expenses as they do not reflect the cash-based operations of the Company. Adjusted EBITDA is a non-GAAP financial measure that is not required by or defined under GAAP. The presentation of this financial measure is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP, including the net income of the Company or net cash provided by operating activities.

Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with the Company’s net income as determined in accordance with GAAP and are not a substitute for or a measure of the Company’s profitability or net earnings. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance and liquidity and because it is less susceptible to variances in actual performance resulting from depreciation and amortization and non-cash charges for stock-based compensation expense and loss on disposal of assets.

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable for a smaller reporting company.

1914 Table of Contents

ITEM 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Consolidated Financial Statements:
Reports of Independent Registered Public Accounting Firms Auditor Firm ID (PCAOB Number 287)		F-2 - F-4
Reports of Independent Registered Public Accounting Firms Auditor Firm ID (PACOB Number 287)		F-1 & F-2
Consolidated Balance Sheets as of June 30, 2023 and 2022		F-5
Consolidated Balance Sheets as of June 30, 2024 and 2023		F-3
Consolidated Statements of Operations for the years ended June 30, 2023 and 2022		F-6
Consolidated Statements of Operations for the years ended June 30, 2024 and 2023		F-4
Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2023 and June 30, 2022		F-7
Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2024 and June 30, 2023		F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2023 and 2022		F-8
Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023		F-6
Notes to Consolidated Financial Statements		F-97

~~F-1~~15 Table of Contents

REPORT OF INDEPENDENT REGISTERED ~~PUBLIC~~PUBLC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Luvu Brands, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Luvu Brands, Inc. and subsidiaries (the “Company”), as of June 30, ~~2023~~2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended June 30, ~~2023~~2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, ~~2023~~2024 and the results of its operations and its cash flows for the year ended June 30, ~~2023~~2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and ~~regulations~~regulators of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. ~~Those~~These standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

We did not identify any critical audit matters that need to be communicated.

~~We have served as the Company’s auditor since 2022. Margate~~Atlanta, ~~Florida~~Georgia

~~October~~September 1330, ~~2023~~2024

~~F-2~~We ~~Table~~have ofserved ~~Contents~~as the Company’s auditor since 2024.

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Luvu Brands, Inc.

~~Luvu~~Opinion ~~Brands,~~on ~~Inc.~~the Consolidated Financial Statements

~~Opinion~~We onhave audited the ~~Financial~~accompanying ~~Statements~~consolidated balance sheet of Luvu Brands, Inc. (the Company) as of June 30, 2023, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year ended June 30, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and the results of its operations and its cash flows for the year ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Luvu Brands, Inc. (the Company) as of June 30, 2022 and the related consolidated statements of operations, stockholders’ equity and cash flows for the year ended June 30, 2022, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and the results of its operations and its cash flows for the year ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’'s management. Our responsibility is to express an opinion on the Company’'s ~~consolidated~~ financial statements based on our ~~audits~~audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audits~~audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ~~consolidated~~ financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our ~~audits~~audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’'s internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audits~~audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audits~~audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audits~~audit ~~provide~~provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the ~~consolidated~~ financial statements that were communicated or required to be communicated to the audit committee and that: (1I) relate to accounts or disclosures that are material to the ~~consolidated~~ financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

~~F-3~~We ~~Table~~did ofnot ~~Contents~~identify any critical audit matters that need to be communicated.

~~Valuation~~We ofhave ~~inventory~~served ~~and~~as ~~inventory~~the ~~reserves~~Company's auditor since 2022. Margate, Florida

AsOctober ~~described in Notes 2 and 4 to the financial statements~~13, the Company has inventories, net totaled to approximately $3.82 million as of June 30, 2022. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method. The Company establishes reserves for excess and obsolete inventory for each accounting period and records any potential adjustments needed for the reserves. 2023

~~Auditing~~F-2 ~~management’s~~Table ~~estimates~~ of the net realizable value of inventories, including inventory reserves was highly judgmental due to the degree of subjectivity involved in assessing the inventory reserves which are based on prevailing circumstances and judgment for consideration of current events, such as economic conditions, that may affect inventory. Contents

To test the estimates for the net realizable value of inventories, including inventory reserves, we performed audit procedures that included, among others, evaluating the reasonableness of the inputs used in management’s inventory reserve calculation and analyzing the reserve calculations to determine whether management identified any evidence of slow-moving inventory or any obsolescence due to existing and potential changes in marketability which may impact the reserves.

/s/ Liggett & Webb, P.A.

We have served as the Company’s auditor since 2012.

Boynton Beach, Florida

October 12, 2022

F-4 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Consolidated Balance Sheets

As of June 30, ~~2023~~2024 and ~~2022~~2023

	2023			2022
	2024			2023
Assets:	(in thousands, except share data)
Current assets:
Cash and cash equivalents	$	1,~~041~~028		$	~~859~~1,041
Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $55 in 2023 and $7 in 2022		1,051			1,107
Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $11 in 2024 and $55 in 2023		1,061			1,051
Inventories, net of allowance for excess or absolete inventory of $252 in 2023 and $176 in 2022		4,202			3,817
Inventories, net of allowance for inventory reserve of $188 in 2024 and $252 in 2023		3,287			4,202
Other current assets		84141			~~165~~83
Total current assets		65,~~378~~517			56,~~948~~377
Equipment, property and leasehold improvements, net		21,~~186~~870			2,~~029~~187
Finance lease assets		24			47
Finance lease assets, net		103			24
Operating lease assets		1,913			2,255
Operating lease assets, net		1,545			1,913
Deferred tax asset, net		10-			-10
Other assets		~~100~~96			100
Total assets	$	109,~~611~~131		$	10,~~379~~611
Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	21,~~114~~502		$	2,~~680~~114
Current debt		1,~~659~~639			1,~~618~~659
Other accrued liabilities		~~416~~508			~~545~~416
Operating lease liability		~~396~~528			~~331~~396
Total current liabilities		4,~~585~~177			54,~~174~~585
Noncurrent liabilities:
Long-term debt		1,148			1,183
Deferred Tax Liability		119			-
Long-term operating lease liability		1,667			2,068
Long-term debt		854			1,148
Total noncurrent liabilities		2,815			3,251
Long-term operating lease liability		1,151			1,667
Total liabilities		7,400			8,425
Total noncurrent liabilities		2,124			2,815
Commitments and contingencies (See Note 13)		—			—
Total liabilities		6,301			7,400
Commitments and contingencies (See Note 13)		-			-
Stockholders’ equity (deficit):
Preferred stock, 5,700,000 shares authorized, $0.0001 par value none issued and outstanding		—-			—-
Series A Convertible Preferred stock, 4,300,000 shares authorized $0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $1,000 as of June 30, 2023 and 2022		—			—
Series A Convertible Preferred stock, 4,300,000 shares authorized $0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $1,000 as of June 30, 2024 and 2023		-			-
Common stock, $0.01 par value, 175,000,000 shares authorized, 76,547,672 and 76,046,249 shares issued and outstanding as of June 30, 2023 and 2022, respectively		765			760
Common stock, $0.01 par value, 175,000,000 shares authorized, 76,547,672 and 76,547,672 shares issued and outstanding as of June 30, 2024 and 2023, respectively		765			765
Additional paid-in capital		6,~~234~~253			6,~~183~~234
Accumulated deficit		(34,~~790~~188	)		(43,~~989~~790	)
Total stockholders’ equity		32,~~211~~830			13,~~954~~211
Total liabilities and stockholders’ equity	$	109,~~611~~131		$	10,~~379~~611

The accompanying notes are an integral part of these consolidated financial statements.

F-53 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Consolidated Statements of Operations

Years Ended June 30, ~~2023~~2024 and ~~2022~~2023

	2023			2022
	2024			2023
	(in thousands, except share data)
Net Sales	$	2924,~~219~~574		$	2629,~~343~~219
Cost of goods sold (excl. depreciation expense presented below)		2218,~~027~~048			2022,~~342~~027
Gross profit		76,~~192~~526			67,~~001~~192
Operating expenses:
Advertising and promotion		~~791~~1,028			~~574~~791
Other selling and marketing		1,~~422~~725			1,~~189~~422
General and administrative		3,~~081~~187			23,~~986~~081
Depreciation		~~354~~412			~~306~~354
Total operating expenses		56,~~648~~352			5,~~055~~648
Operating income		~~1,544~~174			~~946~~1,544
Other income (expense):
Interest expense and financing costs		(355	)		(342	)
Interest income (expense) and financing costs		(411	)		(355	)
Total other income (expense)		(~~355~~411	)		(~~342~~355	)
Income from operations before income taxes		1,189			604
Income/(loss) from operations before income taxes		(237	)		1,189
Benefit for income taxes		10			—
Provision for income taxes		(162	)		10
Net income	$	1,199		$	604
Net income (loss)	$	(399	)	$	1,199
Net income per share:
Basic	$	(0.0201	)	$	0.0102
Diluted	$	(0.0201	)	$	0.0102
Shares used in calculation of net income per share:
Shares used in the calculation of net income per share:
Basic		76,~~333~~547,~~485~~672			7576,~~456~~333,~~306~~485
Diluted		76,~~494~~547,~~717~~672			76,~~110~~494,~~815~~717

The accompanying notes are an integral part of these consolidated financial statements.

F-64 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the years ended June 30, ~~2022~~2024 and June 30, 2023

	Series A Preferred								Additional						Total
	Series A Preferred Stock				Common Stock				AdditionalPaid-in			Accumulated			Total Stockholders’ Equity
	Stock				Common Stock				Paid-in			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			(Deficit)
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
	(in thousands, except share data)
Balance, June 30, 2021		4,300,000	$	—		75,037,890	$	750	$	6,166		$	(5,593	)	$	1,323
Ending balance, June 30, 2022		4,300,000	$	0		76,046,249	$	760	$	6,183		($4,989)			$	1,956
Stock-based compensation expense		—0		—0		—0		—0		2446			—0			2446
Stock option exercises		—0		—0		1501,~~008,359~~423		105		(75	)		—0			310
Net income		—0		—0		—0		—0		—0			~~604~~1,199			~~604~~1,199
Ending balance, June 30, 2022		4,300,000		—		76,046,249		760		6,183			(4,989	)		1,954
Ending balance, June 30, 2023		4,300,000	$	0		76,547,672	$	765	$	6,234		($3,790)			$	3,211
Stock-based compensation expense		—0		—0		—0		—0		4619			—0			4619
Stock option exercises		—0		—0		~~501,423~~0		50		60			—0			12
Net income		—0		—0		—0		—0		—0			~~1,199~~(399	)		~~1,199~~(399	)
Ending balance, June 30, 2023		4,300,000	$	—		76,547,672	$	765	$	6,234		$	(3,790	)	$	3,211
Ending balance, June 30, 2024		4,300,000	$	0		76,547,672	$	765	$	6,253		($4,188)			$	2,830

The accompanying notes are an integral part of these consolidated financial statements.

F-75 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended June 30, ~~2023~~2024 and ~~2022~~2023

	2023			2022
	2024			2023
	(in thousands)
OPERATING ACTIVITIES:
Net income	$	~~1,199~~(399	)	$	~~604~~1,199
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		354			306
Deferred Income Taxes		129			(10	)
Stock-based compensation expense		46			24
Depreciation and amortization		412			354
Provision for bad debt		1			22
Stock-based compensation expense		19			46
Provision for slow moving or obsolete inventory		76			3
Provision for bad debt		10			1
Change in deferred tax assets		(10)			—
Provision for inventory reserve		(38	)		76
Amortization of operating lease asset		342			298
Change in operating assets and liabilities:
Accounts receivable		54(20	)		554
Inventory		~~(460~~953	)		(~~430~~460	)
Prepaid expenses and other assets		81(54	)		~~(34~~81	)
Accounts payable		(~~566~~615	)		12(566	)
Accrued expenses and interest		~~(77~~52	)		17(77	)
Operating lease liability		(337	)		(274	)
Accrued payroll and related		40			(42	)
Accrued payroll and related		(42	)		(166	)
Operating lease liability		(383	)		(337	)
Net cash provided by operating activities		661			387
Amortization of operating lease asset		369			342
Net cash provided by operating activities		475			661
INVESTING ACTIVITIES:
Investment in equipment, software and leasehold improvements		(~~115~~71	)		(52115	)
Net cash used in investing activities		(~~115~~71	)		(52115	)
FINANCING ACTIVITIES:
Borrowing (repayment) under revolving line of credit		~~(31~~5	)		(1331	)
Repayment of unsecured line of credit		(1213	)		(12	)
Repayments under secured note payable		—			(152	)
Proceeds from unsecured notes payable		-			200
Proceeds from unsecured notes payable		200			200
Repayment of unsecured notes payable		-			(200	)
Repayment of unsecured notes payable		(200	)		(200	)
Payments on equipment notes		(392	)		(308	)
Payments on equipment notes		(308	)		(268	)
Proceeds from exercise of stock options		-			2
Proceeds from exercise of stock options		2			3
Principal payments on capital leases		(17	)		(15	)
Principal payments on capital leases		(15	)		(11	)
Net cash used in financing activities		(417	)		(364	)
Net cash used in financing activities		(364	)		(453	)
Net increase (decrease ) in cash and cash equivalents		(13	)		182
Net increase (decrease) in cash and cash equivalents		182			(118	)
Cash and cash equivalents at beginning of year		1,041			859
Cash and cash equivalents at beginning of year		859			977
Cash and cash equivalents at end of year	$	1,028		$	1,041
Cash and cash equivalents at end of year	$	1,041		$	859
Supplemental Disclosure of Cash Flow Information:
Non cash items:
Purchases of equipment with equipment notes	$	~~414~~-		$	~~346~~414
Finance lease asset obligation in exchange for lease payable	$	104		$	2-
Finance lease asset obligation in exchange for lease payable	$	—-		$	23-
Cash paid during the year for:
Interest	$	~~350~~363		$	~~338~~350
Income taxes	$	—-		$	—-

The accompanying notes are an integral part of these consolidated financial statements.

F-86 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 1. ORGANIZATION AND NATURE OF BUSINESS

Luvu Brands, Inc. (the “Company” or Luvu) was incorporated in the State of Florida on February 25, 1999. References to the “Company” in these notes include the Company and its wholly owned subsidiaries, OneUp Innovations, Inc. (“OneUp”), and Foam Labs, Inc. (“Foam Labs”). All operations of the Company are currently conducted by OneUp ~~Innovations, Inc~~.

The Company is an Atlanta, Georgia based designer, manufacturer and marketer of a portfolio of consumer lifestyle brands including: Liberator^®, a brand category of iconic products for enhancing sexual performance; Avana^® inclined bed therapy products, assistive in relieving medical conditions associated with acid reflux, surgery recovery and chronic pain; and Jaxx^®, a diverse range of casual fashion daybeds, sofas and beanbags made from polyurethane foam and repurposed polyurethane foam trim. These products are sold through the Company’s websites, online mass merchants and retail stores worldwide. Many of our products are offered flat-packed and either roll or vacuum compressed to save on shipping and reduce our carbon footprint.

Sales are generated through internet and print advertisements. We have a diversified customer base with only one customer accounting for 1030% or more of consolidated net sales in the current and prior fiscal year and no particular concentration of credit risk in one economic sector. Foreign operations and foreign net sales are not material.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These consolidated financial statements include the accounts and operations of our wholly owned operating subsidiaries, OneUp and Foam Labs. Intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates in these consolidated financial statements include estimates of: income taxes; tax valuation reserves; allowances for doubtful accounts; inventory valuation and reserves, share-based compensation; and useful lives for depreciation and amortization. Actual results could differ materially from these estimates.

Revenue Recognition

We record revenue based on the five-step model which includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when the performance obligations are satisfied. Substantially all of our revenue is generated by fulfilling orders for the purchase of manufactured products and product purchased for resale to retailers, wholesalers, or direct to consumers via online channels, with each order considered to be a distinct performance obligation. These orders may be formal purchase orders, verbal phone orders, e-mail orders or orders received online. Shipping and handling activities for which we are responsible under the terms and conditions of the order are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill our promise to transfer the goods and are expensed when revenue is recognized. The impact of this policy election is insignificant as it aligns with our current practice.

F-97 Table of Contents

~~Luvu~~NOTE ~~Brands, Inc~~2. ~~and~~SUMMARY ~~Subsidiaries~~OF SIGNIFICANT ACCOUNTING POLICIES (continued).

~~Notes~~Revenue is measured as the net amount of consideration expected to ~~Consolidated~~be ~~Financial~~received ~~Statements~~in exchange for fulfilling a performance obligation. We have elected to exclude sales, use and similar taxes from the measurement of the transaction price. The impact of this policy election is insignificant, as it aligns with our current practice. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, which includes costs for trade promotion programs, coupons, returns and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the end of each reporting period and the impact of any adjustments are recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, we consider the customer’s ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on the date of transfer of control of the products to the customer. Revenue is recognized at the point in time that control of the ordered products is transferred to the customer. Generally, this occurs when the product is shipped from the distribution center, or in some cases, picked up from one of our distribution centers by the customer.

June 30, 2023 and 2022

Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling a performance obligation. We have elected to exclude sales, use and similar taxes from the measurement of the transaction price. The impact of this policy election is insignificant, as it aligns with our current practice. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, which includes costs for trade promotion programs, coupons, returns and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the end of each reporting period and the impact of any adjustments are recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, we consider the customer's ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on the date of transfer of control of the products to the customer. Revenue is recognized at the point in time that control of the ordered products is transferred to the customer. Generally, this occurs when the product is delivered, or in some cases, picked up from one of our distribution centers by the customer.

Deferred revenues

Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. Deferred revenues primarily relate to gift cards purchased, but not used, prior to the end of the fiscal period. Our total deferred revenue as of June 30, ~~2023~~2024 and June 30, ~~2022~~2023 was $18 19,~~654~~454 and $18,~~118~~654, respectively, and was included in “Other accrued liabilities” on our consolidated balance sheets.

Cost of Goods Sold

Cost of goods sold includes raw material, labor, manufacturing overhead, and royalty expense.

Shipping and Handling Costs

We include fees earned on the shipment of our products to customers in sales and include costs incurred on the shipment of product to customers in costs of goods sold.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

Allowance for Doubtful Accounts

The allowance for doubtful accounts reflects management'’s best estimate of probable credit losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specifically identified nonpaying accounts, and other currently available evidence. The Company reviews its allowance for doubtful accounts monthly, ~~with~~focusing ~~a focus~~ on significant individual past due balances over 90 days. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers.

The following is a summary of Accounts Receivable as of June 30, ~~2023~~2024 and June 30, ~~2022~~2023.

	June 30, 2023			June 30, 2022
	June 30, 2024			June 30, 2023
	(in thousands)
Accounts receivable	$	1,~~107~~072		$	1,~~114~~107
Allowance for doubtful accounts		(111	)		(1	)
Allowance for discounts and returns		~~(55~~—	)		(655	)
Total accounts receivable, net	$	1,~~051~~061		$	1,~~107~~051

F-108 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Inventories and ~~Allowance for Excess and Obsolete~~ Inventory Reserves

Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method. Net realizable value is defined as sales price less cost to dispose and a normal profit margin. Inventory costs include materials, labor, depreciation and overhead. The company establishes ~~allowances~~ reserves for excess and obsolete inventory, based on prevailing circumstances and judgment for consideration of current events, such as economic conditions, that may affect inventory. The reserve required to record inventory at lower of cost or net realizable value may be adjusted in response to changing conditions.

Concentration of Credit Risk

The Company maintains its cash accounts with banks located in Georgia. The total cash balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per bank. The Company had cash balances on deposit at June 30, ~~2023~~2024 and ~~2022~~2023 that exceeded the balance insured by the FDIC by $~~880~~835,~~083~~054 and $~~717~~880,~~316~~083, respectively. Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in North America and Europe.

During 2024, we purchased 33% of total inventory purchases from one vendor.

During 2023, we purchased 33% of total inventory purchases from one vendor.

~~During~~As ~~2022~~of June 30, we2024, ~~purchased~~two 34of the Company’s customers represent 43% and 17% of the total ~~inventory~~accounts ~~purchases~~receivables, ~~from~~respectively. ~~one~~As ~~vendor~~of June 30, 2023, two of the Company’s customers represent 35% and 12% of the total accounts receivable, respectively. Sales to (and through) Amazon accounted for 36% and 36% of our net sales during each of the years ended June 30, 2024 and June 30, 2023 respectively.

As of June 30, 2023, two of the Company’s customers represent 35% and 12% of the total accounts receivables, respectively. As of June 30, 2022, two of the Company’s customers represent 21% and 13% of the total accounts receivable, respectively. Sales to (and through) Amazon accounted for 36% and 31% of our net sales during each of the years ended June 30, 2023 and June 30, 2022 respectively.

Fair Value of Financial Instruments

At June 30, ~~2023~~2024 and ~~2022~~2023, our financial instruments included cash and cash equivalents, accounts receivable, accounts payable, short-term debt, and other long-term debt.

The fair values of these financial instruments approximated their carrying values based on either their short maturity or current terms for similar instruments.

The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

	·	Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;
	·	Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and

	·	Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;

	·	Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and

	·	Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities.

·F-9 ~~Level~~Table 3:of ~~Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities.~~Contents

F-11 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The valuation techniques that may be used to measure fair value are as follows:

A. Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

B. Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method.

C. Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

Advertising Costs

Advertising costs are expensed ~~in the period~~ when the advertisements are first aired or distributed to the public. Prepaid advertising (included in prepaid expenses) was $0836 aton June 30, ~~2023~~2024, and $~~1,050~~0 aton June 30, ~~2022~~2023. Advertising expense for the years ended June 30, ~~2023~~2024, and ~~2022~~2023 was $~~790~~1,~~757~~028,267 and $~~574~~790,~~146~~757, respectively. ~~Which is included in general and administrative expenses in the consolidated statements of operations.~~

Research and Development

Research and development expenses for new products are expensed as they are incurred. Expenses for new product development (included in general and administrative expense) totaled $~~134~~156,~~624~~617 for the year ended June 30, ~~2023~~2024 and $~~117~~134,~~079~~624 for the year ended June 30, ~~2022~~2023.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over estimated service lives for financial reporting purposes of 2-10 years.

Expenditures for major renewals and betterments which extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. When properties are disposed of, the related costs and accumulated depreciation are removed from the respective accounts, and any gain or loss is recognized currently.

Operating Leases

On November 2, 2020, the Company entered into an agreement with its landlord on a new lease for the current facilities for six years and two months, beginning January 1, 2021. The new lease includes two months of rent abatement totaling $103,230. Under the new lease, the monthly rent on the facility is $51,615, with annual escalations of 3%, with the final two months of rent at $61,605. In addition, the Company will pay the landlord a 2% property management fee. The rent expense for the ~~year~~years ended June 30, ~~2023~~2024 and June 30, ~~2022~~2023 was $652,752 and $652,752 respectively. ~~Which is included in general and administrative expenses in the consolidated statements of operations.~~

F-12 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Under ASC 842, which was adopted July 1, 2019, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company elected not to recognize leases with a term less than one year on its balance sheet. Operating lease right-of-use (ROU) assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.

In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.) Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, the Company elected the practical expedient to not separate lease and non-lease components. The lease component results in an operating right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

~~Under prior guidance ASC 840, rent expense and lease incentives from operating leases were recognized on a straight~~F-~~line~~10 ~~basis~~Table ~~over~~of ~~the lease term. The difference between rent expense recognized and rental payments was recorded as deferred rent in the accompanying consolidated balance sheets.~~Contents

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

Although separation of lease and non-lease components is required, the Company elected the practical expedient to not separate lease and non-lease components. The lease component results in an operating right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

The Company also leases certain equipment under operating leases, as more fully described in NOTE 13 - Commitments and Contingencies.

Sales Channel Information

We have identified three reportable sales channels: Direct, Wholesale and Other. Direct includes product sales through our five e-commerce sites. Wholesale includes Liberator, Jaxx, and Avana branded products sold to distributors and retailers, purchased products sold to retailers, and private label items sold to other resellers. The Wholesale category also includes contract manufacturing services, which consists of specialty items that are manufactured in small quantities for certain customers, and which, to date, has not been a material part of our business. Other consists principally of shipping and handling fees and costs derived from our Direct business and fulfillment service fees.

The following is a summary of sales results for the Direct, Wholesale, and Other channels.

Year Ended June 30, 2023

Year Ended June 30, 2022

% Change

Year Ended June 30, 2024

Year Ended June 30, 2023

% Change

(in thousands)

Net Sales by Channel:

Direct

86,~~255~~475

78,~~136~~255

16(22

Wholesale

2017,~~260~~558

1820,~~546~~260

9(13

Other

~~704~~541

~~661~~704

6(23

Total Net Sales

2924,~~219~~574

2629,~~343~~219

11(16

F-13 Table of Contents

	Year Ended			Margin			Year Ended			Margin			%
	June 30, 2024			%			June 30, 2023			%			Change
	(in thousands)						(in thousands)
Gross Profit by Channel:
Direct	$	2,911			45	%	$	3,802			46	%		(23	)%
Wholesale		4,507			26	%		4,916			25	%		(8	)%
Other		(920	)		(170	)%		(1,526	)		(217	)%		(40	)%
Total Gross Profit	$	6,498			25	%	$	7,192			25	%		(10	)%

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	Year Ended			Margin			Year Ended			Margin			%
	June 30, 2023			%			June 30, 2022			%			Change
	(in thousands)						(in thousands)
Gross Profit by Channel:
Direct	$	3,802			46	%	$	3,289			46	%		16	%
Wholesale		4,916			25	%		4,017			22	%		24	%
Other		(1,526	)		(217	)%		(1,305	)		(197	)%		17	%
Total Gross Profit	$	7,192			25	%	$	6,001			23	%		21	%

Recent accounting pronouncements

From time to time, ~~new accounting pronouncements are issued by~~ the Financial Accounting Standards Board (“FASB”) or other standard -setting bodies issue new accounting pronouncements that are adopted by the Company as of the specified effective date.

Net Income Per Share

In accordance with FASB Accounting Standards Codification No. 260, “Earnings Per Share”, basic net income per share is computed by dividing the net income available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income available to common stockholders by the weighted average number of common and common equivalent shares outstanding during the period.

~~The~~F-11 ~~total~~Table ~~potential dilutive securities as~~ of ~~June 30, 2023 and 2022 are as follows:~~Contents

	2023		2022
Convertible Preferred Stock		4,300,000		4,300,000
Stock options – 2015 Plan		1,400,000		1,975,000
Total		5,700,000		6,275,000

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

The total potential dilutive securities as of June 30, 2024 and 2023 are as follows:

	2024		2023
Convertible Preferred Stock		4,300,000		4,300,000
Stock options – 2015 Plan		1,350,000		1,400,000
Total		5,650,000		5,700,000

Income Taxes

We utilize the asset and liability method of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in ~~assessing~~determining the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets wethat ~~have~~will ~~determined~~not ~~won’t~~reverse beagainst ~~utilized~~deferred tax liabilities within the scheduled reversal period. AtIf ~~June 30,~~we ~~2023,~~determine in the future that it is more likely than not that we ~~has~~will realize all or a portion of our deferred tax ~~asset~~assets, we will adjust our valuation allowance in the period we make the determination. We expect to provide a full valuation allowance on our future tax benefits until we can sustain a level of ~~$10~~profitability ~~thousands~~that demonstrates our ability to realize these assets. At June 30, 2024, we carried a valuation allowance of $1.14 million against our ~~remaining~~ net deferred tax assets.

Stock Based Compensation

We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. We measure the cost of each stock option and restricted stock award at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period.

F-14 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 3. IMPAIRMENT OF LONG-LIVED ASSETS

We follow FASB ASC 360, Property, Plant, and Equipment, regarding impairment of our other long-lived assets (property, plant and equipment). Our policy is to assess our long-lived assets for impairment annually in the fourth quarter of each year or more frequently if events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

An impairment loss is recognized only if the carrying value of a long-lived asset is not recoverable and is measured as the excess of its carrying value over its fair value. The carrying amount of a long-lived asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of a long-lived asset.

Assets to be disposed of and related liabilities would be separately presented in the consolidated balance sheet. Assets to be disposed of would be reported at the lower of the carrying value or fair value less costs to sell and would not be depreciated. There was no impairment as of June 30, ~~2023~~2024 or ~~2022~~2023.

F-12

Table of Contents

NOTE 4. INVENTORIES

All inventories are stated at the lower of cost (which approximates first-in, first-out) or net realizable value. The Company’s inventories consist of the following components at June 30, ~~2023~~2024 and ~~2022~~2023:

	2023			2022
	2024			2023
	(in thousands)
Raw materials	$	1,~~926~~396		$	1,~~893~~926
Work in process		~~507~~460			~~440~~507
Finished goods		21,~~021~~645			12,~~660~~021
Total inventories		43,~~454~~501			34,~~993~~454
Allowance for inventory reserves		(~~252~~214	)		(~~176~~252	)
Total inventories, net of allowance	$	43,~~202~~287		$	34,~~817~~202

NOTE 5. EQUIPMENT, PROPERTY AND LEASEHOLD IMPROVEMENTS, NET

Equipment, property and leasehold improvements at June 30, ~~2023~~2024 and ~~2022~~2023 consisted of the following:

	2023			2022			Estimated Useful Life
							Estimated
	(in thousands)
	2024			2023			Useful Life
Factory equipment	$	4,~~356~~476		$	34,~~840~~356		2-10 years
Computer equipment and software		~~1,171~~761			1,~~167~~171		5-7 years
Office equipment and furniture		~~205~~151			205		5-7 years
Leasehold improvements		~~480~~475			480		10 years
Projects in process		~~320~~-			~~318~~320
Subtotal		65,~~532~~863			6,~~010~~532
Accumulated depreciation		(43,~~346~~890	)		(34,~~981~~346	)
Equipment and leasehold improvements, net	$	21,~~186~~973		$	2,~~029~~186

Depreciation expense was $~~353~~412,~~840~~172 and $~~305~~353,~~643~~840 for the years ended June 30, ~~2023~~2024 and ~~2022~~2023, respectively.

F-15 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 6. OTHER ACCRUED LIABILITIES

Other accrued liabilities at June 30, ~~2023~~2024 and ~~2022~~2023 consisted of the following:

	2023		2022
	2024		2023
	(in thousands)
Accrued compensation	$	~~302~~342	$	~~344~~302
Accrued expenses and interest		~~114~~166		~~201~~114
Other accrued liabilities	$	~~416~~508	$	~~545~~416

F-13

Table of Contents

NOTE 7. CURRENT AND LONG-TERM DEBT SUMMARY

Current and long-term debt at June 30, ~~2023~~2024 and ~~2022~~2023 consisted of the following:

	2023		2022
	2024		2023
Current debt:	(in thousands)
Unsecured lines of credit (Note 11)	$	13-	$	2513
Line of credit (Note 10)		1,~~039~~044		1,~~070~~039
Short-term unsecured notes payable (Note 8)		200		200
Current portion of equipment notes payable (Note 13)		~~392~~371		~~308~~392
Current portion of finance leases payable (Note 13)		15		15
Current portion secured notes payable (Note 12)		-		-
Total current debt		1,659		1,618
Current portion of finance leases payable (Note 13)		24		15
Total current debt		1,639		1,659
Long-term debt:
Unsecured notes payable (Note 8)		200		200
Equipment notes payable (Note 13)		~~824~~452		~~842~~824
Finance leases payable (Note 13)		987		259
Notes payable- related party (Note 9)		116		116
Total long-term debt	$	~~1,148~~855	$	1,~~183~~148

F-16 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 8. UNSECURED NOTES PAYABLE

Unsecured notes payable at June 30, ~~2023~~2024 and ~~2022~~2023 consisted of the following:

	2023		2022
	2024		2023
Current debt:	(in thousands)
13.5% Unsecured note, interest only, due May 1, 2023 (2)		-		200
13.5% Unsecured note, interest only, due May 1, 2025 (2)	$	200	$	-
13.5% Unsecured note, interest only, due July 31, 2023 (3)		100		-
13.5% Unsecured note, interest only, due July 31, 2023(3)		-		100
13.5% Unsecured note, interest only, due October 31, 2023 (1)		100		-
Total current debt		200		200
Long-term debt:
13.5% Unsecured note, interest only, due July 31, 2023 (3)		-		100
13.5% Unsecured note, interest only, due October 31, 2023 (1)		-		100
13.5% Unsecured note, interest only, due May 1, 2025 (2)		200		-
Total current debt	$	200	$	200
Long-term debt:
13.5% Unsecured note, interest only, due July 31, 2025 (3)	$	100	$	-
13.5% Unsecured note, interest only, due October 31, 2025 (1)		100		-
13.5% Unsecured note, interest only, due May 1, 2025 (2)		-		200
Total long-term debt		200		200
Total unsecured notes payable	$	400	$	400

(1) Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on October 31, 2014, extended to October 31, 2019, then extended to October 31, 2021. This note was repaid in full on October 31, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2023. Personally guaranteed by principal stockholder.

(1)	Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on October 31, 2014, extended to October 31, 2019, then extended to October 31, 2021. This note was repaid in full on October 1, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2023. This note was extended in full on September 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2025. Personally guaranteed by Louis Friedman, the Company’s CEO and principal stockholder.

(2)	Unsecured note payable for $200,000 to an individual with interest payable monthly at 20%, principal originally due in full on May 1, 2013, extended to May 1, 2019, then extended to May 1, 2021. This note was repaid in full on April 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2023. This note was extended in full on April 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2025. Personally guaranteed by the Company’s CEO and principal stockholder.

(3)	Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on July 31, 2013, extended to July 31, 2019, then extended to July 31, 2021. This note was repaid in full on July 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2023. This note was extended in full on July 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2025. Personally guaranteed by the Company’s CEO and principal stockholder.

~~(2)~~F-14 ~~Unsecured~~Table ~~note~~of payable for $200,000 to an individual with interest payable monthly at 20%, principal originally due in full on May 1, 2013, extended to May 1, 2019, then extended to May 1, 2021. This note was repaid in full on April 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2023. This note was repaid in full on April 30, 2023 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2025. Personally guaranteed by principal stockholder.Contents

(3) Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on July 31, 2013, extended to July 31, 2019, then extended to July 31, 2021. This note was repaid in full on July 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2023. Personally guaranteed by principal stockholder.

NOTE 9. NOTES PAYABLE - RELATED PARTY

Related party notes payable at June 30, ~~2023~~2024 and ~~2022~~2023 consisted of the following:

	2023		2022
	2024		2023
	(in thousands)
Unsecured note payable to an officer, with interest at 3.25%, due July 1, 2025	$	40	$	40
Unsecured note payable to an officer, with interest at 8.5%, due July 1, 2025	$	40	$	40
Unsecured note payable to an officer, with interest at 3.25%, due July 1, 2025		76		76
Unsecured note payable to an officer, with interest at 8.5%, due July 1, 2025		76		76
Total unsecured notes payable		116		116
Less: current portion		—		—
Long-term unsecured notes payable	$	116	$	116

F-17 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 10. LINE OF CREDIT

The Company’s wholly owned subsidiary, OneUp and OneUp’s wholly owned subsidiary, Foam Labs, ~~has~~have entered into a credit facility with a finance company, Advance Financial Corporation dated May 24, 2011, as amended, to provide it with an asset -based line of credit of up to $1,200,000 against 85% of eligible accounts receivable (as defined in the agreement) for the purpose of improving working capital and includes an Inventory Advance (as defined in the agreement) of up to the lesser of $500,000 or 125% of the eligible accounts receivable loan. The term of the agreement was one year, renewable for additional one-year terms unless either party provides written notice of non-renewal at least 90 days prior to the end of the current financing period. The credit facility is secured by our accounts receivable and other rights to payment, general intangibles, inventory and equipment, and are subject to eligibility requirements for current accounts receivable. Advances under the agreement are currently charged interest at a rate of prime rate plus 2% over the lenders Index Rate. In addition, there is a Monthly Service Fee (as defined in the agreement) of currently 0.05 % per month.

The Company’s President and Chief Executive Officer (CEO), Louis Friedman, has personally guaranteed the repayment of the facility. In addition, the Company has provided its corporate guarantee of the credit facility (see Note 14). On June 30, ~~2023~~2024, ~~and June 30, 2022, respectively~~ the balance owed under this line of credit was $1,~~039~~044,~~013 and $1,070,369~~222. As of June 30, 2023, we were current and in compliance with all terms and conditions of this line of credit.

Management believes cash flows generated from operations, along with current cash and investments as well as borrowing capacity under the line of credit should be sufficient to finance capital requirements required by operations. If new business opportunities do arise, additional outside funding may be required.

NOTE 11. UNSECURED LINES OF CREDIT

The Company has drawn a cash advance on one unsecured lines of credit that is in the name of the Company and Louis S. Friedman (see Note 14). The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 813.2%. The aggregate amount owed on the unsecured line of credit was $~~12,806~~116 at June 30, ~~2023~~2024 and $2412,~~879~~806 at June 30, ~~2022~~2023.

NOTE 12. SECURED NOTE PAYABLE

On February 17, 2021, the Company entered into an agreement with Amazon, whereby Amazon agreed to loan OneUp Innovations a total of $200,000. Repayment of this note is by 12 monthly payments of $17,675, which includes interest at 10.99%. This loan was repaid in full on February 17, 2022. The Company had granted Amazon a security interest in the assets of the Company. None

F-1815 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 13. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its facilities under non-cancelable operating leases expiring at the end of ~~2026~~2027. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and liabilities for the lease renewal were recognized at the inception date which is November 2, 2020 based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate based on the information available. At June 30, ~~2023~~2024, the weighted average remaining lease term for the lease renewal is 52.75 years and the weighted average discount rate is 14.49%. In addition to the rent payment, The Company pays a proportionate share of operating costs, taxes, and insurance costs. The annual cost for these additional rent expenses ending June 30 2024 and 2023 were $221,000 and $231,000 respectively. Supplemental balance sheet information related to leases at June 30, ~~2023~~2024 is as follows:

Supplemental balance sheet information related to leases at June 30, ~~2023~~2024 is as follows:

Operating leases	Balance Sheet Classification	(in thousands)
Right-of-use assets	Operating lease right-of-use assets, net	$	1,~~913~~545
Current lease liabilities	Operating lease obligations	$	~~396~~528
Non-current lease liabilities	Long-term operating lease obligations		1,~~667~~151
Total lease liabilities		$	21,~~063~~679

Maturities of operating lease liabilities at June 30, ~~2023~~2024 are as follows:

Payments	(in thousands)
2024	$	680
2025		720
2025		721
2026		762
2027 and thereafter		~~528~~529
Total undiscounted lease payments		2,~~691~~011
Less: Present value discount		(~~628~~332	)
Total operating lease liability balance	$	21,~~063~~679

Equipment Notes Payable

The Company has acquired equipment under the provisions of long-term equipment notes. For financial reporting purposes, minimum note payments relating to the equipment have been capitalized. The equipment acquired with these equipment notes has a total cost of approximately $ 2,~~147~~451,~~504.~~838 These assets are included in the fixed assets listed in Note 5 - Equipment and Leasehold Improvements and include production equipment. The equipment notes have stated or imputed interest rates ranging from 7.2910% to 1113.35%.

F-1916 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 13. COMMITMENTS AND CONTINGENCIES (continued)

The following is an analysis of the minimum future equipment note payable payments subsequent to June 30, ~~2023~~2024:

Year ending June 30,	(in thousands)
2024	$	473
2025	$	371
2025		427
2026		292
2026		309
2027		122
2027		130
2028		38
2028		39
Minimum Note Payable Payments	$	823
Future Minimum Note Payable Payments	$	1,378
Less current portion		(371	)
Less Amount Representing Interest		(162	)
Long-Tern Obligations under Equipment Notes Payable	$	452
Present Value of Minimum Note Payable Payments		1,216
Less Current Portion		(392	)
Long-Term Obligations under Equipment Notes Payable	$	824

Finance Leases Payable

The Company has lease obligations for equipment under the provisions of long-term finance leases. For financial reporting purposes, minimum lease payments relating to the equipment have been capitalized. The equipment acquired with these leases has a total cost of approximately $58161,~~152~~248. These assets are included in the finance lease and include production equipment.

On July 1, 2020 the Company entered into finance lease agreement with Wells Fargo in the amount of $35,000 with monthly payment of $850 with 48-month term at an imputed interest rate of 8.09%.

On January 5, 2022 the Company entered into finance lease agreement with Raymond in the amount of $23,000 with monthly payment of $514 with 48-month term at an imputed interest rate of 3.75%.

~~The~~On ~~following~~March is15, an2024, ~~analysis~~the ofCompany ~~the~~entered ~~minimum~~into a finance lease ~~payable~~agreement ~~payments~~with ~~subsequent~~Canon toSolutions ~~June 30~~in the amount of $63,948 ~~2023:~~ with monthly payments of $1,325 with 60-month term at an imputed rate of 8.90%.

Year ending June 30,	(in thousands)
2024	$	16
2025		6
2026		3
Future Minimum Finance Lease Payable Payments	$	25
Less Amount Representing Interest		(1	)
Present Value of Minimum Finance Lease Payable Payments		24
Less Current Portion		(15	)
Long-Term Obligations under Finance Lease Payable	$	9

On June 3, 2024, the Company entered into a finance lease agreement with Raymond in the amount of $39,972 with monthly payments of $807 with 60 month term at an imputed rate of 7.80%.

At June 30, 2024, the weighted average remaining lease term is 4.7 years, and the weighted average discount rate is 8.1%

The following is an analysis of the minimum finance lease payable payments subsequent to June 30, 2024:

Year ending June 30,	(in thousands)
2025		33
2026		29
2027		26
2028		26
2029 and thereafter		23
Future Minimum Finance Lease Payable Payments	$	137
Less Amount Representing Interest		(24	)
Present Value of Minimum Finance Lease Payable Payments		113
Less Current Portion		(24	)
Long-Term Obligations under Finance Lease Payable	$	88

F-17

Table of Contents

NOTE 13. COMMITMENTS AND CONTINGENCIES (continued)

Employment Agreements

The Company has entered into an employment agreement with Louis Friedman, President and Chief Executive Officer. The agreement provides for an annual base salary of $155,000 and eligibility to receive a bonus. In certain termination situations, the Company is liable to pay severance compensation to Mr. Friedman for up to nine months at his current salary.

~~F-20~~On ~~Table~~January 15, 2024, the Company, through OneUp, engaged Chris Knauf to serve as Chief Financial Officer and Controller of ~~Contents~~the Company. The Company shall pay Mr. Knauf an annual salary of $160,000 and Mr. Knauf received options to purchase 200,000 shares of the Company’s common stock, exercisable at $0.08 per share on the date of the agreement and subsequently on July 1, 2024, an additional option to purchase an additional 200,000 shares of common stock exercisable at $0.08 per share.

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 13. COMMITMENTS AND CONTINGENCIES (continued)

Legal Proceedings

As of the date of this Annual Report, there are no material pending legal or governmental proceedings relating to the Company or properties to which the Company is a party,. ~~and~~To to the Company’s knowledge, there are no material proceedings to which any of its directors, executive officers or affiliates are a party adverse to the Company or which have a material interest adverse to the Company.

NOTE 14. RELATED PARTY TRANSACTIONS

The Company has a subordinated note payable to an officer of the Company who is also the wife of the Company’s CEO (Louis Friedman) and ~~majority~~principal shareholder in the amount of $76,000 (see Note 9). Interest on the note during the ~~year~~years ended June 30, 2024 and 2023 was accrued by the Company at the prevailing prime rate (which is currently 8.255%) and totaled $56,~~336~~464. The accrued interest on the note as of June 30, 2024 and 2023 was $41,060 and $34,596, respectively. This note is subordinate to all other credit facilities currently in place.

On October 30, 2010, Mr. Friedman, loaned the Company $40,000 (see Note 9). Interest on the note during the ~~year~~years ended June 30, 2024 and 2023 was accrued by the Company at the prevailing prime rate (which is currently 8.255%) and totaled $3,402 and $2,808. The accrued interest on the note as of June 30, 2024 and 2023 was $47,~~098~~500 and $1,289 respectively. This note is subordinate to all other credit facilities currently in place.

The Company’s CEO, Louis Friedman, has personally guaranteed the repayment of the loan obligation to Advance Financial Corporation (see Note 10 – Line of Credit). In addition, Luvu Brands has provided its corporate guarantees of the credit facility. On June 30, 2024 and 2023, the balance owed under this line of credit was $1,~~039~~044,~~013~~222 and $994,374 respectively.

On July 20, 2011, the Company issued an unsecured promissory note to an individual for $100,000. Terms of the promissory note call for monthly interest payments of $1,667 (equal to interest at 20% per annum), with the principal amount due in full on July 31, 2012; extended by the holder to July 31, 2021 under the same terms (see Note 8). This note was repaid in full on July 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2023. This note was extended on July 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2025. Repayment of this promissory note is personally guaranteed by the Company’s CEO ~~and controlling shareholder~~, Louis S. Friedman.

On October 31, 2013, the Company issued an unsecured promissory note to an individual for $100,000. Terms of the promissory note call for monthly interest payments of $1,667 (equal to interest at 20% per annum) beginning on November 30, 2013, with the principal amount due in full on or before October 31, 2014 extended by the holder to October 31, 2021 (see Note 8). This note was repaid in full on October 31, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2023. ~~Repayment~~On ~~of the promissory note is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman.~~October

F-18

Table of Contents

NOTE 14. RELATED PARTY TRANSACTIONS (continued).

1, 2023, this note was extended through October 31, 2025 at the same interest rate of 13.5%. Repayment of the promissory note is personally guaranteed by the Company’s CEO and principal shareholder, Louis S. Friedman.

On May 1, 2012, an individual loaned the Company $200,000 with an interest rate of 20%. Interest on the loan is being paid monthly, with the principal due in full on May 1, 2013; then extended to May 1, 2021 (see Note 8). This note was repaid in full on April 30, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2023. This note was repaid in full on April 30, 2023 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2025. Mr. Friedman has personally guaranteed the repayment of the loan obligation.

The Company has drawn a cash advance on one unsecured lines of credit that is in the name of the Company and Louis S. Friedman. The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 8%. The aggregate amount owed on the unsecured line of credit was $~~12,806~~116 at June 30, ~~2023~~2024 and $2412,~~879~~806 at June 30, ~~2022~~2023 (see Note 11). The loan is personally guaranteed by the Company’s CEO and ~~majority~~principal shareholder, Louis S. Friedman.

F-21 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 15. STOCKHOLDERS’ EQUITY

Options

At June 30, ~~2023~~2024, the Company had the 2015 Equity Incentive Plan (the “2015 Plan”), which is ~~stockholder~~shareholder-approved and under which 1,700,000 shares are reserved for issuance under the 2015 Plan until that Plan terminates on August 31, 2025.

Under the 2015 Plan, eligible employees and certain independent consultants may be granted options to purchase shares of the Company’s common stock. The shares issuable under the 2015 Plan will either be shares of the Company’s authorized but previously unissued common stock or shares reacquired by the Company, including shares purchased on the open market. As of June 30, ~~2023~~2024, the number of shares available for issuance under the 2015 Plan was ~~300~~350,000.

A summary of option activity under the Company’s stock plan for the years ended June 30, ~~2023~~2024 and ~~2022~~2023 is presented below:

Option Activity	Shares			Weighted AverageExercise Price		Weighted Average Remaining Contractual Term	Aggregate IntrinsicValue
Outstanding at June 30, 2021		2,500,000		$	0.04	1.9 years	$	974,300
Granted		900,000		$	0.18	4.8 years
Exercised		(1,175,000	)	$	0.03
Forfeited or Expired		(250,000	)	$	0.03
Outstanding at June 30, 2022		1,975,000		$	0.10	3.0 years	$	107,500
Granted		-		$	-
Exercised		(525,000	)	$	0.03
Forfeited or Expired		(50,000	)	$	0.03
Outstanding at June 30, 2023		1,400,000		$	0.14	3.0 years	$	29,000
Exercisable at June 30, 2023		487,500		$	0.09	2.7 years	$	1,250
Granted		400,000		$	0.08
Exercised		-		$	-
Forfeited or Expired		(450,000	)	$	0.15
Outstanding at June 30, 2024		1,350,000		$	0.12	3.0 years	$	21,000
Exercisable at June 30, 2024		812,500		$	0.10	1.45 years	$	21,000

The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price of $0.1008, $0.1410, and $0.4314 at June 30, ~~2023~~2024, ~~2022~~2023 and ~~2021~~2022, respectively.

~~There~~F-19 ~~were~~Table noof ~~stock options granted during the year ended June 30, 2023 and 900,000 stock options granted during the year ended June 30, 2022.~~ Contents

During the year ended June 30, 2023 and June 30, 2022 the Company’s proceeds from stock options exercise under 2015 Plan were $2,100 and $3,000 respectively.

The range of fair value assumptions related to options granted during the years ended June 30, 2023 and 2022 were as follows:

	2023		2022
Exercise Price:	$	-	$ 0.16 - $0.30
Volatility:		-	500% - 519%
Risk Free Rate:		-	0.65% - 2.90%
Vesting Period:		-	4 years
Forfeiture Rate:		-		0%
Expected Life:		-	4.1 years
Dividend Rate:		-		0%

F-22 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 15. STOCKHOLDERS’ EQUITY (continued)

The ~~following~~range ~~table~~of ~~summarizes~~fair ~~the~~value ~~weighted~~assumptions ~~average~~related ~~characteristics~~to ofoptions ~~outstanding~~granted ~~stock~~during ~~options~~the asyears ofended June 30, 2024 and 2023 were as follows:

			Outstanding Options						Exercisable Options
		2024	2023
Exercise Prices			Numberof Shares		RemainingLife (Years)		WeightedAverage Price		Number ofShares		WeightedAverage Price
Exercise Price:		$0.08	-
0.01 to 0.03				400,000		1.3	$	0.03		275,000	$	0.03
Volatility:		370%-377 %	-
	0.05			—		—	$	—		—		—
Risk Free Rate:		4.23%-4.38 %	-
0.15 to 0.20				950,000		2.7	$	0.17		200,000	$	0.16
Vesting Period:		4 years	-
	0.30			50,000		3.1	$	0.30		12,500	$	0.30
Forfeiture Rate:		0%	-
Total stock options				1,400,000		2.3	$	0.14		487,500	$	0.09
Expected Life:		4.1 years	-
Dividend Rate:		0%	-

There were 400,000 stock options granted during the year ended June 30, 2024 and no stock options granted during the year ended June 30, 2023.

During the year ended June 30, 2024, no stock options were exercised; during the year ended June 30, 2023 the Company’s proceeds from stock options exercise under 2015 Plan were $2,100.

The following table summarizes the weighted average characteristics of outstanding stock options as of June 30, 2024:

		Outstanding Options						Exercisable Options
Exercise Prices		Number of Shares		Remaining Life (Years)		Weighted Average Price		Number of Shares		Weighted Average Price
0.01 to 0.03			400,000		0.3	$	0.03		400,000	$	0.03
0.05 to 0.10			200,000		4.9	$	0.08		0	$	0.08
0.15 to 0.20			700,000		2.7	$	0.16		375,000	$	0.16
	0.30		50,000		2.1	$	0.30		37,500	$	0.30
Total stock options			1,350,000		2.3	$	0.12		812,500	$	0.10

We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. We measure the cost of each stock option and at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period.

All stock option grants made under the Plan were at exercise prices no less than the Company’s closing stock price on the date of grant. Options under the Plan were determined by the board of directors in accordance with the provisions of the plan. The terms of each option grant include vesting, exercise, and other conditions are set forth in a Stock Option Agreement evidencing each grant. No option can have a life in excess of ten (10) years. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. The model requires various assumptions, including a risk-free interest rate, the expected term of the options, the expected stock price volatility over the expected term of the options, and the expected dividend yield. Compensation expense for employee stock options is recognized ratably over the vesting term. The Company has no awards with market or performance conditions.

~~Stock~~the Black-~~based~~Scholes ~~compensation~~option-pricing ~~expense~~model. The ~~recognized~~model inrequires various assumptions, including a risk-free interest rate, the ~~consolidated~~expected ~~statements~~term of ~~operations~~the ~~for~~options, ~~each~~the ofexpected stock price volatility over the ~~fiscal~~expected ~~years~~term ~~ended~~of ~~June 30~~the options, ~~2023~~ and ~~2022~~the expected dividend yield. Compensation expense for employee stock options is ~~based~~recognized onratably over the vesting term. The Company has no awards ~~ultimately~~with ~~expected~~market toor ~~vest~~performance conditions.

~~As of June 30, 2023, total unrecognized stock~~F-~~based~~20 ~~compensation~~Table ~~expense related to all unvested stock options was $117,125 which is expected to be expensed over a weighted average period~~ of ~~2.6 years.~~ Contents

NOTE 15. STOCKHOLDERS’ EQUITY (continued).

Stock-based compensation expense recognized in the consolidated statements of operations for each of the fiscal years ended June 30, 2024 and 2023 is based on awards ultimately expected to vest.

As of June 30, 2024, total unrecognized stock-based compensation expense related to all unvested stock options was $66,851 which is expected to be expensed over a weighted average period of 2.2 years.

In determining the grant date fair value of option awards under the equity incentive plans, the Company applied the Black-Scholes option pricing model. Based upon limited option exercise history, the Company has generally used the “simplified” method outlined in SEC Staff Accounting Bulletin No. 110 to estimate the expected life of stock option grants. Management believes that the historical volatility of the Company’s stock price on OTCQB best represents the expected volatility over the estimated life of the option. The risk-free interest rate is based upon published U.S. Treasury yield curve rates at the date of grant corresponding to the expected life of the stock option. An assumed dividend yield of zero reflects the fact that the Company has never paid cash dividends and has no intentions to pay dividends in the foreseeable future.

F-23 Table of Contents

Luvu Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 15. STOCKHOLDERS’ EQUITY (continued)

The following table summarizes stock-based compensation expense by line item in the consolidated statements of operations, all relating to employee stock plans:

	For the Years Ended June 30,
	2023			2022
	2024			2023
	(in thousands)
Cost of Goods Sold	$	47		$	34
Other Selling and Marketing		1523			1115
General and Administrative		27(11	)		1027
Total	$	4619		$	2446

Share Purchase Warrants

As of June 30, ~~2023~~2024 and ~~2022~~2023, there were no share purchase warrants outstanding.

Common Stock

The Company’s authorized common stock was 175,000,000 shares at June 30, ~~2023~~2024 and ~~2022~~2023. Common shareholders are entitled to dividends if and when declared by the Company’s Board of Directors, subject to preferred stockholder dividend rights. At June 30, ~~2023~~2024, the Company had reserved the following shares of common stock for issuance:

	June 30, 2023
	June 30, 2024
Shares of common stock reserved for issuance under the 2015 Stock Option Plan		1,700,000
Shares of common stock issuable upon conversion of the Preferred Stock		4,300,000
Total shares of common stock equivalents		6,000,000

During fiscal year ~~2023~~2024 and fiscal year ~~2022~~2023 the Company issued ~~501,423~~zero and 1501,~~008,359~~423 shares of common stock respectively for stock option exercises under 2015 Equity Incentive Plan.

Preferred Stock

On February 18, 2011, the Company filed an amendment to its Articles of Incorporation, effective February 9, 2011, authorizing the issuance of preferred stock and the Company now has 10,000,000 authorized shares of preferred stock, par value $0.0001 per share, of which 4,300,000 shares have been designated and issued as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into one share of common stock and has a liquidation preference of $0.2325 ($1,000,000 in the aggregate). Liquidation payments to the preferred holders have priority and are made in preference to any payments to the holders of common stock. In addition, each share of Series A Convertible Preferred Stock is entitled to the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Shares issued and outstanding at the time of such vote. At each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors, holders of Series A Convertible Preferred Shares shall vote together with the holders of common shares as a single class.

~~F-24~~preference ~~Table~~of $.2325 ($1,000,000 in the aggregate). Liquidation payments to the preferred holders have priority and are made in preference to any payments to the holders of ~~Contents~~common stock. In addition, each share of Series A Convertible Preferred Stock is entitled to the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Shares issued and outstanding at the time of such vote. At each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors, holders of Series A Convertible Preferred Shares shall vote together with the holders of common shares as a single class.

~~Luvu~~F-21 ~~Brands,~~Table ~~Inc.~~of ~~and Subsidiaries~~Contents

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

NOTE 16. INCOME TAXES

Deferred tax assets and liabilities are computed by applying the effective U.S. federal income tax rate to the gross amounts of temporary differences and other tax attributes. Deferred tax assets and liabilities relating to state income taxes are not material. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, ~~2023~~2024 and ~~2022~~2023, the Company believed it was more likely than not that future tax benefits from all future net operating loss carryforwards and other deferred tax assets would not be realizable through generation of future taxable income; therefore, they were partially reserved.

~~The~~future ~~components~~tax ofbenefits from net operating loss carryforwards and other deferred tax assets ~~and~~would ~~liabilities~~not atbe ~~June 30,~~realizable ~~2023~~through ~~and~~generation ~~2022~~of ~~are~~future ~~approximately~~taxable asincome; ~~follows:~~therefore, they were fully reserved.

	2023			2022
Deferred tax assets:
Inventory reserves	$	65			46
Allowance for doubtful accounts		5			2
Stock-based compensation		41			106
Net operating loss carry-forwards		1,041			1,233
Total gross deferred tax assets		1,152			1,387
Valuation allowance		(1,059)			(1,387	)
Book to tax depreciation difference - Liability		(83	)		—
Net deferred tax assets	$	10		$	-

The components of deferred tax assets and liabilities at June 30, 2024 and 2023 are approximately as follows:

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 25% to pretax (income) loss from operations for the years ended June 30, 2023 and 2022 due to the following:

	2024			2023
	(in thousands)
Deferred tax assets:
Inventory reserves	$	55		$	65
Allowance for doubtful accounts		3			5
Stock-based compensation		23			41
Net operating loss carry-forwards		1,354			1,041
Total gross deferred tax assets		1,435			1,152
Valuation allowance		(1,435	)		(1,059	)
Book to tax depreciation difference - Liability		(119	)		(83	)
Net deferred tax asset (liability)	$	(119	)	$	10

	2023			2022
Tax expense	$	306		$	156
Permanent differences and change in tax rate estimate		1			—
Valuation (allowance)		(317	)		(156	)
Net tax benefit	$	(10)		$	—

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 25.75% to pretax (income) loss from operations for the years ended June 30, 2024 and 2023 due to the following:

At June 30, 2023, the Company had net operating loss (NOL) carryforwards of approximately $4.0 million that may be offset against future taxable income. During 2023 and 2022, the total change in the valuation allowance was approximately $317,000 and $156,000, respectively. The majority of the Company’s NOL’Sbegin to expire in the year 2030.

	2024			2023
Income taxes at federal rate	$	(50	)	$	250
State income taxes, net of federal income taxes		(11	)		56
Permanent differences		16			1
Other adjustments		(169	)		-
Valuation allowance		376			(317	)

Income tax provision	$	162		$	(10	)

~~F-25~~Our ~~Table~~income tax provision consisted of ~~Contents~~the following for the years ended June 30, 2024 and 2023:

Luvu Brands, Inc. and Subsidiaries

	2024		2023
Current provision	$	33	$	-
Deferred provision		129		(10	)

Income tax provision	$	162	$	(10	)

~~Notes~~At June 30, 2024, the Company had net operating loss (NOL) carryforwards of approximately $5.3 million that may be offset against future taxable income. During 2024 and 2023, the total change in the valuation allowance was approximately $376,000 and $317,000, respectively. The Company’s ability to ~~Consolidated~~use ~~Financial~~its ~~Statements~~NOL carryforwards may be substantially limited due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOL that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50.0% of the outstanding stock of a company by certain stockholders or public groups.

~~June 30,~~F-22 ~~2023~~Table ~~and~~of ~~2022~~Contents

~~The~~NOTE ~~tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2013 through 2023~~16. ~~The~~INCOME ~~Company~~TAXES ~~has not filed its Federal or State tax returns for 2017 through 2022 but expects to file these returns before the end of calendar year 2023~~(continued).

The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company became a “loss corporation” under the definition of Section 382. If the Company has experienced an ownership change, utilization of the NOL carryforwards would be subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL carryforwards before utilization. Further, until a study is completed and any limitation known, no positions related to limitations are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on the results of operations or financial position of the Company. The NOL carryforwards of approximately $5.3 million can be carried forward indefinitely, but are limited to 80% of taxable income in any one year.

The tax years that remain subject to examination by major taxing jurisdictions are those from June 30, 2013 through 2024.

On November 27, 2023, the Company received a notice from the Internal Revenue Service regarding Taxes and Penalties due of approximately $125,000. The Company believes that once Net Operating Losses and tax credits are applied, the penalties and interest will be reduced to approximately $38,000. Therefore, the Company has accrued $38,000 for estimated penalties and interest as of June 30, 2024.

On January 22, 2024, the Company received a notice from the Georgia Department of Revenue for Tax and Penalties due of approximately $104,000. The Company believes once Net Operating Losses and tax credit are applied the liability will be reduced to penalties and interest of approximately $6,000. Therefore, the Company has accrued $6,000 for estimated penalties and interest as of June 30, 2024.

NOTE 17. – SUBSEQUENT EVENTS

On July 281, ~~2023 a promissory note dated July 29~~2024, ~~2021 for~~ the ~~amount~~Company ofissued ~~$100,000~~Christopher ~~with an interest rate of 13.5% paid monthly~~Knauf, ~~with~~Chief ~~the~~Financial ~~principal~~Officer ~~due in full on July 31, 2023, was amended~~ and ~~extended~~Controller ~~with a new promissory note with an interest rate~~ of ~~13.5%, with~~ the ~~principal~~Company, ~~due~~options into ~~full~~purchase on200,000 ~~July~~shares ~~31,~~of ~~2025.~~common Mrstock. ~~Friedman~~These ~~has~~stock ~~personally~~options ~~guaranteed~~are ~~the~~exercisable ~~repayment~~at of$0.08 ~~the~~per ~~loan obligation~~share.

~~F-26~~On ~~Table~~August 8, 2024, the Company issued an employee of ~~Contents~~the Company 94,956 shares of common stock pursuant to the exercise of an option on a cashless basis at an exercise price of $0.03 per share.

On September 17, 2024, the Company issued an employee of the Company 191,429 shares of common stock pursuant to the exercise of an option on a cashless basis at an exercise price of $0.03 per share.

F-23

Table of Contents

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

There are no events required to be disclosed under this Item.

ITEM 9A. Controls and Procedures.

~~(a)~~ Evaluation of Disclosure Controls and Procedures

We maintain certain disclosure controls and procedures as defined under the Securities Exchange Act of 1934. They are designed to help ensure that material information is: (1) gathered and communicated to our management, including our principal executive and financial officers, in a manner that allows for timely decisions regarding required disclosures; and (2) recorded, processed, summarized, reported and filed with the SEC as required under the Securities Exchange Act of 1934 and within the time periods specified by the SEC.

~~Our~~ITEM management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 20239A. ~~Based~~Controls ~~on such evaluation, our Chief Executive Officer~~ and ~~Chief~~Procedures ~~Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2023 due to the material weakness below~~(continued). To address these material weakness, management performed additional procedures to ensure the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

~~(b)~~Our ~~Management’s~~management, ~~Annual~~with ~~Report~~the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based on ~~Internal~~such ~~Control~~evaluation, ~~Over~~our Chief Executive Officer and Chief Financial ~~Reporting~~Officer concluded that our disclosure controls and procedures were effective as of June 30, 2024.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, and for performing an assessment of the effectiveness of internal control over financial reporting as of June 30, 2023. For this purpose, internal control over financial reporting refers to a process designed by, or under the supervision of, the Company’s ~~principal~~Annual ~~executive~~Report ~~and~~on financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal ~~control~~Control ~~over~~Over ~~financial~~Financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material adverse effect on the financial statements.Reporting

~~Because~~Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company and for performing an assessment of ~~its~~the ~~inherent~~effectiveness ~~limitations~~of internal control over financial reporting as of June 30, 2024. For this purpose, internal control over financial reporting ~~may~~refers ~~not~~to ~~prevent~~a process designed by, or ~~detect~~under ~~misstatements.~~the ~~Projections~~supervision of, ~~any~~the ~~evaluation~~Company’s principal executive and financial officers and effected by the Company’s board of ~~effectiveness~~directors, management, and other personnel to ~~future~~provide ~~periods~~reasonable ~~are~~assurance ~~subject~~regarding tothe reliability of financial reporting and the ~~risk~~preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that ~~controls~~(1) ~~may~~pertain ~~become~~to ~~inadequate~~the ~~because~~maintenance of ~~changes~~records that, in ~~conditions~~reasonable detail, oraccurately ~~that~~and fairly reflect the ~~degree~~transactions and dispositions of ~~compliance~~the ~~with~~assets of the ~~policies~~Company; or(2) ~~procedures~~provide ~~may~~reasonable ~~deteriorate.~~assurance that transactions are

A16 ~~material~~Table ~~weakness is a deficiency, or a combination~~ of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCOAB”) Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weakness - Management failed to perform a complete assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2023 based upon criteria in an Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) or alternative framework.Contents

~~(c)~~ITEM ~~Changes~~9A. inControls ~~Internal~~and ~~Control~~Procedures ~~Over Financial Reporting~~(continued).

~~Except~~recorded as ~~set~~necessary ~~forth~~to ~~above~~permit preparation of financial statements in accordance with GAAP, ~~there~~and ~~were~~that noreceipts ~~changes~~and toexpenditures ~~our~~of ~~internal~~the ~~control~~Company ~~over~~are ~~financial~~being ~~reporting~~made ~~during~~only in accordance with authorizations of management and directors of the ~~fourth~~Company; ~~quarter~~and ~~ended~~(3) ~~June 30,~~provide ~~2023~~reasonable ~~that~~assurance ~~have~~regarding ~~materially~~prevention ~~affected~~or timely detection of unauthorized acquisition, use or ~~that~~disposition ~~are~~of ~~reasonably~~the ~~likely~~Company’s toassets ~~materially~~that ~~affect,~~could ~~our~~have ~~internal~~a ~~control~~material ~~over~~adverse effect on the financial ~~reporting~~statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2024 based upon criteria in an Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management believes the Company’s internal control over financial reporting was effective as of June 30, 2024 based on the criteria issued by COSO.

This Annual Report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm. Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting during the fourth quarter ended June 30, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. Other Information.

None.

20ITEM ~~Table~~9C. ofDisclosure ~~Contents~~Regarding Foreign Jurisdictions that Prevent Inspections.

~~PART~~Not ~~III~~applicable.

Table of Contents

PART III.

ITEM 10. Directors, Executive Officers and Corporate Governance.

The following table sets forth the current officers and directors of Luvu Brands, Inc.

Name	Age	Position
Louis S. Friedman	7172	Chief Executive Officer, President, Director
Martin Scott	55	Chief Financial Officer
Christopher Knauf	52	Chief Financial Officer
Leslie S. Vogelman	7172	Treasurer

All directors serve for one-year terms until their successors are elected or they are re-elected at the annual shareholders’ meeting. Officers hold their positions at the pleasure of the board of directors.

There is no arrangement, agreement or understanding between any of the directors or officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer. Also, there is no arrangement, agreement or understanding between management and non-management shareholders under which non-management shareholders may directly or indirectly participate in or influence the management of our affairs.

Directors are not presently compensated for their service on the board, other than the repayment of actual expenses incurred~~. There~~, and there are no present plans to compensate ~~directors for their service on the board~~them.

Background of Executive Officers and Directors

Louis S. Friedman, President, Chief Executive Officer and Director. Mr. Friedman has served as President, Chief Executive Officer, and director since our merger with Old Liberator in October 2009. Prior to that, he served as Old Liberator’s Chief Executive Officer and a director since June 2009, when OneUp Innovations, Inc. merged with Old Liberator in June 2009. Mr. Friedman founded OneUp in 2000. Before starting OneUp, Mr. Friedman was in business consulting, venture capital and private investing from 1990 to 2000. Earlier in his career, Mr. Friedman was Executive Vice President of Chemtronics, Inc., until its sale to Morgan Crucible in 1990. Mr. Friedman’s experience as Chief Executive Officer and insight into our operations, our industry, and related risks as well as experience bringing consumer products to market were factors considered by our board of directors in concluding he should serve as a director of our Company.

~~Martin~~Christopher ~~Scott~~Knauf, Chief Financial Officer. Mr. ~~Scott~~Knauf was appointed chief financial officer effective ~~September~~February 114, ~~2023~~2024. He has ~~served~~an asextensive ~~founder~~background ~~and~~in ~~executive~~omni-channel ~~officer~~integrations of ~~Martin~~design, ~~Scott~~manufacturing, ~~CFO~~retail, ~~Consulting~~and ~~Services~~wholesale ~~Inc.~~distribution, ~~since~~with ~~2002.~~extensive ~~From~~financial ~~March~~management ~~2022~~experience. Prior to ~~January~~joining ~~2023~~the Company, ~~Mr.~~he ~~Scott~~most recently served as ~~chief~~the ~~financial~~Senior ~~officer~~Vice President of ~~MGO~~Accounting ~~Global,~~from ~~Inc.~~February ~~From~~ 2018 to ~~2020,~~2024 Mrfor LocumTenens.com, ~~Scott~~LLC, ~~served~~one asof ~~principal~~the ~~accounting~~largest ~~and~~medical ~~financial~~staffing ~~officer~~companies ofin ~~Puradyn~~the ~~Filter~~United ~~Technologies, Inc~~States. ~~Mr.~~He ~~Scott~~has is a ~~Certified~~BS ~~Public~~in ~~Accountant.~~Finance ~~Mr. Scott graduated~~ from ~~Florida~~Fairfield ~~State~~ University ~~with~~and aan ~~Bachelor~~MBA offrom ~~Science~~Fordham ~~degree in Accounting and Finance~~University.

Leslie Vogelman, Treasurer. Ms. Vogelman joined the Company in October 2009 in connection with our merger with Old ~~Luvu Brands~~Liberator, Inc. Prior to that, she served as Old Liberator’s Treasurer since June 2009, when OneUp ~~Innovations, Inc.~~ merged with Old Liberator in June 2009. Ms. Vogelman joined OneUp at its inception in 2000 as Secretary and Treasurer. Ms. Vogelman holds a B.A. from the State University of New York in Binghamton and an M.B.A. from Adelphi University.

The experience and background of our director, as summarized above, were significant factors in such director previously being nominated a director of the Company.

Family Relationships

Louis Friedman, our President, Chief Executive Officer and Chairman, and Leslie Vogelman, our Treasurer, are husband and wife.

There are no other relationships between the officers or directors of the Company.

2118 Table of Contents

~~Committees~~ITEM 10. Directors, Executive Officers and Corporate Governance. (continued)

As of the date of this report, we have not established an audit committee or any other committee of the board of directors and, therefore, the responsibilities of such committees have been conducted by our board of directors as a whole.Committees

WeAs ~~may,~~of in the ~~future~~date of this report, ~~establish~~we have not established an audit committee ~~and/~~or any other ~~committees~~committee of the board of directors. Weand, ~~currently~~therefore, dothe ~~not~~responsibilities of such committees have ~~any~~been ~~independent~~conducted by our board of directors as a whole.

~~Audit~~We ~~Committee~~may, ~~Financial~~in ~~Expert~~the future, establish an audit committee and/or other committees of the board of directors. We currently do not have any independent directors.

InAudit ~~general,~~Committee anFinancial ~~“audit committee financial expert” is an individual who:~~Expert

·In ~~understands generally accepted accounting principles and financial statements, · is able to assess the~~ general ~~application of such principles in connection with accounting for estimates~~, ~~accruals~~an ~~and~~“audit ~~reserves,~~committee ~~· has experience preparing, auditing, analyzing or evaluating~~ financial ~~statements~~expert” ~~comparable~~is toan ~~the~~individual ~~breadth and complexity of our financial statements, · understands internal controls over financial reporting, and · understands audit committee functions.~~who:

~~Our~~· ~~board~~understands generally accepted accounting principles and financial statements, · is able to assess the general application of ~~directors~~such ~~has~~principles ~~determined~~in ~~that~~connection ~~Louis~~with ~~Friedman~~accounting for estimates, ~~our~~accruals ~~sole~~and ~~Director~~reserves, is· ~~not~~has anexperience ~~“audit~~preparing, ~~committee~~auditing, analyzing or evaluating financial ~~expert”~~statements ~~within~~comparable to the ~~meaning~~breadth and complexity of ~~the~~our ~~foregoing~~financial ~~definition~~statements, · understands internal controls over financial reporting, and · understands audit committee functions.

~~Diversity~~Our board of directors has determined that Louis Friedman, our sole Director, is not an “audit committee financial expert” within the meaning of the foregoing definition.

We only have one member on our board of directors, but we hope to add more members for a diverse board in terms of previous business experience and educational and personal background of the members of our board. While the Company does not have a policy regarding diversity of its board members, diversity is one of a number of factors that will be taken into account in identifying board nominees. Diversity

~~Directors’~~We ~~Compensation~~only have one member on our board of directors, but we hope to add more members for a diverse board in terms of previous business experience and educational and personal background of the members of our board. While the Company does not have a policy regarding diversity of its board members, diversity is one of a number of factors that will be taken into account in identifying board nominees.

~~For~~Directors’ ~~the fiscal years ended June 30, 2023 and 2022, our directors did not receive any compensation in their capacity as a director.~~Compensation

~~Compliance~~For ~~with~~the ~~Section~~fiscal ~~16(a)~~years ofended ~~the~~June 30, ~~Exchange~~2024 ~~Act~~and 2023, our directors did not receive any compensation in their capacity as a director.

~~Section~~Compliance ~~16(a) of the Exchange Act requires our executive officers, directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file~~ with the SEC initial statements of beneficial ownership, reports of changes in ownership, and annual reports concerning their ownership of our common shares and other equity securities on Forms 3, 4, and 5 respectively. Executive officers, directors, and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) ~~reports they file. Based on a review~~ of the ~~copies~~Exchange ~~of such forms received by us, and to the best of our knowledge, there were no reports untimely filed during the fiscal year ended June 30, 2023.~~Act

~~Code~~Section 16(a) of ~~Ethics~~the Exchange Act requires our executive officers, directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership, and annual reports concerning their ownership of our common shares and other equity securities on Forms 3, 4, and 5 respectively. Executive officers, directors, and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on a review of the copies of such forms received by us, Mr. Knauf’s Form 3 and Form 4 was not filed on a timely basis. He has since submitted the forms to be in compliance as of the date of this filing.

~~During~~Code ~~August 2023 we adopted a code~~ of ethics. The code of ethics is filed as an exhibit to this Form 10-K annual report. The code applies to our officers, director, employees, and certain consultants. The code provides written standards that are designed to deter wrongdoing and promote: (i) honest and ethical conduct; (ii) full, fair, accurate, timely and understandable disclosure; (iii) compliance with applicable laws and regulations; (iv) promote reporting of internal violations of the code; and (v) accountability for the adherence to the code. A copy of our code of ethics may, upon request made to us in writing at the following address, be made available without charge: 2745 Bankers Industrial Drive, Atlanta, Georgia, 30360. Ethics

22During ~~Table~~August 2023 we adopted a code of ~~Contents~~ethics. The code of ethics is filed as an exhibit to this Form 10-K annual report. The code applies to our officers, director, employees, and certain consultants. The code provides written standards that are designed to deter wrongdoing and promote: (i) honest and ethical conduct; (ii) full, fair, accurate, timely and understandable disclosure; (iii) compliance with applicable laws and regulations; (iv) promote reporting of internal violations of the code; and (v) accountability for the adherence to the code. A copy of our code ethics may, upon request made to us in writing at the following address, be made available without charge: 2745 Bankers Industrial Drive, Atlanta, Georgia, 30360.

Table of Contents

ITEM 10. Directors, Executive Officers and Corporate Governance. (continued)

Insider Trading Policy

The Company has implemented an Insider Trading Policy applicable to its officers, directors and employees with access to material nonpublic information, as well as such persons’ family members, which prohibits such persons from conducting transactions involving the purchase or sale of the Company’s securities while in possession of material nonpublic information. A copy of the Company’s Insider Trading Policy is filed as Exhibit 19.1 of this Report.

While the granting of options and other equity awards to officers, directors and other employees is not expressly addressed in the Insider Trading Policy described above, the Company follows the same principles set forth in such Policy when granting equity awards, including options, to its officers, directors and other employees with access to material nonpublic information. Generally, the Board of Directors or Compensation Committee does not approve grants of such awards close in time to the disclosure of material nonpublic information and does not take material nonpublic information into account when determining the timing and terms of such an award. Further, the Company does not have a policy or practice of timing the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

Anti-Hedging Policies

Under the Company’s Insider Trading Policy, all officers, directors and employees are prohibited from engaging in hedging, pledging or shoring transactions.

ITEM 11. Executive Compensation.

Summary Compensation Table

The following summary compensation table indicates the cash and non-cash compensation earned during the fiscal years ended June 30, ~~2023~~2024 and ~~2022~~2023 by our named executive officers as defined in Item 402(a) of Regulation S-K (each an “NEO”).

	Fiscal	Salary		Bonus		~~StockAwards~~Stock Awards		~~OptionAwards~~Option Awards		Non- Equity Incentive Compensation			~~Non-EquityIncentive~~All ~~PlanCompensation~~Other Compensation		~~All OtherComp-ensation~~Total		~~Total~~
Name and Principal Position	Year	($)		($)		($)		($)(1)		($)			($)		($)		~~($)~~
Louis S. Friedman	~~2023~~2024		~~151~~155,~~538~~000		—-		—-		—-		-			—-		—155,000		~~151,538~~
President, Chief Executive	~~2022~~2023		~~150~~151,~~000~~538		—-		—-		—-		-			—-		—151,538		~~150,000~~
Officer and Chairman of the Board
Alexander A. Sannikov	2023		150,000		—		—		—					—		—		150,000
Christopher Knauf	2024		66,667		-		-		-		-			-		66,667
Chief Financial Officer(2)	~~2022~~		~~31,154~~		—		—		~~50,000~~		(3	)		—		—		~~81,154~~
Martin Scott	2024		67,743		-		-		-		-			-		67,743
Chief Financial Officer(3)
Alexander A. Sannikov	2024		46,042		-		-		-		-			-		46,042
Chief Financial Officer(4)	2023		150,000													150,000

(1) The amounts reported in this column represent the full grant date fair value of stock awards in accordance with ASC 718, net of estimated forfeitures.

(1)	The amounts reported in this column represent the full grant date fair value of stock awards in accordance with ASC 718, net of estimated forfeitures.
(2)	Commenced serving as chief financial officer on February 20, 2024.
(3)	Served as chief financial officer from September 1, 2023 to February 20, 2024.
(4)	Served as chief financial officer from April 29, 2022 to September 1, 2023.

~~(2) Resigned~~20 onTable ~~September 1, 2023 effective with the appointment~~ of ~~Mr. Martin Scott as chief financial officer.~~Contents

~~(3) Forfeited~~Outstanding ~~effective~~Equity ~~September~~Awards 1,at ~~2023~~Year ~~upon Mr. Sannikov’s resignation.~~End

The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of June 30, 2024.

Name	Number of securities underlying unexercised options (#) exercisable		Number of securities underlying unexercised options (#) unexercisable		Equity incentive plan awards: Number of securities underlying unexercised unearned options		Option exercise price ($)		Option expiration date		Number of shares of unit of stock that have not vested (#)		Market value of shares or units of stock that have not vested ($)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested		Equity incentive plan awards: Market of payout value of unearned shares, units or other rights that have not vested

Louis Friedman		-		-		-		-		-		-		-		-		-

Christopher Knauf		-		200,000		-	$	0.08	4/1/2029			-		-		-		-

Incentive and Non-qualified Stock Option and Stock Award Plans

At June 30, ~~2023~~2024, we had options outstanding under the 2015 Equity Incentive Plan. Please see Note 1517 to the notes to our financial statements appearing elsewhere in this report for a description of the material terms of this plan.

Employment Agreements

The Company has entered into an employment agreement with Louis Friedman, President and Chief Executive Officer. The agreement provides for an annual base salary of $155,000 and eligibility to receive a bonus, should the Company implement a bonus plan for executives. Under the agreement, this executive employee may be terminated at any time with or without cause, or by reason of death or disability. In certain termination situations, the Company is liable to pay severance compensation to this executive for up to 9 months.

~~The~~On ~~Company’s~~January ~~wholly~~15, ~~owned~~2024, ~~subsidiary~~the Company, through One Up, ~~has~~engaged ~~entered~~Chris ~~into~~Knauf ato ~~one~~serve ~~year~~as ~~employment~~Chief ~~agreement~~Financial ~~with~~Officer ~~Mr. Scott~~and ~~effective~~Controller ~~September 1, 2023, providing for a base salary~~ of ~~$126,000~~the ~~per year~~Company. The ~~agreement~~Company ~~may~~shall bepay ~~terminated by either party with or without cause on 30 day notice. In addition,~~ Mr. ~~Scott~~Knauf isan ~~eligible~~annual ~~for~~salary ~~Company~~of ~~benefits~~$150,000 and ~~will be entitled to indemnification to the maximum extent permitted by applicable law. In addition;~~ Mr. ~~Scott~~Knauf ~~entered~~received ~~into~~options ~~a Stock Option Agreement pursuant~~ to ~~the~~purchase ~~Company’s 2015 Equity Incentive Plan granting him an incentive stock option for an aggregate of~~ 200,000 shares of ~~our~~the Company’s common stock, ~~100,000 shares~~ exercisable ~~commencing on September 1, 2024 and the remaining 100,000 shares exercisable commencing on September 1, 2025,~~ at ~~an exercise price of~~ $$0.~~0812~~08 per share~~. The~~ ~~options~~on ~~shall immediately vest upon~~ the ~~Company~~date ~~uplisting~~of ~~to a national exchange or in~~ the ~~event~~agreement ofand aan ~~“change~~option ofto ~~control”~~purchase ofan ~~the~~additional ~~Company~~200,000 asshares ~~defined~~of ~~under~~common ~~the~~stock ~~Stock~~exercisable ~~Option~~at ~~Agreement~~$0.08 ~~The~~per ~~option~~share issix ~~exercisable~~months ~~for~~after athe ~~period~~date of ~~5 years from~~ the ~~initial grant date~~agreement.

23 Table of Contents

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Our voting securities include shares of our common stock and our Series A Convertible Preferred Stock. The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock by:

	·	all persons who are beneficial owners of five percent (5%) or more of any class of our voting securities;
	·	each of our directors;
	·	each of our Named Executive Officers; and
	·	all current directors and executive officers as a group.

Table of Contents

Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table below have sole voting and investment power with respect to all shares of our securities held by them.

Applicable percentage ownership in the following table is based on 76,547,672 shares of common stock and 4,300,000 shares of Series A Convertible Preferred Stock outstanding as of ~~October 12~~September 30, ~~2023~~2024.

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of ~~October~~September 1230, ~~2023~~2024, are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise disclosed these persons’ address is c/o Luvu Brands, Inc., 2745 Bankers Industrial Drive, Atlanta, GA 30360.

Title ofClass	Name and Address of Beneficial Owner	~~Amount and Nature ofBeneficial Ownership~~	Amount and Nature ofBeneficial Ownership		~~Percentof Class~~	Percentof Class
Common	Louis S. Friedman		36,397,233	(1)		45.0	%
Executive Officers and Directors
Common	~~Martin~~Louis ~~Scott~~S. Friedman		036,400,237	(21)		—47.5	%
Common	~~Leslie~~Christopher ~~Vogelman~~Knauf		~~596~~400,~~428~~000	~~(3)~~		*
Common	~~All~~Leslie ~~directors and executive officers as a group (3 persons)~~Vogelman		36596,~~993,661~~428	(2)	*	~~45.8%~~
Series A Convertible Preferred Stock	Louis S. Friedman		4,300,000	(4)		100.0	%
Common	All directors and executive officers as a group (3 persons)		37,396,665			48.4	%
Series A Convertible Preferred Stock	Martin Scott		0			0.0	%
Executive Officers and Directors
Series A Convertible Preferred Stock	Louis S. Friedman		4,300,000	(3)		100.0	%
Series A Convertible Preferred Stock	Christopher Knauf		0			0.0	%
Series A Convertible Preferred Stock	Leslie Vogelman		0			0.0	%
Series A Convertible Preferred Stock	All directors and executive officers as a group (3 persons)		4,300,000	(43)		100.0	%

* Less than 1%

(1)	Includes 4,300,000 shares of common stock issuable upon conversion of 4,300,000 shares of Series A Convertible Preferred stock at the discretion of the holder. Mr. Friedman owns 100% of the Series A Convertible Preferred Stock, each share of which has the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Stock issued and outstanding at the time of such vote. Accordingly, Mr. Friedman will own 71.2 0% of the combined voting power of the common stock and Series A Convertible Preferred Stock, voting as a single class and will control the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Friedman may differ from the interests of the other shareholders. Mr. Friedman disclaims any beneficial ownership of shares held by Leslie Vogelman.
(2)	~~Excludes~~Ms. ~~options~~Vogelman todisclaims ~~purchase~~any ~~200,000~~beneficial ownership of ~~common~~shares ~~stock~~held ~~that~~by ~~are~~Louis ~~subject~~S. ~~to vesting~~Friedman.
(3)	MsMr. ~~Vogelman~~Friedman ~~disclaims~~owns ~~any~~100% ~~beneficial~~of ~~ownership~~the Series A Convertible Preferred Stock, each share of which has the number of votes equal to the result of: (i) the number of shares ~~held~~of common stock of the Company issued and outstanding at the time of such vote multiplied by ~~Louis~~1.01; Sdivided by (ii) the total number of Series A Convertible Preferred Stock issued and outstanding at the time of such vote. Accordingly, Mr. Friedman will own 71.1 % of the combined voting power of the common stock and Series A Convertible Preferred Stock, voting as a single class and will control the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Friedman may differ from the interests of the other shareholders.
(4)	Mr. Friedman owns 100% of the Series A Convertible Preferred Stock, each share of which has the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Stock issued and outstanding at the time of such vote. Accordingly, Mr. Friedman will own 71.1 % of the combined voting power of the common stock and Series A Convertible Preferred Stock, voting as a single class and will control the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Friedman may differ from the interests of the other shareholders.

2422 Table of Contents

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth securities authorized for issuance under any equity compensation plan approved by our shareholders as well as any equity compensation plans not approved by our stockholders as of June 30, ~~2023~~2024.

Number of securities tobe issued upon exerciseof outstanding options,warrants and rights(a)

Weighted averageexercise price ofoutstanding options,warrants and rights(b)

Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a) (c)

Plan category

Plans approved by stockholders:

2015 Equity Incentive Plan

1,~~400~~350,000

.1012

~~300~~350,000

Related Party Transactions – refer to Note 14 in the Notes to Consolidated Financial Statements.

Director Independence

Our board of directors has determined that none of its current members qualifies as “independent” as the term is used in Item 407 of Regulation S-K as promulgated by the SEC or under Nasdaq’s Marketplace Rule 5605(a)(2).

25 Table of Contents

ITEM 14. Principal Accounting Fees and Services.

The aggregate fees billed by our principal accountant for each of the last two fiscal years for Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees are as follows:

	Fiscal Year Ended June 30,
	2023		2022
	2024		2023
	(in thousands)
Audit Fees (1)	$	5079	$	4250
Audit-Related Fees (2)	$	—	$	—
Tax Fees (3)	$	—1	$	—
All Other Fees (4)	$	—4	$	—

(1)	Audit Fees – This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q, and services that are normally provided by independent auditors in connection with the engagement for fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
(2)	Audit-Related Fees – This category consists of assurance and related services by our independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC.
(3)	Tax Fees – This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
(4)	All Other Fees – This category consists of fees for other miscellaneous items.

Our board of directors reviews and approves audit and permissible non-audit services performed by its independent accountants, as well as the fees charged for such services. In its review of non-audit service fees and its appointment of ~~Liggett~~Assurance &Dimensions ~~Webb P.A.~~ (~~2022~~2023) and ~~Assurance~~EC ~~Dimensions~~Barrett, LLC (~~2023~~2024) as our independent accountants, the Board considered whether the provision of such services is compatible with maintaining independence. All of the services provided and fees charged by ~~Liggett~~Assurance &Dimensions ~~Webb P.A.~~ and ~~Assurance~~EC ~~Dimensions~~Barrett, LLC were approved by the Board.

2623 Table of Contents

PART IV

ITEM 15. Exhibits, Financial Statement Schedules.

(a) Financial Statements; Schedules

Our consolidated financial statements for the fiscal years ended June 30, ~~2023~~2024 and ~~2022~~2023 begin on page F-1 of this annual report. We are not required to file any financial statement schedules.

(b) Exhibits.

Incorporated by Reference

~~Filed or Furnished~~

Filed or

No.

Exhibit Description

~~Form~~

Form

~~Date Filed~~

Date Filed

~~Number~~

Number

~~Herewith~~

FurnishedHerewith

2.1

Merger and Recapitalization Agreement between WES Consulting, Inc., the majority shareholder of WES Consulting, Inc., Luvu Brands, Inc., and the majority shareholder of Luvu Brands, Inc., dated as of October 19, 2009

~~8-K~~

8-K

~~10/22/09~~

10/22/09

~~2.1~~

2.1

2.2

Stock Purchase and Recapitalization Agreement between OneUp Acquisition, Inc., Remark Enterprises, Inc., OneUp Innovations, Inc., and Louis S. Friedman, dated March 31, 2009 and fully executed on April 3, 2009

~~8-K/A~~

8-K/A

~~3/24/10~~

3/24/10

~~2.2~~

2.2

2.3

Amendment No. 1 to Stock Purchase and Recapitalization Agreement, dated June 22, 2009

~~8-K/A~~

8-K/A

~~3/24/10~~

3/24/10

~~2.3~~

2.3

3.1

Amended and Restated Articles of Incorporation

~~SB-2~~

SB-2

~~3/2/07~~

3/2/07

3.2

Bylaws

~~SB-2~~

SB-2

~~3/2/07~~

3/2/07

~~3ii~~

3ii

3.3

Articles of Amendment to the Amended and Restated Articles of Incorporation

~~8-K~~

8-K

~~2/23/11~~

2/23/11

~~3.1~~

3.1

3.4

Articles of Amendment to the Amended and Restated Articles of Incorporation, effective February 28, 2011

~~8-K~~

8-K

~~3/3/11~~

3/3/11

~~3.1~~

3.1

3.5

Articles of Amendment to the Amended and Restated Articles of Incorporation, effective November 5, 2015

~~8-K~~

8-K

~~11/5/15~~

11/5/15

~~3.5~~

3.5

4.1

Designation of Rights and Preferences of Series A Convertible Preferred Stock.

~~8-K~~

8-K

~~2/23/11~~

2/23/11

~~4.1~~

4.1

10.1

Receivables Financing Agreement between One Up Innovations, Inc. and Advance Financial Corporation, dated May 24, 2011

~~10-K~~

10-K

~~10/12/11~~

10/12/11

~~10.17~~

10.17

10.2

Guarantee between Luvu Brands, Inc. and Advance Financial Corporation, dated May 24, 2011

~~10-K~~

10-K

~~10/12/11~~

10/12/11

~~10.18~~

10.18

10.3

Guarantee between Foam Labs, Inc. and Advance Financial Corporation, dated May 24, 2011

~~10-K~~

10-K

~~10/12/11~~

10/12/11

~~10.20~~

10.20

10.4

Guarantee between Louis S. Friedman and Advance Financial Corporation, dated May 24, 2011

~~10-K~~

10-K

~~10/12/11~~

10/12/11

~~10.21~~

10.21

10.5

Amended and Restated Receivable Financing Agreement between One Up Innovations, Inc. and Advance Financial Corporation, dated September 4, 2013

~~10-K~~

10-K

~~9/30/13~~

9/30/13

~~10.8~~

10.8

10.6

Form of promissory note

~~10-K~~

10-K

~~10/11/19~~

10/11/19

~~10.11~~

10.11

10.7

Employment Agreement between the Company and Louis Friedman dated January 27, 2021*

~~8-K~~

8-K

~~2/2/11~~

2/2/11

~~10.3~~

10.3

10.8

2015 Equity Incentive Plan*

~~DEF14C~~

DEF14C

~~10/9/15~~

10/9/15

10.9

U.S. Small Business Administration Note by One Up Innovations, Inc. in favor of Ameris Bank

~~8-K~~

8-K

~~4/28/20~~

4/28/20

~~10.1~~

10.1

10.10

Lease Agreement between Goodsen Land Partners, ~~LLC~~ and OneUp Innovations, Inc. dated November 20, 2020

~~10-Q~~

10-Q

~~11/12/20~~

11/12/20

~~10.1~~

10.1

10.11

~~Executive~~Agreement ~~Employment~~between ~~Term~~OneUp ~~Sheet~~Innovations, ~~dated~~Inc. ~~September~~and 1,Christopher ~~2023~~Knauf ~~between~~dated ~~One~~January Up18, ~~Innovations~~2024, ~~Inc.~~as and Martin Scott*supplemented.

~~8-K~~

10-Q/A

~~9/7/23~~

5/17/24

~~10.1~~

10.1

10.12

Stock Option Agreement between Luvu Brands, Inc. and Martin Scott dated September 1, 2023*

8-K

9/7/23

10.2

14.1

Code of Ethics

Filed

14.1

Code of Ethics

Filed

16.1

Letter from Liggett & Webb P.A., dated November 3, 2022

8-K

11/3/22

16.1

Letter from Liggett & Webb P.A., dated November 3, 2022

8-K

11/3/22

16.1

19.1

Insider Trading Policy

Filed

19.1

Insider Trading Policy

Filed

21.1

Subsidiaries

10-K

9/29/14

21.1

Subsidiaries

10-K

9/29/14

21.1

23.1

Consent of EC Barrett, LLC independent registered public accounting firm

Filed

23.1

Consent of Liggett & Webb P.A. independent registered public accounting firm

Filed

23.2

Consent of Assurance Dimensions independent registered public accounting firm

Filed

23.2

Consent of Assurance Dimensions independent registered public accounting firm

Filed

31.1

Section 302 Certificate of Chief Executive Officer

Filed

31.1

Section 302 Certificate of Chief Executive Officer

Filed

31.2

Section 302 Certificate of Chief Financial Officer

Filed

31.2

Section 302 Certificate of Chief Financial Officer

Filed

32.1

Section 906 Certificate of Chief Executive Officer

Filed

32.1

Section 906 Certificate of Chief Executive Officer

Filed

32.2

Section 906 Certificate of Chief Financial Officer

Filed

32.2

Section 906 Certificate of Chief Financial Officer

Filed

101.INS

XBRL Instance Document

Filed

101.INS

XBRL Instance Document

Filed

101.SCH

XBRL Taxonomy Extension Schema Document

Filed

101.SCH

XBRL Taxonomy Extension Schema Document

Filed

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

Filed

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

Filed

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Filed

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Filed

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document

Filed

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document

Filed

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Filed

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Filed

*	Management contract or compensatory plan or arrangement.

ITEM 16. Form 10-K Summary.

The Company elected not to provide the summary information.

2724 Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LUVU BRANDS, INC.
Date: October 13, 2023	By:	/s/ Louis S. Friedman
Date: September 30, 2024	By:	/s/ Louis S. Friedman
		Louis S. Friedman, Chief Executive Officer and President
Date: October 13, 2023	By:	/s/ Martin Scott
Date: September 30, 2024	By:	/s/ Christopher Knauf
		Martin Scott, Chief Financial Officer(Principal Financial and Accounting Officer)
		Christopher Knauf, Chief Financial Officer(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

NAME	TITLE	DATE
/s/ Louis S. Friedman	Chairman of the Board of Directors, Chief Executive Officer, and President (Principal Executive Officer)	~~October~~September 1330, ~~2023~~2024
Louis S. Friedman

2825

Filing Compare · Luvu Brands, Inc.