What changed in this filing

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Item 1. Financial Statements

2023-05-22 compared with 2023-02-17 · 136 added, 117 removed, 574 unchanged (31% of the section changed)

10 unchanged sentences

Total current assets

Equipment and leasehold improvements, net

Property, plant and equipment, net

Finance lease assets

Equipment and leasehold improvements, net

Operating lease right-of-use assets, net

13 unchanged sentences

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 at December 31, 2022 and June 30, 2022

Common stock, $ 0.01 par value, 175,000,000 shares authorized, 76,511,005 and 76,046,249 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively

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 at March 31, 2023 and June 30, 2022

Common stock, $ 0.01 par value, 175,000,000 shares authorized, 76,547,672 and 76,046,249 shares issued and outstanding at March 31, 2023 and June 30, 2022, respectively

Additional paid-in capital

2 unchanged sentences

Total liabilities and stockholders’ equity

(1) During the six months ending December 31, 2022 we reclassified credit balances in accounts receivable of ($106,000) to deferred revenue.

During the nine months ending March 31, 2023 we reclassified credit balances in accounts receivable of $142,123 to deferred revenue.

For the period ending June 30, 2022, accounts receivable and deferred revenue were adjusted by $85,000 for comparability only.

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands, except share data)

Cost of goods sold

Cost of goods sold (excl.

of depreciation shown separately Below)

Operating expenses

16 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity

For the Six Months ended December 31, 2022 and December 31, 2021 (unaudited)

For the Nine Months ended March 31, 2023 and March 31, 2022 (unaudited)

Series A Preferred

4 unchanged sentences

Stock option exercises

Net income for the six months ended December 31, 2021

Balance, December 31, 2021 (unaudited)

Net income for the nine months ended March 31, 2022

Balance, March 31, 2022

Balance, June 30, 2022

1 unchanged sentence

Stock option exercises

Net income for the six months ended December 31, 2022

Balance, December 31, 2022 (unaudited)

For the Three Months ended December 31, 2022 and December 31, 2021 (unaudited)

Net income for the nine months ended March 31, 2023

Balance, March 31, 2023

For the Three Months ended March 31, 2023 and March 31, 2022 (unaudited)

Series A Preferred

1 unchanged sentence

(in thousands, except share data)

Balance, September 30, 2021 (unaudited)

Balance, December 31, 2021

Stock-based compensation expense

Stock option exercises

Net income for the three months ended December 31, 2021

Balance, December 31, 2021 (unaudited)

Balance, September 30, 2022 (unaudited)

Net income for the three months ended March 31, 2022

Balance, March 31, 2022

Balance, December 31, 2022

Stock-based compensation expense

Stock option exercises

Net income for the three months ended December 31, 2022

Balance, December 31, 2022 (unaudited)

Net income for the three months ended March 31, 2023

Balance, March 31, 2023

See accompanying condensed notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

OPERATING ACTIVITIES:

32 unchanged sentences

Purchases of equipment with equipment notes

Finance lease asset obligation in exchange for lease payable

Cash paid during the period for:

(1) During the six months ending December 31, 2022 we reclassified credit balances in accounts receivable of ($106,000) to deferred revenue.

During the nine months ending March 31, 2023 we reclassified credit balances in accounts receivable of $142,123 to deferred revenue.

For the period ending June 30, 2022, accounts receivable and deferred revenue were adjusted by $85,000 for comparability only.

Consolidated Statement of Cash Flow was adjusted accordingly to reflect these reclassifications.

Consolidated Statements of Cash Flows was adjusted accordingly to reflect these reclassifications.

See accompanying condensed notes to unaudited consolidated financial statements.

2 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

ORGANIZATION AND NATURE OF BUSINESS

17 unchanged sentences

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles of the United States of America (“GAAP”) have been condensed or omitted pursuant to applicable rules and regulations.

In the opinion of management, all adjustments considered necessary for fair presentation have been included.

In the opinion of management, all adjustments (including those, which are normal and recurring) considered necessary for fair presentation have been included.

The year-end condensed balance sheet data were derived from audited consolidated financial statements but do not include all disclosures required by GAAP.

The results of operations for the six months ended December 31, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year.

The results of operations for the nine months ended March 31, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2022 as filed with the Securities and Exchange Commission (the “SEC”) on October 14, 2022 (the “2022 10-K”).

20 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

25 unchanged sentences

Deferred revenues primarily relate to gift cards purchased, but not used, prior to the end of the fiscal period.

During the six months ending December 31, 2022, we reclassified credit balances in accounts receivable of ($ 106,000 ) to deferred revenue.

During the nine months ending March 31, 2023, we reclassified credit balances in accounts receivable of $142,123 to deferred revenue.

Our total deferred revenue as of June 30, 2022 was $ 243,944 and was included in “Other accrued liabilities” in the consolidated balance sheets.

The deferred revenue balance as of December 31, 2022 was $ 17,888 .

The deferred revenue balance as of March 31, 2023 was $ 18,272 .

Cost of Goods Sold

5 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

4 unchanged sentences

However, significant deterioration in the financial condition of our customers, resulting in an impairment of their ability to make payments, could materially change these expectations and an additional allowance may be required.

The following is a summary of Accounts Receivable as of December 31, 2022 and June 30, 2022.

The following is a summary of Accounts Receivable as of March 31, 2023 and June 30, 2022.

(in thousands)

3 unchanged sentences

Total accounts receivable, net

(1) During the six months ending December 31, 2022 we reclassified credit balances in accounts receivable of ($106,000) to deferred revenue.

(1) During the nine months ending March 31, 2023 we reclassified credit balances in accounts receivable of $ 142,123 to deferred revenue.

For the period ending June 30, 2022, accounts receivable and deferred revenue were adjusted by $ 85,000 for comparability only.

Consolidated Statement of Cash Flow was adjusted accordingly to reflect these reclassifications.

Inventories and Inventory Reserves

Inventories and Inventory Allowances

Inventories are stated at the lower of cost or net realizable value.

3 unchanged sentences

The Company establishes allowances 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.

The allowances required to record inventory at lower of cost or net realizable value may be adjusted in response to changing conditions.

Concentration of Credit Risk

1 unchanged sentence

The total cash balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per bank.

The Company had bank balances on deposit at December 31, 2022 that exceeded the balance insured by the FDIC by $ 1,837,756 .

The Company had bank balances on deposit at March 31, 2023 that exceeded the balance insured by the FDIC by $ 1,174,029 .

Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in North America and Europe.

During the three and six months ended December 31, 2022, we purchased 35 % and 35 % respectively, of total inventory purchases from one vendor.

During the three and nine months ended March 31, 2023, we purchased 32 % and 35 % respectively, of total inventory purchases from one vendor.

During the fiscal year ended June 30, 2022, we purchased 34 % of total inventory purchases from one vendor.

As of December 31, 2022, two of the Company’s customers represents 35 % and 18 % of the total accounts receivables, respectively.

As of March 31, 2023, two of the Company’s customers represents 49 % and 11 % of the total accounts receivables, respectively.

As of June 30, 2022, two of the Company’s customers represents 21 % and 13 % of the total accounts receivables, respectively.

For the three and six months ended December 31, 2022, sales to and through Amazon accounted for 34 % and 36 % of our net sales, respectively.

For the three and nine months ended March 31, 2023, sales to and through Amazon accounted for 34 % and 36 % of our net sales, respectively.

LUVU BRANDS, INC.

1 unchanged sentence

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments

At December 31, 2022 and June 30, 2022, our financial instruments included cash and cash equivalents, accounts receivable, accounts payable, short-term debt, and other long-term debt.

At March 31, 2023 and June 30, 2022, 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.

14 unchanged sentences

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 $ 687 at December 31, 2022 and $ 1,050 at June 30, 2022.

Advertising expense for the three months ended December 31, 2022 and 2021 was $ 199,504 and $ 154,876 , respectively.

Advertising expense for the six months ended December 31, 2022 and 2021 was $ 386,498 and $ 286,766 , respectively.

Prepaid advertising (included in prepaid expenses) was $ 525 at March 31, 2023 and $ 1,050 at June 30, 2022.

Advertising expense for the three months ended March 31, 2023 and 2022 was $ 170,616 and $ 132,647 , respectively.

Advertising expense for the nine months ended March 31, 2023 and 2022 was $ 557,114 and $ 419,233 , respectively.

LUVU BRANDS, INC.

1 unchanged sentence

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

1 unchanged sentence

Research and development expenses for new products are expensed as they are incurred.

Expenses for new product development totaled $ 36,418 and $ 32,482 for the three months ended December 31, 2022 and 2021, respectively.

Expenses for new product development totaled $ 67,368 and $ 60,805 for the six months ended December 31, 2022 and 2021, respectively.

Expenses for new product development totaled $ 32,958 and $ 26,591 for the three months ended March 31, 2023 and 2022, respectively.

Expenses for new product development totaled $ 100,326 and $ 87,396 for the nine months ended March 31, 2023 and 2022, respectively.

Research and development costs are included in general and administrative expense.

4 unchanged sentences

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 that time.

When properties are disposed of, the related costs and accumulated depreciation are removed from the respective accounts, and any gain or loss is recognized at that time.

Impairment or Disposal of Long Lived Assets

2 unchanged sentences

360, Property, Plant, and Equipment .

The Company has determined that there was no impairment at December 31, 2022.

The Company has determined that there was no impairment at March 31, 2023.

Operating Leases

3 unchanged sentences

In addition, the Company will pay the landlord a 2 % property management fee.

The rent expense for the three months ended December 31, 2022 and 2021 was $ 163,188 and $ 163,188 respectively.

The rent expense for the six months ended December 31, 2022 and 2021 was $ 326,376 and $ 326,376 respectively.

The rent expense for the three months ended March 31, 2023 and 2022 was $ 163,188 and $ 163,188 respectively.

The rent expense for the nine months ended March 31, 2023 and 2022 was $ 489,564 and $ 489,564 respectively.

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.

17 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

8 unchanged sentences

Three Months Ended

December 31 ,

March 31, 2023

Three Months Ended

December 31 ,

March 31, 2022

(in thousands)

1 unchanged sentence

Total Net Sales

Three Months Ended December 31,

Gross Profit by Channel:

Three Months Ended

March 31, 2023

(in thousands)

Gross Profit by Channel:

Total Gross Profit

Six Months Ended

Nine Months Ended

March 31, 2023

Nine Months Ended

March 31, 2022

(in thousands)

1 unchanged sentence

Total Net Sales

Six Months Ended

Nine Months Ended

March 31, 2023

March 31, 2022

(in thousands)

5 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

5 unchanged sentences

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 plus the effect of stock options using the treasury stock method.

As of December 31, 2022 and 2021, the common stock equivalents did not have any effect on net income per share.

As of March 31, 2023 and 2022, the common stock equivalents did not have any effect on net income per share.

Common stock options – 2015 Plan

17 unchanged sentences

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 March 31, 2023 or June 30, 2022.

LUVU BRANDS, INC.

1 unchanged sentence

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

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 December 31, 2022 or June 30, 2022.

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

INVENTORIES, NET

2 unchanged sentences

Inventories consisted of the following:

March 31, 2023

June 30, 2022

(in thousands)

9 unchanged sentences

Equipment and leasehold improvements consisted of the following:

March 31, 2023

June 30, 2022

Estimated Useful Life

(in thousands)

6 unchanged sentences

Equipment and leasehold improvements, net

Depreciation and amortization expense was $ 88,017 and $ 77,825 for the three months ended December 31, 2022 and 2021, respectively.

For the six months ended December 31, 2022 and 2021, depreciation and amortization expense was $ 174,873 and $ 148,513 , respectively.

Depreciation and amortization expense was $ 88,902 and $ 79,542 for the three months ended March 31, 2023 and 2022, respectively.

For the nine months ended March 31, 2023 and 2022, depreciation and amortization expense was $ 263,775 and $ 227,055 , respectively.

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.

1 unchanged sentence

If the carrying amount exceeds its estimated future cash flows, then an impairment charge is recognized to the extent that the carrying amount exceeds the asset’s fair value.

Management has determined no asset impairment occurred during the six months ended December 31, 2022.

Management has determined no asset impairment occurred during the nine months ended March 31, 2023.

LUVU BRANDS, INC.

1 unchanged sentence

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

OTHER ACCRUED LIABILITIES

Other accrued liabilities at December 31, 2022 and June 30, 2022:

Other accrued liabilities at March 31, 2023 and June 30, 2022:

March 31, 2023

June 30, 2022

(in thousands)

2 unchanged sentences

Other accrued liabilities

(1) During the six months ending December 31, 2022 we reclassified credit balances in accounts receivable of ($ 106,000 ) to deferred revenue.

(1) During the nine months ending March 31, 2023 we reclassified credit balances in accounts receivable of $ 142,123 to deferred revenue.

For the period ending June 30, 2022, accounts receivable and deferred revenue were adjusted by $ 85,000 for comparability only.

Audited accounts receivable and deferred revenue balances, reported on Form 10K for the fiscal year ended June 30, 2022, did not change.

CURRENT AND LONG-TERM DEBT SUMMARY

Current and long-term debt at December 31, 2022 and June 30, 2022 consisted of the following:

Current and long-term debt at March 31, 2023 and June 30, 2022 consisted of the following:

March 31, 2023

June 30, 2022

Current debt:

12 unchanged sentences

Equipment notes payable (Note 13)

Notes Payable - related party (Note 9)

Total long-term debt

2 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

UNSECURED NOTES PAYABLE

Unsecured notes payable at December 31, 2022 and June 30, 2022 consisted of the following:

Unsecured notes payable at March 31, 2023 and June 30, 2022 consisted of the following:

June 30, 2022

Current unsecured notes payable:

19 unchanged sentences

NOTES PAYABLE - RELATED PARTY

Related party notes payable at December 31, 2022 and June 30, 2022 consisted of the following:

Related party notes payable at March 31, 2023 and June 30, 2022 consisted of the following:

March 31, 2023

June 30, 2022

(in thousands)

7 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

LINE OF CREDIT

1 unchanged sentence

The term of the agreement was one year, renewable for additional one year terms unless either party provides written notice of nonrenewal at least 90 days prior to the end of the current financing period.

The current agreement term ends on September 4, 2023.

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.

4 unchanged sentences

In addition, the Company has provided its corporate guarantee of the credit facility (see Note 14).

On December 31, 2022, the balance owed under this line of credit was $ 905,410 .

As of December 31, 2022, we were current and in compliance with all terms and conditions of this line of credit.

On March 31, 2023, the balance owed under this line of credit was $ 998,671 .

As of March 31, 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.

1 unchanged sentence

UNSECURED LINE OF CREDIT

The Company has drawn a cash advance on an unsecured line of credit that is in the name of the Company and Louis S.

The Company has drawn a cash advance on an unsecured line of credit with maximum credit limit of $ 55,500 that is in the name of the Company and Louis S.

The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 12.25 %.

The aggregate amount owed on the unsecured line of credit was $ 18,942 at December 31, 2022 and $ 24,879 at June 30, 2022.

The aggregate amount owed on the unsecured line of credit was $ 15,909 at March 31, 2023 and $ 24,879 at June 30, 2022.

SECURED NOTE PAYABLE

5 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

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 December 31, 2022, the weighted average remaining lease term for the lease renewal is 5 years and the weighted average discount rate is 14.49 %.

Supplemental balance sheet information related to leases at December 31, 2022 is as follows:

At March 31, 2023, the weighted average remaining lease term for the lease renewal is 5 years and the weighted average discount rate is 14.49 %.

Supplemental balance sheet information related to leases at March 31, 2023 is as follows:

Operating leases

8 unchanged sentences

Total lease liabilities

Maturities of lease liabilities at December 31, 2021 are as follows:

Maturities of lease liabilities at March 31, 2023 are as follows:

(in thousands)

9 unchanged sentences

The equipment notes have stated or imputed interest rates ranging from 8.5 % to 11.3 %.

The following is an analysis of the minimum future equipment note payable payments subsequent to December 31, 2022:

The following is an analysis of the minimum future equipment note payable payments subsequent to March 31, 2023:

Years ending June 30,

8 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

COMMITMENTS AND CONTINGENCIES (continued)

6 unchanged sentences

On February 1, 2022 the Company entered into finance lease agreement with Raymond in the amount of $ 22,862 with monthly payment of $ 514 with 48-month term at an imputed interest rate of 3.75 %.

The following is an analysis of the minimum finance lease payable payments subsequent to December 31, 2022:

The following is an analysis of the minimum finance lease payable payments subsequent to March 31, 2023:

Year ending June 30,

14 unchanged sentences

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 shareholder in the amount of $ 76,000 (see Note 9).

Interest on the note during the six months ended December 31, 2022 was accrued by the Company at the prevailing prime rate (which is currently 7.50 %) and totaled $ 1,310 .

The accrued interest on the note as of December 31, 2022 was $ 31,598 .

Interest on the note during the nine months ended March 31, 2023 was accrued by the Company at the prevailing prime rate (which is currently 8.0 %) and totaled $ 1,452 .

The accrued interest on the note as of March 31, 2023 was $ 33,050 .

This note is subordinate to all other credit facilities currently in place.

1 unchanged sentence

Friedman, loaned the Company $ 40,000 (see Note 9).

Interest on the note during the six months ended December 31, 2022 was accrued by the Company at the prevailing prime rate (which is currently 7.50 %) and totaled $ 689 .

The accrued interest on the note as of December 31, 2022 was $ 2,520 .

Interest on the note during the nine months ended March 31, 2023 was accrued by the Company at the prevailing prime rate (which is currently 8 .0%) and totaled $ 764 .

The accrued interest on the note as of March 31, 2023 was $ 3,284 .

This note is subordinate to all other credit facilities currently in place.

2 unchanged sentences

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

RELATED PARTY TRANSACTIONS (continued)

1 unchanged sentence

In addition, Luvu Brands has provided its corporate guarantees of the credit facility.

On December 31, 2022, the balance owed under this line of credit was $ 905,410 .

On March 31, 2023, the balance owed under this line of credit was $ 998,671 .

On July 20, 2011, the Company issued an unsecured promissory note to an individual for $ 100,000 .

12 unchanged sentences

The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 12.25 %.

The aggregate amount owed on the unsecured line of credit was $ 18,942 at December 31, 2022 (see Note 11).

The aggregate amount owed on the unsecured line of credit was $ 15,909 at March 31, 2023 (see Note 11).

The loan is personally guaranteed by the Company’s CEO, Louis S.

STOCKHOLDERS’ EQUITY

At December 31, 2022, the Company had the 2015 Stock Option Plan (the “2015 Plan”), which is a shareholder-approved and under which 1,450,000 shares are reserved for issuance under the 2015 Plan until such Plan terminates on August 31, 2025.

At March 31, 2023, the Company had the 2015 Stock Option Plan (the “2015 Plan”), which is a shareholder-approved and under which 1,450,000 shares are reserved for issuance under the 2015 Plan until such 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 December 31, 2022, the number of shares available for issuance under the 2015 Plan was 362,500 .

As of March 31, 2023, the number of shares available for issuance under the 2015 Plan was 362,500 .

LUVU BRANDS, INC.

1 unchanged sentence

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

STOCKHOLDERS’ EQUITY (continued)

The following table summarizes the Company’s stock option activities during the six months ended December 31, 2022:

The following table summarizes the Company’s stock option activities during the nine months ended March 31, 2023:

Number of Shares

1 unchanged sentence

Forfeited or expired

Options outstanding as of December 31, 2022

Options exercisable as of December 31, 2022

Options outstanding as of March 31, 2023

Options exercisable as of March 31, 2023

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 $ 0.17 for such day.

There were 475,000 stock options exercised during the six months ended December 31, 2022 and a total of 250,000 during the six months ended December 31, 2021 in exchange for various consideration including cash, accrued interest and on a cashless basis.

There were no stock options granted during the six months ended December 31, 2022 and 50,000 stock options granted during the six months ended December 31, 2021.

There were 525,000 stock options exercised during the nine months ended March 31, 2023 and a total of 1,050,000 during the nine months ended March 31, 2022 in exchange for various consideration including cash, accrued interest and on a cashless basis.

There were no stock options granted during the nine months ended March 31, 2023 and 50,000 stock options granted during the nine months ended March 31, 2022.

LUVU BRANDS, INC.

1 unchanged sentence

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

STOCKHOLDERS’ EQUITY (continued)

The following table summarizes the weighted average characteristics of outstanding stock options as of December 31, 2022:

The following table summarizes the weighted average characteristics of outstanding stock options as of March 31, 2023:

Outstanding Options

1 unchanged sentence

Exercise Prices

Number of Shares

Remaining Life

Weighted Average

Number of Shares

Weighted Average

$ .02 to $.03

6 unchanged sentences

The cost of each award is recognized as expense in the financial statements over the respective vesting period.

Stock option-based compensation expense recognized in the condensed consolidated statements of operations for the three and six month periods ended December 31, 2022 and 2021 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures.

Stock option-based compensation expense recognized in the condensed consolidated statements of operations for the three and nine month periods ended March 31, 2023 and 2022 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures.

The following table summarizes stock option-based compensation expense by line item in the Condensed Consolidated Statements of Operations, all relating to the Plans:

Ended December 31,

Ended March 31,

($ in thousands)

3 unchanged sentences

Total Stock-based Compensation Expense

As of December 31, 2022, the Company’s total unrecognized compensation cost was $ 140,562 which will be recognized over the weighted average vesting period of approximately 3.1 years.

As of March 31, 2023, the Company’s total unrecognized compensation cost was $ 128,937 which will be recognized over the weighted average vesting period of approximately 2.9 years.

Share Purchase Warrants

As of December 31, 2022 and 2021, there were no warrants outstanding.

As of March 31, 2023 and 2022, there were no warrants outstanding.

LUVU BRANDS, INC.

1 unchanged sentence

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 (UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31, 2023 (UNAUDITED)

STOCKHOLDERS’ EQUITY (continued)

The Company’s authorized common stock was 175,000,000 shares at December 31, 2022 and June 30, 2022.

The Company’s authorized common stock was 175,000,000 shares at March 31, 2023 and June 30, 2022.

Common shareholders are entitled to dividends if and when declared by the Company’s Board of Directors, subject to preferred stockholder dividend rights.

At December 31, 2022, the Company had reserved the following shares of common stock for issuance:

At March 31, 2023, the Company had reserved the following shares of common stock for issuance:

Shares of common stock reserved for issuance under the 2015 Plan

9 unchanged sentences

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.

– SUBSEQUENT EVENTS

On April 25, 2023 a promissory note dated May 26, 2021 for the amount of $ 200,000 with an interest rate of 13.5 % paid monthly, with the principal due in full on May 1, 2023, was amended and extended with a new promissory note, with the principal due in full on May 1, 2025 .

Friedman has personally guaranteed the repayment of the loan obligation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements