What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-10-16 compared with 2022-10-14 · 22 added, 45 removed, 153 unchanged (30% of the section changed)

7 unchanged sentences

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 and employs over 200 people.

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

The Company’s e-commerce websites include:

11 unchanged sentences

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 (the “Merger”).

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.

8 unchanged sentences

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 where we currently employ 216 people.

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

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.

Our sewing equipment is also highly automated with conveyor-based lines leading into vacuum and roll compression packaging of finished products.

2 unchanged sentences

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 which, during fiscal 2022, produced approximately 35% of our sewn product requirements.

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, primarily for Jaxx bean bags, which gives us a cost and quality competitive advantage.

During fiscal 2021, we installed a second, larger roll pack and compression machine used for the majority of our foam-based products, and a second foam contouring machine.

In July 2022, we also acquired and installed an additional automated sewing conveyor system for increased capacity and flexibility.

These actions resulted in increased throughput and lower production costs in these operations, which have been partially offset by increased raw material costs and wages.

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.

14 unchanged sentences

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.

In fiscal 2018 and 2019, the new roll pack compression equipment expanded the number of products offered in smaller boxes.

With the addition of the larger roll pack compression machine that we installed during fiscal 2021, we can now more efficiently compress our larger foam products.

Wholesale Operations .

25 unchanged sentences

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 (4) wholesale distributors of adult / sexual wellness products.

(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, and (3) 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.

1 unchanged sentence

We also sell our products in Europe through a Germany based exclusive distributor.

All products sold under the Liberator brand provided 45% and 42% of our revenues in each of our fiscal years ended June 30, 2022 and 2021, respectively.

Products Purchased for Resale

We import high-quality pleasure objects from around the world.

These resale products provided 6% and 8% of our revenues in each of our fiscal years ended June 30, 2022 and 2021 respectively.

Jaxx Casual Seating

4 unchanged sentences

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, (5) schools and daycare centers, and (6) retail furniture stores.

(1) modern furniture e-tailers, (2) mass marketers, (3) interior designers, (4) schools and daycare centers, and (5) 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.

Jaxx products provided 32% and 29% of our revenues in each of our fiscal years ended June 30, 2022 and 2021, respectively.

The contemporary seating business is highly competitive.

We believe we compete effectively on the basis of product quality, good design, customer service, and good price to value.

We believe that our primary competitive advantages are consumer recognition of the Jaxx brand, as well as distribution through the multiple sales channels where consumers prefer to purchase.

Avana ® Top-of-Bed Comfort Products

1 unchanged sentence

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.

The 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 .

The Avana 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.

Total Avana products provided 11% and 16% of our revenues in our fiscal years ended June 30, 2022 and 2021, respectively.

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

5 unchanged sentences

For European customers, orders are filled from our exclusive Germany-based distributor or directly from our facilities in Atlanta.

Total international sales represented approximately 4% of our total net sales in each year ended June 30, 2022 and 2021.

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.

3 unchanged sentences

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 e-zine blog content on sexual wellness topics, and watch non-pornographic videos on the many facets of human sexuality and erotic expression.

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.

10 unchanged sentences

Major Customers

Our ten largest customers (excluding our own e-commerce sites) accounted for approximately 52% of net sales for the year ended June 30, 2022 and 51% of net sales for the year ended June 30, 2021.

Sales to (and through) Amazon accounted for 36% of our net sales during the year ended June 30, 2023 and 31% of our sales for the year ended June 30, 2022.

3 unchanged sentences

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 no direct competition for the majority of our Liberator branded products.

Due to the strength of our brand, we have limited 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.

9 unchanged sentences

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.

Our future competitive position will likely depend on, but not be limited to, the following:

the continued acceptance of our products by our customers and consumers;

our ability to protect our proprietary rights in our patent and trademarks and the continued validity of such intellectual property;

our ability to successfully expand our product offerings;

our ability to maintain adequate inventory levels to meet our customers’ demands;

our ability to expand operations;

our ability to continue to manufacture high quality products at competitive prices;

our ability to attract and retain qualified personnel;

the effect of any future governmental regulations on our products and business;

the continued growth of the global sexual wellness industry;

our ability to respond to changes within the industry and consumer demand, financially and otherwise.

Government Regulation

7 unchanged sentences

Human Capital and Resources

As of June 30, 2022, we had 201 employees (163 people in Production and Distribution, and 38 in sales, marketing and administrative operations).

As of the date of this report, the Company employs 175 people in Production and Distribution, 2 people in Product Development, 17 people in Sales and Marketing, and 22 people in Administration.

As of June 30, 2023, we had 207 employees.

The Company’s employment levels may change seasonally based on current and anticipated order levels.

At present, approximately 25 people are employed at a subcontractor in Mexico.

Additional staffing is typically required to support the peak holiday period through Valentine’s Day.

1 unchanged sentence

We have had no labor-related work stoppages, and we believe our relationships with our employees are good.

Prior to COVID-19 pandemic our business was seasonal.

With the divarication of our product line, we no longer have large seasonal fluctuations.

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 in purpose-driven, meaningful work and have opportunities for growth and development.

We are committed to creating and maintaining a work environment in 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 positive 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

3 unchanged sentences

Reference in this document to that website address does not constitute incorporation by reference of the information contained on the website.

Risk Factors.

Not applicable to a smaller reporting company.

Unresolved Staff Comments.

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-K

Item 1. Business