What changed in this filing

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Item 1. Financial Statements

2023-11-20 compared with 2023-05-22 · 196 added, 256 removed, 454 unchanged (50% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets

September 30,

(in thousands, except share data)

5 unchanged sentences

Total current assets

Property, plant and equipment, net

Finance lease assets

Equipment and leasehold improvements, net

Operating lease right-of-use assets, net

Finance lease assets

Right of use assets

Deferred Tax asset, net

Liabilities and stockholders’ equity:

2 unchanged sentences

Other accrued liabilities

Operating lease liabilities

Operating lease liability

Total current liabilities

1 unchanged sentence

Long-term debt

Long-term operating lease liabilities

Long-term operating lease liability

Total noncurrent liabilities

2 unchanged sentences

Stockholders’ equity:

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 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

Preferred stock, 0.0001 par value, 5,700,000 shares authorized 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 September 30, 2023 and June 30, 2023

Common stock, $ 0.01 par value, 175,000,000 shares authorized, 76,547,672 and 76,547,672 shares issued and outstanding at September 30, 2023 and June 30, 2023, respectively

Additional paid-in capital

2 unchanged sentences

Total liabilities and stockholders’ equity

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 Flows was adjusted accordingly to reflect these reclassifications.

See accompanying condensed notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Operations

Three Months Ended

Nine Months Ended

Three Months Ended September 30,

(in thousands, except share data)

Cost of goods sold (excl.

of depreciation shown separately Below)

Cost of goods sold

Operating expenses

2 unchanged sentences

General and administrative

Depreciation and amortization

Total operating expenses

Income from operations

Income / (loss) from operations

Other Income (Expense):

3 unchanged sentences

Provision for income taxes

Net income per share:

Shares used in computing net income per share:

See accompanying condensed notes to unaudited consolidated financial statements.

Net (loss) income

Net income / (loss) per share:

Shares used in computing net (loss) income per share:

See accompanying notes to unaudited condensed consolidated financial statements.

Luvu Brands, Inc.

1 unchanged sentence

Consolidated Statements of Changes in Stockholders’ Equity

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

Series A Preferred

Stockholders’

(in thousands, except share data)

Balance, June 30, 2021

Stock-based compensation expense

Stock option exercises

Net income for the nine months ended March 31, 2022

Balance, March 31, 2022

Balance, June 30, 2022

Stock-based compensation expense

Stock option exercises

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)

For the Three Months ended September 30, 2023 and September 30, 2022 (unaudited)

Series A Preferred

1 unchanged sentence

(in thousands, except share data)

Balance, December 31, 2021

Balance, June 30, 2022 (unaudited)

Stock-based compensation expense

Stock option exercises

Net income for the three months ended March 31, 2022

Balance, March 31, 2022

Balance, December 31, 2022

Net income for the three months ended September 30, 2022

Balance, September 30, 2022 (unaudited)

Balance, June 30, 2023 (unaudited)

Stock-based compensation expense

Stock option exercises

Net income for the three months ended March 31, 2023

Balance, March 31, 2023

Net loss for the three months ended September 30, 2023

Balance, September 30, 2023 (unaudited)

See accompanying condensed notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

Three Months Ended

September 30,

OPERATING ACTIVITIES:

( in thousands )

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

Stock based compensation expense

Provision for bad debt

Amortization of operating lease right-of-use assets

Bad debt expense

Amortization of operating lease asset

Changes in operating assets and liabilities:

4 unchanged sentences

Accrued expenses and interest

Operating leases liability

Operating lease liability

Net cash provided by operating activities

INVESTING ACTIVITIES:

Investment in equipment and leasehold improvements

Investment in purchase of equipment and leasehold improvements

Net cash used in investing activities

FINANCING ACTIVITIES:

Repayment of unsecured notes payable

Proceeds from unsecured notes payable

Repayment of unsecured notes payable

Proceeds from secured notes payable

Net cash provided by (repaid to) line of credit

Repayments of secured notes payable

Repayment of unsecured line of credit

Proceeds from exercise of stock options

Payments on equipment notes

1 unchanged sentence

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

1 unchanged sentence

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Non cash item:

Purchases of equipment with equipment notes

Finance lease asset obligation in exchange for lease payable

Cash paid during the period for:

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

See accompanying condensed notes to unaudited consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

ORGANIZATION AND NATURE OF BUSINESS

7 unchanged sentences

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;

Avana ® inclined bed therapy products, assistive in relieving medical conditions associated with acid reflux and surgery recovery;

and Jaxx ® , a diverse range of casual fashion daybeds, sofas and beanbags made from polyurethane foam and repurposed polyurethane foam trim.

3 unchanged sentences

We have a diversified customer base with only one customer accounting for 10 % 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.

Our business is seasonal and as a result we typically experience higher sales in our second and third fiscal quarters.

The accompanying unaudited consolidated financial statements of the Company and all of its wholly-owned subsidiaries included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC").

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 (including those, which are normal and recurring) considered necessary for fair presentation have been included.

In the opinion of management, all normal recurring adjustments 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 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”).

The results of operations for the three months ended September 30, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year.

These 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, 2023 as filed with the Securities and Exchange Commission (the “SEC”) on October 16, 2023 (the “2023 10-K”).

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

10 unchanged sentences

income taxes;

deferred tax allowance;

tax valuation allowance;

allowances for doubtful accounts;

inventory valuation and allowances;

inventory valuation and allowance;

share-based compensation;

3 unchanged sentences

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

17 unchanged sentences

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.

In assessing whether collection of consideration from a customer is probable, we consider the customers 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.

5 unchanged sentences

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

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 March 31, 2023 was $ 18,272 .

Our total deferred revenue as of September 30, 2023 was $ 18,754 and was included in “Other accrued liabilities” on our consolidated balance sheets.

The deferred revenue balance as of September 30, 2022 was $ 137,821 .

Cost of Goods Sold

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

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

Cash and Cash Equivalents

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts to reflect our estimate of current and past due receivable balances that may not be collected.

The allowance for doubtful accounts is based upon our assessment of the collectability of specific customer accounts, the aging of accounts receivable and our history of bad debts.

We maintain an allowance for doubtful accounts on estimated losses to reflect our estimate of current and past due receivable balances that may not be collected.

The allowance for doubtful accounts is based upon our assessment of the collectability of specific customer accounts, the aging of accounts receivable, our history of bad debts and a forecast of projected credit losses.

We believe that the allowance for doubtful accounts is adequate to cover anticipated losses in the receivable balance under current conditions.

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 March 31, 2023 and June 30, 2022.

The following is a summary of Accounts Receivable as of September 30, 2023 and June 30, 2023.

September 30,

(in thousands)

3 unchanged sentences

Total accounts receivable, net

(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 Allowances

Inventories and Allowance for Excess and Obsolete Inventory

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

2 unchanged sentences

Inventory costs include materials, labor, depreciation and overhead.

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

The Company establishes allowance 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 allowance 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 March 31, 2023 that exceeded the balance insured by the FDIC by $ 1,174,029 .

The Company had bank balances on deposit at September 30, 2023 that exceeded the balance insured by the FDIC by $ 926,492 .

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

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 three months ended September, 30 2023, we purchased 35 % of total inventory purchases from one vendor.

During the fiscal year ended June 30, 2023, we purchased 35 % of total inventory purchases from one vendor.

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

As of September 30, 2023, two of the Company’s customers represents 48 % and 13 % of the total accounts receivables, respectively.

As of June 30, 2023, two of the Company’s customers represents 35 % and 12 % of the total accounts receivables, 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.

For the three months ended September 30, 2023, sales to and through Amazon accounted for 37 % of our net sales.

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments

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.

At September 30, 2023 and June 30, 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 term maturity or current terms for similar instruments.

The Company measures the fair value of its assets and liabilities under the guidance of Accounting Standards Codification (“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.

11 unchanged sentences

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

Advertising Costs

Advertising and Promotion 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 $ 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.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

There was no Prepaid advertising at September 30, 2023 and at June 30, 2023.

Advertising expense for the three months ended September 30, 2023 and 2022 was $ 268,544 and $ 186,994 , respectively.

Research and Development

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

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.

Expenses for new product development totaled $ 32,722 and $ 30,950 for the three months ended September 30, 2023 and 2022, respectively.

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

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Equipment and Leasehold Improvements

Equipment and Leasehold Improvements are stated at cost.

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.

1 unchanged sentence

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 at 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 currently.

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 March 31, 2023.

The Company has determined that there was no impairment at September 30, 2023.

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 .

On November 2, 2020, the Company entered into an agreement with its landlord on a lease for the current facilities for six years and two months, beginning January 1, 2021.

The lease includes 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 will pay the landlord a 2 % property management fee.

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.

The rent expense for the three months ended September 30, 2023 and 2022 was $ 163,188 and $ 163,188 , 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.

12 unchanged sentences

See Note 12 for details.

Under prior guidance ASC 840, rent expense and lease incentives from operating leases were recognized on a straight-line basis over the lease term.

The difference between rent expense recognized and rental payments was recorded as deferred rent in the accompanying consolidated balance sheets.

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2 unchanged sentences

Direct, Wholesale and Other .

Direct includes product sales through our five e-commerce sites.

Direct includes product sales through our four 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.

Other consists principally of shipping and handling fees and costs derived from our Direct business.

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

Three Months Ended

March 31, 2023

Three Months Ended

March 31, 2022

(in thousands)

Net Sales by Channel:

Total Net Sales

Three Months Ended

March 31, 2023

(in thousands)

Gross Profit by Channel:

Total Gross Profit

Nine Months Ended

March 31, 2023

Nine Months Ended

March 31, 2022

September 30,

(in thousands)

1 unchanged sentence

Total Net Sales

Nine Months Ended

March 31, 2023

March 31, 2022

September 30,

(in thousands)

2 unchanged sentences

Total Gross Profit

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by FASB or other standard setting bodies that are adopted by the Company as of the specified effective date.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements”, which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model.

Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as accounts receivable, at the net amount expected to be collected.

The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

The Company adopted this standard in the consolidated financial statements on July 1, 2023.

The change had no impact on the Company’s financial statements.

All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable.

Net Income Per Share

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Net Income / (Loss) Per Share

In accordance with ASC 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 plus the effect of stock options using the treasury stock method.

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

For the three months ended September 30, 2023, common stock equivalent shares are excluded from the computation of net loss per share as their effect is anti-dilutive.

For the three months ended September 30, 2022, the common stock equivalents did not have any effect on net income per share.

September 30,

Common stock options – 2015 Plan

6 unchanged sentences

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.

Stock Based Compensation

10 unchanged sentences

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.

There was no impairment as of September 30, 2023 or June 30, 2023.

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

INVENTORIES, NET

2 unchanged sentences

Inventories consisted of the following:

March 31, 2023

June 30, 2022

September 30,

(in thousands)

3 unchanged sentences

Total inventories

Allowance for slow moving inventory

Allowance for excess and obsolete inventory

Total inventories, net of allowance

3 unchanged sentences

Equipment and leasehold improvements consisted of the following:

March 31, 2023

June 30, 2022

Estimated Useful Life

September 30,

(in thousands)

6 unchanged sentences

Equipment and leasehold improvements, net

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.

Depreciation and amortization expense was $ 99,222 and $ 86,856 for the three months ended September 30, 2023 and 2022, 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 nine months ended March 31, 2023.

Management has determined no asset impairment occurred during the three months ended September 30, 2023.

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

OTHER ACCRUED LIABILITIES

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

March 31, 2023

June 30, 2022

Other accrued liabilities at September 30, 2023 and June 30, 2023:

September 30,

(in thousands)

2 unchanged sentences

Other accrued liabilities

(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.

CURRENT AND LONG-TERM DEBT SUMMARY

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

March 31, 2023

June 30, 2022

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

September 30,

Current debt:

4 unchanged sentences

Current portion of equipment notes payable (Note 12)

Current portion secured notes payable (Note 12)

Current portion of finance leases payable (Note 12)

Current portion of notes payable – related party (Note 9)

Total current debt

7 unchanged sentences

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

UNSECURED NOTES PAYABLE

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

June 30, 2022

Unsecured notes payable at September 30, 2023 and June 30, 2023 consisted of the following:

September 30,

Current unsecured notes payable:

(in thousands)

13.5 % Unsecured note, interest only, due May 1, 2023 (2)

13.5% Unsecured note, interest only, due July 31, 2023 (3)

2 unchanged sentences

Long-term unsecured notes payable:

13.5% Unsecured note, interest only, due October 31, 2023 (1)

13.5% Unsecured note, interest only, due May 1, 2025 (2)

13.5% Unsecured note, interest only, due July 31, 2025 (3)

13.5% Unsecured note, interest only, due October 31, 2025 (1)

Total long-term unsecured notes payable

2 unchanged sentences

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 repaid in full on September 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 October 31, 2025.

Personally guaranteed by 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 April 30, 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.

1 unchanged sentence

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 repaid in full on July 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 July 31, 2025.

Personally guaranteed by principal stockholder.

NOTES PAYABLE - RELATED PARTY

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

March 31, 2023

Related party notes payable at September 30, 2023 and June 30, 2023 consisted of the following:

September 30,

June 30, 2023

7 unchanged sentences

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

LINE OF CREDIT

The Company’s wholly owned subsidiary, OneUp and OneUp’s wholly owned subsidiary, Foam Labs has 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 nonrenewal at least 90 days prior to the end of the current financing period.

The current agreement term ends on September 4, 2023.

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.

1 unchanged sentence

In addition, there is a Monthly Service Fee (as defined in the agreement) of currently 0.05 % per month.

The Company’s President, Chief Executive Officer (CEO), and majority shareholder.

Louis Friedman, has personally guaranteed the repayment of the facility.

The Company’s President, Chief Executive Officer (CEO), and majority shareholder, 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 13).

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.

On September 30, 2023 and June 30, 2023, the balance owed under this line of credit were $ 1,102,122 and $ 1,039,013 , respectively.

As of September 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.

1 unchanged sentence

UNSECURED LINE OF CREDIT

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 Company has drawn a cash advance on one unsecured line of credit that is in the name of the Company and Louis Friedman.

The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 11 %.

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

On February 17, 2021, the Company entered into an agreement with Amazon, whereby Amazon agreed to loan OneUp 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 aggregate amount owed on the unsecured line of credit was $ 9,608 at September 30, 2023 and $ 12,806 at June 30, 2023.

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases it facilities under non-cancelable operating leases which now expires February 28, 2027 .

The Company leases its facilities under a non-cancelable operating lease which now expires February 28, 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 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:

At September 30, 2023, the weighted average remaining lease term for the lease renewal is 4 years and the weighted average discount rate is 14.49 %.

Supplemental balance sheet information related to leases at September 30, 2023 is as follows:

Operating leases

8 unchanged sentences

Total lease liabilities

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

Maturities of lease liabilities at September 30, 2023 are as follows:

(in thousands)

2 unchanged sentences

Present value discount

Total lease liabilities balance

Total lease liability balance

Equipment Notes Payable

4 unchanged sentences

The equipment notes have stated or imputed interest rates ranging from 7.29 % to 11.3 %.

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

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

Years ending June 30,

(in thousands)

Future Minimum Note Payable Payments

5 unchanged sentences

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 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 March 31, 2023:

The following is an analysis of the minimum finance lease payable payments subsequent to September 30, 2023:

Year ending June 30,

5 unchanged sentences

Long-Term Obligations under Finance Lease Payable

Employment Agreement

The Company has entered into an employment agreement with Louis Friedman, President and Chief Executive Officer (CEO).

Employment Agreements

The Company has entered into an employment agreement with Louis Friedman, President and CEO.

The agreement provides for an annual base salary of $ 155,000 and eligibility to receive a bonus.

1 unchanged sentence

Friedman for up to nine months at his current salary.

As of September 30, 2023 the Company has not accrued a liability as it is not probable.

Legal Proceedings

As of the date of this Quarterly Report, there are no material pending legal or governmental proceedings relating to the 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 adverse effect to the company.

As of the date of this Quarterly 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.

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

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 .

Interest on the note during the three months ended September 30, 2023 was accrued by the Company at the prevailing prime rate (which is currently 8.50 %) and totaled $ 1,615 .

The accrued interest on the note as of September 30, 2023 was $ 36,210 .

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 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 .

Interest on the note during the three months ended September 30, 2023 was accrued by the Company at the prevailing prime rate (which is currently 8.50 %) and totaled $ 850 .

The accrued interest on the note as of September 30, 2023 was $ 4,948 and included in Other Current Liabilities on the consolidated balance sheet.

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

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

RELATED PARTY TRANSACTIONS (continued)

The Company’s CEO has personally guaranteed the repayment of the loan obligation to Advance Financial Corporation (see Note 11 – Line of Credit).

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

On September 30, 2023, the balance owed under this line of credit was $ 1,102,122 .

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).

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, 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 July 31, 2025 .

Repayment of this promissory note is personally guaranteed by the Company’s CEO, Louis S.

2 unchanged sentences

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 .

This note was repaid in full on October 31, 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 October 31, 2025 .

Repayment of the promissory note is personally guaranteed by the Company’s CEO, Louis S.

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).

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 .

Friedman has personally guaranteed the repayment of the loan obligation.

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

The Company has drawn a cash advance on one unsecured lines of credit 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 11 %.

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

The aggregate amount owed on the unsecured line of credit was $ 9,608 at September 30, 2023 (see Note 11).

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

STOCKHOLDERS’ EQUITY

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.

At September 30, 2023, the Company had the 2015 Stock Option Plan (the “2015 Plan”), which is 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 March 31, 2023, the number of shares available for issuance under the 2015 Plan was 362,500 .

As of September 30, 2023, the number of shares available for issuance under the 2015 Plan was 200,000 .

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

STOCKHOLDERS’ EQUITY (continued)

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

Number of Shares

The following table summarizes the Company’s stock option activities during the three months ended September 30, 2023:

Options outstanding as of June 30, 2023

Forfeited or expired

Options outstanding as of March 31, 2023

Options exercisable as of March 31, 2023

Options outstanding as of

September 30, 2023

Options exercisable as of September 30, 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 $ 0.10 for such day.

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.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 March 31, 2023:

There were no stock options exercised during the three months ended September 30, 2023 and the three months ended September 30, 2022.

On September 1, 2023, 200,000 stock options were granted to a new employee of the Company under the 2015 Plan with exercise price of $ 0.081 .

There were no stock options granted during the three months ended September 30, 2022.

The following table summarizes the weighted average characteristics of outstanding stock options as of September 30, 2023:

Outstanding Options

3 unchanged sentences

$ .05 to $.10

$ .15 to $.20

Total stock options

4 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 nine month periods ended March 31, 2023 and 2022 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 months ended September 30, 2023 and 2022 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures.

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED)

STOCKHOLDERS’ EQUITY (continued)

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 March 31,

Ended September 30,

($ in thousands)

3 unchanged sentences

Total Stock-based Compensation Expense

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

LUVU BRANDS, INC.

AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

STOCKHOLDERS’ EQUITY (continued)

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

(1) Reflects 250,000 forfeited stock options.

On September 1, 250,000 stock options were forfeited by an affiliate of the Company resulting in reversal of stock option-based compensation expense in the amount of $ 15,625 which was recognized in prior periods.

As of September 30, 2023, the Company’s total unrecognized compensation cost was $ 89,662 which will be recognized over the weighted average vesting period of approximately twenty-seven months.

As of September 30, 2023 and 2022, there were no warrants outstanding.

The Company’s authorized common stock was 175,000,000 shares at September 30, 2023 and June 30, 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 March 31, 2023, the Company had reserved the following shares of common stock for issuance:

At September 30, 2023, the Company had reserved the following shares of common stock for issuance:

September 30,

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