Luvu Brands, Inc. 10-K

ITEM 9A. Controls and Procedures (continued). recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material adverse effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2024 based upon criteria in an Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management believes the Company’s internal control over financial reporting was effective as of June 30, 2024 based on the criteria issued by COSO. This Annual Report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm. Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act. Changes in Internal Control Over Financial Reporting There were no changes to our internal control over financial reporting during the fourth quarter ended June 30, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. Other Information. None. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 17 Table of Contents PART III. ITEM 10. Directors, Executive Officers and Corporate Governance. The following table sets forth the current officers and directors of Luvu Brands, Inc. Name Age Position Louis S. Friedman 72 Chief Executive Officer, President, Director Christopher Knauf 52 Chief Financial Officer Leslie S. Vogelman 72 Treasurer All directors serve for one-year terms until their successors are elected or they are re-elected at the annual shareholders’ meeting. Officers hold their positions at the pleasure of the board of directors. There is no arrangement, agreement or understanding between any of the directors or officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer. Also, there is no arrangement, agreement or understanding between management and non-management shareholders under which non-management shareholders may directly or indirectly participate in or influence the management of our affairs. Directors are not presently compensated for their service on the board other than the repayment of actual expenses incurred, and there are no present plans to compensate them. Background of Executive Officers and Directors Louis S. Friedman, President, Chief Executive Officer and Director. Mr. Friedman has served as President, Chief Executive Officer, and director since our merger with Old Liberator in October 2009. Prior to that, he served as Old Liberator’s Chief Executive Officer and a director since June 2009, when OneUp Innovations, Inc. merged with Old Liberator in June 2009. Mr. Friedman founded OneUp in 2000. Before starting OneUp, Mr. Friedman was in business consulting, venture capital and private investing from 1990 to 2000. Earlier in his career, Mr. Friedman was Executive Vice President of Chemtronics, Inc., until its sale to Morgan Crucible in 1990. Mr. Friedman’s experience as Chief Executive Officer and insight into our operations, our industry, and related risks as well as experience bringing consumer products to market were factors considered by our board of directors in concluding he should serve as a director of our Company. Christopher Knauf, Chief Financial Officer. Mr. Knauf was appointed chief financial officer effective February 14, 2024. He has an extensive background in omni-channel integrations of design, manufacturing, retail, and wholesale distribution, with extensive financial management experience. Prior to joining the Company, he most recently served as the Senior Vice President of Accounting from February 2018 to 2024 for LocumTenens.com, LLC, one of the largest medical staffing companies in the United States. He has a BS in Finance from Fairfield University and an MBA from Fordham University. Leslie Vogelman, Treasurer. Ms. Vogelman joined the Company in October 2009 in connection with our merger with Old Liberator, Inc. Prior to that, she served as Old Liberator’s Treasurer since June 2009, when OneUp merged with Old Liberator in June 2009. Ms. Vogelman joined OneUp at its inception in 2000 as Secretary and Treasurer. Ms. Vogelman holds a B.A. from the State University of New York in Binghamton and an M.B.A. from Adelphi University. The experience and background of our director, as summarized above, were significant factors in such director previously being nominated a director of the Company. Family Relationships Louis Friedman, our President, Chief Executive Officer and Chairman, and Leslie Vogelman, our Treasurer, are husband and wife. There are no other relationships between the officers or directors of the Company. 18 Table of Contents ITEM 10. Directors, Executive Officers and Corporate Governance. (continued) Committees As of the date of this report, we have not established an audit committee or any other committee of the board of directors and, therefore, the responsibilities of such committees have been conducted by our board of directors as a whole. We may, in the future, establish an audit committee and/or other committees of the board of directors. We currently do not have any independent directors. Audit Committee Financial Expert In general, an “audit committee financial expert” is an individual who: · understands generally accepted accounting principles and financial statements, · is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves, · has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity of our financial statements, · understands internal controls over financial reporting, and · understands audit committee functions. Our board of directors has determined that Louis Friedman, our sole Director, is not an “audit committee financial expert” within the meaning of the foregoing definition. Diversity We only have one member on our board of directors, but we hope to add more members for a diverse board in terms of previous business experience and educational and personal background of the members of our board. While the Company does not have a policy regarding diversity of its board members, diversity is one of a number of factors that will be taken into account in identifying board nominees. Directors’ Compensation For the fiscal years ended June 30, 2024 and 2023, our directors did not receive any compensation in their capacity as a director. Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Exchange Act requires our executive officers, directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership, and annual reports concerning their ownership of our common shares and other equity securities on Forms 3, 4, and 5 respectively. Executive officers, directors, and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on a review of the copies of such forms received by us, Mr. Knauf’s Form 3 and Form 4 was not filed on a timely basis. He has since submitted the forms to be in compliance as of the date of this filing. Code of Ethics During August 2023 we adopted a code of ethics. The code of ethics is filed as an exhibit to this Form 10-K annual report. The code applies to our officers, director, employees, and certain consultants. The code provides written standards that are designed to deter wrongdoing and promote: (i) honest and ethical conduct; (ii) full, fair, accurate, timely and understandable disclosure; (iii) compliance with applicable laws and regulations; (iv) promote reporting of internal violations of the code; and (v) accountability for the adherence to the code. A copy of our code ethics may, upon request made to us in writing at the following address, be made available without charge: 2745 Bankers Industrial Drive, Atlanta, Georgia, 30360. 19 Table of Contents ITEM 10. Directors, Executive Officers and Corporate Governance. (continued) ITEM 10. Directors, Executive Officers and Corporate Governance. (continued) Insider Trading Policy The Company has implemented an Insider Trading Policy applicable to its officers, directors and employees with access to material nonpublic information, as well as such persons’ family members, which prohibits such persons from conducting transactions involving the purchase or sale of the Company’s securities while in possession of material nonpublic information. A copy of the Company’s Insider Trading Policy is filed as Exhibit 19.1 of this Report. While the granting of options and other equity awards to officers, directors and other employees is not expressly addressed in the Insider Trading Policy described above, the Company follows the same principles set forth in such Policy when granting equity awards, including options, to its officers, directors and other employees with access to material nonpublic information. Generally, the Board of Directors or Compensation Committee does not approve grants of such awards close in time to the disclosure of material nonpublic information and does not take material nonpublic information into account when determining the timing and terms of such an award. Further, the Company does not have a policy or practice of timing the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. Anti-Hedging Policies Under the Company’s Insider Trading Policy, all officers, directors and employees are prohibited from engaging in hedging, pledging or shoring transactions. ITEM 11. Executive Compensation. Summary Compensation Table The following summary compensation table indicates the cash and non-cash compensation earned during the fiscal years ended June 30, 2024 and 2023 by our named executive officers as defined in Item 402(a) of Regulation S-K (each an “NEO”). Fiscal Salary Bonus Stock Awards Option Awards Non- Equity Incentive Compensation All Other Compensation Total Name and Principal Position Year ($) ($) ($) ($)(1) ($) ($) ($) Louis S. Friedman 2024 155,000 - - - - - 155,000 President, Chief Executive 2023 151,538 - - - - - 151,538 Officer and Chairman of the Board Christopher Knauf 2024 66,667 - - - - - 66,667 Chief Financial Officer(2) Martin Scott 2024 67,743 - - - - - 67,743 Chief Financial Officer(3) Alexander A. Sannikov 2024 46,042 - - - - - 46,042 Chief Financial Officer(4) 2023 150,000 150,000 (1) The amounts reported in this column represent the full grant date fair value of stock awards in accordance with ASC 718, net of estimated forfeitures. (2) Commenced serving as chief financial officer on February 20, 2024. (3) Served as chief financial officer from September 1, 2023 to February 20, 2024. (4) Served as chief financial officer from April 29, 2022 to September 1, 2023. 20 Table of Contents Outstanding Equity Awards at Year End The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of June 30, 2024. Name Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexercisable Equity incentive plan awards: Number of securities underlying unexercised unearned options Option exercise price ($) Option expiration date Number of shares of unit of stock that have not vested (#) Market value of shares or units of stock that have not vested ($) Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested Equity incentive plan awards: Market of payout value of unearned shares, units or other rights that have not vested Louis Friedman - - - - - - - - - Christopher Knauf - 200,000 - $ 0.08 4/1/2029 - - - - Incentive and Non-qualified Stock Option and Stock Award Plans At June 30, 2024, we had options outstanding under the 2015 Equity Incentive Plan. Please see Note 17 to the notes to our financial statements appearing elsewhere in this report for a description of the material terms of this plan. Employment Agreements The Company has entered into an employment agreement with Louis Friedman, President and Chief Executive Officer. The agreement provides for an annual base salary of $155,000 and eligibility to receive a bonus, should the Company implement a bonus plan for executives. Under the agreement, this executive employee may be terminated at any time with or without cause, or by reason of death or disability. In certain termination situations, the Company is liable to pay severance compensation to this executive for up to 9 months. On January 15, 2024, the Company, through One Up, engaged Chris Knauf to serve as Chief Financial Officer and Controller of the Company. The Company shall pay Mr. Knauf an annual salary of $150,000 and Mr. Knauf received options to purchase 200,000 shares of the Company’s common stock, exercisable at $0.08 per share on the date of the agreement and an option to purchase an additional 200,000 shares of common stock exercisable at $0.08 per share six months after the date of the agreement. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Our voting securities include shares of our common stock and our Series A Convertible Preferred Stock. The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock by: · all persons who are beneficial owners of five percent (5%) or more of any class of our voting securities; · each of our directors; · each of our Named Executive Officers; and · all current directors and executive officers as a group. 21 Table of Contents Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table below have sole voting and investment power with respect to all shares of our securities held by them. Applicable percentage ownership in the following table is based on 76,547,672 shares of common stock and 4,300,000 shares of Series A Convertible Preferred Stock outstanding as of September 30, 2024. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of September 30, 2024, are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise disclosed these persons’ address is c/o Luvu Brands, Inc., 2745 Bankers Industrial Drive, Atlanta, GA 30360. Title of Class Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class Executive Officers and Directors Common Louis S. Friedman 36,400,237 (1) 47.5 % Common Christopher Knauf 400,000 * Common Leslie Vogelman 596,428 (2) * Common All directors and executive officers as a group (3 persons) 37,396,665 48.4 % Executive Officers and Directors Series A Convertible Preferred Stock Louis S. Friedman 4,300,000 (3) 100.0 % Series A Convertible Preferred Stock Christopher Knauf 0 0.0 % Series A Convertible Preferred Stock Leslie Vogelman 0 0.0 % Series A Convertible Preferred Stock All directors and executive officers as a group (3 persons) 4,300,000 (3) 100.0 % * Less than 1% (1) Includes 4,300,000 shares of common stock issuable upon conversion of 4,300,000 shares of Series A Convertible Preferred stock at the discretion of the holder. Mr. Friedman owns 100% of the Series A Convertible Preferred Stock, each share of which has the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Stock issued and outstanding at the time of such vote. Accordingly, Mr. Friedman will own 71.0% of the combined voting power of the common stock and Series A Convertible Preferred Stock, voting as a single class and will control the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Friedman may differ from the interests of the other shareholders. Mr. Friedman disclaims any beneficial ownership of shares held by Leslie Vogelman. (2) Ms. Vogelman disclaims any beneficial ownership of shares held by Louis S. Friedman. (3) Mr. Friedman owns 100% of the Series A Convertible Preferred Stock, each share of which has the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Stock issued and outstanding at the time of such vote. Accordingly, Mr. Friedman will own 71.1 % of the combined voting power of the common stock and Series A Convertible Preferred Stock, voting as a single class and will control the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Friedman may differ from the interests of the other shareholders. 22 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The following table sets forth securities authorized for issuance under any equity compensation plan approved by our shareholders as well as any equity compensation plans not approved by our stockholders as of June 30, 2024. Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c) Plan category Plans approved by stockholders: 2015 Equity Incentive Plan 1,350,000 .12 350,000 ITEM 13. Certain Relationships and Related Transactions, and Director Independence. Related Party Transactions – refer to Note 14 in the Notes to Consolidated Financial Statements Director Independence Our board of directors has determined that none of its current members qualifies as “independent” as the term is used in Item 407 of Regulation S-K as promulgated by the SEC or under Nasdaq’s Marketplace Rule 5605(a)(2). ITEM 14. Principal Accounting Fees and Services. The aggregate fees billed by our principal accountant for each of the last two fiscal years for Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees are as follows: Fiscal Year Ended June 30, 2024 2023 (in thousands) Audit Fees (1) $ 79 $ 50 Audit-Related Fees (2) $ — $ — Tax Fees (3) $ 1 $ — All Other Fees (4) $ 4 $ — (1) Audit Fees – This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q, and services that are normally provided by independent auditors in connection with the engagement for fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements. (2) Audit-Related Fees – This category consists of assurance and related services by our independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC. (3) Tax Fees – This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice. (4) All Other Fees – This category consists of fees for other miscellaneous items. Our board of directors reviews and approves audit and permissible non-audit services performed by its independent accountants, as well as the fees charged for such services. In its review of non-audit service fees and its appointment of Assurance Dimensions (2023) and EC Barrett, LLC (2024) as our independent accountants, the Board considered whether the provision of such services is compatible with maintaining independence. All of the services provided and fees charged by Assurance Dimensions and EC Barrett, LLC were approved by the Board. 23 Table of Contents PART IV ITEM 15. Exhibits, Financial Statement Schedules. (a) Financial Statements; Schedules Our consolidated financial statements for the fiscal years ended June 30, 2024 and 2023 begin on page F-1 of this annual report. We are not required to file any financial statement schedules. (b) Exhibits. Incorporated by Reference Filed or No . Exhibit Description Form Date Filed Number Furnished Herewith 2.1 Merger and Recapitalization Agreement between WES Consulting, Inc., the majority shareholder of WES Consulting, Inc., Luvu Brands, Inc., and the majority shareholder of Luvu Brands, Inc., dated as of October 19, 2009 8-K 10/22/09 2.1 2.2 Stock Purchase and Recapitalization Agreement between OneUp Acquisition, Inc., Remark Enterprises, Inc., OneUp Innovations, Inc., and Louis S. Friedman, dated March 31, 2009 and fully executed on April 3, 2009 8-K/A 3/24/10 2.2 2.3 Amendment No. 1 to Stock Purchase and Recapitalization Agreement, dated June 22, 2009 8-K/A 3/24/10 2.3 3.1 Amended and Restated Articles of Incorporation SB-2 3/2/07 3i 3.2 Bylaws SB-2 3/2/07 3ii 3.3 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 2/23/11 3.1 3.4 Articles of Amendment to the Amended and Restated Articles of Incorporation, effective February 28, 2011 8-K 3/3/11 3.1 3.5 Articles of Amendment to the Amended and Restated Articles of Incorporation, effective November 5, 2015 8-K 11/5/15 3.5 4.1 Designation of Rights and Preferences of Series A Convertible Preferred Stock. 8-K 2/23/11 4.1 10.1 Receivables Financing Agreement between One Up Innovations, Inc. and Advance Financial Corporation, dated May 24, 2011 10-K 10/12/11 10.17 10.2 Guarantee between Luvu Brands, Inc. and Advance Financial Corporation, dated May 24, 2011 10-K 10/12/11 10.18 10.3 Guarantee between Foam Labs, Inc. and Advance Financial Corporation, dated May 24, 2011 10-K 10/12/11 10.20 10.4 Guarantee between Louis S. Friedman and Advance Financial Corporation, dated May 24, 2011 10-K 10/12/11 10.21 10.5 Amended and Restated Receivable Financing Agreement between One Up Innovations, Inc. and Advance Financial Corporation, dated September 4, 2013 10-K 9/30/13 10.8 10.6 Form of promissory note 10-K 10/11/19 10.11 10.7 Employment Agreement between the Company and Louis Friedman dated January 27, 2021* 8-K 2/2/11 10.3 10.8 2015 Equity Incentive Plan* DEF14C 10/9/15 B 10.9 U.S. Small Business Administration Note by One Up Innovations, Inc. in favor of Ameris Bank 8-K 4/28/20 10.1 10.10 Lease Agreement between Goodsen Land Partners and OneUp Innovations, Inc. dated November 20, 2020 10-Q 11/12/20 10.1 10.11 Agreement between OneUp Innovations, Inc. and Christopher Knauf dated January 18, 2024, as supplemented. 10-Q/A 5/17/24 10.1 14.1 Code of Ethics Filed 16.1 Letter from Liggett & Webb P.A., dated November 3, 2022 8-K 11/3/22 16.1 19.1 Insider Trading Policy Filed 21.1 Subsidiaries 10-K 9/29/14 21.1 23.1 Consent of EC Barrett, LLC independent registered public accounting firm Filed 23.2 Consent of Assurance Dimensions independent registered public accounting firm Filed 31.1 Section 302 Certificate of Chief Executive Officer Filed 31.2 Section 302 Certificate of Chief Financial Officer Filed 32.1 Section 906 Certificate of Chief Executive Officer Filed 32.2 Section 906 Certificate of Chief Financial Officer Filed 101.INS XBRL Instance Document Filed 101.SCH XBRL Taxonomy Extension Schema Document Filed 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed 101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed 101.LAB XBRL Taxonomy Extension Labels Linkbase Document Filed 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed * Management contract or compensatory plan or arrangement. ITEM 16. Form 10-K Summary . The Company elected not to provide the summary information. 24 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LUVU BRANDS, INC. Date: September 30, 2024 By: /s/ Louis S. Friedman Louis S. Friedman, Chief Executive Officer and President Date: September 30, 2024 By: /s/ Christopher Knauf Christopher Knauf, Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. NAME TITLE DATE /s/ Louis S. Friedman Chairman of the Board of Directors, Chief Executive Officer, and President (Principal Executive Officer) September 30, 2024 Louis S. Friedman 25