What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2025-10-14 compared with 2024-09-30 · 1 added, 113 removed, 24 unchanged (83% of the section changed)

2 unchanged sentences

The Company’s Common Stock trades on the OTCQB Tier of the OTC Markets under the symbol “LUVU”.

On September 20, 2024, the last sale price of the Common Stock, as reported on the OTCQB, was $0.627 per share.

On October 14, 2025, the last sale price of the Common Stock, as reported on the OTCQB, was $0.04 per share.

The following table sets forth for the periods indicated, high and low bid prices of the Common Stock as reported by the OTCQB.

19 unchanged sentences

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

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

This discussion summarizes the significant factors affecting the results of operations and financial condition of the Company during the fiscal years ended June 30, 2024 and 2023 and should be read in conjunction with our financial statements and accompanying notes thereto included elsewhere herein.

Certain information contained in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are “forward-looking statements.” Statements that are not historical in nature and which may be identified by the use of words like “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could be” and other words of similar meaning, are forward-looking statements.

These statements are based on management’s expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed.

Our actual results may differ materially from the results discussed in this section because of various factors, including those set forth elsewhere herein.

See “Forward-Looking Statements” included in this report.

Results of Operations

The following table sets forth, for the periods indicated, information derived from our Consolidated Financial Statements, expressed as a percentage of net sales.

The discussion that follows the table should be read in conjunction with our Consolidated Financial Statements.

Cost of goods sold

Selling, General and Administrative Expenses

Operating income

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

The net sales decrease of 16% in fiscal 2024 from fiscal 2023 consists of a 23% decrease in sales of Liberator products, offset, in part, by a 3% increase in Jaxx products, a 16% increase in sales of Avana products, and 15% decrease in products purchased for resale.

Sales of Liberator products decreased 23% from the prior year to approximately $13.6 million during fiscal 2024.

Sales of Jaxx products increased 3% during fiscal 2024 to approximately $7.1 million.

Sales of Avana products increased 16% to $2.6 million during fiscal 2024.

Sales of all products through the Wholesale sales channel in fiscal 2024 decreased by 13% from the prior year, while the Direct sales channel decreased by approximately 22% from the prior year.

The Wholesale sales channel includes branded products and resale products sold to brick-and-mortar retailers and e-merchants, including, but not limited to, Amazon, Overstock, and Wayfair.

The Wholesale sales channel also includes contract manufacturing services, which consist of specialty items that are manufactured in small quantities for certain customers and which, to date, have not been a material part of our business.

The Direct sales channel consists of consumer sales through our three websites.

The decrease in sales through the Direct channel was due to lower site traffic to our Liberator.com and Liberatorstore.com websites.

Efforts to increase traffic through additional spending on Google Adwords proved to be ineffective.

Gross profit.

Gross profit, derived from net sales less than product sales, includes the cost of materials, direct labor, manufacturing overhead, and depreciation.

Total gross profit as a percentage of sales for the year ended June 30, 2024 increased to 27% from 25% in the prior year.

Gross profit dollars decreased to $6,526,367 from $7,192,330 in the prior year, representing a 9% decrease.

The Company also continued to implement cost reduction strategies like transitioning the sewing of certain high-volume Jaxx and Avana products to a contract facility in Mexico which, during fiscal 2024, produced approximately 4% of our sewn products and reduced our total cost of production for those products.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Operating expenses.

Excluding depreciation expense, total operating expenses for the year ended June 30, 2024, were 24% of net sales, or $5,940,178, compared to 18% of net sales, or $5,294,191, for the year ended June 30, 2023.

The 13% increase in operating expenses from the prior year was primarily due to higher advertising expenses and personnel-related costs.

Other income (expense).

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

Income tax expense.

Income tax expenses increased to ($162,000) from a benefit of $10,000 in the prior fiscal year.

The expense was mainly related to prior years’ deferred tax adjustments, which we had not previously recorded.

Net Income/(loss) income.

We had a net loss from operations of $398,602 or $0.01 per diluted share, for the year ended June 30, 2024 compared with net income from operations of $1,199,000 or $0.02 per diluted share, for the year ended June 30, 2023 due to decrease in net sales and increase in operating expenses related to sales and marketing.

Financial Information about Our Business Sales Channels

We conduct our business through two primary sales channels:

Direct (consisting of our Internet websites) and Wholesale (consisting of our stocking reseller, drop-ship, contract manufacturing, and distributor accounts).

During the last two years, substantially all of our revenue has been generated within North America, and all of our long-lived assets are located in the United States.

The following is a summary of our revenues:

(Dollars in thousands)

Total Net Sales

Net sales in the Other channel consist primarily of shipping and handling fees derived from our Direct business.

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

(Dollars in thousands)

Direct sales channel net sales

Direct net sales as a percentage of total revenues

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

(Dollars in thousands)

Wholesale sales channel net sales

Wholesale net sales as a percentage of total revenues

As of June 30, 2024, the Company has over 323 active wholesale accounts, most of which are located in the United States.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Sales by Product The following table represents the dollars and percentage of net sales by product type:

(Dollars in thousands)

June 30, 2024

June 30, 2023

Products purchased for resale

Total Net Sales

Liberator - Liberator products consist of items that we manufacture and sell in the sexual health and wellness market.

Liberator products are sold to e-merchants, retailers and distributors as well as directly through our e-commerce site.

Net sales of Liberator products decreased 23% from the prior year, which ended June 30, 2024.

This decrease is primarily related to reduced sales following the prior year’s product sales boosted as they related to Netflix’s “How to Build a sex room”.

In fiscal year 2023, Liberator product sales experienced a boost in sales associated with the success of the Netflix show.

At this time, the show has not been renewed, and the additional marketing exposure related to that show has resulted in a 23% decline in Liberator-related products.

Jaxx - Jaxx products are contemporary seating products manufactured by us and sold under the Jaxx brand.

Jaxx products are sold to e-merchants and retailers as well as directly through our e-commerce site.

Net sales of Jaxx products increased 3% during the year ended June 30, 2024, compared to the prior year.

This increase is primarily due to Jaxx outdoor product sales having increased distribution by adding new online accounts.

Avana - The Avana product line is a unique collection of top-of-bed and comfort products that aid in sleep, meditation, and relaxation.

Avana products are sold through e-merchants, mail order catalogers and through our e-commerce site.

Net sales of Avana products increased 16% during the year ended June 30, 2024, compared to the prior year.

The increase in sales was due primarily to increased distribution into schools.

Products purchased for resale – Products purchased for resale are other branded products that we buy from others at wholesale or distributor prices and resell through our sales channels to e-merchants, retailers, or through one of our e-commerce sites.

Sales of these products decreased 15% during the year ended June 30, 2024, from the prior year due to consumer demand shrinkage across the industry.

Sales of these products are increasingly competitive, and, as a result, the Company has elected only to offer a more curated selection of products that typically have a higher gross profit.

Other - Other products include sales from contract manufacturing and fulfillment services.

Net sales during the year ended June 30, 2024 decreased 77% from the prior year due to reduced contract sales.

Variability of Results

We have experienced significant quarterly fluctuations in operating results and anticipate that these fluctuations may continue in future periods.

Operating results have fluctuated due to changes in sales levels to consumers and wholesalers, competition, seasonality costs associated with new product introductions, and increases in raw material costs.

In addition, future operating results may fluctuate as a result of factors beyond our control, such as raw material cost increases, labor cost increases resulting from the current labor shortage, foreign exchange fluctuation, changes in government regulations, and economic changes in the region in which we operate and sell.

A portion of our operating expenses are relatively fixed and the timing of expense level increases is largely based on future sales forecasts.

Therefore, if net sales are below expectations in any given period, the adverse impact on the results of operations may be magnified by our inability to adjust spending in certain areas meaningfully or the inability to adjust spending quickly enough, as in personnel and administrative costs, to compensate for a sales shortfall.

We may also choose to increase spending in response to market conditions, and these decisions may adversely affect the financial condition and results of operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Liquidity and Capital Resources

The following table summarizes our cash flows:

(in thousands)

Cash flow data from continuing operations:

Cash provided by operating activities

Cash used in investing activities

Cash used in financing activities

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

Operating Activities

Net cash provided by operating activities primarily consists of the net loss adjusted for certain non-cash items, including depreciation, stock-based compensation, and the effect of changes in operating assets and liabilities.

Net cash provided by operating activities increased from the prior year due to the decrease in net inventory.

Investing Activities

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

Financing Activities

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

Capital Resources

We expect total capital expenditures for fiscal 2025 to be less than $100,000 and to be funded by equipment loans and, to a lesser extent, anticipated operating cash flows and borrowings under the line of credit with Advance Financial Corporation.

This includes capital expenditures in support of our normal operations.

If our business plans and cost estimates are inaccurate and our operations require additional cash or if we deviate from our current plans, we could be required to seek further debt financing for particular projects or ongoing operational needs.

This indebtedness could harm our business if we cannot obtain additional financing on reasonable terms.

In addition, any indebtedness we incur in the future could subject us to restrictive covenants limiting our flexibility in planning for or reacting to changes in our business.

If we do not comply with such covenants, our lenders could accelerate repayment of our debt or restrict our access to further borrowings, which in turn could limit our operating flexibility and endanger our ability to continue operations.

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 5. Market for Registrant’s Common Equity