# EDGAR Filing Document

**Accession Number:** 0001374567
**File Stem:** 0001654954-25-011757
**Filing Date:** 2025-10
**Character Count:** 186633
**Document Hash:** 4097cf9169cfc5d163983fdc3fd69d4a
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001654954-25-011757.hdr.sgml**: 20251014

**ACCESSION NUMBER**: 0001654954-25-011757

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 82

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20251014

**DATE AS OF CHANGE**: 20251014

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Luvu Brands, Inc.
- **CENTRAL INDEX KEY:** 0001374567
- **STANDARD INDUSTRIAL CLASSIFICATION:** HOUSEHOLD FURNITURE [2510]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 593581576
- **STATE OF INCORPORATION:** FL
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-53314
- **FILM NUMBER:** 251392039

**BUSINESS ADDRESS:**
- **STREET 1:** 2745 BANKERS INDUSTRIAL DRIVE
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30360
- **BUSINESS PHONE:** 770-246-6426

**MAIL ADDRESS:**
- **STREET 1:** 2745 BANKERS INDUSTRIAL DRIVE
- **CITY:** ATLANTA
- **STATE:** GA
- **ZIP:** 30360

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Liberator, Inc.
- **DATE OF NAME CHANGE:** 20110304

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** WES Consulting, Inc.
- **DATE OF NAME CHANGE:** 20060905

?xml version='1.0' encoding='ASCII'? luvu_10k.htm

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

**Form 10-K**

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| ☒ | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|  | **For the fiscal year ended June 30, 2025** |

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or

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| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|  | **For the transition period from _______ to ____________** |

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Commission file number: **<u>000-53314</u>**

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| **Luvu Brands, Inc.** |
| (Exact name of registrant as specified in its charter) |

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|:---|:---|
| **Florida** | **59-3581576** |
| (State or other jurisdiction of incorporation<br>or organization) | (IRS Employer<br>Identification No.) |
| **2745 Bankers Industrial Drive, Atlanta, Georgia** | **30360** |
| (Address of principal executive offices) | (Zip Code) |

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Registrant's telephone number, including area code: **<u>(770) 246-6400</u>**

Securities registered pursuant to Section 12(b) of the Act:

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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |

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Securities registered pursuant to Section 12(g) of the Act:

<u>Common Stock, $.01 par value</u>

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ YES ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ YES ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes&nbsp;&nbsp;&nbsp;&nbsp; ☐ NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding twelve months (or for such shorter period that the registrant was required to submit such files) ☒ Yes&nbsp;&nbsp;&nbsp;&nbsp; ☐ NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
|  |  | Emerging growth company | ☐ |

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If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on or attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ YES ☒ NO

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average of the bid and asked price of such common equity, on December 31, 2024, the last trading day of the registrant's most recently completed second fiscal quarter, was $3,841,702.

The number of shares of Common Stock, $.01 par value, outstanding as of the close of business on October 14, 2025 was 76,834,057.

**DOCUMENTS INCORPORATED BY REFERENCE**

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None.

**Luvu Brands, Inc.**

**Index to Annual Report on Form 10-K**

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| | | |
|:---|:---|:---|
| **[PART I](#p1)** | **[PART I](#p1)** | **[PART I](#p1)** |
| [ITEM 1.](#i1) | [Business.](#i1) | 1 |
| [ITEM 1A.](#i1a) | [Risk Factors.](#i1a) | 6 |
| [ITEM 1B.](#i1b) | [Unresolved Staff Comments.](#i1b) | 7 |
| [ITEM 1C.](#i1c) | [Cybersecurity](#i1c) | 7 |
| [ITEM 2.](#i2) | [Properties.](#i2) | 8 |
| [ITEM 3.](#i3) | [Legal Proceedings.](#i3) | 8 |
| [ITEM 4.](#i4) | [Mine Safety Disclosures.](#i4) | 8 |
| **[PART II](#p2)** | **[PART II](#p2)** | **[PART II](#p2)** |
| [ITEM 5.](#i5) | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.](#i5) | 9 |
| [ITEM 6.](#i6) | [**\[Reserved\]**.](#i6) | 9 |
| [ITEM 7.](#i7) | [Management's Discussion and Analysis of Financial Condition and Results of Operations.](#i7) | 10 |
| [ITEM 7A.](#i7a) | [Quantitative and Qualitative Disclosures about Market Risk.](#i7a) | 14 |
| [ITEM 8.](#i8) | [Financial Statements and Supplementary Data.](#i8) | 15 |
| [ITEM 9.](#i9) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.](#i9) | 16 |
| [ITEM 9A.](#i9a) | [Controls and Procedures.](#i9a) | 16 |
| [ITEM 9B.](#i9b) | [Other Information.](#i9b) | 16 |
| [ITEM 9C.](#i9c) | [Disclosure Regarding Foreign Jurisdiction that Prevent Inspection](#i9c) | 16 |
| **[PART III](#p3)** | **[PART III](#p3)** | **[PART III](#p3)** |
| [ITEM 10.](#i10) | [Directors, Executive Officers and Corporate Governance.](#i10) | 17 |
| [ITEM 11.](#i11) | [Executive Compensation.](#i11) | 19 |
| [ITEM 12.](#i12) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.](#i12) | 21 |
| [ITEM 13.](#i13) | [Certain Relationships and Related Transactions, and Director Independence.](#i13) | 22 |
| [ITEM 14.](#i14) | [Principal Accounting Fees and Services.](#i14) | 23 |
| **[PART IV](#p4)** | **[PART IV](#p4)** | **[PART IV](#p4)** |
| [ITEM 15.](#i15) | [Exhibits, Financial Statement Schedules.](#i15) | 24 |
| [ITEM 16.](#i16) | [Form 10-K Summary.](#i16) | 24 |

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i<br>

 **FORWARD-LOOKING STATEMENTS**

*This Annual Report on Form 10-K ("Annual Report") for Luvu Brands, Inc. ("Luvu Brands" the "Company" "we" "our" or "us") may contain forward-looking statements, which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as "expects," "anticipates," "intends," "plan," "believes," "predicts", "estimates" or similar expressions. In addition, any statement concerning future financial performance, ongoing business strategies or prospects and possible future actions are also forward-looking statements. Forward-looking statements are based upon current expectations and projections about future events and are subject to risks, uncertainties, and the accuracy of assumptions concerning the Company, the performance of the industry in which they do business, and economic and market factors, among other things.* **These forward-looking statements are not guarantees of future performance. You should not place undue reliance on forward-looking statements.**

Forward-looking statements speak only as of the date of this report, presentation or filing in which they are made. Except to the extent required by federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our forward-looking statements in this report include, but are not limited to:

· Statements relating to our business strategy;

· Statements relating to our business objectives; and

· Expectations concerning future operations, profitability, liquidity and financial resources.

These forward-looking statements are subject to risks, uncertainties, and assumptions about us and our operations, which are subject to change based on various important factors, some of which are beyond our control. The following factors, among others, could cause our financial performance to differ significantly from the goals, plans, objectives, intentions and expectations expressed in our forward-looking statements:

· Continue uncertainty in import tariffs and a possible further rise in inflation in coming years would put additional stress on consumer spending;

· Competition from other websites, including Amazon, mass market and specialty e-tailers, and sexual wellness retailers and adult-oriented websites;

· Our ability to satisfy, extend, renew, or refinance our existing debt;

· The loss of one or more significant customers;

· Our ability to generate significant sales revenue from internet, print, and podcast advertising;

· Our plan to make continued investments in advertising and marketing;

· Our ability to protect our trademarks, brand image, or other intellectual property rights;

· Any decline in consumer spending, including due to negative impact from economic conditions;

· Our ability to successfully adapt to consumer shopping preferences;

· Systems interruptions that impair customer access to our sites or other performance failures in our technology infrastructure, including significant disruptions of or breach in security of information technology systems and violation of data privacy laws;

· Our ability to attract, develop, motivate and maintain well-qualified associates;

ii<br>

· Our history of operating losses and the risk of incurring additional losses in the future;

· Our ability to maintain our brand image, engage new and existing customers and gain market share;

· Our ability to renew our current operating lease for our manufacturing facility at a reasonable rate;

· Unfavorable changes to government regulation of the Internet and ecommerce;

· The impact of increases in demand for, or the price of, raw materials used to manufacture our products, and any disruption in the supply of those raw materials;

· Changes in government laws affecting our business;

· Our dependence on the experience and competence of our executive officers and other key employees;

· Risks associated with currency fluctuations; and

· Other risks or uncertainties described elsewhere in this report and in other periodic reports previously and subsequently filed by the Company with the Securities and Exchange Commission.

iii<br>

**PART I.**

**ITEM 1. Business.**

**General**

Luvu Brands, Inc. designs, manufactures and markets a portfolio of consumer lifestyle brands through the Company's websites, online mass merchants, and specialty retail stores worldwide. Brands include **Liberator<sup>®</sup>**, a brand category of iconic products for enhancing sensuality and intimacy; **Jaxx<sup>®</sup>**, a diverse range of casual fashion daybeds, sofas and beanbags made from virgin and re-purposed polyurethane foam; and **Avana<sup>®</sup>**, products of yoga exercises, sleep comfort, and inclined bed therapy. These products are sold through the Company's websites, online mass merchants, and retail stores worldwide. Many of our products are offered flat-packed and either roll or vacuum-compressed to save on shipping and reduce our carbon footprint.

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

The Company's e-commerce websites include liberator.com, jaxxbeanbags.com, and avanacomfort.com.

Unless the context requires otherwise, all references in this report to the "Company," "Luvu Brands," "we," "our," and "us" refers to Luvu Brands, Inc. and its subsidiaries.

Our executive offices are located at 2745 Bankers Industrial Dr., Atlanta, GA 30360; our telephone number is +1-770-246-6400.

Our corporate website is *www.LuvuBrands.com*. We make available copies of Luvu Brands' documents, news releases, and our filings with the U.S. Securities and Exchange Commission, also known as the "SEC", including financial statements.

Unless specifically set forth to the contrary, the information that appears on our websites or our various social media platforms is not part of this annual report.

**Corporate History**

The Company was incorporated in the State of Florida on February 25, 1999, under the name of WES Consulting, Inc. On October 19, 2009, the Company entered into a Merger and Recapitalization Agreement (the "Merger Agreement") with Liberator, Inc., a Nevada corporation ("Old Liberator"). Pursuant to the Merger Agreement, Old Liberator merged with and into the Company, with the Company surviving as the sole remaining entity. On February 28, 2011, the Company name was changed from WES Consulting, Inc. to Liberator, Inc. Effective November 5, 2015, the Company changed its corporate name from Liberator, Inc. to Luvu Brands, Inc. to reflect its broader offering of wellness and lifestyle products designed for mass market channels.

**Overview of our Facilities and Operations**

Since inception we have used a vertically integrated business model, with manufacturing, distribution, product development, advertising and marketing performed in-house. We believe this allows us to create new products with reduced lead times at a lower cost while enabling us to quickly respond to market and customer demands for our existing products.

For our wholesale accounts and international distributors, being able to fulfill large orders with shorter turnaround times allows us to capture business during December and February when wholesale customers make just-in-time holiday purchases.

Our 140,000 square foot facility on eight acres is located in a suburb of metro Atlanta, Georgia and includes manufacturing and distribution, sales and marketing, product development, customer service and administrative staff. All of the Liberator, Jaxx and Avana branded products are designed, produced and marketed from our facility in Atlanta, Georgia.

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

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Our sewing equipment is also highly automated with conveyor-based lines leading into vacuum and roll compression packaging of finished products. We believe that our in-house manufacturing capabilities have enabled us to achieve greater efficiencies and cost savings, as well as strict control over the entire manufacturing cycle including raw material procurement, finished goods production and logistics optimization. In addition to providing us with greater production flexibility, our in-house manufacturing provides us with the opportunity to improve fulfillment response time, reduces the risk of out-of-stock situations, limits finished goods obsolescence and improves overall operating margins.

Because fabric cutting, sewing, foam contouring, assembly and vacuum packaging are performed in-house, we believe we can exercise greater control over product quality and respond faster to changing customer demands, which gives us a competitive advantage over companies that utilize only out-sourced sewing services. In addition to our in-house sewing capabilities, we outsource the sewing of certain high-volume products to a contract sewing facility in Mexico.

We source raw materials from multiple domestic and foreign suppliers and have supply contracts to produce our specialty fabrics under specific quality control and performance standards with just-in-time deliveries. We also repurpose over 4,000 pounds of polyurethane foam trim daily, primarily for Jaxx bean bags, giving us a cost and quality competitive advantage.

All business activity of the Company is done through our wholly-owned subsidiary, OneUp Innovations, Inc. ("OneUp"). OneUp was organized in 2000 and began operations in 2002.

**Business Strategy**

We aim to achieve long-term growth and profitability by expanding our distribution channels and customer base for Liberator, Jaxx, and Avana. We create ongoing collections of innovative products with good design and price-to-value that ship flat-packed and vacuum-compressed. By running our own websites and aligning ourselves with both mass market and specialty retailers, we leave less room for importers and copy-cats to compete. We believe that marketing directly to the customer is the best way to build brands, and by doing so we create value for our customers and wealth for our shareholders.

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| ***Manufacturing*.** To improve our business results, we constantly look for ways to manage the impact of rising raw material and labor costs by improving the productivity and efficiency of our manufacturing processes. As demand for certain high-volume products continues to increase, we plan to shift more production to low cost international manufacturers. |
| ***Sustainability*.** We believe that sustainable operations are both financially and operationally beneficial to our business and critical to our future success. We are acutely focused on waste reduction efforts: repurposing 98% of our foam trim to other products, compressing all of our foam products to reduce freight costs and corrugated use, improving manufacturing processes to reduce waste overall, finding new ways to repurpose certain waste streams and establishing local recycling partnerships to divert waste from landfills. |
| ***Eco-Packaging****.* We maintain vacuum-compressed packaging to reduce our carbon footprint, make our products more convenient for the consumer and easier to display for the retailer, and reduce our outbound shipping costs. |
| ***Wholesale Operations****.* Our goal is to increase consumer demand through advertising and public relations while our wholesale operations expand our offering to distributors, retailers, and e-tailers across every channel of adult, mass market, drug, and specialty accounts. For wholesalers thinking about adding Sexual Wellness products to their retail or online store, our Liberator product line is typically one of the first "safer" products presented, as it can be promoted as an assistive aid to sexual positioning. As the mainstream demand for Sexual Wellness products grows, our sales staff is training and educating new resellers on how to get started in this category. For retail display, we offer mainstream packaging in a variety of sizes and price points to meet their customers' particular demographics. We offer all our brands for sale through various e-tailers, and for these customers, we maintain brand continuity by providing rich product content, photography and instructional videos for use on their websites. We also provide fulfillment services and can drop-ship orders directly to their customer, frequently the same day the order is received. |

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**Products, Principal Markets and Methods of Distribution**

***Liberator Products***

We developed a patented brand category called "*Liberator Bedroom Adventure Gear*"<sup>®</sup>. The products in this collection are designed to elevate, create motion, and create surfaces and textures that expand the sexual repertoire and make the act of love more exciting. Liberator *Bedroom Adventure Gear* combines functional design with sensuous textures that transform ordinary bedrooms into supportive landscapes for intimacy. Liberator products present angles, elevations, curves, and motion that help people of all sizes, including those with back injuries and other medical conditions, find comfortable ways to connect intimately while assisting their stamina and performance.

Liberator foam-based products (called "Liberator Shapes") are manufactured in a variety of heights and widths to accommodate variations in the human body. They consist of differently shaped cushions and props that are available in an assortment of fabric colors to add to the visual excitement. Each of the product profiles of the Liberator Shapes is unique, designed to introduce positions to the sexual experience that were previously difficult to achieve or impossible to achieve with standard pillows or cushions. Liberator Shapes are manufactured from structured polyurethane foam and cut at various angles, platforms, and profiles. The foam base is encased in a tight, fluid-resistant polyester shell, helping the cushions to maintain their shape. Liberator Shapes that are designed to be used in tandem are covered in a proprietary microfiber cover that allows the "Shapes" to adhere to each other without slipping loose. This allows for positioning freedom.

We have also developed vacuum-compressed large profile designs commonly called "Love Loungers or Tantric / Yoga Chaises". Most of the sex furniture pieces are made from contoured polyurethane foam and covered in a variety of fabrics and colors. These items are marketed as the Esse® Chaise, Equus Wave®, and Prelude® Bench, all in a variety of sizes. Larger designs include products based on shredded polyurethane foam trim encased in a wide range of fabric types and colors and sold under our Zeppelin® product offering. The Liberator larger profile designs can also be used as lounge seating when not being used for relaxed interaction and creative intimacy. Newer styles are now flat packed with wooden bases and maple feet.

We conduct our wholesale business for Liberator sexual wellness products through four primary channels: (1) adult and female-friendly retailers and specialty boutiques, (2) e-tailers who sell our products through adult, mass market, drug, and other sites offering sexual wellness products, (3) mail order catalogers, and (4) wholesale distributors of adult / sexual wellness products. These wholesale accounts have approximately 1,000 retail locations and websites in the United States and Canada. We have a growing number of retailers who have added a dedicated Liberator exhibition concept to their merchandising space.

***Jaxx Casual Seating***

The Company manufactures a line of contemporary casual indoor and outdoor seating under the Jaxx® brand. Jaxx bean bags are an offshoot from Liberator manufacturing as it provides additional revenue from repurposing our polyurethane foam trim into shredded bean bag fill.

The *Jaxx* indoor beanbag collection includes an offering of adult and children size beanbags in a variety of fabrics, faux-furs and vinyl. The Jaxx product line also includes solid foam indoor furniture collections and outdoor furniture collections that use polystyrene bead filling. The *Jaxx* product line and accessory products are sold through the following wholesale channels: (1) modern furniture e-tailers, (2) mass marketers, (3) specialty retailers, (4) interior designers, (5) schools and daycare centers, and (6) retail furniture stores. We also offer Jaxx private label and custom designs for large regional and national furniture chains. The Company also owns and manages a website under the URLs *www.JaxxBeanBags.com* and *www.JaxxLiving.com* for direct-to-consumer sales of *Jaxx* products.

***Avana*<sup>®</sup> Top-of-Bed Comfort Products**

The Company sells a unique collection of comfort products that aid in sleep, meditation, and relaxation under the *Avana*<sup>®</sup> brand. These products include a diverse offering of top-of-bed support cushions and props, many of which are assistive in relieving medical conditions associated with acid reflux, surgery recovery, and chronic pain.

The *Avana* product line is sold through e-merchants (including Amazon.com, Walmart.com, medical product distributors and specialty e-tailers), mail order catalogers and through our website under the URL *www.AvanaComfort.com*. We believe that our Avana products compete effectively on the basis of good design, through offering a wide-range of designer colors and fabrics and supported by thousands of 5-star product reviews.

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***Products Purchased for Resale***

We import high-quality pleasure objects from around the world for sale on our direct-to-consumer website Liberator.com.

**Sales and Distribution**

Our sales management team is organized by market channel and by customer type. We have sales personnel who routinely visit sexual wellness retailers to assist in product training, merchandising and stocking of selling areas. Through our in-house wholesale sales organization, we engage e-merchants and retailers directly and then either ship to them on a wholesale basis or provide fulfillment services by drop-shipping directly to their customers. In international markets, the Company has a direct sales model with a US-based salesperson. This salesperson is responsible for wholesale sales, marketing operations and customer service in Canada and the European Union and other international markets. For European customers, orders are filled from our exclusive Germany-based distributor or directly from our facilities in Atlanta.

As is customary in the sexual wellness and casual furniture industry, sales to customers are generally made pursuant to purchase orders, and we do not have long-term or exclusive contracts with any of our retail customers or wholesale distributors. We believe that our continuing relationships with our customers are based upon our ability to provide a wide selection and reliable source of sexual wellness and casual furniture products, combined with our expertise in marketing and new product introduction.

**Internet Websites**

We design and operate our websites using in-house development teams and our creative group using all media and social platforms to promote visibility and sales conversions. We also maintain a B-to-B website allowing wholesalers to both place orders and track delivery schedules.

*Liberator.com* is promoted as a direct B-to-C website, and entertainment and educational venue, where consumers can watch product demonstration videos, peruse ezine blog content on sexual wellness topics, and watch non-pornographic videos on the many facets of human sexuality and erotic expression.

*Jaxxbeanbags.com* offers a collection of contemporary indoor and outdoor fashion seating, daybeds, children's play couches and modular Panelist wall mounted headboards.

*AvanaComfort.com* presents our collection of top-of-bed comfort products, specialty pillows, and yoga inspired furniture.

**Sources and Availability of Raw Materials**

We obtain all of the raw materials and component parts used to produce our products from outside sources without long term supply contracts. A number of components, including certain fabrics and polyurethane foam are sourced from suppliers who currently serve as our sole or primary source of supply. We believe we can obtain these raw materials and components from other sources of supply, although we could experience some short-term disruption in our ability to fulfill orders in the event of an unexpected loss of supply from one of the primary suppliers. We utilize dual sourcing on most fabrics and components when effective.

Changes in U.S. trade policy, including tariffs on certain goods imported into the United States from international suppliers have increased the costs of certain raw materials, parts or components used in our products. Such an increase may materially and adversely affect our sales and our business, as we may increase the selling prices of our products. If any increase in costs of goods cannot be passed on to our customers, our business and gross profit may be materially and adversely affected. Purchases of manufactured goods that are impacted by tariffs will also require the Company to pass along any price increases to the customers where ever possible.

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**Major Customers**

Sales to (and through) Amazon accounted for 34% of our net sales during the year ended June 30, 2025 and 36% of our net sales for the year ended June 30, 2024. The loss of, or a significant adverse change in our relationship with, any of our largest customers could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows.

**Competition**

We compete with other marketers of sexual wellness, lifestyle and casual seating products both within and outside the U.S. The sexual wellness, bean bag and comfort products are highly fragmented and competition for the sale of such products comes from many types of e-tailers and retailers across diverse channels.

For Liberator products, our primary competitive advantage is consumer recognition of our iconic brand. Due to the strength of our brand, we have some direct competition for a portion of our Liberator branded products. In fact, many e-commerce websites refer to Liberator as a product category and not as a generic sex furniture listing. And since we sell through multiple sales channels, we provide consumers with the ability to shop for Liberator intimacy products in an environment or website that they are most comfortable in. We also believe that we differentiate ourselves from conventional sexual wellness products based on our utility of design and overall customer satisfaction as it relates to enhanced intimacy.

For Jaxx and Avana products, we believe our primary competitive advantage is good designs, our offering of a wide range of designer colors and fabrics, good price to value, and our positive consumer reviews.

For our pleasure products purchased for Resale, competition among retailers of adult products and web-based marketers is high. Although we compete with retail and internet businesses and now mass and drug retailers that sell sexual wellness products including vibrators, pleasure objects, accessories and similar merchandise, we believe that this opens new channels of distribution for our Liberator products and that we are able to compete favorably as our Liberator products are unique, are couple-centric, and are assistive devices for couples with sexual limitations and issues.

For the Liberator e-commerce website, other competitive factors include the effectiveness of our electronic customer mailing lists, maintaining natural search listing, advertising response rates, website design and functionality. The broad range of designs, color choice, fabrics and accessories that we offer helps to differentiate us and allows us to compete favorably against many other adult or sexual wellness websites. Liberator.com also competes against numerous mainstream websites, many of which have a greater volume of web traffic, greater financial strength and marketing resources.

We believe competition in our industries is based on, among other things, the ability to deliver the right product at the right time, product quality and safety, innovation, customer service and price. We believe we compete favorably with other companies because of our ability to provide a broad product offering for customers, our vertically integrated manufacturing operation which allows us to quickly respond to customer demand, our commitment to quality and safety, and our commitment to minimizing our environmental impact.

**Government Regulation**

We are subject to customs, truth-in-advertising and other laws, including consumer protection regulations that regulate the promotion and sale of merchandise and the operation of warehouse facilities. We monitor changes in these laws and believe that we are in material compliance with applicable laws.

**Intellectual Property**

The Liberator trademark is registered with the United States Patent and Trademark office and with the registries of many foreign countries. In addition, we were issued approximately 20 other product name trademarks and trade names including: "Bedroom Adventure Gear"<sup>®</sup>, Ramp<sup>®</sup>, Wedge<sup>®</sup>, Stage<sup>®</sup>, Esse<sup>®</sup>, Zeppelin<sup>®</sup>, Hipster<sup>®</sup>, Wing<sup>®</sup>, Equus<sup>®</sup>, Jaxx<sup>®</sup>, Avana<sup>®</sup>, and Bonbon<sup>®</sup>. We believe our trademarks have significant value and we intend to continue to vigorously protect them against infringement.

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**Human Capital and Resources**

As of June 30, 2025, we had 195 employees. The Company's employment levels may change seasonally based on current and anticipated order levels. Additional staffing is typically required to support the peak holiday period through Valentine's Day. None of our employees are represented by a union. We have had no labor-related work stoppages, and we believe our relationships with our employees are good. Human capital management is critical to our ongoing business success, which requires investing in our people. Our aim is to create a highly engaged and motivated workforce where employees are inspired by leadership, involved in purpose-driven, meaningful work, and have opportunities for growth and development. We are committed to creating and maintaining a work environment where employees are treated with respect and dignity. We value our diverse employees and provide career and professional development opportunities that foster the success of our company. An effective approach to human capital management requires that we invest in talent, development, culture, and employee engagement. We aim to create an environment where our employees are encouraged to contribute positively and fulfill their potential. We emphasize our core values of innovation, encouragement, motivation, and curiosity with our employees to instill our culture and create an environment of growth and positivity.

***Additional information***

We file annual and quarterly reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information with the Securities and Exchange Commission ("SEC" or the "Commission"). The Commission also maintains an Internet site at <u>http://www.sec.gov</u> that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.

Other information about the Company can be found on our website <u>www.luvubrands.com</u>. Reference in this document to that website address does not constitute incorporation by reference of the information contained on the website.

**ITEM 1A. Risk Factors.**

*This section describes circumstances or events that could have a negative effect on our financial results or operations or that could change, for the worse, existing trends in our businesses. The occurrence of one or more of the circumstances or events described below could have a material adverse effect on our financial condition, results of operations and cash flows or on the trading prices of our common stock. The risks and uncertainties described in this Annual Report on Form 10-K are not the only ones facing us. Additional risks and uncertainties that currently are not known to us or that we currently believe are immaterial also may adversely affect our businesses and operation. Although we have attempted to list comprehensively these important factors, we caution you that other factors may in the future prove to be important in affecting our results of operations. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.* 

***We have been adversely affected by the effects of import tariffs and weak economic conditions.***

Import tariffs have adversely affected our liquidity, business, financial condition, and results of operations by increasing our overall cost structure, and such effects will be further exacerbated if we are unable to achieve commensurate increases in the prices we charge our customers. Uncertainty in the economy has resulted in, and may continue to result in, higher capital costs, shipping costs, supply shortages, increased costs of labor, weakening exchange rates, and other similar effects. As a result, we have experienced and may continue to experience, cost increases. In addition, poor economic and market conditions, including a potential recession, may negatively impact market sentiment, decreasing the demand for our products, which would adversely affect our operating income and results of operations. If we are unable to take effective measures in a timely manner to mitigate the impact of inflation, as well as a potential recession, our business, financial condition, and results of operations could be adversely affected.

***Competition from other brands may hinder the development of our business.***

Increased competitor consolidations, marketplace competition, and competitive product and pricing pressures could impact our earnings, market share, and volume growth. If, due to such pressure or other competitive threats, we are unable to maintain or develop our sales sufficiently, we may be unable to achieve our current revenue and financial targets. As a means of maintaining and expanding our sales revenues, we intend to introduce additional products. We may not be successful in doing this, or it may take us longer than anticipated to achieve market acceptance of these new brands, if at all. Other companies may be more successful in this regard over the long term. Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our existing markets, as well as on our ability to expand the market for our products.

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***Our reliance on logistics service providers, distributors, ecommerce and social media platforms and retailers could affect our ability to efficiently and profitably promote, sell, distribute and market our products, maintain our existing markets and expand our business into other geographic markets.***

Our ability to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas, is dependent on our ability to establish and maintain successful relationships with reliable logistics service providers, distributors, ecommerce and social media platforms and retailers strategically positioned to serve those areas. Most of our distributors and retailers promote, sell and distribute competing products, and our products may represent a small portion of their businesses. The success of our distribution network depends on the performance of the logistics service providers, distributors, ecommerce and social media platforms and retailers in our network. There is a risk they may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our products in localities that may not be receptive to our product. Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition from other companies who have greater resources than we do. To the extent that our distributors and retailers are distracted from selling our products or do not employ sufficient efforts in managing and selling our products, our sales and results of operations could be adversely affected. Furthermore, such third parties' financial position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities.

***We are dependent on our manufacturers and do not have supply agreements with our manufacturers. Events adversely affecting our suppliers, manufacturers and contractors would adversely affect us.***

If we experience significant increased sales, and since we do not have supply agreements to ensure sufficient reserves of materials, there can be no assurance that additional materials for our products will be available when required or on terms that are favorable to us, or that a supplier would allocate sufficient materials for our products to us in order to meet our requirements or fill our orders in a timely manner which could lead to delays to our customers, which could hurt our relationships with our customers, result in negative publicity, damage our brand and adversely affect our business, prospects and operating results.

We intend to maintain a full supply chain for the provision of our products. Suppliers, manufacturers, service providers and contractors may elect, at any time, to decline or withdraw services necessary for our operations. Loss of these suppliers, manufacturers, service providers and contractors may have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, any significant interruption, negative change in the availability or economics of the supply chain or increase in the prices for the production of our products provided by any such third-party suppliers, manufacturers, service providers and contractors could materially impact our business, financial condition, results of operations and prospects. Any inability to secure required supplies or to do so on appropriate terms could have a materially adverse impact on our business, financial condition, results of operations and prospects.

**ITEM 1B. Unresolved Staff Comments.**

None.

**ITEM 1C. Cybersecurity**

Like all companies that utilize technology, we are subject to threats of breaches of our technology systems. To mitigate the threat to our business, we take a comprehensive approach to cybersecurity risk management. Our board of directors and our management actively oversee our risk management program, including the management of cybersecurity risks. We have established policies, standards, processes and practices for assessing, identifying, and managing material risks from cybersecurity threats, including those discussed in our Risk Factors. We have devoted resources to implement and maintain security measures to meet regulatory requirements and shareholder expectations, and we intend to continue to make investments to maintain the security of our data and cybersecurity infrastructure. While there can be no guarantee that our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective, we believe that our company's sustained investment in these efforts and technologies have put the Company in a position to protect against potential compromises, and we do not believe that risks from prior cybersecurity threats have materially affected our business to date. We can provide no assurance that there will not be incidents in the future or that past or future attacks will not materially affect us, including our business strategy, results of operations, or financial condition.

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**Risk management and strategy**.

We employ a multi-layered cybersecurity defense strategy that includes:

· Network and endpoint protection: Utilizing firewalls, intrusion detection systems, antivirus software, and advanced encryption protocols to safeguard sensitive data and systems.

· Employee training and awareness programs: Educating employees on cybersecurity best practices and conducting phishing simulations to promote vigilance against social engineering attacks.

· Incident detection and response plans: Maintaining real-time monitoring and implementing a structured incident response plan that allows us to quickly detect, respond to, and recover from cyber incidents.

· Third-party risk management: Assessing the cybersecurity controls of vendors and partners to ensure that their practices align with our standards for protecting sensitive information.

· While we have not experienced a cybersecurity incident that has had a material impact to date, the threat of potential incidents remains high. We continually evaluate our exposure to risks such as:

· Operational disruption from ransomware or other cyberattacks.

· Data breaches that could compromise customer or proprietary information.

· Regulatory and legal exposure arising from cybersecurity failures.

As part of our risk management framework, we regularly assess whether any cybersecurity incidents, or the likelihood of such incidents, could materially affect our business. We are also committed to continuous improvements to address emerging threats.

**Governance.**

Our board of directors plays an active role in overseeing the company's approach to managing cybersecurity risks. The board receives regular updates from senior management regarding the company's cybersecurity strategy, potential risks, and any incidents that may arise. These updates ensure that the board remains informed and able to provide guidance on cybersecurity matters.

The Board is also regularly briefed by our director of information technology (IT) on the Company's cybersecurity policies, risk assessments, and mitigation strategies. This reporting structure allows the board to remain engaged with the company's efforts to address and manage evolving cyber threats, ensuring that cybersecurity is aligned with our overall risk management framework.

Management, led by the director of IT, plays a critical role in assessing and managing material risks related to cybersecurity. This includes implementing day-to-day cybersecurity measures, conducting regular risk assessments, and ensuring the timely response to any cyber threats or incidents. The director of IT is responsible for ensuring that cybersecurity is integrated into our company's broader risk management strategy, with direct reporting lines to both senior executives and the board of directors.

Additionally, management conducts regular tabletop exercises and incident simulations to assess readiness for potential cyber threats and continuously evaluates the effectiveness of our cybersecurity defenses.

**ITEM 2. Properties.**

We are headquartered in Atlanta, Georgia as 2745 Bankers Industrial Drive, Atlanta, GA 30360. We lease a 140,000 square feet building on eight acres, which we believe allows for expansion when needed. Our facility houses manufacturing, distribution and fulfillment, call center, in-house advertising and creative departments, product design group, and administrative offices. 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 lease included 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 pays the landlord a 2% property management fee. The rent expense under this lease for the 12 months ended June 30, 2024 was $652,752. The rent expense under this lease for the 12 months ended June 30, 2025 was $652,752.

Our facilities are currently adequate for their intended purposes and are adequately maintained.

**ITEM 3. Legal Proceedings.**

As of the date of this annual 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.

**ITEM 4. Mine Safety Disclosures.**

None.

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**PART II.**

**ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.**

**Market Information**

The Company's Common Stock trades on the OTCQB Tier of the OTC Markets under the symbol "LUVU". 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. Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

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| | | |
|:---|:---|:---|
| **Fiscal Year Ended June 30, 2025** | **HIGH**  | **LOW** |
| Fourth Quarter | $0.06 | $0.03 |
| Third Quarter | $0.07 | $0.04 |
| Second Quarter | $0.07 | $0.05 |
| First Quarter | $0.09 | $0.05 |
| **Fiscal Year Ended June 30, 2024** | **HIGH**  | **LOW** |
| Fourth Quarter | $0.10 | $0.05 |
| Third Quarter | $0.10 | $0.07 |
| Second Quarter | $0.11 | $0.05 |
| First Quarter | $0.19 | $0.07 |

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**Stockholders**

As of June 30, 2025, we had 88 stockholders of record of our common stock. This amount does not reflect persons or entities that hold our securities in nominee or "street" name through various brokerage firms.

**Dividend Policy**

We have not paid dividends and we plan to retain all earnings generated by our operations, if any, for use in our business. We do not anticipate paying any cash dividends to our shareholders in the foreseeable future. The payment of future dividends on the common stock and the rate of such dividends, if any, and when not restricted, will be determined by our board of directors in light of our earnings, financial condition, capital requirements, and other factors. Additionally, under the terms of our credit facility, we are precluded from paying a dividend and we may in the future issue preferred stock and/or other securities that provides for preferences over holders of common stock in the payment of dividends.

**Recent Sales of Unregistered Securities**

None.

**Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

None.

**ITEM 6. [RESERVED].**

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**ITEM 7. 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, 2025, and 2024 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" is "forward-looking statements." Statements that are not historical 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**

**Overview**

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.

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|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
| Net sales | 100% | 100% |
| Cost of goods sold | 74% | 73% |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 26% | 27% |
| Operating Expenses | 26% | 26% |
| &nbsp;&nbsp;&nbsp;&nbsp;Income from operations | 0% | 1% |

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**Fiscal Year ended June 30, 2025 Compared to the Fiscal Year Ended June 30, 2024**

***Net Sales.*** Net sales remained nearly flat in fiscal 2025 compared to fiscal 2024. Our Direct to Consumer segment rose by $1.1 million, or 16%, compared to FY2024, while our Wholesale segment declined by $1 million. The direct sales channel includes consumer sales via our three websites. The growth in this segment was driven by new marketing efforts on social media and influencer promotions on Liberator.com, along with higher sales through Jaxxbeanbags.com. The decrease in wholesale sales was due to weaker demand from our brick-and-mortar customers and aggressive, low-price products from Chinese manufacturers sold via Amazon.

***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, 2025, decreased to 26% from 27% in the prior year. Gross profit dollars decreased to $6,469,682 from $6,526,367 in the prior year, representing a 1% decrease. The Company increased the Inventory Reserve by $18,056 to $232,278 which impacted the Gross Profit for the year. The Company also continued to implement cost reduction strategies such as sourcing more raw materials from China and India, reducing warehouse and production headcounts, and system improvements to better forecast inventory requirements. The impact of import tariffs on raw materials may offset some of the savings from lower cost manufacturers and may impact our gross margin in the future.

***Operating expenses.*** Excluding depreciation expense, total operating expenses for the year ended June 30, 2025, were 25% of net sales, or $6,114,497, compared to 24% of net sales, or $5,940,238, for the year ended June 30, 2024. The 3% increase in operating expenses from the prior year was primarily due to higher non-capitalizable facilities and equipment repairs, as well as personnel-related costs.

***Other income (expense).*** Other expense decreased to ($378,696) from expense of ($411,165) in the prior fiscal year.

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***Income tax expense.*** Income tax expenses were $0 compared to an expense of ($162,000) in the prior fiscal year.

***Net Income/ (Loss).*** We had a net loss from operations of $448,659 or $(0.01) per diluted share, for the year ended June 30, 2025 compared with net loss from operations of $398,602 or $(0.01) per diluted share, for the year ended June 30, 2024 due to decrease in net sales and increase in operating expenses related to facilities and equipment repairs, as well as administrative headcount related costs.

**Financial Information about Our Business Segmentation** 

We conduct our business through two segments: Direct (consisting of our Internet websites) and Wholesale (consisting of our stocking resellers, drop-ship accounts, 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 business segments:

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|:---|:---|:---|:---|:---|:---|:---|
|  | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** |
|  | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** |
| (in thousands) | **Direct to**<br>**Consumer** | **Wholesale** | **Total** | **Direct to**<br>**Consumer** | **Wholesale** | **Total** |
| &nbsp;&nbsp;&nbsp;&nbsp;Revenues | $8155 | $16535 | $24691 | $7016 | $17558 | $24574 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of Goods Sold | 5723 | 12431 | 18154 | 5020 | 13028 | 18048 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other direct operating expenses (a) | 859 | 1598 | 2457 | 768 | 1795 | 2563 |
| &nbsp;&nbsp;&nbsp;&nbsp;Overhead expenses(b) |  |  | 4083 |  |  | 3789 |
| Operating (loss) income | 1574 | 2506 | (3) | 1229 | 2734 | 174 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income |  |  | (5) |  |  | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense |  |  | 377 |  |  | 417 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other expense, net |  |  | 7 |  |  | 0 |
| Loss from operations before income taxes |  |  | (382) |  |  | (237) |
| **Reconciliation of operating (loss) income to adjusted operating income:** |  |  |  |  |  |  |
| Operating (loss) income | 1574 | 2506 | (3) | 1229 | 2734 | 174 |
| Adjustments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation expense |  |  | 37 |  |  | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  | 428 |  |  | 412 |
| Adjusted operating income | $1574 | $2506 | $462 | $1229 | $2734 | $605 |

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(a) Other direct operating expenses are directly attributable to the business segment, such as marketing, salaries, customer relationship expenses, and travel and entertainment expenses.

(b) Overhead expenses are all non-direct expenses related to the operation of the business segment. It includes G&A, unallocated marketing expenses, facilities, product development, and depreciation. 

**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 due to changing import tariffs. In addition, future operating results may fluctuate due to factors beyond our control, such as increases in raw material costs, labor cost increases, foreign exchange fluctuations, changes in government regulations, and economic changes in the region where 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.

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**Liquidity and Capital Resources**

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|  | **Year ended** | **Year ended** |
| The following table summarizes our cash flows: | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(in thousands)** | **(in thousands)** |
| **Cash flow data from continuing operations:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash provided/(used) by operating activities | $(410) | $475 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash used in investing activities | $(41) | $(71) |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash provided/(used) in financing activities | $158 | $(417) |

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As of June 30, 2025, our cash and cash equivalents totaled $734,911 compared to $1,028,448 in cash and cash equivalents as of June 30, 2024.

*Operating Activities*

Net cash used by operating activities primarily consists of the purchase of inventories and the effect of changes in operating assets and liabilities. Net cash used by operating activities decreased from the prior year due to the increase in accounts receivable.

*Investing Activities*

Cash used in investing activities in the year ended June 30, 2025, was primarily for a replacement database server purchased in the period. In the year ended June 30, 2024, cash used from investing activities was related to the purchase of a forklift and commercial printer.

*Financing Activities*

Cash provided by financing activities in the year ended June 30, 2025, was due to the addition of two unsecured notes payable totaling $500,000, offset partially by the repayment of unsecured notes payable and equipment loans. Cash used by financing activities in the year ended June 30, 2024, was from the repayment of equipment notes payable and the unsecured line of credit.

**Capital Resources**

We expect total capital expenditures for fiscal 2026 to be less than $100,000, funded primarily 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 supporting our usual operations.

If our business plans and cost estimates are inaccurate, or if our operations require additional cash, or if we deviate from our current plans, we might need to seek additional debt financing for specific projects or ongoing operational needs. Such debt could harm our business if we cannot secure further financing on acceptable terms. Additionally, any debt we take on in the future could come with restrictive covenants that limit our flexibility in planning for or responding to changes in our business. If we fail to comply with these covenants, our lenders could accelerate the repayment of our debt or restrict our access to more borrowings, which could limit our operational flexibility and threaten our ability to continue operations.

**Off-Balance Sheet Arrangements**

We do not use off-balance sheet arrangements with unconsolidated entities or related parties, nor do we use other forms of off-balance sheet arrangements. Accordingly, our liquidity and capital resources are not subject to off-balance sheet risks from unconsolidated entities. As of June 30, 2025, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

We have entered into operating leases primarily for certain equipment and our facilities in the normal course of business. These arrangements are often referred to as a form of off-balance-sheet financing. Future minimum lease payments under our operating leases as of June 30, 2025, are detailed in the section entitled "Commitments and Contingencies" in the Notes to the Consolidated Financial Statements.

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**Effect of Recently Issued Accounting Standards and Estimates**

We do not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on our consolidated financial position, results of operations, or cash flows.

**Application of Critical Accounting Policies and Estimates**

Our consolidated financial statements included under Item 8 in this report have been prepared in accordance with GAAP. Our significant accounting policies are described in the notes to our consolidated financial statements. Preparing financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the amounts reported in our financial statements and their accompanying notes. We have identified certain policies that we believe are important to the portrayal of our financial condition and results of operations. These policies require the application of significant judgment by our management. We base our estimates on our historical experience, industry standards, and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. An adverse effect on our financial condition, changes in financial condition, and results of operations could occur if circumstances change that alter the various assumptions or conditions used in such estimates or assumptions. Our critical accounting policies include those listed below.

*Revenue Recognition* 

We record revenue based on the five-step model which includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when the performance obligations are satisfied. Substantially all of our revenue is generated by fulfilling orders for the purchase of manufactured products and product purchased for resale to retailers, wholesalers, or direct to consumers via online channels, with each order considered to be a distinct performance obligation. These orders may be formal purchase orders, verbal phone orders, e-mail orders or orders received online. Shipping and handling activities for which we are responsible under the terms and conditions of the order are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill our promise to transfer the goods and are expensed when revenue is recognized. The impact of this policy election is insignificant as it aligns with our current practice.

Revenue is measured as the net amount of consideration expected to be received to fulfill a performance obligation. We have elected to exclude sales, use and similar taxes from the measurement of the transaction price. The impact of this policy election is insignificant, as it aligns with our current practice. The amount of consideration expected to be received and revenue recognized includes variable consideration estimates, including costs for trade promotion programs, coupons, returns, and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. 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. 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. Revenue is recognized at the point in time that control of the ordered products is transferred to the customer. Generally, this occurs at the time of the shipment from our warehouse. or in some cases, picked up from one of our distribution centers by the customer.

*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 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.

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*Inventories*

We value inventory at the lower of cost or net realizable value on an item-by-item basis and establish reserves equal to all or a portion of the related inventory to reflect situations in which the cost of the inventory is not expected to be recovered. This requires us to make estimates regarding the net realizable value of our inventory, including an assessment for excess and obsolete inventory. Once we establish an inventory reserve amount in a fiscal period, the reduced inventory value is maintained until the inventory is sold or otherwise disposed of. In evaluating whether inventory is stated at the lower of cost or net realizable value, management considers such factors as the amount of inventory on-hand, the estimated time required to sell such inventory, the foreseeable demand within a specified time horizon and current and expected market conditions. Based on this evaluation, we record adjustments to cost of goods sold to adjust inventory to its net realizable value. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions, customer demand or other factors differ from expectations. Finished goods and goods in process include a provision for manufacturing overhead, including depreciation.

*Accounting for Income Taxes*

We utilize the asset and liability method of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. 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. At June 30, 2025, we carried a valuation allowance of $1.5 million against our net deferred tax assets.

*Impairment of Long-Lived Assets*

We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flows the asset or asset group is expected to generate. If an asset or asset group is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. If the estimated fair value is less than the book value, the asset is written down to the estimated fair value, and an impairment loss is recognized.

In fiscal year 2025, we generated negative cash flow from operations, and in fiscal year 2024, we generated positive cash flow from operations. If our long-term future results do not yield positive cash flows in excess of the carrying amount of our long-lived assets, we would anticipate possible future impairments of those assets.

Considerable management judgment is necessary in estimating future cash flows and other factors affecting the valuation of long-lived assets, including operating and macroeconomic factors that may affect them. We use historical financial information, internal plans and projections, and industry information to make such estimates.

**Non-GAAP Financial Measures**

Reconciliation of net loss to Adjusted EBITDA for the years ended June 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **Twelve Months Ended** | **Twelve Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(in thousands)** | **(in thousands)** |
| Net income (loss) | $(448) | $(399) |
| &nbsp;&nbsp;&nbsp;&nbsp;Plus interest expense, financing costs and income tax | 377 | 578 |
| &nbsp;&nbsp;&nbsp;&nbsp;Plus depreciation and amortization expense | 428 | 412 |
| &nbsp;&nbsp;&nbsp;&nbsp;Plus stock-based compensation expense | 36 | 19 |
| Adjusted EBITDA  | $393 | $610 |

---

As used herein, Adjusted EBITDA represents net income before interest income, interest expense and financing costs, depreciation, and stock-based compensation expense. We have excluded the non-cash expenses and stock-based compensation expenses as they do not reflect the cash-based operations of the Company. Adjusted EBITDA is a non-GAAP financial measure that is not required by or defined under GAAP. The presentation of this financial measure is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP, including the net income of the Company or net cash provided by operating activities.

Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with the Company's net income as determined in accordance with GAAP and are not a substitute for or a measure of the Company's profitability or net earnings. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance and liquidity and because it is less susceptible to variances in actual performance resulting from depreciation and amortization and non-cash charges for stock-based compensation expense and loss on disposal of assets.

**ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.**

Not applicable for a smaller reporting company.

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**ITEM 8. Financial Statements and Supplementary Data.**

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page** |
| Consolidated Financial Statements: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;[Reports of Independent Registered Public Accounting Firm](#report) Auditor Firm ID (PACOB Number 287) | F-1 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Balance Sheets as of June 30, 2025 and 2024](#bs) | F-2 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Operations for the years ended June 30, 2025 and 2024](#so) | F-3 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Changes in Stockholders' Equity for the years ended June 30, 2025 and June 30, 2024](#sse) | F-4 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Cash Flows for the years ended June 30, 2025 and 2024](#cs) | F-5 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Notes to Consolidated Financial Statements](#note) | F-6 |

---

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| 15 |
| *[**Table of Contents**](#toc1)* |

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![luvu_10kimg1.jpg](luvu_10kimg1.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLC ACCOUNTING FIRM**

To the Board of Directors and Stockholders of

Luvu Brands, Inc.

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheets of Luvu Brands, Inc. and subsidiaries (the "Company"), as of June 30, 2025 and 2024, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the two-year period ended June 30, 2025, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

We did not identify any critical audit matters that need to be communicated.

![luvu_10kimg2.jpg](luvu_10kimg2.jpg)

We have served as the Company's auditor since 2024.

EC Barrott, LLC

Atlanta, Georgia

October 14, 2025

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| F-1 |
| *[**Table of Contents**](#toc2)* |

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**Luvu Brands, Inc. and Subsidiaries**

**Consolidated Balance Sheets**

**As of June 30, 2025 and 2024**

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br>**2025** | **June 30,**<br>**2024** |
| **Assets:** | **(in thousands, except share data)** | **(in thousands, except share data)** |
| **Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Cash and cash equivalents** | $735 | $1028 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $34 on June 30, 2025 and $11 on June 30, 2024** | 1600 | 1061 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Inventories, net of allowance for inventory reserve of $232 on June 30, 2025 and $214 on June 30, 2024** | 3585 | 3287 |
| **Other current assets** | 108 | 141 |
| **Total current assets** | 6028 | 5517 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Equipment, property and leasehold improvements, net** | 1476 | 1870 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Finance lease assets** | 104 | 103 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Operating lease assets** | 1057 | 1545 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Other assets** | 96 | 96 |
| **Total assets** | $8761 | $9131 |
| **Liabilities and stockholders' equity:** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Accounts payable** | $1858 | $1502 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Current debt** | 1949 | 1639 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Other accrued liabilities** | 553 | 508 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Operating lease liability** | 646 | 528 |
| **Total current liabilities** | 5006 | 4177 |
| **Noncurrent liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Deferred Tax Liability** | 119 | 119 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Long-term debt** | 704 | 854 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Long-term operating lease liability** | 513 | 1151 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total noncurrent liabilities** | 1336 | 2124 |
| **Total liabilities** | 6342 | 6301 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Commitments and contingencies (See Note 13)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Stockholders' equity:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Preferred stock, 5,700,000 shares authorized, $0.0001 par value none issued and outstanding** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**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 as of June 30, 2025 and June 30, 2024** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Common stock, $0.01 par value, 175,000,000 shares authorized, 76,834,057 and 76,547,672 shares issued and outstanding as of June 30, 2025 and June 30, 2024, respectively** | 766 | 765 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Additional paid-in capital** | 6289 | 6253 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Accumulated deficit** | (4636) | (4188) |
| **Total stockholders' equity** | 2419 | 2830 |
| **Total liabilities and stockholders' equity** | $8761 | $9131 |

---

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| F-2 |
| *[**Table of Contents**](#toc2)* |

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**Luvu Brands, Inc. and Subsidiaries**

**Consolidated Statements of Operations**

**Years Ended June 30, 2025 and 2024**

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(in thousands, except share data)** | **(in thousands, except share data)** |
| **Net Sales** | $24691 | $24574 |
| **Cost of goods sold (excluding depreciation expense presented below)**  | 18221 | 18048 |
| **Gross profit** | 6470 | 6526 |
| **Operating expenses:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Advertising and promotion** | 950 | 1028 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Other selling and marketing** | 1644 | 1725 |
| &nbsp;&nbsp;&nbsp;&nbsp;**General and administrative** | 3517 | 3187 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Depreciation and amortization** | 428 | 412 |
| **Total operating expenses** | 6539 | 6352 |
| **Operating income/(loss)** | (69) | 174 |
| **Other expense:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Interest expense and financing costs** | (372) | (411) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Disposal of fixed asset** | (7) | - |
| **Total other expense**  | (379) | (411) |
| **Loss from operations before income taxes** | (448) | (237) |
| **Provision for income taxes** | - | (162) |
| **Net loss** | $(448) | $(399) |
| **Net loss per share:** |  |  |
| **Basic**  | $(0.01) | $(0.01) |
| **Diluted** | $(0.01) | $(0.01) |
| **Shares used in calculation of net loss per share:** |  |  |
| **Basic** | 76834057 | 76547672 |
| **Diluted** | 76834057 | 76547672 |

---

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| F-3 |
| *[**Table of Contents**](#toc2)* |

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**Luvu Brands, Inc. and Subsidiaries**

**Consolidated Statements of Changes in Stockholders' Equity**

**For the Years Ended June 30, 2025 and June 30, 2024**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Series A**<br>**Preferred Stock** | **Series A**<br>**Preferred Stock** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br>**Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Total**<br>**Stockholders'**<br>**Equity** |
|  | **(in thousands, except share data)** | **(in thousands, except share data)** | **(in thousands, except share data)** | **(in thousands, except share data)** | **(in thousands, except share data)** | **(in thousands, except share data)** | **(in thousands, except share data)** |
| **Balance, June 30, 2023** | **4300000** | $0 | 76547672 | $765 | $6234 | ($3789) | $3210 |
| Stock-based compensation expense |  |  |  |  | 19 |  | 19 |
| Stock option exercises |  |  |  |  |  |  |  |
| Net loss | - | - | - | - | - | (399) | (399) |
| **Balance, June 30, 2024** | **4300000** | $**0** | **76547672** | $**765** | $**6253** | **($4188)** | $**2830** |
| Stock-based compensation expense |  |  |  |  | 36 |  | 36 |
| Stock option exercises |  |  | 286385 | 1 |  |  | 1 |
| Net loss | - | - | - | - | - | (448) | (448) |
| **Balance, June 30, 2025** | **4300000** | $**0** | **76834057** | $**766** | $**6289** | **($4636)** | $**2419** |

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| F-4 |
| *[**Table of Contents**](#toc2)* |

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**Luvu Brands, Inc. and Subsidiaries**

**Consolidated Statements of Cash Flows**

**Years Ended June 30, 2025 and 2024**

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
|  | **(in thousands)** | **(in thousands)** |
| **OPERATING ACTIVITIES:** |  |  |
| Net loss  | $(448) | $(399) |
| *Adjustments to reconcile net loss to net cash (used in) provided by operating activities:* |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 428 | 412 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred Income Taxes |  | 129 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 36 | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for bad debt | 24 | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory reserves | 18 | (38) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of fixed asset | 7 |  |
| *Change in operating assets and liabilities:* |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (562) | (20) |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory | (316) | 953 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 32 | (54) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 359 | (615) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and interest | 4 | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll and related | 41 | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability | (521) | (383) |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of operating lease asset | 488 | 369 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by operating activities | $(410) | $475 |
| **INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment in equipment, software and leasehold improvements | $(41) | $(71) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | $(41) | $(71) |
| **FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowing under revolving line of credit | $52 | $5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of unsecured line of credit |  | (13) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of unsecured notes payable | (46) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from unsecured notes payable | 500 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from unsecured line of credit | 52 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal payments on equipment notes | (377) | (392) |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal payments on finance leases | (23) | (17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities | $158 | $(417) |
| **Net decrease in cash and cash equivalents** | (293) | (13) |
| **Cash and cash equivalents at beginning of year** | $1028 | $1041 |
| **Cash and cash equivalents at end of year** | $735 | $1028 |
| Supplemental Disclosure of Cash Flow Information: |  |  |
| Non cash items: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance lease asset obligation in exchange for lease payable | $- | $104 |
| Cash paid during the year for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest | $368 | $363 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes |  |  |

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| F-5 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 1. ORGANIZATION AND NATURE OF BUSINESS.**

Luvu Brands, Inc. (the "Company" or "Luvu") was incorporated in the State of Florida on February 25, 1999. References to the Company in these notes include the Company and its wholly owned subsidiaries, OneUp Innovations, Inc. ("OneUp"), and Foam Labs, Inc. ("Foam Labs"). All operations of the Company are currently conducted by OneUp.

The Company is an Atlanta, Georgia based designer, manufacturer and marketer of a portfolio of consumer lifestyle brands including:

· JAXX-a diverse range of convertible daybeds, headboard panels, outdoor soft seating and bean bags made from repurposed polyurethane foam trim.

· AVANA-products for yoga exercise, sleep comfort and inclined bed therapy.

· LIBERATOR-transformable chaises and specially designed pillows and props for enhancing sexual performance.

· FOAMLABS-private label Jaxx products and contract manufacturing for hospitality, school, furniture mass market and beyond.

These products are sold through the Company's websites, online mass merchants and retail stores worldwide. Many of our products are offered flat-packed and either roll or vacuum compressed to save on shipping and reduce our carbon footprint.

Sales are generated through internet, print advertisements, and social marketing. We have a diversified customer base with only one customer accounting for 34% in fiscal 2025 and 36% in fiscal 2024 of consolidated net and no particular concentration of credit risk in one customer type.

**NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.**

**Basis of Presentation**

These consolidated financial statements include the accounts and operations of our wholly owned operating subsidiaries, OneUp and Foam Labs. Intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

**Use of Estimates**

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates in these consolidated financial statements include estimates of: income taxes; tax valuation reserves; allowances for doubtful accounts; inventory valuation and reserves, share-based compensation; and useful lives for depreciation and amortization. Actual results could differ materially from these estimates.

**Revenue Recognition**

We record revenue based on the five-step model which includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when the performance obligations are satisfied. Substantially all of our revenue is generated by fulfilling orders for the purchase of manufactured products and product purchased for resale to retailers, wholesalers, or direct to consumers via online channels, with each order considered to be a distinct performance obligation. These orders may be formal purchase orders, verbal phone orders, e-mail orders or orders received online. Shipping and handling activities for which we are responsible under the terms and conditions of the order are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill our promise to transfer the goods and are expensed when revenue is recognized. The impact of this policy election is insignificant as it aligns with our current practice.

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| F-6 |
| *[**Table of Contents**](#toc2)* |

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Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling a performance obligation. We have elected to exclude sales, use and similar taxes from the measurement of the transaction price. The impact of this policy election is insignificant, as it aligns with our current practice. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, which includes costs for trade promotion programs, coupons, returns and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. 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. 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. Revenue is recognized at the point in time that control of the ordered products is transferred to the customer. Generally, this occurs when the product is shipped from the distribution center, or in some cases, picked up from one of our distribution centers by the customer.

**Deferred revenues**

Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. Deferred revenues primarily relate to gift cards purchased but not used, prior to the end of the fiscal period. Our total deferred revenue as of June 30, 2025 and June 30, 2024 was $1,700 and $19,454, respectively, and was included in "Other accrued liabilities" on our consolidated balance sheets.

**Cost of Goods Sold**

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

**Shipping and Handling Costs**

We include fees earned on the shipment of our products to customers in sales and include costs incurred on the shipment of product to customers in costs of goods sold.

**Cash and Cash Equivalents**

For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

**Allowance for Doubtful Accounts**

The allowance for doubtful accounts reflects management's best estimate of probable credit losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specifically identified nonpaying accounts, and other currently available evidence. The Company reviews its allowance for doubtful accounts monthly, focusing on significant individual past due balances over 90 days. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers.

Our retailer customer, Nogin who operated the retail locations of Brookstone, had been operating under a Chapter 11 bankruptcy agreement since December 5, 2023. On April 25, 2025. Nogin agreed to settle their outstanding balance of $24,516 for $5,000. The balance of $19,516 was charged to the Allowance for Doubtful Accounts. Payment of the $5,000 was received on July 14, 2025.

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| F-7 |
| *[**Table of Contents**](#toc2)* |

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The following is a summary of Accounts Receivable as of June 30, 2025 and June 30, 2024.

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| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2025** | **June 30,** <br>**2024** |
|  | **(in thousands)** | **(in thousands)** |
| Accounts receivable | $1634 | $1072 |
| &nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | (34) | (11) |
| &nbsp;&nbsp;&nbsp;&nbsp;Allowance for discounts and returns | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total accounts receivable, net | $1600 | $1061 |

---

**Inventories and Inventory Reserves**

Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method. Net realizable value is defined as sales price less cost to dispose and a normal profit margin. Inventory costs include materials, labor, depreciation and overhead. The Company establishes reserves for excess and obsolete inventory, based on prevailing circumstances and judgment for consideration of current events, such as economic conditions, that may affect inventory. The reserve required to record inventory at lower of cost or net realizable value may be adjusted in response to changing conditions.

**Concentration of Credit Risk**

The Company maintains its cash accounts with two banks located in Georgia. The total cash balances are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000 per bank. The Company had cash balances on deposit at June 30, 2025 and 2024 that exceeded the balance insured by the FDIC by $545,634 and $835,054, respectively. Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in North America and Europe.

During 2025, we purchased 31% of total inventory purchases from one vendor.

During 2024, we purchased 33% of total inventory purchases from one vendor.

As of June 30, 2025, two of the Company's customers represent 19% and 15% of the total accounts receivables, respectively. As of June 30, 2024, two of the Company's customers represent 43% and 17% of the total accounts receivable, respectively. Sales to (and through) Amazon accounted for 34% and 36% of our net sales during each of the years ended June 30, 2025 and June 30, 2024 respectively.

**Fair Value of Financial Instruments**

At June 30, 2025 and 2024, 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.

The Company measures the fair value of its assets and liabilities under the guidance of *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. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

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ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

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| *Level 1*: Observable inputs such as quoted prices for identical assets or liabilities in active markets; |
| *Level 2*: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and |
| *Level 3*: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities. |

---

The valuation techniques that may be used to measure fair value are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. *Market approach* - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. *Income approach* - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method.

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

**Advertising Costs**

Advertising costs are expensed when the advertisements are first aired or distributed to the public. Prepaid advertising (included in prepaid expenses) was $0 on June 30, 2025, and $836 on June 30, 2024. Advertising expense for the years ended June 30, 2025, and 2024 was $950,071 and $1,028,044, respectively.

**Research and Development**

Research and development expenses for new products are expensed as they are incurred. Expenses for new product development (included in general and administrative expense) totaled $167,252 for the year ended June 30, 2025 and $156,617 for the year ended June 30, 2024.

**Property and Equipment**

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.

Expenditures for major renewals and betterments which extend the useful lives of property and equipment are capitalized. 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 currently.

**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. In addition, the Company will pay the landlord a 2% property management fee. The rent expense for the years ended June 30, 2025 and June 30, 2024 was $652,752 and $652,752 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. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company elected not to recognize leases with a term less than one year on its balance sheet. Operating lease right-of-use (ROU) assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.

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| |
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| F-9 |
| *[**Table of Contents**](#toc2)* |

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In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.) Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, the Company elected the practical expedient to not separate lease and non-lease components. The lease component results in an operating right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

The Company also leases certain equipment under operating leases, as more fully described in NOTE 13 - *Commitments and Contingencies*.

**Segmentation Information**

The Company has identified two reportable sales segmentations: *Direct to Consumer and Wholesale*. *Direct to Consumer* includes product sales through the Company's 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.

Information as to the operations of the Company's reportable segments is set forth below.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** |
| (in thousands) | **Direct to**<br>**Consumer** | **Wholesale** | **Total** | **Direct to**<br>**Consumer** | **Wholesale** | **Total** |
| &nbsp;&nbsp;&nbsp;&nbsp;Revenues | $8156 | $16535 | $24691 | $7016 | $17558 | $24574 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of Goods Sold | 5739 | 12482 | 18221 | 5020 | 13028 | 18048 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other direct operating expenses (a) | 859 | 1601 | 2460 | 767 | 1796 | 2563 |
| &nbsp;&nbsp;&nbsp;&nbsp;Overhead expenses(b) |  |  | 4079 |  |  | 3789 |
| Operating (loss) income | 1558 | 2452 | (69) | 1229 | 2734 | 174 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income |  |  | (5) |  |  | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense |  |  | 377 |  |  | 417 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other expense, net |  |  | 7 |  |  | 0 |
| Loss from operations before income taxes |  |  | (448) |  |  | (237) |
| **Reconciliation of operating (loss) income to adjusted operating income:** |  |  |  |  |  |  |
| Operating (loss) income | 1558 | 2452 | (69) | 1229 | 2734 | 174 |
| Adjustments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation expense |  |  | 36 |  |  | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  | 428 |  |  | 412 |
| Adjusted operating income | $1558 | $2452 | $395 | $1229 | $2734 | $605 |

---

(a) Other direct operating expenses are directly attributable to the business segment, such as marketing, salaries, customer relationship expenses, and travel and entertainment expenses.

(b) Overhead expenses are all non-direct expenses related to the operation of the business segment. It includes G&A, unallocated marketing expenses, facilities, product development, and depreciation.

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| F-10 |
| *[**Table of Contents**](#toc2)* |

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**Recent accounting pronouncements**

From time to time, the Financial Accounting Standards Board ("FASB") or other standard-setting bodies issue new accounting pronouncements that are adopted by the Company as of the specified effective date. The Company has adopted ASU 2023-07 regarding business segmentation reporting and will be adopting ASU2023-09 and 2024-03 in future filings.

**Net Loss Per Share**

In accordance with FASB Accounting Standards Codification No. 260, "Earnings Per Share", basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss 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.

The total potential dilutive securities as of June 30, 2025 and 2024 are as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Convertible Preferred Stock | 4300000 | 4300000 |
| Stock options – 2015 Plan | 1200000 | 1350000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 5500000 | 5650000 |

---

 **Income Taxes**

We utilize the asset and liability method of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in determining the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. 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. At June 30, 2025, we carried a valuation allowance of $1.5 million against our net deferred tax assets.

**Stock Based Compensation**

We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. We measure the cost of each stock option and restricted stock award at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period.

**NOTE 3. IMPAIRMENT OF LONG-LIVED ASSETS**

We follow FASB ASC 360, Property, Plant, and Equipment, regarding impairment of our other long-lived assets (property, plant and equipment). Our policy is to assess our long-lived assets for impairment annually in the fourth quarter of each year or more frequently if events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

An impairment loss is recognized only if the carrying value of a long-lived asset is not recoverable and is measured as the excess of its carrying value over its fair value. The carrying amount of a long-lived asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of a long-lived asset.

Assets to be disposed of and related liabilities would be separately presented in the consolidated balance sheet. Assets to be disposed of would be reported at the lower of the carrying value or fair value less costs to sell and would not be depreciated. There was no impairment as of June 30, 2025 or 2024.

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|:---|
| F-11 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 4. INVENTORIES**

All inventories are stated at the lower of cost (which approximates first-in, first-out) or net realizable value. The Company's inventories consist of the following components at June 30, 2025 and 2024:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
|  | **(in thousands)** | **(in thousands)** |
| Raw materials | $1407 | $1396 |
| Work in process | 366 | 460 |
| Finished goods | 2044 | 1645 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total inventories | 3817 | 3501 |
| Allowance for inventory reserves | (232) | (214) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total inventories, net of allowance | $3585 | $3287 |

---

**NOTE 5. EQUIPMENT, PROPERTY AND LEASEHOLD IMPROVEMENTS, NET**

Equipment, property and leasehold improvements at June 30, 2025 and 2024 consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **Estimated**<br>**Useful Life** |
| Factory equipment | $4465 | $4476 | 2-10 years |
| Computer equipment and software | 764 | 761 | 5-7 years |
| Office equipment and furniture | 181 | 151 | 5-7 years |
| Leasehold improvements | 475 | 475 | 10 years |
| Subtotal | 5885 | 5863 |  |
| Accumulated depreciation | (4305) | (3890) |  |
| Equipment and leasehold improvements, net | $1580 | $1973 |  |

---

Depreciation expense was $428,147 and $412,172 for the years ended June 30, 2025 and 2024, respectively.

**NOTE 6. OTHER ACCRUED LIABILITIES**

Other accrued liabilities at June 30, 2025 and 2024 consisted of the following:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
|  | **(in thousands)** | **(in thousands)** |
| Accrued compensation | $383 | $342 |
| Accrued expenses and interest | 170 | 166 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities | $553 | $508 |

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|:---|
| F-12 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 7. CURRENT AND LONG-TERM DEBT SUMMARY**

Current and long-term debt at June 30, 2025 and 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| **Current debt:** | **(in thousands)** | **(in thousands)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Line of credit (Note 10) | $1096 | $1044 |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term unsecured notes payable (Note 8) | 544 | 200 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current portion of equipment notes payable (Note 13) | 286 | 371 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current portion of finance leases payable (Note 13) | 23 | 24 |
| Total current debt | $1949 | $1639 |
| **Long-term debt:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured lines of credit (Note 11) | $52 | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured notes payable (Note 8) | 309 | 200 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equipment notes payable (Note 13) | 159 | 452 |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance leases payable (Note 13) | 66 | 87 |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes payable- related party (Note 9) | 116 | 116 |
| Total long-term debt | $702 | $855 |

---

**NOTE 8. UNSECURED NOTES PAYABLE**

Unsecured notes payable at June 30, 2025 and 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
|  | *(in thousands)* | *(in thousands)* |
| **Current debt:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;13.5% Unsecured note, interest only, due April 30, 2025 (2) | $- | $200 |
| &nbsp;&nbsp;&nbsp;&nbsp;13.5% Unsecured note, interest only, due July 31, 2025(3) | 100 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;13.5% Unsecured note, interest only, due October 31, 2025 (1) | 100 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;18.0% Unsecured note, due March 25, 2027 (4) | 121 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;19.2% Unsecured note, due July 3, 2026 (5) | 223 | - |
| Total current debt | $544 | $200 |
| **Long-term debt:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;13.5% Unsecured note, interest only, due July 31, 2025 (3) | $- | $100 |
| &nbsp;&nbsp;&nbsp;&nbsp;13.5% Unsecured note, interest only, due October 31, 2025 (1) |  | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;13.5% Unsecured note, interest only, due April 30, 2027 (2) | 200 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;18.0% Unsecured note, due March 25, 2027 (4) | 93 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;19.2% Unsecured note, due July 3, 2026 (5) | 16 | - |
| Total long-term debt | 309 | 200 |
| Total unsecured notes payable | $853 | $400 |

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| |
|:---|
| F-13 |
| *[**Table of Contents**](#toc2)* |

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(1) Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on October 31, 2014, extended to October 31, 2019, then extended to October 31, 2021. 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 extended in full on September 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2025. Personally guaranteed by Louis Friedman, the Company's CEO and 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 May 1, 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 extended in full on April 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on May 1, 2025. This note was extended in full on April 8, 2025 with the same lender with interest payable monthly at 13.5%, principal due in full on April 30, 2027. Personally guaranteed by the Company's CEO and principal stockholder.

(3) Unsecured note payable for $100,000 to an individual with interest payable monthly at 20%, principal originally due in full on July 31, 2013, extended to July 31, 2019, then extended to July 31, 2021. 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 extended in full on July 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2025. Personally guaranteed by the Company's CEO and principal stockholder. This note was extended in full on August 20, 2025 with the same lender with interest payable monthly of 13.5% and principal due in full on July 31, 2027.

(4) Unsecured note payable for $250,000 to a lending company with monthly payments of $12,485 was signed on March 25, 2025. The note payable is for 24 monthly payments till March 25, 2027. The note is personally guaranteed by the Company's CEO and principal.

(5) Unsecured note payable for $250,000 to a lending company with weekly payments of $5,366 was signed on June 4, 2025. The note payable is for 56 weeks till July 3, 2026. The note is personally guaranteed by the Company's CEO and principal

**NOTE 9. NOTES PAYABLE - RELATED PARTY**

Related party notes payable at June 30, 2025 and 2024 consisted of the following:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
|  | **(in thousands)** | **(in thousands)** |
| Unsecured note payable to an officer, with interest at 7.5%, due June 30, 2027 | $40 | $40 |
| Unsecured note payable to an officer, with interest at 7.5%, due June 30, 2027 | 76 | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total unsecured notes payable | 116 | 116 |
| Less: current portion | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term unsecured notes payable | $116 | $116 |

---

**NOTE 10. LINE OF CREDIT**

The Company's wholly owned subsidiary, OneUp and OneUp's wholly owned subsidiary, Foam Labs, have 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 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.

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|:---|
| F-14 |
| *[**Table of Contents**](#toc2)* |

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Advances under the agreement are currently charged interest at a rate of prime rate plus 2% over the lenders Index Rate. In addition, there is a Monthly Service Fee (as defined in the agreement) of currently 0.05 % per month.

The Company's President and Chief Executive Officer (CEO), 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 14). On June 30, 2025, the balance owed under this line of credit was $1,096,403. On June 30, 2024, the balance owed under this line of credit was $1,044,222. As of June 30, 2025, 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. If new business opportunities do arise, additional outside funding may be required.

**NOTE 11. UNSECURED LINES OF CREDIT**

The Company has drawn a cash advance on one unsecured line of credit that is in the name of the Company and Louis S. Friedman (see Note 14). The terms of this unsecured line of credit call for monthly payments of principal and interest, with interest at 13.2%. The aggregate amount owed on the unsecured line of credit was $52,144 at June 30, 2025 and $116 at June 30, 2024.

**NOTE 12. SECURED NOTE PAYABLE**

None

**NOTE 13. COMMITMENTS AND CONTINGENCIES**

***Operating Leases***

The Company leases its facilities under non-cancelable operating leases expiring at the end of 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 June 30, 2025, the weighted average remaining lease term for the lease renewal is 1.75 years and the weighted average discount rate is 14.49%. In addition to the rent payment, The Company pays a proportionate share of operating costs, taxes, and insurance costs. The annual cost for these additional rent expenses ending June 30 2025 and 2024 were $256,157 and $221,245 respectively. Supplemental balance sheet information related to leases at June 30, 2025 is as follows:

Supplemental balance sheet information related to leases at June 30, 2025 is as follows:

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| | | |
|:---|:---|:---|
| **Operating leases** | **Balance Sheet Classification** | **(in thousands)** |
| Right-of-use assets | Operating lease right-of-use assets, net | $1057 |
| Current lease liabilities | Operating lease obligations | $646 |
| Non-current lease liabilities | Long-term operating lease obligations | 513 |
| Total lease liabilities |  | $1159 |

---

Maturities of operating lease liabilities at June 30, 2025 are as follows:

---

| | |
|:---|:---|
| **Payments** | **(in thousands)** |
| &nbsp;&nbsp;&nbsp;&nbsp;2026 | $762 |
| &nbsp;&nbsp;&nbsp;&nbsp;2027 | 529 |
| Total undiscounted lease payments | 1291 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Present value discount | (132) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating lease liability balance | $1159 |

---

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|:---|
| F-15 |
| *[**Table of Contents**](#toc2)* |

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***Equipment Notes Payable***

The Company has acquired equipment under the provisions of long-term equipment notes. For financial reporting purposes, minimum note payments relating to the equipment have been capitalized. The equipment acquired with these equipment notes has a total cost of approximately $1,725,849 These assets are included in the fixed assets listed in Note 5 - *Equipment and Leasehold Improvements* and include production equipment. The equipment notes have stated or imputed interest rates ranging from 5.9% to 13.2%.

The following is an analysis of the minimum future equipment note payable payments subsequent to June 30, 2025:

---

| | |
|:---|:---|
| **Year ending June 30,**  | **(in thousands)** |
| 2026 | $286 |
| 2027 | 122 |
| 2028 | 37 |
| Minimum Note Payable Payments | $445 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less current portion | (286) |
| Long-Tern Obligations under Equipment Notes Payable | $159 |

---

***Finance Leases Payable***

The Company has lease obligations for equipment under the provisions of long-term finance leases. For financial reporting purposes, minimum lease payments relating to the equipment have been capitalized. The equipment acquired with these leases has a total cost of approximately $126,782. These assets are included in the finance lease and include production equipment.

On January 5, 2022, the Company entered into a finance lease agreement with Raymond in the amount of $22,862 with monthly payments of $514 with a 48 month term at an imputed interest rate of 3.75%.

On March 15, 2024, the Company entered into a finance lease agreement with Canon Solutions in the amount of $63,948 with monthly payments of $1,325 with a 60 month term at an imputed rate of 8.90%.

On June 3, 2024, the Company entered into a finance lease agreement with Raymond in the amount of $39,972 with monthly payments of $807 with a 60 month term at an imputed rate of 7.80%.

At June 30, 2025, the weighted average remaining lease term is 3.9 years, and the weighted average discount rate is 8.5%

The following is an analysis of the minimum finance lease payable payments subsequent to June 30, 2025:

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| | |
|:---|:---|
| **Year ending June 30,** | **(in thousands)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2026 | $29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2027 | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2028 | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2029 | 23 |
| Future Minimum Finance Lease Payable Payments | $104 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less Amount Representing Interest | (15) |
| Present Value of Minimum Finance Lease Payable Payments | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less Current Portion | (23) |
| Long-Term Obligations under Finance Lease Payable | $66 |

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|:---|
| F-16 |
| *[**Table of Contents**](#toc2)* |

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***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 $160,000 and eligibility to receive a bonus. In certain termination situations, the Company is liable to pay severance compensation to Mr. Friedman for up to nine months at his current salary.

On January 15, 2024, the Company, through OneUp, engaged Chris Knauf to serve as Chief Financial Officer and Controller of the Company. The Company shall pay Mr. Knauf an annual salary of $160,000 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 subsequently on July 1, 2024, an additional option to purchase an additional 200,000 shares of common stock exercisable at $0.08 per share.

***Legal Proceedings***

As of the date of this Annual Report, there are no material pending legal or governmental proceedings relating to the Company or properties to which the Company is a party. To the Company's knowledge, there are no material proceedings to which any of its directors, executive officers or affiliates are a party adverse to the Company or which have a material interest adverse to the Company.

**NOTE 14. 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 principal shareholder in the amount of $76,000 (see Note 9). Interest on the note during the years ended June 30, 2025 and 2024 was accrued by the Company at the prevailing prime rate (which is currently 7.5%) and totaled $5,955 and $6,464 respectively. The accrued interest on the note as of June 30, 2025 and 2024 was $47,015 and $41,060, respectively. This note is subordinate to all other credit facilities currently in place.

On October 30, 2010, Mr. Friedman, loaned the Company $40,000 (see Note 9). Interest on the note during the years ended June 30, 2025 and 2024 was accrued by the Company at the prevailing prime rate (which is currently 7.5%) and totaled $3,134 and $3,402. The accrued interest on the note as of June 30, 2025 and 2024 was $10,634 and $7,500 respectively. This note is subordinate to all other credit facilities currently in place.

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 June 30, 2025 and 2024, the balance owed under this line of credit was $1,096,403 and $1,044,222 respectively.

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). 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 extended on July 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2025. This note was extended in full on August 20, 2025 with the same lender with interest payable monthly at 13.5%, principal is due in full on July 31, 2027. Repayment of this promissory note is personally guaranteed by the Company's CEO, Louis S. Friedman.

On October 31, 2013, 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) beginning on November 30, 2013, with the principal amount due in full on or before October 31, 2014 extended by the holder to October 31, 2021 (see Note 8). 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. On October 1, 2023, this note was extended through October 31, 2025 at the same interest rate of 13.5%. Repayment of the promissory note is personally guaranteed by the Company's CEO and principal shareholder, Louis S. Friedman.

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| |
|:---|
| F-17 |
| *[**Table of Contents**](#toc2)* |

---

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). 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. This note was extended in full on April 8, 2025 with the same lender with interest payable monthly at 13.5%, principal due in full on April 30, 2027. Mr. 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. Friedman. The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 8%. The aggregate amount owed on the unsecured line of credit was $52,144 at June 30, 2025 and $116 at June 30, 2024 (see Note 11). The loan is personally guaranteed by the Company's CEO and principal shareholder, Louis S. Friedman.

On March 25, 2025, the Company obtained an unsecured note payable for $250,000 from a lending company. The note payable is being paid back through monthly payments of $12,485. The note payable term is 24 monthly payments ending on March 25, 2027. The loan is personally guaranteed by the Company's CEO and principal shareholder, Louis S. Friedman.

On June 4, 2025, the Company obtained an unsecured note payable in the amount of $250,000 from a lending company. The note payable is being paid back through weekly payments of $5,366. The term of the note is 56 weeks ending on July 3, 2026. The loan is personally guaranteed by the Company's CEO and principal shareholder, Louis S. Friedman.

**NOTE 15. STOCKHOLDERS' EQUITY.**

***Options***

At June 30, 2025, the Company had the 2015 Equity Incentive Plan (the "2015 Plan"), which is shareholder-approved and under which 1,700,000 shares are reserved for issuance under the 2015 Plan until that Plan terminates on August 31, 2025. As of October 14, 2025, the Company will expire the 2015 Plan and any unissued stock options will be terminated.

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 June 30, 2025, the number of shares available for issuance under the 2015 Plan was 500,000.

A summary of option activity under the Company's stock plan for the years ended June 30, 2025 and 2024 is presented below:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Option Activity** | **Shares** | **Weighted**<br>**Average**<br>**Exercise**<br>**Price** | **Weighted**<br>**Average**<br>**Remaining**<br>**Contractual Term** | **Aggregated**<br>**Intrinsic**<br>**Value** |
| Outstanding at June 30, 2023 | 1400000 | $0.14 | 3.0 years | $29000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Granted | 400000 | $0.08 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercised |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Forfeited or Expired | (450000) | $0.15 |  |  |
| Outstanding at June 30, 2024 | 1350000 | $0.12 | 3.0 years | $21000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Granted | 250000 | $0.08 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercised | (300000) | $0.03 |  | ($15000) |
| &nbsp;&nbsp;&nbsp;&nbsp;Forfeited or expired | (100000) | $0.02 |  | ($6000) |
| Options Outstanding as of June 30, 2025 | 1200000 | $0.13 | 2.3 years | $0 |
| Options Exercisable as of June 30, 2025 | 637500 | $0.16 | 1.8 years | $0 |

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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 $0.05, $0.08, and $0.10 at June 30, 2025, 2024 and 2023, respectively.

The range of fair value assumptions related to options granted during the years ended June 30, 2025 and 2024 were as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Exercise Price: | $0.04-$0.08  | $0.08 |
| Volatility: | 195%-387% | 370%-377% |
| Risk Free Rate: | 4.01%-4.38% | 4.23%-4.38% |
| Vesting Period: | 4 years | 4 years |
| Forfeiture Rate: | 0% | 0% |
| Expected Life: | 4.1 years | 4.1 years |
| Dividend Rate: | 0% | 0% |

---

There were 250,000 stock options granted during the year ended June 30, 2025 and 400,000 stock options granted during the year ended June 30, 2024.

During the year ended June 30, 2025, 300,000 stock options were exercised; during the year ended June 30, 2025 the Company's proceeds from stock options exercise under the 2015 Plan were $0. During the year ended June 30, 2024, no options were exercised.

During fiscal year 2025 and fiscal year 2024 the Company issued 286,385 and zero shares of common stock respectively for stock option exercises under 2015 Equity Incentive Plan.

The following table summarizes the weighted average characteristics of outstanding stock options as of June 30, 2025:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Outstanding Options** | **Outstanding Options** | **Outstanding Options** | **Exercisable** | **Exercisable** |
| <br>**Exercise Prices** | **Number of Shares** | **Remaining Life (Years)** | **Weighted Average Price** | **Options Number of Shares** | **Weighted Average Price** |
| $0.04 to $0.10 | 450000 | 4.2 | $0.08 | 50000 | $0.08 |
| $0.15 to $0.20 | 700000 | 1.6 | $0.16 | 550000 | $0.16 |
| $0.30 | 50000 | 1.1 | $0.30 | 37500 | $0.30 |
| Total stock options | 1200000 | 2.3 | $0.12 | 637500 | $0.16 |

---

We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation. We measure the cost of each stock option and at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period.

All stock option grants made under the Plan were at exercise prices no less than the Company's closing stock price on the date of grant. Options under the Plan were determined by the board of directors in accordance with the provisions of the plan. The terms of each option grant include vesting, exercise, and other conditions are set forth in a Stock Option Agreement evidencing each grant. No option can have a life in excess of ten (10) years. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. The model requires various assumptions, including a risk-free interest rate, the expected term of the options, the expected stock price volatility over the expected term of the options, and the expected dividend yield. Compensation expense for employee stock options is recognized ratably over the vesting term. The Company has no awards with market or performance conditions.

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Stock-based compensation expense recognized in the consolidated statements of operations for each of the fiscal years ended June 30, 2025 and 2024 is based on awards ultimately expected to vest.

As of June 30, 2025, total unrecognized stock-based compensation expense related to all unvested stock options was $45,282, which is expected to be expensed over a weighted average period of 2.1 years.

In determining the grant date fair value of option awards under the equity incentive plans, the Company applied the Black-Scholes option pricing model. Based upon limited option exercise history, the Company has generally used the "simplified" method outlined in SEC Staff Accounting Bulletin No. 110 to estimate the expected life of stock option grants. Management believes that the historical volatility of the Company's stock price on OTCQB best represents the expected volatility over the estimated life of the option. The risk-free interest rate is based upon published U.S. Treasury yield curve rates at the date of grant corresponding to the expected life of the stock option. An assumed dividend yield of zero reflects the fact that the Company has never paid cash dividends and has no intention to pay dividends in the foreseeable future.

The following table summarizes stock-based compensation expense by line item in the consolidated statements of operations, all relating to employee stock plans:

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| | | |
|:---|:---|:---|
|  | **For the Years Ended June 30,** | **For the Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(in thousands)** | **(in thousands)** |
| Cost of Goods Sold | $4 | $7 |
| Other Selling and Marketing | 20 | 23 |
| General and Administrative | 13 | (11) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $37 | $19 |

---

***Share Purchase Warrants***

As of June 30, 2025 and 2024, there were no share purchase warrants outstanding.

***Common Stock***

The Company's authorized common stock was 175,000,000 shares at June 30, 2025 and 2024. Common shareholders are entitled to dividends if and when declared by the Company's Board of Directors, subject to preferred stockholders dividend rights. As of June 30, 2025, the Company had reserved the following shares of common stock for issuance:

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| | |
|:---|:---|
|  | **June 30, 2025** |
| Shares of common stock reserved for issuance under the 2015 Stock Option Plan | 1700000 |
| Shares of common stock issuable upon conversion of the Preferred Stock | 4300000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total shares of common stock equivalents | 6000000 |

---

***Preferred Stock***

On February 18, 2011, the Company filed an amendment to its Articles of Incorporation, effective February 9, 2011, authorizing the issuance of preferred stock and the Company now has 10,000,000 authorized shares of preferred stock, par value $0.0001 per share, of which 4,300,000 shares have been designated and issued as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into one share of common stock and has a liquidation preference of $0.2325 ($1,000,000 in the aggregate). Liquidation payments to the preferred holders have priority and are made in preference to any payments to the holders of common stock. In addition, each share of Series A Convertible Preferred Stock is entitled to 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 Shares issued and outstanding at the time of such vote. 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.

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 **NOTE 16. INCOME TAXES.**

Deferred tax assets and liabilities are computed by applying the effective U.S. federal income tax rate to the gross amounts of temporary differences and other tax attributes. Deferred tax assets and liabilities relating to state income taxes are not material. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, 2025 and 2024, the Company believed it was more likely than not that future tax benefits from net operating loss carryforwards and other deferred tax assets would not be realizable through the generation of future taxable income; therefore, they were fully reserved.

The components of deferred tax assets and liabilities at June 30, 2025 and 2024 are approximately as follows:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Deferred income tax assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease liability | $298 | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory reserve | 60 | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;Allowance | 9 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock based compensation | 32 | 23 |
| Net operating loss carryforward | 1127 | 1354 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total gross deferred tax assets | 1526 | 1435 |
| Less valuation allowance | (1526) | (1435) |
| Deferred tax liability - fixed assets | (15) | (119) |
| Deferred tax liability – Right of Use Asset | (104) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax liability | $(119) | $(119) |

---

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 25.75% to pretax loss from operations for the years ended June 30, 2025 and 2024 due to the following:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Income taxes at federal rate | $(94) | $(50) |
| State income taxes, net of federal income taxes | (21) | (11) |
| Permanent differences | 2 | 16 |
| Other adjustments | 22 | (169) |
| Valuation allowance | 91 | 376 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax provision | $- | $162 |

---

Our income tax provision consisted of the following for the years ended June 30, 2025 and 2024:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Current provision | $- | $33 |
| Deferred provision | - | 129 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax provision | $- | $162 |

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As of June 30, 2025, the Company had net operating loss (NOL) carryforwards of approximately $4.4 million that may be offset against future taxable income. During 2025 and 2024, the total change in the valuation allowance was approximately $91,000 and $376,000, respectively. The Company's ability to use its NOL carryforwards may be substantially limited due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOL that can be utilized annually to offset future taxable income and tax, respectively. In general, an "ownership change" as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50.0% of the outstanding stock of a company by certain stockholders or public groups.

The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company became a "loss corporation" under the definition of Section 382. If the Company has experienced an ownership change, utilization of the NOL carryforwards would be subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of the Company's stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL carryforwards before utilization. Further, until a study is completed and any limitation known, no positions related to limitations are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on the results of operations or financial position of the Company. The NOL carryforwards of approximately $4.4 million can be carried forward indefinitely, but are limited to 80% of taxable income in any one year.

The tax years that remain subject to examination by major taxing jurisdictions are those from June 30, 2021 through 2023.

On November 27, 2023, the Company received a notice from the Internal Revenue Service regarding Taxes and Penalties due of approximately $125,000. The Company believes that once Net Operating Losses and tax credits are applied, the penalties and interest will be reduced to approximately $38,000. Therefore, the Company has accrued $38,000 for estimated penalties and interest as of June 30, 2025 and 2024. The Company has continued to work with the IRS to resolve this matter. All requested documentation has been submitted to the IRS for review. As of October 14, 2025, no resolution has been reached by the IRS.

On January 22, 2024, the Company received a notice from the Georgia Department of Revenue for Tax and Penalties due of approximately $104,000. The Company believes once Net Operating Losses and tax credit are applied the liability will be reduced to penalties and interest of approximately $6,000. Therefore, the Company has accrued $6,000 for estimated penalties and interest as of June 30, 2025 and 2024. The Company has continued to work with the Georgia Department of Revenue and Tax to resolve this matter. All requested documentation has been submitted to for review. As of October 14, 2025, no resolution has been reached.

**NOTE 17. – SUBSEQUENT EVENTS**

There are no events required to be disclosed under this Item.

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**ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.**

There are no events required to be disclosed under this Item.

**ITEM 9A. CONTROLS AND PROCEDURES.**

**Evaluation of Disclosure Controls and Procedures**

We maintain certain disclosure controls and procedures as defined under the Securities Exchange Act of 1934. They are designed to help ensure that material information is: (1) gathered and communicated to our management, including our principal executive and financial officers, in a manner that allows for timely decisions regarding required disclosures; and (2) recorded, processed, summarized, reported and filed with the SEC as required under the Securities Exchange Act of 1934 and within the time periods specified by the SEC.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2025.

**Management's Annual Report on Internal Control Over Financial Reporting**

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company and for performing an assessment of the effectiveness of internal control over financial reporting as of June 30, 2025. For this purpose, internal control over financial reporting refers to a process designed by, or under the supervision of, the Company's principal executive and financial officers and effected by the Company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are 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, 2025 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, 2025 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 a smaller reporting 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, 2025 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.

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**PART III.**

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.**

The following table sets forth the current officers and directors of Luvu Brands, Inc.

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position** |
| Louis S. Friedman | 73 | Chief Executive Officer, President, Director |
| Christopher Knauf | 53 | Chief Financial Officer |
| Leslie S. Vogelman | 73 | 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 omnichannel 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 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.

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**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, 2025 and 2024, our directors did not receive any compensation in their capacity as a director.

**Code of Ethics**

During August 2023 we adopted a code of ethics. The code of ethics is filed as an exhibit to our Form 10-Q quarterly report for the period ending September 30, 2024. 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.

**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 to our Form 10-Q for period ended September 30, 2024.

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.

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**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, 2025 and 2024 by our named executive officers as defined in Item 402(a) of Regulation S-K (each an "NEO").

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| <br>**Name and Principal Position** | **Fiscal**<br>**Year** | **Salary**<br>**($)** | **Bonus**<br>**($)** | **Stock Awards**<br>**($)** | **Option Awards**<br>**($)(1)** | **Non- Equity Incentive Compensation**<br>**($)** | **All Other Compensation**<br>**($)** | **Total**<br>**($)** |
| **Louis S. Friedman** | 2025 | 160000 |  |  |  |  |  | 160000 |
| President, Chief Executive | 2024 | 155000 |  |  |  |  |  | 155000 |
| Officer and Chairman of the Board |  |  |  |  |  |  |  |  |
| **Christopher Knauf**  | 2025 | 160000 |  |  |  |  |  | 160000 |
| Chief Financial Officer (2) | 2024 | 66667 |  |  |  |  |  | 66667 |
| **Martin Scott** | 2024 | 67743 |  |  |  |  |  | 67743 |
| Chief Financial Officer (3) |  |  |  |  |  |  |  |  |
| **Alexander A. Sannikov** | 2024 | 46042 |  |  |  |  |  | 46042 |
| Chief Financial Officer (4) |  |  |  |  |  |  |  |  |

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(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.

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**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, 2025.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name** | **Number of securities underlying unexercised options (#) exercisable** | **Number of securities underlying unexercised options (#) unexercisable** | **Equity**<br>**incentive plan awards:**<br>**Number of**<br>**securities**<br>**underlying unexercised**<br>**unearned**<br>**options** | **Option**<br>**exercise**<br>**price**<br>**($)** | **Option**<br>**expiration**<br>**date** | **Number of**<br>**shares of**<br>**unit of stock**<br>**that have**<br>**not vested**<br>**(#)** | **Market**<br>**value of**<br>**shares or**<br>**units of**<br>**stock that**<br>**have not**<br>**vested ($)** | **Equity**<br>**incentive plan awards:**<br>**Number of**<br>**unearned**<br>**shares, units**<br>**or other rights**<br>**that have not**<br>**vested** | **Equity**<br>**incentive plan awards:**<br>**Market of**<br>**payout value**<br>**of unearned**<br>**shares, units or**<br>**other rights**<br>**that have not**<br>**vested** |
| Louis Friedman | – |  | – |  |  | – |  | – |  |
| Christopher Knauf | – | 400000 | – $| 0.08 | 4/1/2029 | – |  | – |  |

---

**Incentive and Non-qualified Stock Option and Stock Award Plans**

At June 30, 2025, we had options outstanding under the 2015 Equity Incentive Plan. Please see Note 15 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 $160,000 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 $160,000 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 on July 1, 2024.

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**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:

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| |
|:---|
| 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. |

---

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 76,834,057 shares of common stock and 4,300,000 shares of Series A Convertible Preferred Stock outstanding as of October 14, 2025.

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 October 14, 2025, 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**<br>**Class** | **Name and Address of Beneficial** <br>**Owner** | **Amount and Nature of**<br>**Beneficial Ownership** |  | **Percent**<br>**of Class** |
| <u>Executive Officers and Directors</u> |  |  |  |  |
| Common | Louis S. Friedman | 36397233 | (1) | 47.4% |
| Common | Christopher Knauf | 400000 | (4) | \* |
| Common | Leslie Vogelman | 596428 | (2) | \* |
| Common | All directors and executive officers as a group (3 persons) | 37396665 |  | 48.7% |
| <u>Executive Officers and Directors</u> |  |  |  |  |
| Series A Convertible Preferred Stock | Louis S. Friedman | 4300000 | (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) | 4300000 | (3) | 100.0% |

---

\*&nbsp;&nbsp;&nbsp;&nbsp;Less than 1%

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(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 70.9 % 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 70.9 % 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. 

(4) Includes 400,000 shares of common stock underlying options exercisable at $0.08 per share.

**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, 2025.

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| | | | |
|:---|:---|:---|:---|
|  | **Number of securities to**<br>**be issued upon exercise**<br>**of outstanding options,**<br>**warrants and rights**<br>**(a)** | **Weighted average**<br>**exercise price of**<br>**outstanding options,**<br>**warrants and rights**<br>**(b)** | **Number of securities**<br>**remaining available for**<br>**future issuance under**<br>**equity compensation**<br>**plans (excluding**<br>**securities reflected in**<br>**column (a)** <br>**(c)** |
| *Plan category* |  |  |  |
| Plans approved by stockholders: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;2015 Equity Incentive Plan | 1200000 | 0.12 | 500000 |

---

**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).

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**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:

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| | | |
|:---|:---|:---|
|  | **Fiscal Year Ended June 30,** | **Fiscal Year Ended June 30,** |
|  | **2025** | **2024** |
|  | **(in thousands)** | **(in thousands)** |
| Audit Fees (1) | $60 | $79 |
| Audit-Related Fees (2) | $- | $- |
| Tax Fees (3) | $5 | $1 |
| All Other Fees (4) | $2 | $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 EC Barrett, LLC 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 EC Barrett, LLC were approved by the Board.

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**PART IV**

**ITEM 15. Exhibits, Financial Statement Schedules.**

**(a)** **Financial Statements; Schedules**

Our consolidated financial statements for the fiscal years ended June 30, 2025 and 2024 begin on page F-1 of this annual report. We are not required to file any financial statement schedules.

**(b)** **Exhibits.**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | <br>**Incorporated by Reference** | <br>**Incorporated by Reference** | <br>**Incorporated by Reference** |
| <br>**No.** | <br>**Exhibit Description** | **Form** | **Date Filed** | **Number** |
| [2.1](http://www.sec.gov/Archives/edgar/data/1374567/000114420409054090/v163418_ex2-1.htm) | [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](http://www.sec.gov/Archives/edgar/data/1374567/000114420409054090/v163418_ex2-1.htm) | 8-K | 10/22/09 | 2.1 |
| [2.2](http://www.sec.gov/Archives/edgar/data/1374567/000114420410015381/v178277_ex2-2.htm) | [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](http://www.sec.gov/Archives/edgar/data/1374567/000114420410015381/v178277_ex2-2.htm) | 8-K/A | 3/24/10 | 2.2 |
| [2.3](http://www.sec.gov/Archives/edgar/data/1374567/000114420410015381/v178277_ex2-3.htm) | [Amendment No. 1 to Stock Purchase and Recapitalization Agreement, dated June 22, 2009](http://www.sec.gov/Archives/edgar/data/1374567/000114420410015381/v178277_ex2-3.htm) | 8-K/A | 3/24/10 | 2.3 |
| [3.1](http://www.sec.gov/Archives/edgar/data/1374567/000117337507000032/ex3iamendedrestated.htm) | [Amended and Restated Articles of Incorporation](http://www.sec.gov/Archives/edgar/data/1374567/000117337507000032/ex3iamendedrestated.htm) | SB-2 | 3/2/07 | 3i |
| [3.2](http://www.sec.gov/Archives/edgar/data/1374567/000117337507000032/ex3iibylaws.htm) | [Bylaws](http://www.sec.gov/Archives/edgar/data/1374567/000117337507000032/ex3iibylaws.htm) | SB-2 | 3/2/07 | 3ii |
| [3.3](http://www.sec.gov/Archives/edgar/data/1374567/000114420411010262/v212273_ex3-1.htm) | [Articles of Amendment to the Amended and Restated Articles of Incorporation](http://www.sec.gov/Archives/edgar/data/1374567/000114420411010262/v212273_ex3-1.htm) | 8-K | 2/23/11 | 3.1 |
| [3.4](http://www.sec.gov/Archives/edgar/data/1374567/000114420411012438/v213409_ex3-1.htm) | [Articles of Amendment to the Amended and Restated Articles of Incorporation, effective February 28, 2011](http://www.sec.gov/Archives/edgar/data/1374567/000114420411012438/v213409_ex3-1.htm) | 8-K | 3/3/11 | 3.1 |
| [3.5](http://www.sec.gov/Archives/edgar/data/1374567/000101738615000294/exhibit_3-5.htm) | [Articles of Amendment to the Amended and Restated Articles of Incorporation, effective November 5, 2015](http://www.sec.gov/Archives/edgar/data/1374567/000101738615000294/exhibit_3-5.htm) | 8-K | 11/5/15 | 3.5 |
| [4.1](http://www.sec.gov/Archives/edgar/data/1374567/000114420411010262/v212273_ex4-1.htm) | [Designation of Rights and Preferences of Series A Convertible Preferred Stock.](http://www.sec.gov/Archives/edgar/data/1374567/000114420411010262/v212273_ex4-1.htm) | 8-K | 2/23/11 | 4.1 |
| [10.1](http://www.sec.gov/Archives/edgar/data/1374567/000114420411057485/v237025_ex10-17.htm) | [Receivables Financing Agreement between One Up Innovations, Inc. and Advance Financial Corporation, dated May 24, 2011](http://www.sec.gov/Archives/edgar/data/1374567/000114420411057485/v237025_ex10-17.htm) | 10-K | 10/12/11 | 10.17 |
| [10.2](http://www.sec.gov/Archives/edgar/data/1374567/000114420411057485/v237025_ex10-18.htm) | [Guarantee between Luvu Brands, Inc. and Advance Financial Corporation, dated May 24, 2011](http://www.sec.gov/Archives/edgar/data/1374567/000114420411057485/v237025_ex10-18.htm) | 10-K | 10/12/11 | 10.18 |
| [10.3](http://www.sec.gov/Archives/edgar/data/1374567/000114420411057485/v237025_ex10-20.htm) | [Guarantee between Foam Labs, Inc. and Advance Financial Corporation, dated May 24, 2011](http://www.sec.gov/Archives/edgar/data/1374567/000114420411057485/v237025_ex10-20.htm) | 10-K | 10/12/11 | 10.20 |
| [10.4](http://www.sec.gov/Archives/edgar/data/1374567/000114420411057485/v237025_ex10-21.htm) | [Guarantee between Louis S. Friedman and Advance Financial Corporation, dated May 24, 2011](http://www.sec.gov/Archives/edgar/data/1374567/000114420411057485/v237025_ex10-21.htm) | 10-K | 10/12/11 | 10.21 |
| [10.5](http://www.sec.gov/Archives/edgar/data/1374567/000101738613000246/exhibit_10-8.htm) | [Amended and Restated Receivable Financing Agreement between One Up Innovations, Inc. and Advance Financial Corporation, dated September 4, 2013](http://www.sec.gov/Archives/edgar/data/1374567/000101738613000246/exhibit_10-8.htm) | 10-K | 9/30/13 | 10.8 |
| [10.6](http://www.sec.gov/Archives/edgar/data/1374567/000101738618000279/exhibit_10-11.htm) | [Form of promissory note](http://www.sec.gov/Archives/edgar/data/1374567/000101738618000279/exhibit_10-11.htm) | 10-K  | 10/11/19  | 10.11  |
| [10.7](http://www.sec.gov/Archives/edgar/data/1374567/000114420411005552/v209838_ex10-3.htm) | [Employment Agreement between the Company and Louis Friedman dated January 27, 2021\*](http://www.sec.gov/Archives/edgar/data/1374567/000114420411005552/v209838_ex10-3.htm) | 8-K  | 2/2/11  | 10.3  |
| [10.8](http://www.sec.gov/Archives/edgar/data/1374567/000101738615000264/luvu_2015sept-def14c.htm) | [2015 Equity Incentive Plan\*](http://www.sec.gov/Archives/edgar/data/1374567/000101738615000264/luvu_2015sept-def14c.htm) | DEF14C | 10/9/15 | B |
| [10.9](http://www.sec.gov/Archives/edgar/data/1374567/000101738620000121/exhibit_10-1.htm) | [U.S. Small Business Administration Note by One Up Innovations, Inc. in favor of Ameris Bank](http://www.sec.gov/Archives/edgar/data/1374567/000101738620000121/exhibit_10-1.htm) | 8-K | 4/28/20 | 10.1 |
| [10.10](http://www.sec.gov/Archives/edgar/data/1374567/000101738620000464/exhibit_10-1.htm) | [Lease Agreement between Goodsen Land Partners and OneUp Innovations, Inc. dated November 20, 2020](http://www.sec.gov/Archives/edgar/data/1374567/000101738620000464/exhibit_10-1.htm) | 10-Q | 11/12/20 | 10.1 |
| [10.11](http://www.sec.gov/Archives/edgar/data/1374567/000165495424006587/luvu_ex101.htm) | [Agreement between OneUp Innovations, Inc. and Christopher Knauf dated January 18, 2024, as supplemented.](http://www.sec.gov/Archives/edgar/data/1374567/000165495424006587/luvu_ex101.htm) | 10-Q/A | 5/17/24 | 10.1 |
| [14.1](http://www.sec.gov/Archives/edgar/data/1374567/000165495424012491/luvu_ex141.htm) | [Code of Ethics](http://www.sec.gov/Archives/edgar/data/1374567/000165495424012491/luvu_ex141.htm) | 10-Q | 11/14/24 | 14.1 |
| [16.1](http://www.sec.gov/Archives/edgar/data/1374567/000165495422014669/luvu_ex161.htm) | [Letter from Liggett & Webb P.A., dated November 3, 2022](http://www.sec.gov/Archives/edgar/data/1374567/000165495422014669/luvu_ex161.htm) | 8-K | 11/3/22 | 16.1 |
| [19.1](http://www.sec.gov/Archives/edgar/data/1374567/000165495424014331/luvu_ex191.htm) | [Insider Trading Policy](http://www.sec.gov/Archives/edgar/data/1374567/000165495424014331/luvu_ex191.htm) | 10-Q | 11/14/24 | 19.1 |
| [21.1](http://www.sec.gov/Archives/edgar/data/1374567/000101738614000259/exhibit_21-1.htm) | [Subsidiaries](http://www.sec.gov/Archives/edgar/data/1374567/000101738614000259/exhibit_21-1.htm) | 10-K | 9/29/14 | 21.1 |
| 23.1 | Consent of EC Barrett, LLC 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.

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**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.** | **LUVU BRANDS, INC.** |
| Date: October 14, 2025 | By:  | /s/ Louis S. Friedman |
|  | Louis S. Friedman, Chief Executive Officer and President | Louis S. Friedman, Chief Executive Officer and President |
| Date: October 14, 2025 | By: | /s/ Christopher Knauf |
|  | Christopher Knauf, Chief Financial Officer<br>(Principal Financial and Accounting Officer) | Christopher Knauf, Chief Financial Officer<br>(Principal Financial and Accounting Officer) |

---

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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.

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| | | |
|:---|:---|:---|
| **NAME** | **TITLE** | **DATE** |
| /s/ Louis S. Friedman | Chairman of the Board of Directors, Chief Executive Officer,<br>and President (Principal Executive Officer) | October 14, 2025 |
| Louis S. Friedman |  |  |

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26<br>