Luvu Brands, Inc 10-Q for FY2025 Q3

Luvu Brands, Inc. (LUVU)

10-Q 2025-05-15 For: 2025-03-31

Added on April 06, 2026

About this 10-Q

Luvu Brands, Inc filed this 10-Q on May 15, 2025, covering the quarter ended March 31, 2025 (FY2025 Q3).

Headline figures

Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.85M; down 1.3% from $5.92M a year earlier
Net loss: $88K; compared with a net loss of $94K a year earlier
Diluted EPS: $0.00; compared with $0.00 a year earlier

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2745 Bankers Industrial Drive, Atlanta, GA		30360
(Address of principal executive offices)		(Zip code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None

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

	PART I – FINANCIAL INFORMATION
		Page Number
ITEM 1.	Financial Statements

	Consolidated Balance Sheets – At March 31, 2025 (unaudited) and June 30, 2024	4

	Consolidated Statements of Operations – For the Three and Nine Months Ended March 31, 2025 and March 31, 2024 (unaudited)	5

	Consolidated Statements of Stockholders’ Equity – For the Three and Nine Months Ended March 31, 2025 and March 31, 2024 (unaudited)	6

	Consolidated Statements of Cash Flows – For the Nine Months Ended March 31, 2025 and March 31, 2024 (unaudited)	7

	Notes Consolidated Financial Statements (unaudited)	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	30

ITEM 4.	Controls and Procedures	30

	PART II – OTHER INFORMATION

ITEM 1.	Legal Proceedings	31

ITEM 1A.	Risk Factors and Cybersecurity	31

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

ITEM 3.	Defaults Upon Senior Securities	31

ITEM 4.	Mine Safety Disclosures	31

ITEM 5.	Other Information	31

ITEM 6.	Exhibits	32

SIGNATURES		33

	March 31,
	2025			June 30,
	(unaudited)			2024
Assets:	(in thousands, except share data)
Current assets:
Cash and cash equivalents	$	1,110		$	1,028
Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $10 on March 31, 2025 and $11 on June 30, 2024		1,420			1,061
Inventories, net of allowance for inventory reserve of $165 on March 31, 2025 and $214 on June 30, 2024		3,457			3,287
Other current assets		137			141
Total current assets		6,124			5,517

Equipment, property and leasehold improvements, net		1,573			1,870
Finance lease assets		104			103
Operating lease assets		1,179			1,545
Other assets		96			96
Total assets	$	9,076		$	9,131

Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	1,811		$	1,502
Current debt		1,744			1,639
Other accrued liabilities		694			508
Operating lease liability		614			528
Total current liabilities		4,863			4,177

Noncurrent liabilities:
Deferred Tax Liability		119			119
Long-term debt		665			854
Long-term operating lease liability		677			1,151
Total noncurrent liabilities		1,461			2,124
Total liabilities		6,324			6,301
Commitments and contingencies (See Note 13)		—			—
Stockholders’ equity (deficit):
Preferred stock, 5,700,000 shares authorized, $0.0001 par value none issued and outstanding		—			—
Series A Convertible Preferred stock, 4,300,000 shares authorized $0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $1,000 as of March 31, 2025 and June 30, 2024		—			—
Common stock, $0.01 par value, 175,000,000 shares authorized, 76,834,057 and 76,547,672 shares issued and outstanding as of March 31, 2025 and June 30, 2024, respectively		766			765
Additional paid-in capital		6,279			6,253
Accumulated deficit		(4,293	)		(4,188	)
Total stockholders’ equity		2,752			2,830
Total liabilities and stockholders’ equity	$	9,076		$	9,131

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2025			2024			2025			2024
	(in thousands, except share data)						(in thousands, except share data)

Net Sales	$	5,846		$	5,923		$	18,787		$	18,835
Cost of goods sold (excluding depreciation expense presented below)		4,243			4,284			13,687			13,795
Gross profit		1,603			1,639			5,100			5,039
Operating expenses:
Advertising and promotion		240			244			718			785
Other selling and marketing		430			463			1,281			1,334
General and administrative		827			789			2,610			2,452
Depreciation		107			104			324			307
Total operating expenses		1,604			1,600			4,933			4,878
Operating income/(loss)		(1	)		39			167			162

Other income (expense):
Interest expense and financing costs		(87	)		(133	)		(272	)		(322	)
Total other income (expense)		(87	)		(133	)		(272	)		(322	)
Loss from operations before income taxes		(88	)		(94	)		(105	)		(160	)
Provision for income taxes		-			-			-			(31	)
Net Loss	$	(88	)	$	(94	)	$	(105	)	$	(191	)

Net loss per share:
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Shares used in calculation of net loss per share:
Basic		76,834,057			76,547,672			76,834,057			76,547,672
Diluted		76,834,057			76,547,672			76,834,057			76,547,672

	Series A Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders' Equity
	Shares		Amount		Shares		Amount		Capital		Deficit			(Deficit)
	(in thousands, except share data)
Ending balance, June 30, 2023		4,300,000	$	0		76,547,672	$	765	$	6,236	$	(3,791	)	$	3,211

Stock-based compensation expense		-		-		-		-		11		-			11
Stock option exercises		-		-		-		-		-		-			-
Net loss		-		-		-		-		-		(191	)		(191	)
Ending balance, March 31, 2024		4,300,000	$	0		76,547,672	$	765	$	6,247	$	(3,982	)	$	3,030

Ending balance, June 30, 2024		4,300,000	$	0		76,547,672	$	765	$	6,253	$	(4,188	)	$	2,830
Stock-based compensation expense		-		-		-		-		26		-			26
Stock option exercises		-		-		286,385		1		-		-			1
Net loss		-		-		-		-		-		(105	)		(105	)
Ending balance, March 31, 2025		4,300,000	$	0		76,834,057	$	766	$	6,279	$	(4,293	)	$	2,752

	■	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.

	March 31, 2025			June 30, 2024
	(unaudited)
	(in thousands)
Accounts receivable	$	1,430		$	1,072
Allowance for doubtful accounts		(10	)		(11	)
Allowance for discounts and returns		-			-
Total accounts receivable, net	$	1,420		$	1,061

	(i)	depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,

	(ii)	amortization for capitalized costs,

	(iii)	share-based compensation expense,

	(iv)	gains or losses on sales or dispositions of assets,

	Three Months Ended							Three Months Ended
	March 31, 2025							March 31, 2024
(in thousands)	Direct to Consumer		Wholesale		Total			Direct to Consumer		Wholesale		Total
Revenues	$	1,944	$	3,902	$	5,846		$	1,768	$	4,155	$	5,923
Cost of Goods Sold		1,358		2,885		4,243			1,168		3,115		4,284
Other direct operating expenses (a)		277		365		641			291		332		623
Overhead expenses(b)						963							977
Operating (loss) income		310		652		(1	)		308		708		39
Interest income						(1	)						(1	)
Interest expense						88							134
Other expense, net						-							-
Loss from operations before income taxes						(88	)						(94	)
Reconciliation of operating loss to adjusted operating income:
Operating (loss) income		310		652		(1	)		308		708		39
Adjustments:
Share-based compensation expense						9							5
Depreciation and amortization						107							104
Adjusted operating income	$	310	$	652	$	114		$	308	$	708	$	148

	(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.

	March 31, 2025			June 30, 2024			Estimated Useful Life
	(unaudited)
	(in thousands)
Factory equipment	$	4,458		$	4,476		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		6 years
Subtotal		5,878			5,863
Accumulated depreciation		(4,201	)		(3,890	)
Equipment and leasehold improvements, net	$	1,677		$	1,973

	Nine Months Ended
	March 31,
	2025			2024
	(in thousands)
OPERATING ACTIVITIES:
Net loss	$	(105	)	$	(191	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		324			307
Stock-based compensation expense		27			10
Loss on sale of fixed asset		7			-
Change in operating assets and liabilities:
Accounts receivable		(359	)		(247	)
Inventory		(170	)		733
Prepaid expenses and other assets		4			(18	)
Accounts payable		312			(474	)
Accrued expenses and interest		186			217
Operating lease liability		(388	)		(299	)
Amortization of operating lease asset		365			294
Net cash provided by operating activities		203			332

INVESTING ACTIVITIES:
Investment in equipment, software and leasehold improvements		(34	)		(52	)
Net cash used in investing activities		(34	)		(52	)

FINANCING ACTIVITIES:
Borrowing (repayment) under revolving line of credit		(82	)		64
Proceeds from unsecured line of credit		54			(10	)
Proceeds from unsecured notes payable		250			200
Repayment of unsecured notes payable		(9	)		(200	)
Payments on equipment notes		(282	)		(292	)
Principal payments on finance leases		(17	)		(11	)
Net cash used in financing activities		(87	)		(249	)
Net increase (decrease) in cash and cash equivalents		82			31
Cash and cash equivalents at beginning of period		1,028			1,041
Cash and cash equivalents at end of period	$	1,110		$	1,072

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest	$	218		$	275

	March 31,
	2025		2024
Common stock options – 2015 Plan		1,150,000		1,150,000
Convertible preferred stock		4,300,000		4,300,000
Total		5,450,000		5,450,000

	March 31, 2025		June 30, 2024
	(unaudited)
	(in thousands)
Accrued compensation	$	518	$	342
Accrued expenses and interest		176		166
Other accrued liabilities	$	694	$	508

	March 31,		June 30,
	2025(unaudited)		2024
Current debt:
13.5% Unsecured note, interest only, due May 1, 2025 (2)		-	$	200
13.5% Unsecured note, interest only, due July 31, 2025(3)		100		-
18.0% Unsecured note, due February 28, 2027 (4)		116		-
13.5% Unsecured note, interest only, due October 31, 2025 (1)		100		-
Total current debt	$	316	$	200

Long-term debt:
13.5% Unsecured note, interest only, due July 31, 2025 (3)	$	-	$	100
13.5% Unsecured note, interest only, due April 30, 2027 (2)		200		-
18.0% Unsecured note, due February 28, 2027 (4)		125		-
13.5% Unsecured note, interest only, due October 31, 2025 (1)		-		100
Total long-term debt	$	325	$	200
Total unsecured notes payable	$	641	$	400

Operating leases	Balance Sheet Classification	(in thousands)
Right-of-use assets	Operating lease right-of-use assets, net	$	1,179

Current lease liabilities	Operating lease liabilities	$	614
Non-current lease liabilities	Long-term operating lease liabilities		677
Total lease liabilities		$	1,291

Payments	(in thousands)
2026	$	751
2027		725
Total undiscounted lease payment	$	1,476
Less: Present value discount		(185	)
Total lease liability balance	$	1,291

	*(in thousands)*
2026	$	328
2027		154
2028		59
Future Minimum Note Payable Payments		541
Less Current Portion		(328	)
Long-Term Obligations under Equipment Notes Payable	$	213

	Number of shares of underlying outstanding option			Weighted Average Remaining Contract Life		Weighted Average Exercise Price			Intrinsic Value
Option Outstanding as of June 30, 2024		1,350,000			3.0	$	0.12		$	21,000
Granted		200,000			-		0.08
Exercised		(300,000	)		-		0.03			(15,000	)
Forfeited or expired		(100,000	)		-		(0.02	)		-
Options Outstanding as of March 31, 2025		1,150,000			2.7	$	0.14		$	-
Options Exercisable as of March 31, 2025		412,500			2.0	$	0.17		$	-

	Outstanding Options						Exercisable
Exercise Prices	Number of Shares		Remaining Life (Years)		Weighted Average Price		Options Number of Shares		Weighted Average Price

$0.02 to $0.03		-		-		-		-		-
$0.05 to $0.10		400,000		4.1	$	0.08		-	$	0.08
$0.15 to $0.20		700,000		1.9	$	0.16		375,000	$	0.16
$0.30		50,000		1.4	$	0.30		37,500	$	0.30
Total stock options		1,150,000		2.7	$	0.14		412,500	$	0.17

	Three Months Ending March 31,
	2025		2024
	($ in thousands)
Cost of Goods Sold	$	1	$	2
Other Selling and Marketing		5		8
General and Administrative		3		(4	)
Total Stock-based Compensation Expense	$	9	$	6

	Nine Months Ending March 31,
	2025		2024
	($ in thousands)
Cost of Goods Sold	$	3	$	4
Other Selling and Marketing		15		13
General and Administrative		9		(7	)
Total Stock-based Compensation Expense	$	27	$	10

	March 31,
	2025
Shares of common stock reserved for issuance under the 2015 Plan		1,150,000
Shares of common stock issuable upon conversion of the Preferred Stock		4,300,000
Total shares of common stock equivalents		5,450,000

	Three Months Ended
	(unaudited)
(Dollars in thousands)	31-Mar-25				31-Mar-24
Net Sales:
Liberator	$	3,869	66	%	$	3,442	58	%
Jaxx		1,145	20	%		1,419	24	%
Avana		518	9	%		681	12	%
Products purchased for resale		225	4	%		259	4	%
Other		89	1	%		122	2	%
1 Total Net Sales	$	5,846	100	%	$	5,923	100	%


	Nine months Ended
	March 31,
Cash flow data:	2025			2024
	(Unaudited)
	(Dollars in thousands)
Cash provided by operating activities	$	203		$	333
Cash used in investing activities	$	(34	)	$	(52	)
Cash used in financing activities	$	(87	)	$	(250	)

	·	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.
	·	The threat of potential incidents remains high. We continually evaluate our exposure to risks such as:

	o	Operational disruption from ransomware or other cyberattacks.
	o	Data breaches that could compromise customer or proprietary information.
	o	Regulatory and legal exposure arising from cybersecurity failures.

		Incorporated by Reference			Filed or
No.	Exhibit Description	Form	Date Filed	Number	Furnished Herewith

2.1	Merger and Recapitalization Agreement between WES Consulting, Inc., the majority shareholder of WES Consulting, Inc., Luvu Brands, Inc., and the majority shareholder of Luvu Brands, Inc., dated as of October 19, 2009	8-K	10/22/09	2.1
2.2	Stock Purchase and Recapitalization Agreement between OneUp Acquisition, Inc., Remark Enterprises, Inc., OneUp Innovations, Inc., and Louis S. Friedman, dated March 31, 2009 and fully executed on April 3, 2009	8-K/A	3/24/10	2.2
2.3	Amendment No. 1 to Stock Purchase and Recapitalization Agreement, dated June 22, 2009	8-K/A	3/24/10	2.3
3.1	Amended and Restated Articles of Incorporation	SB-2	3/2/07	3i
3.2	Bylaws	SB-2	3/2/07	3ii
3.3	Articles of Amendment to the Amended and Restated Articles of Incorporation	8-K	2/23/11	3.1
3.4	Articles of Amendment to the Amended and Restated Articles of Incorporation, effective February 28, 2011	8-K	3/3/11	3.1
3.5	Articles of Amendment to the Amended and Restated Articles of Incorporation, effective November 5, 2015	8-K	11/5/15	3.5
4.1	Designation of Rights and Preferences of Series A Convertible Preferred Stock.	8-K	2/23/11	4.1
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				*Furnished
32.2	Section 906 Certificate of Chief Financial Officer				*Furnished
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

		LUVU BRANDS, INC.
		(Registrant)

May 15, 2025	By:	/s/ Louis S. Friedman
(Date)		Louis S. Friedman
		President and Chief Executive Officer (Principal Executive Officer)

May 15, 2025	By:	/s/ Christopher Knauf
(Date)		Christopher Knauf
		Chief Financial Officer (Principal Financial & Accounting Officer)

1.	I have reviewed this quarterly report on Form 10-Q of Luvu Brands, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2025		/s/ Christopher A Knauf
		Christopher A Knauf
		Chief Financial Officer (Principal Financial and Accounting Officer)