UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

or

Commission file number: 000-53314

Registrant’s telephone number, including area code: (770) 246-6400

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

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

Common Stock, $.01 par value

(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     ☐ 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     ☐ 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.

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, 2025, the last trading day of the registrant’s most recently completed second fiscal quarter, was $2,305,021.

The number of shares of Common Stock, $.01 par value, outstanding as of the close of business on September 29, 2026 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

 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. . Forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. 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:

 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:

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^®, a brand category of iconic products for enhancing sensuality and intimacy; Jaxx^®, a diverse range of casual fashion daybeds, sofas and beanbags made from virgin and re-purposed polyurethane foam; and Avana^®, 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, jaxxliving.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.

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.

Products, Principal Markets and Methods of Distribution

Liberator Products

We developed a patented brand category called “Liberator Bedroom Adventure Gear”^®. 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 through our Foamlabs brand. The Company also owns and manages a website under the URL www.JaxxLiving.com for direct-to-consumer sales of Jaxx products.

Avana^® Top-of-Bed Comfort Products

The Company sells a unique collection of comfort products that aid in sleep, meditation, and relaxation under the Avana^® 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.

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.

Jaxxliving.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 had increased the costs of certain raw materials, parts or components used in our products. Such increases did not materially affect our sales and our business. However, due to the increases in shipping costs related to spikes in fuel cost, we increased the selling prices of our products.

Major Customers

Sales to (and through) Amazon accounted for 36% of our net sales during the year ended June 30, 2026 and 34% of our net sales for the year ended June 30, 2025. 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 us to differentiate ourselves 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”^®, Ramp^®, Wedge^®, Stage^®, Esse^®, Zeppelin^®, Hipster^®, Wing^®, Equus^®, Jaxx^®, Avana^®, and Bonbon^®. We believe our trademarks have significant value and we intend to continue to vigorously protect them against infringement.

Human Capital and Resources

As of June 30, 2026, we had 189 full time employees and 1 part time employee. 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 http://www.sec.gov 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 www.luvubrands.com. 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 increases in raw material and shipping costs related to increases in fuel cost.

We have experienced increased raw material and shipping costs as higher fuel costs, including those associated with the war in Iran, have raised transportation, logistics, and supplier costs across our supply chain. These increases have adversely affected our overall cost structure, liquidity, business, financial condition, and results of operations. We were unable to fully absorb these higher costs through operating efficiencies or other cost-reduction measures and, as a result, were forced to pass a portion of these increased costs on to customers through higher selling prices. Additional increases in fuel, raw material, labor, or shipping costs, or any supply shortages or related disruptions, could further increase our costs and may negatively affect demand for our products, market sentiment, operating income, and results of operations. If we are unable to take effective measures in a timely manner to mitigate these cost pressures, 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.

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 suppliers 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. 

Our Board currently consists of a single director, and we are substantially dependent upon our Chief Executive Officer and controlling shareholder.

Louis Friedman is CEO, President, Chairman/sole director and controlling shareholder. Consequently, Board oversight is concentrated. There are no independent directors; no Audit/Compensation/Nominating Committees, and no audit committee financial expert. The death, incapacity, resignation or unavailability of Mr. Friedman could materially disrupt governance and operations.

Our controlling shareholder has the ability to determine the outcome of matters submitted to shareholders.

Mr. Friedman owns the Series A convertible preferred shares described herein. Because of his voting power, minority/common holders may be unable to:

ITEM 1B. Unresolved Staff Comments.

None.

ITEM 1C. Cybersecurity

Risk management and strategy.

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

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:

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.

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 at 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 7, 2025, the Company entered into an agreement with its landlord on a lease for its then current facilities for 56 months, beginning November 7, 2025. The lease includes four months of rent abatement totaling $333,000 beginning March 1, 2027. Under the lease, the monthly rent on the facility will be $58,053 with annual escalations of 3% to February 2027 at $61,605. From March 1, 2027, the monthly rent will increase to $83,250 with 3.5% annual increases with the final 4 months of the lease ending at $92,241. In addition, the Company will pay the landlord proportional share of project expenses and taxes estimated at $23,421 per month. The rent expense for the twelve months ended June 30, 2026 was $728,419. The rent expense for the twelve 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.

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 September 28, 2026, the last sale price of the Common Stock, as reported on the OTCQB, was $0.03 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.

Stockholders

As of June 30, 2026, we had 89 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].

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, 2026, and 2025 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.

Fiscal Year ended June 30, 2026 Compared to the Fiscal Year Ended June 30, 2025

Net Sales. Net sales grew 5.8% in fiscal 2026 compared to fiscal 2025. Our Direct to Consumer segment rose by $0.1 million, or 2%, compared to fiscal 2025, while our Wholesale segment rose by $1.3 million or 8%. Wholesale increase was related to the continued increase in our dropship network. The direct sales channel includes consumer sales via our three websites. The increase in this segment was driven by new marketing efforts from social media influencers and pay per click. The increase in wholesale sales was due to higher demand from our International and new customers. Fiscal 2025 net sales have been increased by $1,163,648 for third-party marketplace fulfillment fees now recorded in selling expense, as described in Note 2, and the growth rates above are presented on that comparable basis.

Gross profit. Gross profit, derived from net sales less the cost of 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, 2026, increased to 31.5% from 29.5% in the prior year. Gross profit dollars increased to $8,613,562 from $7,633,516 in the prior year, representing a 12.8% increase. Fiscal 2025 gross profit and gross margin as presented reflect the $1,163,648 revision described in Note 2, and both years are presented on a comparable basis. The Company increased the Inventory Reserve by $68,598 to $300,877 which negatively 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. Gross margin during fiscal 2026 was also negatively affected by higher fuel, freight and raw material costs arising from the armed conflict involving Iran, which began during our third fiscal quarter and disrupted shipping through the Middle East. Benchmark crude oil prices rose sharply during that period and have remained volatile through the date of this report. The cost reduction initiatives described above, offset these higher input costs during fiscal 2026, and gross margin improved notwithstanding the cost pressure. Because a substantial portion of our raw materials is sourced from Asia, a prolonged conflict, further disruption to Middle East shipping lanes, or a sustained increase in fuel prices could raise our inbound freight and raw material costs faster than we are able to offset them and could adversely affect our gross margin, operating results and liquidity in fiscal 2027.

Operating expenses. Excluding depreciation expense, total operating expenses for the year ended June 30, 2026, were 27% of net sales, or $7,386,273, compared to 28% of net sales, or $7,274,981 for the year ended June 30, 2025. The 1.5% increase in operating expenses from the prior year was primarily due to higher selling expenses related increased payroll costs, partially offset by tighter cost controls for G&A expenses. Fiscal 2025 operating expenses include $1,163,648 of third-party marketplace fulfillment fees reclassified from net sales, as described in Note 2, so both years are presented on a comparable basis.

Other income (expense). Other expense increased to ($446,861) from expense of ($378,696) in the prior fiscal year. Increase was due to short term loan interest expense.

Income tax expense. Income tax expense was $674,636 for the fiscal year ended June 30, 2026, compared to $0 in the prior fiscal year. Fiscal 2026 income tax expense consisted of a deferred tax provision of approximately $719,000, partially offset by the reversal of approximately $44,000 of prior tax accruals after the Internal Revenue Service and the Georgia Department of Revenue accepted the related amended returns. The deferred tax provision principally reflects deferred tax liabilities associated with right-of-use assets, including those arising from the November 7, 2025 renewal of the operating lease for our manufacturing facility, and with property and equipment. Significant items in the reconciliation of income tax expense to the U.S. federal statutory rate included an increase in the valuation allowance of approximately $382,000, state and local income taxes of approximately $101,000, and a prior-period deferred tax adjustment of approximately $137,000. There was no current income tax provision in either fiscal yeart.

Net Income/ (Loss). We had a net loss from operations of ($245,718) or ($0.00) per diluted share, for the year ended June 30, 2026 compared with net loss from operations of ($448,659) or $0.00 per diluted share, for the year ended June 30, 2025. The decrease in loss is due to flat operating expenses and increased gross profit, which was mostly offset by the tax impact of the new operating lease for the facility.

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:

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.

Liquidity and Capital Resources

As of June 30, 2026, our cash and cash equivalents totaled $1,199,011 compared to $734,911 in cash and cash equivalents as of June 30, 2025.

Operating Activities

Net cash provided by operating activities was $773,000 for the year ended June 30, 2026 compared to cash used in operating activities of $410,000 in the prior year. The improvement was primarily attributable to increase in net sales, expansion of the gross margin, deferred tax expense and a reduction in inventory.

Investing Activities

Net cash used in investing activities was ($29,000) for the year ended June 30, 2026, compared to ($41,000) in the prior year. Cash used in investing activities was for expansion of the woodworking equipment. To expand the woodworking capabilities, a glue machine $5,000, joiner and planer $22,000.

Financing Activities

Net cash used in financing activities was ($280,000) for the year ended June 30, 2026, compared to net cash provided by financing activities of $158,000 in the prior year. Cash used in financing activities was primarily attributable to repayments of secured notes payable and equipment notes, partially offset by borrowings under the revolving line of credit and proceeds from a $250,000 secured note payable entered into in September 2025.

Capital Resources

We expect total capital expenditures for fiscal 2027 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 expenditure supporting our usual operations.

At June 30, 2026, the Company had working capital of $1,865,702, compared to $1,022,459 at June 30, 2025, an increase of $843,243. The Company believes that it has sufficient working capital to meet financial needs over the next twelve months.

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, 2026, we did not have any material off-balance-sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.

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 Credit Losses

We sell certain products directly to consumers through third-party online marketplaces, including Amazon. We have evaluated these arrangements and determined that we are the principal, as we control the products before they are transferred to the customer, are primarily responsible for fulfilling the promise to provide the products, bear inventory risk, and have discretion in establishing pricing. Accordingly, revenue from these sales is recognized on a gross basis. Marketplace, referral, commission, fulfillment, shipping, and related fees associated with certain online sales, which were previously recorded as a reduction of net sales, are included in other sales and marketing expenses. Prior period amounts have been reclassified to conform to the current period presentation. The reclassification had no impact on operating income (loss), net income (loss), or cash flows.

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, 2026, we carried a valuation allowance of $1.9 million against our gross 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 2026, we generated positive cash flow from operations compared to negative cash flow from operations in fiscal year 2025. 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, 2026 and 2025: 

As used herein, Adjusted EBITDA represents net income before interest income, interest expense and financing costs, depreciation, stock-based compensation and income taxes expense. We have excluded depreciation and stock-based compensation expenses because they are non-cash expenses that do not reflect the cash-based operations of the Company, and we have excluded interest income, interest expense and financing costs, and income taxes because they reflect our capital structure and tax position rather than our core operating performance. 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 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.

ITEM 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors 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, 2026 and 2025, 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, 2026, 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, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2026, 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

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the board of directors 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. We determined that there are no critical audit matters.

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

EC Barrott, LLC

Atlanta, Georgia

September 29, 2026

Luvu Brands, Inc. and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2026 and 2025 

Luvu Brands, Inc. and Subsidiaries

Consolidated Statements of Operations

Years Ended June 30, 2026 and 2025

Luvu Brands, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the Years Ended June 30, 2026 and June 30, 2025

Luvu Brands, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended June 30, 2026 and 2025