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, 2026 and 2025 was accrued by the Company at the prevailing prime rate (which is currently 6.75%) and totaled $5,290 and $5,955 respectively. The accrued interest on the note as of June 30, 2026 and 2025 was $52,305 and $47,015, 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, 2026 and 2025 was accrued by the Company at the prevailing prime rate (which is currently 6.75%) and totaled $2,784 and $3,134. The accrued interest on the note as of June 30, 2026 and 2025 was $13,418 and $10,634 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, 2026 and 2025, the balance owed under this line of credit was $1,408,244 and $1,096,403 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%. On August 20, 2025, this note was extended through October 31, 2027. Repayment of the promissory note is personally guaranteed by the Company’s CEO and principal shareholder, Louis S. Friedman.

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 $44,842 at June 30, 2026 and $52,144 at June 30, 2025 (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 a 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. In the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, this note was classified as an unsecured note payable. Upon further review of the loan agreement, the Company determined that the note is secured by the Company’s inventory and accounts receivable in a subordinated position. Accordingly, the note is presented as a secured note payable, and the June 30, 2025 balance has been reclassified to conform to the current year presentation.

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. In the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, this note was classified as an unsecured note payable. Upon further review of the loan agreement, the Company determined that the note is secured by the Company’s inventory and accounts receivable in a subordinated position. Accordingly, the note is presented as a secured note payable, and the June 30, 2025 balance has been reclassified to conform to the current year presentation. The loan is personally guaranteed by the Company’s CEO and principal shareholder, Louis S. Friedman.

On September 26, 2025, the Company obtained a secured 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 October 23, 2026. The note is secured by the Company’s inventory and accounts receivable in a subordinated position. The loan is personally guaranteed by the Company’s CEO and principal shareholder, Louis S. Friedman.