Attached files
| file | filename |
|---|---|
| 8-K - Luvu Brands, Inc. | v177019_8k.htm |
March 11,
2010
Dear
Shareholders,
It is my
sincere pleasure to be writing this update to our shareholders in order to give
you a snapshot of our efforts to date as we strive to take advantage of the
sexual wellbeing trend. As we continue to grow and embrace the
emergence of this trend we realize the inherent need to accomplish several
initiatives simultaneously:
|
·
|
Continuing
the branding of Liberator
|
|
·
|
Launching
Liberator branded “pleasure objects” in order to extend our
reach
|
|
·
|
Expanding
our distribution channels into mainstream
retailers
|
|
·
|
Launching
a world class website that is rich in content and visually
entertaining
|
|
·
|
Upgrading
our back office manufacturing software
systems
|
|
·
|
Attracting
and acquiring new talent in management, technology, marketing and
sales
|
|
·
|
Creating
new Liberator products
|
|
·
|
Become
part of a publicly quoted company on the OTC Bulletin Board®.
|
I am
proud to say that we are well on our way to successfully completing all of the
initiatives we identified as key business objectives and as such I am confident
that we are on a path that will lead us to continued success and growth as a
public entity.
I have
put together several of the highlights and business events that have occurred
over the last quarter plus an update on our efforts on becoming part of a
publicly quoted company on the OTCBB.
Sales for our second quarter
ended December 31, 2009
During
the three months ended December 31, 2009 (our second fiscal quarter) sales
increased 12% over the same period of last year to $3 million. A
general improvement in the economy resulted in overall increases in online
consumer spending during the quarter, leading to consumers purchasing more of
our products, which are typically a discretionary purchase. The
general trend of sexual wellbeing promoted by brands such as KY, Trojan and
Liberator in magazine ads and other media continues to create consumer awareness
and is beginning to change the way mainstream and big box retailers think about
merchandising sexual wellness products. This trend, although still in its
infancy, should continue to contribute to our sales growth in the months and
years ahead. On the other hand, however, present economic conditions
required widespread discounting and, as a result, our gross profit increased a
modest 3% to almost $1.1 million during the quarter. Operating
expenses were essentially unchanged from the prior year at $1.2 million,
resulting in an operating loss of $105,758. I should point out that
depreciation expense (which is a non-cash expense) during the quarter was
$75,930, so without depreciation, we were close to break even with an operating
loss of approximately $30,000.
Merger Between Liberator and
WES, and OTCBB Quotation
As you
know, in June 2009, OneUp Innovations, Inc. merged with Remark Enterprises, a
Form 10 shell company in connection with a $2 million private
placement. We also changed the name of the company to Liberator, Inc.
(“Liberator”). Then in October 2009, Liberator merged with an OTC Bulletin
Board company, WES Consulting, Inc. (“WES”), with WES being the surviving
entity. This action was taken to increase the market for our common
stock. In connection with the merger into WES, we filed a Form 15 with the
Securities and Exchange Commission (“SEC”) to terminate registration of
Liberator’s common stock under Section 12(g) of the Securities Act of 1934 and
terminate Liberator’s reporting obligations. We then took steps to
change the name of WES to Liberator, Inc.
In
connection with these transactions, we have, to date, filed approximately an
additional 800 pages of documents with the SEC. I can assure you that we
are working diligently to change the name of WES to Liberator,
Inc. We will certainly keep you informed on all the developments as
they occur.
In the
interim, if you would like your Liberator stock certificate to be exchanged for
a WES stock certificate pursuant to the merger, please call or e-mail our CFO,
Ron Scott, at 770-246-6426 or ron.scott@liberator.com and he will make
arrangements for a new stock certificate to be delivered to
you. Please keep in mind that your certificate may be exchanged
(again) when WES’ name change to Liberator is completed.
New Products, Distribution,
Websites and Trade Shows
Over the
last six months we have been diligently working towards and identifying viable
partnerships that will enhance the Liberator brand. I am pleased to
report that during the AEE show (January) in Las Vegas we introduced to the
industry some exciting new products from companies new to the U.S. market
including ZINI from South Korea, TENGA from Japan and Tickler from
Sweden.
The
Tickler product line is the brain child of Eric Kalén, the former chief designer
for the hugely successful LELO luxury line of vibrators. The ZINI line
combines unique designs and performance into sleek shapes that invoke visceral
responses from all who see them. In addition to the unique designs of
Tickler and ZINI, we are co-branding these toys under the Liberator moniker in
order to take full advantage of the consumer brand we have established over the
years. We expect to do well with both of these products as additions
to the Liberator line.
However,
perhaps the most significant announcement is our exclusive agreement with TENGA
to become the sole US distributor and licensee for this exciting new line of
toys. TENGA is a novel male sexual wellness product that has reached
significant sales in a little over 3 years in Japan. Based on our
relationship with TENGA and our understanding of the US market, we have set the
following purchase projections: $2.2 million of product in the first year, $4.4
million in the second year and $9.9 million in the third year. With the
success of the TENGA products worldwide, we are confident that these goals are
attainable and will result in higher revenues when sold at the wholesale and
retail levels. It is also our objective to market TENGA through
mainstream outlets including drugstores, convenience stores, hotels/resorts,
catalogers and just about anywhere that embraces the sexual wellbeing trend.
For more information, please see the WES current report on Form 8-K filed
with the SEC on February 19, 2010.
Acquisition of
Talent
As we
continued to grow Liberator from a family owned business to a viable public
entity it was apparent that we needed to bring in new talent to achieve our
goals. As such, I am pleased to announce the addition of several key
hires that will help propel us to the next level of success.
|
·
|
William
Seitz – Chief Technology Officer
|
|
·
|
Michael
Kane – Chief Business Development
Officer
|
|
·
|
Olena
Eaton – Director Internet Marketing
|
These new
members of our team will participate in sales, technology, strategic
partnerships and M & A as part of our plan for growth.
Technology
Over one
year ago, I personally approved the initiative to enhance our web offering
through the use of the latest technology available. All of our
existing as well as our new web properties are powered by the iCongo technology
offering us the same state of the art robust platform used by the likes of
www.lordandtaylor.com, www.selectcomfort.com and many other large retail chains
and e-marketers. For more information please visit www.icongo.com.
Branding
I
encourage you to keep up with last quarter’s news and press by visiting the Buzz
links on www.liberator.com. In
addition, we advertise in many mainstream publications and we continue to garner
free press via television, print and radio.
Liberator.com
We
constantly enhance our web offering and have made great strides in innovative
and industry leading initiatives including:
|
·
|
New
Liberator Shapes: Wing, Axis Hitachi, Hipster, Hipster Black Label and
Esse chaise
|
|
·
|
Co-branded
pleasure objects: Liberator-ZINI Roae, Liberator-ZINI Deux, Tickler by
Liberator and TENGA
|
|
·
|
We
have added over 500 SKUs to the site consisting of toys, consumables and
artisan products
|
|
·
|
The
Valkyrie home party program with its unique and innovative approach just
launched a little over one month ago with an incredible response to the
concept.
|
Let me
conclude by saying that it is my honor and my pleasure to serve as the CEO and I
appreciate the support and confidence you have bestowed upon me. I
will continue to work tirelessly with my entire staff to accomplish each and
every goal and objective set forth in order to propel this company well into the
future.
Warmest
regards,
Louis
Friedman