Attached files
| file | filename |
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| 8-K - Luvu Brands, Inc. | v204707_8k.htm |
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EXHIBIT
99.1
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Dear
Fellow Shareholders,
The trend
is our friend. Some might call it a revolution, but intimacy products are being
advertised and distributed through retail channels never before imagined (see
www.soap.com). You
can now purchase a wide range of “sex toys” and Liberator gear from
mass-marketers like Walgreens.com without the fear of embarrassment or concerns
of impropriety, because now they are marketed under the heading of “Sexual
Wellness”.
We view
this as a great opportunity for our company. The mainstreaming of the
product category under the moniker of Sexual Wellness has opened up new outlets
for Liberator products including drug chains, big-box stores, niche catalogers,
lingerie boutiques, convenience stores and many others. Unlike adult
retailers who now have to concern themselves with huge mainstream competitors,
these competitors for us represent a whole new group of wholesale customers who
are looking to this sexual wellness category for increased sales and
profitability. As one of the few branded, advertised categories they
typically add Liberator to their offering from the onset.
This past
year we expanded our product line and brand categories as well as created new
Liberator designs that integrate with other sexual enhancement
devices. We also created mainstream packaging, developed smaller
versions of Liberator Shapes for the retail boutiques, and lowered prices of
certain products for distribution through mass market channels.
This week
we introduced the Liberator “Home Collection”; inspired by the book “Design Your Life” by Ellen
and Julia Lupton, who describe and illustrate how to infuse Liberator gear into
the master bedroom bedding and décor. As Liberator is the only sexuality product
in the book, we believe that this is just another indication that we have
already crossed over to mainstream as both a brand and a product
category. To see this new offering, please visit www.liberator.com.
As from
our beginning, we take great pride in manufacturing and investing in USA made
goods. We now employ 120 co-workers this holiday season and are
gearing up for the Valentine’s Day buying season as well. During the first
quarter of fiscal 2011, we acquired an additional overhead conveyor system for
our sewing team and also installed higher volume manufacturing equipment for
foam processing. This allows us to be more competitive with foreign
labor while lowering inventory balances and reducing delivery times during peak
season. It also offers our co-workers the opportunity to earn a living
wage proportionate with their individual output and productivity.
Meeting
our environmental and corporate responsibilities, we have made considerable
progress re-purposing our polyurethane foam trim into viable consumer products
under the Jaxx brand offered under www.studiooneup.com. Today
you will find Jaxx beanbags in major online retailers including Costco,
Brookstone, and Target.
Regarding
the Liberator, Inc. merger into WES Consulting, Inc., we have submitted a
preliminary Form14C information statement and it is being reviewed by the
Securities and Exchange Commission. When they have concluded their
review, we will file the definitive information statement and mail it to
shareholders and, after a 20 calendar day waiting period, file the proposed name
change from WES Consulting, Inc. to Liberator, Inc. We will also provide FINRA
with notice of our name change to “Liberator, Inc.”
I believe
that the first quarter of fiscal 2011 (the three months ended September 30,
2010) marked a turning point in your Company’s development. Despite
reporting a loss for the first quarter, we experienced a 29% growth in sales
revenue, year-over-year. This marks the fourth consecutive quarter of
double-digit revenue growth after the 38% growth during the fourth quarter, the
11% growth during the third quarter and the 12% growth in the second
quarter.
I wish
you the best for the holiday season and encourage you to visit with us when in
Atlanta.
Sincerely,
Louis
Friedman
President
and CEO
Here are
our results for the first quarter ended September 30, 2010, and the
comparable period of last year:
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Three
Months Ended
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||||||||
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9/30/2010
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9/30/2009
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|||||||
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(In
thousands, except share data)
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||||||||
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Net
sales
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$ | 2,624 | $ | 2,035 | ||||
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Cost
of sales
|
1,704 | 1,377 | ||||||
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Gross
profit
|
920 | 658 | ||||||
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Selling,
general administrative & other expense
|
1,163 | 1,173 | ||||||
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Loss before
income taxes
|
(243 | ) | (515 | ) | ||||
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Income
tax expense
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- | - | ||||||
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Net
loss
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$ | (243 | ) | $ | (515 | ) | ||
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Net
loss per share — basic (a)
|
$ | (0.00 | ) | $ | (0.01 | ) | ||
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Net
loss per share — diluted
|
(0.00 | ) | (0.01 | ) | ||||
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Weighted
average shares outstanding - basic (a)
|
63,183 | 60,070 | ||||||
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Weighted
average shares outstanding - diluted
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63,183 | 60,070 | ||||||
Here are
our results for the fourth quarter and the twelve months ended June 30,
2010, and the comparable periods of last year:
|
Three
Months Ended
|
Twelve
Months Ended
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|||||||||||||||
|
6/30/2010
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6/30/2009
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6/30/2010
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6/30/2009
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|||||||||||||
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(In
thousands, except share data)
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(In
thousands, except share data)
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|||||||||||||||
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Net
sales
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$ | 2,852 | $ | 2,062 | $ | 11,080 | $ | 10,261 | ||||||||
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Cost
of sales
|
1,981 | 1,691 | 7,400 | 7,145 | ||||||||||||
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Gross
profit
|
871 | 371 | 3,680 | 3,116 | ||||||||||||
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Selling,
general administrative & other expense
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1,258 | 3,265 | 4,714 | 6,703 | ||||||||||||
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Loss before
income taxes
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(387 | (2,894 | ) | (1,034 | ) | (3,587 | ) | |||||||||
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Income
tax expense
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- | - | - | - | ||||||||||||
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Net
loss
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$ | $(387 | ) | $ | (2,894 | ) | $ | (1,034 | ) | $ | (3,587 | ) | ||||
|
Net
loss per share — basic (a)
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$ | (0.01 | ) | $ | (0.06 | ) | $ | (0.02 | ) | $ | (0.07 | ) | ||||
|
Net
loss per share — diluted
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(0.01 | ) | (0.06 | ) | (0.02 | ) | (0.07 | ) | ||||||||
|
Weighted
average shares outstanding - basic (a)
|
63,130 | 45,700 | 62,103 | 48,342 | ||||||||||||
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Weighted
average shares outstanding - diluted
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63,130 | 45,700 | 62,103 | 48,342 | ||||||||||||
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(a)
|
Net
loss per share was calculated based on basic shares outstanding due to the
anti-dilutive effect on the inclusion of common stock equivalent
shares.
|
|
9/30/2010
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6/30/2010
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|||||||
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Current
assets
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$ | 1,919 | $ | 2,070 | ||||
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Non-current
assets
|
1,058 | 1,078 | ||||||
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Current
liabilities
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2,843 | 2,750 | ||||||
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Non-current
liabilities
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1,112 | 1,137 | ||||||
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Stockholders’
deficit
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(978 | ) | (738 | ) | ||||