Greetings, ladies and gentlemen, and welcome to Luvu Brands Incorporated's fiscal third quarter of fiscal 2024 conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Christopher Knauf, the company's Chief Financial Officer. Mr. Knauf, you may begin. Thank you, and thank you to everyone who has joined us today for Luvu Brands' third quarter fiscal 2024 conference call. Joining me today is Louis Friedman, our Founder, President, and Chief Executive Officer, and Jordan Friedman, our Vice President of E-commerce. On May 15, we filed our Form 10-Q for the third quarter of fiscal 2024 and issued an earnings release and presentation that highlighted the company's third quarter and nine-month performance. You can find the press release and the presentation on our company website, luvubrands.com/presentations. There are a number of items that we look forward to discussing with you this morning, including Luvu Brands' financial results for the third quarter and nine months ended March 31, 2024, recent developments in Luvu Brands' operational activities, as well as the company's near-term plans for the future. At the conclusion of this call, we will be answering questions during a brief Q&A session. Before we get started, I'd like to remind you that some of the information discussed will include forward-looking statements regarding future events and our future financial performance. These include statements about our future expectations, financial projections, and our plans and prospects. Actual results may differ materially from those set forth in such statements. For discussion of risks and uncertainties, you should review the company's filings with the SEC. You should not rely on forward-looking statements as prediction of the future. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligations to update them except as required by law. Our discussion today will include non-GAAP financial measures, including EBITDA and adjusted EBITDA. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of the most directly comparable GAAP financial measures to such non-GAAP financial measures will be provided as supplemental financial information in our press release. Now that we've completed, I'd like to start the call with a few words from Luvu Brands' Founder and CEO, Louis Friedman. Louis? Thank you, Chris, and good morning to everyone. I thank everyone for joining us today. As you have seen in the last three quarters, they have been challenging. For the third quarter, we reported sales of $5.9 million, with a decrease of 14% from the third fiscal quarter of 2023. For the nine months ending March 31, we reported sales of $18.8 million, a decrease of 18% from the same period in the prior fiscal year. The challenge for the last three quarters came from a sales decline in the overall retail market for pleasure products, compounded with increased competition from China-based knockoffs appearing on e-tailers, mass market websites and, of course, Amazon. As far as the Liberator brand, we believe that we maintain a competitive advantage with higher quality materials, lower material costs, better content, continual innovation, and a vertically integrated, very responsive manufacturing made right here at our Atlanta factory. In response to these competitive conditions, we've increased our marketing efforts in Google and Amazon PPP, pay, pay per click, and other advertising channels to drive our online retail sales. We have increased our analysis over the past months to eliminate low-performing ad spends and be more targeted in our approach to drive sales. Now, I'd like to walk you through some of the key takeaways of our strategy to return to growth. For Liberator, we are focusing on our product development around the erotic home category, with designs of transformable, multipurpose furniture and complementary erotic home accessories. Our marketing efforts are targeting customers through traditional advertising channels such as print, email, search engine marketing. We are reaching new customers through podcasts, cable TV, as well as exploring strategic partners with influencers and sexual wellness educators. On the international front, we are in active discussions with partners around the world to increase our footprint on the global market. We hope to have further announcements about that in coming months. We believe that this will position the brand to return to growth, as we believe the adult product market will recover in the coming years. Later this year, we will be introducing a new intimacy brand that will give us access to more mass market distributions into drug and department stores, as well as specialty retailers. We believe that this new brand will align with mainstream distribution channels that have come to embrace the emerging sexual wellness category at retail. Now, for this strategy for our other brands, I'll hand it over to Jordan Friedman, our Vice President of E-commerce. Jordan? Thank you, Louis, and good morning, everyone. I manage the company's mass market accounts, digital marketing, and wholesale sales team, a position I have grown steadily into over the last 10 years. First, I would like to outline the growth strategy for our Jaxx brand, and then discuss the approach for Avana and our relaunch of our hospitality division, Foam Labs. Our growth strategy for Jaxx consists of three parts: product innovation, increased speed to new markets, and category expansion. We continue to listen to our customers and the market by developing products that are innovative to maximize seasonal trends and selling opportunities. Regarding product innovation, we completely revised our outdoor collection this year, with new color offerings on our best sellers, products for the boating industry, luxurious new commercial-grade sun loungers, and modular sofa systems. One of our new outdoor products is our first step into completely modular indoor and outdoor sofas. Our R&D team continues to deliver higher-end products with more advanced rigid frames and locking modular connection points, a big momentum driver into higher average order values. Additionally, our panelist headboard product line of customizable wall panels continues to grow as we expand sizes and fabric options for different demographics, both commercial and residential. Meanwhile, our core beanbag and soft seating options are growing steadily as well, with best-in-class fabric options and great price to value. The Jaxx brand is making steady progress with new e-commerce partners and categories. We have grown our presence with mass-market retailers and retail chains, as well as increased sales in school systems and hospitality markets. Hospitality has been a huge point of focus for us, as this industry allows us to attain larger orders with higher prices and longer lead times for manufacturing. This has also been a driving factor for the revitalization of our Foam Labs brand. Foam Labs has been relaunched as our contract, custom design, and hospitality division. The Foam Labs branding allows us to take a different approach with commercial clients, with targeted content and marketing specifically for hotels, resorts, offices, event companies, and luxury high-end retail. Hospitality buyers appreciate our ability to customize via our in-house manufacturing and our Made in America commitment. We're anticipating strong growth for this sector in the coming year. For our Avana brand, the focus remains on innovative product solutions and efficiency. Avana continues to make progress in establishing itself as a leader in product innovation for sleep therapy and yoga products. Additionally, our R&D and purchasing teams continue to lower our cost of goods and improve our manufacturing efficiency. In such price-competitive categories, our continued efficiency improvements are allowing us to bring back market share to the Avana brand. One other investment we are currently making is in a new software to improve our speed to market for dropship and e-commerce. This will allow us to reduce the time and resources required to onboard new customers, upload new products, and make dynamic product changes across channels through one central source of truth. As we continue to grow our dropship distribution network, this will provide a key component to achieving scalable growth with little to no additional cost. Now, let's dive into the financials. I will turn over this call to Chris Knauf, Luvu Brands' Chief Financial Officer, to summarize some of the financial highlights of the third quarter and nine months fiscal year 2024. Thank you, Jordan. I'll briefly touch on some of the financial highlights from the third quarter and nine months ended March 31, 2024. As Louis mentioned, net sales in the third quarter decreased 14% to $5.9 million, compared to $6.9 million in the same quarter in the prior year. Sales of Liberator products decreased 23% to $3.4 million, from $4.5 million from the third quarter of the prior year. Jaxx product sales totaled $1.4 million, up 16%, from $1.2 million in the third quarter from the prior year. Avana products increased 5% to $686,000 from $646,000 in the third quarter of the prior year. For the 9 months of fiscal year 2024, net sales decreased to $18.8 million from $23.1 million, a decrease of 18%. Liberator sales decreased 26% to $10.6 million from $14.4 million in the prior year 9 months. Jaxx product sales decreased 1% to $5.03 million, compared to last year's $5.09 million. Avana's product sales increased 9% to $1.9 million from $1.7 million for the same period a year ago. Gross profit for the third quarter totaled $1.6 million, compared to $1.7 million in the prior year third quarter, a decline of 7%. The decline is due to lower sales from our Liberator-branded and third-party adult product sales. This was somewhat offset by improved raw material sourcing and a decline in fulfillment costs. Gross profit as a percentage of net sales increased to 28% from 26% in the prior year third quarter. Nine months' gross margin was 27%, compared to 26% in the prior year nine months. Adjusted EBITDA for the nine months ended March 31, 2024, was $448,000, compared to $2,040,000 in the prior year quarter. This is reflective of the 18% decline in sales and an increase in sales and marketing expenses to support online sales. Working capital decreased from $1,793,000 at June 30, 2023, to $1,700,000 at the end of March 31, 2024. Net inventory declined to $3,468,000 at the end of Q3 2024, from $4,202,000 on June 30, 2023. A decrease of 17%, reflecting our efforts to control manufacturing excess and reductions in raw material costs through improved vendor sourcing. Now, I'd like to turn it back to Louis for some additional comments regarding current developments. Louis? Thank you, Chris. The third quarter was a challenge on several fronts, but I'm confident we have the strategy in place to return the company to profitable growth in the coming year. By expanding our innovative product offerings, increasing our speed to market through software and investment, and expanding our category sales by diversifying brand presence, we are confident to return to top line growth. Our domestic manufacturing capacity allows us to continue to execute within a challenging supply chain environment. With a disciplined approach to cost control and improved vendor sourcing, we will realize improvements in gross margin and reduce costs over the coming year. Everyone at Luvu Brands remains focused on executing against our key growth strategies to drive long-term value for shareholders. We look forward to keeping you updated on our progress and developments as we finalize our fourth quarter results and work through fiscal 2025. That wraps up our formal presentation. Operator, we'll now open the call for Q&A, and after Q&A, we'll provide some closing comments. Thank you. Ladies and gentlemen, we'll now be conducting a question and answer session. If you would like to ask a question via the webcast, please type your question in on the webcast link and hit Submit. For those who wish to ask a question via the telephone lines, please press star one on your phone at this time. We do ask that while posing your question, you please pick up your handset or phone speakerphone to provide optimum sound quality. Please hold while we poll for questions. Okay, if we have no questions via the webcast lines, I will go to the phone lines, if that's okay? No, we have a few on the webcast. We have 2 on the webcast. Well, wait, these are the phone lines, actually. Oh, phone lines. Okay. Okay, gentlemen, I will start our Q&A session. We have a question from Jim Koenig, who is a private investor. Your line is live. Hi, guys. I guess first thing, Hi, Jim. Hi, Louis. I guess I want to thank you guys for, one, having earnings release, which was great, and two, for having a call. I think, for all of us investors, it's important to hear from you guys and hear what's going on. I guess my first question, Louis, is, and we've talked in the past, I go, what is the strategy for you guys to increase shareholder value? I mean, we're kind of at the low here, and, you know, we hear all this stuff about, growth and investment in sales marketing, but what, what are you guys going to do to get the story out and to get, people confident that, you know, that you can achieve profitable growth? Are we talking about growth, or we're talking about getting the stories out, or both? Both. It's, I think it's a combination. Both. Okay. So, you know, as you can see, we've updated our Luvu Brands website. We've updated our deck. Right after Memorial Day, Chris will be reaching out to a variety of people, investment funds and other people, to see what deals we can do together and how we can promote the stock. So that's what we're doing from that standpoint. From a business standpoint, we're trying to simply grow our top line back to where it was to at least $30 million or $35 million in a variety of ways. So we have all of these kind of engines working together with new product development. You know, as we got into the, when we say we're into the hospitality side, we advertise to the consumer, and from the consumer, we get calls from institutions and others that want this and want that, and before you know it, we're selling to hotels and others. So we keep promoting our brands, we keep developing products, and that's ideally how we're going to keep getting the top line back to at least $30 million, which is our short-term goal. I'd like to also add, this is Chris, that you know part of getting the word out, also, we've been you know in talks of trying to select some investor relation marketing companies to kind of help us promote the the business as well. So we'll have more on that in the coming months as we finalize more of those plans. But we are putting together a proper, almost, let's call it a roadshow type deal, that we can get out there and get the word out about this company and where we're headed. Chris, since you're pretty new to the company, as you look at Jaxx, Avana, and Liberator, which of those lines is the driver behind Luvu? Well, I mean, right now, you know, almost 60% of the company is still Liberator at this point, with, with, even with the contraction of, the revenue piece. Jaxx obviously has a much wider market of open for that piece, and we think there's a significant growth in that space for us. We, you know, we're growing double digits at this point, and I think that'll continue as we put more of our marketing efforts and kind of rally the product line around that piece and increase our distribution through drop ship expansion. As Jordan had mentioned, we are putting in some scalable software that'll help us to be much quicker to market on that space. So I think we'll—you know, our strategy here is to, you know, return Liberator back to growth from where it's been. Again, if I look at that business over the last couple of years, it had significant revenue increases due to COVID, and it also had a significant jump. When COVID was starting to, you know, that bump was starting to come down, we got the Netflix show bump that also accelerated that piece. So we're comping against two sort of, I would call them, abnormalities or non-recurring events, let's hope. Yeah. Unfortunately, we don't believe the Netflix show is gonna return, but it did open our eyes to how we can try to use the marketing efforts to get more influencers and more content exposure that way. So we're in the process of exploring more of that. As Louis said, we're looking at influencers and other approaches to grow that space. So we think Liberator will return to growth as that market gets kind of back to normal. For the Jaxx business, I think we are just sort of scratching the surface here, and I think we have got a lot of running room there, and the margins are bigger, the dollar, the average order size is bigger. So it's definitely a very attractive category for us to really put more efforts into. Okay. Well said. Jordan, as you look at the market and as you market, Jaxx and Avana, are there any lines that you're missing? Are you missing international? Is there? Is it all retail, or how do you look at the market for the, for Avana? Yeah. Yeah, I mean, we are missing out on some international, mainly just due to the large size of our boxes. You know, we're definitely focused on trying to get as many partners in our immediate area as possible, you know, and just within the US, because there's still plenty of untapped market there as well. And, you know, we don't have to worry about shipping product for $300 overseas or whatever it might be. But, yeah, I mean, you know, school and hospitality and contract and commercial, you know, those are all big focuses of ours. You know, just because those clients tend to be more flexible in some ways, but, you know, we just seem to have better connections there to be able to continue our growth trajectory in a space that's not gonna be as competitive as Amazon or as some of these hyper-competitive e-commerce marketplace channels. So yeah, so we're, we're definitely focused on those, but, you know, trying to keep all of our drop ship channels humming and doing their best as well. Louis, I think that's all I've got. Again, thanks for the call, and good luck on the growth strategy, and we'll listen to you guys in three months. So we appreciate your guidance, and, if you have any comments regarding our deck or some of the additions that we've done on Luvu Brands, you know, please send them along. And, it's always great to hear from you, and you don't have to wait three months. All right. Thank you. Whenever you want to chat, that's good for me. It's always a pleasure to hear from you guys. All right. Thanks, Louis. You guys have a good, great day. Take care. All right. Take care. Thank you. Our next question is coming from Bryan Robson with Breakout Investors. Your line is live. Hi, guys. About 10 months ago, you had the press release on Jaxx going into, I think, it was 120 retail stores. And then it looked like your Jaxx sales were down in, you know, the last couple of quarters and then, you know, picked up this last quarter. I guess, can you comment on overall, I guess, how that initiative went, and then what's caused it to shift just this past quarter? Sure. Sure, yeah, I can comment on that. So, yeah, so we did have a good deal with a retail client, going into the winter season, for holiday of calendar year 2023. Most of the products that they selected were more winter and Q4. Well, what most companies would call Q4, for us, it's our Q2. You know, the holiday Christmas quarter. So primarily, what they selected were, designed for that, market of gift giving and kids type products. So we saw a good, bump on that leading into, you know, September or so as they were ramping up ordering for that. And then after the new year, it kind of slowed back down a little bit. So we're, we're hoping to revitalize that for this Christmas season. But I'd say right now is kind of the slow season for that product line. But we've been focusing a lot on some of our other channels, and, you know, regardless of that retail deal, we've been getting some really good growth out of Jax in both marketplace channels, as well as some of our key retailers that we sell to. And we also have some really good new staff here in our sales department that have been opening up a lot of new channels for us. You know, we have a much better team than we did last year, just as far as introducing our products to new customers, signing on new clients and, you know, trying to get Jax in more places where we can have more eyes and more visibility on it, on the daily. So, I think a large part of our growth this quarter was separate from the retail deal, but just a good sign that we're establishing ourselves more as a main player and really being competitive in the e-commerce channels. Okay, thanks for that. And then, I guess staying in the retail world, we've talked in the past about the, I'll say, increased openness on behalf of major retailers to have willingness to have Liberator products available. Has there been much in the way of changes in that regard, or is that still kind of a bit of a struggle at the moment? Yeah, these are retail mass market outside of the sexual wellness market, meaning like, Sephora or Bloomingdale's or, or whatever. Is that what you're referring to, or Target? Yeah, whether it's, I guess maybe you could educate me as to what extent those Liberator products are available in, you know, the Targets and the Walmarts of the world? Yeah, so Liberator covers a wide- My understanding was it was quite- Right. It was quite limited in terms of what they're willing to provide. Yeah. It's kind of interesting because Liberator has a couple of subcategories. For instance, on Avana, we have products called Yoga Chaises, which, believe it or not, sell on Wayfair and whatever, and everybody knows what they're for, but we don't call them Liberator. So, I would say that the reason we're working on this third brand, this other brand, is in fact different price points, different graphics to go into the Sephora's and Bloomingdale's. We do sell some Liberator to Urban Outfitters at the moment, and we have a handful of other retailers that are way outside of the sexual wellness channel. But this other brand that we've been working on will be addressed to Target and Sephora and Bloomingdale's and others. Different graphics, different look, different approach. So, to answer your question, Liberator is not moving in or hasn't really moved into the sexual wellness market, although Avana has. Yeah. Right? Where does Avana appear? Yeah. As Yoga Chaise, so to speak. So just to back up for a second, we're working on another brand, which is unreleased at this point, that we haven't fully announced yet. But, you know, right now, the brands that you're familiar with or, you know, are in our press release are Jaxx, Liberator, Avana, and Foam Labs, which we talked about as contract. But then we also have a fifth brand that we're working on, which is going to be, basically a mainstream version of Liberator. Because, you know, depending on what market you're in, everyone wants to see different styles of content, different styles of packaging. Different price points. Different price points. Right. You know, we sort of... When we started this business, no one was taking sexual wellness products into mainstream stores, so all of the packaging revolved around, you know, your adult shops and people specifically going to sexual stores to buy the product, which is a completely different, you know, marketing angle and packaging and product variety, versus trying to appeal to someone like a Target or a Walmart. So that's where Liberator got kind of a little bit stuck as being too adult, and that's why we're now pivoting into another brand, which will be kind of an offshoot for those more mainstream markets. Yeah, and also, these markets want to carry products that you don't find in Hustler. Right. You know, they don't want to compete with the Hustlers of the world or even with Amazon for the most part. So this is where this other brand has been. But the Avana brand, with Yoga Chaise, goes all over the place. Yeah. I mean, that's in a wide variety of consumer brands, including Walmart, right? Isn't it in Walmart? Yeah. So, so the Avana brand does have some pseudo sexual wellness products that are on all of our mainstream furniture sites, as well as Walmart, even in, you know, furniture retail websites like, you know, regional furniture stores will have it up on their website. And, you know, our products kind of reach a category gap where people can use products for just about any purpose, and it just depends how you want to market it. And, as we all know, the, you know, what qualifies as a sexual product is very much a gray area that's been changing all the time, and, you know, the biggest sex product that people use every day is a mattress, but you don't see, you know, you don't see mattress companies selling at the adult store. That's the major adult product. Yeah. The mattress. So, you know, there's definitely some debate as to how much of a product you can sexualize and still put it out there everywhere. But- Well, even our daybeds now appear on Liberator- Right as a sex product, because Yeah. So, you know, we exist in this world where we make furniture, but we also make furniture for sex, and there's a whole spectrum in between where some clients will take it one way, but they won't take it the other way. And now, so we have to basically provide every iteration along that spectrum of- Right all the different packaging options and, you know Yeah, to meet every market. To meet every market and every level of, you know, PG rated all the way through X-rated. We hope that we've answered your question, but with Yoga Chaises, we've sold millions of dollars worth of Yoga Chaises in mass market. Mm-hmm. And they sell every day... Mm-hmm in mass market, including Wayfair sells them, you know, so. Yep. Strange places are selling- Yeah -Yoga Chaise. Just call them yoga and, you know. Yeah. And then it's just a chair. Then it's just a chair. Anyone can- Anyone can buy it. Anyone can buy it, you know? If what they do in their own home is, you know, that's, that's their choice. Right. We hope we've answered your questions. Okay. No, I appreciate the extra color. Thank you. Good luck. Okay. Are there any other questions or is that it? We have no further questions on the lines at this time, gentlemen. Great. Thank you. Okay, yeah. Well, the third quarter was a challenge on several fronts, but I'm confident we have a strategy in place to return the company to profitable growth in the coming year. By expanding our innovative product offering, increasing our speed to market through software investment, and expanding our category sales by diversifying brand presence, we are confident in a return to top line growth. Our domestic manufacturing capability allows us to continue to execute within a challenging supply chain environment, with a disciplined approach to cost and the entire cost control. Our entire Luvu Brands management team, I wanna thank you again for joining us today. Thank you. Thank you, operator. Thank you. Ladies and gentlemen, this concludes today's conference call. You may disconnect your lines and from the webcast at this time, and we thank you for your participation.