LUVU Luvu Brands Inc (QB)

Liberator Announces Second Fiscal Quarter and First Half Results

Reports Record Sales of $4.2 Million for the Second Quarter and $7.5 Million for the Six Months

ATLANTA, GA--(Marketwired - Feb 18, 2014) -  Liberator, Inc. (OTCQB: LUVU), an innovative product development company and brand category manufacturer in sexual wellness products, reported financial and operating results for its second fiscal quarter and first half fiscal 2014 (year ending June 30, 2014.)

Second Quarter and First Half Highlights:

• Adjusted EBITDA* of $418,000 for the first six months of fiscal 2014, an 8% increase from the prior year.
• Record revenue for the six months of $7.5 million, a 4% increase from the prior year.
• Record revenue of $4.2 million for the second quarter, a 4.4% increase from the prior year.
• Net income of $95,000 for the second quarter compared to net income of $104,000 in the prior year.

Louis S. Friedman, the Company's President and Chief Executive Officer said: "We are encouraged by our second quarter's growth in sales of Liberator branded products. Because of our eco-compressed packaging, our direct to consumer websites are now able to offer free shipping. As a result, sales through our ecommerce channel increased 28% during the second quarter from the prior year second quarter and 22% during the six month period. This increase reflects growth from a larger selection of branded and third party products as well as a number of new internet marketing initiatives."

Revenues

Revenue for the quarter ended December 31, 2013 total $4.2 million compared to $4 million in the same quarter last year. Revenues for the six months ended December 31, 2013 were $7.5 million compared to $7.2 million last year. Increases were primarily due to higher sales through our direct-to-consumer channel.

Gross Margin

In the second quarter of fiscal 2014, gross profit was $1.1 million (27% of sales), compared to $1.2 million (29% of sales) in the prior year's quarter. For the first half of fiscal 2014, gross profit was $2.2 million (29% of sales) compared to $2.2 million (30% of sales) in last year's period.

Selling, General and Administrative

For the second quarter of fiscal 2014, SG&A expenses were $0.9 million, or 23% of sales, compared to $1 million, or 25% of sales, in the second quarter of last year. For the current six month period, SG&A expenses were $1.9 million (25% of sales), compared to $1.9 million (or 27% of sales) last year.

Operating Income

Income from operations was $186,532 in the second quarter of fiscal 2014 and $190,577 in the prior year second quarter. For the six months ended December 31, 2013, income from operations was $267,262, relatively unchanged from $282,004 last year.

Use of Non-GAAP Measure - *Adjusted EBITDA

Liberator management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. While Adjusted EBITDA is not a measure of performance in accordance with GAAP, management believes that this non-GAAP measure provides useful information about the Company's operating results. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.

Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation expense and common stock issued for services.

Reconciliation of Adjusted EBITDA to Net Income

Computation of *EBITDA (unaudited)
		Three Months Ended December 31						Six Months Ended December 31,
		2013			2012			2013			2012
Net income		$	95,112		$	103,707		$	68,170		$	110,184
Interest (net)			91,420			84,069			199,093			169,019
Income taxes			--			--			--			--
Depreciation & amortization			57,121			45,156			114,970			88,963
Stock based compensation			11,386			9,035			35,713			19,609
Adjusted EBITDA		$	255,039		$	241,967		$	417,946		$	387,775

About Liberator, Inc.

Liberator, Inc. is a vertically integrated USA-based manufacturer, marketer and multi-channel lifestyle retailer of Liberator® branded products sold through retail stores, mass merchants, and internet retailers worldwide. Established with the conviction that sensual pleasure and fulfillment are essential to a well-lived life, Liberator Bedroom Adventure Gear® empowers exploration, fantasy and the communication of desire for persons of all shapes, sizes and abilities. Products include Liberator shapes, sex furniture, positioning systems, pleasure objects, and sensual / intimate accessories. As a by-product from the manufacturing of Liberator shapes, the Company produces Jaxx, a line of contemporary furniture, which it sells to many of the same mass-market wholesale customers that purchase Liberator Bedroom Adventure Gear. Liberator, Inc. and its operating company, OneUp Innovations, Inc., are headquartered in a 140,000 square foot facility in a suburb of Atlanta, Georgia and have over 130 employees.

Liberator operates www.liberator.com and other global ecommerce sites plus a retail concept store within its factory. Liberator can be followed on Twitter at www.twitter.com/Liberator.

For comprehensive investor relations material, including fact sheets, videos, and research reports on Liberator and emerging sexual wellbeing trends visit the Company's investor relations web site at www.invest-in-LUVU-Liberator.com.

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of forward-looking statements in this release include statements related to new products, anticipated revenue and profitability. The Company assumes no obligation to update the cautionary information in this release.

Company Contact: Liberator, Inc. Ronald Scott Chief Financial Officer 770-246-6426 ron.scott@Liberator.com