Luvu Brands Inc. (LUVU)

[1center]

$LUVU Brands..production automation improvements installed and implemented during Q3 should help the profit margins as well going foward into Q4 ending 6/30/17

Gross profit, derived from net sales less the cost of goods sold, includes the cost of materials, direct labor, manufacturing overhead, freight costs and depreciation. Gross profit increased 30% to approximately $1,348,000 for the three months ended March 31, 2017 from $1,037,000 in the comparable prior year period. Gross margin as a percentage of sales increased from 24.1% in the prior year period to 33.5% in the current year, primarily due to better labor utilization and production automation improvements that were put into production at the beginning of the third quarter. The Company purchased compress and roll pack equipment that was installed at the beginning of the third fiscal quarter and implemented with most of our high volume products during the third quarter. This new equipment is expected to further reduce labor costs and increase production capacity as additional manufactured products are packaged with this equipment.

Investing Activities

Cash used in investing activities in the nine months ended March 31, 2017 was $61,000 and related to the purchase and installation of new production equipment during the first, second and third quarters.

From: MD&A Q3 ending 3/31/17
https://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=12067081