Core Insights - Koss Corporation's shares have declined 2.9% following the earnings report for the quarter ended June 30, 2025, contrasting with a -0.2% change in the S&P 500 index during the same period [1] - The company reported a fiscal fourth-quarter 2025 loss per share of 2 cents, which is wider than the 1 cent loss in the same quarter last year [1] Financial Performance - Net sales for the quarter reached $3.1 million, reflecting a 6.6% increase from $2.9 million in the previous year, despite a net loss of $0.2 million, which is wider than the $0.1 million loss from the prior year [2] - For fiscal 2025, revenues increased by 2.9% to $12.6 million from $12.3 million, while the net loss slightly narrowed to $0.9 million from $1 million, and loss per share improved marginally to 9 cents from 10 cents [3] Revenue Drivers - The quarterly revenue increase was largely attributed to a nearly 49% surge in export market sales, with significant order increases from the two largest European distributors, driven by new product introductions [4] - Direct-to-Consumer (DTC) sales rose approximately 18% year over year, supported by enhanced advertising and online engagement, now constituting nearly a quarter of the company's total annual revenues [6] Challenges and Strategic Focus - Domestic sales faced challenges due to excess inventory of non-Koss products among domestic partners and delays in budget approvals affecting the education sector [5] - The company is shifting its focus towards international and DTC markets, with the CEO highlighting the importance of new product launches and targeted online advertising for growth [6] Market Conditions - The CEO noted that gains in Europe and Asia were partly driven by increased traction among new and existing customers, particularly OEMs in Asia, although caution was expressed regarding macroeconomic challenges [7] - Despite improved gross margins due to a favorable product mix and higher-margin new products, the company faces margin pressure from recently imposed tariffs on Chinese imports [8] - Logistics costs remain a concern, but the company is optimistic about stabilizing freight expenses in the upcoming quarter due to a partnership with a dedicated freight provider [9]

PART I [Business Overview](index=5&type=section&id=Item%201.%20Business) Koss Corporation designs, manufactures, and sells stereo headphones globally, with 84% of FY2025 sales from music headphones, actively enforcing its extensive intellectual property rights - Koss Corporation operates as a single reporting segment, focusing on the design, manufacture, and sale of stereo headphones and related personal listening accessories[19](index=19&type=chunk) - Approximately **84% of the Company's fiscal year 2025 sales** were from stereo headphones used for listening to music, with the remaining 16% from headphones for communications, education, and OEM[21](index=21&type=chunk) - As of June 30, 2025, the Company had over **400 trademarks** registered in approximately 88 countries and over **170 patents** in approximately 26 countries, actively enforcing its intellectual property rights[24](index=24&type=chunk)[25](index=25&type=chunk) - The Company's business is **not seasonal**, with net sales for the last three years, including fiscal year 2025, being fairly evenly dispersed throughout the year[26](index=26&type=chunk) Net Sales by Country (Fiscal Years 2025 vs. 2024) | Country/Region | 2025 Sales ($) | 2024 Sales ($) | | :--------------- | :------------- | :------------- | | United States | 8,968,799 | 9,795,438 | | Sweden | 1,247,981 | 993,043 | | Czech Republic | 1,206,827 | 418,004 | | Korea, Republic of | 207,061 | 185,143 | | Malaysia | 156,976 | 41,641 | | Canada | 131,320 | 101,056 | | Japan | 114,438 | 66,682 | | All other countries | 590,768 | 664,062 | | **Net sales** | **12,624,170** | **12,265,069** | [Risk Factors](index=9&type=page&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including macroeconomic downturns, geopolitical tensions, supply chain disruptions, inflationary pressures, operational challenges, and stock price volatility - The Company's sales outside the U.S. represent nearly **30% of total net sales** for fiscal year 2025, and it relies almost exclusively on contract manufacturing facilities in China, making it vulnerable to global economic and political developments[38](index=38&type=chunk) - Geopolitical tensions, including the Russia-Ukraine war and U.S.-China trade relations, pose risks of supply chain disruptions, trade restrictions, and increased costs, with sales to Russia suspended and Ukraine sales impacted[42](index=42&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) - Inflationary pressures, elevated interest rates, and increased costs for commodities, packaging, wages, energy, and transportation could adversely affect the Company's profitability and consumer demand[46](index=46&type=chunk) - Over **90% of the Company's products** are sourced from contract manufacturing facilities in China and Taiwan, creating dependence and risks related to geopolitical tensions, supply chain interruptions, and tariffs[53](index=53&type=chunk) - Direct-to-Consumer (DTC) sales through the Amazon portal accounted for approximately **19% and 17% of net sales** in fiscal years 2025 and 2024, respectively, making the company significantly dependent on this channel[66](index=66&type=chunk) - The market price of the Company's common stock has experienced significant fluctuations and volatility, with a high of **$18.73** and a low of **$4.00** during fiscal year 2025, potentially driven by social media hype[74](index=74&type=chunk)[75](index=75&type=chunk) [Unresolved Staff Comments](index=16&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments applicable to the company [Cybersecurity](index=16&type=section&id=Item%201C.%20Cybersecurity) Koss Corporation integrates robust cybersecurity policies and processes, including continuous monitoring, cloud migration, and third-party assessments, into its overall risk management framework - The Company has integrated cybersecurity risk management into its overall risk processes, including programs for monitoring threats, updating software, and securing corporate systems[80](index=80&type=chunk) - Enhancements to cybersecurity include migrating business-critical systems to Tier-1 cloud service providers, enhanced encryption, two-factor authentication (2FA), and real-time threat monitoring[80](index=80&type=chunk) - Annual vulnerability assessments and penetration testing are performed by third-party service providers, with results shared with the CFO[81](index=81&type=chunk) - The Board of Directors reviews cybersecurity policies and processes annually, with management providing regular updates on programs, training metrics, and risk mitigation strategies[83](index=83&type=chunk) [Properties](index=16&type=section&id=Item%202.%20Properties) Koss Corporation leases its 126,000 square foot Milwaukee facility from a related party, with a renewed lease extending to 2028 and an option to 2033, including a rent increase - The Company leases its **126,000 square foot facility** in Milwaukee, Wisconsin, from Koss Holdings, LLC, which is controlled by beneficiaries of the former chairman's revocable trust and includes current stockholders[84](index=84&type=chunk) - The lease was renewed on May 24, 2022, extending to **June 30, 2028**, with a second extension option to **June 30, 2033**[84](index=84&type=chunk) - Annual rent is **$380,000** for the extended term, increasing to **$397,000** for the second extended term, which will be the first rent increase since 1996[84](index=84&type=chunk) [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) Koss Corporation is engaged in ongoing patent infringement lawsuits against jLab Audio and Skullcandy, and is investigating a new infringement claim from One-E-Way, Inc - The Company has ongoing patent infringement suits against PEAG, LLC d/b/a jLab Audio and Skullcandy, Inc. related to its wireless headphone technology, filed on July 22, 2020[85](index=85&type=chunk) - A Supplemental Notice of Infringement was sent to the Company on March 18, 2025, by One-E-Way, Inc., alleging infringement by some of Koss's wireless products, which the Company is investigating[86](index=86&type=chunk) [Mine Safety Disclosures](index=17&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=18&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Koss Corporation's common stock trades on Nasdaq (KOSS), with 9.46 million shares outstanding; the company has an authorized stock repurchase program but no recent activity and no plans for future dividends - The Company's common stock is traded on The Nasdaq Capital Market under the trading symbol **KOSS**[89](index=89&type=chunk) - As of August 25, 2025, there were **9,456,438 shares outstanding** of the registrant's common stock[8](index=8&type=chunk) - The Board of Directors has authorized an aggregate of **$45,500,000** for stock repurchases, with **$2,139,753** remaining available as of June 30, 2025; no purchases were made in fiscal years 2025 or 2024[90](index=90&type=chunk) - The Company has not paid dividends on its capital stock since March 2014 and does not anticipate paying cash dividends in the foreseeable future, intending to retain future earnings[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes FY2025 and FY2024 financial performance, noting a 2.9% net sales increase, improved gross profit margin, higher SG&A, and strong liquidity, alongside critical accounting estimates Consolidated Performance Summary (Fiscal Years 2025 vs. 2024) | Metric | 2025 | 2024 | | :------------------------------------------ | :----------- | :----------- | | Net sales | $12,624,170 | $12,265,069 | | Net sales increase (decrease) % from prior year | 2.9% | (6.4)% | | Gross profit | $4,773,598 | $4,185,447 | | Gross profit as % of net sales | 37.8% | 34.1% | | Selling, general and administrative expenses | $6,510,721 | $6,057,606 | | Selling, general and administrative expenses as % of net sales | 51.6% | 49.4% | | Interest income | $879,774 | $847,644 | | Loss before income tax provision (benefit) | $(857,349) | $(1,024,515) | | Income tax provision (benefit) | $17,482 | $(73,604) | | Net loss | $(874,831) | $(950,911) | | Basic Loss per common share | $(0.09) | $(0.10) | - Net sales increased by **2.9% in fiscal year 2025** to **$12,624,170**, primarily driven by a **48% increase in sales to European distributors** and a **16.5% increase in Direct-to-Consumer (DTC) sales**[99](index=99&type=chunk)[103](index=103&type=chunk) - Gross profit as a percentage of net sales increased from **34.1% in FY2024 to 37.8% in FY2025**, attributed to a favorable sales mix, higher-margin new product sales to Europe, and reduced impact from higher prior-year freight rates[99](index=99&type=chunk)[106](index=106&type=chunk) - Selling, general and administrative expenses increased by **7.5% ($453,000)** in FY2025, mainly due to new product compliance testing, higher online marketing spend, and legal costs for patent litigation and an ADA lawsuit settlement[99](index=99&type=chunk)[107](index=107&type=chunk) Cash Flows Summary (Fiscal Years 2025 vs. 2024) | Activity | 2025 ($) | 2024 ($) | | :-------------------------------- | :--------- | :--------- | | Operating activities | (214,908) | (190,531) | | Investing activities | (120,284) | (198,425) | | Financing activities | 305,908 | 134,975 | | Net (decrease) in cash and cash equivalents | (29,284) | (253,981) | - As of June 30, 2025, the Company had **$2.8 million in cash and cash equivalents**, **$12.9 million in short-term investments**, and available credit facilities of **$5.0 million**, indicating a strong financial position[113](index=113&type=chunk) [Overview](index=19&type=section&id=Overview) [Fiscal Year 2025 Summary](index=19&type=section&id=Fiscal%20Year%202025%20Summary) [Consolidated Results](index=20&type=section&id=Consolidated%20Results) [2025 Results of Operations Compared with 2024](index=20&type=section&id=2025%20Results%20of%20Operations%20Compared%20with%202024) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash Flows](index=22&type=section&id=Cash%20Flows) [Operating Activities](index=22&type=section&id=Operating%20Activities) [Investing Activities](index=22&type=section&id=Investing%20Activities) [Financing Activities](index=22&type=section&id=Financing%20Activities) [Short Term Liquidity](index=22&type=section&id=Short%20Term%20Liquidity) [Long Term Liquidity](index=23&type=section&id=Long%20Term%20Liquidity) [Credit Facility](index=23&type=section&id=Credit%20Facility) [Stock Repurchase Program](index=23&type=section&id=Stock%20Repurchase%20Program) [Contractual Obligation](index=23&type=section&id=Contractual%20Obligation) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) [Revenue Recognition](index=24&type=section&id=Revenue%20Recognition) [Accounts Receivable](index=24&type=section&id=Accounts%20Receivable) [Inventories](index=24&type=section&id=Inventories) [Product Warranty Obligations](index=24&type=section&id=Product%20Warranty%20Obligations) [Deferred Compensation](index=25&type=section&id=Deferred%20Compensation) [Stock-Based Compensation](index=25&type=section&id=Stock-Based%20Compensation) [Income Taxes](index=25&type=section&id=Income%20Taxes) [Quantitative and Qualitative Disclosure About Market Risk](index=26&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) Quantitative and qualitative disclosures about market risk are not applicable to the company [Financial Statements and Supplementary Data](index=26&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the Consolidated Financial Statements and Supplementary Data included elsewhere in the report - The report includes Consolidated Financial Statements: Balance Sheets, Statements of Operations, Cash Flows, and Stockholders' Equity for the years ended June 30, 2025 and 2024, along with Notes to Consolidated Financial Statements[164](index=164&type=chunk) - All financial statement schedules have been omitted because the information is not applicable, not material, or included in the Consolidated Financial Statements or their notes[165](index=165&type=chunk) - An Exhibit Index is attached, detailing other documents filed as part of this report[166](index=166&type=chunk)[271](index=271&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=26&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure [Controls and Procedures](index=26&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2025, with no material changes during the quarter - The Company's disclosure controls and procedures were evaluated and concluded to be effective at the reasonable assurance level as of June 30, 2025[149](index=149&type=chunk) - Management concluded that the Company's internal control over financial reporting was effective as of June 30, 2025[151](index=151&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the three months ended June 30, 2025[152](index=152&type=chunk) [Other Information](index=26&type=section&id=Item%209B.%20Other%20Information) There is no other information to report [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=26&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) There are no disclosures regarding foreign jurisdictions that prevent inspections applicable to the company PART III [Directors, Executive Officers and Corporate Governance](index=27&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance, including the code of ethics, is incorporated by reference from the 2025 Proxy Statement - Information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[156](index=156&type=chunk) - The Company has adopted a code of ethics and an Insider Trading and Tipping Policy, publicly available on its website[156](index=156&type=chunk)[157](index=157&type=chunk) [Executive Compensation](index=27&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2025 Proxy Statement - Information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[158](index=158&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=27&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners, management, and related stockholder matters is incorporated by reference from the 2025 Proxy Statement - Information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[159](index=159&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=27&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2025 Proxy Statement - Information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[160](index=160&type=chunk) [Principal Accountant Fees and Services](index=27&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement - Information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[161](index=161&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=28&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements, schedules, and exhibits, including Balance Sheets, Statements of Operations, Cash Flows, Stockholders' Equity, and Notes - The report includes Consolidated Financial Statements: Balance Sheets, Statements of Operations, Cash Flows, and Stockholders' Equity for the years ended June 30, 2025 and 2024, along with Notes to Consolidated Financial Statements[164](index=164&type=chunk) - All financial statement schedules have been omitted because the information is not applicable, not material, or included in the Consolidated Financial Statements or their notes[165](index=165&type=chunk) - An Exhibit Index is attached, detailing other documents filed as part of this report[166](index=166&type=chunk)[271](index=271&type=chunk)

[Report Overview](index=1&type=section&id=Report%20Overview) [Company Information](index=1&type=section&id=Company%20Information) Koss Corporation, a U.S.-based high-fidelity headphone company, announced its financial results for the fourth quarter and full fiscal year ended June 30, 2025 - **Koss Corporation (NASDAQ: KOSS)** is a U.S.-based high-fidelity headphone company[1](index=1&type=chunk) [Fourth Quarter Fiscal Year 2025 Performance](index=1&type=section&id=Fourth%20Quarter%20Fiscal%20Year%202025%20Performance) For the fourth quarter of fiscal year 2025, Koss Corporation reported a 6.6% increase in sales, primarily driven by significant growth in export markets and Direct-to-Consumer (DTC) sales, despite a higher net loss compared to the prior year Fourth Quarter Financial Highlights (YoY) | Metric | Q4 FY2025 | Q4 FY2024 | Change ($) | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | :--------- | | Net Sales | $3,084,210 | $2,893,401 | $190,809 | 6.6% | | Net Loss | $(232,696) | $(110,369) | $(122,327) | 110.8% | | Basic & Diluted Loss per Share | $(0.02) | $(0.01) | $(0.01) | 100.0% | - Sales increase was fueled by an approximately **49% increase in export markets**, with sales to the two largest European distributors up **over 100%**, mostly led by new product sales[3](index=3&type=chunk) - The Direct-to-Consumer (DTC) market grew approximately **18%** compared to the prior year's fourth quarter, attributed to new product introductions and higher online traffic from enhanced advertising efforts[3](index=3&type=chunk) - Growth was partially offset by declines in orders from domestic distributors (influenced by excess inventory of non-Koss product) and lower e-tailer sales[3](index=3&type=chunk) [Full Year Fiscal Year 2025 Performance](index=1&type=section&id=Full%20Year%20Fiscal%20Year%202025%20Performance) For the full fiscal year 2025, Koss Corporation achieved a 2.9% sales growth, primarily driven by improved international sales and a significant increase in DTC sales, while also reducing its net loss compared to the previous fiscal year Full Year Financial Highlights (YoY) | Metric | FY2025 | FY2024 | Change ($) | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | :--------- | | Net Sales | $12,624,170 | $12,265,069 | $359,101 | 2.9% | | Net Loss | $(874,831) | $(950,911) | $76,080 | -8.0% | | Basic & Diluted Loss per Share | $(0.09) | $(0.10) | $0.01 | -10.0% | - Full fiscal year sales growth was mainly from improved sales to European customers, higher sales to original equipment manufacturers (OEMs) in Asian markets, and various new customers in the region[4](index=4&type=chunk) - DTC sales saw an uptick of **16.5%**, now representing nearly a quarter of the Company's total sales, primarily due to new product launches, increased online advertising, and webpage optimizations[4](index=4&type=chunk) - A favorable sales mix, along with sales of higher margin new products, yielded an improved gross margin in the current fiscal year[4](index=4&type=chunk) - The company anticipates headwinds from newly imposed tariffs on goods from China, which will adversely impact margins as inventory sells through, but expects freight costs to stabilize next quarter[4](index=4&type=chunk) [About Koss Corporation](index=1&type=section&id=About%20Koss%20Corporation) [Product Offerings](index=1&type=section&id=Product%20Offerings) Koss Corporation offers a comprehensive range of high-fidelity audio products, catering to various consumer needs with both wired and wireless solutions - Koss Corporation markets a complete line of high-fidelity headphones, wireless Bluetooth® speakers, computer headsets, telecommunications headsets, active noise canceling headphones, and wireless headphones[5](index=5&type=chunk) [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) [Unaudited Financial Data](index=3&type=section&id=Unaudited%20Financial%20Data) The unaudited condensed consolidated statements of operations provide detailed financial figures for the three and twelve months ended June 30, 2025, compared to the same periods in 2024, outlining net sales, cost of goods sold, gross profit, operating expenses, and net loss Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Twelve Months Ended June 30, 2025 | Twelve Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $3,084,210 | $2,893,401 | $12,624,170 | $12,265,069 | | Cost of goods sold | 1,973,166 | 1,725,607 | 7,850,572 | 8,079,622 | | Gross profit | 1,111,044 | 1,167,794 | 4,773,598 | 4,185,447 | | Selling, general and administrative expenses | 1,550,243 | 1,485,557 | 6,510,721 | 6,057,606 | | Loss from operations | (439,199) | (317,763) | (1,737,123) | (1,872,159) | | Interest income | 212,555 | 211,162 | 879,774 | 847,644 | | Loss before income tax provision (benefit) | (226,644) | (106,601) | (857,349) | (1,024,515) | | Income tax provision (benefit) | 6,052 | 3,768 | 17,482 | (73,604) | | Net loss | $(232,696) | $(110,369) | $(874,831) | $(950,911) | | Loss per common share: Basic | $(0.02) | $(0.01) | $(0.09) | $(0.10) | | Loss per common share: Diluted | $(0.02) | $(0.01) | $(0.09) | $(0.10) | | Weighted-average number of shares: Basic | 9,390,855 | 9,274,987 | 9,363,117 | 9,251,373 | | Weighted-average number of shares: Diluted | 9,390,855 | 9,274,987 | 9,363,117 | 9,251,373 | [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) [Disclaimer and Risk Factors](index=2&type=section&id=Disclaimer%20and%20Risk%20Factors) This section serves as a standard disclaimer, highlighting that statements regarding future events or financial performance are forward-looking and subject to various risks and uncertainties that could cause actual results to differ materially. The company explicitly states it undertakes no obligation to update these statements - Forward-looking statements are based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties, which may cause actual events or results to differ materially[7](index=7&type=chunk) - Key risk factors include fluctuations in economic conditions, ability to develop new products, consumer receptivity to new technologies, competition, foreign manufacturing and sales (including government regulation and trade tensions like U.S.-China tariffs), health crises, geopolitical conflicts, and litigation[7](index=7&type=chunk) - The Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances or new information[7](index=7&type=chunk)

Core Insights - Koss Corporation's shares increased by 14.7% following the earnings report for the quarter ended March 31, 2025, outperforming the S&P 500's 4.5% growth during the same period [1] - The company reported net sales of $2.8 million, a 5.4% increase from $2.6 million in the same quarter last year, despite incurring a net loss of $0.3 million, slightly wider than the previous year's loss [1][2] Financial Performance - Gross profit rose to $1.1 million from $0.8 million year-over-year, with gross margin improving by over 600 basis points due to lower shipping costs [2][8] - Operating expenses increased to $1.6 million from $1.5 million, leading to a narrowed operating loss of $0.5 million compared to $0.6 million in the prior year [3] - Interest income contributed positively, reducing the pre-tax loss to $0.3 million from $0.4 million [3] Management Commentary - The CEO highlighted geographic expansion and new product sales as key growth drivers, particularly in Europe and Asia [4] - Direct-to-consumer sales also supported revenue growth [4] Market Dynamics - Sales to the education sector fell nearly 60% due to a postponed project, impacting overall performance [5] - The decline in domestic distributor sales also weighed on results [5][7] - The rebound in international distributor sales, especially in Europe and Asia, was a significant growth factor [7] Margin Analysis - Margin expansion was attributed to lower inbound freight and transit costs, although some gains were offset by write-offs related to obsolete inventory [6][8]

Financial Performance - For the three months ended March 31, 2025, Koss Corporation reported net sales of $2,781,006, an increase of 5.4% compared to $2,637,606 for the same period in 2024[10]. - Gross profit for the three months ended March 31, 2025, was $1,084,672, representing a gross margin of 39.0%, up from $841,523 and a gross margin of 31.9% in the prior year[10]. - The net loss for the nine months ended March 31, 2025, was $642,135, a decrease from a net loss of $840,542 for the same period in 2024[12]. - The company reported a loss from operations of $519,006 for the three months ended March 31, 2025, an improvement from a loss of $609,724 in the same period of 2024[10]. - The Company recorded a net loss of $316,742 for the three months ended March 31, 2025, compared to a net loss of $313,780 for the same period in 2024[35]. - Loss before income tax provision for the three months ended March 31, 2025, was $(310,831), or (11.2)% of net sales, an improvement from (15.0)% in the prior year[50]. Assets and Liabilities - Total current assets decreased to $19,636,400 as of March 31, 2025, down from $21,917,161 as of June 30, 2024, primarily due to a reduction in short-term investments[9]. - Total liabilities rose to $6,614,743 as of March 31, 2025, compared to $6,052,303 as of June 30, 2024, reflecting an increase in current liabilities[9]. - Stockholders' equity decreased to $30,683,175 as of March 31, 2025, down from $31,147,176 as of June 30, 2024, primarily due to the net loss incurred[9]. - The total net inventories as of March 31, 2025 were $4,396,383, a decrease from $4,473,680 as of June 30, 2024[31]. - The amortized cost basis of held-to-maturity U.S. Treasury securities was $17,111,885 as of March 31, 2025, with a fair value of $17,175,268[29]. - The Company’s deferred compensation liability increased to $2,241,804 as of March 31, 2025, up from $2,093,124 as of June 30, 2024[28]. Cash Flow - Cash and cash equivalents increased to $2,934,892 at the end of the period, compared to $2,837,081 at the beginning of the period[12]. - The company experienced a net cash provided by operating activities of $319,989 for the nine months ended March 31, 2025, compared to a net cash used of $16,558 in the prior year[12]. - Cash provided by operating activities for the nine months ended March 31, 2025, was $319,989, compared to cash used of $16,558 in the same period in 2024[76]. - The Company experienced a net increase in cash and cash equivalents of $97,811 for the nine months ended March 31, 2025, compared to a decrease of $178,383 in the same period in 2024[76]. - Cash used in investing activities for the nine months ended March 31, 2025, was $374,623, primarily for fixed asset expenditures[78]. Taxation - The effective tax rate for the three months ended March 31, 2025 was 1.9%, significantly lower than 20.5% for the same period in 2024[26]. - The effective tax rate for the three and nine months ended March 31, 2025, was 1.9% and 1.8%, respectively, a significant decrease from 20.5% and 8.4% for the same periods in 2024[60]. - The Company has a tax loss carryforward of approximately $33,600,000 as of March 31, 2025, due to cumulative taxable losses over the last three years[27]. - The remaining expected federal tax loss carryforward approximates $33.6 million at the end of the third quarter[61]. Expenses - Selling, general and administrative expenses for the three months ended March 31, 2025, were $1,603,678, accounting for 57.7% of net sales, up from 55.0% in the prior year[50]. - Selling, general and administrative expenses for the three months ended March 31, 2025, increased by $152,000, or 10.5%, to $1,604,000 compared to the same period in the prior year[58]. - For the nine months ended March 31, 2025, selling, general and administrative expenses rose by $388,000, or 8.5%, to $4,960,000 compared to $4,572,000 for the same period in 2024[58]. Sales and Market Performance - Export sales for the nine months ended March 31, 2025, were $3,022,000, a 47.7% increase compared to $2,045,000 for the same period in 2024[53]. - Sales to European distributors increased by 41% over the prior year, driven by new product sales and inventory restocking[53]. - The gross margin for the nine months ended March 31, 2025, was 38.4%, an increase of 620 basis points from 32.2% in the prior year[55]. Legal and Compliance - The Company is involved in ongoing patent infringement lawsuits against PEAG, LLC and Skullcandy, Inc. related to its wireless headphone technology[93]. - A Supplemental Notice of Infringement was served on the Company by One-E-Way, Inc. on March 18, 2025, regarding potential patent infringements[94]. - The company expects to incur approximately $41,000 in costs related to a patent infringement matter, which has been accrued as of March 31, 2025[41]. Management and Governance - The Company's management concluded that the disclosure controls and procedures were effective as of March 31, 2025[90]. - There have been no changes in the Company's internal control over financial reporting that materially affected its effectiveness during the most recent fiscal quarter[91]. Credit Facilities - The Company has a secured credit facility of $5 million with no outstanding borrowings as of March 31, 2025[82]. - The Company’s credit facility remains unused as of March 31, 2025, with a total revolving secured credit facility of $5,000,000[32]. Stock and Shareholder Information - Koss Corporation's weighted-average number of shares for basic loss per share was 9,375,795 for the three months ended March 31, 2025, compared to 9,254,795 for the same period in 2024[10]. - The Company has a stock repurchase program with a maximum authorization of $45.5 million, of which $43.36 million had been expended through March 31, 2025[98].

Financial Performance - Net sales for Q3 2025 were $2,781,006, an increase of $143,400 or 5.4% compared to Q3 2024[2] - For the nine months ended March 31, 2025, net sales were $9,539,960, reflecting an increase of $168,292 or 1.8% over the same period in the prior year[3] - The net loss for Q3 2025 was $316,742, slightly higher than the net loss of $313,780 in Q3 2024[2] - The net loss for the nine months ended March 31, 2025, improved to $642,135 from $840,542 in the prior year[3] - Basic and diluted net loss per share for Q3 2025 was $0.03, consistent with Q3 2024[2] - Basic and diluted net loss per share for the nine months ended March 31, 2025, was $0.07, compared to $0.09 for the same period in 2024[3] - The company reported a gross profit of $1,084,672 for Q3 2025, up from $841,523 in Q3 2024[9] Sales and Market Impact - Direct-to-consumer sales contributed to growth, but a nearly 60% drop in sales to education markets offset some gains[4] Cost and Margin Analysis - Margin improvement of over 600 basis points was noted during the first nine months of fiscal year 2025 compared to the same period last year[4] - The company is closely monitoring the impact of recent tariff announcements on product costs, particularly due to sourcing from China[4]

Core Viewpoint - Koss Corporation reported a slight increase in net sales for the third quarter of fiscal year 2025, but continued to experience net losses, highlighting challenges in certain market segments and the impact of external factors such as tariffs on product costs [2][4]. Financial Performance - Net sales for the three months ended March 31, 2025, were $2,781,006, an increase of $143,400, or 5.4%, compared to $2,637,606 for the same period in the prior year [2]. - For the nine months ended March 31, 2025, net sales reached $9,539,960, reflecting an increase of $168,292, or 1.8%, over the prior year's $9,371,668 [3]. - The net loss for the third quarter of fiscal year 2025 was $316,742, slightly higher than the net loss of $313,780 for the same quarter in the previous year [2]. - The net loss for the nine months ended March 31, 2025, was $642,135, showing improvement compared to a net loss of $840,542 for the same period in the prior year [3]. Sales and Market Dynamics - A significant increase in sales to distributors in Europe and Asia, driven by new product success, was a key factor in the overall sales improvement for the fiscal year-to-date [4]. - Direct-to-consumer (DTC) sales contributed to sales growth, but a nearly 60% drop in sales to the education markets due to project postponements and lower domestic distributor sales offset some of the gains [4]. Margin and Cost Analysis - Margin improvement of over 600 basis points during the first nine months of fiscal year 2025 was attributed to the adverse impact on prior year's margins from higher transit costs [4]. - The write-off of obsolete products during the current year partially offset margin gains [4]. Strategic Considerations - The company is closely monitoring recent tariff announcements that could significantly impact product costs, particularly since a substantial portion of its products are sourced from China [4]. - A strategic response is being developed to mitigate potential adverse effects on operations and financial condition [4].

Core Insights - Koss Corporation's shares have declined 1.6% since the earnings report for the quarter ended December 31, 2024, compared to a 0.5% decline in the S&P 500 index during the same period [1] - Over the past month, Koss's stock has decreased by 21.5%, while the S&P 500 has grown by 0.6% [1] Financial Performance - For the fiscal second quarter, Koss reported earnings per share (EPS) of 1 cent, a significant improvement from a loss of 3 cents per share in the prior-year quarter [2] - The company achieved net sales of $3.6 million, marking a 5.9% increase from $3.4 million in the same quarter last year [2] - Koss recorded a net income of $0.1 million, recovering from a net loss of $0.3 million reported in the same period last year [2] Key Business Metrics - Koss's gross profit for the fiscal second quarter reached $1.4 million, up from $1.1 million in the same period last year, driven by higher sales volumes and an improved product mix [3] - The gross margin expanded to 39.5%, an increase from 33% a year ago, benefiting from increased direct-to-consumer (DTC) sales and stronger European distribution [3] Operating Expenses - Selling, general, and administrative (SG&A) expenses for the second quarter slightly declined to $1.55 million from $1.58 million in the prior-year period [4] - The operating loss narrowed to $0.1 million from $0.5 million in the same quarter last year [4] Management Commentary - Chairman and CEO Michael J. Koss emphasized that sales to the company's two largest export distributors were crucial for revenue growth, with European market sales more than doubling year-over-year due to strong demand for new products [5] - Higher-margin DTC sales and a substantial custom order from a new U.S. customer contributed to improved financial performance, although these gains were partially offset by lower sales to the education sector, e-tailers, and domestic distributors [5] Supply Chain Considerations - Koss noted a slight increase in freight costs, with further increases anticipated, and the company is closely monitoring potential supply chain disruptions and tariff changes that could impact operations [6]

Financial Performance - Net sales for the three months ended December 31, 2024, were $3,557,086, representing a 5.9% increase from $3,360,124 in the same period of 2023[50]. - Gross profit for the three months ended December 31, 2024, was $1,404,957, with a gross profit margin of 39.5%, up from 33.0% in the prior year[50][55]. - Selling, general and administrative expenses for the three months ended December 31, 2024, decreased slightly to $1,546,741, or 43.5% of net sales, compared to 47.2% in the same period of 2023[50][57]. - Export sales for the three months ended December 31, 2024, were $1,376,000, a 90% increase compared to $693,000 in the prior year, driven by new product sales to European distributors[53]. - Domestic market sales declined by $486,000, or 18.2%, year over year for the three-month period ended December 31, 2024[54]. - The effective tax rate for the three months ended December 31, 2024, was 2.8%, compared to less than 1% in the same period of 2023[59]. Cash Flow and Investments - The company had $2.5 million in cash and cash equivalents and $7.2 million in short-term investments as of December 31, 2024[62]. - The Company experienced a net operating loss for the first half of fiscal year 2024, resulting in cash used in operating activities of $(50,419) compared to $(345,185) in the same period of fiscal year 2023[75]. - Cash used in investing activities for the six months ended December 31, 2024, was $(403,380), primarily for fixed asset expenditures, including approximately $346,000 for roof replacement[77]. - The Company had a net decrease in cash and cash equivalents of $(301,354) for the six months ended December 31, 2024, compared to $(566,808) in the prior year[75]. - The Company believes its existing cash and cash equivalents, along with cash provided by operating activities, will be sufficient to meet anticipated working capital and capital expenditure requirements over the next twelve months[80]. - The Company had no outstanding borrowings on its bank line of credit facility as of December 31, 2024[79]. Operational Challenges - The company expects shipment costs to increase in the coming quarters due to general rate increases and supply chain delays[56]. - The Company anticipates that economic uncertainties, including inflation and consumer confidence, will continue to impact its business performance[64]. - The Company continues to monitor supply chain disruptions and trade tensions, particularly with China, which may affect future shipments and costs[68]. - Cyberattacks are identified as a significant risk, potentially impacting the Company's operations and financial condition due to the reliance on information systems[72]. Strategic Decisions - The Company maintains a program focused on enforcing its intellectual property, particularly its wireless headphone technology patents[61]. - The lease for the Company's 126,000 square foot facility was renewed for five years at a fixed rate of $380,000 per year, with an option to renew for an additional five years starting July 1, 2028[83]. - The Company suspended sales to Russia following sanctions imposed due to the invasion of Ukraine, with no sales recorded during the three and six months ended December 31, 2024, and 2023[71]. - The Company issued 76,000 shares of common stock from employee stock option exercises during the six months ended December 31, 2024, compared to 20,000 shares in the same period of 2023[78].

Financial Performance - Net sales for Q2 2025 were $3,557,086, an increase of $196,962 or 5.9% compared to $3,360,124 in Q2 2024[2] - Net income for Q2 2025 was $94,142, a significant improvement from a net loss of $269,153 in Q2 2024, resulting in a basic and diluted net income per share of $0.01 compared to a loss of $0.03[2] - For the six months ended December 31, 2024, net sales were $6,758,954, up slightly by $24,892 or 0.4% from $6,734,062 in the prior year[3] - The company experienced a net loss of $325,393 for the six months ended December 31, 2024, an improvement from a net loss of $526,762 in the same period of the prior year[3] Gross Margin and Sales Growth - The gross margin increased to 38.1% for the first half of the fiscal year, compared to 32.3% for the same period in the prior year, driven by higher direct-to-consumer sales and new product sales[4] - Sales to the European market exceeded prior year sales by over 100%, contributing significantly to the overall sales growth[4] Expenses and Income - Selling, general and administrative expenses for the first half of the fiscal year were $3,356,800, compared to $3,120,802 in the prior year[9] - Interest income for the six months ended December 31, 2024, was $459,044, compared to $421,668 in the prior year[9] - The weighted-average number of basic shares for the six months ended December 31, 2024, was 9,332,844, slightly up from 9,238,002 in the prior year[9] Supply Chain and Costs - The company anticipates further increases in freight costs and is monitoring the supply chain and potential tariffs closely[4]