Koss(KOSS) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended December 31, 2024, were $3,557,086, representing a 5.9$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$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$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$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].