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Koss(KOSS) - 2025 Q3 - Quarterly Report
KOSSKoss(KOSS)2025-05-08 22:11

Financial Performance - For the three months ended March 31, 2025, Koss Corporation reported net sales of 2,781,006,anincreaseof5.42,781,006, 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,representingagrossmarginof39.01,084,672, 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,adecreasefromanetlossof642,135, a decrease from a net loss of 840,542 for the same period in 2024[12]. - The company reported a loss from operations of 519,006forthethreemonthsendedMarch31,2025,animprovementfromalossof519,006 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 316,742forthethreemonthsendedMarch31,2025,comparedtoanetlossof316,742 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)(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 21,917,161asofJune30,2024,primarilyduetoareductioninshort−terminvestments[9].−Totalliabilitiesroseto21,917,161 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 6,052,303asofJune30,2024,reflectinganincreaseincurrentliabilities[9].−Stockholders′equitydecreasedto6,052,303 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 31,147,176asofJune30,2024,primarilyduetothenetlossincurred[9].−ThetotalnetinventoriesasofMarch31,2025were31,147,176 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 4,473,680asofJune30,2024[31].−Theamortizedcostbasisofheld−to−maturityU.S.Treasurysecuritieswas4,473,680 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].−TheCompany’sdeferredcompensationliabilityincreasedto17,175,268[29]. - The Company’s deferred compensation liability increased to 2,241,804 as of March 31, 2025, up from 2,093,124asofJune30,2024[28].CashFlow−Cashandcashequivalentsincreasedto2,093,124 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 2,837,081atthebeginningoftheperiod[12].−Thecompanyexperiencedanetcashprovidedbyoperatingactivitiesof2,837,081 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 16,558intheprioryear[12].−CashprovidedbyoperatingactivitiesfortheninemonthsendedMarch31,2025,was16,558 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 16,558inthesameperiodin2024[76].−TheCompanyexperiencedanetincreaseincashandcashequivalentsof16,558 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 178,383inthesameperiodin2024[76].−CashusedininvestingactivitiesfortheninemonthsendedMarch31,2025,was178,383 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 33,600,000asofMarch31,2025,duetocumulativetaxablelossesoverthelastthreeyears[27].−Theremainingexpectedfederaltaxlosscarryforwardapproximates33,600,000 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,accountingfor57.71,603,678, 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 1,604,000comparedtothesameperiodintheprioryear[58].−FortheninemonthsendedMarch31,2025,selling,generalandadministrativeexpensesroseby1,604,000 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 4,960,000comparedto4,960,000 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,a47.73,022,000, 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 41,000incostsrelatedtoapatentinfringementmatter,whichhasbeenaccruedasofMarch31,2025[41].ManagementandGovernance−TheCompany′smanagementconcludedthatthedisclosurecontrolsandprocedureswereeffectiveasofMarch31,2025[90].−TherehavebeennochangesintheCompany′sinternalcontroloverfinancialreportingthatmateriallyaffecteditseffectivenessduringthemostrecentfiscalquarter[91].CreditFacilities−TheCompanyhasasecuredcreditfacilityof41,000 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].StockandShareholderInformation−KossCorporation′sweighted−averagenumberofsharesforbasiclosspersharewas9,375,795forthethreemonthsendedMarch31,2025,comparedto9,254,795forthesameperiodin2024[10].−TheCompanyhasastockrepurchaseprogramwithamaximumauthorizationof5,000,000[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].