Koss(US:KOSS)2025-10-30 22:23Financial Performance - Net sales for the three months ended September 30, 2025, increased to $4,070,778, a 27.1% increase from $3,201,868 in the same period of 2024[11]. - Gross profit for the same period was $1,628,692, up from $1,172,926, reflecting a gross margin improvement[11]. - Net income for the three months ended September 30, 2025, was $243,729 compared to a net loss of $419,535 in the prior year[11]. - The Company reported a basic income per share of $0.03 for the three months ended September 30, 2025, compared to a loss per share of $(0.05) in the prior year[11]. - Gross profit margin improved to 40.0%, up from 36.6% in the prior year, representing a 340 basis point increase[59]. - Selling, general, and administrative expenses decreased by 7.5% to $1,674,732 from $1,810,059 in the same period last year[67]. - Direct-to-consumer (DTC) sales increased by $170,000, or 22.5%, contributing to overall sales growth[61]. - Sales to the Asia market saw a notable increase of 243% year-over-year, although export sales were down 27.6% compared to the previous year[61][62]. Assets and Liabilities - Total current assets as of September 30, 2025, were $22,669,666, slightly up from $22,604,105 as of June 30, 2025[10]. - Total assets increased to $37,663,395 as of September 30, 2025, compared to $37,184,609 as of June 30, 2025[10]. - Total liabilities rose to $6,808,157 as of September 30, 2025, from $6,574,574 as of June 30, 2025[10]. - Stockholders' equity increased to $30,855,238 as of September 30, 2025, compared to $30,610,035 as of June 30, 2025[10]. - Total segment assets increased to $37,663,395 from $37,184,609 in the previous quarter[47]. Cash Flow - Net cash provided by operating activities for the three months ended September 30, 2025, was $762,617, significantly higher than $201,554 in the same period of 2024[13]. - Cash and cash equivalents at the end of the period were $2,515,913, down from $2,807,797 at the beginning of the period[13]. - The Company experienced a net decrease in cash and cash equivalents of $291,884 for the three months ended September 30, 2025, compared to a decrease of $86,349 in the same period of 2024[84]. - Cash provided by operating activities was $762,617 for the three months ended September 30, 2025, primarily due to an IRS refund of $512,000 related to prior payroll tax overpayments[85]. - The Company incurred cash used in investing activities of $1,052,130 for the three months ended September 30, 2025, mainly due to the purchase of a new U.S. Treasury security[86]. Taxation - The effective tax rate for the three months ended September 30, 2025, was 1.1%, up from 0.7% in 2024, primarily due to the utilization of net operating loss carryforwards[36]. - The Company's tax loss carryforward as of September 30, 2025, was approximately $34,500,000, with future utilization expected to be uncertain[27]. - The effective tax rate for the quarter was 1.1%, compared to 0.7% in the prior year, due to net operating loss carryforwards[68]. Inventory and Receivables - Total inventories as of September 30, 2025, were $4,647,319, down from $4,885,067 as of June 30, 2025, reflecting a decrease in both raw materials and finished goods[34]. - Four customers represented over 10% of total accounts receivable as of September 30, 2025, accounting for approximately 61% of total accounts receivable[43]. Operational Insights - The Company operates in a single reportable segment focused on the design, manufacture, and sale of headphones and related accessories[44]. - The Company increased its deferral rates for domestic sales from 2.4% to 3% effective July 1, 2023, while decreasing the rate for export sales from 10% to 8%[39]. - The Company is monitoring the impact of ongoing macroeconomic conditions, including elevated inflation and supply chain disruptions, on its business performance[73]. - The Company anticipates higher costs for commodities and packaging materials due to recently enacted tariffs, which may affect pricing strategies in the upcoming quarter[78]. Legal and Compliance - The Company resolved a patent infringement matter with One-E-Way at a cost of $22,200, which was fully accrued in the financial statements as of June 30, 2025[101]. - There have been no changes in the Company's internal control over financial reporting that materially affected its financial reporting during the most recent fiscal quarter[98]. - The Company has no off-balance sheet transactions, obligations, or relationships as of September 30, 2025[94]. Stock and Financing - The Company has a stock repurchase program with a maximum authorization of $45,500,000, of which $43,360,247 had been expended through September 30, 2025[105]. - The Company had no outstanding borrowings on its $5,000,000 revolving secured credit facility as of September 30, 2025[38]. - The Company had no outstanding borrowings on its bank line of credit facility as of September 30, 2025[88]. - The Company has a lease for its 126,000 square foot facility at a fixed rate of $380,000 per year, renewed for five years ending June 30, 2028[92].