Koss(US:KOSS)2026-01-29 23:10Financial Performance - Net sales for the three months ended December 31, 2025, were $2,861,379, a decrease of 19.5% compared to $3,557,086 for the same period in 2024[11]. - Gross profit for the six months ended December 31, 2025, was $2,459,498, down from $2,577,883 in 2024, reflecting a decline of 4.6%[11]. - The company reported a net loss of $565,407 for the three months ended December 31, 2025, compared to a net income of $94,142 in the same period of 2024[11]. - For the six months ended December 31, 2025, Koss Corporation reported a net loss of $321,678, compared to a net loss of $325,393 for the same period in 2024, indicating a slight improvement[17]. - The net sales for the three months ended December 31, 2025, were $2,861,379, a decrease from $3,557,086 in the same period of 2024, while six-month net sales increased to $6,932,157 from $6,758,954[41]. - The gross profit margin for the three months ended December 31, 2025, was 29.0%, down from 39.5% in the same period of 2024, and the six-month gross profit margin decreased to 35.5% from 38.1%[47]. Assets and Liabilities - Total current assets decreased to $21,877,328 as of December 31, 2025, from $22,604,105 as of June 30, 2025, a decline of 3.2%[10]. - Total liabilities decreased to $6,458,748 as of December 31, 2025, from $6,574,574 as of June 30, 2025, a reduction of 1.8%[10]. - Total stockholders' equity decreased to $30,310,930 as of December 31, 2025, from $30,610,035 as of June 30, 2025, a decline of 1.0%[10]. - The total stockholders' equity decreased from $30,993,892 as of December 31, 2024, to $30,310,930 as of December 31, 2025, reflecting a decline of approximately 2.2%[17]. - As of December 31, 2025, total segment assets were $36,769,678, a slight decrease from $37,184,609 on June 30, 2025[48]. Cash Flow - Cash and cash equivalents at the end of the period were $2,464,838, down from $2,807,797 at the beginning of the period, representing a decrease of 12.2%[13]. - Cash provided by operating activities was $1,823,000 for the six months ended December 31, 2025, compared to cash used of $50,419 in the same period in 2024[89]. - Cash used by investing activities was $361,092 for the six months ended December 31, 2025, primarily due to capital expenditures[91]. - The Company had $2.5 million in cash and cash equivalents and $13.0 million in short-term investments as of December 31, 2025[76]. Expenses - The company incurred selling, general and administrative expenses of $3,520,116 for the six months ended December 31, 2025, an increase of 4.9% from $3,356,800 in 2024[11]. - Selling, general, and administrative expenses increased by $298,000, or 19.3%, to $1,845,000 for the three months ended December 31, 2025, compared to $1,547,000 for the same period in the prior year[71]. - The stock-based compensation expense for the six months ended December 31, 2025, was $1,474, a significant decrease from $19,664 for the same period in 2024[17]. Income and Other Income - Interest income for the six months ended December 31, 2025, was $495,612, compared to $459,044 in 2024, reflecting an increase of 8.0%[11]. - The company recorded licensing proceeds of $250,000 as other income for the three and six months ended December 31, 2025, with no such proceeds reported in the prior year[26]. - Other income for the three and six months ended December 31, 2025 consisted entirely of $250,000 in non-recurring licensing proceeds, with no other income recorded for the same periods in 2024[72]. Tax and Deferred Compensation - The company had a tax loss carryforward of approximately $34,760,000 as of December 31, 2025, which may limit future tax payment requirements due to net operating loss carryforwards[29]. - The effective tax rate for the three months ended December 31, 2025, was less than 1%, compared to 2.8% for the same period in 2024[37]. - The remaining expected federal tax loss carryforward approximates $34,760,000, resulting in a deferred tax asset of roughly $8,877,000 as of December 31, 2025[74]. - The Company anticipates that the effective tax rate will continue to be reduced by the utilization of available federal and state net operating loss carryforwards[73]. - The company reported a provision for deferred compensation of $220,249 for the six months ended December 31, 2025, compared to $134,665 in 2024, an increase of 63.6%[13]. - The deferred compensation liability increased from $2,226,454 as of June 30, 2025, to $2,446,703 as of December 31, 2025, reflecting an increase of approximately 9.9%[30]. Inventory and Sales - The company had inventories of $4,838,377 as of December 31, 2025, down from $4,885,067 on June 30, 2025, with a reserve for obsolete inventory of $1,922,958[35]. - Export sales for the three months ended December 31, 2025, were $612,000, a decline of 55.5% from $1,375,000 in the prior year[66]. - Domestic market sales increased by $68,000, or 3.1%, to $2,249,000 for the three months ended December 31, 2025[67]. Credit and Financing - The company has a secured credit facility of $5,000,000 with no outstanding borrowings as of December 31, 2025[39]. - The Company has a secured credit facility of $5,000,000 with a sublimit of $1,000,000 for letters of credit, with no outstanding borrowings as of December 31, 2025[95]. Legal and Compliance - The Company is involved in ongoing patent infringement litigation against Skullcandy, Inc. regarding wireless headphone technology[104]. - The stock repurchase program has a remaining authorized amount of $2,139,753 as of December 31, 2025, with a total of $43,360,247 expended since its inception[107]. - There have been no significant changes in critical accounting policies and estimates since the last Annual Report for the fiscal year ended June 30, 2025[97]. - The Company has not experienced any changes in internal control over financial reporting that materially affected its operations during the most recent fiscal quarter[102]. - The Company continues to monitor the impact of macroeconomic conditions, including inflation and supply chain disruptions, on its business operations[78]. - There have been no material changes to the risk factors affecting the Company since the last Annual Report[105]. Facility and Lease - The lease for the 126,000 square foot facility is fixed at $380,000 per year, renewed for five years until June 30, 2028, with an option to extend for another five years at $397,000 annually[96]. - The Company is responsible for all property maintenance, insurance, taxes, and other normal expenses related to the leased facility[96].