Koss(US:KOSS)2023-10-26 22:08Financial Performance - Net sales for the three months ended September 30, 2023, were $3,373,938, representing a slight increase of 0.3% compared to $3,364,129 in the same period of 2022, which had a significant decline of 22.9%[61] - Gross profit decreased to $1,067,690 for the three months ended September 30, 2023, with a gross profit margin of 31.6%, down from 35.5% in the prior year[61] - Selling, general and administrative expenses significantly declined by $22,144,000, or 93.5%, from $23,680,196 in the prior year to $1,536,279 in the current period[68] - Interest income increased to $212,859 for the three months ended September 30, 2023, compared to $27,056 in the same period of 2022[61] - Export net sales increased by $129,000, or 20.1%, for the three months ended September 30, 2023, primarily due to an order from a distributor in Eastern Europe[64] - Domestic market net sales declined by $119,000, or 4.4%, to approximately $2,603,000, impacted by a 28.6% drop in direct-to-consumer sales[65] - The company recorded no other income for the three months ended September 30, 2023, compared to $33,000,000 in licensing proceeds in the same period of 2022[69] Cash Flow and Liquidity - Cash used in operating activities for Q3 2023 was $(713,247), a significant decrease from $11,692,114 in Q3 2022[87] - Cash used in investing activities for Q3 2023 was $(393,536), primarily for fixed asset expenditures, including approximately $300,000 for roof replacement[89] - No cash was generated from financing activities in Q3 2023, compared to $70,440 from stock option exercises in Q3 2022[90] - The net decrease in cash and cash equivalents for Q3 2023 was $(1,106,783), contrasting with an increase of $11,662,787 in Q3 2022[87] - As of September 30, 2023, the company had no outstanding borrowings on its bank line of credit facility[91] - The company believes its existing cash and cash equivalents, along with investments in short-term U.S. Treasury securities, will be sufficient for anticipated working capital needs over the next twelve months[93] Tax and Compliance - The effective tax rate for the three months ended September 30, 2023, was less than 1%, compared to 5.7% in the same period of 2022[70] - The company is in compliance with all covenants related to its credit agreement as of September 30, 2023[94] - The company has not reported any off-balance sheet transactions or obligations as of September 30, 2023[96] Future Outlook - The company anticipates continued inflationary pressures and supply chain disruptions impacting future performance, particularly due to geopolitical tensions and rising transportation costs[76][78] Lease and Stock Activities - The company renewed its lease for a 126,000 square foot facility at a fixed rate of $380,000 per year, with an option to renew for an additional five years starting July 1, 2028[95] - The company has not engaged in any stock repurchase activities during the three months ended September 30, 2023[92]