Core Insights - Koss Corporation reported a significant decline in net sales for the second quarter of fiscal year 2026, with a decrease of 19.6% year-over-year, resulting in net sales of $2,861,379 compared to $3,557,086 in the same quarter of the previous year [2] - The company experienced a net loss of $565,407 for the second quarter, contrasting with a net income of $94,142 in the same period last year, leading to a basic and diluted net loss per share of $0.06 [2] - For the first six months of fiscal year 2026, net sales increased by 2.6% to $6,932,157, while the net loss remained relatively stable at $321,678 compared to $325,393 in the prior year [3] Sales Performance - The company saw strong sales growth in the Education market, but this was offset by a decline in European market sales due to the absence of new product launches that had previously boosted sales [4] - The direct-to-consumer (DTC) segment, which constitutes approximately 25% of total sales, grew by 13% year-over-year [4] Financial Metrics - Gross margins decreased by 260 basis points from 38.1% in the first half of fiscal year 2025 to 35.5% in the same period of fiscal year 2026, primarily due to the impact of high tariffs on products sourced from China [4] - The company reported a loss from operations of $1,014,578 for the three months ended December 31, 2025, compared to a loss of $141,784 in the same period the previous year [8] Operational Highlights - The cost of goods sold for the second quarter was $2,030,573, leading to a gross profit of $830,806, down from $1,404,957 in the same quarter of the previous year [8] - Selling, general, and administrative expenses increased to $1,845,384 for the second quarter, compared to $1,546,741 in the same period last year [8]