10-Q 1 koss-20231231x10q.htm 10-Q koss-20231231x10q
falseQ220240000056701YesYesP5YP3Y0000056701us-gaap:CommonStockMember2023-10-012023-12-310000056701us-gaap:CommonStockMember2023-07-012023-12-310000056701us-gaap:CommonStockMember2022-10-012022-12-310000056701us-gaap:CommonStockMember2022-07-012022-12-310000056701us-gaap:RetainedEarningsMember2023-12-310000056701us-gaap:AdditionalPaidInCapitalMember2023-12-310000056701us-gaap:RetainedEarningsMember2023-09-300000056701us-gaap:AdditionalPaidInCapitalMember2023-09-300000056701us-gaap:RetainedEarningsMember2023-06-300000056701us-gaap:AdditionalPaidInCapitalMember2023-06-300000056701us-gaap:RetainedEarningsMember2022-12-310000056701us-gaap:AdditionalPaidInCapitalMember2022-12-310000056701us-gaap:RetainedEarningsMember2022-09-300000056701us-gaap:AdditionalPaidInCapitalMember2022-09-300000056701us-gaap:RetainedEarningsMember2022-06-300000056701us-gaap:AdditionalPaidInCapitalMember2022-06-300000056701koss:EquityIncentivePlan2023Member2023-12-310000056701koss:TenPercentStockholderMemberus-gaap:EmployeeStockOptionMemberkoss:EquityIncentivePlan2023Member2023-07-012023-12-310000056701us-gaap:EmployeeStockOptionMemberkoss:EquityIncentivePlan2023Member2023-07-012023-12-310000056701srt:MinimumMemberus-gaap:EmployeeStockOptionMemberkoss:EquityIncentivePlan2023Memberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-07-012023-12-310000056701srt:MaximumMemberus-gaap:EmployeeStockOptionMemberkoss:EquityIncentivePlan2023Memberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-07-012023-12-310000056701koss:ExportSalesMember2023-12-310000056701koss:DomesticSalesMember2023-12-310000056701koss:ExportSalesMember2022-06-300000056701koss:DomesticSalesMember2022-06-300000056701us-gaap:NonUsMember2023-10-012023-12-310000056701country:US2023-10-012023-12-310000056701us-gaap:NonUsMember2023-07-012023-12-310000056701country:US2023-07-012023-12-310000056701us-gaap:NonUsMember2022-10-012022-12-310000056701country:US2022-10-012022-12-310000056701us-gaap:NonUsMember2022-07-012022-12-310000056701country:US2022-07-012022-12-310000056701srt:ScenarioPreviouslyReportedMember2023-09-300000056701srt:RestatementAdjustmentMember2023-09-3000000567012023-09-300000056701srt:ScenarioPreviouslyReportedMember2022-09-300000056701srt:RestatementAdjustmentMember2022-09-3000000567012022-09-300000056701srt:ScenarioPreviouslyReportedMember2022-06-300000056701srt:RestatementAdjustmentMember2022-06-300000056701us-gaap:RetainedEarningsMember2023-10-012023-12-310000056701us-gaap:RetainedEarningsMember2023-07-012023-12-310000056701us-gaap:RetainedEarningsMember2022-10-012022-12-310000056701us-gaap:RetainedEarningsMember2022-07-012022-12-310000056701koss:CreditAgreementMemberkoss:TownBankMember2023-06-300000056701koss:AdditionalRenewalMember2023-12-310000056701us-gaap:StateAndLocalJurisdictionMember2023-10-012023-12-310000056701us-gaap:DomesticCountryMember2023-10-012023-12-310000056701us-gaap:StateAndLocalJurisdictionMember2023-07-012023-12-310000056701us-gaap:DomesticCountryMember2023-07-012023-12-310000056701us-gaap:StateAndLocalJurisdictionMember2022-10-012022-12-310000056701us-gaap:DomesticCountryMember2022-10-012022-12-310000056701us-gaap:StateAndLocalJurisdictionMember2022-07-012022-12-310000056701us-gaap:DomesticCountryMember2022-07-012022-12-310000056701srt:RestatementAdjustmentMember2022-10-012022-12-310000056701srt:RestatementAdjustmentMember2022-07-012022-12-310000056701koss:KossEmployeeStockOwnershipTrustMember2023-10-012023-12-310000056701koss:KossEmployeeStockOwnershipTrustMember2023-07-012023-12-310000056701koss:KossEmployeeStockOwnershipTrustMember2022-10-012022-12-310000056701koss:KossEmployeeStockOwnershipTrustMember2022-07-012022-12-310000056701srt:ScenarioPreviouslyReportedMember2022-10-012022-12-310000056701srt:ScenarioPreviouslyReportedMember2022-07-012022-12-310000056701srt:OfficerMember2023-12-310000056701srt:OfficerMember2023-06-300000056701srt:OfficerMember2023-07-012023-12-310000056701srt:OfficerMember2022-07-012022-12-310000056701us-gaap:USTreasurySecuritiesMember2023-12-310000056701us-gaap:USTreasurySecuritiesMember2023-06-300000056701koss:CreditAgreementMemberkoss:TownBankMember2023-07-012023-12-310000056701koss:CustomerTwoMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2023-07-012023-12-310000056701koss:CustomerThreeMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2023-07-012023-12-310000056701koss:CustomerOneMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2023-07-012023-12-310000056701koss:CustomerTwoMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2022-07-012023-06-300000056701koss:CustomerThreeMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2022-07-012023-06-300000056701koss:CustomerOneMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2022-07-012023-06-300000056701us-gaap:CommonStockMember2023-12-310000056701us-gaap:CommonStockMember2023-09-300000056701us-gaap:CommonStockMember2023-06-300000056701us-gaap:CommonStockMember2022-12-310000056701us-gaap:CommonStockMember2022-09-300000056701us-gaap:CommonStockMember2022-06-3000000567012022-12-3100000567012022-06-300000056701us-gaap:AdditionalPaidInCapitalMember2023-10-012023-12-3100000567012023-10-012023-12-310000056701us-gaap:AdditionalPaidInCapitalMember2023-07-012023-12-310000056701us-gaap:AdditionalPaidInCapitalMember2022-10-012022-12-3100000567012022-10-012022-12-310000056701us-gaap:AdditionalPaidInCapitalMember2022-07-012022-12-310000056701srt:ScenarioPreviouslyReportedMember2023-06-300000056701srt:RestatementAdjustmentMember2023-06-3000000567012023-12-3100000567012023-06-300000056701us-gaap:AccountsReceivableMember2023-07-012023-12-310000056701us-gaap:AccountsReceivableMember2022-07-012023-06-300000056701koss:CreditAgreementMemberkoss:TownBankMember2023-12-310000056701koss:AdditionalRenewalMember2023-07-012023-12-310000056701srt:MinimumMember2023-07-012023-12-310000056701srt:MaximumMember2023-07-012023-12-3100000567012022-07-012022-12-3100000567012024-01-2900000567012023-07-012023-12-31xbrli:pureiso4217:USDxbrli:shareskoss:customeriso4217:USDxbrli:shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 for the quarterly period ended December 31, 2023

 

OR

 

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 Commission File Number 0-3295

 

KOSS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

DELAWARE

 

39-1168275

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

 

4129 North Port Washington Avenue, Milwaukee,

Wisconsin

 

53212

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (414) 964-5000

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.005 per share

KOSS

Nasdaq Capital Market

 

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

 

Large accelerated filer 

 

Accelerated filer 

 

 

 

Non-accelerated filer 

 

Smaller reporting company 

 

 

 

 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).  Yes No

 

At January 29, 2024, there were 9,254,795 shares outstanding of the registrant’s common stock. 

  

KOSS CORPORATION

FORM 10-Q

December 31, 2023

 

INDEX

 

 

 

 

Page

 

 

 

PART I

FINANCIAL INFORMATION

3

 

Item 1.

Financial Statements (Unaudited)

3

 

 

Condensed Consolidated Balance Sheets as of December 31, 2023 and June 30, 2023

3

 

 

Condensed Consolidated Statements of Operations for the Three and Six months ended December 31, 2023 and 2022

4

 

 

Condensed Consolidated Statements of Cash Flows for the Three and Six months ended December 31, 2023 and 2022

5

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six months ended December 31, 2023 and 2022

6

 

 

Notes to Condensed Consolidated Financial Statements

7

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

15

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

 

Item 4.

Controls and Procedures

21

PART II

OTHER INFORMATION

21

 

Item 1.

Legal Proceedings

21

Item 1A.

Risk Factors

21

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

22

 

Item 6.

Exhibits

23

 

PART I

FINANCIAL INFORMATION

Item 1.    Financial Statements

 

KOSS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 

December 31, 2023

June 30, 2023

ASSETS

Current assets:

Cash and cash equivalents

$

2,524,254

$

3,091,062

Short term investments

12,071,737

17,064,274

Accounts receivable, less allowance for credit losses of $1,922 and $6,027, respectively

1,513,908

1,379,517

Inventories

5,166,667

6,423,441

Prepaid expenses and other current assets

1,062,264

1,002,514

Interest receivable

134,046

51,150

Income taxes receivable

127,363

86,901

Total current assets

22,600,239

29,098,859

Equipment and leasehold improvements, net

1,261,850

953,903

Other assets:

Long term investments

5,000,920

Operating lease right-of-use asset

2,884,497

3,015,887

Cash surrender value of life insurance

6,254,684

6,020,048

Total other assets

14,140,101

9,035,935

Total assets

$

38,002,190

$

39,088,697

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

262,502

$

267,513

Accrued liabilities

923,243

1,342,039

Deferred revenue

334,672

450,312

Operating lease liability

233,492

236,225

Income taxes payable

3,758

87,237

Total current liabilities

1,757,667

2,383,326

Long-term liabilities:

Deferred compensation

2,060,375

1,997,120

Deferred revenue

120,644

113,003

Operating lease liability

2,663,148

2,787,970

Total long-term liabilities

4,844,167

4,898,093

Total liabilities

6,601,834

7,281,419

Stockholders' equity:

Common stock, $0.005 par value, authorized 20,000,000 shares; issued and outstanding 9,254,795 and 9,234,795, respectively

46,274

46,174

Paid in capital

13,233,733

13,113,993

Retained earnings

18,120,349

18,647,111

Total stockholders' equity

31,400,356

31,807,278

Total liabilities and stockholders' equity

$

38,002,190

$

39,088,697

 

 The accompanying notes are an integral part of these condensed consolidated financial statements. 

KOSS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

Three Months Ended

Six Months Ended

December 31

December 31

2023

2022

2023

2022

Net sales

$

3,360,124

$

3,281,333

$

6,734,062

$

6,645,462

Cost of goods sold

2,251,684

2,145,769

4,557,932

4,314,074

Gross profit

1,108,440

1,135,564

2,176,130

2,331,388

Selling, general and administrative expenses

1,584,523

2,482,688

3,120,802

26,157,905

(Loss) from operations

(476,083)

(1,347,124)

(944,672)

(23,826,517)

Other income

33,000,000

Interest income

208,809

97,832

421,668

124,888

(Loss) income before income tax provision (benefit)

(267,274)

(1,249,292)

(523,004)

9,298,371

Income tax provision (benefit)

1,879

(103,102)

3,758

494,839

Net (loss) income

$

(269,153)

$

(1,146,190)

$

(526,762)

$

8,803,532

(Loss) income per common share:

Basic

$

(0.03)

$

(0.12)

$

(0.06)

$

0.96

Diluted

$

(0.03)

$

(0.12)

$

(0.06)

$

0.90

Weighted-average number of shares:

Basic

9,241,208

9,186,208

9,238,002

9,171,746

Diluted

9,241,208

9,186,208

9,238,002

9,817,398

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements. 

KOSS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

Six Months Ended

December 31

2023

2022

Operating activities:

Net (loss) income

$

(526,762)

$

8,803,532

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

(Recovery of) Provision for credit losses

(4,105)

8,473

Depreciation of equipment and leasehold improvements

93,647

135,915

Accretion of discount on treasury securities

(234,298)

(16,232)

Noncash operating lease expense

3,835

4,476

Stock-based compensation expense

84,040

166,708

Change in cash surrender value of life insurance

(152,892)

(143,691)

Provision (benefit) for deferred compensation

63,255

(46,075)

Net changes in operating assets and liabilities:

Accounts receivable

(130,286)

558,058

Inventories

1,256,774

801,766

Prepaid expenses and other current assets

(59,750)

(164,503)

Interest receivable

(82,896)

(128,030)

Income taxes receivable

(40,462)

Income taxes payable

(83,479)

494,839

Accounts payable

(5,011)

(510,681)

Accrued liabilities

(418,796)

732,493

Deferred revenue

(107,999)

(158,464)

Net cash (used in) provided by operating activities

(345,185)

10,538,583

Investing activities:

Purchase of equipment and leasehold improvements

(401,594)

(50,492)

Life insurance premiums paid

(81,744)

(87,995)

Proceeds from the maturity of treasury securities

7,223,000

Purchases of treasury securities

(6,997,085)

(14,884,929)

Net cash used in investing activities

(257,423)

(15,023,416)

Financing activities:

Proceeds from exercise of stock options

35,800

88,940

Net cash provided by financing activities

35,800

88,940

Net (decrease) in cash and cash equivalents

(566,808)

(4,395,893)

Cash and cash equivalents at beginning of period

3,091,062

9,208,170

Cash and cash equivalents at end of period

$

2,524,254

$

4,812,277

Supplemental cash flow information:

Cash paid for income taxes

$

127,700

$

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements. 

KOSS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

 

Six Months Ended December 31, 2023

Common Stock

Paid in

Retained

Shares

Amount

Capital

Earnings

Total

Balance, June 30, 2023

9,234,795

$

46,174

$

13,113,993

$

18,647,111

$

31,807,278

Net (loss)

(526,762)

(526,762)

Stock-based compensation expense

84,040

84,040

Stock option exercises

20,000

100

35,700

35,800

Balance, December 31, 2023

9,254,795

$

46,274

$

13,233,733

$

18,120,349

$

31,400,356

Six Months Ended December 31, 2022

Common Stock

Paid in

Retained

Shares

Amount

Capital

Earnings

Total

Balance, June 30, 2022

9,147,795

$

45,739

$

12,653,402

$

10,327,899

$

23,027,040

Net income

8,803,532

8,803,532

Stock-based compensation expense

166,708

166,708

Stock option exercises

42,000

210

88,730

88,940

Balance, December 31, 2022

9,189,795

$

45,949

$

12,908,840

$

19,131,431

$

32,086,220

Three Months Ended December 31, 2023

Common Stock

Paid in

Retained

Shares

Amount

Capital

Earnings

Total

Balance, September 30, 2023

9,234,795

$

46,174

$

13,160,785

$

18,389,502

$

31,596,461

Net (loss)

(269,153)

(269,153)

Stock-based compensation expense

37,248

37,248

Stock option exercises

20,000

100

35,700

35,800

Balance, December 31, 2023

9,254,795

$

46,274

$

13,233,733

$

18,120,349

$

31,400,356

Three Months Ended December 31, 2022

Common Stock

Paid in

Retained

Shares

Amount

Capital

Earnings

Total

Balance, September 30, 2022

9,179,795

$

45,899

$

12,811,717

$

20,277,621

$

33,135,237

Net (loss)

(1,146,190)

(1,146,190)

Stock-based compensation expense

78,673

78,673

Stock option exercises

10,000

50

18,450

18,500

Balance, December 31, 2022

9,189,795

$

45,949

$

12,908,840

$

19,131,431

$

32,086,220

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

KOSS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

(Unaudited)

 

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A)    BASIS OF PRESENTATION

 

The condensed consolidated balance sheets as of December 31, 2023 and June 30, 2023, the condensed consolidated statements of operations for the three and six months ended December 31, 2023 and 2022, the condensed consolidated statements of cash flows for the six months ended December 31, 2023 and 2022, and the condensed consolidated statements of stockholders' equity for the three and six months ended December 31, 2023 and 2022, have been prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and have not been audited.  In the opinion of management, all adjustments (con