Koss Corp 10-Q for FY2024 Q2

Koss Corp (KOSS)

10-Q 2024-02-02 For: 2023-12-31

Added on April 06, 2026

About this 10-Q

Koss Corp filed this 10-Q on February 2, 2024, covering the quarter ended December 31, 2023 (FY2024 Q2).

Headline figures

Quarter ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.36M; up 2.4% from $3.28M a year earlier
Net loss: $269.15K; compared with a net loss of $1.15M a year earlier
Diluted EPS: -$0.03; compared with -$0.12 a year earlier

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DELAWARE		39-1168275
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)


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


Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☑		Smaller reporting company ☑

		Emerging growth company ☐


			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



	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



	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



	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


	As of June 30, 2023
	As Previously Reported	Revision	As Revised
Condensed consolidated balance sheet:
Prepaid expenses and other current assets	284,622	717,892	1,002,514
Total current assets	28,380,967	717,892	29,098,859
Total assets	38,370,805	717,892	39,088,697
Accrued liabilities	970,530	371,509	1,342,039
Total current liabilities	2,011,817	371,509	2,383,326
Total liabilities	6,909,910	371,509	7,281,419
Retained earnings	18,300,728	346,383	18,647,111
Total stockholders' equity	31,460,895	346,383	31,807,278


	December 31, 2023		June 30, 2023
Deferred income tax assets:
Deferred compensation	$	516,932	$	491,608
Stock-based compensation		77,530		117,607
Accrued expenses and reserves		549,015		571,719
Deferred revenue		108,033		138,665
Federal and state net operating loss carryforwards		8,260,294		8,216,671
IRC Section 174 research and development costs		113,521		63,855
Credit carryforwards		188,893		169,552
Equipment and leasehold improvements		107,258		136,294
Lease liability		684,670		744,431
Valuation allowance		(9,893,613)		(9,906,018)
Total deferred income tax assets		712,533		744,384

Deferred income tax liabilities:
ROU asset		(680,737)		(742,386)
Other		(31,796)		(1,998)
Total deferred income tax liabilities		(712,533)		(744,384)
Net deferred income tax assets	$	-	$	-


	December 31, 2023
	Amortized cost basis		Gross unrealized gains		Gross unrealized losses		Fair Value
US Treasury securities	$	17,072,657	$	—	$	(12,757)	$	17,059,900
Total	$	17,072,657	$	—	$	(12,757)	$	17,059,900


	December 30, 2023
	Amortized Cost Basis		Fair value
Due within one year	$	12,071,737	$	12,052,010
Due after one year through five years		5,000,920		5,007,890
Total	$	17,072,657	$	17,059,900



	December 31, 2023		June 30, 2023
Raw materials	$	2,030,598	$	2,071,360
Finished goods		5,074,004		6,178,186
Inventories, gross		7,104,602		8,249,546
Reserve for obsolete inventory		(1,937,935)		(1,826,105)
Inventories, net	$	5,166,667	$	6,423,441



Total cash (used in) provided by:	2023		2022
Operating activities	$	(345,185)	$	10,538,583
Investing activities		(257,423)		(15,023,416)
Financing activities		35,800		88,940
Net (decrease) in cash and cash equivalents	$	(566,808)	$	(4,395,893)


	Total # of ‎Shares ‎Purchased	Average ‎Price Paid ‎per Share		Total Number of Shares Purchased as ‎Part of Publicly Announced Plan (1)	Approximate Dollar Value of ‎Shares Available under Repurchase Plan
October 1 - October 31, 2023	—	$	—	—	$	2,139,753
November 1 - November 30, 2023	—	$	—	—	$	2,139,753
December 1 - December 31, 2023	—	$	—	—	$	2,139,753


KOSS CORPORATION

/s/ Michael J. Koss		February 2, 2024
Michael J. Koss
Chairman
Chief Executive Officer

/s/ Kim M. Schulte		February 2, 2024
Kim M. Schulte
Chief Financial Officer
Principal Accounting Officer


Grantee:	Participant Name
Type of Option:	Incentive Stock Option (ISO)
Grant Date:	TBD
Number of Shares Purchasable:	TBD at Grant Date
Option Price per Share:	$TBD
Expiration Date:	Ten years from the Grant Date


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
United States	$	2,666,978	$	2,155,876	$	5,270,669	$	4,892,309
Export		693,146		1,125,457		1,463,393		1,753,153
Net Sales	$	3,360,124	$	3,281,333	$	6,734,062	$	6,645,462



	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
Numerator
Net (loss) income	$	(269,153)	$	(1,146,190)	$	(526,762)	$	8,803,532

Denominator
Weighted average shares, basic		9,241,208		9,186,208		9,238,002		9,171,746
Dilutive effect of stock compensation awards (1)		—		—		—		645,652
Diluted shares		9,241,208		9,186,208		9,238,002		9,817,398

Net (loss) income attributable to common shareholders per share:
Basic	$	(0.03)	$	(0.12)	$	(0.06)	$	0.96
Diluted	$	(0.03)	$	(0.12)	$	(0.06)	$	0.90


Exhibit No.	Exhibit Description
3.1	Amended and Restated Certificate of Incorporation of Koss Corporation, as in effect on November 19, 2009. Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2009 and incorporated herein by reference.
3.2	By-Laws of Koss Corporation. Filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1996 and incorporated herein by reference.
3.3	Amendment to the By-Laws of Koss Corporation. Filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K on March 7, 2006 and incorporated herein by reference.
3.4	Amendment to the By-Laws of Koss Corporation. Filed as Exhibit 3.4 to the Company’s Annual Report on Form 10-K on August 27, 2020 and incorporated herein by reference.
10.1#	Koss Corporation 2023 Equity Incentive Plan. Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on October 23, 2023 and incorporated herein by reference.
10.2#	Koss Corporation 2023 Equity Incentive Plan Notice of Grant of Stock Option Award*
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer *
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer *
32.1	Section 1350 Certification of Chief Executive Officer **
32.2	Section 1350 Certification of Chief Financial Officer **
101	The following financial information from Koss Corporation's Quarterly Report on Form 10-Q for the quarter ended December 31, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of December 31, 2023 and June 30, 2023, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended December 31, 2023 and 2022 (iii) Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended December 31, 2023 and 2022, (iv) Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the three and six months ended December 31, 2023 and 2022 and (v) the Notes to Condensed Consolidated Financial Statements (Unaudited). *


Dated: February 2, 2024

/s/ Michael J. Koss
Michael J. Koss
Chairman and Chief Executive Officer