Koss Corporation Reports Slight Increase in Net Sales but Rising Losses for Third Quarter

Koss Corporation reported its financial results for the three and nine months ended March 31, 2026, revealing a slight increase in net sales but a notable rise in losses compared to the previous fiscal period. For the third quarter, net sales reached $2.82 million, a 1.6% increase from $2.78 million in the same period last year. The nine-month figures also showed growth, with sales totaling $9.76 million, up 2.3% from $9.54 million. However, the company experienced a net loss of $546,587 for the quarter, compared to a loss of $316,742 in the prior year, and a nine-month loss of $868,265 versus $642,135 in the previous year.

The increase in sales was primarily driven by a 40% rise in domestic distributor orders and a 23% increase in direct-to-consumer shipments, although this was offset by a significant decline in export sales, particularly in Asia and Canada. Export sales fell by 37.7% in the third quarter, largely due to reduced orders from key distributors in Europe and political factors affecting Canadian purchases. The company noted that while domestic sales were bolstered by a large order from the education sector, challenges in international markets impacted overall performance.

Koss Corporation's gross profit margin also declined, with gross profit as a percentage of net sales dropping to 35.5% for the third quarter, down from 39.0% in the prior year. This decrease was attributed to increased costs from tariffs and higher freight rates, which affected the cost structure. Selling, general, and administrative expenses rose by 7.4% in the third quarter, driven by higher legal fees and increased commissions, reflecting the company's ongoing investment in its operations and legal matters related to patent enforcement.

In terms of strategic developments, Koss reclassified its debt securities from held-to-maturity to available-for-sale, reflecting a shift in its liquidity management strategy to support potential acquisitions. The company reported total assets of $36.06 million as of March 31, 2026, down from $37.18 million a year earlier, with cash and cash equivalents decreasing to $1.90 million. The company continues to monitor macroeconomic conditions, including inflation and geopolitical tensions, which may impact its operations and financial outlook. Management remains optimistic about leveraging its existing resources and credit facilities to navigate these challenges and support future growth initiatives.