Koss Corporation Reports 19.6% Decline in Quarterly Net Sales, Net Loss of $565,407

Koss Corporation reported a decline in financial performance for the second quarter of fiscal year 2026, with net sales of $2.86 million, a decrease of 19.6% compared to $3.56 million in the same period last year. For the first half of the fiscal year, total sales reached $6.93 million, reflecting a modest increase of 2.6% from $6.76 million in the prior year. The decrease in quarterly sales was attributed primarily to a lack of repeat sales from new products launched in the European market during the previous year, although there were gains in domestic distributor sales and a slight increase in direct-to-consumer sales.

The company's gross profit margin also experienced a significant decline, falling to 29.0% for the three months ended December 31, 2025, down from 39.5% in the same quarter of the previous year. This reduction in margins was largely due to the impact of tariffs on inventory sold during the period, with some products facing tariffs as high as 145%. Despite these challenges, a favorable customer mix, including higher-margin domestic distributor and direct-to-consumer sales, helped mitigate some of the adverse effects of the tariffs.

Koss Corporation's selling, general, and administrative expenses increased to $1.85 million for the three months ended December 31, 2025, up 19.3% from $1.55 million in the prior year. This rise was primarily driven by $250,000 in legal fees related to patent litigation, as well as an increase in deferred compensation expenses. The company reported a net loss of $565,407 for the quarter, compared to a net income of $94,142 in the same period last year. For the first half of the fiscal year, the net loss totaled $321,678, slightly improved from a loss of $325,393 in the previous year.

Operationally, Koss Corporation maintained a strong liquidity position with $2.46 million in cash and cash equivalents and $13.01 million in short-term investments as of December 31, 2025. The company also had no outstanding borrowings on its $5 million credit facility. Looking ahead, Koss Corporation remains cautious about the impact of ongoing macroeconomic conditions, including inflation, tariff volatility, and geopolitical tensions, on its business operations. The company plans to continue monitoring these factors closely while adapting its strategies to maintain product availability and manage costs effectively.