Koss Sales Edge Up to $12.6M, IP Enforcement Key Amid Global Risks

TL;DR

**Koss is fighting to stay relevant with IP lawsuits and Amazon sales, but its small size and global supply chain make it a risky bet.**

AI Summary

KOSS CORP reported net sales of $12,624,170 for the fiscal year ended June 30, 2025, an increase from $12,265,069 in fiscal year 2024. Approximately 84% of fiscal year 2025 sales were from stereo headphones for music listening, with the remaining 16% from headphones for communications, education, metal detectors, and OEM. The company's largest sales concentration was its direct-to-consumer (DTC) offerings via the Amazon portal, accounting for approximately 19% of net sales in fiscal year 2025, up from 17% in fiscal year 2024. The five largest customers represented about 50% of net sales in fiscal year 2025. KOSS CORP continues to enforce its extensive intellectual property portfolio, holding over 400 trademarks in 88 countries and over 170 patents in 26 countries. The company faces risks from foreign manufacturing dependencies, potential trade barriers, and currency fluctuations, as evidenced by the suspension of sales to Russia and impacted sales to Ukraine due to geopolitical conflicts.

Why It Matters

Koss's slight revenue increase to $12.6 million, driven by DTC growth on Amazon, signals resilience in a competitive audio market. For investors, the heavy reliance on its top five customers (50% of sales) and Amazon (19% of sales) presents concentration risk, while its aggressive intellectual property enforcement program could be a significant value driver or a source of litigation expense. Employees benefit from a stable, albeit small, workforce of 28, but the company's dependence on foreign manufacturing introduces supply chain vulnerabilities. Customers continue to receive products from a brand with a long history, but geopolitical events like the Russia-Ukraine conflict directly impact international sales, affecting market reach and product availability.

Risk Assessment

Risk Level: high — KOSS CORP faces high risk due to significant customer concentration, with its five largest customers accounting for approximately 50% of net sales in fiscal year 2025. Additionally, the company is heavily reliant on foreign manufacturing facilities in China and Taiwan, exposing it to business interruptions from natural disasters, war, disease, and government intervention through tariffs or trade restrictions, with recovery of top 10 selling models estimated to take 18-24 months.

Analyst Insight

Investors should closely monitor KOSS CORP's intellectual property litigation outcomes and its ability to diversify its customer base beyond the current 50% concentration with its top five customers. Given the high reliance on foreign manufacturing, investors should also assess geopolitical developments and trade policies that could impact supply chain stability and profitability.

Financial Highlights

debt To Equity

N/A

revenue

$12,624,170

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

N/A

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

+2.9%

Revenue Breakdown

Key Numbers

• $12,624,170 — Net Sales (Increased from $12,265,069 in fiscal year 2024)
• 19% — DTC Sales via Amazon (Percentage of net sales in fiscal year 2025, up from 17% in 2024)
• 50% — Sales from Five Largest Customers (Percentage of net sales in fiscal year 2025, up from 46% in 2024)
• 84% — Stereo Headphones for Music (Percentage of fiscal year 2025 sales)
• 400 — Trademarks Registered (Registered in approximately 88 countries as of June 30, 2025)
• 170 — Patents Issued (Issued in approximately 26 countries as of June 30, 2025)
• 28 — Employees (Total employees as of June 30, 2025)
• $38,421,704 — Market Value of Nonaffiliate Common Stock (As of December 31, 2024)
• 9,456,438 — Shares Outstanding (As of August 25, 2025)
• 18-24 months — Recovery Time for Top 10 Models (Estimated time to restore production if a single foreign facility is lost)

Key Players & Entities

• KOSS CORP (company) — registrant
• John C. Koss (person) — creator of the personal listening industry
• Amazon (company) — largest DTC sales channel
• Nasdaq Capital Market (regulator) — exchange where KOSS common stock is registered
• President Biden (person) — issued Executive Order 14071
• Securities and Exchange Commission (regulator) — filing recipient
• Delaware (regulator) — state of incorporation
• Koss Corp B.V. (company) — subsidiary
• Koss U.K. Limited (company) — subsidiary
• People's Republic of China (regulator) — location of contract manufacturing facilities

FAQ

Risk Factors

• Economic and Political Instability [high — financial]: Global and regional economic conditions, including inflation, higher interest rates, and increased energy/labor costs, can reduce consumer discretionary spending and impact demand. Political developments, international trade disputes, natural disasters, and public health concerns can disrupt operations and supply chains. Sales outside the U.S. represent nearly 30% of net sales, making the company vulnerable to foreign economic and political risks.
• Foreign Manufacturing Dependency [high — operational]: The company relies almost exclusively on contract manufacturing facilities in China for production. This dependency creates significant operational risk, as disruptions in this region due to political developments, trade disputes, or other factors can severely impact the business. The estimated recovery time for top 10 models if a single foreign facility is lost is 18-24 months.
• Currency Fluctuations and Trade Barriers [medium — financial]: Fluctuations in foreign currency exchange rates can increase costs and reduce profitability. The imposition of new tariffs or trade restrictions can also negatively impact the company's cost structure and access to key markets. Geopolitical conflicts have already led to the suspension of sales to Russia and impacted sales to Ukraine.
• Intellectual Property Enforcement [medium — legal]: While the company holds over 400 trademarks in 88 countries and over 170 patents in 26 countries, ongoing enforcement of this extensive intellectual property portfolio requires continuous investment and vigilance. Failure to adequately protect or enforce IP rights could lead to competitive disadvantages.
• Customer Concentration [high — market]: The five largest customers accounted for approximately 50% of net sales in fiscal year 2025. This high concentration of sales with a few key customers creates a significant risk, as the loss of one or more of these customers could have a material adverse effect on the company's revenue and profitability.
• Competition and Product Differentiation [medium — market]: The audio/video industry is competitive. The company's products are not significantly differentiated beyond sound quality, which is subjective. Success depends on the receptivity of consumers to new technologies and the company's ability to successfully market its products in a competitive landscape.

Industry Context

Koss Corporation operates within the audio/video segment of the home entertainment and communication industry, primarily focusing on stereo headphones. The market is characterized by competition, evolving consumer electronics technologies, and the subjective nature of audio quality. Key sales channels include direct-to-consumer platforms like Amazon, traditional retail, and distributors, with a significant portion of sales still driven by music listening headphones.

Regulatory Implications

The company's reliance on foreign manufacturing, particularly in China, exposes it to risks associated with international trade policies, tariffs, and geopolitical tensions. Changes in corporate tax laws, environmental regulations, and international trade agreements could impact operating costs and market access. Compliance with EU and UK requirements necessitates specific subsidiary structures.

What Investors Should Do

1. Monitor customer concentration risk.
2. Assess the impact of geopolitical and trade risks.
3. Evaluate the growth and sustainability of the DTC channel.
4. Consider the company's intellectual property strategy.

Key Dates

• 2025-06-30: Fiscal Year End — Reporting period for the 10-K filing, showing net sales of $12,624,170.
• 2024-12-31: Market Value of Nonaffiliate Common Stock — Reported at $38,421,704, providing a snapshot of the company's market valuation at that time.
• 2025-08-25: Shares Outstanding — Reported as 9,456,438, relevant for per-share calculations and investor ownership analysis.

Glossary

OEM

Original Equipment Manufacturer. A company that manufactures products based on a client's design or specifications. (Koss sells products to OEMs, indicating a B2B revenue stream beyond direct consumer sales.)

DTC

Direct-to-Consumer. Selling products directly to end-users, bypassing traditional retail intermediaries. (Koss's significant and growing sales via Amazon's DTC channel highlight a key sales strategy and growth area.)

Intellectual Property

A category of property that includes intangible assets such as patents, trademarks, copyrights, and trade secrets. (Koss heavily relies on its extensive portfolio of over 400 trademarks and 170 patents for competitive advantage and brand protection.)

Private Securities Litigation Reform Act of 1995

A U.S. federal law that provides safe harbor protections for forward-looking statements made by public companies. (The company explicitly references this act, indicating that many statements in the 10-K are forward-looking and subject to inherent risks and uncertainties.)

Year-Over-Year Comparison

Fiscal year 2025 saw a modest increase in net sales to $12,624,170 from $12,265,069 in fiscal year 2024, representing a growth of approximately 2.9%. The direct-to-consumer channel via Amazon continued its upward trend, increasing its share of net sales to 19% from 17%. Customer concentration also slightly increased, with the top five customers now accounting for 50% of net sales, up from 46% in the prior year. No new significant risks were highlighted, but existing risks related to foreign manufacturing dependency, geopolitical instability, and trade barriers remain prominent.

Key Financial Figures

• $0.005 — nge on which registered Common Stock, $0.005 par value per share KOSS Nasdaq Cap
• $7.38 — roximately $ 38,421,704 b ased on the $7.38 per share closing price of the Company'

Filing Documents

• koss-20250630x10k.htm (10-K) — 2619KB
• koss-20250630xex19_1.htm (EX-19.1) — 133KB
• koss-20250630xex23_1.htm (EX-23.1) — 3KB
• koss-20250630xex31_1.htm (EX-31.1) — 13KB
• koss-20250630xex31_2.htm (EX-31.2) — 15KB
• koss-20250630xex32_1.htm (EX-32.1) — 7KB
• koss-20250630xex32_2.htm (EX-32.2) — 8KB
• 0000056701-25-000044.txt ( ) — 10742KB
• koss-20250630.xsd (EX-101.SCH) — 50KB
• koss-20250630_cal.xml (EX-101.CAL) — 74KB
• koss-20250630_def.xml (EX-101.DEF) — 127KB
• koss-20250630_lab.xml (EX-101.LAB) — 543KB
• koss-20250630_pre.xml (EX-101.PRE) — 375KB
• koss-20250630x10k_htm.xml (XML) — 2287KB

Business

Business 5 Item 1A .

Risk Factors

Risk Factors 9 Item 1B. Unresolved Staff Comments 16 Item 1C. Cybersecurity 16 Item 2.

Properties

Properties 16 Item 3.

Legal Proceedings

Legal Proceedings 16 Item 4. Mine Safety Disclosures 17 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 18 Item 7.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 26 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 26 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 26 Item 9A.

Controls and Procedures

Controls and Procedures 26 Item 9B. Other Information 26 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 26 Part III Item 10. Directors, Executive Officers and Corporate Governance 27 Item 11.

Executive Compensation

Executive Compensation 27 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 27 Item 13. Certain Relationships and Related Transactions, and Director Independence 27 Item 14. Principal Accountant Fees and Services 27 PART IV Item 15. Exhibits and Financial Statement Schedules 28 3 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 (the "Act") (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities Exchange Commission, press releases, or otherwise. Statements contained in this Form 10-K that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Act. Forward-looking statements may include, but are not limited to, projections of revenue, income or loss and capital expenditures, statements regarding future operations, anticipated financing needs, compliance with financial covenants in loan agreements, plans for acquisitions or sales of assets or businesses, plans relating to products or services of the Company, assessments of materiality, predictions of future events, the effects of pending and possible litigation and assumptions relating to the foregoing. In addition, when used in this Form 10-K, the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "may," "will," "should," "could," "would," "shall," "forecasts," "predicts," "potential," "continue," "seeks," "goal," "projects," and variations thereof and similar expressions are intended to identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quan

BUSINESS

ITEM 1. BUSINESS GENERAL As used herein unless the context otherwise requires, the term "Company" means Koss Corporation and its subsidiaries, Koss Corp B.V. and Koss U.K. Limited. Koss Corporation was incorporated in Delaware in 1971. It formed Koss Corp B.V. and Koss U.K. Limited to comply with certain European Union ("EU") requirements. Koss U.K. Limited is maintained to comply with certain U.K. requirements. The Company operates in the audio/video industry segment of the home entertainment and communication industry through its design, manufacture and sale of stereo headphones and related accessory products. The Company reports its results as a single reporting segment, as the Company's only business line is the design, manufacture and sale of stereo headphones and related personal listening accessories. The Company's products are sold through U.S. distributors, international distributors, audio specialty stores, the internet, national retailers, grocery stores, electronics retailers, and prisons under the "Koss" name as well as private label. The Company also sells products to distributors for resale to school systems, and directly to other manufacturers for inclusion with their own products. International markets are served by domestic sales representatives and sales personnel in the Netherlands and the Caucasus region. The Company utilizes independent distributors in several foreign countries. Approximately 84% of the Company's fiscal year 2025 sales were from stereo headphones used for listening to music. The remaining approximately 16% of the Company's sales were from headphones used in communications, education settings, and in conjunction with metal detectors, as well as sold to original equipment manufacturers ("OEM"). The products are not significantly differentiated by their retail sales channel or application with the exception of products sold to school systems, prisons, and OEM customers. There are no other product line differentiations ot

RISK FACTORS

ITEM 1A. RISK FACTORS We are subject to various risks that may adversely affect our business, prospects, financial condition, and results of operations, including, but not limited to, those set forth below. These are the risks and uncertainties we believe are most important for you to consider, however, there may be other risks that are currently deemed immaterial or not currently known to us that could materially impact the business. If any of the following risks, or those unidentified, develop into actual events, the Company's business, reputation, results of operations, financial condition and stock price can be materially and adversely affected. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. Macroeconomic and Political Risks The Company's operations and results are influenced by both global and regional economic environments, and less than favorable economic conditions may have a material adverse impact on the Company's business, operating results, and financial position. The Company sales outside the U.S. represent nearly 30% of total net sales for the fiscal year ended Jne 30, 2025. Moreover, the Company relies almost exclusively on contract manufacturing facilities based in the People's Republic of China to produce its goods, underscoring the critical importance of this region to its overall operations. As a result, the Company's business, financial condition, and results of operations may be adversely affected by unfavorable global, national, and regional economic conditions and political developments. Inflationary pressures, sustained higher interest rates, and increased energy and labor costs have reduced consumer discretionary spending and may continue to impact demand for the Company's products. In addition, supply chain disruptions, fluctuations in foreign currency exchange rates, and the imposition of new tariffs or trade res

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