Koss (KOSS) investor relations material

Executive summary

• Net sales for the quarter ended March 31, 2026 increased 1.6% year-over-year to $2.82 million, driven by strong domestic distributor, education market, and direct-to-consumer (DTC) sales, offset by declines in export markets, especially Europe and Asia.

• Gross profit margin declined to 35.5% from 39.0% year-over-year due to adverse tariff impacts and higher freight costs, partially offset by favorable sales mix and inventory management.

• Operating loss widened to $719,131 for the quarter and $1.78 million for the nine months, reflecting increased legal and compensation expenses.

• Net loss for the quarter was $546,587 ($0.06 per share), compared to $316,742 ($0.03 per share) in the prior year.

• The company operates as a single segment focused on the design, manufacture, and sale of headphones and related accessories.

Financial highlights

• Net sales for the nine months ended March 31, 2026 were $9.76 million, up 2.3% year-over-year.

• Gross profit for the nine months was $3.46 million (35.5% margin), down from $3.66 million (38.4% margin) in the prior year.

• Selling, general, and administrative expenses rose 5.7% to $5.24 million for the nine months, mainly due to legal fees and higher compensation.

• Interest income for the nine months was $670,000; other income included a one-time $250,000 licensing settlement, fully offset by related legal expenses.

• Net loss for the nine months was $868,265 ($0.09 per share), compared to $642,135 ($0.07 per share) in the prior year.

Outlook and guidance

• Management expects continued volatility in tariffs, supply chain costs, and global demand, with ongoing monitoring of trade policy and geopolitical risks.

• Anticipates higher ocean freight rates in Q4 due to peak season surcharges, but expects some relief from the elimination of certain tariffs.

• Refunds from unlawful tariffs are expected but not guaranteed; no receivables have been recorded for potential refunds.

• Management notes continued strength in domestic and DTC channels but highlights significant slowdown in European markets due to weak consumer confidence and extended stock replacement cycles.

• Management believes current liquidity and credit facilities are sufficient for at least the next twelve months.