On this page of StockholderLetter.com we present the latest annual shareholder letter from KOSS CORP — ticker symbol KOSS. Reading current and past KOSS letters to shareholders can bring important insights into the investment thesis.
Letter to Stockholders KOSS CORPORATION Fiscal Year 2025 Dear Stockholders, We continued to see some segments improving in fiscal year 2025 ( FY2025 ) but still found the year to be a challenge. Net sales improved by 2.9% for the fiscal year and gross margins improved from 34.1% to 37.8% for the same period. We experienced some domestic slowdowns in orders from customers that are sensitive to the high cost of credit. We also had some business shift out of the period and into fiscal year 2026 ( FY2026 ) as a hesitating step to assess the impacts of federal budget cuts, most notably in the education channel. We did receive some inbound shipments for imported items that were tariffed at the 145% punitive rate. This impacted cash more than FY2025 earnings based upon the accounting capitalization of the tariffs on our balance sheet as part of the cost of inventory and will bleed off as an increase in cost of goods sold through the income statement over successive periods when the items are sold. Our supply chain uses contract manufacturing in China and tariffs will continue to be an ongoing challenge to our business. In sharp contrast with last year, export sales were outstanding in FY2025, increasing by 48%. Whilst the War in Ukraine continued to impact energy supplies and the cost of living in many European countries, we still saw great improvements, with exports to the region increasing by 67%. Our European distributor partners continue to express concern over the war, exchange rate fluctuations with the US dollar, and ongoing trade negotiations related to tariffs. The War in Gaza and the increase in hostilities with Iran continued to disrupt international shipping lanes through the Gulf, jeopardizing the international supply of energy, and increasing geopolitical tensions to levels the world has not experienced in decades. Freight to Europe has been directly impacted by longer transit times and at higher costs. Tensions are also high in Asia where Chinese and Russian forces recently held joint military operations in the Sea of Japan, which ultimately could pose a threat to Taiwan and the global market for semiconductor chips. These geopolitical conditions are likely to continue to disrupt sourcing and fulfillment to Europe in FY2026, just as the continuing high cost of credit in the US appears to be impeding purchasing and investment decisions with certain customers. Direct to Consumer ( DTC ) Strategy We believe our focus on DTC has put us on a solid foundation to compete in the future as traditional brick and mortar retail chains and stores continue to fade. Our DTC business increased by 16.5% during FY2025. We continue to develop the DTC segment as a part of our long-term strategy which enables us to control our messaging and forge a one-to-one relationship with consumers. Artificial Intelligence ( Ai ) Over the last two years, I have reminded you of the vitality of our Striva patent portfolio and the relationship these products will provide to the implementation of large language models at the heart of the Ai revolution. Ai is already impacting our daily lives and is especially liberating when using headphones. As you may recall, I made the following statement six years ago in our 2019 Annual Letter to Stockholders: The headphone market continues to transition to wireless accessories and solutions. This requires us to evaluate not only the current state of the market but look into the future. Based on the success of current trends, we believe the future is crystal clear. Soon, wireless personal audio accessories will be self-aware and directly connect to the ubiquitous wireless network. These devices will form bi-directional network relationships without the need for an additional device to act as an intermediary. 1
Devices are beginning to allow users to interact with Artificial Intelligence ( Ai ) as virtual assistants, facilitating commands ranging from changing the volume of audio to locking doors or turning on lights. Beyond these simple requests, this AI is destined to become conversational. Once this happens, consumers will control the routine activities of their lives by simply speaking to themselves. As Ai becomes available at the sound of our voices, we will become reliant on Ai to perform anticipated daily tasks, which in today s world are currently completed by invoking a series of physical inputs on a keypad style device. Spoken commands to a device, which is essentially self-implantable and removable at our discretion, will allow us to complete tasks more rapidly, and dispense with the repetitive and the mundane. To liberate this activity in the future, devices need not be tethered to another local device that does the heavy lifting. Instead, personal listening accessories will make direct, bi-directional connections that can transition between networks. The technical benefits of using a bi-directional style framework (Wi-Fi or other wireless communication protocols) and remote networks are obvious. We identified headphones as a primary interface tool for Ai almost 21 years ago and made significant investments in the technology that allows consumers to interface with these models. We currently own and continue to enforce these Striva patents that enable the use of Ai as a feature. It has been over five years since we filed infringement lawsuits against five competitors. Three of these cases have been resolved and two of the cases are stayed in the courts pending various outcomes. We believe that our patent portfolio remains a significant asset and continue to call on Congress to correct the America Invents Act ( AIA ) to prevent patent infringers who serve as defendants in these cases and are often some of the largest companies in the world, from using the asymmetric AIA system to bleed away the resources of America s hard-working inventors. It is clear that most inventors who cannot keep up with the complexity and costs of these Congressionally created actions are hobbled by this form of lawfare. Final Thoughts The company does not publish or present any future guidance; however, you will find that the management comments throughout the company s Form 10-K highlight the various risks that economic uncertainty, worldwide geopolitical events, and other risks could have on our business. We are very proud of the team s creativity and flexibility during a very unpredictable year. In closing, let me thank you for your support, and further extend my appreciation to the Koss team, our distributor partners, customers, suppliers, contract manufacturers, and the millions of music lovers around the world who enjoy The Sound of Koss each and every day. Hearing is Believing Michael J. Koss Chairman & CEO 2
Management Information Executive Officers Directors Michael J. Koss Chairman, CEO, President Thomas L. Doerr Retired President, Doerr Corporation Kim M. Schulte CFO, Secretary Michael J. Koss Chairman, CEO, President, Koss Corporation John C. Koss, Jr. Vice President Sales Steven A. Leveen Retired CEO, Levenger Company Michael J. Koss, Jr. Vice President Marketing & Product William J. Sweasy Chairman, Red Wing Shoe Company Lenore E. Lillie Retired Vice President - Operations, Koss Corporation Transfer Agent Questions regarding a change of address, stock transfer, lost certificates, or information on a particular account should be directed in writing to: Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342 Brentwood, NY 11717 Independent Registered Public Accounting Firm Wipfli LLP Legal Counsel K&L Gates LLP Annual Meeting The Annual Meeting of Shareholders of Koss Corporation ( Koss or the Company ) will be held on Wednesday, October 15, 2025, at 8:00 a.m. Central Time. You can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/KOSS2025, where you will be able to listen to the meeting live, submit questions and vote online. You are cordially invited to attend. Koss Corporation 4129 North Port Washington Avenue, Milwaukee, Wisconsin, 53212 United States of America 414-964-5000 | www.koss.com This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as anticipates, believes, estimates, expects, intends, plans, may, will, should, forecasts, predicts, potential, or continue or the negative of such terms and other comparable terminology. These statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual events or results may differ materially. In evaluating forward-looking statements, you should specifically consider various factors that may cause actual results to vary from those contained in the forward-looking statements, such as general economic conditions, in particular, consumer demand for the Company s and its customers products, competitive and technological developments, foreign currency fluctuations, and costs of operations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this annual report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. In addition, such uncertainties and other operational matters are discussed further in the Company s quarterly and annual filings with the Securities and Exchange Commission. 3
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KOSS Shareholder/Stockholder Letter Transcript:

Letter to Stockholders
KOSS CORPORATION
Fiscal Year 2025
Dear Stockholders,
We continued to see some segments improving in fiscal year 2025 (   FY2025   ) but still found the year to be a challenge.
Net sales improved by 2.9% for the fiscal year and gross margins improved from 34.1% to 37.8% for the same period.
We experienced some domestic slowdowns in orders from customers that are sensitive to the high cost of credit. We also
had some business shift out of the period and into fiscal year 2026 (   FY2026   ) as a hesitating step to assess the impacts of
federal budget cuts, most notably in the education channel.
We did receive some inbound shipments for imported items that were tariffed at the 145% punitive rate. This impacted
cash more than FY2025 earnings based upon the accounting capitalization of the tariffs on our balance sheet as part of the
cost of inventory and will bleed off as an increase in cost of goods sold through the income statement over successive
periods when the items are sold. Our supply chain uses contract manufacturing in China and tariffs will continue to be an
ongoing challenge to our business.
In sharp contrast with last year, export sales were outstanding in FY2025, increasing by 48%. Whilst the War in Ukraine
continued to impact energy supplies and the cost of living in many European countries, we still saw great improvements,
with exports to the region increasing by 67%. Our European distributor partners continue to express concern over the war,
exchange rate fluctuations with the US dollar, and ongoing trade negotiations related to tariffs.
The War in Gaza and the increase in hostilities with Iran continued to disrupt international shipping lanes through the
Gulf, jeopardizing the international supply of energy, and increasing geopolitical tensions to levels the world has not
experienced in decades. Freight to Europe has been directly impacted by longer transit times and at higher costs. Tensions
are also high in Asia where Chinese and Russian forces recently held joint military operations in the Sea of Japan, which
ultimately could pose a threat to Taiwan and the global market for semiconductor chips.
These geopolitical conditions are likely to continue to disrupt sourcing and fulfillment to Europe in FY2026, just as the
continuing high cost of credit in the US appears to be impeding purchasing and investment decisions with certain
customers.
Direct to Consumer (   DTC   ) Strategy
We believe our focus on DTC has put us on a solid foundation to compete in the future as traditional brick and mortar
retail chains and stores continue to fade. Our DTC business increased by 16.5% during FY2025. We continue to develop
the DTC segment as a part of our long-term strategy which enables us to control our messaging and forge a    one-to-one   
relationship with consumers.
Artificial Intelligence (   Ai   )
Over the last two years, I have reminded you of the vitality of our Striva     patent portfolio and the relationship these
products will provide to the implementation of large language models at the heart of the Ai revolution. Ai is already
impacting our daily lives and is especially liberating when using headphones. As you may recall, I made the following
statement six years ago in our 2019 Annual Letter to Stockholders:
   The headphone market continues to transition to wireless accessories and solutions. This requires us to
evaluate not only the current state of the market but look into the future. Based on the success of current trends,
we believe the future is crystal clear. Soon, wireless personal audio accessories will be    self-aware    and directly
connect to the ubiquitous wireless network. These devices will form bi-directional network relationships without
the need for an additional device to act as an intermediary.
1

Devices are beginning to allow users to interact with Artificial Intelligence (   Ai   ) as virtual assistants,
facilitating commands ranging from changing the volume of audio to locking doors or turning on lights. Beyond
these simple requests, this AI is destined to become conversational. Once this happens, consumers will control the
routine activities of their lives by simply speaking to themselves.
As Ai becomes available at the sound of our voices, we will become reliant on Ai to perform anticipated
daily tasks, which in today   s world are currently completed by invoking a series of physical inputs on a keypad
style device.
Spoken commands to a device, which is essentially self-implantable and removable at our discretion, will
allow us to complete tasks more rapidly, and dispense with the repetitive and the mundane. To liberate this
activity in the future, devices need not be tethered to another local device that does the    heavy lifting.    Instead,
personal listening accessories will make direct, bi-directional connections that can transition between networks.
The technical benefits of using a bi-directional style framework (Wi-Fi or other wireless communication
protocols) and remote networks are obvious.   
We identified headphones as a primary interface tool for Ai almost 21 years ago and made significant investments in the
technology that allows consumers to interface with these models. We currently own and continue to enforce these Striva
    patents that enable the use of Ai as a feature. It has been over five years since we filed infringement lawsuits against
five competitors. Three of these cases have been resolved and two of the cases are stayed in the courts pending various
outcomes.
We believe that our patent portfolio remains a significant asset and continue to call on Congress to correct the America
Invents Act (   AIA   ) to prevent patent infringers who serve as defendants in these cases and are often some of the largest
companies in the world, from using the asymmetric AIA system to bleed away the resources of America   s hard-working
inventors.
It is clear that most inventors who cannot keep up with the complexity and costs of these Congressionally created actions
are hobbled by this form of lawfare.
Final Thoughts
The company does not publish or present any future guidance; however, you will find that the management comments
throughout the company   s Form 10-K highlight the various risks that economic uncertainty, worldwide geopolitical
events, and other risks could have on our business.
We are very proud of the team   s creativity and flexibility during a very unpredictable year.
In closing, let me thank you for your support, and further extend my appreciation to the Koss team, our distributor
partners, customers, suppliers, contract manufacturers, and the millions of music lovers around the world who enjoy The
Sound of Koss each and every day.
Hearing is Believing
Michael J. Koss
Chairman & CEO
2

Management Information
Executive Officers
Directors
Michael J. Koss
Chairman, CEO, President
Thomas L. Doerr
Retired President, Doerr Corporation
Kim M. Schulte
CFO, Secretary
Michael J. Koss
Chairman, CEO, President, Koss Corporation
John C. Koss, Jr.
Vice President Sales
Steven A. Leveen
Retired CEO, Levenger Company
Michael J. Koss, Jr.
Vice President Marketing & Product
William J. Sweasy
Chairman, Red Wing Shoe Company
Lenore E. Lillie
Retired Vice President - Operations, Koss Corporation
Transfer Agent
Questions regarding a change of address, stock transfer, lost certificates, or information on a particular account should be directed in
writing to: Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342 Brentwood, NY 11717
Independent Registered Public Accounting Firm
Wipfli LLP
Legal Counsel
K&L Gates LLP
Annual Meeting
The Annual Meeting of Shareholders of Koss Corporation (   Koss    or the    Company   ) will be held on Wednesday, October 15, 2025, at
8:00 a.m. Central Time. You can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/KOSS2025, where you will
be able to listen to the meeting live, submit questions and vote online. You are cordially invited to attend.
Koss Corporation
4129 North Port Washington Avenue, Milwaukee, Wisconsin, 53212
United States of America
414-964-5000 | www.koss.com
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking
statements by terminology such as    anticipates,       believes,       estimates,       expects,       intends,       plans,       may,       will,       should,       forecasts,       predicts,       potential,    or    continue    or the
negative of such terms and other comparable terminology. These statements are based on currently available operating, financial and competitive information and are subject to various risks
and uncertainties. Actual events or results may differ materially. In evaluating forward-looking statements, you should specifically consider various factors that may cause actual results to vary
from those contained in the forward-looking statements, such as general economic conditions, in particular, consumer demand for the Company   s and its customers    products, competitive and
technological developments, foreign currency fluctuations, and costs of operations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating
the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of
this annual report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. In addition, such uncertainties
and other operational matters are discussed further in the Company   s quarterly and annual filings with the Securities and Exchange Commission.
3



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