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.
To the Shareholders of Koss Corporation: The operating environment in fiscal 2026 was difficult. Tariffs, higher freight costs, and the continuing conflicts in Ukraine and the Middle East made business harder to predict and harder to manage. Export sales to Europe fell sharply. Over the prior eighteen months, the Company paid more than $1 million in tariffs. Following judicial decisions affecting certain tariffs imposed under the International Emergency Economic Powers Act, we filed for refunds. In May and June, the Company received approximately $1 million in cash refunds in respect of these tariffs. The accounting details, together with the rest of our results, appear in our Form 10-K, which I encourage every investor to read. Our export business has dealt with constant war-related disruption ever since the 2014 invasion of Crimea, and the current conflicts are another reminder that conditions can quickly change or reverse. Overall results were mixed. Demand was uneven by channel and geography. Some areas improved; others remained under pressure from tariffs, freight expense, shifts in retail purchasing habits, and softer consumer confidence in some markets. Our Direct-to-Consumer business continued to make excellent progress and remains a more controllable, higher-touch part of Koss. This reflects the steady work we have been doing for years: rightsizing the enterprise, protecting the brand, and improving the customer experience. We continued to manage the balance sheet conservatively. Cash and liquid investments remained substantial relative to our size, debt remained at zero, and we preserved the flexibility that matters when opportunities appear. This is the executive summary of the year. The more important story follows. Acquisitions & Corporate Development More than ten years ago we took a look at the declining health of the U.S. Consumer Electronics Retail sector and began to formulate a long-term plan to leverage the strength of our intellectual property portfolio to create enough liquidity to propel the company toward expansion through diversification. Our Executive Vice President, Michael Koss Jr., spearheaded this effort to craft a new future vision for Koss. We set out to strengthen the brand and to put our intellectual property assets to work so that meaningful capital could eventually be raised and available for this purpose. The plan took time and we were fortunately able to survive everything from a global pandemic to U.S. tariffs on headphones exceeding 140%. In March, we formally announced the next step of our diversification strategy with the hiring of Megan Brobson as Director of Acquisitions and Corporate Development. Megan brings more than a decade of private equity and client finance experience, most recently in the lower middle market. She has built relationships with owners and intermediaries, sourced and executed transactions, and worked with management teams after closing. That experience is directly relevant to what we intend to do. Our strategy is straightforward. We intend to use the strength of our balance sheet, built through years of intellectual-property enforcement success and careful cash management, to acquire solid companies outside our existing consumer electronics market. We are not looking for synergistic bolt-ons, or strategic partnerships inside headphones or audio products. We are looking for real diversification. Our targets are businesses generating roughly $2 million to $4 million of annual EBITDA. We intend to buy them, help them grow, and hold them as permanent parts of Koss Corporation, preferably forever. 1
This is not private-equity thinking with a five-to-seven-year exit clock. It is the opposite. We intend Koss to become a permanent home for exceptional businesses. We ve outlined this initiative on a new website www.kosscorporation.com that says it well: we pair the stability of long-term ownership with the discipline, resources, and governance of a decades-old public company. When we find a match, we prefer to think in years, not quarters. We intend to keep their management in place. We plan to provide their team with additional capital for reinvestment. We will not dismantle good companies to chase short-term metrics. Our geographic preference is to focus on Wisconsin, the Midwest, and select U.S. opportunities, but the real filter is the quality of the businesses we find, and the quality of the people that make them successful. For the last fifteen years we patiently re-sized and re-branded the Stereophones business around our founding principles of excellent sound and an outstanding customer experience. That work created the platform and balance sheet that now allow us to step outside the headphone category. This initiative is being led by Michael Koss, Jr. and Megan Brobson, a new generation, and it builds upon the foundation that my father, John C. Koss, laid seventy-three years ago when he began renting televisions to hospital patients. Koss has evolved several times since then and this is the next evolution. The Road Ahead There are several reasons to be cautiously optimistic. First, we have a clean, liquid balance sheet and a culture of financial conservatism. That combination is rare and valuable when a good business becomes available at a reasonable price. Second, the permanent-capital model should matter in the lower middle market. Many owners of solid small companies are entrepreneurs who would like to provide a lasting home and legacy for their enterprise as a bonus to a fair price for their achievement. Koss can offer that home. We have no forced exit horizon. We can leave talented managers in place while providing resources and the backing of a public company that understands long-term stewardship. Third, scale can work in our favor over time. Even a small number of $2 4 million EBITDA businesses, acquired carefully and held indefinitely, could meaningfully change the earnings power and resilience of Koss Corporation without requiring us to take unnecessary risks in the crowded consumer electronics industry. Fourth, our long history of committed investor stewardship aligns our incentives. We are not temporary owners. We intend to treat acquired companies the way we would want our own business treated: with respect for the people, the culture, and the long arc of compounding. None of this guarantees success. Finding, negotiating, and integrating the right businesses into the Koss Corporation is hard work, and entails some risk. But the need for this direction is clear. The capital is available. The people are in place. And the philosophy is one that we clearly know has worked: buy good businesses run by good people, pay a fair price, and hold them for a very long time. --Fiscal 2026 will be remembered less for the month-to-month fluctuations of the Koss Stereophones business and more for the formal beginning of this new chapter. We still have work to do in our traditional markets, and we will continue to do it carefully. At the same time, we now have a decisive new direction and the resources to build something broader and more durable. 2
I remain grateful to our team members, our customers, our suppliers, and to you the owners who have stayed with us through the long seasons of rebuilding. The next phase will require the same patience that has rewarded us in the past. Sincerely, Michael J. Koss Chairman and Chief Executive Officer 3
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 William J. Sweasy Chairman, Red Wing Shoe Company Michael J. Koss, Jr. Executive Vice President 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 14, 2026, at 8:00 a.m. Central Time. You can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/KOSS2026, 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. 4
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KOSS Shareholder/Stockholder Letter Transcript:

To the Shareholders of Koss Corporation:
The operating environment in fiscal 2026 was difficult. Tariffs, higher freight costs, and the continuing
conflicts in Ukraine and the Middle East made business harder to predict and harder to manage. Export sales to
Europe fell sharply.
Over the prior eighteen months, the Company paid more than $1 million in tariffs. Following judicial
decisions affecting certain tariffs imposed under the International Emergency Economic Powers Act, we filed
for refunds. In May and June, the Company received approximately $1 million in cash refunds in respect of
these tariffs. The accounting details, together with the rest of our results, appear in our Form 10-K, which I
encourage every investor to read. Our export business has dealt with constant war-related disruption ever since
the 2014 invasion of Crimea, and the current conflicts are another reminder that conditions can quickly change
or reverse.
Overall results were mixed. Demand was uneven by channel and geography. Some areas improved;
others remained under pressure from tariffs, freight expense, shifts in retail purchasing habits, and softer
consumer confidence in some markets. Our Direct-to-Consumer business continued to make excellent progress
and remains a more controllable, higher-touch part of Koss. This reflects the steady work we have been doing
for years: rightsizing the enterprise, protecting the brand, and improving the customer experience.
We continued to manage the balance sheet conservatively. Cash and liquid investments remained
substantial relative to our size, debt remained at zero, and we preserved the flexibility that matters when
opportunities appear.
This is the executive summary of the year. The more important story follows.
Acquisitions & Corporate Development
More than ten years ago we took a look at the declining health of the U.S. Consumer Electronics Retail
sector and began to formulate a long-term plan to leverage the strength of our intellectual property portfolio to
create enough liquidity to propel the company toward expansion through diversification. Our Executive Vice
President, Michael Koss Jr., spearheaded this effort to craft a new future vision for Koss. We set out to
strengthen the brand and to put our intellectual property assets to work so that meaningful capital could
eventually be raised and available for this purpose. The plan took time and we were fortunately able to survive
everything from a global pandemic to U.S. tariffs on headphones exceeding 140%.
In March, we formally announced the next step of our diversification strategy with the hiring of Megan
Brobson as Director of Acquisitions and Corporate Development. Megan brings more than a decade of private
equity and client finance experience, most recently in the lower middle market. She has built relationships with
owners and intermediaries, sourced and executed transactions, and worked with management teams after
closing. That experience is directly relevant to what we intend to do.
Our strategy is straightforward. We intend to use the strength of our balance sheet, built through years of
intellectual-property enforcement success and careful cash management, to acquire solid companies outside our
existing consumer electronics market.
We are not looking for synergistic bolt-ons, or strategic partnerships inside headphones or audio
products. We are looking for real diversification. Our targets are businesses generating roughly $2 million to $4
million of annual EBITDA. We intend to buy them, help them grow, and hold them as permanent parts of Koss
Corporation, preferably forever.
1

This is not private-equity thinking with a five-to-seven-year exit clock. It is the opposite. We intend
Koss to become a permanent home for exceptional businesses. We   ve outlined this initiative on a new website
www.kosscorporation.com that says it well: we pair the stability of long-term ownership with the discipline,
resources, and governance of a decades-old public company.
When we find a match, we prefer to think in years, not quarters. We intend to keep their management in
place. We plan to provide their team with additional capital for reinvestment. We will not dismantle good
companies to chase short-term metrics. Our geographic preference is to focus on Wisconsin, the Midwest, and
select U.S. opportunities, but the real filter is the quality of the businesses we find, and the quality of the people
that make them successful.
For the last fifteen years we patiently re-sized and re-branded the Stereophones business around our
founding principles of excellent sound and an outstanding customer experience. That work created the platform
and balance sheet that now allow us to step outside the headphone category.
This initiative is being led by Michael Koss, Jr. and Megan Brobson, a new generation, and it builds
upon the foundation that my father, John C. Koss, laid seventy-three years ago when he began renting
televisions to hospital patients. Koss has evolved several times since then and this is the next evolution.
The Road Ahead
There are several reasons to be cautiously optimistic.
First, we have a clean, liquid balance sheet and a culture of financial conservatism. That combination is
rare and valuable when a good business becomes available at a reasonable price.
Second, the permanent-capital model should matter in the lower middle market. Many owners of solid
small companies are entrepreneurs who would like to provide a lasting home and legacy for their enterprise as a
bonus to a fair price for their achievement. Koss can offer that home. We have no forced exit horizon. We can
leave talented managers in place while providing resources and the backing of a public company that
understands long-term stewardship.
Third, scale can work in our favor over time. Even a small number of $2   4 million EBITDA businesses,
acquired carefully and held indefinitely, could meaningfully change the earnings power and resilience of Koss
Corporation without requiring us to take unnecessary risks in the crowded consumer electronics industry.
Fourth, our long history of committed investor stewardship aligns our incentives. We are not temporary
owners. We intend to treat acquired companies the way we would want our own business treated: with respect
for the people, the culture, and the long arc of compounding.
None of this guarantees success. Finding, negotiating, and integrating the right businesses into the Koss
Corporation is hard work, and entails some risk. But the need for this direction is clear. The capital is available.
The people are in place. And the philosophy is one that we clearly know has worked: buy good businesses run
by good people, pay a fair price, and hold them for a very long time.
--Fiscal 2026 will be remembered less for the month-to-month fluctuations of the Koss Stereophones
business and more for the formal beginning of this new chapter. We still have work to do in our traditional
markets, and we will continue to do it carefully. At the same time, we now have a decisive new direction and the
resources to build something broader and more durable.
2

I remain grateful to our team members, our customers, our suppliers, and to you   the owners who have
stayed with us through the long seasons of rebuilding. The next phase will require the same patience that has
rewarded us in the past.
Sincerely,
Michael J. Koss
Chairman and Chief Executive Officer
3

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
William J. Sweasy
Chairman, Red Wing Shoe Company
Michael J. Koss, Jr.
Executive Vice President
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 14, 2026, at
8:00 a.m. Central Time. You can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/KOSS2026, 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.
4


shareholder letter icon 8/27/2026 Letter Continued (Full PDF)
 

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