SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-3295 - ----------------------------- KOSS CORPORATION - ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) A DELAWARE CORPORATION 39-1168275 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 4129 North Port Washington Avenue, Milwaukee, Wisconsin 53212 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (414) 964-5000 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X] At September 30, 2003, there were 3,767,929 shares outstanding of the registrant's common stock, $0.005 par value per share. 1 of 17 KOSS CORPORATION AND SUBSIDIARIES FORM 10-Q September 30, 2003 INDEX 2 of 17
Page PART I FINANCIAL INFORMATION Item 1 Financial Statements Condensed Consolidated Balance Sheets (Unaudited) September 30, 2003 and June 30, 2003 3 Condensed Consolidated Statements of Income (Unaudited) Three months ended September 30, 2003 and 2002 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Three months ended September 30, 2003 and 2002 5 Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2003 6-7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 Item 3 Quantitative and Qualitative Disclosures About Market Risk 9 Item 4 Controls and Procedures 10 PART II OTHER INFORMATION Item 4 Submission of Matters to a Vote of Security-Holders 11 Item 6 Exhibits and Reports on Form 8-K 11 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. KOSS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) See accompanying notes. 3 of 17
September 30, 2003 June 30, 2003 ------------------ ------------- ASSETS Current assets: Cash $ 1,546,931 $ 1,557,104 Accounts receivable 8,886,277 8,695,553 Inventories 8,316,576 7,333,772 Other current assets 1,346,675 1,240,383 - --------------------------------------------------------------------------------------------------- Total current assets 20,096,459 18,826,812 Property and equipment, net 1,803,100 1,923,817 Other assets 2,449,528 2,472,006 - --------------------------------------------------------------------------------------------------- $24,349,087 $23,222,635 =================================================================================================== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable $ 3,442,011 $ 2,793,550 Accrued liabilities 1,419,124 1,499,043 Income taxes payable 660,534 68,462 Dividends payable 492,431 488,856 - --------------------------------------------------------------------------------------------------- Total current liabilities 6,014,100 4,849,911 Deferred compensation 631,855 631,855 Other liabilities 437,354 437,354 Contingently redeemable equity interest 1,490,000 1,490,000 Stockholders' investment 15,775,778 15,813,515 - --------------------------------------------------------------------------------------------------- $24,349,087 $23,222,635 =================================================================================================== KOSS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) See accompanying notes. 4 of 17
Three Months Ended September 30, 2003 2002 - -------------------------------------------------------------------- Net sales $ 9,164,691 $ 8,954,978 Cost of goods sold 5,667,046 5,424,221 - -------------------------------------------------------------------- Gross profit 3,497,645 3,530,757 Selling, general and administrative expense 2,029,734 1,880,652 - -------------------------------------------------------------------- Income from operations 1,467,911 1,650,105 Other income (expense): Royalty income 190,325 163,961 Interest income 4,420 4,279 Interest expense -- (11,290) - -------------------------------------------------------------------- Income before income tax provision 1,662,656 1,807,055 Provision for income taxes 642,152 706,277 - -------------------------------------------------------------------- Net income $ 1,020,504 $ 1,100,778 ==================================================================== Earnings per common share: Basic $ 0.27 $ 0.30 Diluted $ 0.26 $ 0.29 ==================================================================== Dividends per common share $ 0.13 $ 0.13 ==================================================================== KOSS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) See accompanying notes. 5 of 17
Three Months Ended September 30, 2003 2002 - -------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,020,504 $ 1,100,778 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 175,333 150,069 Deferred compensation -- (26,436) Net changes in operating assets and liabilities (111,161) 18,020 - -------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,084,676 1,242,431 - -------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of equipment (37,681) (106,993) - -------------------------------------------------------------------------------------------------- Net cash used in investing activities (37,681) (106,993) - -------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (488,856) (440,466) Purchase of common stock (877,500) -- Exercise of stock options 309,188 -- - -------------------------------------------------------------------------------------------------- Net cash used in financing activities (1,057,168) (440,466) - -------------------------------------------------------------------------------------------------- Net (decrease) increase in cash (10,173) 694,972 Cash at beginning of period 1,557,104 1,052,364 - -------------------------------------------------------------------------------------------------- Cash at end of period $ 1,546,931 $ 1,747,336 ================================================================================================== KOSS CORPORATION AND SUBSIDIARIES September 30, 2003 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The financial statements presented herein are based on interim amounts. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2003 and for all periods presented have been made. The income from operations for the quarter ended September 30, 2003 is not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Registrant's June 30, 2003, Annual Report on Form 10-K. 2. EARNINGS PER COMMON SHARE Basic earnings per common share are computed based on the weighted average number of common shares outstanding. The weighted average number of common shares outstanding for the quarters ending September 30, 2003 and 2002 were 3,766,093 and 3,855,625, respectively. When dilutive, stock options are included as share equivalents using the treasury stock method. Common stock equivalents of 139,928 and 185,071 related to stock option grants were included in the computation of the average number of shares outstanding for diluted earnings per common share for the quarters ended September 30, 2003 and 2002, respectively. 3. INVENTORIES The classification of inventories is as follows: 6 of 17
September 30, 2003 June 30, 2003 - ------------------------------------------------------------------------------------ Raw materials and work in process $ 3,019,598 $ 3,039,272 Finished goods 6,306,564 5,304,086 - ----------------------------------------------------------------------------------- 9,326,162 8,343,358 LIFO reserve (1,009,586) (1,009,586) - ----------------------------------------------------------------------------------- $ 8,316,576 $ 7,333,772 =================================================================================== 4. STOCK PURCHASE AGREEMENT The Company has an agreement with its Chairman to repurchase Company common stock from his estate in the event of his death. The repurchase price is 95% of the fair market value of the common stock on the date that notice to repurchase is provided to the Company. The total number of shares to be repurchased shall be sufficient to provide proceeds which are the lesser of $2,500,000 or the amount of estate taxes and administrative expenses incurred by his estate. The Company is obligated to pay in cash 25% of the total amount due and to execute a promissory note at the prime rate of interest for the balance. The Company maintains a $1,150,000 life insurance policy to fund a substantial portion of this obligation. At September 30, 2003 and June 30, 2003, $1,490,000 has been classified as a Contingently Redeemable Equity Interest reflecting the estimated obligation in the event of execution of the agreement. 5. RECENTLY ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTS During April 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Accounting Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which amends and clarifies financial accounting and reporting for certain derivative instruments. We do not anticipate the adoption of this statement to have a material impact on our consolidated financial statements, as we are not currently a party to derivative financial instruments included in this standard. During May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," which establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. We do not anticipate the adoption of this statement to have a material impact on our consolidated financial statements, as we are not currently a party to such instruments included in this standard. 6. DIVIDENDS DECLARED On September 29, 2003, the Company declared a quarterly cash dividend of $0.13 per share for stockholders of record on September 30, 2003 to be paid October 15, 2003. Such dividend payable has been recorded at September 30, 2003. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Financial Condition, Liquidity and Capital Resources Cash provided by operating activities during the three months ended September 30, 2003 amounted to $1,084,676. This was a result of net income for the period adjusted for changes in operating assets and liabilities, primarily related to increases in accounts receivable, inventories, accounts payable and income taxes payable. Capital expenditures for new equipment (including production tooling) were $37,681 for the quarter. Budgeted capital expenditures for fiscal year 2004 are $1,573,000. The Company expects to generate sufficient funds through operations to fund these expenditures. Stockholders' investment decreased to $15,775,778 at September 30, 2003, from $15,813,515 at June 30, 2003. The decrease reflects the effect of the exercise of stock options, purchase and retirement of common stock, offset by net income and dividends declared. 7 of 17 The Company amended its existing credit facility in October 2003, extending the maturity date of the unsecured line of credit to November 1, 2004. This credit facility provides for borrowings up to a maximum of $10,000,000. The Company can use this credit facility for working capital purposes or for the purchase of its own common stock pursuant to the Company's common stock repurchase program. Borrowings under this credit facility bear interest at the bank's prime rate, or LIBOR plus 1.75%. This credit facility includes certain financial covenants that require the Company to maintain a minimum tangible net worth and specified current, interest coverage, and leverage ratios. The Company uses its credit facility from time to time, although there was no utilization of this credit facility at September 30, 2003 or June 30, 2003. In April of 1995, the Board of Directors approved a stock repurchase program authorizing the Company to purchase from time to time up to $2,000,000 of its common stock for its own account. Subsequently, the Board of Directors periodically have approved increases in the stock repurchase program. The most recent increase was for an additional $2,000,000 in January 2003, for a maximum of $37,500,000. The Company intends to effectuate all stock purchases either on the open market or through privately negotiated transactions, and intends to finance all stock purchases through its own cash flow or by borrowing for such purchases. For the quarter ended September 30, 2003, the Company purchased 45,000 shares of its common stock at a net price of $13.59 per share, for a total net purchase price of $611,325. From the commencement of the Company's stock repurchase program through September 30, 2003, the Company has purchased a total of 4,969,180 shares for a total gross purchase price of $40,655,545, (representing an average gross purchase price of $8.18 per share) and a total net purchase price of $36,030,060 (representing an average net purchase price of $7.25 per share). The difference between the total gross purchase price and the total net purchase price is the result of the Company purchasing from certain employees shares of the Company's stock acquired by such employees pursuant to the Company's stock option program. In determining the dollar amount available for additional purchases under the stock repurchase program, the Company uses the total net purchase price paid by the Company for all stock purchases, as authorized by the Board of Directors. The Company also has an Employee Stock Ownership Plan and Trust ("ESOP") pursuant to which shares of the Company's stock are purchased by the ESOP for allocation to the accounts of ESOP participants. For the quarter ended September 30, 2003, the ESOP purchased 3,633 shares of the Company's stock. Results of Operations Net sales for the first quarter ended September 30, 2003 were $9,164,691 compared with $8,954,978 for the same period in 2002, an increase of $209,713. The increase is primarily due to the contribution to sales by the acquired Addax, now renamed BiAudio. Gross profit as a percent of net sales decreased to 38% for the quarter ended September 30, 2003 compared with 39% in the prior year, as a result of a lower rate of overhead absorption. Selling, general and administrative expenses for the quarter ended September 30, 2003 were $2,029,734 or 22% of net sales, compared to $1,880,652 or 21% of net sales for the same period in 2002. This was due to the Company experiencing higher sales commission for the quarter. For the first quarter ended September 30, 2003, income from operations was $1,467,911 versus $1,650,105 for the same period in the prior year. 8 of 17 Effective July 1, 1998, the Company entered into a License Agreement and an Addendum thereto with Logitech Electronics Inc. of Ontario, Canada whereby the Company licensed to Logitech the right to sell multimedia/computer speakers under the Koss brand name. This License Agreement covers North America and certain countries in South America and Europe, requiring royalty payments by Logitech through June 30, 2008, subject to certain minimum annual royalty amounts. The Company has a License Agreement with Jiangsu Electronics Industries Limited, a subsidiary of Orient Power Holdings Limited, by way of an assignment of a previously existing License Agreement with Trabelco N.V. Orient Power is based in Hong Kong and has an extensive portfolio of audio and video products. This License Agreement covers the United States, Canada, and Mexico, and has been renewed through December 31, 2004. Pursuant to this License Agreement, Jiangsu Electronics has agreed to meet certain minimum royalty amounts each year. The products covered by this License Agreement include various consumer electronics products. Effective June 30, 2003, the Company entered into a License Agreement with Sonigem Products, Inc. ("Sonigem") of Ontario, Canada whereby the Company licensed to Sonigem the right to sell video and communications products under the Koss brand name. This License Agreement covers Canada, requiring royalty payments by Sonigem through June 30, 2010, subject to certain minimum annual royalty amounts. Royalty income for the quarter ended September 30, 2003 was $190,325, compared to $163,961 for the quarter ended September 30, 2002. Interest income for the quarter was $4,420 as compared to $4,279 for the same quarter in 2002. The provision for income taxes was $642,152 and $706,277 for the quarter ended September 30, 2003 and 2002, respectively. The effective tax rate was 39% for each quarter. On September 29, 2003, the Company declared a quarterly cash dividend of $0.13 per share payable on October 15, 2003 to stockholders of record on September 30, 2003, which is recorded as dividends payable. Recently Issued Financial Accounting Pronouncements During April 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Accounting Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which amends and clarifies financial accounting and reporting for certain derivative instruments. We do not anticipate the adoption of this statement to have a material impact on our consolidated financial statements, as we are not currently a party to derivative financial instruments included in this standard. During May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," which establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. We do not anticipate the adoption of this statement to have a material impact on our consolidated financial statements, as we are not currently a party to such instruments included in this standard. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. In management's opinion, the Company does not engage in any material risk sensitive activities and does not have any market risk sensitive instruments, other than the Company's commercial credit facility used for working capital purposes and stock repurchases. 9 of 17 ITEM 4. CONTROLS AND PROCEDURES. The Company's management, including the Chief Executive Officer/Chief Financial Officer, evaluated the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) within 90 days of the filing of this report and concluded that the Company's disclosure controls and procedures were effective. There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls, including any corrective actions with regard to significant deficiencies and material weaknesses subsequent to the date of their evaluation. Management, including the Chief Executive Officer/Chief Financial Officer, periodically reviews the Company's internal controls for effectiveness and plans to conduct quarterly evaluations of its disclosure controls and procedures. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Form 10-Q 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-Q 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-Q, the words "anticipates," "believes," "estimates," "expects," "intends," "plans" 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 quantified based on current expectations. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained in this Form 10-Q, or in other Company filings, press releases, or otherwise. In addition to the factors discussed in this Form 10-Q, other factors that could contribute to or cause such differences include, but are not limited to, developments in any one or more of the following areas: future fluctuations in economic conditions, the receptivity of consumers to new consumer electronics technologies, the rate and consumer acceptance of new product introductions, competition, pricing, the number and nature of customers and their product orders, production by third party vendors, foreign manufacturing, sourcing and sales (including foreign government regulation, trade and importation concerns), borrowing costs, changes in tax rates, pending or threatened litigation and investigations, and other risk factors which may be detailed from time to time in the Company's Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. 10 of 17 PART II OTHER INFORMATION ITEM 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY-HOLDERS (a) On September 23, 2003 an Annual Meeting of Stockholders was held. (b) Proxies for the election of directors were solicited pursuant to Regulation 14. There was no solicitation in opposition to management's nominees, and all such nominees were elected. (c) There were 3,760,429 shares of common stock eligible to vote at the Annual Meeting, of which 3,573,092 shares were present at the Annual Meeting in person or by proxy, which constituted a quorum. The following is a summary of the results of the voting:
Number of Votes Broker -------------------- --------- For Withheld Non-Votes --------- -------- --------- Nominees for 1-year terms ending in 2004: John C. Koss 3,565,192 7,900 0 Thomas L. Doerr 3,564,984 8,108 0 Michael J. Koss 3,565,174 7,918 0 Lawrence S. Mattson 3,564,884 8,208 0 Martin F. Stein 3,564,884 8,208 0 John J. Stollenwerk 3,564,884 8,208 0 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Filed See Exhibit Index attached hereto. (b) Reports on Form 8-K On October 8, 2003, the Company filed a Current Report on Form 8-K to report a press release. The matter was reported under Items 7, 9 and 12 of Form 8-K. 11 of 17
Number of Votes Broker ------------------- -------------------- For Against Abstain Non-Votes --------- ------- ------- --------- Appointment of PricewaterhouseCoopers LLP as independent auditors for the year ended June 30, 2004 3,566,783 5,709 600 0 Signatures Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KOSS CORPORATION Date: November 7, 2003 /s/ Michael J. Koss ------------------------- Michael J. Koss Vice Chairman, President, Chief Executive Officer, Chief Financial Officer Date: November 7, 2003 /s/ Sue Sachdeva ----------------------- Sue Sachdeva Vice President--Finance Secretary 12 of 17 EXHIBIT INDEX The Company will furnish a copy of any exhibit described below upon request and upon reimbursement to the Company of its reasonable expenses of furnishing such exhibit, which shall be limited to a photocopying charge of $0.25 per page and, if mailed to the requesting party, the cost of first-class postage. 13 of 17
Designation Incorporation of Exhibit Exhibit Title by Reference - ----------- ------------- ------------- 3.1 Certificate of Incorporation of Koss Corporation, as in effect on September 25, 1996 ................................ (1) 3.2 By-Laws of Koss Corporation, as in effect on September 25, 1996........................................... (2) 4.1 Certificate of Incorporation of Koss Corporation, as in effect on September 25, 1996................................. (1) 4.2 By-Laws of Koss Corporation, as in effect on September 25, 1996........................................... (2) 10.1 Officer Loan Policy ........................................ (3) 10.3 Supplemental Medical Care Reimbursement Plan................. (4) 10.4 Death Benefit Agreement with John C. Koss.................... (5) 10.5 Stock Purchase Agreement with John C. Koss................... (6) 10.6 Salary Continuation Resolution for John C . Koss............. (7) 10.7 1983 Incentive Stock Option Plan ............................ (8) 10.8 Assignment of Lease to John C. Koss ......................... (9) 10.9 Addendum to Lease ........................................... (10) 10.10 1990 Flexible Incentive Plan ................................ (11) 10.12 Loan Agreement, effective as of February 17, 1995............ (12) 10.13 Amendment to Loan Agreement dated June 15, 1995, effective as of February 17, 1995 ........................... (13) 10.14 Amendment to Loan Agreement dated April 29, 1999............. (14) 10.15 Amendment to Loan Agreement dated December 15, 1999.......... (15) 10.16 Amendment to Loan Agreement dated October 10, 2001........... (16) 14 of 17
10.17 License Agreement dated November 15, 1991 between Koss Corporation and Trabelco N.V. (a subsidiary of Hagemeyer N.V.) for North America, Central America and South America (including Amendment to License Agreement dated November 15, 1991; Renewal Letter dated November 18, 1994; and Second Amendment to License Agreement dated September 29, 1995)........................................................ (17) 10.18 License Agreement dated September 29, 1995 between Koss Corporation and Trabelco N.V. (a subsidiary of Hagemeyer N.V.) for Europe (including First Amendment to License Agreement dated December 26, 1995) ....................................................... (18) 10.19 Third Amendment and Assignment of License Agreement to Jiangsu Electronics Industries Limited dated as of March 31, 1997......................................................... (19) 10.20 Fourth Amendment to License Agreement between Koss Corporation and Jiangsu Electronics Industries Limited dated as of May 29, 1998........................................... (20) 10.21 Fifth Amendment to License Agreement between Koss Corporation and Jiangsu Electronics Industries Limited dated March 30, 2001............................................... (21) 10.22 Sixth Amendment to License Agreement between Koss Corporation and Jiangsu Electronics Industries Limited dated August 15, 2001.............................................. (22) 10.23 Seventh Amendment to License Agreement between Koss Corporation and Jiangsu Electronics Industries Limited dated December 28, 2001............................................ (23) 10.24 Eighth Amendment to License Agreement between Koss Corporation and Jiangsu Electronics Industries Limited dated July 31, 2002.................................. (24) 10.25 License Agreement dated June 30, 1998 between Koss Corporation and Logitech Electronics Inc. (including Addendum to License Agreement dated June 30, 1998)........... (25) 10.26 Amendment and Extension Agreement between Koss Corporation and Logitech Electronics Inc. dated May 1, 2001.. (26) 10.27 Consent of Directors (Supplemental Executive Retirement Plan for Michael J. Koss dated March 7, 1997)............................................... (27) 10.28 Amendment to Lease........................................... (28) 10.29 Partial Assignment, Termination and Modification of Lease........................................................ (29) (1) Incorporated by reference from Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (2) Incorporated by reference from Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (3) Incorporated by reference from Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (4) Incorporated by reference from Exhibit 10.3 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (5) Incorporated by reference from Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (6) Incorporated by reference from Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (7) Incorporated by reference from Exhibit 10.6 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (8) Incorporated by reference from Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (9) Incorporated by reference from Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended June 30, 1988 (Commission File No. 0-3295) (10) Incorporated by reference from Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended June 30, 1988 (Commission File No. 0-3295) (11) Incorporated by reference from Exhibit 25 to the Company's Annual Report on Form 10-K for the year ended June 30, 1990 (Commission File No. 0-3295) 15 of 17
10.30 Restated Lease.................................................. (30) 31.1 Certification pursuant to Rule 13a-14(a) under the Securities (Filed herewith and Exchange Act of 1934............................................ attached hereto) 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted (Furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ...... herewith and attached hereto) (12) Incorporated by reference from Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 (Commission File No. 0-3295) (13) Incorporated by reference from Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended June 30, 1995 (Commission File No. 0-3295) (14) Incorporated by reference from Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended June 30, 1999 (Commission File No. 0-3295 (15) Incorporated by reference from Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended June 30, 2000 (Commission File No. 0-3295) (16) Incorporated by reference from Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2001 (Commission File No. 0-3295) (17) Incorporated by reference from Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (18) Incorporated by reference from Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295) (19) Incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 (Commission File No. 0-3295) (20) Incorporated by reference from Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended June 30, 1998 (Commission File No. 0-3295) (21) Incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 (Commission File No. 0-3295) (22) Incorporated by reference from Exhibit 10.21 to the Company's Annual Report on Form 10-K for the year ended June 30, 2001 (Commission File No. 0-3295) (23) Incorporated by reference from Exhibit 10.23 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2001 (Commission File No. 0-3295) (24) Incorporated by reference from Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended June 30, 2002 (Commission File No. 0-3295) 16 of 17 (25) Incorporated by reference from Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended June 30, 1998 (Commission File No. 0-3295) (26) Incorporated by reference from Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 (Commission File No. 0-3295) (27) Incorporated by reference from Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 (Commission File No. 0-3295) (28) Incorporated by reference from Exhibit 10.22 to the Company's Annual Report on Form 10-K for the year ended June 30, 2000 (Commission File No. 0-3295) (29) Incorporated by reference from Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended June 30, 2001 (Commission File No. 0-3295) (30) Incorporated by reference from Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended June 30, 2001 (Commission File No. 0-3295) 17 of 17
EXHIBIT 31.1 KOSS CORPORATION CERTIFICATION* I, Michael J. Koss, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Koss Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 7, 2003 /s/ Michael J. Koss - ------------------- Michael J. Koss Chief Executive Officer, President and Chief Financial Officer * Since Michael J. Koss is both the principal executive officer and the principal financial officer of the registrant, only one certification is provided.
EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Form 10-Q of Koss Corporation (the "Company") for the quarter ended September 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael J. Koss, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Michael J. Koss --------------------------- Michael J. Koss Chief Executive Officer and Chief Financial Officer Date: November 7, 2003