37 unchanged sentences
Although retail sales of consumer electronics have historically been higher during the holiday season, sales of stereo headphones have smoothed throughout the year.
−Removed: Management believes that the Company’s business is not seasonal as evidenced by the fact that the Company’s net sales for the last three years, including the year ended June 30, 2023, were almost equally split between the first and second halves of the year.
+Added: Management believes that the Company’s business is not seasonal as evidenced by the fact that the Company’s net sales for the last three years, including the year ended June 30, 2024, were fairly evenly dispersed throughout the year.
Management believes that the reason for this level performance of sales to retailers and distributors is related to the fact that consumers are increasingly purchasing stereo headphones throughout the year as replacements for older or lower quality headphones to improve the quality of their listening experience as it relates to portable electronic products.
Therefore, upgrades and replacements appear to have as much interest over the course of the year as gifts of stereo headphones during the holiday season.
−Removed: WORKING CAPITAL AND BACKLOG
−Removed: The Company’s working capital needs do not differ substantially from those of its competitors in the industry and generally reflect the need to carry sufficient amounts of inventory to meet delivery requirements of its customers.
+Added: WORKING CAPITAL
+Added: The Company’s working capital needs do not differ substantially from those of its competitors in the industry and generally reflect the need to carry sufficient amounts of inventory to meet the delivery requirements of its customers.
On a limited basis, the Company does offer 90-120 day payment terms to certain customers and may, on a rare occasion, extend payment terms to its customers for a special promotion.
Based on historical trends, management does not expect these practices to have a material effect on net sales or net income.
−Removed: As of June 30, 2023, the Company’s backlog of orders was approximately $320,000, which the Company considers minimal in relation to net sales during fiscal year 2023 or projected sales for fiscal year 2024 net sales.
−Removed: The Company markets a line of products used by consumers to listen to music, to work and study from home, and to listen to other audio-related media.
+Added: The Company markets a line of products used by consumers to listen to music, to work and study from home, to communicate via telephone or internet, and to listen to other audio-related media.
The Company distributes these products through distributors and retail channels in the U.S.
2 unchanged sentences
The Company markets its products through many domestic retail outlets and numerous retailers worldwide.
−Removed: The Company also markets products directly to several original equipment manufacturers for use in their products.
−Removed: In the years ended June 30, 2023 and 2022, the Company’s largest sales concentration was represented by its own DTC offerings via the Amazon portal and were approximately 20% and 16% of net sales in fiscal year 2023 and 2022, respectively.
+Added: The Company also markets products directly to several OEMs for use in their products.
+Added: In the years ended June 30, 2024 and 2023, the Company’s largest sales concentration was represented by its own DTC offerings via the Amazon portal and were approximately 17% and 20% of net sales in fiscal years 2024 and 2023, respectively.
The Company’s products have broad distribution worldwide across many channels including distributors, specialty stores, mass merchants, and electronics stores.
The Company is dependent upon its ability to retain a base of retailers and distributors to sell the Company’s line of products.
−Removed: A material loss of retailers and/or distributors could result in a loss of product placement and have an adverse effect on the Company’s financial results, however, management believes that the impact of any such loss could be partially alleviated by a corresponding decrease, on a limited basis, in expenses.
+Added: A material loss or disruption of retailers and/or distributors could result in a loss of product placement and have an adverse effect on the Company’s financial results.
The Company’s five largest customers accounted for approximately 46% and 51% of net sales in fiscal years 2024 and 2023, respectively.
−Removed: The Company focuses on the stereo headphone industry.
+Added: The Company principally focuses on the stereo headphone industry.
In the stereo headphone market, the Company competes with all major competitors, many of which are large and diversified and have greater total assets and resources than the Company.
−Removed: The extent to which retailers and consumers view the Company as a pioneer in the creation of the personal listening industry, an innovative vendor of high-quality stereo headphone products, and a provider of excellent after-sales customer service, is the extent to which the Company offers a competitive advantage.
+Added: The extent to which retailers and consumers view the Company as a pioneer in the creation of the personal listening industry, an innovative vendor of high-quality stereo headphone products, and a provider of excellent after-sales customer service and direct sales, is the extent to which the Company offers a competitive advantage.
The Company relies upon its unique sound, quality workmanship, brand identification, engineering skills, and customer service, as well as its intellectual property portfolio, to support its competitive position.
7 unchanged sentences
The Company believes that it has materially complied with all currently existing federal, state and local statutes and regulations regarding environmental standards and occupational safety and health matters to which it is subject.
−Removed: During fiscal years 2023 and 2022, the amounts incurred in complying with federal, state and local statutes and regulations pertaining to environmental standards and occupational safety and health laws and regulations did not materially affect the Company’s operating results or financial
+Added: During fiscal years 2024 and 2023, the amounts incurred in complying with federal, state and local statutes and regulations pertaining to environmental standards and occupational safety and health laws and regulations did not materially affect the Company’s operating results or financial condition.
The increased public awareness and concern regarding climate change has resulted in increased regulations which are rapidly evolving.
The Company continues to monitor the evolving regulations, as well as related required disclosures, to ensure that we will be conformant.
−Removed: It is unclear as to whether any emerging and evolving regulations will have a material impact on the Company's results of operations.
+Added: It is unclear as to whether any emerging and evolving regulations will have a material impact on the Company's results of operations.
As of June 30, 2024, the Company employed 30 non-union employees, 2 of which were part-time employees.
5 unchanged sentences
In addition, any fluctuations in currency exchange rates could affect the pricing of the Company’s products and divert customers who might choose to purchase lower-priced, less profitable products, and could affect overall demand for the Company’s products.
−Removed: For further information, see Part II, Item 7.
+Added: For further information, see Part II, Item 7, as well as additional description of risks related to our business in foreign markets described in Part I, Item 1A.
+Added: under “ We may be subject to risks related to doing business in, and having counterparties based in, foreign countries.
The Company has sales personnel currently located in the Netherlands and the Caucasus region to service the international export marketplace.
8 unchanged sentences
Sales to Ukraine have also been impacted as a result of the humanitarian crisis there due to the ongoing hostilities.
−Removed: In the prior two fiscal years, neither Russia nor Ukraine represented a significant portion of the Company’s export business and, in the aggregate, was less than 3.4% of net sales for the year ended June 30, 2022.
−Removed: The Company is uncertain, however, how the conflict will impact future sales.
+Added: In the years ended June 30, 2024 and 2023, there were no sales to Russia, however, Ukraine resumed ordering in fiscal year 2024 and represented approximately 9% of the Company’s export business during the year ended June 30, 2024.
+Added: The Company is uncertain how the conflict will impact future sales.
The Company has a manufacturing facility in Milwaukee, Wisconsin and uses contract manufacturing facilities in the People’s Republic of China and Taiwan.
8 unchanged sentences
In addition, the Company may not be able to pass along most increases in tariffs and freight charges to the Company’s customers, which would directly affect profits.
−Removed: CYBERSECURITY
−Removed: The Company depends on information technology as an enabler to improve the effectiveness of its operations and to interface with its customers, as well as to maintain financial accuracy and efficiency.
−Removed: Information technology system failures, including suppliers’ or vendors’ system failures, could disrupt the Company’s operations by causing transaction errors, processing inefficiencies, delays or cancellation of customer orders, the loss of customers, impediments to the manufacture or shipment of products, other business disruptions, or the loss of or damage to intellectual property through a security breach.
−Removed: The Company’s information systems, or those of its third-party service providers, could also be penetrated by outside parties’ intent on extracting information, corrupting information or disrupting business processes.
−Removed: Such unauthorized access could disrupt the Company’s business, increase costs and/or result in the loss of assets.
−Removed: Cybersecurity attacks are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, corruption or destruction of data and other manipulation or improper use of systems or networks.
−Removed: These events could negatively impact the Company’s customers and/or reputation and lead to financial losses from remediation actions, loss of business, production downtimes, operational delays or potential liability, penalties, fines or other increases in expense, all of which may have a material adverse effect on the Company’s business.
−Removed: In addition, as security threats and cybersecurity and data privacy and protection laws and regulations continue to evolve and increase in terms of sophistication, we may invest additional resources in the security of our systems.
−Removed: Any such increased level of investment could adversely affect our financial condition or results of operations.
−Removed: The Company has programs in place intended to address and mitigate the cybersecurity risks.
−Removed: These programs include regular monitoring of outside threats, continuous updating of software to mitigate risk, education of employees to the risks of external threats, and simplification of infrastructure to minimize servers.
−Removed: Additionally, the Company seeks to minimize its risk by keeping the number of physical servers at the HQ location and its exposure to public systems to a minimum.
−Removed: Additional e-commerce improvements have further mitigated exposure and business critical systems, including the Company’s ERP system, have been migrated to Tier-1 cloud service providers, with more anticipated in the future.
−Removed: While the Company devotes resources to security measures to protect its systems and data, these measures cannot provide absolute security.
AVAILABLE INFORMATION
The Company’s internet website is https://www.koss.com.
−Removed: The Company makes available free of charge through its internet website the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and all amendments to those reports as soon as reasonably practicable after they are electronically filed with (or furnished to) the Securities and Exchange Commission.
+Added: The Company makes available free of charge through its internet website the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and all amendments to those reports as soon as reasonably practicable after they are electronically filed with (or furnished to) the Securities and Exchange Commission (the “SEC”).
These reports and other information regarding the Company are also available on the SEC’s internet website at https://www.sec.gov.
−Removed: The information on the Company’s website is not part of this or any other report the Company files with or furnishes to the Securities and Exchange Commission.
+Added: The information on the Company’s website is not part of this or any other report the Company files with or furnishes to the SEC.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.