KOSS Koss Corp

Management Discussion

• For the three months ended March 31, 2019, sales increased 10.7%. Net sales increased in both the export and domestic markets. For the nine months ended March 31, 2019 net sales declined 1.9% primarily due to a decrease in domestic mass retail customers and certain domestic distributors with these declines partially offset by increased sales in the export markets.
• Net sales in the domestic market were approximately $3,688,000 in the three months ended March 31, 2019, which is a 3.4% increase from last year's approximately $3,568,000. Net sales to mass retail and certain distributors improved during the quarter. In addition, there have been strong sales to a direct to consumer customer.
• For the nine months ended March 31, 2019, domestic net sales decreased from approximately $11,949,000 to approximately $10,644,000. Declines in sales to mass retail customers and certain distributors accounted for most of the decrease in the nine months ended March 31, 2019. Mass retail has been impacted by product placement and decreased sales to a retailer with financial difficulties. The decline of sales to certain distributors was partially due to competition in lower priced and low margin products where we increased pricing to improve margins.