New products result in Koss loss

Milwaukee-based Koss Corp. today reported a fiscal second quarter net loss of $3.4 million, or 47 cents per share, down dramatically from net income of $338,688, or 5 cents per share, in the second quarter of 2013.

Revenue for the second quarter ended Dec. 31 was $6.5 million, down from $8.6 million in the same period a year ago.

The company attributed the loss to a $4.5 million impairment charge related to product and equipment changes.

“We have developed new architecture for the software and firmware that supports our WiFi headphones and earbuds during the last several months,” said Michael Koss, president and chief executive officer. “This new architecture will replace the old architecture that was being capitalized. As a result of these changes to the system architecture, we are taking an impairment charge for the remainder of the original software plus some tooling, inventory and related items to reflect this change.”

In addition, weakened European economies and lower demand in Asia drove lower sales, while Koss’ new manufacturing facility in Mexico incurred some initial start-up costs.

“If we do not see an improvement in our net sales in the spring and early summer, we will likely need to either reduce or eliminate the quarterly dividend that would normally be scheduled to be paid for the period ending June 30, 2014,” Koss said. “We will be closely monitoring sales in our export markets as well as sales contributions by our new products.”

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