Koss Corp (NASDAQ: KOSS)

Koss Corporation, popularly known as KOSS, operates in the audio/video industry, with a focus on designing, manufacturing, and selling stereo headphones and related personal listening accessories. The company, established in Delaware in 1971, has built a strong reputation in the industry over the years.

KOSS's revenue is primarily generated through the sale of its products, which are distributed through various channels such as U.S. distributors, international distributors, audio specialty stores, the internet, national retailers, grocery stores, electronics retailers, and prisons. The company's products are also sold to distributors for resale to school systems and directly to other manufacturers for inclusion with their own products.

The company's operations are divided into three main segments. The first, Stereo Headphones, contributes to approximately 80% of the company's sales and includes a range of products like the Koss SP/3, Koss Porta Pro, and Koss QZ101. These products are designed for music lovers who value high-quality sound and durability. The second segment, Communications and Education, accounts for around 20% of the company's sales and offers products designed for use in communications, education settings, and with metal detectors. These products are popular among professionals who require high-quality audio equipment for their work. The third segment, Original Equipment Manufacturers (OEM), contributes to a small percentage of the company's sales and includes products designed for use with other manufacturers' products. These products are popular among companies that require customized audio equipment for their products.

In the stereo headphone industry, KOSS competes with major players such as Sony, Sennheiser, and Audio-Technica. The company's competitive advantage lies in its unique sound, quality workmanship, brand identification, engineering skills, and customer service, as well as its intellectual property portfolio.

KOSS's customers are primarily retailers and distributors who sell its products to consumers. The company's largest customers account for approximately 51% of its net sales, and maintaining strong relationships with these customers is crucial for KOSS to sustain its market share.

In terms of research and development, KOSS invests in the development of new products and technologies to stay ahead of the competition. The company has a team of engineers and designers who work on developing new products and improving existing ones.

However, KOSS is not without its challenges. The company faces various risks, including environmental and cybersecurity risks. To mitigate these risks, KOSS has programs in place, such as regular monitoring of outside threats, continuous updating of software, education of employees to the risks of external threats, and simplification of infrastructure to minimize servers.