<PAGE>   1
                       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, 1998
                                       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 office)                       (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 
                                     ---       ---

At September 30, 1998, there were 3,177,269 shares  outstanding of the 
Registrant's  common stock,  $0.01 par value per share.









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<PAGE>   2





                        KOSS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                               September 30, 1998


                                      INDEX


<TABLE>
<CAPTION>

                                                                            Page
<S>                                                                        <C>
PART I   FINANCIAL INFORMATION

         Item 1     Financial Statements

                    Condensed Consolidated Balance Sheets
                    September 30, 1998 (Unaudited) and June 30, 1998          3 

                    Condensed Consolidated Statements
                    of Income (Unaudited)
                    Three months ended September 30, 1998 and 1997            4

                    Condensed Consolidated Statements of Cash
                    Flows (Unaudited)
                    Three months ended September 30, 1998 and 1997            5

                    Notes to Condensed Consolidated Financial
                    Statements (Unaudited) September 30, 1998               6-7

         Item 2     Management's Discussion and Analysis of
                    Financial Condition and Results of Operations          8-10


PART II  OTHER INFORMATION

         Item 4     Submission of Matters to a Vote of Security-Holders   10-11

         Item 6     Exhibits and Reports on Form 8-K                         11
</TABLE>







                                    2 of 12
<PAGE>   3

                                    
                        KOSS CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                            September 30, 1998         June 30, 1998
                                                                               (Unaudited)                 (*)
                                                                         ----------------------------------------------
<S>                                                                                <C>                  <C>           
ASSETS
     Current Assets:
          Cash                                                                     $       19,048       $       14,778
          Accounts receivable                                                           9,950,184            8,387,839
          Inventories                                                                  16,177,331           19,486,058
          Other current assets                                                          1,232,891            1,104,838
-----------------------------------------------------------------------------------------------------------------------
               Total current assets                                                    27,379,454           28,993,513

     Property and Equipment, net                                                        2,035,788            2,062,531
     Intangible and Other Assets                                                          965,655              772,725
-----------------------------------------------------------------------------------------------------------------------
                                                                                      $30,380,897          $32,028,769
=======================================================================================================================


LIABILITIES AND STOCKHOLDERS' INVESTMENT
          Current Liabilities:
          Accounts payable                                                           $  1,003,312         $  1,956,877
          Accrued liabilities                                                           1,066,429            1,314,701
          Income taxes payable                                                            290,261              677,527
-----------------------------------------------------------------------------------------------------------------------
               Total current liabilities                                                2,360,002            3,949,105

     Long-Term Debt                                                                     1,367,000            2,746,000
     Deferred Compensation and Other Liabilities                                        1,281,274            1,252,504
     Contingently Redeemable Equity Interest                                            1,490,000            1,490,000
     Stockholders' Investment                                                          23,882,621           22,591,160
=======================================================================================================================
                                                                                      $30,380,897          $32,028,769
=======================================================================================================================
</TABLE>


*    The balance sheet at June 30, 1998, has been prepared from the audited
financial statements at that date.

See accompanying notes.





                                    3 of 12
<PAGE>   4





                                     
                        KOSS CORPORATION AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)


<TABLE>
<CAPTION>


Three Months Ended September 30                                              1998                  1997
--------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                     <C>        
Net sales                                                                 $   9,031,043           $11,755,125
Cost of goods sold                                                            5,058,104             7,330,668
--------------------------------------------------------------------------------------------------------------
Gross profit                                                                  3,972,939             4,424,457
Selling, general and
   administrative expense                                                     2,056,767             2,201,168
--------------------------------------------------------------------------------------------------------------
Income from operations                                                        1,916,172             2,223,289
Other income (expense)
   Royalty income                                                               253,314               170,296
   Interest income                                                                3,938                 3,938
   Interest expense                                                            (50,950)              (20,356)
--------------------------------------------------------------------------------------------------------------
Income before income tax provision                                            2,122,474             2,377,167
Provision for income taxes                                                      831,013               975,744
==============================================================================================================
   Net income                                                               $ 1,291,461           $ 1,401,423
==============================================================================================================
Earnings per common share:
   Basic                                                                          $0.41                 $0.42
   Diluted                                                                        $0.40                 $0.41
==============================================================================================================
Dividends per common share                                                         None                  None
==============================================================================================================
</TABLE>


See accompanying notes.









                                    4 of 12
<PAGE>   5
                                     
                        KOSS CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>


Three Months Ended September 30                                         1998              1997
------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                 <C>         
CASH FLOWS FROM OPERATING
ACTIVITIES:
     Net income                                                      $   1,291,461       $  1,401,423
     Adjustments to reconcile net
          income to net cash provided
          by operating activities:
               Depreciation and amortization                               173,638            216,312
               Deferred compensation                                        28,770             28,770
               Net changes in operating assets and
                    liabilities                                             29,227            301,133
------------------------------------------------------------------------------------------------------
               Net cash provided by operating
                    activities                                           1,523,096          1,947,638
------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
     Acquisition of equipment
          and leasehold improvements                                      (139,826)           (22,619)
------------------------------------------------------------------------------------------------------
          Net cash used in
              investing activities                                        (139,826)           (22,619)
------------------------------------------------------------------------------------------------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
     Repayments under line of credit agreements                         (7,610,000)        (4,716,000)
     Borrowings under line of credit agreements                          6,231,000          4,940,000
     Purchase and retirement of common stock                                    --         (4,763,844)
     Exercise of stock options                                                  --          2,681,050
------------------------------------------------------------------------------------------------------
          Net cash used in financing activities                         (1,379,000)        (1,858,794)
------------------------------------------------------------------------------------------------------
Net increase in cash                                                         4,270             66,225
Cash at beginning of year                                                   14,778             32,551
======================================================================================================
Cash at end of quarter                                                 $    19,048         $   98,776
======================================================================================================
</TABLE>


See accompanying notes.



                                    5 of 12
<PAGE>   6








                        KOSS CORPORATION AND SUBSIDIARIES
                               September 30, 1998
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         The financial statements presented herein are based on interim amounts
         and are subject to audit. 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, 1998 and for all periods presented have been made. The
         income from operations for the quarter ended September 30, 1998 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 generally accepted
         accounting principles 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, 1998, Annual Report on Form 10-K.

2.       EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE

         In February 1997, the Financial Accounting Standards Board ("FASB")
         issued Statement of Financial Accounting Standards No. 128, "Earnings
         per Share," (SFAS 128). This Statement establishes new standards for
         computing and presenting earnings per share. SFAS 128 is effective for
         financial statements issued for periods ending after December 15, 1997
         and requires restatement of all prior-period earnings per share data.
         The Company's adoption of the provisions of SFAS 128 resulted in the
         dual presentation of basic and diluted per share amounts on the
         Company's income statement.

         Basic earnings per 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, 1998 
         and 1997 were 3,177,269 and 3,342,486, respectively. When dilutive, 
         stock options are included as share equivalents using the Treasury 
         stock method. Common stock equivalents of 38,769 and 110,510 related to
         stock option grants were included in the computation of the average 
         number of shares outstanding for diluted earnings per share for the 
         quarters ended September 30, 1998 and 1997, respectively.







                                    6 of 12
<PAGE>   7







                                   
3.       INVENTORIES

         The classification of inventories is as follows:
<TABLE>
<CAPTION>

                                                              September 30, 1998       June 30, 1998
                      -------------------------------------------------------------------------------
<S>                                                                 <C>                 <C>         
                      Raw materials and
                        work in process                             $  5,654,369        $  6,700,168
                      Finished goods                                  10,984,129          13,247,057
                      -------------------------------------------------------------------------------
                                                                      16,638,498          19,947,225
                      LIFO Reserve                                     (461,167)           (461,167)
                      ===============================================================================
                                                                     $16,177,331         $19,486,058
                      ===============================================================================
</TABLE>



4.       STOCK PURCHASE AGREEMENT

         The Company has an agreement with its Chairman to repurchase 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, 1998 and June 30, 1998, $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.       DEFERRED COMPENSATION

         In 1991, the Board of Directors agreed to continue John C. Koss'
         current base salary in the event he becomes disabled prior to age 70.
         After age 70, Mr. Koss shall receive his current base salary for the
         remainder of his life, whether or not he becomes disabled. The Company
         is currently recognizing an annual expense of $115,080 in connection
         with this agreement, which represents the present value of the
         anticipated future payments. At September 30, 1998 and June 30, 1998,
         respectively, the related liabilities in the amounts of $795,150 and
         $766,380 have been included in deferred compensation on the
         accompanying balance sheets.




                                    7 of 12
<PAGE>   8






                                    
                        KOSS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                               September 30, 1998
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition and Liquidity

Cash generated by operating activities during the three months ended September
30, 1998 amounted to $1,523,096. Working capital was $25,019,452 at September
30, 1998, a decrease of $24,956 from the balance at June 30, 1998. The cash
necessary to fund the Company's operating activities fluctuates from time to
time; however, as a general rule, the Company expects to generate adequate
amounts of cash to meet future operating needs. The Company maintains sufficient
borrowing capacity to fund any shortfall.

Capital expenditures for new property and equipment (including production
tooling) were $139,826 for the quarter. For the fiscal year ending June 30,
1999, the Company expects its capital expenditures to be approximately
$1,100,000. The Company expects to generate sufficient operating funds to
fulfill these expenditures.

Stockholders' investment increased to $23,882,621 at September 30, 1998, from
$22,591,160 at June 30, 1998. The increase reflects primarily the net effect of
income.

The Company has an unsecured working capital line of credit with a bank which
expires November 1, 1999. This credit facility provides for borrowings up
to a maximum of $8,000,000. Borrowings under this credit facility bear interest
at the bank's prime rate, or LIBOR plus 2.25%. 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. Utilization of this credit facility as of September 30, 1998 and June
30, 1998 totaled $1,367,000 and $2,746,000, respectively, consisting solely of
borrowings. The decrease as of September 30, 1998 is the result of decreased
inventory purchases due to lower sales volumes.

The Company has also reinstated a $2,000,000 credit facility which can be used
by the Company to purchase shares of its own stock pursuant to the Company's
stock repurchase program. This credit facility also expires November 1, 1999.

In August 1998, the Board of Directors authorized an additional $3,000,000 to be
used for purchasing the Company's common stock for its own account, increasing
the total net amount of the Company's stock repurchase program from $7,000,000
to $10,000,000. The Company intends to effectuate all stock purchases either on
the open market or through one or more 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, 1998, the Company did
not purchase any shares of its common stock pursuant to the Company's stock
repurchase program. For the quarter ended September 30, 1998, the Company
purchased 15,000 shares of its common stock for allocation to the Company's
Employee Stock Ownership Plan and Trust ("ESOP") at an average price of $12.23
per share.





                                    8 of 12
<PAGE>   9


                                    
From the commencement of the Company's stock repurchase program through
September 30, 1998, the Company has purchased and retired a total of 891,348
shares at a total gross purchase price of $9,108,577 (representing an average
gross purchase price of $10.22 per share) and a total net purchase price of
$6,485,677 (representing an average net purchase price of $7.28 per share). The
difference between the total gross purchase price and the total net purchase
price is the result of the Company repurchasing certain shares acquired by
employees pursuant to the Company stock option program.


Results of Operations

Net sales for the quarter ended September 30, 1998 were $9,031,043 compared with
$11,755,125 for the same period in 1997, a decrease of $2,724,082. This is the
result of the Company's decision to withdraw from the speaker business.

Gross profit as a percent of net sales was 44% for the quarter ended September
30, 1998 compared with 38% in the prior year. This improvement is primarily due
to a change in product mix and withdrawal from the speaker business.

Selling, general and administrative expenses for the quarter ended September 30,
1998 were $2,056,767 or 23% of net sales, as against $2,201,168 or 19% of net
sales for the same period in 1997.

For the quarter ended September 30, 1998, income from operations was $1,916,172
versus $2,223,289 for the same period in 1997, a decrease of $307,117.

Interest expense amounted to $50,950 for the quarter as compared to $20,356 for
the same period in the prior year. This increase is a result of increased
borrowing activity for the quarter as compared to the same period last year.

The Company had a License Agreement with Trabelco N.V., a Netherlands, Antilles
company and a subsidiary of Hagemeyer, N.V., a diverse international trading
company based in the Netherlands. This License Agreement covered North America,
Central America, and South America. Effective as of March 31, 1997, the Company
assigned this License Agreement to Jiangsu Electronics Industries Limited
("Jiangsu"), a subsidiary of Orient Power Holdings Limited. Orient Power is
based in Hong Kong and has an extensive portfolio of audio and video products.
Pursuant to this assignment, Jiangsu has agreed to make royalty payments through
December 31, 2000, subject to certain minimum royalty amounts due for the years
1998, 1999, and 2000. In May of 1998, the Company and Jiangsu entered into an
amendment to this License Agreement expanding the products covered by this
License Agreement to include mobile electronics and increasing the minimum
royalties due for the years 1998, 1999, and 2000. This License Agreement is
subject to renewal for additional 3 year periods.

Royalty income earned in connection with this License Agreement for the quarter
ended September 30, 1998 was $253,314 as compared to $170,296 for the same
period in 1997. The Company recognizes royalty income when earned. The increase
in royalty income for the quarter was the result of higher sales volume in
products covered under this License Agreement.





                                    9 of 12
<PAGE>   10

                                    
The License Agreement between the Company and Trabelco N.V. covering certain
European countries remains in place. Although no sales have been reported under
this License Agreement to date, certain minimum royalties are due for calendar
year 1998. This License Agreement expires on December 31, 1998; however,
Trabelco N.V. has the option to renew this License Agreement for additional 3
year periods.

Effective July 1, 1998, the Company entered into a License Agreement and an 
Addendum thereto with Logitech Electronics Inc. ("Logitech") 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.  This License 
Agreement extends for 5 years and includes a 5 year renewal option at the 
Company's discretion.  This License Agreement requires royalty payments by 
Logitech through June 30, 2003, subject to certain minimum royalty amounts due 
each year.

Year 2000

The Company is currently working to resolve the potential impact of the year
2000 on the processing of date sensitive information by the Company's
computerized information systems.  The year 2000 problem is the result of
computer programs being written using 2 digits to define the applicable year (as
opposed to 4 digits).  Any of the Company's programs that have time sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or systems failure.  Based on a
review of the Company's software by the Chief Information Officer and outside
consultants, the anticipated costs of addressing potential problems are not
expected to have an adverse impact on the Company's financial position, results
of operations or cash flows in future periods.  The Company expects its computer
systems will be year 2000 compliant by January 31, 1999.

A year 2000 compliance letter and survey form has been sent to all our 
customers doing over $10,000 annually in sales.  Responses will be analyzed to 
see if there are any adverse conditions that the Company may have overlooked in 
its year 2000 plan.  The same procedure is being followed with our suppliers 
and vendors.  The Company's current inventory levels and forecasting technique 
will insure product is available to support customer requirements.  In the 
event there are any adverse conditions, the Company will devote necessary 
resources to resolve all significant year 2000 issues in a timely manner.


PART II  OTHER INFORMATION

Item 4   Submission of Matters to Vote of Security-Holders

         (a)  On October 22, 1998 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 3,177,269 shares of common stock eligible to           
              vote at the Annual Meeting, of which 2,845,927 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:                                            
              



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<PAGE>   11

<TABLE>
<CAPTION>


                    Number of Votes              Broker
                    ---------------              ------
                                        For            Withheld        Non-Votes
                                        ---            --------        ---------
<S>                                  <C>               <C>             <C> 
           Nominees for 1-year
           terms ending in 1999:

           John C. Koss              2,828,644         17,555               0
           Thomas L. Doerr           2,827,834         18,365               0
           Victor L. Hunter          2,827,246         18,953               0
           Michael J. Koss           2,828,423         17,776               0
           Lawrence S. Mattson       2,827,096         19,103               0
           Martin F. Stein           2,828,867         17,332               0
           John J. Stollenwerk       2,828,779         17,420               0
</TABLE>

                                    

<TABLE>
<CAPTION>
                                                        Number of Votes         Broker
                                                        ---------------         ------
                                                 For     Against      Abstain     Non-Votes
                                                 ---     -------      -------     ---------
<S>                                          <C>         <C>          <C>         <C>
           Appointment of
           PricewaterhouseCoopers L.L.P.
           as independent auditors
           for the year ended
           June 30, 1999                      2,842,456    1,927       1,816           0
</TABLE>



Item 6     Exhibits and Reports on Form 8-K

           (a)    Exhibits Filed
                  27 Financial Data Schedule

           (b)    Reports on Form 8-K
                  There were no reports on Form 8-K filed by the
                  Company during the period covered by this report.



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<PAGE>   12


                                   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 authorized.


                                              KOSS CORPORATION



                  Dated: 11/13/98            /s/ Michael J. Koss
                                             -----------------------------------
                                             Michael J. Koss, President,
                                             Chief Executive Officer,
                                             Chief Financial Officer

                  Dated: 11/13/98            /s/ Sue Sachdeva
                                             -----------------------------------
                                             Sue Sachdeva
                                             Vice President--Finance





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