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SECURITIES AND EXCHANGE COMMISSION  Form 10-Q/A, Amendment No. 2 [X]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934for the quarterly period ended September 30, 2003
  [  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 0-3295 KOSS CORPORATION   A DELAWARE CORPORATION
    

    39-1168275(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification No.)4129 North Port Washington Avenue, Milwaukee,Wisconsin
    
    
    53212(Address of principal executive offices)
    
    (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  [  ]
 Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES  [  ]
  NO  [X]
 At September 30, 2003, there were 3,767,929 shares outstanding of the
registrants common stock, $0.005 par value per share. 1 of  22




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KOSS CORPORATION AND SUBSIDIARIES
FORM 10-Q/A
September 30, 2003  
 INDEX PagePART I FINANCIAL INFORMATIONItem 1 Financial StatementsCondensed Consolidated Balance Sheets (Unaudited)September 30, 2003 and June 30, 2003
    
    
    4Condensed Consolidated Statements of Income (Unaudited)Three months ended September 30, 2003 and 2002
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited)Three months ended September 30, 2003 and 2002
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2003
    
    
    7-8Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8-11Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    11Item 4 Controls and Procedures
    
    
    11PART II OTHER INFORMATIONItem 4 Submission of Matters to a Vote of Security-Holders
    
    
    14Item 6 Exhibits and Reports on Form 8-K
    
    
    14Certification Pursuant to Rule 13a-14(a)Certification Pursuant to Section 906
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EXPLANATORY NOTE Koss Corporation (the Company) is filing this Amendment No. 2 on Form 10-Q/A
for the quarterly period ended September 30, 2003, to amend its Form 10-Q/A,
Amendment No. 1 filed on February 17, 2004 (the Amended Report) which amended
its original Quarterly Report on Form 10-Q filed on November 7, 2003. Subsequent to the filing of the Amended Report on February 17, 2004, the
Company concluded that certain provisions of a stock repurchase agreement with
the Chairman of the Company required the adoption of SFAS 150 Accounting for
Certain Financial Instruments with Characteristics of Both Liabilities and
Equity. The new accounting pronouncement was effective for public companies
for interim periods beginning after June 15, 2003. The change is reflected in this Form 10-Q/A: (i) on the Companys balance sheet
set forth in Item 1.  Financial Statements as an increase in other assets of
$49,125, an increase in derivative liability of $125,000, a decrease in
contingently redeemable equity interest of $1,490,000, and an increase in
stockholders investment of $1,414,125; (ii) on the Companys income statement
set forth in Item 1.  Financial Statements as a loss of $75,875 reflecting
the cumulative effect of the change in accounting principle; (iii) on the
Companys statement of cash flows as an adjustment of $75,875 reflecting the
cumulative effect of the change in accounting principle; (iv) in Item 2. 
Managements Discussion and Analysis of Financial Condition and Results of
Operations; (v) in Item 4.  Controls and Procedures, in the discussion of
Recently Issued Financial Accounting Pronouncements; and (vi) in updated
certifications of certain executive officers, as of the date of this Form
10-Q/A. This Form 10-Q/A is hereby amended, as described above, and for convenience of
reference is restated in its entirety as set forth herein. This amended quarterly report continues to speak as of the original date of the
original quarterly report and unless as otherwise noted, the Company has not
updated the disclosure in this amended quarterly report to speak as of a later
date. 3 of  22




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PART I
FINANCIAL INFORMATION 
 Item 1. Financial Statements. KOSS CORPORATION AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) September 30, 2003
    
    June 30, 2003AS REPORTED
    
    AS AMENDEDASSETSCurrent assets:Cash
    
    $
    1,546,931
    
    
    $
    1,546,931
    
    
    $
    1,557,104Accounts receivable
    
    
    8,886,277
    
    
    
    8,886,277
    
    
    
    8,695,553Income taxes receivable
    
    
    
    
    
    
    
    
    
    
    181,871Inventories
    
    
    8,316,576
    
    
    
    8,316,576
    
    
    
    7,333,772Other current assets
    
    
    1,346,675
    
    
    
    1,346,675
    
    
    
    1,240,383Total current assets
    
    
    20,096,459
    
    
    
    20,096,459
    
    
    
    19,008,683Property and equipment, net
    
    
    1,803,100
    
    
    
    1,803,100
    
    
    
    1,923,817Other assets
    
    
    2,449,528
    
    
    
    2,498,653
    
    
    
    2,854,318$
    24,349,087
    
    
    $
    24,398,212
    
    
    $
    23,786,818LIABILITIES AND STOCKHOLDERS INVESTMENTCurrent liabilities:Accounts payable
    
    $
    3,442,011
    
    
    $
    3,442,011
    
    
    $
    2,793,550Accrued liabilities
    
    
    1,419,124
    
    
    
    1,419,124
    
    
    
    1,499,043Income taxes payable
    
    
    410,201
    
    
    
    410,201
    
    
    
    Dividends payable
    
    
    492,431
    
    
    
    492,431
    
    
    
    488,856Total current liabilities
    
    
    5,763,767
    
    
    
    5,763,767
    
    
    
    4,781,449Deferred compensation
    
    
    631,855
    
    
    
    631,855
    
    
    
    1,014,167Other liabilities
    
    
    
    
    
    
    
    
    
    
    Derivative liability
    
    
    
    
    
    
    125,000
    
    
    
    Contingently redeemable equity interest
    
    
    1,490,000
    
    
    
    
    
    
    
    1,490,000Stockholders investment
    
    
    16,463,465
    
    
    
    17,877,590
    
    
    
    16,501,202$
    24,349,087
    
    
    $
    24,398,212
    
    
    $
    23,786,818
 See accompanying notes. 4 of  22




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KOSS CORPORATION AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three Months Ended September 30,
    
    2003
    
    2002AS REPORTED
    
    AS AMENDEDNet sales
    
    $
    9,164,691
    
    
    $
    9,164,691
    
    
    $
    8,954,978Cost of goods sold
    
    
    5,667,046
    
    
    
    5,667,046
    
    
    
    5,424,221Gross profit
    
    
    3,497,645
    
    
    
    3,497,645
    
    
    
    3,530,757Selling, general and
administrative expense
    
    
    2,029,734
    
    
    
    2,029,734
    
    
    
    1,880,652Income from operations
    
    
    1,467,911
    
    
    
    1,467,911
    
    
    
    1,650,105Other income (expense):Royalty income
    
    
    190,325
    
    
    
    190,325
    
    
    
    163,961Interest income
    
    
    4,420
    
    
    
    4,420
    
    
    
    4,279Interest expense
    
    
    
    
    
    
    
    
    
    
    (11,290
    )Income before income tax
provision and cumulative effect
of change in accounting
principles
    
    
    1,662,656
    
    
    
    1,662,656
    
    
    
    1,807,055Provision for income taxes
    
    
    642,152
    
    
    
    642,152
    
    
    
    706,277Income before cumulative effect
of change in accounting
principles
    
    
    1,020,504
    
    
    
    1,020,504
    
    
    
    1,100,778Cumulative effect of change in
accounting principles (net of
tax effect of $49, 125)
    
    
    
    
    
    
    (75,875
    )
    
    
    Net income
    
    $
    1,020,504
    
    
    $
    944,629
    
    
    $
    1,100,778Earnings per common share:Basic
    
    $
    0.27
    
    
    $
    0.25
    
    
    $
    0.30Diluted
    
    $
    0.26
    
    
    $
    0.24
    
    
    $
    0.29Dividends per common share
    
    $
    0.13
    
    
    $
    0.13
    
    
    $
    0.13
 See accompanying notes. 5 of  22




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KOSS CORPORATION AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Three Months Ended September 30,
    
    2003
    
    2002AS REPORTED
    
    AS AMENDEDCASH FLOWS FROM OPERATING
ACTIVITIES:Net income
    
    $
    1,020,504
    
    
    $
    944,629
    
    
    $
    1,100,778Adjustments to reconcile net
income to net cash provided
by operating activities:Cumulative change in accounting
principles
    
    
    
    
    
    
    75,875
    
    
    
    Depreciation and amortization
    
    
    175,333
    
    
    
    175,333
    
    
    
    150,069Deferred compensation
    
    
    
    
    
    
    
    
    
    
    (26,436
    )Net changes in operating assets and
liabilities
    
    
    (111,161
    )
    
    
    (111,161
    )
    
    
    18,020Net cash provided by operating
activities
    
    
    1,084,676
    
    
    
    1,084,676
    
    
    
    1,242,431CASH FLOWS FROM INVESTING
ACTIVITIES:Acquisition of equipment
    
    
    (37,681
    )
    
    
    (37,681
    )
    
    
    (106,993
    )Net cash used in investing activities
    
    
    (37,681
    )
    
    
    (37,681
    )
    
    
    (106,993
    )CASH FLOWS FROM FINANCING ACTIVITIES:Dividends paid
    
    
    (488,856
    )
    
    
    (488,856
    )
    
    
    (440,466
    )Purchase of common stock
    
    
    (877,500
    )
    
    
    (877,500
    )
    
    
    Exercise of stock options
    
    
    309,188
    
    
    
    309,188
    
    
    
    Net cash used in financing
activities
    
    
    (1,057,168
    )
    
    
    (1,057,168
    )
    
    
    (440,466
    )Net (decrease) increase in cash
    
    
    (10,173
    )
    
    
    (10,173
    )
    
    
    694,972Cash at beginning of period
    
    
    1,557,104
    
    
    
    1,557,104
    
    
    
    1,052,364Cash at end of period
    
    $
    1,546,931
    
    
    $
    1,546,931
    
    
    $
    1,747,336
 See accompanying notes. 6 of  22




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KOSS CORPORATION AND SUBSIDIARIES
September 30, 2003 
 
  1.
    
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe financial statements presented herein are based on interim amounts.
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, 2003 and for all
periods presented have been made. The income from operations for the
quarter ended September 30, 2003 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 accounting principles
generally accepted in the United States of America 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, 2003, Annual Report on Form
10-K/A.2.
    
    EARNINGS PER COMMON SHAREBasic earnings per common 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, 2003
and 2002 were 3,766,093 and 3,855,625, respectively. When dilutive,
stock options are included as share equivalents using the treasury stock
method. Common stock equivalents of 139,928 and 185,071 related to stock
option grants were included in the computation of the average number of
            shares outstanding for diluted earnings per common share for the quarters
ended September 30, 2003 and 2002, respectively.3.
    
    INVENTORIESThe classification of inventories is as follows: September 30, 2003
    
    June 30, 2003Raw materials and
work in process
    
    $
    3,019,598
    
    
    $
    3,039,272Finished goods
    
    
    6,306,564
    
    
    

    5,304,0869,326,162
    
    
    
    8,343,358LIFO reserve
    
    
    (1,009,586
    )
    
    
    (1,009,586
    )$
    8,316,576
    
    
    $
    7,333,772
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4.
    
    STOCK PURCHASE AGREEMENTThe Company has an agreement with its Chairman, John C. Koss, to, at the
request of the executor of the estate, repurchase Company common stock
from his estate in the event of his death. The Company does not have the
right to require the estate to sell stock to the Company. As such, this
arrangement is accounted for as a written put option with the fair value
of the put option recorded as a derivative liability. The fair value of
the option at September 30, 2003 was $125,000. 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 may elect to pay the
purchase price in cash or may elect to pay cash equal to 25% of the total
amount due and to execute a promissory note for the balance, payable over
four years, at the prime rate of interest. The Company maintains a
$1,150,000 life insurance policy to fund a substantial portion of this
obligation. At September 30, 2003, $125,000 has been classified as a
derivative liability on the Companys financial statements.5.
    
    RECENTLY ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTSDuring April 2003, the Financial Accounting Standards Board (FASB)
issued Statement of Accounting Standards (SFAS) No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities, which
amends and clarifies financial accounting and reporting for certain
derivative instruments. We do not anticipate the adoption of this
statement to have a material impact on our consolidated financial
statements, as we are not currently a party to derivative financial
instruments included in this standard.During May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity, which establishes standards for the classification and
measurement of certain financial instruments with characteristics of both
liabilities and equity. The Company adopted SFAS No. 150 effective July
1, 2003. Upon adoption the Company recorded a derivative liability for
the fair market value of a written put option of $125,000 and a
cumulative effect of change in accounting principle of $75,875 (net of
the tax effect equal to $49,125) in the income statement. In addition,
the contingently redeemable equity interest as of $1,490,000, as of July
1, 2003, was reclassified into equity. See Note 4  Stock Purchase
Agreement.6.
    
    DIVIDENDS DECLAREDOn September 29, 2003, the Company declared a quarterly cash dividend of $0.13 per share
for stockholders of record on September 30, 2003 to be paid October 15, 2003. Such dividend payable has
been recorded at September 30, 2003. Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations. The Managements Discussion and Analysis of Financial Condition and Results
of Operations presented below reflects the restatement to previously issued consolidated financial
statements for fiscal 2003, and for the three months ended September 30, 2003 as discussed in the Introductory
Note to this Form 10-Q/A. Financial Condition, Liquidity and Capital Resources Cash provided by operating activities during the three months ended September 30,
2003 amounted to $1,084,676. This was a result of net income for the period adjusted for changes in operating
assets and liabilities, primarily related to increases in accounts receivable, inventories, accounts
payable and income taxes payable. Capital expenditures for new equipment (including production tooling)
were $37,681 for the quarter. Budgeted capital expenditures for fiscal year 2004 are $1,573,000. The Company expects to
generate sufficient funds through operations to fund these expenditures. 8 of  22




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Stockholders investment increased to $17,877,590 at September 30, 2003, from
$16,501,202 at June 30, 2003. The increase reflects net income of $944,629 and
the effect of the change in accounting principle related to the adoption of
Statement of Accounting Standards (SFAS) No. 150, in connection with the
stock repurchase agreement with the Chairman of the Company (for more
information, see the Recently Issued Financial Accounting Pronouncements
section below). The Company amended its existing credit facility in October 2003, extending the
maturity date of the unsecured line of credit to November 1, 2004. This credit
facility provides for borrowings up to a maximum of $10,000,000. The Company
can use this credit facility for working capital purposes or for the purchase
of its own common stock pursuant to the Companys common stock repurchase
program. Borrowings under this credit facility bear interest at the banks
prime rate, or LIBOR plus 1.75%. 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. The
Company uses its credit facility from time to time, although there was no
utilization of this credit facility at September 30, 2003 or June 30, 2003. In April of 1995, the Board of Directors approved a stock repurchase program
authorizing the Company to purchase from time to time up to $2,000,000 of its
common stock for its own account. Subsequently, the Board of Directors
periodically have approved increases in the stock repurchase program. The most
recent increase was for an additional $2,000,000 in January 2003, for a maximum
of $37,500,000. The Company intends to effectuate all stock purchases either
on the open market or through 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, 2003, the Company purchased 45,000 shares
of its common stock at a net price of $13.59 per share, for a total net
purchase price of $611,325. From the commencement of the Companys stock repurchase program through
September 30, 2003, the Company has purchased a total of 4,969,180 shares for a
total gross purchase price of $40,655,545, (representing an average gross
purchase price of $8.18 per share) and a total net purchase price of
$36,030,060 (representing an average net purchase price of $7.25 per share).
The difference between the total gross purchase price and the total net
purchase price is the result of the Company purchasing from certain employees
shares of the Companys stock acquired by such employees pursuant to the
Companys stock option program. In determining the dollar amount available for
additional purchases under the stock repurchase program, the Company uses the
total net purchase price paid by the Company for all stock purchases, as
authorized by the Board of Directors. The Company also has an Employee Stock Ownership Plan and Trust (ESOP)
pursuant to which shares of the Companys stock are purchased by the ESOP for
allocation to the accounts of ESOP participants. For the quarter ended
September 30, 2003, the ESOP purchased 3,633 shares of the Companys stock. Results of Operations Net sales for the first quarter ended September 30, 2003 were $9,164,691
compared with $8,954,978 for the same period in 2002, an increase of $209,713.
The increase is primarily due to the contribution to sales by the acquired
Addax, now renamed BiAudio. Gross profit as a percent of net sales decreased to 38% for the quarter ended
September 30, 2003 compared with 39% in the prior year, as a result of a lower
rate of overhead absorption. Selling, general and administrative expenses for the quarter ended September
30, 2003 were $2,029,734 or 22% of net sales, compared to $1,880,652 or 21% of
net sales for the same period in 2002. This was due to the Company
experiencing higher sales commission for the quarter. 9 of  22




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For the first quarter ended September 30, 2003, income from operations was
$1,467,911 versus $1,650,105 for the same period in the prior year. Effective July 1, 1998, the Company entered into a License Agreement and an
Addendum thereto with Logitech Electronics Inc. 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, requiring royalty payments by
Logitech through June 30, 2008, subject to certain minimum annual royalty
amounts. The Company has a License Agreement with Jiangsu Electronics Industries
Limited, a subsidiary of Orient Power Holdings Limited, by way of an assignment
of a previously existing License Agreement with Trabelco N.V. Orient Power is
based in Hong Kong and has an extensive portfolio of audio and video products.
This License Agreement covers the United States, Canada, and Mexico, and has
been renewed through December 31, 2004. Pursuant to this License Agreement,
Jiangsu Electronics has agreed to meet certain minimum royalty amounts each
year. The products covered by this License Agreement include various consumer
electronics products. Effective June 30, 2003, the Company entered into a License Agreement with
Sonigem Products, Inc. (Sonigem) of Ontario, Canada whereby the Company
licensed to Sonigem the right to sell video and communications products under
the Koss brand name. This License Agreement covers Canada, requiring royalty
payments by Sonigem through June 30, 2010, subject to certain minimum annual
royalty amounts. Royalty income for the quarter ended September 30, 2003 was $190,325, compared
to $163,961 for the quarter ended September 30, 2002. Interest income for the quarter was $4,420 as compared to $4,279 for the same
quarter in 2002. The provision for income taxes was $642,152 and $706,277 for the quarter ended
September 30, 2003 and 2002, respectively. The effective tax rate was 39% for
each quarter. On September 29, 2003, the Company declared a quarterly cash dividend of $0.13
per share payable on October 15, 2003 to stockholders of record on September
30, 2003, which is recorded as dividends payable. Recently Issued Financial Accounting Pronouncements During April 2003, the Financial Accounting Standards Board (FASB) issued
Statement of Accounting Standards (SFAS) No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities, which amends and clarifies
financial accounting and reporting for certain derivative instruments. We do
not anticipate the adoption of this statement to have a material impact on our
consolidated financial statements, as we are not currently a party to
derivative financial instruments included in this standard. During May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity,
which establishes standards for the classification and measurement of certain
financial instruments with characteristics of both liabilities and equity. The
Company adopted SFAS No.150 effective July 1, 2003. Upon adoption the Company recorded
a derivative liability for the fair market value of a written put option of $125,000 and a
cumulative effect of change in accounting principle of $75,875 (net of the tax effect equal
to $49,125) in the income statement. 10 of  22




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Item 3. Quantitative and Qualitative Disclosures About Market Risk. In managements opinion, the Company does not engage in any material risk
sensitive activities and does not have any market risk sensitive instruments,
other than the Companys commercial credit facility used for working capital
purposes and stock repurchases. 
 Item 4. Controls and Procedures. The Company, under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer/Chief Financial
Officer, has evaluated the effectiveness of the design and operation of the
Companys disclosure controls and procedures. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded that the
Companys disclosure controls and procedures were effective as of September 30,
2003, to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. During the first week of February of 2004, the Company was made aware by our
former independent accountants that the Company erroneously failed to
accurately record some repurchases of common stock from our employees. We
disclosed this error in Amendment No. 1 on Form 10-Q/A, filed on February 17,
2004. Neither the management of the Company nor our former accountants were
aware of this error prior to the first week of February of 2004. The Company
has subsequently implemented a policy that prohibits the Company from
repurchasing any common stock of the Company that has not been held by the
employee for a period of at least 6 months in order to avoid repetition of this
error. Additionally, our management will subscribe to technical publications
in order to keep current on applicable accounting issues and our new
independent auditors will brief us on new accounting pronouncements and
releases. Our financial reporting process with respect to preparation and
review of regulatory filings will be enhanced to include the utilization of a
checklist by the preparer and reviewer to ensure that new accounting
pronouncements and regulatory requirements are incorporated in our filings. Subsequent to the date of the initial filing of this quarterly report on Form
10-Q, management became aware that a provision in the Companys stock
repurchase agreement with its chairman required adjustments to the Companys
financial statements upon a change of accounting principles mandated subsequent
to the date of the agreement. Our management has now subscribed to additional
publications in order to keep current on applicable accounting issues and our
new independent auditors will brief us on new accounting pronouncements and
releases to attempt to avoid any similar errors in the future. Our financial
reporting process with respect to preparation and review of regulatory filings
have also been enhanced to include the utilization of a checklist by the
preparer and reviewer to ensure that new accounting pronouncements and
regulatory requirements are incorporated in the filing. The discovery of the errors in the recording of the repurchases of common stock
from our employees and the recording of the cumulative effect of the change in
accounting principle has affected, to some extent, the Companys previous
conclusion about the effectiveness of the design and operation of the Companys
disclosure controls and procedures. Management is of the view that these
errors do not constitute a material weakness in the Companys internal
control over financial reporting identified by management. A material
weakness is defined, in the relevant accounting literature, as a reportable
condition in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level the risk that
misstatements caused by errors or fraud in amounts that would be material in
relation to the financial statements being audited may occur and not be
detected within a timely period by employees in the normal course of performing
their assigned functions. Although these errors could constitute a
significant deficiency, management has considered the 11 of  22




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significance of the error (together with other reported errors) in light of the
financial statements taken as whole and believes that the errors do not
evidence or constitute a material weakness in the Companys disclosure
controls and procedures. Therefore, based on an overall evaluation of the Companys disclosure controls
and procedures, including an evaluation of any possible significant
deficiencies and the corrective actions taken by the management in response to
the discovery of the accounting errors, the Companys management concludes that
the Companys disclosure controls and procedures are effective to provide
reasonable assurance that information required to be disclosed by the Company
in the reports that it files or submits under the Exchange Act is accumulated
and communicated to management, including the Chief Executive Officer/Chief
Financial Officer, to allow timely decisions regarding required disclosure and
are effective to provide reasonable assurance that such information is
recorded, processed, summarized and reported within the time periods specified
by the SECs rules and forms. There has been no change in the Companys internal control over financial
reporting that occurred during the quarter covered by this report that has
materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting. Subsequent to the date of the initial filing of this quarterly report on Form
10-Q, there have been changes, as described above, in the Companys internal
control over financial reporting. Management is of the view that these changes
have not materially affected and are not reasonably likely to materially
affect, the Companys internal control over financial reporting. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Form 10-Q/A contains forward-looking statements within the meaning of that
term in the Private Securities Litigation Reform Act of 1995 (the Act)
(Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934). Additional written or oral forward-looking statements
may be made by the Company from time to time in filings with the Securities
Exchange Commission, press releases, or otherwise. Statements contained in
this Form 10-Q/A that are not historical facts are forward-looking statements
made pursuant to the safe harbor provisions of the Act. Forward-looking
statements may include, but are not limited to, projections of revenue, income
or loss and capital expenditures, statements regarding future operations,
anticipated financing needs, compliance with financial covenants in loan
agreements, plans for acquisitions or sales of assets or businesses, plans
relating to products or services of the Company, assessments of materiality,
predictions of future events, the effects of pending and possible litigation,
and assumptions relating to the foregoing. In addition, when used in this Form
10-Q/A, the words anticipates, believes, estimates, expects, intends,
plans and variations thereof and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified based on current expectations.
Consequently, future events and actual results could differ materially from
those set forth in, contemplated by, or underlying the forward-looking
statements contained in this Form 10-Q/A, or in other Company filings, press
releases, or otherwise. In addition to the factors discussed in this Form
10-Q/A, other factors that could contribute to or cause such differences
include, but are not limited to, developments in any one or more of the
following areas: future fluctuations in economic conditions, the receptivity
of consumers to new consumer electronics technologies, the rate and consumer
acceptance of new product introductions, competition, pricing, the number and
nature of customers and their product orders, production by third party
vendors, foreign 12 of  22




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manufacturing, sourcing and sales (including foreign government regulation,
trade and importation concerns), borrowing costs, changes in tax rates, pending
or threatened litigation and investigations, and other risk factors which may
be detailed from time to time in the Companys Securities and Exchange
Commission filings. Readers are cautioned not to place undue reliance on any forward-looking
statements contained herein, which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unexpected events. 13 of  22




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PART II
OTHER INFORMATION 
  Item 4 Submission of Matters to Vote of Security-Holders  (a)
    
    On September 23, 2003 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 3,760,429 shares of common stock
eligible to vote at the Annual Meeting, of which 3,573,092
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: Number of Votes
    
    BrokerFor
    
    Withheld
    
    Non-VotesNominees for 1-year
terms ending in 2004:John C. Koss
    
    
    3,565,192
    
    
    
    7,900
    
    
    
    0Thomas L. Doerr
    
    
    3,564,984
    
    
    
    8,108
    
    
    
    0Michael J. Koss
    
    
    3,565,174
    
    
    
    7,918
    
    
    
    0Lawrence S. Mattson
    
    
    3,564,884
    
    
    
    8,208
    
    
    
    0Martin F. Stein
    
    
    3,564,884
    
    
    
    8,208
    
    
    
    0John J. Stollenwerk
    
    
    3,564,884
    
    
    
    8,208
    
    
    
    0
 Number of Votes
    
    BrokerFor
    
    Against
    
    Abstain
    
    Non-VotesAppointment of
PricewaterhouseCoopers
LLP
as independent auditors
for the year ended
June 30, 2004
    
    
    3,566,783
    
    
    
    5,709
    
    
    
    600
    
    
    
    0
 
  Item 6 Exhibits and Reports on Form 8-K  (a)
    
    Exhibits FiledSee Exhibit Index attached hereto.(b)
    
    Reports on Form 8-KNo reports on Form 8-K were filed by the Company during the
period covered by this report. 14 of  22




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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 duly authorized. KOSS CORPORATION Date: November 17, 2004
    
    /s/ Michael J. KossMichael J. KossVice Chairman, President,Chief Executive Officer,Chief Financial OfficerDate: November 17, 2004
    
    /s/ Sue SachdevaSue SachdevaVice PresidentFinanceSecretary
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EXHIBIT INDEX The Company will furnish a copy of any exhibit described below upon request and
upon reimbursement to the Company of its reasonable expenses of furnishing such
exhibit, which shall be limited to a photocopying charge of $0.25 per page and,
if mailed to the requesting party, the cost of first-class postage. Designation
    
    
    
    Incorporationof Exhibit
    
    Exhibit Title
    
    by Reference3.1
    
    Certificate of Incorporation of Koss Corporation, as in
effect on September 25, 1996
    
    
    (1
    )3.2
    
    By-Laws of Koss Corporation, as in effect on
September 25, 1996
    
    
    (2
    )4.1
    
    Certificate of Incorporation of Koss Corporation, as in
effect on September 25, 1996
    
    
    (1
    )4.2
    
    By-Laws of Koss Corporation, as in effect on
September 25, 1996
    
    
    (2
    )10.1
    
    Officer Loan Policy
    
    
    (3
    )10.3
    
    Supplemental Medical Care Reimbursement Plan
    
    
    (4
    )10.4
    
    Death Benefit Agreement with John C. Koss
    
    
    (5
    )10.5
    
    Stock Purchase Agreement with John C. Koss
    
    
    (6
    )10.6
    
    Salary Continuation Resolution for John C. Koss
    
    
    (7
    )10.7
    
    1983 Incentive Stock Option Plan
    
    
    (8
    )10.8
    
    Assignment of Lease to John C. Koss
    
    
    (9
    )10.9
    
    Addendum to Lease
    
    
    (10
    )10.10
    
    1990 Flexible Incentive Plan
    
    
    (11
    )10.12
    
    Loan Agreement, effective as of February 17, 1995
    
    
    (12
    )10.13
    
    Amendment to Loan Agreement dated June 15, 1995,
effective as of February 17, 1995
    
    
    (13
    )10.14
    
    Amendment to Loan Agreement dated April 29, 1999
    
    
    (14
    )10.15
    
    Amendment to Loan Agreement dated December 15, 1999
    
    
    (15
    )10.16
    
    Amendment to Loan Agreement dated October 10, 2001
    
    
    (16
    )
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Designation
    
    
    
    Incorporationof Exhibit
    
    Exhibit Title
    
    by Reference10.17
    
    License Agreement dated November 15, 1991 between
Koss Corporation and Trabelco N.V. (a subsidiary
of Hagemeyer N.V.) for North America, Central
America and South America (including Amendment
to License Agreement dated November 15, 1991;
Renewal Letter dated November 18, 1994; and Second
Amendment to License Agreement dated September 29,
1995)
    
    
    (17
    )10.18
    
    License Agreement dated September 29, 1995 between
Koss Corporation and Trabelco N.V. (a subsidiary
of Hagemeyer N.V.) for Europe (including First
Amendment to License Agreement dated December 26,
1995)
    
    
    (18
    )10.19
    
    Third Amendment and Assignment of License Agreement to
Jiangsu Electronics Industries Limited dated as of
March 31, 1997
    
    
    (19
    )10.20
    
    Fourth Amendment to License Agreement between Koss
Corporation and Jiangsu Electronics Industries Limited
dated as of May 29, 1998
    
    
    (20
    )10.21
    
    Fifth Amendment to License Agreement between Koss
Corporation and Jiangsu Electronics Industries Limited
dated March 30, 2001
    
    
    (21
    )10.22
    
    Sixth Amendment to License Agreement between Koss
Corporation and Jiangsu Electronics Industries Limited
dated August 15, 2001
    
    
    (22
    )10.23
    
    Seventh Amendment to License Agreement between Koss
Corporation and Jiangsu Electronics Industries Limited
dated December 28, 2001
    
    
    (23
    )10.24
    
    Eighth Amendment to License Agreement between Koss
Corporation and Jiangsu Electronics Industries Limited
dated July 31, 2002
    
    
    (24
    )10.25
    
    License Agreement dated June 30, 1998 between Koss
Corporation and Logitech Electronics Inc. (including
Addendum to License Agreement dated June 30, 1998)
    
    
    (25
    )10.26
    
    Amendment and Extension Agreement between Koss
Corporation and Logitech Electronics Inc. dated May 1,
2001
    
    
    (26
    )10.27
    
    Consent of Directors (Supplemental Executive
Retirement Plan for Michael J. Koss dated
March 7, 1997)
    
    
    (27
    )10.28
    
    Amendment to Lease
    
    
    (28
    )
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Designation
    
    
    
    Incorporationof Exhibit
    
    Exhibit Title
    
    by Reference10.29
    
    Partial Assignment, Termination and Modification of
Lease
    
    
    (29
    )10.30
    
    Restated Lease
    
    
    (30
    )31.1
    
    Certification pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934
    
    (Filed and
attached hereto)32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
    
    (Furnished and
attached hereto)
 (1)
    
    Incorporated by reference from Exhibit 3.1 to the Companys Annual Report on
Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(2)
    
    Incorporated by reference from Exhibit 3.2 to the Companys Annual Report on
Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(3)
    
    Incorporated by reference from Exhibit 10.1 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(4)
    
    Incorporated by reference from Exhibit 10.3 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(5)
    
    Incorporated by reference from Exhibit 10.4 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(6)
    
    Incorporated by reference from Exhibit 10.5 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(7)
    
    Incorporated by reference from Exhibit 10.6 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(8)
    
    Incorporated by reference from Exhibit 10.7 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(9)
    
    Incorporated by reference from Exhibit 10.7 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1988 (Commission File No. 0-3295)(10)
    
    Incorporated by reference from Exhibit 10.8 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1988 (Commission File No. 0-3295)
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##### Table of Contents



(11)
    
    Incorporated by reference from Exhibit 25 to the Companys Annual Report on
Form 10-K for the year ended June 30, 1990 (Commission File No. 0-3295)(12)
    
    Incorporated by reference from Exhibit 10 to the Companys Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995 (Commission File No.
0-3295)(13)
    
    Incorporated by reference from Exhibit 10.13 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1995 (Commission File No. 0-3295)(14)
    
    Incorporated by reference from Exhibit 10.14 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1999 (Commission File No. 0-3295(15)
    
    Incorporated by reference from Exhibit 10.15 to the Companys Annual Report
on Form 10-K for the year ended June 30, 2000 (Commission File No. 0-3295)(16)
    
    Incorporated by reference from Exhibit 10.16 to the Companys Quarterly
Report on Form 10-Q for the quarter ended December 31, 2001 (Commission File
No. 0-3295)(17)
    
    Incorporated by reference from Exhibit 10.14 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(18)
    
    Incorporated by reference from Exhibit 10.15 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-3295)(19)
    
    Incorporated by reference from Exhibit 10.1 to the Companys Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997 (Commission File
No. 0-3295)(20)
    
    Incorporated by reference from Exhibit 10.17 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1998 (Commission File No. 0-3295)(21)
    
    Incorporated by reference from Exhibit 10.1 to the Companys Quarterly
Report on Form 10-Q for the quarter ended March 31, 2001 (Commission File
No. 0-3295)(22)
    
    Incorporated by reference from Exhibit 10.21 to the Companys Annual Report
on Form 10-K for the year ended June 30, 2001 (Commission File No. 0-3295)
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(23)
    
    Incorporated by reference from Exhibit 10.23 to the Companys Quarterly
Report on Form 10-Q for the quarter ended December 31, 2001 (Commission File
No. 0-3295)(24)
    
    Incorporated by reference from Exhibit 10.24 to the Companys Annual Report
on Form 10-K for the year ended June 30, 2002 (Commission File No. 0-3295)(25)
    
    Incorporated by reference from Exhibit 10.18 to the Companys Annual Report
on Form 10-K for the year ended June 30, 1998 (Commission File No. 0-3295)(26)
    
    Incorporated by reference from Exhibit 10.3 to the Companys Quarterly
Report on Form 10-Q for the quarter ended March 31, 2001 (Commission File
No. 0-3295)(27)
    
    Incorporated by reference from Exhibit 10.2 to the Companys Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997 (Commission File
No. 0-3295)(28)
    
    Incorporated by reference from Exhibit 10.22 to the Companys Annual Report
on Form 10-K for the year ended June 30, 2000 (Commission File No. 0-3295)(29)
    
    Incorporated by reference from Exhibit 10.25 to the Companys Annual Report
on Form 10-K for the year ended June 30, 2001 (Commission File No. 0-3295)(30)
    
    Incorporated by reference from Exhibit 10.26 to the Companys Annual Report
on Form 10-K for the year ended June 30, 2001 (Commission File No. 0-3295)
 20 of  22