KOSS CORP Leases Disclosure
The Company leases its facility in Milwaukee, Wisconsin from Koss Holdings, LLC, which is controlled by five equal ownership interests in trusts held by the five beneficiaries of the former Chairman’s revocable trust and includes current stockholders of the Company. On May 24, 2022, the lease was renewed for a period of five years, ending June 30, 2028 (the “Extended Term”), and is being accounted for as an operating lease. The lease extension maintained the rent at a fixed rate of $380,000 per year and included an option to renew at an increased rate of $397,000 for an additional five years ending June 30, 2033 (the “Second Extended Term”). The negotiated increase in rent slated for 2028 will be the first increase in rent since 1996. The Company is responsible for all property maintenance, insurance, taxes, and other normal expenses related to ownership.
The Company used its incremental borrowing rate as of the date of renewal, May 24, 2022, to recalculate the net present value of the operating lease ROU asset and liability. Both the Extended Term and the Second Extended Term renewal options were included in the calculation of the ROU asset and liability as the Company believes it is reasonably certain to exercise both rights to renew. The non-lease components of the agreement related to common area maintenance charges are accounted for separately.
Supplemental information related to lease expense and valuation of the ROU asset and liability was as follows:
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| Year Ended | |||
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| 2025 |
| 2024 | ||
Operating lease cost |
| $ | 387,669 |
| $ | 387,669 |
Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows from operating leases |
| $ | (380,000) |
| $ | (380,000) |
Weighted-average remaining lease term (in years) |
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| 8 |
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| 9 |
Weighted-average discount rate |
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| 5.25% |
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| 5.25% |
The maturity schedule of future minimum lease payments and reconciliation to the operating lease liabilities reported on the 2025 Consolidated Balance Sheet is as follows:
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Year Ending June 30, |
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2026 |
| $ | 380,000 |
2027 |
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| 380,000 |
2028 |
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| 380,000 |
2029 |
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| 397,000 |
2030 |
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| 397,000 |
Thereafter |
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| 1,191,000 |
Total lease payments |
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| 3,125,000 |
Present value adjustment |
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| (583,266) |
Total lease liabilities |
| $ | 2,541,734 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 29, 2025 | Showing above |
| 2024 | Aug 30, 2024 | |
| 2023 | Aug 25, 2023 | |
| 2022 | Aug 26, 2022 | |
| 2021 | Aug 20, 2021 | |
| 2020 | Aug 27, 2020 | |
| 2019 | Aug 30, 2019 | |
| 2018 | Aug 23, 2018 | |
| 2017 | Aug 25, 2017 | |
| 2016 | Aug 25, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.