WEEK4_lecture_spring2012 - Todays topics KOSS 2 Course...

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Today’s topics Course Sequence (subject to change, but pretty solid) KOSS Waste Management 2
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KOSS 6/30/2011 THE COMPANY IS CURRENTLY UNABLE TO ASSESS THE AMOUNTS THAT MAY BE RECOVERED THROUGH THE PROCEEDS FROM THE SALE OF ITEMS SEIZED BY LAW ENFORCEMENT, INSURANCE, POTENTIAL CLAIMS AGAINST THIRD PARTIES OR TAX REFUNDS . The Company has estimated that the amount of the unauthorized transactions is approximately $31,500,000 since fiscal year 2005 through December 31, 2009 as described in the Company’s Form 10-K/A for June 30, 2009 that was filed on June 30, 2010. Over 25,000 items were seized by law enforcement authorities. Although the Company expects to receive some proceeds from the sale of these items seized by law enforcement authorities, and is currently pursuing potential claims against third parties and tax refunds, the Company cannot reasonably assess the amounts or timing of such recoveries. Through the date of issuance of this 10-K, the Company has received $4,144,671 from its insurance company related to the unauthorized transactions. The Company’s inability to recover a significant amount of its losses may have an adverse effect on its future financial condition. 3
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KOSS 6/30/2011 On January 26, 2010, the SEC’s Division of Enforcement advised the Company that it obtained a formal order of investigation in connection with the unauthorized transactions. The Company voluntarily brought the unauthorized transactions to the SEC staff’s attention when they were discovered in December 2009, and is cooperating with the ongoing SEC investigation. 4
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KOSS 6/30/2011 On January 15, 2010, a class action complaint was filed in federal court in Wisconsin against the Company, Michael Koss and Sujata Sachdeva. The suit alleges violations of Section 10(b), Rule 10b-5 and Section 20(a) of the Exchange Act relating to the unauthorized transactions and requests an award of compensatory damages in an amount to be proven at trial. An amended complaint was filed on September 10, 2010 adding Grant Thornton LLP as a defendant. The Company and Grant Thornton filed
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WEEK4_lecture_spring2012 - Todays topics KOSS 2 Course...

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