What changed in this filing

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Item 1. Financial Statements

2026-05-05 compared with 2026-02-02 · 182 added, 141 removed, 614 unchanged (34% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2025

March 31, 2026

June 30, 2025

3 unchanged sentences

Marketable securities

Accounts receivable, net of allowance for credit losses of $ 27 and $ 25 as of December 31, 2025 and June 30, 2025, respectively

Accounts receivable, net of allowance for credit losses of $ 27 and $ 25 as of March 31, 2026 and June 30, 2025, respectively

Income tax receivable

10 unchanged sentences

Accrued expenses

Accrued litigation costs

Accrued salaries and wages

8 unchanged sentences

Common Stock, par value $ 0.01 per share;

100,000,000 shares authorized as of December 31, 2025 and June 30, 2025;

100,000,000 shares authorized as of March 31, 2026 and June 30, 2025;

39,841,951 and 39,771,035 shares issued;

2 unchanged sentences

Retained earnings

Treasury Stock, at cost, 4,114,614 shares as of both December 31, 2025 and June 30, 2025

Treasury Stock, at cost, 4,114,614 shares as of both March 31, 2026 and June 30, 2025

Accumulated other comprehensive income

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months ended December 31,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months ended March 31,

(in thousands, except for share and per share data)

9 unchanged sentences

Selling, general, and administrative

Litigation settlement cost

Total Operating Expenses

Operating Income

Other Income (expense):

Operating (Loss) Income

Other Income:

Interest income, net

Other income (expense), net

Income before Provision for Income Taxes

Other income, net

(Loss) Income before Provision for Income Taxes

Provision for Income Taxes

Income Per Share:

Net (Loss) Income

(Loss) Income Per Share:

Weighted Average Number of Shares Outstanding:

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Six Months Ended December 31,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Nine Months Ended March 31,

(in thousands, except for share and per share data)

9 unchanged sentences

Selling, general, and administrative expenses

Litigation settlement cost

Total Operating Expenses

10 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months ended December 31,

Six Months Ended December 31,

Other comprehensive income

Net change in unrealized gains on available-for-sale debt securities

Tax effect on net change in unrealized gains on available-for-sale debt securities

Total other comprehensive income

Comprehensive income

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months ended March 31,

Nine Months Ended March 31,

Net (Loss) Income

Other comprehensive income (loss)

Net change in unrealized gains (losses) on available-for-sale debt securities

Tax effect on net change in unrealized (gains) losses on available-for-sale debt securities

Total other comprehensive income (loss)

Comprehensive (loss) income

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Six months ended December 31, 2025 (in thousands, except for share data)

Nine months ended March 31, 2026 (in thousands, except for share data)

Treasury Stock

13 unchanged sentences

( 4,114,614 )

Six months ended December 31, 2024 (in thousands, except share data)

Other comprehensive loss, net of tax

Stock-based compensation expense

Stock options exercised

Tax withholdings related to stock option exercises

Cash dividend ($ .15 per share)

Balances at March 31, 2026

( 4,114,614 )

Nine months ended March 31, 2025 (in thousands, except share data)

Treasury Stock

14 unchanged sentences

( 3,369,614 )

Other comprehensive income, net of tax

Stock-based compensation expense

Purchase of treasury shares

Cash dividend ($ .125 per share)

Balances at March 31, 2025

( 4,114,614 )

See accompanying notes to condensed consolidated financial statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months ended December 31,

Nine Months ended March 31,

(in thousands)

13 unchanged sentences

Income tax receivable

Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes

Accounts payable, accrued expenses, accrued litigation costs, accrued salaries and wages, accrued income taxes

Net Cash Provided by Operating Activities

10 unchanged sentences

Repurchase of common stock

Payment of tax withholdings related to stock option exercises

Net Cash Used in Financing Activities

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

September 30, 2025

March 31, 2026

NOTE 1 – Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

25 unchanged sentences

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, marketable securities, current receivables and payables and certain other short-term financial instruments approximate their fair value as of December 31, 2025 and June 30, 2025 due to their short-term maturities.

The carrying amount of cash and cash equivalents, marketable securities, current receivables and payables and certain other short-term financial instruments approximate their fair value as of March 31, 2026 and June 30, 2025 due to their short-term maturities.

The fair value of debt for footnote disclosure purposes, including current maturities, if any, is estimated using recently quoted market prices of the instrument, or if not available, a discounted cash flow analysis based on the estimated current incremental borrowing rates for similar types of instruments.

4 unchanged sentences

Investments that are classified as cash equivalents are carried at cost, which approximates fair value.

Cash and cash equivalents include approximately $ 75,814,000 and $ 48,249,000 of short-term time deposits money market funds as of December 31, 2025, and June 30, 2025.

Cash and cash equivalents include approximately $ 80,454,000 and $ 48,249,000 of short-term time deposits money market funds as of March 31, 2026, and June 30, 2025, respectively.

The Company classifies these highly liquid investments with original maturities of three months or less as cash equivalents.

Cash and cash equivalents consist of the following as of (in thousands):

December 31, 2025

March 31, 2026

June 30, 2025

Money Market Fund

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of December 31, 2025.

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of March 31, 2026.

The Company has not historically experienced any credit losses with balances in excess of FDIC limits.

13 unchanged sentences

Accounts Receivable

Accounts receivable are stated net of the reserves for credit losses of $ 27,000 and $ 25,000 as of December 31, 2025 and June 30, 2025, respectively.

Accounts receivable are stated net of the reserves for credit losses of $ 27,000 and $ 25,000 as of March 31, 2026 and June 30, 2025, respectively.

In accordance with ASU No.

5 unchanged sentences

The Company also continuously evaluates such pooling decisions and adjusts as needed from period to period as risk characteristics change.

The Company utilizes the loss rate method in determining its lifetime expected credit losses on its receivables.

The Company utilizes the loss rate method in determining its expected credit losses on its receivables.

This method is used for calculating an estimate of losses based primarily on the Company’s historical loss experience.

5 unchanged sentences

Inventory costs include raw materials, direct labor and overhead.

The Company’s overhead expenses are applied based, in part, upon estimates of the proportion of those expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products.

The Company’s applied overhead expenses are based, in part, upon estimates of the proportion of those expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products.

These proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and actual results could differ from those estimates.

4 unchanged sentences

The Company also regularly reviews the period over which its inventories will be converted to sales.

Any inventories expected to convert to sales beyond 12 months from the balance sheet date are classified as non-current.

Any inventories expected to convert to sales beyond 12 months from the balance sheet date are presented as non-current.

Property, Plant, and Equipment

8 unchanged sentences

Impairment would be recorded in circumstances where undiscounted cash flows expected to be generated by an asset are less than the carrying value of that asset.

Intangible assets consisted of the follows (in thousands):

December 31, 2025

Intangible assets consisted of the following (in thousands):

March 31, 2026

June 30, 2025

Customer relationships

Amortization expense for intangible assets was approximately $ 74,000 and $ 79,000 for the three months ended December 31, 2025 and 2024, respectively and was approximately $ 149,000 and $ 157,000 for the six months ended December 31, 2025 and 2024, respectively.

Amortization expense for intangible assets was approximately $ 74,000 and $ 79,000 for the three months ended March 31, 2026 and 2025, respectively and was approximately $ 223,000 and $ 236,000 for the nine months ended March 31, 2026 and 2025, respectively.

Amortization expense for each of the next five fiscal years is estimated to be as follows:

4 unchanged sentences

and 2031 - $ 202,000 .

The weighted average remaining amortization period for intangible assets was 13.7 years and 14.1 years at December 31, 2025 and June 30, 2025, respectively.

The weighted average remaining amortization period for intangible assets was 13.5 years and 14.1 years at March 31, 2026 and June 30, 2025, respectively.

Revenue Recognition

Revenue from contracts with customers is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

Revenue from all sales types is recognized at the transaction price, which is the amount we expect to be entitled to in exchange for transferring goods or providing services.

Revenue from all sale types are recognized at the transaction price, which is the amount we expect to be entitled to in exchange for transferring goods or providing services.

Equipment Revenue

Equipment revenue, which includes shipping and handling costs, is primarily generated from the sale of finished products to customers.

Equipment revenue, which includes shipping and handling costs, is primarily generated by the sale of finished products to customers.

Those sales predominantly contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer, which is typically the date of shipment of the related equipment when the product is picked up by the carrier or customer.

A provision for product returns, credits and rebates is recorded as a reduction of equipment revenue in the same period the revenue is recognized.

A provision for product returns, credits and rebates is recorded as a reduction in equipment revenue in the same period the revenue is recognized.

The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months , and accepts returns for such defective products as well as for other limited circumstances.

12 unchanged sentences

Shipping and Handling Revenues and Costs

The Company records the amount billed to customers for shipping and handling in net revenue ($ 132,000 and $ 80,000 in the three months ended December 31, 2025 and 2024, respectively and $ 274,000 and $ 186,000 in the six months ended December 31, 2025 and 2024, respectively) and classifies the costs associated with these revenues in cost of sales ($ 365,000 and $ 353,000 in the three months ended December 31, 2025 and 2024, respectively and $ 844,000 and $ 743,000 in the six months ended December 31, 2025 and 2024, respectively).

The Company records the amount billed to customers for shipping and handling in net revenue ($ 175,000 and $ 91,000 in the three months ended March 31, 2026 and 2025, respectively and $ 449,000 and $ 261,000 in the nine months ended March 31, 2026 and 2025, respectively) and classifies the costs associated with these revenues in cost of sales ($ 412,000 and $ 330,000 in the three months ended March 31, 2026 and 2025, respectively and $ 1,256,000 and $ 1,073,000 in the nine months ended March 31, 2026 and 2025, respectively).

Advertising and Promotional Costs

Advertising and promotional costs are included in "Selling, General and Administrative" (“SG&A”) expenses in the consolidated statements of income and are expensed as incurred.

Advertising expense for the three months ended December 31, 2025 and 2024 was $ 916,000 each period.

Advertising expense for the six months ended December 31, 2025 and 2024 was $ 1,851,000 and $ 1,806,000 , respectively.

Advertising and promotional costs are included in "Selling, General and Administrative" (“SG&A”) expenses in the consolidated statements of operations and are expensed as incurred.

Advertising expense for the three months ended March 31, 2026 and 2025 was $ 1,361,000 and 526,000 , respectively.

Advertising expense for the nine months ended March 31, 2026 and 2025 was $ 3,212,000 and $ 2,332,000 , respectively.

Research and Development Costs

Research and development (“R&D”) costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income.

Research and development (“R&D”) costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of operations.

The Company records provisions for income taxes in the consolidated financial statements using the asset and liability method.

11 unchanged sentences

The Company recognizes the tax on GILTI as a period cost when the tax is incurred.

Net Income per Share

Basic net income per common share (Basic EPS) is computed by dividing net income by the weighted average number of common shares outstanding.

Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended December 31, 2025 and 2024 (in thousands, except per share data):

Net (Loss) Income per Share

Basic net (loss) income per common share (Basic EPS) is computed by dividing net (loss) income by the weighted average number of common shares outstanding.

Diluted net (loss) income per common share (Diluted EPS) is computed by dividing net (loss) income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended March 31, 2026 and 2025 (in thousands, except per share data):

Net (Loss) Income

Weighted Average Shares

Net Income per Share

Net (Loss) Income per Share

Basic (loss) earnings per share

Effect of Dilutive Securities:

Stock Options

Options to purchase 20,000 and 120,000 shares of common stock were excluded for the three months ended December 31, 2025 and 2024, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

Diluted (loss) earnings per share

The effect of dilutive securities for the three months ended March 31, 2026 were not included in weighted shares outstanding due to the net loss in the period.

Options to purchase 125,000 shares of common stock were excluded for the three months ended March 31, 2025, were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

These options were still outstanding at the end of the period.

The following provides a reconciliation of information used in calculating the per share amounts for the six months ended December 31, 2025 and 2024 (in thousands, except per share data):

The following provides a reconciliation of information used in calculating the per share amounts for the nine months ended March 31, 2026 and 2025 (in thousands, except per share data):

Net Income per

Weighted Average Shares

Basic earnings per share

Effect of Dilutive Securities:

Stock Options

Options to purchase 70,000 shares of common stock were excluded for the both the six months ended December 31, 2025 and 2024, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

Diluted earnings per share

Options to purchase 53,333 and 88,333 shares of common stock were excluded for the nine months ended March 31, 2026 and 2025, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

These options were still outstanding at the end of the period.

8 unchanged sentences

The day-to-day operations of all foreign subsidiaries are dependent on the economic environment of the U.S.

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three and six months ended December 31, 2025 or 2024.

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three and nine months ended March 31, 2026 or 2025.

Segment Reporting

The Company operates its business under one operating segment, which is also its reportable segment.

The Company's Chief Operating Decision maker (“CODM”), who is our President and Chief Operating Officer, reviews financial information presented at the consolidated level and decides how to allocate resources based on financial metrics, including net income.

The measure of

segment assets is reported on the balance sheet as total consolidated assets.

The Company's Chief Operating Decision maker (“CODM”), who is our President and Chief Operating Officer, reviews financial information presented at the

consolidated level and decides how to allocate resources based on financial metrics, including net income.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The CODM uses such financial metrics, including net income, to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits or allocate to other parts of the organization, such as working capital needs, mandatory and discretionary capital expenditures or other growth opportunities that may arise that are in the Company’s best interest and the best interest of the stockholders.

11 unchanged sentences

The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty.

An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated.

An estimated loss from a loss contingency such as legal proceedings or claims is accrued by a charge to income if it is probable that an asset has been impaired, or a liability has been incurred, and the amount of the loss can be reasonably estimated.

In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.

Changes in these factors could materially impact our consolidated financial statements.

Changes in these factors could have a material impact our consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

18 unchanged sentences

2025-05 Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which amends the manner in which credit losses for accounts receivable and contract assets

are determined.

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which amends the manner in which credit losses for accounts receivable and contract assets are determined.

For public companies, the guidance introduces a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets.

13 unchanged sentences

The Company is engaged in the development, manufacture, and distribution of security products, encompassing access control systems, door security products, intrusion and fire alarm systems, alarm communication services, and video surveillance products for commercial and residential use.

The Company also provides wireless communication service, on a monthly basis, to dealers and installers of intrusion and fire alarm systems.

The Company also provides wireless communication service, monthly, to dealers and installers of intrusion and fire alarm systems.

These products and services are used for commercial, residential, institutional, industrial and governmental applications, and are sold primarily to independent distributors, dealers and installers of security equipment.

Sales to unaffiliated customers are primarily shipped from the United States.

As of December 31, 2025 and June 30, 2025, the Company included refund liabilities of approximately $ 3,707,000 and $ 4,790,000 , respectively, in current liabilities.

As of December 31, 2025 and June 30, 2025, the Company included return-related assets of approximately $ 1,003,000 and $ 1,152,000 , respectively, in other current assets.

As a percentage of gross revenue, returns, rebates and allowances were 4 % for both the three months ended December 31, 2025 and 2024, respectively.

As a percentage of gross revenue, returns, rebates and allowances were 4 % and 7 % for the six months ended December 31, 2025 and 2024, respectively.

As of March 31, 2026 and June 30, 2025, the Company included refund liabilities of approximately $ 3,756,000 and $ 4,790,000 , respectively, in current liabilities.

As of March 31, 2026 and June 30, 2025, the Company included return-related assets of approximately $ 1,205,000 and $ 1,152,000 , respectively, in other current assets.

As a percentage of gross revenue, returns, rebates and allowances were 5 % and 6 % for the three months ended March 31, 2026 and 2025, respectively.

As a percentage of gross revenue, returns, rebates and allowances were 5 % and 7 % for the nine months ended March 31, 2026 and 2025, respectively.

The Company disaggregates revenue from contracts with customers into major product lines.

2 unchanged sentences

Following is the disaggregation of revenues based on major product lines (in thousands):

Three months ended December 31,

Six months ended December 31,

Three months ended March 31,

Nine months ended March 31,

Major Product Lines:

4 unchanged sentences

Financial instruments that potentially subject the Company to a concentration of credit risk mainly consist of cash equivalents, short-term investments and accounts receivable.

Our cash equivalents and short-term investments primarily consist of government securities and money market funds which are held and managed by high credit quality financial institutions.

The Company had one customer that comprised 15 % and 13 % of the accounts receivable balance as of December 31, 2025 and June 30, 2025, respectively.

The Company had one additional customer that comprised 16 % accounts receivable balance as of December 31, 2025 and a different customer that comprised of 11 % accounts receivable balance as of June 30, 2025.

Sales to any customer did not exceed 10% of net revenues during the three and six months ended December 31, 2025 and 2024, respectively.

Our cash equivalents and short-term investments primarily consist of government securities and money market funds which are held and managed by high credit financial institutions.

The Company had two customer that comprised 10 % and 13 % of the accounts receivable balance as of March 31, 2026.

The same two customers comprised 11 % and 13 % of the accounts receivable balance as of June 30, 2025.

The Company had one additional customer that comprised 14 % accounts receivable balance as of March 31, 2026.

Sales to any customer did not exceed 10% of net revenues during the three and nine months ended March 31, 2026 and 2025, respectively.

NOTE 4 – Fair Value Measurement

7 unchanged sentences

The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.

The following table presents the Company’s assets that were measured at fair value on a recurring basis at December 31, 2025 and June 30, 2025, respectively (in thousands):

December 31, 2025

The following table presents the Company’s assets that were measured at fair value on a recurring basis at March 31, 2026 and June 30, 2025, respectively (in thousands):

March 31, 2026

Cash equivalents

8 unchanged sentences

The Company’s investments classified as Level 1 are based on quoted prices that are available in active markets, as well as certificates of deposits and time deposits that are classified as Level 1 due to their short-term nature.

For the three ending December 31, 2025 and 2024, there were no transfers between Levels 1 and 2 investments and no transfers in or out of Level 3.

For the three and nine months ending March 31, 2026 and 2025, there were no transfers between Levels 1 and 2 investments and no transfers in or out of Level 3.

NOTE 5 – Marketable Securities

A summary of the fair value of the Company’s investment in marketable securities as of December 31, 2025 and June 30, 2025 is as follows:

December 31, 2025

A summary of the fair value of the Company’s investment in marketable securities as of March 31, 2026 and June 30, 2025 is as follows:

March 31, 2026

June 30, 2025

2 unchanged sentences

Investments in Equity Securities

The disaggregated net gains and losses on the equity securities recognized within the accompanying condensed consolidated statements of income for the three and six months ended December 31, 2025 and 2024, are as follows (in thousands):

Three months ended December 31,

Six months ended December 31,

The disaggregated net gains and losses on the equity securities recognized within the accompanying condensed consolidated statements of operations for the three and nine months ended March 31, 2026 and 2025, are as follows (in thousands):

Three months ended March 31,

Nine months ended March 31,

Net gains recognized during the period on equity securities

Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date

The following tables summarize the Company’s investments in equity securities at December 31, 2025 and June 30, 2025, respectively (in thousands):

December 31, 2025

Unrealized gains recognized during the reporting period on equity securities still held at the reporting date

The following tables summarize the Company’s investments in equity securities at March 31, 2026 and June 30, 2025, respectively (in thousands):

March 31, 2026

June 30, 2025

2 unchanged sentences

Investments in Debt Securities

The following tables summarize the Company’s investments in debt securities at December 31, 2025 and June 30, 2025 (in thousands):

December 31, 2025

The following tables summarize the Company’s investments in debt securities at March 31, 2026 and June 30, 2025 (in thousands):

March 31, 2026

Amortized Cost

9 unchanged sentences

Treasury Securities

The debt investments all mature within one year or less, and the Company did no t recognize any credit or non-credit related losses related to its debt securities during the three and six months ended December 31, 2025 and 2024.

NOTE 6 - Inventories

5 unchanged sentences

Classification of inventories:

The reserve for excess and slow-moving inventory, which reduces inventory in our consolidated balance sheets were $ 5,388,000 and $ 5,515,000 as of December 31, 2025 and June 30, 2025, respectively.

The reserve for excess and slow-moving inventory, which reduces inventory in our consolidated balance sheets were $ 4,915,000 and $ 5,515,000 as of March 31, 2026 and June 30, 2025, respectively.

NOTE 7 – Property, Plant, and Equipment

Property, plant and equipment consist of the following (in thousands):

December 31, 2025

March 31, 2026

June 30, 2025

6 unchanged sentences

accumulated depreciation and amortization

Depreciation and amortization expense on property, plant, and equipment was approximately $ 488,000 and $ 506,000 for the three months ended December 31, 2025 and 2024, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 986,000 and $ 976,000 for the six months ended December 31, 2025 and 2024, respectively

Depreciation and amortization expense on property, plant, and equipment was approximately $ 463,000 and $ 493,000 for the three months ended March 31, 2026 and 2025, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 1,447,000 and $ 1,469,000 for the nine months ended March 31, 2026 and 2025, respectively

NOTE 8 - Income Taxes

The income tax provision is calculated using an estimated annual effective tax rate based upon estimates of annual income, permanent items, statutory tax rates and planned tax strategies in the various jurisdictions in which the Company operates, except that certain discrete items such as the resolution of uncertain tax positions and stock-based accounting income tax benefits are treated separately.

Income tax expense included on our accompanying consolidated statements of income is as follows:

Three months ended December 31,

Six months ended December 31,

Income tax expense included on our accompanying consolidated statements of operations is as follows:

Three months ended March 31,

Nine months ended March 31,

Provision for income taxes (1)

Effective tax rate

(1) Net discrete income tax expense (benefit) $ 0 and ($ 44,000 ) and $ 342,000 and ($ 27,000 ) , are included in the provision for income taxes for the three and six months ended December 31, 2025 and 2024, respectively.

(1) Net discrete income tax expense (benefit) of ($ 83,000 ) and $ 188,000 and $ 259,000 and $ 160,000 , are included in the provision for income taxes for the three and nine months ended March 31, 2026 and 2025, respectively.

The difference between the U.S.

8 unchanged sentences

income tax return and tax returns in certain state and local and foreign jurisdictions.

As of December 31, 2025, fiscal years 2022 and forward are still open for examination.

As of March 31, 2026, fiscal years 2022 and forward are still open for examination.

In addition, the Company has a wholly-owned subsidiary which operates in a Free Zone in the Dominican Republic (“DR”) and is exempt from DR income tax.

2 unchanged sentences

Borrowings on the Line bear interest at the Secured Overnight Financing Rate ( SOFR ) benchmark rate plus 1.2645 % to 1.3645 %, depending on the Fixed Charge Coverage Ratio (as defined), which is to be measured and adjusted quarterly.

As of December 31, 2025 and June 30, 2025, the Company has no outstanding borrowings on the Line.

As of March 31, 2026 and June 30, 2025, the Company has no outstanding borrowings on the Line.

The Line is secured by substantially all the Company’s domestic assets, including but not limited to, deposit accounts, accounts receivable, inventory, equipment and fixtures and intangible assets.

3 unchanged sentences

NOTE 10 - Stock Options

The Company recognized stock-based compensation of $ 185,000 and $ 386,000 for the three months ended December 31, 2025 and 2024, respectively and recognized stock-based compensation of $ 494,000 and $ 757,000 for the six months ended December 31, 2025 and 2024, respectively.

Stock-based compensation is included in Selling, General and Administrative expense in the consolidated statements of income.

The Company recognized stock-based compensation of $ 290,000 and $ 386,000 for the three months ended March 31, 2026 and 2025, respectively and recognized stock-based compensation of $ 784,000 and $ 1,143,000 for the nine months ended March 31, 2026 and 2025, respectively.

Stock-based compensation is included in Selling, General and Administrative expense in the consolidated statements of operations.

The Company has five stock option plans, two of the plans are available to grant stock options to employees (“Employee Plans”), and three of the plans are available to issue stock options to non-employee directors and consultants (“Non-Employee Plans”).

4 unchanged sentences

The Employee Plans provide a cash-less exercise option for the participants, and options granted vest in full upon a “change in control” as defined in the plans.

The Non-Employee Plans provide for the Company to grant stock options with a term of up to 10 years , from date of grant, at an exercise price equal to or greater than the fair market value on the date of grant.

The Non-Employee Plans provide for the grant of stock options with a term of up to 10 years , from date of grant, at an exercise price equal to or greater than the fair market value on the date of grant.

The Non-Employee Plans provide a cash-less exercise option for the participants, and options granted vest in full upon a “change in control” as defined in the plans.

2 unchanged sentences

Plan termination date

Options available for grant as of December 31, 2025

Options available for grant as of March 31, 2026

2012 Employee Stock Option plan

7 unchanged sentences

2020 Non-Employee Stock Option plan

The following table reflects the total activity for the stock option plans for the six months ended December 31:

The following table reflects the total activity for the stock option plans for the nine months ended March 31, 2026:

Weighted average

9 unchanged sentences

Weighted average fair value at grant date of options granted

There were no stock options granted during the three and six months ended December 31, 2025 and 2024, respectively.

The total fair value of stock options vested during the three and six months ended December 31, 2025 and 2024 was $ 711,000 and $ 864,000 , and $ 770,000 and $ 961,000 , respectively.

The aggregate intrinsic value of stock options exercised during the three and six months ended December 31, 2025 and 2024 was $ 0 and $ 325,000 and $ 0 and $ 67,000 , respectively.

As of December 31, 2025, the total compensation cost related to nonvested awards not yet recognized was $ 1,354,000 .

Cash received from exercises of stock options during the three and six months ended December 31, 2025 and 2024 was $ 0 and $ 0 , and $ 0 and $ 54,000 , respectively.

There were 25,000 stock options granted during the three and nine months ended March 31, 2026 and no stock options granted during the three and nine months ended March 31, 2025.

The total fair value of stock options vested during the three and nine months ended March 31, 2026 and 2025 was $ 100,000 and $ 965,000 , and $ 16,000 and $ 977,000 , respectively.

The aggregate intrinsic value of stock options exercised during the three and nine months ended March 31, 2026 and 2025 was $ 4,287,000 and $ 4,631,000 and $ 0 and $ 67,000 , respectively.

As of March 31, 2026, the total compensation cost related to nonvested awards not yet recognized was $ 1,488,000 .

Cash received from exercises of stock options during the three and nine months ended March 31, 2026 and 2025 was $ 0 and $ 0 , and $ 0 and $ 54,000 , respectively.

NOTE 11 – Stockholders’ Equity Transactions

The following table summarizes information about dividends declared by the Company for the six months ended December 31, 2025 and the fiscal year ended June 30, 2025:

The following table summarizes information about dividends declared by the Company for the nine months ended March 31, 2026 and the fiscal year ended June 30, 2025:

Dividend Declaration Date

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Per Share Cash Dividend Amount

April 30, 2026

June 12, 2026

January 29, 2026

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October 3, 2024

Shares Withheld

As permitted under the terms of our employee stock option plans, we may withhold shares of common stock in connection with the exercise of stock options issued to employees to satisfy applicable tax withholding requirements.

These withheld shares are not issued or considered common stock repurchases under our stock repurchase program.

We paid $ 1,541,000 in tax withholdings related to the exercise of employee stock options for the three and nine months ended March 31, 2026.

No tax withholdings related to the exercise of employee stock options were paid during the three and nine months ended March 31, 2025.

Common Share Repurchases

On September 16, 2014, the Company’s board of directors authorized the repurchase of up to 2 million of the approximately 38.8 million shares of the Company’s common stock then outstanding.

Such repurchases may be made from time to time in the open market or in privately negotiated transactions subject to market conditions and the market price of the common stock.

Such purchases may be made from time to time in the open market or in privately negotiated transactions subject to market conditions and the market price of the common stock.

In December of Fiscal 2018, the board of directors authorized the repurchase of up to an additional 1 million shares.

In November 2024, the board authorized the repurchase of up to an additional 1 million shares.

In November of Fiscal 2025, the board authorized the repurchase of up to an additional 1 million shares.

During the first quarter of the fiscal year ended June 30, 2025, the Company repurchased 193,252 shares of its outstanding common stock at a weighted average price of $ 37.67 .

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The Company currently has 359,741 available shares that can be repurchased under this authorization.

There were no common stock was repurchases during the three and six months ended December 31, 2025.

There were no common stock repurchases during the three and nine months ended March 31, 2026.

The following table summarizes information about shares repurchased by the Company for the fiscal year ended June 30, 2025:

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employees and is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code.

Company contributions to this plan are discretionary and totaled $ 74,000 and $ 69,000 for the three months ended December 31, 2025 and 2024, respectively and totaled $ 144,000 and $ 138,000 for the six months ended December 31, 2025 and 2024, respectively.

Company contributions to this plan are discretionary and totaled $ 160,000 and $ 73,000 for the three months ended March 31, 2026 and 2025, respectively and totaled $ 303,000 and $ 211,000 for the nine months ended March 31, 2026 and 2025, respectively.

NOTE 13 - Commitments and Contingencies

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Operating leases are included in operating lease right-of-use assets, accrued expenses and operating lease liabilities, non-current on our condensed consolidated balance sheets.

For the three months ended December 31, 2025 and 2024 cash payments against operating lease liabilities totaled $ 87,000 and $ 115,000 , respectively.

For the six months ended December 31, 2025 and 2024 cash payments against operating lease liabilities totaled $ 173,000 and $ 172,000 , respectively.

For the three months ended March 31, 2026 and 2025 cash payments against operating lease liabilities totaled $ 87,000 and $ 86,000 , respectively.

For the nine months ended March 31, 2026 and 2025 cash payments against operating lease liabilities totaled $ 260,000 and $ 258,000 , respectively.

Supplemental balance sheet information related to operating leases was as follows:

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Weighted-average discount rate

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2025 (in thousands):

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2026 (in thousands):

Year Ending June 30,

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Imputed interest

Operating lease expense totaled approximately $ 124,000 and $ 144,000 for the three months ended December 31, 2025 and 2024, respectively.

Operating lease expense totaled approximately $ 249,000 and $ 239,000 for the six months ended December 31, 2025 and 2024, respectively.

Operating lease expense totaled approximately $ 124,000 for both the three months ended March 31, 2026 and 2025, respectively.

Operating lease expense totaled approximately $ 373,000 and $ 363,000 for the nine months ended March 31, 2026 and 2025, respectively.

On August 29, 2023, a purported class action, brought on behalf of a putative class who acquired publicly traded NAPCO securities between November 7, 2022 and August 18, 2023, was filed in the United States District Court for the Eastern District of New York against the Company, its Chairman and Chief Executive Officer, and its former Chief Financial Officer (who is currently the President and Chief Operating Officer).

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NAPCO Security Technologies, Inc.

et al., asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with statements made in the Company’s quarterly reports and earnings releases during the period of November 7, 2022 through May 8, 2023.

et al., asserts claims under Sections

10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with statements made in the Company’s quarterly reports and earnings releases during the period of November 7, 2022 through May 8, 2023.

A lead plaintiff was appointed in November 2023 and lead plaintiff filed an Amended Complaint on February 16, 2024.

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Defendants filed a motion to dismiss the Amended Complaint on April 26, 2024.

On April 11, 2025, the Court granted in part and

denied in part the motion to dismiss.

On April 11, 2025, the Court granted in part and denied in part the motion to dismiss.

The Section 11 and Section 12 claims brought against the individual Defendants were dismissed;

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On May 12, 2025, Defendants filed Answers to the Amended Complaint.

On September 29, 2025, the plaintiffs moved for class certification of both the Exchange Act and remaining Securities Act claims.

On September 29, 2025, Plaintiffs moved for class certification of both the Exchange Act and remaining Securities Act claims.

On October 17, 2025, pursuant to a joint letter and stipulation filed by all the parties, the Court dismissed the Securities Act claims with prejudice and certified a class with respect to the Exchange Act claims.

The Company believes it has meritorious defenses and intends to vigorously defend against the Action.

On February 9, 2026, a Second Amended Complaint was filed that added additional allegations but did not modify the claims brought against Defendants.

On April 15, 2026, Defendants and Plaintiffs filed letters requesting a pre-motion conference regarding Defendants’ proposed motion for summary judgment and Plaintiffs’ proposed partial motion for summary judgment, respectively, which the Court scheduled for May 5, 2026.

On May 1, 2026, the parties reached a settlement in principle to resolve all remaining claims.

The settlement is subject to final documentation and Court approval.

On November 26, 2024, a putative derivative lawsuit captioned Minzer v.

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The Company is a “Nominal Defendant” in the lawsuit.

After the Company and the individual defendants moved to dismiss or stay the action, plaintiffs filed an Amended Complaint on June 12, 2025.

After the Company and the individual defendants moved to dismiss or stay the action, Plaintiff filed an Amended Complaint on June 12, 2025.

The Amended Complaint alleges, among other things, that the individual Defendants breached their fiduciary duties and aided and abetted breach of fiduciary duties by allowing the Company to remain with ineffective internal controls over financial reporting and inventory and by allowing for the dissemination of false and misleading financial information in public filings.

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Oral argument on that motion is scheduled for May 7, 2026.

On March 31, 2025, the Company received a subpoena from the Securities and Exchange Commission (“SEC”).

The SEC’s subpoena and inquiry was principally focused on the Company’s previously disclosed restatements and related material weakness determination.

The Company produced documents responsive to the SEC subpoena.

On January 27, 2026, the Company received a termination letter from the SEC concluding the investigation without further action.

On April 25, 2025, a purported class action, brought on behalf of a putative class who acquired publicly traded NAPCO securities between February 5, 2024 and February 3, 2025, was filed in the United States District Court for the Eastern District of New York against the Company, its Chairman and Chief Executive Officer, and its former Chief Financial Officer (who is currently the President and Chief Operating Officer).

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et al., asserts securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with statements made in quarterly earnings releases and calls during the period of February 5, 2024 through February 3, 2025.

The Court has not yet appointed a lead plaintiff.

On March 10, 2026, the Court appointed Co-Lead Plaintiffs.

On April 24, 2026, the Court approved the parties’ proposed case management schedule.

Pursuant to that schedule, Plaintiffs’ Amended Complaint is due on or before May 11, 2026, and Defendants shall either answer the Amended Complaint or request a pre-motion conference and file a letter stating the basis for the motion on or before July 13, 2026.

The Company believes it has meritorious defenses and intends to vigorously defend against the Action.

With respect to all litigation and related matters, the Company records a liability when the Company believes it is probable that a liability has been incurred, and the amount can be reasonably estimated.

As of the end of the period covered by this report, due to the early stage of the case the Company is not able to estimate any range of potential loss related to this matter and has not recorded any liability.

As of the end of the period covered by this report, due to the stage of the cases the Company is not able to estimate any range of potential loss related to these matters and has not recorded any liability other than the settlement described above.

It is possible that the Company could be required to pay damages (in excess of insurance coverages), incur other costs or establish accruals in amounts that could not be reasonably estimated as of the end of the period covered by this report.

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The severance agreement with the Company’s President and COO provides for, if terminated by the Company without cause or within three months of a change in corporate control of the Company, severance of nine months’ salary, continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions.

Tariff Ruling

On February 20, 2026, the U.S.

Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were invalid, and in March 2026, the U.S.

Court of International Trade further ruled that importers that paid such tariffs are due refunds.

Although we may be entitled to refunds of previously paid IEEPA tariffs, the amount and timing of any such refunds remain uncertain, and as of March 31, 2026, we have not recorded any amounts related to potential recoveries.

Following these rulings, new tariffs under other laws and on imports from more countries were imposed, in addition to existing non-IEEPA tariffs.

NOTE 14 – Segment and Geographical Data

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The consolidated net income is the measure of segment profit that is most consistent with U.S.

Segment profit is used in developing the overall strategy and during the annual budget process, as well as considered in budget-to-actual variances on a monthly basis when making decisions about the allocation of operating and capital resources.

Segment profit is used in developing the overall strategy and during the annual budget process, as well as considered in budget-to-actual variances monthly when making decisions about the allocation of operating and capital resources.

The CODM is regularly provided with not only the consolidated expenses as noted on the face of the income statement, but also the significant segment expenses as below:

Three months ended December 31,

Six months ended December 31,

Three months ended March 31,

Nine months ended March 31,

(in thousands)

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Selling, general, and administrative expenses (2)

Litigation settlement cost

Interest and other (income), net

Provision for Income Taxes

Segment Profit

Segment (Loss) Profit

(1) Excludes stock based compensation.

7 unchanged sentences

The Company has customers worldwide with major concentrations in North America.

All of the Company’s sales

originate in the United States and are shipped primarily from the Company’s facilities in the United States.

All of the Company’s sales originate in the United States and are shipped primarily from the Company’s facilities in the United States.

There were no sales into any one foreign country in excess of 10% of total Net Revenue.

The following table presents net revenue by geographic area.

Three months ended December 31,

Six months ended December 31,

Three months ended March 31,

Nine months ended March 31,

Sales to external customers:

5 unchanged sentences

The following table presents long-lived assets by geographic area.

December 31, 2025

March 31, 2026

June 30, 2025

5 unchanged sentences

The Company has evaluated subsequent events occurring after the end of the period covered by the condensed consolidated financial statements for events requiring recording or disclosure in the condensed consolidated financial statements.

On January 27, 2026, the Company received a termination letter from the SEC concluding the investigation without further action.

On January 29, 2026 , the Company’s Board of Directors declared a cash dividend of $ .15 per share payable on April 3, 2026 , to stockholders of record on March 12, 2026 .

On January 29, 2026, the Company’s Board of Directors appointed a Chief Revenue Officer for the Company.

On April 30, 2026 , the Company’s Board of Directors declared a cash dividend of $ .15 per share payable on July 3, 2026 , to stockholders of record on June 12, 2026 .

On May 1, 2026, the Company reached a settlement in principle to resolve all remaining claims in the action, captioned Zornberg v.

NAPCO Security Technologies, Inc.

The settlement is subject to final documentation and Court approval.

The Company’s share of the settlement payment is $ 16,000,000 , net of any insurance reimbursements, which is reflected in the accompanying financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements