What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-08-24 compared with 2025-08-25 · 285 added, 439 removed, 816 unchanged (47% of the section changed)

4 unchanged sentences

AND SUBSIDIARIES

Report of Independent Registered Accounting Firm (PCAOB ID 34 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 34 )

1 unchanged sentence

Consolidated Balance Sheets as of June 30, 2026 and 2025

Consolidated Statements of Income for the y ears ended June 30, 2025, 2024 and 2023

Consolidated Statements of Comprehensive Income for the years ended June 30, 2025, 2024 and 2023

Consolidated Statements of Stockholders' Equity for the y ears ended June 30, 2025, 2024 and 2023

Consolidated Statements of Cash Flows for the years ended June 30, 2025, 2024 and 2023

Consolidated Statements of Income for the three y ears ended June 30, 2026

Consolidated Statements of Comprehensive Income for the three years ended June 30, 2026

Consolidated Statements of Stockholders' Equity for the three y ears ended June 30, 2026

Consolidated Statements of Cash Flows for the three years ended June 30, 2026

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of Napco Security Technologies, Inc.

and subsidiaries (the "Company") as of June 30, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for the years ended June 30, 2025 and 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for the years ended June 30, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of June 30, 2026 and 2025, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended June 30, 2026, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 24, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

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We have served as the Company's auditor since fiscal year 2024.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of Napco Security Technologies, Inc.

and Subsidiaries:

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of income, stockholders’ equity, and cash flows of Napco Security Technologies, Inc.

and Subsidiaries (the “Company”) for the year ended June 30, 2023, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Company’s management is responsible for these consolidated financial statements.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud in all material respects.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BAKER TILLY US, LLP

We served as the Company's auditor from 2008 to 2023.

New York, New York

September 8, 2023

NAPCO SECURITY TECHNOLOGIES, INC.

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Cash and cash equivalents

Investments - other

Marketable securities

Accounts receivable, net of allowance for credit losses of $ 25 and $ 32 as of June 30, 2025 and June 30, 2024, respectively

Income tax receivable

Accounts and other receivable, net of allowance for credit losses of $ 101 and $ 25 as of June 30, 2026 and June 30, 2025, respectively

Prepaid expenses and other current assets

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Accrued expenses

Accrued litigation costs

Accrued salaries and wages

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Operating lease liability

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Total Liabilities

Commitments and Contingencies (Note 13)

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Common Stock, par value $ 0.01 per share;

100,000,000 shares authorized as of June 30, 2025 and June 30, 2024;

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

39,883,051 and 39,771,035 shares issued;

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Retained earnings

Treasury Stock, at cost ( 4,114,614 and 2,893,715 shares as of June 30, 2025 and June 30, 2024, respectively)

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

Accumulated other comprehensive income

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

Equipment revenues

Service revenues

Cost of Sales:

Equipment-related expenses

Service-related expenses

Equipment revenue

Service revenue

Total revenue

Cost of Revenue:

Cost of equipment revenue

Cost of service revenue

Total cost of revenue

Operating Expenses:

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Selling, general, and administrative expenses

Litigation settlement cost

Total operating expenses

1 unchanged sentence

Other Income:

Interest and other income, net

Interest income, net

Other income, net

Income before Provision for Income Taxes

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Year Ended June 30,

Other comprehensive income, net of tax

Net change in unrealized gains on available-for-sale debt securities, net of taxes of $ 25

Other comprehensive income, net of tax

Total Comprehensive income

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

See accompanying notes to consolidated financial statements.

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Stock-based compensation expense

Purchase of treasury shares

( 1,220,899 )

Cash dividend ($ .52 per share)

Other comprehensive income, net of tax

Balances at June 30, 2025

1 unchanged sentence

Stock options exercised

Tax withholdings related to stock option exercises

Stock-based compensation expense

Purchase of treasury shares

( 1,220,899 )

Cash dividend ($ .58 per share)

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Depreciation and amortization

Gain on disposal of fixed asset

Change in accrued interest on other investments

Unrealized (gain) loss on marketable securities

Realized (gain) loss on sales of marketable securities

(Recovery of) credit losses

Unrealized gain on marketable securities

Realized gain on sales of marketable securities

Charge (recovery) of credit losses

Change to inventory reserve

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Changes in operating assets and liabilities:

Accounts receivable

Accounts and other receivable

Prepaid expenses and other current assets

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

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Purchases of property, plant, and equipment

Proceeds from disposal of fixed asset

Purchases of marketable securities

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Dividends paid

Repurchase of common stock

Purchase of treasury shares

Payment of tax withholdings related to stock option exercises

Net Cash Used in Financing Activities

Net increase (decrease) in Cash and Cash Equivalents

Net increase in Cash and Cash Equivalents

Cash and Cash Equivalents - Beginning

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Interest paid

Income taxes paid

Income taxes paid, net of refunds received

Non-Cash Investing and Financing Transactions

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All financial instruments purchased with an original maturity of three months or less at the time of purchase are considered cash equivalents.

Such items may include liquid money market funds, certificate of deposit and time deposit accounts.

Such items may include liquid money market funds and time deposit accounts.

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

Certificate of deposits with an original maturity greater than three months are classified as Investments – other.

The Company’s cash and cash equivalents included approximately $ 66,355,000 of short-term time deposits as of June 30, 2025.

Cash and cash equivalents include approximately $ 46,518,000 of short-term time deposits, consisting of a certificate of deposit totaling $ 5,402,000 and $ 41,116,000 in a money market fund as of June 30, 2024.

The Company’s cash and cash equivalents included approximately $ 92,915,000 and $ 48,249,000 of short-term time deposits as of June 30, 2026 and 2025, respectively.

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

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Money Market Fund

Certificate of Deposits

Investments-other consists of the following as of (in thousands):

June 30, 2025

June 30, 2024

Certificate of Deposits

Certificate of deposits are recorded at the original cost plus accrued interest.

There were no certificate of deposits outstanding at June 30, 2025.

The Company’s certificate of deposits as of June 30, 2024 consisted of the following (in thousands):

June 30, 2024

Balance Sheet Classification

Interest Rate

Maturity Date

Carrying Value

Cash and Cash Equivalents

Investments - other

4.55 % - 4.75 %

7/25/2024 - 10/24/2024

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of June 30, 2026.

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Changes in value are recorded in other income (expense), net.

Accounts Receivable

Accounts receivable is stated net of the reserves for credit losses of $ 25,000 and $ 32,000 as of June 30, 2025 and 2024, respectively.

Accounts and Oher Receivable

Accounts receivable are stated net of the reserves for credit losses of $ 101,000 and $ 25,000 as of June 30, 2026 and 2025, respectively.

In accordance with ASU No.

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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.

Changes in intangible assets are as follows (in thousands):

Intangible assets consisted of the following (in thousands):

June 30, 2026

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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.

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Service Revenue

Service revenue is primarily generated from the sale of monthly cellular communication services to customers.

Service revenue is primarily generated from the sale of monthly cellular communication services.

Those sales predominantly contain a single performance obligation and revenue is recognized ratably with the delivery of cellular communication service over the related monthly period, and when ownership, risks and rewards transfer to the customer.

The services are billed monthly, and customers have the right to cancel the cellular communication services at any time, however the contract with the customer does not provide for a refund.

Cost of Sales

Equipment Cost of Sales

Equipment cost of sales is primarily comprised of direct materials and supplies consumed in the manufacturing of products, as well as manufacturing labor, depreciation expense and direct and indirect overhead expenses necessary to acquire and convert the purchased materials and supplies into finished products.

Service Cost of Sales

Service cost of sales is primarily the cost of operating our network operations center to manage and deliver telecommunication services.

Cost of Revenue

Cost of Equipment Revenue

Cost of equipment revenue is primarily comprised of direct materials and supplies consumed in the manufacturing of products, as well as manufacturing labor, depreciation expense and direct and indirect overhead expenses necessary to acquire and convert the purchased materials and supplies into finished products.

Cost of Service Revenue

Cost of service revenue is primarily the cost of operating our network operations center to manage and deliver telecommunication services.

Shipping and Handling Sales and Costs

The Company records the amount billed to customers for shipping and handling in net sales ($ 419,000 , $ 349,000 and $ 450,000 in the fiscal years ended June 30, 2025, 2024 and 2023, respectively) and classifies the costs associated with these sales in cost of sales ($ 1,589,000 , $ 1,573,000 and $ 1,697,000 in the fiscal years ended June 30, 2025, 2024 and 2023, respectively).

The Company records the amount billed to customers for shipping and handling in net revenue ($ 569,000 , $ 419,000 and $ 349,000 in the fiscal years ended June 30, 2026, 2025 and 2024, respectively) and classifies the costs associated with these revenues in cost of sales ($ 1,764,000 , $ 1,589,000 and $ 1,573,000 in the fiscal years ended June 30, 2026, 2025 and 2024, respectively).

Advertising and Promotional Costs

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Legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act introduced the global intangible low-taxed income (“GILTI”) provisions effective in 2018, which generally impose a tax on the net income earned by foreign subsidiaries of a U.S.

excess of a deemed return on their tangible assets.

company in excess of a deemed return on their tangible assets.

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

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The Company has established five share incentive programs as discussed in Note 10.

Stock-based awards exchanged for services are accounted for under the fair value method.

Accordingly, stock-based compensation cost is measured at the grant date based on the estimated fair value of the award.

The expense for awards is recognized over the requisite service period (generally the vesting period of the award).

The Company has elected to treat awards with only service conditions and with graded vesting as one award.

Consequently, the total compensation expense is recognized straight-line over the entire vesting period, so long as the compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date.

Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility, among other factors.

Stock-based compensation costs of $ 1,513,000 , $ 1,733,000 and $ 1,464,000 were recognized for the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

The Company measures stock-based compensation at the grant date based on the fair value of the award and estimates the fair value of each option granted on the date of the grant using the Black-Scholes option-pricing model, which contains uncertainties and requires us to estimate the risk-free interest rate, expected term, expected stock price volatility and dividend yield.

The expected term for options granted is estimated using our historical experience, including information related to options we have granted.

The Company has elected to treat awards with only service conditions and with graded vesting as one award and recognizes compensation costs for share-based awards on a straight-line basis, net of actual forfeitures, over the requisite service period of the award, usually the vesting period, which is generally four or five years .

Foreign Currency

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Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the fiscal years ended June 30, 2026, 2025 or 2024.

Comprehensive Income

For the fiscal years ended June 30, 2024 and 2023, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income.

Accordingly, the Company’s comprehensive income approximates its net income for the year ending June 30, 2024 and 2023.

Segment Reporting

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Operating lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term.

The implicit discount rate in the Company’s leases generally cannot readily be determined, and therefore the Company uses its incremental borrowing rate based on information available at lease commencement date in determining the present value of future payments.

The implicit discount rate in the Company’s leases generally cannot readily be determined, and therefore the Company uses its incremental borrowing rate based on

information available at lease commencement date in determining the present value of future payments.

If the Company has options to renew or terminate certain leases, those options are included in the determination of lease term when it is reasonably certain that the Company will exercise such options.

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Recently Adopted Accounting Standards

The Company adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting:

Improvements to Reportable Segment Disclosures , which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

Refer to Note 15, Segment and Geographic Information for the adoption of this guidance and related disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes:

Improvements to Income Tax Disclosures , which requires on an annual basis to (1) disclose specific categories in the rate reconciliation, (2) provide additional information for reconciling items that meet a quantitative threshold, and (3) income taxes paid disaggregated by jurisdiction.

This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and can be applied either prospectively or retrospectively.

The Company has adopted this ASU for the fiscal year beginning July 1, 2025, on a prospective basis.

The adoption resulted in additional disaggregated tax information.

Refer to Note 8, Income Taxes for the adoption of this guidance and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

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The adoption of this new standard will not have a material impact on our financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes:

Improvements to Income Tax Disclosures , which requires on an annual basis to (1) disclose specific categories in the rate reconciliation, (2) provide additional information for reconciling items

that meet a quantitative threshold, and (3) income taxes paid disaggregated by jurisdiction.

This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact that this guidance may have on its financial statements and related disclosures.

In November 2024, the FASB issued ASU No.

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The Company is currently evaluating the impact that this guidance may have on our financial statements and related disclosures.

In July 2025, the FASB issued ASU No.

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.

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

Under this expedient, entities may assume that conditions existing at the balance sheet date will persist for the remaining life of the asset, which simplifies the estimation process by eliminating the need to forecast future economic conditions for these short-term assets.

This guidance is effective for fiscal years beginning after December 15, 2025, with early adoption permitted.

The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures.

In September 2025, the FASB issued ASU No.

2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting tor Internal-Use Software.

The amendments update the framework for recognizing and disclosing costs related to software developed for internal use, including costs associated with website development.

The amendments

are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods.

Early adoption is permitted as of the beginning of an annual reporting period.

The Company is currently evaluating the impact of this guidance on its financial statements and related disclosures.

The Company is evaluating other pronouncements recently issued but not yet adopted.

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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 with an accounts receivable balance that comprised 11 %, 17 % and 19 % of the Company’s accounts receivable at June 30, 2025, 2024 and 2023, respectively.

Sales to this customer did not exceed 10% of net sales during fiscal years ended June 30, 2025 and 2024.

Sales to this customer were 10% of net sales for the fiscal year ended June 30, 2023.

The Company had another customer with an accounts receivable balance that comprised 13 %, 12 % and 14 % of the Company’s accounts receivable at June 30, 2025, 2024 and 2023, respectively.

Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2025, 2024 and 2023, 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 three customers that comprised 34 % of the Company’s accounts receivable balance as of June 30, 2026 and two customers that comprised 24 % and 30 % of the Company’s accounts receivable balances as of June 30, 2025 and 2024, respectively.

Sales to any customers did not exceed 10% of net revenue during fiscal years ended June 30, 2026, 2025 and 2024.

NOTE 4 – Fair Value Measurements

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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 June 30, 2025 and 2024:

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

June 30, 2026

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Cash equivalents

Certificate of deposits

Money market funds

Short-term investments

Certificate of deposits

Marketable securities

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.

The Company’s investments classified as Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes, or alternative pricing sources with reasonable levels of price transparency.

Treasury Securities

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

For the years ended June 30, 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 June 30, 2025 and 2024 is as follows:

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

Equity Securities

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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

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

The following tables summarize the Company’s investment in equity securities as of June 30, 2026 and 2025, respectively (in thousands):

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Investments in Debt Securities

The Company had no investments in debt securities as of June 30, 2024.

The following tables summarize the Company’s investments in debt securities as of June 30, 2025 (in thousands):

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

June 30, 2026

Amortized Cost

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Treasury Securities

The debt investments all mature within one year or less, and the Company did not recognize any credit or non-credit related losses related to its det securities during the year ended June 30, 2025.

June 30, 2025

Amortized Cost

Unrealized Gains

Unrealized Losses

Aggregate Fair Value

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 det securities during the year ended June 30, 2026 and 2025, respectively.

NOTE 6 - Inventories

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NOTE 7 - Property, Plant, and Equipment

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

Property, plant and equipment consist of the following (in thousands) as of the year ending June 30,:

Useful Life in Years

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Our effective tax rate will change based on recurring and non-recurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation, and state and local income taxes.

The amounts of income before income taxes attributable to domestic and foreign operations were as follows:

The amounts of income before income taxes attributable to domestic and foreign operations were as follows (in thousands):

For the Year ended June 30,

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Provision for income taxes

A reconciliation of the U.S.

Federal statutory income tax rate to our actual effective tax rate on earnings before income taxes is as follows for the years ended June 30, (dollars in thousands):

We adopted Accounting Standards Update 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”) prospectively.

The items accounting for the difference between income taxes computed at the U.S.

federal statutory rate and our effective rate for the year ended June 30, 2026, pursuant to the requirements of ASU 2023-09, were as follows:

(in thousands, except for percentages):

federal statutory income tax rate

State and local income taxes, net (1)

Increases (decreases) in taxes resulting from:

Foreign tax effects

Dominican Republic (DR)

Statutory tax rate difference between DR and U.S.

Withholding tax

Effects of cross-board tax laws

Global intangible low-taxed income

Nontaxable or Nondeductible items

Share-based payment awards

Executive compensation

Change in uncertain tax positions

Other adjustments

Effective tax rate

(1) State taxes in California, Massachusetts, New Jersey and New York make up greater than 50% of the tax effect in this category.

As previously disclosed for the years ended June 30, 2025 and 2024, prior to the adoption of ASU 2023-09, the items accounting for the difference between income taxes computed at the U.S.

federal statutory rate and our effective rate were as follows (in thousands, except for percentages):

Tax at Federal statutory rate

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Capitalized research and development cost

Litigation settlement

Total Deferred Tax Assets

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Net Deferred Tax Asset

Income taxes paid, net of refunds, pursuant to the disclosure requirements of ASU 2023-09 in fiscal year 2026 were as follows:

June 30, 2026

Total cash paid for income taxes, net of refunds received

The Company has identified the United States and New York State as its major tax jurisdictions.

Fiscal years 2021 and forward are still open for examination, in addition to fiscal year 2018, which is subject to a six year statute of limitations.

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.

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The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense and accrued income taxes.

As of June 30, 2025, the Company had accrued interest totaling $ 5,000 , penalties totaling $ 5,000 , and $ 22,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period.

The Company does not expect that its unrecognized tax benefits will significantly change within the next twelve months.

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Balance of gross unrecognized tax benefits as of End of Year

Subsequent to year end, on July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

Key income tax-related provisions of the OBBBA relevant to the Company include the removal of mandatory capitalization of domestic research and development expenditures, permanent extension of bonus depreciation and revisions to international tax regimes.

The Company is evaluating the financial implications of the OBBBA and will begin reflecting its effects in its first quarter of fiscal 2026.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA").

The OBBBA preserves the 21 % U.S.

Federal statutory tax rate and makes a favorable change to the business interest expense limitation.

Further, the OBBBA also makes key elements of the Tax Cuts and Jobs Act permanent, including 100% bonus depreciation, domestic research cost expensing, and various expiring international provisions (with some modifications).

Pursuant to ASC 740, changes in tax rates and tax law are required to be recognized in the period in which the legislation is enacted.

The Company has completed its evaluation of the impact of this legislation and has determined that the OBBBA will defer the payment of a significant portion of our current federal tax but did not have a material impact on its Fiscal 2026 financial statements.

NOTE 9 - Debt

On February 9, 2024, the Company and its primary bank, HSBC Bank USA National Association (“HSBC”), agreed to amend and restate the existing Third Amended and Restated Credit Agreement (“Agreement”) dated June 29, 2012, as amended, between the Registrant and HSBC with the Fourth Amended and Restated Credit Agreement (“Amended Agreement”).

The Amended Agreement extends the term of the Agreement from June 28, 2024, to February 9, 2029.

The Amended Agreement also increases the available revolving credit line from $ 11,000,000 to $ 20,000,000 and replaces the LIBOR benchmark rate with the Secured Overnight Financing Rate (SOFR) benchmark rate.

As of June 30, 2025 and 2024, the Company has no outstanding debt.

The Amended Agreement provides for a SOFR-based interest rate option of SOFR plus 1.2645 % to 1.3645 % , depending on the Fixed Charge Coverage Ratio, which is to be measured and adjusted quarterly, a prime rate-based interest rate option of the prime rate, as defined in the Amended Agreement, and other terms and conditions as more fully described in the Amended Agreement.

The Company’s obligations under the Amended Agreement continue to be secured by substantially all its domestic assets, including but not limited to, deposit accounts, accounts receivable, inventory, equipment and fixtures and intangible assets.

In addition, the Company’s wholly owned subsidiaries, except for the Company’s foreign subsidiaries, have issued guarantees and pledges of all their assets to secure the Company’s obligations under the Amended Agreement.

All the outstanding common stock of the Company’s domestic subsidiaries and 65% of the common stock of the Company’s foreign subsidiaries have been pledged to secure the Company’s obligations under the Amended Agreement.

The Amended Agreement contains various restrictions and covenants including, but not limited to, compliance with certain financial rations, restrictions on payment of dividends and restrictions on borrowings.

The Company has available a $ 20 million revolving credit line (the “Line”) with its primary bank, HSBC Bank USA National Association (“HSBC”), which expires on February 9, 2029.

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 June 30, 2026 and 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.

All the outstanding common stock of the Company’s domestic subsidiaries and 65 % of the common stock of the Company’s foreign subsidiaries have been pledged to secure the Company’s obligations under the Line.

The Line contains various restrictions and covenants including, but not limited to, compliance with certain financial rations, restrictions on payment of dividends and restrictions on borrowings.

NOTE 10 - Stock Options

The Company follows ASC 718 (“Share-Based Payment”), which requires that all share-based payments to employees, including stock options, be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period.

For the fiscal years ended June 30, 2025, 2024 and 2023, the Company recorded non-cash compensation expense of $ 1,513,000 ($ .04 per basic and diluted share), $ 1,733,000 ($ .05 per basic and diluted share) and $ 1,464,000 ($ .04 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model.

The Company uses a weighted-average expected stock-price volatility assumption that is a combination of both current and historical implied volatilities of the underlying stock.

The implied volatilities were obtained from publicly available data sources.

For the weighted-average expected option life assumption, the Company considers the exercise behavior of past grants.

The average risk-free interest rate is based on the U.S.

Treasury Bond rate for the expected term of the options and the average dividend yield is based on historical experience.

The Company recognized stock-based compensation of $ 989,000 , $ 1,513,000 and $ 1,733,000 for the fiscal years ended June 30, 2026, 2025 and 2024, respectively.

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

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”).

The Employee Plans provide for the Company to grant stock options, which are intended to qualify as incentive stock options (“ISOs”) or non-incentive stock options.

Plan participants who are granted ISOs and possess more than 10 % of the voting rights of the Company’s outstanding common stock must be granted options with an exercise price of at least 110 % of the fair market value on the date of grant.

Options granted under the Employee Plans have 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 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 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.

The following table reflects provisions of each of the stock option plans:

Options available to be granted at plan inception

Plan termination date

Options available for grant as of June 30, 2026

2012 Employee Stock Option plan

In December 2012, the stockholders approved the 2012 Employee Stock Option Plan (the “2012 Employee Plan”).

The 2012 Employee Plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 1,900,000 shares of the Company’s common stock to be acquired by the holders of such awards.

Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (ISOs), to valued employees.

Any plan participant who is granted ISOs and possesses more than 10 % of the voting rights of the Company’s outstanding common stock must be granted an option with a price of at least 110 % of the fair market value on the date of grant.

Under the 2012 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20 % per year beginning on the date of grant.

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At June 30, 2025, 361,036 stock options were outstanding, 277,636 stock options were exercisable and no further stock options were available for grant under this plan after December 2022.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rates

Expected lives

Expected volatility

Expected dividend yields

The following table reflects activity under the 2012 Plan for the fiscal years ended June 30,:

Weighted average

exercise price

Outstanding, beginning of year

Forfeited/Lapsed

Outstanding, end of period

Exercisable, end of period

Weighted average fair value at grant date of options granted

Total intrinsic value of options exercised

Total intrinsic value of options outstanding

Total intrinsic value of options exercisable

0, 0 and 37,500 options were granted during the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

2,000 , 147,544 and 39,000 options were exercised during the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

109,544 of the 147,544 stock options exercised during the fiscal year ended June 30, 2024 were settled by the Company withholding 46,570 from the shares issuable on exercise of the options.

The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid.

29,600 of the 39,000 stock options exercised during the fiscal year ended June 30, 2023, were settled by the Company withholding 10,150 from the shares issuable on exercise of the options.

The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid.

$ 54,000 , $ 427,000 and $ 84,000 was received from the remaining option exercises for the fiscal years ended June 30, 2025, 2024 and 2023, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 , $ 119,000 and $ 0 for the years ended June 30, 2025, 2024 and 2023, respectively.

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at June 30, 2025:

Options outstanding

Options exercisable

Weighted average

Range of exercise prices

contractual life

exercise price

$ 10.02 ‑ $ 26.94

As of June 30, 2025 and 2024, there was $ 275,000 and 1,094,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan, respectively.

88,676 , 101,876 and 109,876 options vested during the years June 30, 2025, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during the fiscal years ended June 30, 2025, 2024 and 2023 under this plan was $ 847,000 , $ 946,000 and $ 981,000 , respectively.

December 2022

2022 Employee Stock Option plan

December 2032

2012 Non-Employee Stock Option plan

In December 2012, the stockholders approved the 2012 Non-Employee Stock Option Plan (the “2012 Non-Employee Plan”).

This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company’s common stock to be acquired by the holders of such awards.

Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries.

Under the 2012 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20 % per year beginning on the date of grant.

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At June 30, 2025, 20,400 stock options were outstanding, 18,480 stock options were exercisable and 0 stock options were available for grant under this plan after December 2022.

The following table reflects activity under the 2012 Non-Employee Plan for the fiscal years ended June 30,:

Weighted average

exercise price

Outstanding, beginning of year

Forfeited/Lapsed

Outstanding, end of period

Exercisable, end of period

Weighted average fair value at grant date of options granted

Total intrinsic value of options exercised

Total intrinsic value of options outstanding

Total intrinsic value of options exercisable

No options were exercised or granted during the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

No cash was received from the remaining option exercises for each of the fiscal years ended June 30, 2025, 2024 and 2023, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for each period.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at June 30, 2025:

Options outstanding

Options exercisable

Weighted average

average exercise

Range of exercise prices

contractual life

$ 4.35 - $ 22.93

As of June 30, 2025 and 2024, there was $ 5,000 and $ 24,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan, respectively.

1,920 , 2,640 and 2,640 options vested during the years June 30, 2025, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during each of the fiscal years ended June 30, 2025, 2024 and 2023 under this plan was $ 19,000 , $ 24,000 and $ 24,000 , respectively.

December 2022

2018 Non-Employee Stock Option plan

In December 2018, the stockholders approved the 2018 Non-Employee Stock Option Plan (the “2018 Non-Employee Plan”).

This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company's common stock to be acquired by the holders of such awards.

Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries.

Under the 2018 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20 % per year beginning on the date of grant.

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At June 30, 2025, 64,900 stock options were outstanding, 62,200 stock options were exercisable and 4,000 stock options were available for grant under this plan.

No options may be granted under this plan after December 2028.

The following table reflects activity under the 2018 Non-Employee plan for the fiscal year ended June 30,:

Weighted average

exercise price

Outstanding, beginning of year

Forfeited/Lapsed

Outstanding, end of period

Exercisable, end of period

Weighted average fair value at grant date of options granted

Total intrinsic value of options exercised

Total intrinsic value of options outstanding

Total intrinsic value of options exercisable

No options were granted during the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

0 , 6,100 and 14,000 options were exercised during the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

6,100 stock options exercised during the fiscal year ended June 30, 2024 were settled by the Company withholding 2,700 from the shares issuable on exercise of the options.

The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid.

14,000 stock options exercised during the fiscal year ended June 30, 2023 were settled by the company withholding 7,235 from the shares issuable on exercise of the options.

The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid.

$ 0 was received from the remaining option exercises for each of the fiscal years ended June 30, 2025, 2024 and 2023, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 , $ 30,000 and $ 44,000 in fiscal 2025, 2024 and 2023, respectively.

The following table summarizes information about stock options outstanding under the 2018 Non- Employee Plan at June 30, 2025:

Options outstanding

Options exercisable

Weighted average

average exercise

Range of exercise prices

contractual life

$ 8.10 - $ 22.93

As of June 30, 2025 and 2024, there was $ 7,000 and $ 59,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan, respectively.

2,700 , 14,880 and 19,680 options vested during the years June 30, 2025, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during the fiscal year ended June 30, 2025, 2024 and 2023 under this plan was $ 27,000 , $ 124,000 and $ 149,000 , respectively.

December 2028

2020 Non-Employee Stock Option plan

In May 2020, the stockholders approved the 2020 Non-Employee Stock Option Plan (the “2020 Non-Employee Plan”).

This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company's common stock to be acquired by the holders of such awards.

Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries.

Under the 2020 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20 % per year beginning on the date of grant.

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At June 30, 2025, 51,900 stock options were outstanding, 38,520 stock options were exercisable and 45,100 stock options were available for grant under this plan.

No options may be granted under this plan after May 2030.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

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Expected dividend yields

The following table reflects activity under the 2020 Non-Employee plan for the fiscal year ended June 30,:

Weighted average

exercise price

Outstanding, beginning of year

Forfeited/Lapsed

Outstanding, end of period

Exercisable, end of period

Weighted average fair value at grant date of options granted

Total intrinsic value of options exercised

Total intrinsic value of options outstanding

Total intrinsic value of options exercisable

0, 0 and 30,000 options were granted during the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

3,000 , 0 and 0 options were exercised during the fiscal years ended June 30, 2025, 2024 and 2023.

3,000 stock options exercised during the fiscal year ended June 30, 2025 were settled by the Company withholding 2,151 from the shares issuable on exercise of the options.

The withheld shares of Common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for the year ending June 30, 2025.

The following table summarizes information about stock options outstanding under the 2020 Non- Employee Plan at June 30, 2025:

Options outstanding

Options exercisable

Weighted average

The risk-free interest rate is based on U.S.

government issues with a remaining term equal to the expected life of the stock options.

The determination of expected volatility is based on historical volatility of the Company’s' common stock over the period commensurate with the expected term of stock options.

The weighted average expected term was determined based on the historical employee exercise behavior of the options.

The weighted-average fair value of stock options granted during the years ended June 30, 2026 and 2024 were $ 16.96 and $ 21.29 , respectively.

The following table reflects the total activity for the stock option plans for the Year ended June 30, 2026, 2025 and 2024:

Weighted average

Range of exercise prices

Contractual Life

exercise price

$ 11.40 - $ 30.71

As of June 30, 2025 and 2024, there was $ 85,000 and $ 215,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan, respectively.

11,380 options vested during each of the years June 30, 2025, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during the fiscal year ended June 30, 2025, 2024 and 2023 under this plan was $ 129,000 each year.

2022 Employee Stock Option Plan

In December 2022, the stockholders approved the 2022 Employee Stock Option Plan (the “2022 Employee Plan”).

The plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 950,000 shares of the Company’s common stock to be acquired by the holders of such awards.

Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (“ISOs”) or non-incentive stock options, to valued employees.

Under the 2022 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20 % per year beginning on the date of grant.

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At June 30, 2025, 130,000 stock options were outstanding, 52,000 stock options were exercisable and 820,000 stock options were available for grant under this plan.

No options may be granted under this plan after December 2032.

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rates

Expected lives

5.63 - 5.87 Years

Expected volatility

Expected dividend yields

The following table reflects activity under the 2022 Employee plan for the fiscal year ended June 30,:

Weighted average

exercise price

Intrinsic Value

exercise price

Outstanding, beginning of year

(in thousands)

Outstanding as of June 30, 2023

Forfeited/Lapsed

Outstanding, end of period

Exercisable, end of period

Weighted average fair value at grant date of options granted

Total intrinsic value of options exercised

Total intrinsic value of options outstanding

Total intrinsic value of options exercisable

0 , 130,000 and 5,000 options were granted during the fiscal year ended June 30, 2025, 2024 and 2023, respectively.

No options were exercised during the fiscal year ended June 30, 2025, 2024 and 2023.

The following table summarizes information about stock options outstanding under the 2022 Employee Plan at June 30, 2025:

Options outstanding

Options exercisable

Weighted average

Range of exercise prices

contractual life

exercise price

$ 21.60 - $ 49.39

As of June 30, 2025 and 2024, there was $ 1,536,000 and $ 2,066,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan, respectively.

26,000 , 26,000 and 1,000 options vested during the year ended June 30, 2025, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during the fiscal year ended June 30, 2025, 2024 and 2023 under this plan was $ 559,000 , $ 553,000 and $ 20,000 , respectively.

Outstanding as of June 30 ,2024

Forfeited/Lapsed

Outstanding as of June 30, 2025

Forfeited/Lapsed

Outstanding as of June 30, 2026

Vested and Exercisable as of June 30, 2024

Vested and Exercisable as of June 30, 2025

Vested and Exercisable as of June 30, 2026

As of June 30, 2026, the total compensation cost related to nonvested awards not yet recognized was $ 1,283,000 .

There were 25,000 and 130,000 stock options granted during the fiscal years ending June 30, 2026 and 2024.

There were no stock options granted during the year ending June 30, 2025.

The total fair value of stock options vested was $ 1,504,000 , $ 1,582,000 and $ 1,777,000 during the fiscal years ended June 30, 2026, 2025 and 2024, respectively.

The aggregate intrinsic value of stock options exercised was $ 5,479,000 , $ 67,000 and $ 4,113,000 during the fiscal years ended June 30, 2026, 2025 and 2024, respectively.

Cash received from exercises of stock options was $ 628,000 , $ 54,000 and $ 427,000 during the fiscal years ended June 30, 2026, 2025 and 2024, respectively.

NOTE 11 – Stockholders’ Equity Transactions

The following tables summarizes information about dividends declared by the Company for the Fiscal years ended June 30, 2025, 2024 and 2023:

The following table summarizes information about dividends declared by the Company for the Fiscal years ended June 30, 2026, 2025 and 2024:

Dividend Declaration Date

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Per Share Cash Dividend Amount

April 30, 2026

June 12, 2026

2 unchanged sentences

April 3, 2026

October 30, 2025

December 12, 2025

January 2, 2026

August 21, 2025

September 12, 2025

October 3, 2025

June 12, 2025

January 30, 2025

March 12, 2025

April 3, 2025

November 1, 2024

14 unchanged sentences

September 22, 2023

June 12, 2023

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 during the fiscal year ended June 30, 2026.

No tax withholdings related to the exercise of employee stock options were paid during the fiscal years ended June 30, 2025 and 2024, respectively.

Common Shares 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.

In December of Fiscal 2018, the board of directors 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 .

During the second quarter of the fiscal year ended June 30, 2025, the Company repurchased 282,647 shares of its outstanding common stock at a weighted average price of $ 37.95 .

During the third quarter of the fiscal year ended June 30, 2025, the Company repurchased 745,000 shares of its outstanding common stock at a weighted average price of $ 25.22 .

Shares repurchased through the year ended June 30, 2025, are included in the Company’s Treasury Stock as of June 30, 2025.

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

There were no purchases of treasury shares for the years ended June 30, 2024 and 2023.

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

On September 16, 2014, the Company’s Board of Directors authorized the repurchase of up to 2 million of the shares of the Company’s common stock then outstanding.

In December of Fiscal 2018, the Board of Directors authorized the repurchase of up to an additional 1 million shares, and in November of Fiscal 2025, the Board of Directors authorized the repurchase of up to an additional 1 million shares.

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.

The Company currently has 359,741 available shares that can be repurchased under these authorizations.

There were no repurchases of shares for the years ended June 30, 2026 or 2024, respectively

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

Total Number of

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Total for the Year ended June 30, 2025

Stock Option Exercises

During fiscal 2025, certain employees and directors exercised stock options under the Company's 2012 Employee and 2020 Non-Employee Stock Option Plans totaling 5,000 shares.

3,000 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees.

The number of shares surrendered by the optionees was 2,151 and was based upon the aggregate fair market value on the date of the exercise equal to the purchase price being paid.

During fiscal 2024, certain employees and directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plans totaling 153,644 shares.

115,644 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees.

The number of shares surrendered by the optionees was 49,270 and was based upon the aggregate fair market value on the date of the exercise equal to the purchase price being paid.

During fiscal 2023, certain employees and directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plans totaling 53,000 shares.

43,600 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees.

The number of shares surrendered by the optionees was 17,385 and was based upon the aggregate fair market value on the date of the exercise equal to the purchase price being paid.

NOTE 12 – Related Party Transaction

1 unchanged sentence

In connection with such offering, the selling stockholder granted the underwriters an option to purchase additional shares (the “Greenshoe Option”) up to an additional 300,000 shares of their common stock.

On April 8, 2024, the underwriters exercised the Greenshoe Options, pursuant to which the selling stockholder sold an additional 50,000 shares.

The Company did not sell any shares in the offering and received no proceeds from the offerings, but the Company incurred $ 407,000 in offering expenses, which are recorded in SG&A in the consolidation statements of income for the year ended June 30, 2024.

On February 13, 2023, the Company's Chief Executive Officer and Chairman and the Company’s President, Chief Operating Officer and Chief Financial Officer sold 2,012,500 and 87,500 shares of our common stock, respectively, as selling stockholders in an underwritten secondary public offering at a public offering price of $ 31.50 per share.

In connection with such offering, the selling stockholders granted the underwriters an option to purchase additional shares (the “Greenshoe Option”).

On February 15, 2023, the underwriters exercised in full the Greenshoe Option, pursuant to which the selling stockholders sold a total of 300,000 additional shares of common stock at the same public offering price.

The Company did not sell any shares in the offering and received no proceeds from the offerings, but the Company incurred $ 509,000 in offering expenses, which are recorded in selling, general, and administrative expenses in the accompanying consolidated statements of income.

On April 8, 2024, the underwriters exercised the Greenshoe Option, pursuant to which the selling stockholder sold an additional 50,000 shares.

The Company did not sell any shares in the offering and received no proceeds from the offerings.

The Company incurred $ 407,000 in offering expenses, which is included in Selling, General and Administrative expenses in the consolidation statement of income for the year ended June 30, 2024.

NOTE 13 - 401(k) Plan

3 unchanged sentences

NOTE 14 - Commitments and Contingencies

Our lease obligation consists of a 99-year lease, entered into by one of the Company’s foreign subsidiaries, for approximately four acres of land in the Dominican Republic on which the Company’s principal production facility is located.

The lease, which commenced on April 26, 1993 and expires in 2092, initially had an annual base rent of approximately $ 235,000 plus $ 53,000 in annual service charges.

On September 14, 2022, a lease modification was executed which provides for an annual base rent of $ 235,000 plus $ 105,000 in annual service charges.

The Company has entered into a 99 -year lease, as amended, for approximately four acres of land in the Dominican Republic on which the Company’s principal production facility is located.

The lease, which expires in 2092 provides for an annual base rent of $ 235,000 plus $ 105,000 in annual service charges.

The service charges increase 2 % annually over the remaining life of the lease.

modification resulted in a remeasurement of the operating lease asset and liability, and the effect was a reduction to the asset and liability of $ 1.3 million.

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

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

For the fiscal year ended June 30, 2026 and 2025, cash payments against operating lease liabilities totaled $ 318,000 and $ 345,000 , respectively.

7 unchanged sentences

Operating lease expense totaled approximately $ 468,000 , $ 486,000 and $ 512,000 , for the fiscal years ended June 30, 2026, 2025 and 2024, 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).

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 (now Founder and Executive Chairman) (the “former CEO”), and its former Chief Financial Officer (who is currently the President and Chief Executive Officer) (the “current CEO”).

The action, captioned Zornberg v.

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., asserted 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.

The Amended Complaint added claims under Sections 11, 12, and 15 of the Securities Act of 1933 in connection with the secondary public offering in February 2023.

These additional claims are brought against the defendants named in the initial complaint, as well as the directors who allegedly signed the offering materials (prospectuses and registration statement in connection with the offering), and the underwriters for the offering.

These additional claims were brought against the Defendants named in the initial complaint, as well as the directors who allegedly signed the offering materials, and the underwriters for the offering.

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

3 unchanged sentences

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

The Company intends to vigorously defend against the action.

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.

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 Company has accrued a liability of $ 16,000,000 in the third quarter with respect to this litigation, which is reflected in the accompanying consolidated financial statements.

A settlement agreement has been substantially finalized.

Once final, it will be subject to Court approval.

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

Soloway, et al., Case No.

2024-1218, was filed in the Court of Chancery in the State of Delaware against the Company’s Chairman and Chief Executive Officer, former Chief Financial Officer (who is currently the President and Chief Operating Officer), and certain current and former directors.

2024-1218, was filed in the Court of Chancery in the State of Delaware against the Company’s former CEO, the current CEO, and certain current and former directors.

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.

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.

The Amended Complaint also brings breach of fiduciary duty and unjust enrichment claims in connection with stock sales by the Company’s Chairman and Chief Executive Officer and its former Chief Financial Officer (who is currently the President and Chief Operating Officer) and seeks indemnity and contribution.

After the Company and the individual Defendants moved to dismiss or stay the action, the 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.

The Amended Complaint also brings breach of fiduciary duty and unjust enrichment claims in connection with stock sales by the Company’s former CEO and its current CEO and seeks indemnity and contribution.

The Company’s status as a “Nominal Defendant” in the action reflects the fact that the lawsuit is maintained by the named Plaintiff on behalf of the Company and that the Plaintiff seeks damages on the Company’s behalf.

Defendants believe that there are substantial defenses to the claims asserted and filed a second motion to dismiss or stay the case on August 22, 2025.

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

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

The Company has produced, and will continue to produce documents, responsive to the SEC subpoena.

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).

Defendants filed a second motion to dismiss or stay the case on August 22, 2025.

On May 7, 2026, the motion to stay was denied and the motion to dismiss was granted in part and denied in part, with four current and former directors being dismissed from the action;

and certain claims against the former CEO and his wife, the current CEO, and the Chair of the Audit Committee remaining.

On June 30, 2026, the Company’s Board of Directors appointed a special litigation committee (the “SLC”) to investigate the claims asserted in the action.

On August 4, 2026, the parties and the SLC entered into a stipulation requesting the Court stay the action for 180 days pending the SLC’s investigation and the Court subsequently so-ordered the 180-day stay.

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 former CEO, and its former Chief Financial Officer (the current CEO).

The action, captioned Patel v.

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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.

The Company intends to vigorously defend against the action.

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

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

On May 11, 2026, Co-Lead Plaintiffs filed an Amended Complaint.

On July 13, 2026, Defendants filed a letter requesting a pre-motion conference regarding Defendants’ proposed motion to dismiss the Amended Complaint.

On July 20, 2026, Co-Lead Plaintiffs filed a letter opposing Defendants’ request for a pre-motion conference and proposed motion to dismiss.

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.

IEEPA Tariff Refunds

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.

During the year ended June 30, 2026, U.S.

Customs and Border Protection approved certain of the Company’s refund claims for tariffs previously paid under IEEPA.

Based on the approval received and the absence of remaining substantive contingencies, the Company determined that $ 3,353,000 was realized or realizable as of and for the year June 30, 2026.

The Company recognized a receivable of $ 2,931,000 in accounts and other receivables in the accompanying consolidated balance sheet as of June 30, 2026.

Tariff refunds received and or accrued as of June 30, 2026, were recognized in cost of goods sold in the accompanying consolidated statement of income, and approximately $ 1,003,000 of the recognized refund pertained to periods prior to fiscal 2026.

Although we may be entitled to additional refunds of previously paid IEEPA tariffs, the amount and timing of any such refunds remain uncertain.

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

Employment Agreements

As of June 30, 2026, the Company was obligated under three employment agreements and one severance agreement.

The employment agreements are with the Company’s Chief Executive Officer (“CEO”), another one with the Chief Financial Officer and Chief Accounting Officer (“CFO”), and the last agreement with the Company’s Senior Vice President of Engineering and Chief Technology Officer (“the SVP of Engineering”).

The severance agreement is with the Company’s President and Chief Operating Officer.

The employment agreement with the CEO provides for an annual salary of $ 980,000 , as adjusted for inflation;

The employment agreements are with the Company’s former Chief Executive Officer (“Former CEO”) now Founder and Executive Chairman, one with the Chief Financial Officer and Chief Accounting Officer (“CFO”), and with the Company’s Senior Vice President of Engineering and Chief Technology Officer (“the SVP of Engineering”).

The severance agreement is with the Company’s current President and Chief Executive Officer (“Current CEO”).

The employment agreement with the former CEO provides for an annual salary of $ 1,019,000 , as adjusted for inflation;

incentive compensation as may be approved by the Board of Directors from time to time;

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The employment agreement with the SVP of Engineering expires in August 2026 and provides for an annual salary of $ 476,000 , and, if terminated by the Company without cause, severance of nine months’ salary and continued company-sponsored health insurance for six months from the date of termination.

The severance agreement is with the President and Chief Operating Officer and 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, based on a salary of $ 628,000 , continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions.

The severance agreement is with the current CEO and 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, based on a salary of $ 654,000 , continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions.

The agreements with the former CEO and Current CEO described above have been superseded by new agreements executed subsequent to June 30, 2026.

NOTE 15 – Segment and Geographical Data

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Selling, general, and administrative expenses (2)

Litigation settlement cost

Interest and other (income), net

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

The following table presents net sales by geographic area.

The following table presents net sales by geographic area (in thousands).

Fiscal Year ended June 30,

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United States

Total Net Sales

Total Net Revenue

Geographic Information for Long-Lived Assets

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Our long-lived assets are based on the physical location of the assets.

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

The following table presents long-lived assets by geographic area (in thousands).

As of June 30,

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The Company has evaluated subsequent events occurring after the date of the consolidated financial statements through the date the consolidated financial statements were issued for events requiring recognition or disclosure.

Cash Dividend

On August 20, 2026 , the Company’s Board of Directors declared a cash dividend of $ .17 per share payable on October 2, 2026 to stockholders of record on September 11, 2026 .

Employment Agreements

On July 8, 2026, the Board of the Company, approved a leadership transition plan whereby the former Chairman and CEO, will serve as Founder and Executive Chairman, and the former President and Chief Operating Officer, will serve as Chief Executive Officer and President.

The transition was effective as of July 8, 2026.

In connection with the transition and appointment to Founder and Executive Chairman, the Company entered into an Employment Agreement with the former Chairman and CEO effective as of July 8, 2026, whereby he will receive an annual base salary of $ 800,000 and be eligible for an annual cash performance bonus targeted at 50 % of base salary, in addition to being eligible for an annual equity award targeted at 50 % of base salary.

In connection with the transition and appointment to Chief Executive Officer and President, the Company entered into an Employment Agreement with the former President and Chief Operating Officer effective as of July 8, 2026, whereby he will receive an annual base salary of $ 900,000 and be eligible for an annual cash performance bonus targeted at 50 % of base salary, in addition to being eligible for an annual equity award targeted at 50 % of base salary.

The employment agreements for both executives also provide for severance upon a termination without cause or a resignation for good reason, equal to two times their base salary and target bonus amount which is conditioned upon a standard release of claims.

Both executives are subject to restrictive covenant obligations, including non-competition and non-solicitation obligations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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Deloitte & Touche LLP, our independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of June 30, 2026, and has issued an attestation report on our internal controls over financial reporting, which is included herein.

Remediation of Previously Reported Material Weakness

As previously reported in Part II, Item 9A.

“Controls and Procedures” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, in connection with our assessment of the effectiveness of internal control over financial reporting as of June 30, 2024, we identified a control deficiency related to inventory costing, as a result of ineffective review of information used in the inventory costing process.

We have completed execution of our remediation plan for this material weakness and, as of June 30, 2025, successfully remediated this material weakness by implementing reconciliation procedures to determine that the information used in the costing of inventory is complete and accurate.

Changes in Internal Control over Financial Reporting

During the quarter ending June 30, 2025, there were no changes in the Company’s internal controls over financial reporting, except for the remediation efforts described above, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting except as described above.

During the quarter ending June 30, 2026, there were no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Report of Independent Registered Accounting Firm (PCAOB ID 34)

Report of Independent Registered Public Accounting Firm (PCAOB ID 23)

Consolidated Financial Statements:

Consolidated Balance Sheets as of June 30, 2026 and 2025

Consolidated Statements of Income for the Fiscal Years Ended June 30, 2025, 2024 and 2023

Consolidated Statements of Comprehensive Income for the Fiscal Years Ended June 30, 2025, 2024 and 2023

Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended June 30, 2025, 2024 and 2023

Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2025, 2024 and 2023

Consolidated Statements of Income for the t hree Years Ended June 30, 2026

Consolidated Statements of Comprehensive Income for the three Years Ended June 30, 2026

Consolidated Statements of Stockholders' Equity for the t hree Years Ended June 30, 2026

Consolidated Statements of Cash Flows for the t hree Years Ended June 30, 2026

Notes to Consolidated Financial Statements

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0-10004) for fiscal year ended June 30, 2024

Amended and Restated Employment Agreement with Richard Soloway

Exhibit 10.S to Report on Form 10-K (Commission file No.

0-10004) for fiscal year ended June 30, 2026

Amended and Restated Employment Agreement with Kevin Buchel

Exhibit 10.T to Report on Form 10-K (Commission file No.

0-10004) for fiscal year ended June 30, 2026

Code of Ethics

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Consent of Independent Registered Accounting Firm – Deloitte & Touche LLP

Consent of Independent Registered Accounting Firm – Baker Tilly, LLP

Section 302 Certification of Chief Executive Officer

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NAPCO SECURITY TECHNOLOGIES, INC.

/s/ RICHARD SOLOWAY

Richard Soloway

Chairman of the Board of

Director and Secretary

Chief Executive Officer, President and Director

(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and the dates indicated.

/s/ RICHARD SOLOWAY

Chairman of the Board of Directors,

Chief Executive Officer and President and

August 24, 2026

Richard Soloway

Director and Secretary

(Principal Executive Officer)

President and Chief Operating Officer

August 25, 2025

/s/ ANDREW J.

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(Principal Financial and Accounting Officer)

/s/ RICHARD SOLOWAY

Chairman of Board of Directors

August 24, 2026

Richard Soloway

/s/ RICK LAZIO

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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-K

Item 8. Financial Statements and Supplementary Data