What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-09-13 compared with 2020-09-15 · 664 added, 1056 removed, 303 unchanged (85% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Financial Statements:

Financial statements required pursuant

to this Item are presented on pages FS-1 through FS-25 of this report as follows:

Financial statements required pursuant to this Item are presented on pages FS-1 through FS-25 of this report as follows:

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

Management Report on Internal Control

1 unchanged sentence

Consolidated Financial Statements:

Consolidated Balance Sheets as of June 30,

2020 and 2019

Consolidated Statements of Income for the

Fiscal Years Ended June 30, 2020 and 2019

Consolidated Statements of Stockholders'

Equity for the Fiscal Years Ended June 30, 2020 and 2019

Consolidated Statements of Cash Flows for

the Fiscal Years Ended June 30, 2020 and 2019

Consolidated Balance Sheets as of June 30, 2021 and 202 0

Consolidated Statements of Income for the Fiscal Years Ended June 30, 2021, 2020 and 201 9

Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended June 30, 2021, 2020 and 201 9

Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2021, 2020 and 201 9

Notes to Consolidated Financial Statements

Management Report on Internal Control

Management has prepared and is responsible for our consolidated

financial statements and related notes.

Management is also responsible for establishing and maintaining adequate internal control

over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.

Technologies, Inc.

(the “Company”) internal control over financial reporting includes those policies and procedures

that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures

of the Company are being made only in accordance with the authorizations of management and directors of the Company;

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the

Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting is designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for

external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control

over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future

periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies,

in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the

company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management conducted an assessment of the effectiveness of

internal control over financial reporting based on the framework in Internal Control –

Integrated Framework (2013)

as issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management determined

that as of June 30, 2020, the Company did maintain effective internal control over financial reporting.

The effectiveness of our internal control over financial reporting

as of June 30, 2020 has been audited by Baker Tilly US LLP (formerly Baker

Tilly Virchow Krause, LLP) , an independent registered public accounting firm, as stated in their report included herein.

Report of Independent

Registered Public Accounting Firm

To the stockholders and board of directors of Napco Security

Technologies, Inc.

Management has prepared and is responsible for our consolidated financial statements and related notes.

Management is also responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.

Napco Technologies, Inc.

(the “Company”) internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with the authorizations of management and directors of the Company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management conducted an assessment of the effectiveness of internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) as issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management determined that as of June 30, 2021, the Company did maintain effective internal control over financial reporting.

The effectiveness of our internal control over financial reporting as of June 30, 2021 has been audited by Baker Tilly US, LLP , an independent registered public accounting firm, as stated in their report included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

and Subsidiaries:

Opinions on the Financial Statements and Internal Control

over Financial Reporting

We have audited the accompanying consolidated balance sheets

of Napco Security Technologies, Inc.

and Subsidiaries (the "Company") as of June 30, 2020 and 2019, the related consolidated

statements of income, stockholders’

equity, and cash flows, for each of the two years in the period ended June 30, 2020,

and the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the

Company’s internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control

Integrated Framework:

Opinions on the Financial Statements and Internal Control over Financial Reporting

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

and Subsidiaries (the "Company") as of June 30, 2021 and 2020, the related consolidated statements of income, stockholders’ equity, and cash flows, for each of the three years in the period ended June 30, 2021, and the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company’s internal control over financial reporting as of June 30, 2021, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements present

fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, and the results of their

operations and their cash flows for each of the two years in the period ended June 30, 2020, in conformity with accounting principles

generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective

internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control –

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2021, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated

financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness

of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over

Financial Reporting.

Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion

on the Company’s internal control over financial reporting 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 audits in accordance with the standards of

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud and whether effective internal control over

financial reporting was maintained in all material respects.

Our audits 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 audits 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 of internal control over financial reporting included obtaining an

understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing

and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also

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

We believe that our audits provide

a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial

A company's internal control over financial reporting is a

process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over

financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable

detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance

that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted

accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations

of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized

acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over

financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods

are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company’s internal control over financial reporting 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 audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects.

Our audits 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 audits 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 of internal control

over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

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

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Obsolete Inventory Reserve

Critical Audit Matter Description

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated net inventory and inventory reserves as of June 30, 2021 were approximately $32,442,000 and $2,092,000, respectively.

Management establishes its reserve for obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory.

The estimated reserve percentages consider future inventory requirements to support forecasted sales based on historical usage, known trends, market conditions, and the ability to find alternate applications of its raw materials into finished goods to better match customer demand.

We identified the reserve for inventory obsolescence as a critical audit matter because of the significant estimates and assumptions management makes to determine the reserve, specifically the future inventory requirements and related forecasted sales and usage.

Performing audit procedures to evaluate the reasonableness of these estimates, including the estimated reserve percentages, and assumptions is subjective and requires a high degree of auditor judgment.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this critical audit matter included:

● We tested the design and operating effectiveness of the controls over management’s evaluation of the key estimates and assumptions used in the determination of the inventory reserve on the Company's books at year-end.

● We tested management’s process in developing the estimate for reserve for obsolete inventory;

including performing a retrospective review of management’s estimates in order to determine management’s ability to make such estimates.

● We evaluated the appropriateness of management’s approach and estimates and whether the assumptions were consistent with evidence obtained in other audit areas.

● We tested the completeness and accuracy of underlying data used in the approach, including historical usage, inventory age, and subsequent sales of the Company’s products.

● We evaluated the reasonableness of the estimated reserve percentages used by management to determine the obsolete inventory reserve and tested the clerical accuracy of the model.

We have served as the Company's auditor since 2009.

TILLY US LLP (FORMERLY BAKER TILLY VIRCHOW KRAUSE, LLP)

/s/BAKER TILLY US, LLP

Melville, New York

September 13, 2021

SECURITY TECHNOLOGIES, INC.

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

2 unchanged sentences

June 30, 2020

CURRENT ASSETS

(in thousands, except share data)

CURRENT ASSETS

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts

of $326 and $88 at June 30, 2020 and 2019, respectively, and other reserves

Marketable securities

Accounts receivable, net of allowance for doubtful accounts of $ 226 and $ 326 at June 30, 2021 and June 30, 2020, respectively, and other reserves

Inventories, net

Prepaid expenses and other current assets

Total Current Assets

Inventories - non-current

Inventories - non-current, net

Property, plant and equipment, net

8 unchanged sentences

Total Current Liabilities

Long term debt

Long term debt, net of current portion

Deferred income taxes

2 unchanged sentences

Total Liabilities

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES (Note 13)

STOCKHOLDERS’ EQUITY

5 unchanged sentences

Retained earnings

Treasury Stock, at cost (2,893,715 and 2,749,310 shares)

Treasury Stock, at cost ( 2,893,715 shares)

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

See accompanying

notes to consolidated financial statements.

SECURITY TECHNOLOGIES, INC.

See accompanying notes to consolidated financial statements.

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Fiscal Year ended June 30,

Year Ended June 30,

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

Equipment sales

Service sales

Equipment revenues

Service revenues

Cost of sales:

1 unchanged sentence

Service-related expenses

Operating expenses:

Research and development

3 unchanged sentences

Other expense:

Interest expense, net

Interest and other expense, net

Income before Provision for Income Taxes

2 unchanged sentences

Weighted average number of shares outstanding:

See accompanying

notes to consolidated financial statements.

SECURITY TECHNOLOGIES, INC.

See accompanying notes to consolidated financial statements.

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

STATEMENT OF STOCKHOLDERS’

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Fiscal Years ended June 30, 2021, 2020 and 2019

1 unchanged sentence

Treasury Stock

Balances at June 30, 2018

Balance at June 30, 2018

( 2,475,245 )

Implementation of ASC 606

3 unchanged sentences

Balances at June 30, 2019

Stock options exercised

( 2,749,310 )

Repurchase of treasury shares

Stock options exercised

Stock-based compensation expense

Balances at June 30, 2020

See accompanying

notes to consolidated financial statements.

SECURITY TECHNOLOGIES, INC.

( 2,893,715 )

Stock options exercised

Stock-based compensation expense

Balances at June 30, 2021

( 2,893,715 )

See accompanying notes to consolidated financial statements.

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Year ended June 30,

1 unchanged sentence

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income

to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Impairment of intangible asset

Provision for doubtful accounts

Loss on marketable securities

(Recovery of) provision for doubtful accounts

Change to inventory obsolescence reserve

4 unchanged sentences

Prepaid expenses and other current assets

Accounts payable, accrued expenses,

accrued salaries and wages, accrued income taxes

Net Cash Provided

by Operating Activities

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

Net Cash Provided by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property,

plant, and equipment

Net Cash Used in

Investing Activities

Purchases of property, plant, and equipment

Purchases of marketable securities

Net Cash Used in Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES

1 unchanged sentence

Proceeds from stock option exercises

Cash paid for purchase

of treasury stock

Net Cash Provided

by (Used in) Financing Activities

Net Change in Cash and Cash Equivalents

Cash paid for purchase of treasury stock

Net Cash Provided by (Used in) Financing Activities

Net increase in Cash and Cash Equivalents

CASH AND CASH EQUIVALENTS - Beginning

2 unchanged sentences

Interest paid

Income taxes paid

Surrender of Common Shares

See accompanying notes to consolidated

financial statements.

NAPCO SECURITY TECHNOLOGIES,

See accompanying notes to consolidated financial statements.

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Nature of Business and Summary of Significant Accounting

NOTE 1 - Nature of Business and Summary of Significant Accounting Policies

Nature of Business :

Napco Security Technologies, Inc (“NAPCO”, “the

Company”, “we”) is one of the leading manufacturers and designers of high-tech electronic security devices,

as well as a leading provider of school safety solutions.

We offer a diversified array of security products, encompassing access

control systems, door-locking products, intrusion and fire alarm systems and video surveillance products.

These products are used

for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent

distributors, dealers and installers of security equipment.

We have experienced significant growth in recent years, primarily

driven by fast growing recurring service revenues generated from wireless communication services for intrusion and fire alarm

systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as

a result of on-campus shooting and violence in the U.S.

Company's fiscal year begins on July 1 and ends on June 30.

Historically, the end users of the Company’s products

want to install its products prior to the summer;

therefore sales of its products historically peak in the period April 1 through

June 30, the Company's fiscal fourth quarter, and are reduced in the period July 1 through September 30, the Company's fiscal

first quarter.

Napco Security Technologies, Inc (“NAPCO”, “the Company”, “we”) is one of the leading manufacturers and designers of high-tech electronic security devices, as well as a leading provider of school safety solutions.

We offer a diversified array of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products.

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

We have experienced significant growth in recent years, primarily driven by fast growing recurring service revenues generated from wireless communication services for intrusion and fire alarm systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as a result of on-campus shooting and violence in the U.S.

The Company’s fiscal year begins on July 1 and ends on June 30.

Historically, the end users of the Company’s products want to install its products prior to the summer;

therefore sales of its products historically peak in the period April 1 through June 30, the Company’s fiscal fourth quarter, and are reduced in the period July 1 through September 30, the Company’s fiscal first quarter.

In addition, demand for our products is affected by the housing and construction markets.

Deterioration of the

current economic conditions may also affect this trend.

Our fourth quarter of fiscal 2020 reflects the challenging

business environment resulting from the COVID-19 pandemic.

The COVID-19 pandemic has caused difficulties for security equipment

professionals getting access to both commercial and residential installation sites.

The Company believes this access issue is

an industry-wide issue related to COVID-19 and not reflective of the loss of any market share unique to the Company or any long-term

negative reflection of the post-pandemic vibrancy of the security industry as a whole.

Deterioration of the current economic conditions may also affect this trend.

Our results for fiscal 2021 reflects the increase in customer demand after the creation of the challenging business environment resulting from the COVID-19 pandemic.

While the Company believes this recovery will continue, there can be no assurances in the event of a return to building and construction restrictions that might result from a return to last year’s levels of COVID-19 cases.

Significant Accounting Policies :

Principles of Consolidation

The consolidated financial statements include

the accounts of Napco Security Technologies, Inc.

and all of its wholly-owned subsidiaries.

All inter-company balances and transactions

have been eliminated in consolidation.

The consolidated financial statements include the accounts of Napco Security Technologies, Inc.

and its wholly-owned subsidiaries.

All inter-company balances and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in

conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

Critical estimates include management's

judgments associated with reserves for sales returns and allowances, allowance for doubtful accounts, inventory reserves, valuation

of intangible assets and income taxes.

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Critical estimates include management’s judgments associated with reserves for sales returns and allowances, allowance for doubtful accounts, inventory reserves, valuation of intangible assets and income taxes.

Actual results could differ from those estimates.

Fair Value of Financial Instruments

methods and assumptions used to estimate the fair value of the following classes of financial instruments were:

Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, current receivables

and payables and certain other short-term financial instruments approximate their fair value as of June 30, 2020 and 2019 due

to their short-term maturities.

The methods and assumptions used to estimate the fair value of the following classes of financial instruments were:

Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, current receivables and payables and certain other short-term financial instruments approximate their fair value as of June 30, 2021 and 2020 due to their short-term maturities.

Long-term debt and lease liabilities reflect fair value based on prevailing market rates.

Cash and Cash Equivalents

Cash and cash equivalents include approximately

$460,000 of short-term time deposits at June 30, 2020 and 2019.

The Company considers all highly liquid investments with original

maturities of three months or less to be cash equivalents.

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, 2020 and 2019.

The Company has not historically experienced

any credit losses with balances in excess of FDIC limits.

Cash and cash equivalents include approximately $ 63,000 and $ 460,000 of short-term time deposits at June 30, 2021 and 2020, respectively.

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

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, 2021 and 2020.

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

Marketable Securities

The Company’s marketable securities include investments in mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds .

The Company’s marketable securities are reported at fair value with the related unrealized and realized gains and losses included in other expense (income).

Realized gains or losses on mutual funds are determined on a specific identification basis.

The Company evaluates its investments periodically for possible other-than-temporary impairment by reviewing factors such as the length of time and extent to which fair value had been below cost basis, the financial condition of the issuer and the Company’s ability and intent to hold the investment for a period of time, which may be sufficient for anticipated recovery of market value.

The Company records an impairment charge to the extent that the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary.

During the year ended June 30, 2021, the Company did not record an impairment charge regarding its investment in marketable securities because management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary.

Accounts Receivable

Accounts receivable is stated net of the

reserves for doubtful accounts of $326,000 and $88,000 as of June 30, 2020 and 2019, respectively.

Our reserves for doubtful accounts

are subjective critical estimates that have a direct impact on reported net earnings.

These reserves are based upon the evaluation

of our accounts receivable aging, specific exposures, sales levels and historical trends.

Inventories are valued at the lower of cost

or net realizable value, with cost being determined on the first-in, first-out (FIFO) method.

The reported net value of inventory

includes finished saleable products, work-in-process and raw materials that will be sold or used in future periods.

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.

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.

In addition, the Company records an inventory

obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value, based on various

product sales projections.

This reserve is calculated using an estimated obsolescence percentage applied to the inventory based

on age, historical trends, requirements to support forecasted sales, and the ability to find alternate applications of its raw

materials and to convert finished product into alternate versions of the same product to better match customer demand.

and as necessary, the Company may establish specific reserves for future known or anticipated events.

There is inherent professional

judgment and subjectivity made by both production and engineering members of management in determining the estimated obsolescence

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.

Accounts receivable is stated net of the reserves for doubtful accounts of $ 226,000 and $ 326,000 as of June 30, 2021 and 2020, respectively.

Our reserves for doubtful accounts are subjective critical estimates that have a direct impact on reported net earnings.

These reserves are based upon the evaluation of our accounts receivable aging, specific exposures, sales levels and historical trends.

Inventories are valued at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (FIFO) method.

The reported net value of inventory includes finished saleable products, work-in-process and raw materials that will be sold or used in future periods.

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.

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.

In addition, the Company records an inventory obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value, based on various product sales projections.

This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, requirements to support forecasted sales, and the ability to find alternate applications of its raw materials and to convert finished product into alternate versions of the same product to better match customer demand.

In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events.

There is inherent professional judgment and subjectivity made by both production and engineering members of management in determining the estimated obsolescence percentage.

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.

Property, Plant, and Equipment

Property, plant, and equipment are carried

at cost less accumulated depreciation.

Property, plant, and equipment are carried at cost less accumulated depreciation.

Expenditures for maintenance and repairs are charged to expense as incurred;

costs of major

renewals and improvements are capitalized.

At the time property and equipment are retired or otherwise disposed of, the cost and

accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition

is reflected in income.

Depreciation is recorded over the estimated

service lives of the related assets using primarily the straight-line method.

Amortization of leasehold improvements is calculated

by using the straight-line method over the estimated useful life of the asset or lease term, whichever is shorter.

Intangible Assets

Intangible assets determined to have indefinite

lives are not amortized but are tested for impairment at least annually.

Intangible assets with definite lives are amortized over

their useful lives.

Infinite-lived intangible assets are reviewed for impairment at least annually at the Company’s fiscal

year end of June 30 or more often whenever there is an indication that the carrying amount may not be recovered.

Company’s acquisition of substantially all of the assets and certain liabilities of G.

costs of major renewals and improvements are capitalized.

At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition is reflected in income.

Depreciation is recorded over the estimated service lives of the related assets using primarily the straight-line method.

Amortization of leasehold improvements is calculated by using the straight-line method over the estimated useful life of the asset or lease term, whichever is shorter.

Long-Lived and Intangible Assets

Long-lived assets are amortized over their useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets in question may not be recoverable.

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 determined to have indefinite lives were not amortized but were tested for impairment at least annually.

The Company’s acquisition of substantially all of the assets and certain liabilities of G.

Marks Hardware, Inc.

(“Marks”)

in August 2008 included intangible assets recorded at fair value on the date of acquisition.

The customer relationships

are amortized over their estimated useful lives of twenty years.

The Marks trade name was deemed to have an indefinite life.

the conclusion of fiscal 2020, the Company determined that the trade-name was impaired.

Accordingly, the Company recorded an impairment

charge of $1,852,000 and reclassified the remaining balance of the underlying asset from indefinite-lived to a long-lived asset

with a remaining useful life of 20 years as of June 30, 2020.

Changes in intangible assets are as follows

(in thousands):

relationships

expense for intangible assets subject to amortization was approximately $264,000 and $313,000 for the fiscal years ended June

30 , 2020 and 2019, respectively.

Amortization expense for each

of the next five fiscal years is estimated to be as follows:

(“Marks”) in August 2008 included intangible assets recorded at fair value on the date of acquisition.

The customer relationships are amortized over their estimated useful lives of twenty years .

At the acquisition date, the Marks trade name was deemed to have an indefinite life.

During the 4th quarter of fiscal 2020, the Company determined that the trade-name was impaired.

Accordingly, the Company recorded an impairment charge of $ 1,852,000 and reclassified the remaining balance of the underlying asset from indefinite-lived to a long-lived asset with a remaining useful life of 20 years as of June 30, 2020.

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

June 30, 2021

June 30, 2020

June 30, 2019

Customer relationships

Amortization expense for intangible assets subject to amortization was approximately $ 425,000 , $ 264,000 and $ 313,000 for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

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

2022-$ 390,000 ;

1 unchanged sentence

2024 - $ 336,000 ;

2025 - $ 315,000 ;

and 2026-$ 297,000 .

The weighted average remaining amortization period for intangible assets was 17.5 years and 9.1 years

at June 30 , 2020 and 2019, respectively.

Long-Lived Assets

Long-lived assets are reviewed for impairment

whenever events or changes in circumstances indicate that the carrying amount of the assets in question may not be recoverable.

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.

The weighted average remaining amortization period for intangible assets was 16.9 years and 17.5 years at June 30, 2021 and 2020, respectively.

Revenue Recognition

The Company recognizes revenue in accordance

with Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers , which the

Company adopted effective July 1, 2018.

Accordingly, the Company recognizes revenue when its customers obtain control of its products

or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods and

See Note 2 –

Revenue Recognition for additional accounting policies and transition disclosures.

Revenue 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.

For product sales, the Company typically transfers control at a point in time upon shipment or delivery of the product.

For monthly communication services the Company satisfies its performance obligation as the services are rendered and therefore recognizes revenue over the monthly period.

Typically timing of revenue recognition coincides with the timing of invoicing to the customers, at which time the Company has an unconditional right to consideration.

As such, the Company typically records a receivable when revenue is recognized.

The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product purchased.

Payment for product sales is typically due within 30 and 180 days of the delivery date.

Payment for monthly communication services is billed on a monthly basis and is typically due at the beginning of the month of service.

The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months.

The Company accepts returns for such defective products as well as for other limited circumstances.

The Company also provides rebates to customers for meeting specified purchasing targets and other coupons or credits in limited circumstances.

The Company establishes reserves for the estimated returns, rebates and credits and measures such variable consideration based on the expected value method using an analysis of historical data.

Changes to the estimated variable consideration in subsequent periods are not material.

The Company analyzes sales returns and is able to make reasonable and reliable estimates of product returns based on the Company’s past history.

Estimates for sales returns are based on several factors including actual returns and based on expected return data

communicated to it by its customers.

Accordingly, the Company believes that its historical returns analysis is an accurate basis for its allowance for sales returns.

Actual results could differ from those estimates.

Advertising and Promotional Costs

Advertising and promotional costs are included

in "Selling, General and Administrative"

Advertising and promotional costs are included in "Selling, General and Administrative"

expenses in the consolidated statements of income and are expensed as incurred.

1 unchanged sentence

Research and Development Costs

Research and development costs incurred by

the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income.

Company-sponsored research and development expense for the fiscal years ended June 30, 2020 and 2019 was $7,257,000 and $7,212,000,

respectively.

Deferred tax assets and liabilities are recognized

for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing

assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates

expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes

the enactment date.

Deferred income tax expense represents the change during the period in the deferred tax assets and deferred

tax liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely

than not that some portion or all of the deferred tax assets will not be realized.

The Company measures and recognizes the tax

implications of positions taken or expected to be taken in its tax returns on an ongoing basis.

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 fiscal years ended June 30 (in thousands, except per share data):

Weighted Average Shares

Research and development costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income.

Company-sponsored research and development expense for the fiscal years ended June 30, 2021, 2020 and 2019 was $ 7,620,000 , $ 7,257,000 and $ 7,212,000 , respectively.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

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 fiscal years ended June 30 (in thousands, except per share data):

Weighted Average

Net Income per

Effect of Dilutive Securities:

Stock Options

Options to purchase 38,819 and 2,957 shares

of common stock were excluded for the fiscal years ended June 30, 2020 and 2019, 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 respective

Options to purchase 20,000 , 38,819 and 2,957 shares of common stock were excluded for the fiscal years ended June 30, 2021, 2020 and 2019, 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 respective periods.

Stock-Based Compensation

The Company has established three share incentive

programs as discussed in Note 8.

Stock-based compensation cost is measured

at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting

Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility

and forfeiture rates, among other factors.

Stock-based compensation costs of $583,000

and $160,000 were recognized for the fiscal years ended June 30, 2020 and 2019, respectively.

The Company has established three share incentive programs as discussed in Note 9.

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period.

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

Stock-based compensation costs of $ 435,000 , $ 583,000 and $ 160,000 were recognized for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

Foreign Currency

The Company has determined the functional currency of all foreign

subsidiaries is the U.S.

All foreign operations are considered a direct and integral part or extension of the Company's

The Company has determined the functional currency of all foreign subsidiaries is the U.S.

All foreign operations are considered a direct and integral part or extension of the Company’s operations.

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 fiscal

years ended June 30, 2020 or 2019.

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the fiscal years ended June 30, 2021, 2020 or 2019.

Comprehensive Income

For the fiscal years ended June 30, 2020

and 2019, the Company's operations did not give rise to material items includable in comprehensive income, which were not already

included in net income.

For the fiscal years ended June 30, 2021, 2020 and 20219, 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 all periods presented.

Segment Reporting

The Company’s reportable operating

segments are determined based on the Company's management approach.

The management approach is based on the way that the chief

operating decision maker organizes the segments within an enterprise for making operating decisions and assessing performance.

The Company's results of operations are reviewed by the chief operating decision maker on a consolidated basis and the Company

operates in only one segment.

The Company’s reportable operating segments are determined based on the Company’s management approach.

The management approach is based on the way that the chief operating decision maker organizes the segments within an enterprise for making operating decisions and assessing performance.

The Company’s results of operations are reviewed by the chief operating decision maker on a consolidated basis and the Company operates in only one segment.

The Company has presented required geographical data in Note 14.

Shipping and Handling Sales and Costs

Company records the amount billed to customers for shipping and handling in net sales ($452,000 and $430,000 in the fiscal years

ended June 30 , 2020 and 2019, respectively) and classifies the costs associated with these sales in cost of sales ($1,034,000

and $1,115,000 in the fiscal years ended June 30, 2020 and 2019, respectively).

July 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying

the new standard at the adoption date.

In addition, we elected the package of practical expedients permitted under the transition

guidance within the new standard, which among other things, allowed us to not reassess (1) whether any expired or existing contracts

are or contain leases, (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing

Adoption of the new standard resulted in the recording of an operating ROU asset and lease liabilities of approximately

$7.7 million.

Given the length of the lease term, the right-of-use asset and corresponding liability assume a weighted

discount rate as disclosed below.

The Company records the amount billed to customers for shipping and handling in net sales ($ 395,000 , $ 452,000 and $ 430,000 in the fiscal years ended June 30, 2021, 2020 and 2019, respectively) and classifies the costs associated with these sales in cost of sales ($ 1,058,000 , $ 1,034,000 and $ 1,115,000 in the fiscal years ended June 30, 2021, 2020 and 2019, respectively).

Effective July 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date.

In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases.

Adoption of the new standard resulted in the recording of an operating ROU asset and lease liabilities of approximately $ 7.7 million .

Given the length of the lease term, the right-of-use asset and corresponding liability assume a weighted discount rate as disclosed below.

A change in the rate utilized could have a material effect on the amounts reported.

positions for reporting periods beginning on or after July 1, 2019 are presented under new guidance, while prior period amounts

are not adjusted and continue to be reported in accordance with previous guidance.

See Note 11 –

Commitments and Contingencies;

Financial positions for reporting periods beginning on or after July 1, 2019 are presented under new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance.

See Note 13 – Commitments and Contingencies;

Leases for additional accounting policies and transition disclosures.

Recently Issued and Adopted Accounting Standards

On July 1, 2019, we adopted Accounting Standards

2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under

Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use

assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising

from leasing arrangements.

We adopted the new guidance using the modified retrospective transition approach by applying the new

standard to all leases existing at the date of initial application and not restating comparative periods.

The most significant

impact was the recognition of ROU assets and lease liabilities for operating leases.

For information regarding the impact of Topic

842 adoption, see Significant Accounting Policies - Leases and Note 11- Leases.

NOTE 2 –

Revenue Recognition and Contracts

with Customers

On July 1, 2018, the Company adopted new guidance on revenue

from contracts with customers using the modified retrospective method applied to contracts that were not completed as of July

Results for reporting periods beginning after July 1, 2018 are presented under the new guidance, while prior period amounts

are not adjusted and continue to be reported in accordance with previous guidance.

The Company recorded a net decrease to opening retained earnings

of approximately $719,000 (net of tax benefit of $191,000) as of July 1, 2018, for the cumulative impact of adopting the new guidance.

The impact primarily related to the change in the recognition and measurement of certain types of variable consideration, which

resulted in the increase in sales allowance reserves (i.e.

refund liabilities) by a net of $1,627,000 and increased other assets

Recently Adopted Accounting Standards

On July 1, 2019, we adopted Accounting Standards Update No.

2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.

We adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating

comparative periods.

The most significant impact was the recognition of ROU assets and lease liabilities for operating leases.

For information regarding the impact of Topic 842 adoption, see Significant Accounting Policies - Leases and Note 13- Leases.

Recently Issued Accounting Standards

Reference Rate Reform (ASC Topic 848)

In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”), which is expected to be phased out at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate.

In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform.

The amendments clarify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC Topic 848.

Effective for the Company – This guidance can be applied for a limited time through December 31, 2022.

The guidance will no longer be available to apply after December 31, 2022.

Impact on consolidated financial statements – The Company is currently assessing the impact of applying this guidance on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance.

NOTE 2 – Revenue Recognition and Contracts with Customers

On July 1, 2018 the Company adopted new guidance on revenue from contracts with customers using the modified retrospective method applied to contracts that were not completed as of July 1, 2018.

Results for reporting periods beginning after July 1, 2018 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance.

The Company recorded a net decrease to opening retained earnings of approximately $ 719,000 (net of tax benefit of $ 191,000 ) as of July 1, 2018, for the cumulative impact of adopting the new guidance.

The impact primarily related to the change in the recognition and measurement of certain types of variable considerations, which resulted in the increase in sales allowance reserves (i.e.

refund liabilities) by a net of $ 1,627,000 and increased other assets (i.e.

return related assets) by approximately $ 716,000 .

The Company is engaged in one major line

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

The Company is engaged in one major line of business:

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 for intrusion and fire alarm systems on a monthly basis.

These products

are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally

to independent distributors, dealers and installers of security equipment.

Sales to unaffiliated customers are primarily shipped

from the United States.

Revenue 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.

For product sales, the Company typically transfers control

at a point in time upon shipment or delivery of the product.

For monthly communication services the Company satisfies its performance

obligation as the services are rendered and therefore recognizes revenue over the monthly period.

Typically timing of revenue recognition coincides with the

timing of invoicing to the customers, at which time the Company has an unconditional right to consideration.

As such, the Company

typically records a receivable when revenue is recognized.

The contract with the customer states the

final terms of the sale, including the description, quantity, and price of each product purchased.

Payment for product sales is

typically due within 30 and 180 days of the delivery date.

Payment for monthly communication services is billed on a monthly basis

and is typically due at the beginning of the month of service.

The Company provides limited standard warranty for defective

products, usually for a period of 24 to 36 months.

The Company accepts returns for such defective products as well as for other

limited circumstances.

The Company also provides rebates to customers for meeting specified purchasing targets and other coupons

or credits in limited circumstances.

The Company establishes reserves for the estimated returns, rebates and credits and measures

such variable consideration based on the expected value method using an analysis of historical data.

Changes to the estimated

variable consideration in subsequent periods are not material.

As of June 30, 2020 and 2019, the Company included refund liabilities

of approximately $3,331,000 and $3,524,000, respectively, in current liabilities.

As of June 30, 2020 and 2019, the Company included

return-related assets of approximately $701,000 and $820,000, respectively, in other current assets.

The Company analyzes sales returns and is

able to make reasonable and reliable estimates of product returns based on the Company’s past history.

Estimates for sales

returns are based on several factors including actual returns and based on expected return data communicated to it by its customers.

Accordingly, the Company believes that its historical returns analysis is an accurate basis for its allowance for sales returns.

Actual results could differ from those estimates.

As a percentage of gross sales, sales returns, rebates and allowances were 9%

and 8% for the fiscal years ended June 30, 2020 and 2019, respectively.

In accordance with ASC 606-10-50, the Company

disaggregates revenue from contracts with customers into major product lines.

The Company determines that disaggregating revenue

into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and

cash flows are affected by economic factors.

As noted in the accounting policy footnote, the Company’s business consists

of one operating segment.

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

As of June 30, 2021 and 2020, the Company included refund liabilities of approximately $ 4,277,000 and $ 3,331,000 , respectively, in current liabilities.

As of June 30, 2021 and 2020, the Company included return-related assets of approximately $ 890,000 and $ 701,000 , respectively, in other current assets.

As a percentage of gross sales, sales returns, rebates and allowances were 10 %, 9 % and 8 % for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

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

The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and

uncertainty of revenue and cash flows are affected by economic factors.

As noted in the accounting policy footnote, the Company’s business consists of one operating segment.

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

Fiscal year ended June 30,

Year ended June 30,

Major Product Lines:

2 unchanged sentences

Total Revenues

NOTE 3 - Business and Credit Concentrations

An entity is more vulnerable to concentrations

of credit risk if it is exposed to risk of loss greater than it would have had if it mitigated its risk through diversification

of customers.

Such risks of loss manifest themselves differently, depending on the nature of the concentration, and vary in significance.

The Company had one customer with an accounts receivable balance that comprised 24% and 19% of the Company’s accounts receivable

at June 30, 2020 and 2019, respectively.

NOTE 3 – Reserve for Doubtful Accounts

An entity is more vulnerable to concentrations of credit risk if it is exposed to risk of loss greater than it would have had if it mitigated its risk through diversification of customers.

The Company had one customer with an accounts receivable balance that comprised 19 %, 24 % and 19 % of the Company’s accounts receivable at June 30, 2021, 2020 and 2019, respectively.

Sales to this customer did not exceed 10% of net sales during fiscal year ended June 30, 2020.

Sales to this customer comprised 10% of net sales during fiscal year ended June 30, 2019.

The Company had another customer

with an accounts receivable balance that comprised 10% of the Company’s accounts receivable at June 30, 2020.

Sales to this

customer did not exceed 10% of net sales in either of the fiscal years ended June 30, 2020 and 2019.

The Company had another customer

with an accounts receivable balance that comprised 10% of the Company’s accounts receivable at June 30, 2019.

Sales to this

customer did not exceed 10% of net sales in either of the fiscal years ended June 30, 2020 or 2019.

Sales to this customer comprised 10 % of net sales during fiscal year ended June 30, 2021 and 2019.

The Company had another customer with an accounts receivable balance that comprised 10 % of the Company’s accounts receivable at June 30, 2021.

Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

The Company had another customer with an accounts receivable balance that comprised 10 % of the Company’s accounts receivable at June 30, 2020.

Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

The Company had another customer with an accounts receivable balance that comprised 10 % of the Company’s accounts receivable at June 30, 2021 and 2019.

Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2021, 2020 and 2019.

NOTE 4 – Marketable Securities

Marketable securities include investments in fixed income mutual funds, which are reported at their fair values.

The disaggregated net gains and losses on the marketable securities recognize in the income statement for the year ended June 30, 2021, are as follows:

Net gains recognized during the period on marketable securities

Net gains recognized during the year on marketable securities sold during the period

Unrealized (losses) gains recognized during the reporting year on marketable securities still held at the reporting date

The fair values of the Company’s marketable securities are determined as being the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, the Company utilizes the three-tier value hierarchy, as prescribed by US GAAP, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s marketable securities, which are considered available-for-sale securities, are re-measured to fair value on a recurring basis and are valued using Level 1 inputs using quoted prices (unadjusted) for identical assets in active markets.

The following tables summarize the Company’s investments:

Marketable Securities

Investment income is recognized when earned and consists principally of interest income from fixed income mutual funds.

Realized gains and losses on sales of investments are determined on a specific identification basis.

For the year ended June 30, 2021, there were no transfers between Levels 1 and 2 investments and no transfers in or out of Level 3.

NOTE 5 - Inventories

Inventories, net of reserves are valued at

lower of cost (first-in, first-out method) or net realizable value.

The Company regularly reviews parts and finished goods inventories

on hand and, when necessary, records a provision for excess or obsolete inventories.

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.

Inventories, net of reserves consist of

the following as of June 30, (in thousands):

Inventories, net of reserves are valued at lower of cost (first-in, first-out method) or net realizable value.

Inventories, net of reserves consist of the following as of June 30, (in thousands):

Component parts

3 unchanged sentences

NOTE 6 - Property, Plant, and Equipment

Property, plant and equipment consist of the following (in

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

June 30, 2021

June 30, 2020

Useful Life in Years

3 unchanged sentences

Building improvements

Shorter of the lease term or life

Shorter of the lease term or life of asset

accumulated depreciation and amortization

Depreciation and amortization expense

on property, plant, and equipment was approximately $1,221,000 and $1,085,000 in fiscal 2020 and 2019, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 1,260,000 , $ 1,221,000 and $ 1,085,000 in fiscal 2021, 2020 and 2019, respectively.

NOTE 7 - Income Taxes

The provision for income taxes is comprised of the following

(in thousands):

For the Years Ended June 30,

The provision for income taxes is comprised of the following (in thousands):

For the Year ended June 30,

Current income taxes:

2 unchanged sentences

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):

% of Pre-tax Income

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):

Tax at Federal statutory rate

3 unchanged sentences

Foreign source income not subject to tax

Transition tax

Foreign withholding tax

3 unchanged sentences

Effective tax rate

Deferred tax assets and deferred tax liabilities at June 30,

2020 and 2019 are as follows (in thousands):

Tax Assets (Liabilities)

Deferred tax assets and deferred tax liabilities at June 30, 2021 and 2020 are as follows (in thousands):

Deferred Tax Assets (Liabilities)

Accounts receivable

6 unchanged sentences

Net deferred tax liabilities

The Company has identified the United States

and New York State as its major tax jurisdictions.

Fiscal year 2017 is currently under audit by the Internal Revenue Service (“IRS”).

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

Fiscal year 2018 and forward years 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.

Company was audited by the IRS for the fiscal year 2016.

In July 2019, the Company received Form 4549-A, Income Tax Examination

Changes from the IRS proposing an adjustment to income for the fiscal 2016 tax year regarding deemed dividends based on its interpretation

of Internal Revenue Code (“IRC”) Section 956 arising from the intercompany balances on the books of the Company.

August 2019, the Company filed a formal protest with the IRS requesting an opportunity to appeal the examination findings to the

Appeals Office.

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.

The Company was audited by the IRS for the fiscal year 2016.

In July 2019, the Company received Form 4549-A, Income Tax Examination Changes from the IRS proposing an adjustment to income for the fiscal 2016 tax year regarding deemed dividends based on its interpretation of Internal Revenue Code ("IRC") Section 956 arising from the intercompany balances on the books of the Company.

In August 2019, the Company filed a formal protest with the IRS requesting an opportunity to appeal the examination findings to the Appeals Office.

During fiscal year 2020, the Company settled the issue at Appeals.

There is a provision recorded for the federal

and state impact of $762,000 and $70,000, respectively.

The Company is currently under audit for

the fiscal year 2017.

The IRS has raised the IRC Section 956 issue that was settled during the fiscal year 2016 audit.

strongly believes that the position of the IRS with regard to this matter is inconsistent with the provisions of IRC Section 956

and that the Company is willing to go to court, if necessary to argue its position.

During fiscal year 2020, the Company’s

Provision for income taxes included a provision for the incremental tax liability of $657,000 and interest of $66,000 was recorded

for the 2017 and 2018 fiscal years.

The provision for income taxes represents

Federal, foreign, and state and local income taxes.

The effective rate differs from statutory rates due to the effect of tax rates

in foreign jurisdictions, state and local income taxes, tax benefit of R&D credits, certain nondeductible expenses, uncertain

tax positions, audit settlements and global intangible low-taxed income (“GILTI”).

On December 22, 2017, the U.S.

passed the Tax Cuts and Jobs Act (the “Tax Act”).

The Tax Act is comprehensive tax legislation effective January 1,

2018 that implements complex changes to the U.S.

tax code including, but not limited to, the reduction of the corporate tax rate

from 35% to 21% and includes provisions to tax GILTI.

We are subject to the GILTI provisions beginning with the fiscal year ended

June 30, 2019.

The Tax Act also imposed a one-time transition tax on its unremitted foreign earnings.

ASC 740 requires filers

to record the effects of tax law changes in the period enacted.

However, the SEC issued Staff Accounting Bulletin No.

118 (“SAB

118”), that permits filers to record provisional amounts during a measurement period ending no later than one year from

the date of the Act’s enactment.

As of March 31, 2019, the Company finalized its accounting for the income tax effects of

the Tax Act and no additional expense was recorded since the final transition tax expense was equal to the $381,000 provisional

expense reported in the fiscal year ended June 30, 2018.

The net section 965 tax liability was $338,000, which is payable over

During the year ending June 30, 2020 the

Company increased its reserve for uncertain income tax positions by $824,000.

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, 2020, the Company had

accrued interest totaling $83,000 and $866,000 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.

The Company claims R&D tax credits on eligible research and development

expenditures.

There was a provision recorded for the federal and state impact of $ 762,000 and $ 70,000 , respectively.

The Company was audited by the IRS for the fiscal year 2017.

The Company received Form 4549-A, Income Tax Examination Changes from the IRS proposing an adjustment to income for the fiscal 2017 tax year regarding deemed dividends based on its interpretation under IRC Section 956 arising from the intercompany balances on the books of the Company.

During the third quarter of fiscal 2021, the Company settled the issue and paid the IRS $ 399,000 .

The Company reported the results of the IRS exam to all the jurisdictions in which it files and paid taxes and interest totaling $ 97,000 .

Subsequent to the quarter end, the Company paid the IRS $ 68,000 for interest.

None of the payments were recorded to expense since liabilities had previously been established.

The provision for income taxes represents Federal, foreign, and state and local income taxes.

The effective rate differs from statutory rates due to the effect of tax rates in foreign jurisdictions, state and local income taxes, tax benefit of R&D credits, certain nondeductible expenses, uncertain tax positions, audit settlements and global intangible low-taxed income ("GILTI").

During the year ending June 30, 2021 the Company decreased its reserve for uncertain income tax positions by $ 208,000 .

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, 2021, the Company had accrued interest totaling $ 63,000 and $ 678,000 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.

The Company claims R&D tax credits on eligible research and development expenditures.

The R&D tax credits are recognized as a reduction to income tax expense.

A reconciliation of the beginning and

ending amount of unrecognized tax benefits is as follows (in thousands):

Balance of gross unrecognized tax benefits

as of July 1, 2018

Decrease to unrecognized tax benefits

resulting from the release of R&D credits due to the IRS audit

to unrecognized tax benefits resulting from the generation of additional R&D credits

Balance of gross unrecognized tax benefits as of

June 30, 2019

to unrecognized tax benefits resulting from deemed dividends for investments in US property

to unrecognized tax benefits resulting from the generation of additional R&D credits

Balance of gross unrecognized

tax benefits as of June 30, 2020

The Company plans to permanently reinvest

a substantial portion of its foreign earnings and as such has not provided withholding tax on the permanently reinvested earnings.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance of gross unrecognized tax benefits as of July 1, 2018

Decrease to unrecognized tax benefits resulting from release of R&D credits due to the IRS audit

Increases to unrecognized tax benefits resulting from the generation of additional R&D credits

Balance of gross unrecognized tax benefits as of June 30, 2019

Increase to unrecognized tax benefits resulting from deemed dividends for investments in US property

Increases to unrecognized tax benefits resulting from the generation of additional R&D credits

Balance of gross unrecognized tax benefits as of June 30, 2020

Decrease to unrecognized tax benefits from deemed dividends for investments in US property

Decrease to unrecognized tax benefits resulting from the release of R&D credits due to the settled IRS audit

Balance of gross unrecognized tax benefits as of June 30, 2021

The Company plans to permanently reinvest a substantial portion of its foreign earnings and as such has not provided withholding tax on the permanently reinvested earnings.

The Company has accrued $ 613,000 for withholding taxes on undistributed earnings that are not permanently reinvested.

30, 2020 the Company had approximately $42.5 million of undistributed earnings of foreign subsidiaries.

As of June 30, 2021 the Company had approximately $ 60.4 million of undistributed earnings of foreign subsidiaries.

NOTE 8 - Long-Term Debt

As of June 30, 2020, long-term debt consisted

of a revolving line of credit of $11,000,000 (“Agreement”) which expires in June 2021 and term loans from the U.S.

As of June 30, 2021 and 2020, long-term debt consisted of a revolving line of credit of $ 11,000,000 (“Revolver Agreement”) which expires in June 2024 and term loans from the U.S.

Small Business Administration totaling $ 3,904,000 through its Payroll Protection Program.

Outstanding balances and interest rates as

of June 30, 2020 and June 30, 2019 are as follows (dollars in thousands):

Outstanding balances and interest rates as of June 30, 2021 and June 30, 2020 are as follows (dollars in thousands):

June 30, 2021

June 30, 2020

Interest Rate

Revolving line of credit

The Agreement also provides for a LIBOR-based

interest rate option of LIBOR plus 1.15% to 2.00%, depending on the ratio of outstanding debt to EBITDA, which is to be measured

and adjusted quarterly, a prime rate-based option of the prime rate plus 0.25% and other terms and conditions as more fully described

in the Agreement.

In addition, the Agreement provides for availability to be limited to the lesser of $11,000,000 or the result

of a borrowing base formula based upon the Company’s Accounts Receivables and Inventory values net of certain deductions.

The Company’s obligations under the Agreement continue to be secured by all of its assets, including but not limited to,

deposit accounts, accounts receivable, inventory, and the Company’s corporate headquarters in Amityville, NY, equipment

and fixtures and intangible assets.

In addition, the Company’s wholly-owned subsidiaries, with the exception of the Company’s

foreign subsidiaries, have issued guarantees and pledges of all of their assets to secure the Company’s obligations under

the Agreement.

All of the outstanding common stock of the Company’s domestic subsidiaries and 65% of the common stock of

the Company’s foreign subsidiaries has been pledged to secure the Company’s obligations under the Agreement.

The Agreement contains various restrictions

and covenants including, among others, restrictions on payment of dividends, restrictions on borrowings and compliance with certain

financial ratios, as defined in the Agreement.

During the fourth quarter of fiscal 2020,

the Company received the proceeds of promissory notes dated between April 17, 2020 and May 7, 2020 (the “PPP Loan Agreement”),

entered into between the Company and HSBC Bank USA N.A., as lender (the “Lender).

Lender made the loans pursuant to the

Paycheck Protection Program (the “PPP”), created by Section 1102 of the CARES Act and governed by the CARES Act, Section

7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the SBA implementing the PPP and acting as guarantor,

or any other applicable loan program requirements, as defined in 13 CFR §

120.10, as amended from time to time.

to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $3,904,000 (the “PPP

Loan”).

The maturity dates of the PPP Loan are

between April 17, 2022 and May 7, 2022, which is two years from the PPP Loan Agreement date.

accrues from the date of disbursement of the PPP Loan (the “Effective Date”).

The PPP Loan bears interest at a fixed

rate equal to one percent (1%) per annum and interest will accrue from the Effective Date.

PPP Loan payments are deferred for

the first six months from the Effective Date.

Subject to any PPP Loan forgiveness granted by the CARES Act, the

Company will subsequently pay 18 fully amortized monthly consecutive principal and interest payments for all principal and

all accrued interest not yet paid, with the first PPP Loan payment due on the date that is seven months after the Effective Date.

The proceeds of the PPP Loan shall be used for the following purposes only:

(i) payroll costs as defined by the CARES Act, (ii)

costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance

(iii) mortgage interest payments, (iv) rent payments, (v) utility payments, (vi) interest payments on any other debt

obligations incurred before February 15, 2020, and/or (vii) refinancing a SBA Economic Injury Disaster Loan made between January

31, 2020 and April 3, 2020.

The PPP Loan and the related documentation

contain customary events of default, including:

(i) any representation or warranty made, or financial or other information provided,

by the Company under the PPP Loan Agreement being false or misleading in any material respect;

(ii) the failure by the Company

to make required payments;

(iii) the failure by the Company to perform or comply with certain agreements;

and (iv) the dissolution

or termination of the Company's existence as a going business, the insolvency of the Company, the appointment of a receiver for

any part of the Company's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement

of any proceeding under any bankruptcy or insolvency laws by or against the Company.

Upon default, Lender may declare the entire

unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then the Company will pay that amount.

Lender may hire or pay someone else to help collect this Note if the Company does not pay.

The Company will pay Lender that amount.

This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not

there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any

automatic stay or injunction), and appeals.

The Company also will pay any court costs, in addition to all other sums provided

Should the Company default on the PPP Loan,

SBA may be required to pay Lender under the SBA guarantee.

SBA may then seek recovery of these funds from the Company and the

Company may not claim or assert against SBA any immunities or defenses available under local law to defeat, modify or otherwise

limit the Company's obligation to repay to SBA any funds advanced by Lender to the Company.

If the Company defaults on the SBA-guaranteed

loan and SBA suffers a loss, the names of the small business will be referred for listing in the Credit Alert Verification Reporting

System (CAIVRS) database, which may affect their edibility for further assistance.

Pursuant to the CARES Act, the loan may be

forgiven by the SBA.

The Company anticipates applying for forgiveness of these loans during fiscal 2021.

The amount of loan forgiveness

is determined by and is subject to the sole approval of the SBA.

The amount of loan forgiveness may be reduced if loan proceeds

are spent inappropriately.

To receive loan forgiveness, the Company must apply for loan forgiveness and provide documentation

as requested by the SBA.

There will be no loan forgiveness without the Company’s submission of the proper application and

documentation to Lender to include all SBA requirements.

Not more than 25% of the amount forgiven can be attributable to non-payroll

No assurance can be provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

The Company is accounting for the PPP Loan as debt in accordance

with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 470, Debt and accrue interest in accordance

with the interest method under FASB ASC 835-30.

The Company will not impute additional interest at a market

rate (even though the stated interest rate may be below market) as transactions where interest rates are prescribed by governmental

agencies are excluded from the scope of the FASB ASC 835-30 guidance on imputing interest.

For purposes of de-recognition or forgiveness of the liability,

FASB ASC 470-50-15-4 refers to guidance in FASB ASC 405-20.

Based on the guidance in FASB ASC 405-20-40-1, the proceeds from the

loan would remain recorded as a liability until either (1) the loan is, in part or wholly, forgiven and the debtor has been “legally

released”

or (2) the debtor pays off the loan to the creditor.

Once the loan is, in part or wholly, forgiven and legal release

is received, the Company will reduce the liability by the amount forgiven and record a gain on extinguishment.

current maturities

Long-term debt

The Revolver Agreement also provides for a LIBOR-based interest rate option of LIBOR plus 1.15 % to 2.00 %, depending on the ratio of outstanding debt to EBITDA, which is to be measured and adjusted quarterly, a prime rate-based option of the prime rate plus 0.25 % and other terms and conditions as more fully described in the Revolver Agreement.

The Company’s obligations under the Revolver Agreement continue to be secured by substantially all of 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, with the exception of the Company’s foreign subsidiaries, have issued guarantees and pledges of all of their assets to secure the Company’s obligations under the Revolver Agreement.

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

The Revolver Agreement contains various restrictions and covenants including, among others, restrictions on payment of dividends, restrictions on borrowings and compliance with certain financial ratios, as defined in the Revolver Agreement.

In September 2020, the Company and its lender amended the Revolver Agreement, which had an expiration date of June 2021, to expire in June 2024.

The amended Revolver Agreement also removed certain requirements and restrictions on the Company as well as removing the mortgage on the Company’s Amityville facility.

During the fourth quarter of fiscal 2020, the Company received the proceeds of promissory notes dated between April 17, 2020 and May 7, 2020 (the "PPP Loan Agreement"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender).

Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act and governed by the CARES Act, Section 7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the Small Business Association (“SBA”) implementing the PPP and acting as guarantor, or any other applicable loan program requirements, as defined in 13 CFR § 120.10, as amended from time to time.

Pursuant to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $ 3,904,000 (the "PPP Loan").

Pursuant to the CARES Act, the loans may be forgiven by the SBA.

The Company has applied to have the balance of the Loan forgiven.

Following year-end, $2,850,000 of the PPP Loan was forgiven in accordance with guidelines set for in the PPP.

The Company will recognize debt forgiveness in the first quarter of 2022 in the amount of $2,850,000 and will recognize further forgiveness income in the quarter that the remaing forgiveness application may be granted.

While the Company believes that it meets to requirements for forgiveness, there can be no assurance that its remaining application will be granted.

NOTE 9 - 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.

the fiscal years ended June 30, 2020 and 2019, the Company recorded non-cash compensation expense of $583,000 ($0.03 per basic

and diluted share) and $160,000 ($0.01 per basic and diluted share), respectively, relating to stock-based compensation.

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, 2021, 2020 and 2019, the Company recorded non-cash compensation expense of $ 435,000 ($ 0.02 per basic and diluted share), $ 583,000 ($ 0.03 per basic and diluted share) and $ 160,000 ($ 0.01 per basic and diluted share), respectively, relating to stock-based compensation.

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 950,000 shares of the Company's common stock to be acquired by the holders of such

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.

granted under this plan shall vest in full upon a “change in control”

as defined in the plan.

At June 30, 2020, 117,840

stock options were outstanding, 35,000 stock options were exercisable and 731,960 stock options were available for grant under

The fair value of each option granted during

fiscal 2020 and 2019 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted

average assumptions:

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 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), 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, 2021, 107,040 stock options were outstanding, 49,088 stock options were exercisable and 738,460 stock options were available for grant under this plan.

No options were granted under this plan during the year ended June 30, 2021.

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

2 unchanged sentences

Expected dividend yields

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

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

The following table reflects activity

under the 2012 Plan for the fiscal years ended June 30,:

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

Weighted average

exercise price

Outstanding, beginning of year

Outstanding, end of year

Exercisable, end of year

Weighted average fair value at grant date of options

Outstanding, end of period

Exercisable, end of period

Weighted average fair value at grant date of options granted

Total intrinsic value of options exercised

1 unchanged sentence

Total intrinsic value of options exercisable

The following table summarizes information

about stock options outstanding under the 2012 Employee Plan at June 30, 2020:

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at June 30, 2021:

Options outstanding

Options exercisable

Weighted average

Range of exercise prices

contractual life

average exercise

As of June 30, 2020, there was $849,000 of unearned stock-based

compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan.

70,940 and 29,000 options

were granted during the fiscal years ended June 30, 2020 and 2019, respectively.

3,600 of the 15,600 stock options exercised during

the fiscal year ended June 30, 2020 were settled by exchanging 1,628 shares of the Company’s common stock which were retired

and returned to unissued status upon receipt.

8,200 of the 13,700 stock options exercised during the fiscal year ended June 30,

2019 were settled by exchanging 3,106 shares of the Company’s common stock which were retired and returned to unissued status

upon receipt.

The total grant date fair value of the options vesting during the fiscal years ended June 30, 2020 and 2019 under

this plan was $197,000 and $95,000, respectively.

$79,000 and $31,000 was received from option exercises for the fiscal years

ended June 30, 2020 and 2019, respectively, and the actual tax benefit realized for the tax deductions from option exercises was

$0 for each of these periods.

exercise price

$ 4.37 ‑ $ 33.59

As of June 30, 2021, there was $ 555,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan.

0 and 70,940 options were granted during the fiscal years ended June 30, 2021 and 2020, respectively.

4,300 stock options exercised during the fiscal year ended June 30, 2021, were settled by exchanging 2,302 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

3,600 of the 15,600 stock options exercised during the fiscal year ended June 30, 2020 were settled by exchanging 1,628 shares of the Company's common stock which were retired and returned to unissued status upon receipt.

8,200 of the 13,700 stock options exercised during the fiscal year ended June 30, 2019 were settled by exchanging 3,106 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

The total grant date fair value of the options vesting during the fiscal years ended June 30, 2021, 2020 and 2019 under this plan was $ 244,000 , $ 197,000 and $ 95,000 , respectively.

$ 0 , $ 79,000 and $ 31,000 was received from option exercises for the fiscal years ended June 30, 2021, 2020 and 2019, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for each of these periods.

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 50,000 shares of the Company's common stock to be acquired by the holders of such awards.

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 50,000 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, 2020, 12,000 stock options were

outstanding, 5,760 stock options were exercisable and no further stock options were available for grant under this plan.

The fair value of each option granted during

fiscal 2020 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average

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, 2021, 6,000 stock options were outstanding, 3,120 stock options were exercisable and 4,800 stock options were available for grant under this plan.

No options were granted under this plan during the year ended June 30, 2021.

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

2 unchanged sentences

Expected dividend yields

The following table reflects activity under

the 2012 Non-Employee Plan for the fiscal years ended June 30,:

average exercise

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

Outstanding, end of year

Exercisable, end of year

Weighted average fair value at grant date of options

Outstanding, end of period

Exercisable, end of period

Weighted average fair value at grant date of options granted

Total intrinsic value of options exercised

1 unchanged sentence

Total intrinsic value of options exercisable

The following table summarizes information

about stock options outstanding under the 2012 Non-Employee Plan at June 30, 2020:

Range of exercise prices

contractual life

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at June 30, 2021:

Options outstanding

Options exercisable

Weighted average

average exercise

Range of exercise prices

contractual life

$ 4.37 - $ 23.35

As of June 30, 2020, there was $46,000

of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee

As of June 30, 2021, there was $ 15,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan.

0 and 1,800 options were granted during the fiscal years ended June 30, 2021 and 2020, respectively.

14,600 of the 15,800

stock options exercised during the fiscal year ended June 30, 2019 were settled by exchanging 4,832 shares of the Company’s

common stock which were retired and returned to unissued status upon receipt.

The total grant date fair value of the options vesting

during each of the fiscal years ended June 30, 2020 and 2019 under this plan was $18,000 and $22,000, respectively.

1,200 stock options exercised during the fiscal year ended June 30, 2021 were settled by exchanging 306 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

14,600 of the 15,800 stock options exercised during the fiscal year ended June 30, 2019 were settled by exchanging 4,832 shares of the Company common stock which were retired and returned to unissued status upon receipt.

No options were exercised during the fiscal year ended June 30, 2020.

The actual tax benefit realized for the tax deductions from option exercises was $ 6,000 , $ 0 and $ 35,000 in fiscal 2021, 2020 and 2019, respectively.The total grant date fair value of the options vesting during each of the fiscal years ended June 30, 2021, 2020 and 2019 under this plan was $ 18,000 , $ 18,000 and $ 22,000 , respectively.

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 50,000 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, 2020, 48,400 stock options were

outstanding, 12,240 stock options were exercisable and 0 stock options were available for grant under this plan.

The fair value of each option granted during

the fiscal year ended June 30, 2020 was estimated on the date of grant using the Black-Scholes option-pricing model with the following

weighted average assumptions:

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 50,000 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, 2021, 35,050 stock options were outstanding, 14,980 stock options were exercisable and 11,750 stock options were available for grant under this plan.

No options were granted under this plan during the year ended June 30, 2021.

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

2 unchanged sentences

Expected dividend yields

The following table reflects activity under

the 2018 Non-Employee plan for the fiscal year ended June 30,:

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

The following table summarizes information about stock options outstanding under the 2018 Non- Employee Plan at June 30, 2021:

Options outstanding

Options exercisable

Weighted average

average exercise

Range of exercise prices

contractual life

$ 16.20 - $ 30.54

As of June 30, 2021, there was $ 278,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan.

0 , 33,200 and 20,000 options were granted during the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

1,600 of the stock options exercised during the fiscal year ended June 30, 2021 were settled by exchanging 759 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

800 of the 1,600 stock options exercised during the fiscal year ended June 30, 2019 were settled by exchanging 395 shares of the Company’s common stock which were retired and returned to unissued status upon receipt.

There were no options exercised during the fiscal year ended June 30, 2020.

The actual tax benefit realized for the tax deductions from option exercises was $ 6,000 , $ 0 $ 3,000 in fiscal 2021, 2020 and 2019, respectively.

The total grant date fair value of the options vesting during the fiscal year ended June 30, 2021, 2020 and 2019 under this plan was $ 133,000 , $ 133,000 and $ 41,000 , respectively.

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 50,000 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, 2021, 5,000 stock options were outstanding, 1,000 stock options were exercisable and 45,000 stock options were available for grant under this plan.

The fair value of each option granted during the fiscal year ended June 30, 2021 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 2020 Non-Employee plan for the fiscal year ended June 30,:

Weighted average

exercise price

Outstanding, beginning of year

Outstanding, end of year

Exercisable, end of year

Weighted average fair value at grant date of options

Outstanding, end of period

Exercisable, end of period

Weighted average fair value at grant date of options granted

Total intrinsic value of options exercised

1 unchanged sentence

Total intrinsic value of options exercisable

The following table summarizes information

about stock options outstanding under the 2018 Non- Employee Plan at June 30, 2020:

The following table summarizes information about stock options outstanding under the 2020 Non- Employee Plan at June 30, 2021:

Options outstanding

Options exercisable

Weighted average

Range of exercise prices

contractual life

average exercise

$16.20-$30.54

As of June 30, 2020, there was $410,000

of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee

exercise price

As of June 30, 2021, there was $ 37,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan.

5,000 and 0 options were granted during the fiscal years ended June 30, 2021 and 2020, respectively.

800 of the 1,600

stock options exercised during the fiscal year ended June 30, 2019 were settled by exchanging 395 shares of the Company’s

common stock which were retired and returned to unissued status upon receipt and the actual tax benefit realized for the tax deductions

from option exercises was $0 for each of these periods.

The total grant date fair value of the options vesting during the fiscal

year ended June 30, 2020 and 2019 under this plan was $133,000 and $41,000, respectively.

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 50,000 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, 2020, 0 stock options

were outstanding, 0 stock options were exercisable and 50,000 stock options were available for grant under this plan.

NOTE 9 –

Stockholders’

Equity Transactions

September 16, 2014 the Company’s board of directors authorized the repurchase of up to 1 million of the approximately 19.4

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.

to the loan agreement described in Note 6, the Company’s lender gave its consent to this stock repurchase plan.

fiscal year ended June 30, 2020 the Company repurchased 144,405 shares of its outstanding common stock at a weighted average price

Shares repurchased through June 30, 2020 are included in the Company’s Treasury Stock as of June 30, 2020.

to the PPP Loan Agreement described in Note 7, the Company may not repurchase any of its shares of common stock until 12 months

after the termination of the term loans described therein.

During fiscal 2020, certain employees and

Directors exercised stock options under the Company’s 2012 Employee and Non-Employee Stock Option Plans totaling 15,600

3,600 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.

of shares surrendered by the optionees was 1,628 and was based upon the per share price on the effective date of the option exercise.

During fiscal 2019, certain employees and

Directors exercised stock options under the Company’s 2012 Employee and Non-Employee Stock Option Plans and the Company’s

2002 Employee Stock Option Plan totaling 31,100 shares.

23,600 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 8,333 and was based upon the per

share price on the effective date of the option exercise.

The total grant date fair value of the options vesting during the fiscal year ended June 30, 2021 and 2020 under this plan was $ 12,000 and $ 0 , respectively.

There were no options exercised in either of the fiscal years ended June 30, 2021 and 2020.

NOTE 10 – Stockholders’ Equity Transactions

On September 16, 2014 the Company’s board of directors authorized the repurchase of up to 1 million of the approximately 19.4 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.

Relative to the loan agreement described in Note 8, the Company’s lender gave its consent to this stock repurchase plan.

During the fiscal year ended June 30, 2021 the Company did not repurchase any shares of its outstanding common stock.

During the fiscal year ended June 30,

2020 the Company repurchased 144,405 shares of its outstanding common stock at a weighted average price of $ 16.99 .

Shares repurchased through June 30, 2021 are included in the Company’s Treasury Stock as of June 30, 2021 and 2020.

Pursuant to the PPP Loan Agreement described in Note 8, the Company may not repurchase any of its shares of common stock until 12 months after the termination of the term loans described therein.

During fiscal 2021, certain employees and Directors exercised stock options under the Company's 2012 Employee and Non-Employee and 2018 Non-employee Stock Option Plans totaling 7,100 shares.

All 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 3,367 and was based upon the per share price on the effective date of the option exercise.

During fiscal 2020, certain employees and Directors exercised stock options under the Company's 2012 Employee and Non-Employee Stock Option Plans totaling 15,600 shares.

3,600 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 1,628 and was based upon the per share price on the effective date of the option exercise.

During fiscal 2019, certain employees and Directors exercised stock options under the Company’s 2012 Employee and Non-Employee Stock Option Plans and the Company’s 2002 Employee Stock Option Plan totaling 31,100 shares.

23,600 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 8,333 and was based upon the per share price on the effective date of the option exercise.

NOTE 11 – Related Party Transaction

On December 15, 2020, 2,333,071 shares of common stock were sold in a secondary offering by the Company's President and Chairman.

On December 21, 2020, the underwriters of the secondary offering fully exercised the option granted at the time of the secondary offering to purchase an additional 334,961 shares of common stock at the secondary offering price of $ 26.00 per share ("Greenshoe"), less underwriting discounts and commissions, which consists solely of shares sold by the Company's President and Chairman.

The Company received no proceeds from the secondary offering or the Greenshoe, but incurred $ 289,000 in offering expenses, which are recorded in selling, general, and administrative expenses in the accompanying condensed consolidated statements of income.

NOTE 12 - 401(k) Plan

The Company maintains a 401(k) plan (“the

Plan”) that covers all U.S.

non-union employees with one or more years of service and is qualified under Sections 401(a)

and 401(k) of the Internal Revenue Code.

Company contributions to this plan are discretionary and totaled $133,000 for the years

ended June 30, 2020 and 2019.

The Company maintains a 401(k) plan (“the Plan”) that covers all U.S.

non-union employees with one or more years of service and is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code.

Company contributions to this plan are discretionary and totaled $ 138,000 , $ 133,000 and $ 133,000 for the years ended June 30, 2021, 2020 and 2019, respectively.

NOTE 13 - Commitments and Contingencies

Effective July 1, 2019, the Company adopted

the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption

In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard,

which among other things, allowed us to not reassess (1) whether any expired or existing contracts are or contain leases, (2)

lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases.

Adoption of the

new standard resulted in the recording of an operating ROU asset and lease liabilities of approximately $7.7 million.

length of the lease term, the right-of-use asset and corresponding liability assume a weighted discount rate as disclosed below.

Effective July 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date.

Adoption of the new standard resulted in the recording of an operating ROU asset and lease liabilities of approximately $ 7.7 million .

Given the length of the lease term, the right-of-use asset and corresponding liability assume a weighted discount rate as disclosed below.

A change in the rate utilized could have a material effect on the amounts reported.

Financial positions for reporting periods

beginning on or after July 1, 2019 are presented under new guidance, while prior period amounts are not adjusted and continue

to be reported in accordance with previous guidance.

Our lease obligation consists of a 99 year lease which commenced

on April 26, 1993 with one of the Company’s foreign subsidiaries, expiring in 2092, for approximately four acres of land

in the Dominican Republic at an annual cost of $288,000, on which the Company’s principal production facility is located.

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 fiscal year ended June 30, 2020, cash payments against

operating lease liabilities totaled $240.

Supplemental balance sheet information related to operating

leases was as follows:

Our lease obligation consists of a 99 year lease which commenced on April 26, 1993 with one of the Company’s foreign subsidiaries, expiring in 2092, for approximately four acres of land in the Dominican Republic at an annual cost of $ 288,000 , on which the Company’s principal production facility is located.

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 fiscal year ended June 30, 2021 and 2020, cash payments against operating lease liabilities totaled $ 288,000 and $ 240,000 respectively.

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

Weighted-average remaining lease term

Weighted-average discount rate

The following is a schedule, by years, of maturities of lease

liabilities as of June 30, 2020 (in thousands):

Year Ending June 30,

As previously disclosed in our 2019 Annual Report on Form 10-K

and under the previous lease accounting standard, undiscounted future minimum lease payments for operating leases having initial

or remaining non-cancellable lease terms in excess of one year are as follows (in thousands):

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2021 (in thousands):

Year Ending June 30,

Operating lease expense totaled approximately

$315,000 and $330,000, for the fiscal years ended June 30, 2020 and 2019, respectively.

In the normal course of business, the

Company is a party to claims and/or litigation.

Management believes that the settlement of such claims and/or litigation, considered

in the aggregate, will not have a material adverse effect on the Company's financial position and results of operations.

Operating lease expense totaled approximately $ 316,000 , $ 315,000 and $ 330,000 , for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

In the normal course of business, the Company is a party to claims and/or litigation.

Management believes that the settlement of such claims and/or litigation, considered in the aggregate, will not have a material adverse effect on the Company’s financial position and results of operations.

Employment Agreements

As of June 30, 2020, the Company was obligated under two employment

agreements and one severance agreement.

The employment agreements are with the Company’s CEO and the Senior Vice President

of Engineering (“the SVP of Engineering”).

The employment agreement with the CEO provides for an annual salary of

$752,000, as adjusted for inflation;

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

a termination payment in an amount up to 299% of the average of the prior five calendar year's compensation, subject to certain

limitations, as defined in the agreement.

The employment agreement renews annually in August unless either party gives the other

notice of non-renewal at least six months prior to the end of the applicable term.

The employment agreement with the SVP of Engineering

expires in August 2022 and provides for an annual salary of $333,799, and, if terminated by the Company without cause, severance

of nine month’s salary and continued company-sponsored health insurance for six months from the date of termination.

severance agreement is with the Senior Vice President of Operations and Finance 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 month’s salary,

continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive

As of June 30, 2021, the Company was obligated under two employment agreements and one severance agreement.

The employment agreements are with the Company’s CEO and the Senior Vice President of Engineering (“the SVP of Engineering”).

The employment agreement with the CEO provides for an annual salary of $ 838,000 , as adjusted for inflation;

incentive compensation as may be approved by the Board of Directors from time to time and a termination payment in an amount up to 299 % of the average of the prior five calendar year’s compensation, subject to certain limitations, as defined in the agreement.

The employment agreement renews annually in August unless either party gives the other notice of non-renewal at least six months prior to the end of the applicable term.

The employment agreement with the SVP of Engineering expires in August 2021 and provides for an annual salary of $ 347,000 , and, if terminated by the Company without cause, severance of nine month’s salary and continued company-sponsored health insurance for six months from the date of termination.

The severance agreement is with the Senior Vice President of Operations and Finance 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 month’s salary, continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions.

NOTE 14 - Geographical Data

The Company is engaged in one major line of business:

the development,

manufacture, and distribution of security products, encompassing access control systems, door-locking products, intrusion and

fire alarm systems and video surveillance products for commercial and residential use.

The Company also provides wireless communication

service for intrusion and fire alarm systems.

These products are used for commercial, residential, institutional, industrial and

governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security

the development, manufacture, and distribution of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products for commercial and residential use.

The Company also provides wireless communication service for intrusion and fire alarm systems.

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

The Company has customers worldwide with

major concentrations in North America.

Financial Information Relating to Domestic

and Foreign Operations

ended June 30,

(in thousands)

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

Financial Information Relating to Domestic and Foreign Operations

Year ended June 30,

Sales to external customers (1):

Total Net Sales

As of June 30,

June 30, 2021

June 30, 2020

Identifiable assets:

2 unchanged sentences

Total Identifiable Assets

(1) 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 Sales.

(1) 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 Sales.

(2) Consists primarily of inventories (2021 = $ 21,020 ;

(2020 = $25,246;

2020 = $ 25,246 ), operating lease assets (2021 = $ 7,373 ;

2020 = $ 7,395 ) and fixed assets (2021 = $ 3,208 ;

2019 = $3,443)

2020 = $ 3,481 ) located at the Company’s principal manufacturing facility in the Dominican Republic.

NOTE 13 –

Subsequent Events

The Company has evaluated subsequent events

occurring after the date of the consolidated financial statements for events requiring recording or disclosure in the consolidated

financial statements.

CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

NOTE 15 – Subsequent Events

The Company has evaluated subsequent events occurring after the date of the consolidated financial statements for events requiring recording or disclosure in the consolidated financial statements.

Pursuant to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $ 3,904,000 (the "PPP Loan").

Pursuant to the CARES Act, the loans may be forgiven by the SBA.

Subsequent to June 30, 2021, the Company received notice from the SBA that its loans had been forgiven in full.

Based on the guidance in FASB ASC 405-20-40-1, the proceeds from the loan will remain recorded as a liability until either (1) the loan is, in part or wholly, forgiven and the debtor has been “legally released” or (2) the debtor pays off the loan to the creditor.

Accordingly, the Company will eliminate the liability and record a gain of $ 3,904,000 on the extinguishment of this debt in its fiscal quarter ended September 30, 2021 .

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

CONTROL AND PROCEDURES

Evaluation of Disclosure Controls and

At the conclusion of the period ended June 30, 2020, we carried out an evaluation, under the supervision

and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness

of the design and operation of our disclosure controls and procedures.

Based upon that evaluation, the Chief Executive Officer

and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2020.

Management’s Annual Report on Internal

Control over Financial Reporting.

Management’s Report on Internal Control over Financial Reporting is set forth

on page FS-1.

Audit Opinion on Internal Control over

Financial Reporting.

The effectiveness of the Company’s internal control over financial reporting has been audited by

Baker Tilly US , LLP an independent registered public accounting firm,

as stated in their report, which is included herein on page FS-2.

Evaluation of Disclosure Controls and Procedures.

At the conclusion of the period ended June 30, 2021, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2021.

Management’s Annual Report on Internal Control over Financial Reporting.

Management’s Report on Internal Control over Financial Reporting is set forth on page FS-1.

Audit Opinion on Internal Control over Financial Reporting.

The effectiveness of the Company’s internal control over financial reporting has been audited by Baker Tilly US , LLP an independent registered public accounting firm, as stated in their report, which is included herein on page FS-2.

Limitations on Internal Control .

internal control systems, no matter how well designed, have inherent limitations.

Therefore, even those systems determined

to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because

of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Board of Directors of the Company has

an Audit Committee comprised of three non-management directors.

The Committee meets periodically with financial management and

the independent auditors to review accounting, control, audit and financial reporting matters.

Baker Tilly US, LLP has full and

free access to the Audit Committee, with and without the presence of management.

Changes in Internal Control over Financial

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2020

that has materially affected or is likely to materially affect our internal controls over financial reporting.

All internal control systems, no matter how well designed, have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Board of Directors of the Company has an Audit Committee comprised of three non-management directors.

The Committee meets periodically with financial management and the independent auditors to review accounting, control, audit and financial reporting matters.

Baker Tilly US, LLP has full and free access to the Audit Committee, with and without the presence of management.

Changes in Internal Control over Financial Reporting .

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2021 that has materially affected or is likely to materially affect our internal controls over financial reporting.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information about our directors appearing

in the Company’s Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders, to be filed with the Securities

and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report

on Form 10-K (“Proxy Statement”) under the heading “Election of Directors”, is incorporated herein by

We have adopted a Code of Ethics which applies

to our senior executive and financial officers, among others.

The Code is posted on our website, www.napcosecurity.com ,

under the “Investors –

We intend to make all required disclosures regarding any amendment to,

or waiver of, a provision of the Code of Ethics for senior executive and financial officers by posting such information on our

The information appearing in the Proxy Statement

relating to the members of the Audit Committee and the Audit Committee financial expert under the headings “Corporate Governance

and Board Matters –

Board Structure and Committee Composition”

and “Corporate Governance and Board Matters –

Board Structure and Committee Composition –

Audit Committee”

and the information appearing in the Proxy Statement

under the heading “Delinquent Section 16(c) Beneficial Ownership Reporting Compliance”

is incorporated herein by this

The information set forth in the Proxy Statement

under the heading “Information Concerning Executive Officers”

is incorporated herein by reference.

The information about our directors appearing in the Company’s Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K (“Proxy Statement”) under the heading “Election of Directors”, is incorporated herein by reference.

We have adopted a Code of Ethics which applies to our senior executive and financial officers, among others.

The Code is posted on our website, www.napcosecurity.com , under the “Investors – Other” caption.

We intend to make all required disclosures regarding any amendment to, or waiver of, a provision of the Code of Ethics for senior executive and financial officers by posting such information on our website.

The information appearing in the Proxy Statement relating to the members of the Audit Committee and the Audit Committee financial expert under the headings “Corporate Governance and Board Matters – Board Structure and Committee Composition” and “Corporate Governance and Board Matters – Board Structure and Committee Composition – Audit Committee” and the information appearing in

the Proxy Statement under the heading “Delinquent Section 16(c) Beneficial Ownership Reporting Compliance” is incorporated herein by this reference.

The information set forth in the Proxy Statement under the heading “Information Concerning Executive Officers” is incorporated herein by reference.

EXECUTIVE COMPENSATION

The information appearing in the Proxy Statement

under the heading “Executive Compensation”

and the information appearing in the Proxy Statement relating to the compensation

of directors under the caption “Compensation of Directors”

are incorporated herein by this reference.

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information appearing in the Proxy Statement

under the heading “Beneficial Ownership of Common Stock”

is incorporated herein by this reference.

Information regarding Equity Compensation

Plan Information as of June 30, 2020 is included in Item 5.

CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information appearing in the Proxy Statement

under the headings “Corporate Governance and Board Matters –

Independence of Directors,”

“Corporate Governance

and Board Matters –

Board Structure and Committee Composition,”

“Corporate Governance –

Policy with Respect

to Related Person Transactions,”

and “Executive Compensation –

Certain Transactions”

is incorporated herein

by this reference.

PRINCIPAL ACCOUNTING FEES AND

Information appearing in the Proxy Statement

under the headings “Principal Accountant Fees”

and “Policy on Audit Committee Pre-Approval of Audit and Permissible

Non-Audit Services of Independent Auditors”

is incorporated herein by this reference.

EXHIBITS AND FINANCIAL STATEMENT

The information appearing in the Proxy Statement under the heading “Executive Compensation” and the information appearing in the Proxy Statement relating to the compensation of directors under the caption “Compensation of Directors” are incorporated herein by this reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information appearing in the Proxy Statement under the heading “Beneficial Ownership of Common Stock” is incorporated herein by this reference.

Information regarding Equity Compensation Plan Information as of June 30, 2021 is included in Item 5.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information appearing in the Proxy Statement under the headings “Corporate Governance and Board Matters – Independence of Directors,” “Corporate Governance and Board Matters – Board Structure and Committee Composition,” “Corporate Governance – Policy with Respect to Related Person Transactions,” and “Executive Compensation – Certain Transactions” is incorporated herein by this reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Information appearing in the Proxy Statement under the headings “Principal Accountant Fees” and “Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors” is incorporated herein by this reference.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Financial Statements

The following consolidated financial statements

of NAPCO Security Technologies, Inc.

The following consolidated financial statements of NAPCO Security Technologies, Inc.

and its subsidiaries are included in Part II, Item 8:

3 unchanged sentences

Consolidated Balance Sheets as of June 30, 2021 and 202 0

Consolidated Statements of Income for the Fiscal Years Ended

June 30, 2020 and 2019

Consolidated Statements of Stockholders' Equity for the Fiscal

Years Ended June 30, 2020 and 2019

Consolidated Statements of Cash Flows for the Fiscal Years

Ended June 30, 2020 and 2019

Consolidated Statements of Income for the Fiscal Years Ended June 30, 2021, 2020 and 2019

Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended June 30, 2021, 2020 and 201 9

Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2021, 2020 and 201 9

Notes to Consolidated Financial Statements

Financial Statement Schedules

The following consolidated financial statement schedules of

NAPCO Security Technologies, Inc.

The following consolidated financial statement schedules of NAPCO Security Technologies, Inc.

and its subsidiaries are included in Part II, Item 8:

1 unchanged sentence

Management Contracts designated by asterisk.

of Amendment of Certificate of Incorporation

Exhibit-3.(i)

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

Certificate of Amendment of Certificate of Incorporation

Exhibit-3.(i) to Report on Form 10-K (Commission file No.

0-10004) for the fiscal year ended June 30, 2011

of Incorporation as amended

Exhibit-3.(ii)

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

Certificate of Incorporation as amended

Exhibit-3.(ii) to Report on Form 10-K (Commission file No.

0-10004) for the fiscal year ended June, 30 2011

Amended and Restated By-Laws

3.(ii) to Report on Form 18-K (Commission file No.

Second Amended and Restated By-Laws

Exhibit 3.(ii) to Report on Form 18-K (Commission file No.

0-10004) filed on September 8, 2020

Amended and Restated Credit Agreement dated June 29, 2012.

4.01 to Report on Form 8-K (Commission file No.

Third Amended and Restated Credit Agreement dated June 29, 2012.

Exhibit 4.01 to Report on Form 8-K (Commission file No.

0-10004) dated June 29, 2012

Amended and Restated Term A Loan Note

4.02 to Report on Form 8-K (Commission file No.

Second Amended and Restated Term A Loan Note

Exhibit 4.02 to Report on Form 8-K (Commission file No.

0-10004) dated June 29, 2012

Amended and Restated Term B Loan Note

4.03 to Report on Form 8-K (Commission file No.

Second Amended and Restated Term B Loan Note

Exhibit 4.03 to Report on Form 8-K (Commission file No.

0-10004) dated June 29, 2012

Amended and Restated Revolving Credit Note

4.04 to Report on Form 8-K (Commission file No.

Second Amended and Restated Revolving Credit Note

Exhibit 4.04 to Report on Form 8-K (Commission file No.

0-10004) dated June 29, 2012

Amended and Restated Swing Line Note

4.05 to Report on Form 8-K (Commission file No.

Second Amended and Restated Swing Line Note

Exhibit 4.05 to Report on Form 8-K (Commission file No.

0-10004) dated June 29, 2012

General Security Agreement

4.06 to Report on Form 8-K (Commission file No.

Continuing General Security Agreement

Exhibit 4.06 to Report on Form 8-K (Commission file No.

0-10004) dated June 29, 2012

Reaffirmation

of Collateral Documents

4.07 to Report on Form 8-K (Commission file No.

Reaffirmation of Collateral Documents

Exhibit 4.07 to Report on Form 8-K (Commission file No.

0-10004) dated June 29, 2012

Reaffirmation

of Negative Pledge

4.08 to Report on Form 8-K (Commission file No.

Reaffirmation of Negative Pledge

Exhibit 4.08 to Report on Form 8-K (Commission file No.

0-10004) dated June 29, 2012

Amendment No.

3 to Third Amended and Restated Credit Agreement

1.01 (e) contained in Report on Form 8-K (Commission file No.

Item 1.01 (e) contained in Report on Form 8-K (Commission file No.

0-10004) dated June 28, 2016

of the Company’s Securities

Description of the Company’s Securities

*Ex-10.A (ii)

2002 Employee Stock Option Plan

10.A(II) to Report on Form 10-K (Commission file No.

Exhibit 10.A(II) to Report on Form 10-K (Commission file No.

0-10004) for the fiscal year ended June 30, 2008

2012 Employee Stock Option Plan

A to Proxy Statement dated October 29, 2012 for Annual Meeting of Stockholders to be held on December 11, 2012

Appendix A to Proxy Statement dated October 29, 2012 for Annual Meeting of Stockholders to be held on December 11, 2012

2012 Non-Employee Stock Option Plan

B to Proxy Statement dated October 29, 2012 for Annual Meeting of Stockholders to be held on December 11, 2012

Appendix B to Proxy Statement dated October 29, 2012 for Annual Meeting of Stockholders to be held on December 11, 2012

2018 Non-Employee Stock Option Plan

A to Proxy Statement dated October 29, 2018 for Annual Meeting of Stockholders to be held on December 11, 2018

Appendix A to Proxy Statement dated October 29, 2018 for Annual Meeting of

Stockholders to be held on December 11, 2018

2020 Non-Employee Stock Option Plan

Appendix A to Proxy Statement dated

April 13, 2020 for Annual Meeting of Stockholders to be held on May 21, 2020

and Restated Employment Agreement with Richard Soloway

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

Appendix A to Proxy Statement dated April 13, 2020 for Annual Meeting of Stockholders to be held on May 21, 2020

Amended and Restated Employment Agreement with Richard Soloway

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

0-10004) for fiscal year ended June 30, 2010

(2) Year Extension, dated October 24, 2019, of Employment Agreement between the Registrant and Michael Carrieri

of Indemnification Agreement adopted September 3, 2020

Agreement between the Registrant and Kevin S Buchel dated December 30, 2015

10.O to Report on Form 10-Q (Commission file No.

Two (2) Year Extension, dated October 24, 2019, of Employment Agreement between the Registrant and Michael Carrieri

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

0-10004) for fiscal year ended June 30, 2020

Form of Indemnification Agreement adopted September 3, 2020

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

0-10004) for fiscal year ended June 30, 2020

Severance Agreement between the Registrant and Kevin S Buchel dated December 30, 2015

Exhibit 10.O to Report on Form 10-Q (Commission file No.

0-10004) dated February 1, 2016

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

Compensation Agreement between the Registrant and Stephen Spinelli dated April 6, 2020

Code of Ethics

Exhibit 14.0 to Report on Form 10-K (Commission file No.

0-10004) for the fiscal year ended June 30, 2010

of the Registrant

of Independent Auditors

302 Certification of Chief Executive Officer

302 Certification of Chief Financial Officer

Certification

of Chief Executive Officer Pursuant to 18 USC Section 1350 and Section 906 of Sarbanes - Oxley Act of 2002

Certification

of Chief Financial Officer Pursuant to 18 USC Section 1350 and Section 906 of Sarbanes - Oxley Act of 2002

Subsidiaries of the Registrant

Consent of Independent Auditors

Section 302 Certification of Chief Executive Officer

Section 302 Certification of Chief Financial Officer

Certification of Chief Executive Officer Pursuant to 18 USC Section 1350 and Section 906 of Sarbanes - Oxley Act of 2002

Certification of Chief Financial Officer Pursuant to 18 USC Section 1350 and Section 906 of Sarbanes - Oxley Act of 2002

XBRL Instance Document **

Taxonomy Extension Schema Document**

Taxonomy Extension Calculation Linkbase Document**

Taxonomy Extension Label Linkbase Document**

Taxonomy Extension Presentation Linkbase Document**

Taxonomy Extension Definition Linkbase Document**

Pursuant to the requirements of Section 13

or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf

by the undersigned, thereunto duly authorized.

XBRL Taxonomy Extension Schema Document**

XBRL Taxonomy Extension Calculation Linkbase Document**

XBRL Taxonomy Extension Label Linkbase Document**

XBRL Taxonomy Extension Presentation Linkbase Document**

XBRL Taxonomy Extension Definition Linkbase Document**

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

September 13, 2021

NAPCO SECURITY TECHNOLOGIES, INC.

RICHARD SOLOWAY

/s/ RICHARD SOLOWAY

Richard Soloway

2 unchanged sentences

(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.

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,

7 unchanged sentences

(Principal Financial and Accounting Officer)

STEPHEN BEEBER

/s/ PAUL STEPHEN BEEBER

September 13, 2021

Paul Stephen Beeber

/s/ RICK LAZIO

September 13, 2021

/s/ DONNA SOLOWAY

September 13, 2021

Donna Soloway

/s/ ROBERT UNGAR

September 13, 2021

/s/ ANDREW J.

September 13, 2021

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