NAPCO SECURITY TECHNOLOGIES, INC 10-K

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ​ a. Financial Statements: 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 ​ Page Management Report on Internal Control FS-1 Report of Independent Registered Public Accounting Firm FS-2 Consolidated Financial Statements: Consolidated Balance Sheets as of June 30, 2021 and 202 0 FS-5 Consolidated Statements of Income for the Fiscal Years Ended June 30, 2021, 2020 and 201 9 FS-6 Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended June 30, 2021, 2020 and 201 9 FS-7 Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2021, 2020 and 201 9 FS-8 Notes to Consolidated Financial Statements FS-9 ​ 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. 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. FS-1 Table of Contents 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, 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, 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 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 FS-2 Table of Contents 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. ​ FS-3 Table of Contents We have served as the Company's auditor since 2009. ​ /s/BAKER TILLY US, LLP ​ Melville, New York September 13, 2021 ​ ​ ​ FS-4 Table of Contents NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 June 30, 2020 ​ ​ (in thousands, except share data) ​ CURRENT ASSETS ​ ​ ​ ​ Cash and cash equivalents ​ $ 34,806 ​ $ 18,248 ​ Marketable securities ​ ​ 5,413 ​ ​ — ​ Accounts receivable, net of allowance for doubtful accounts of $ 226 and $ 326 at June 30, 2021 and June 30, 2020, respectively, and other reserves ​ 28,081 ​ 22,932 ​ Inventories, net ​ 25,278 ​ 35,231 ​ Prepaid expenses and other current assets ​ 2,408 ​ 2,049 ​ Total Current Assets ​ 95,986 ​ 78,460 ​ Inventories - non-current, net ​ 7,164 ​ 6,524 ​ Property, plant and equipment, net ​ 7,836 ​ 8,088 ​ Intangible assets, net ​ 4,691 ​ 5,116 ​ Operating lease asset ​ ​ 7,373 ​ ​ 7,395 ​ Other assets ​ 243 ​ 255 ​ TOTAL ASSETS ​ $ 123,293 ​ $ 105,838 ​ ​ ​ ​ ​ ​ ​ ​ ​ CURRENT LIABILITIES ​ ​ ​ ​ Accounts payable ​ $ 6,095 ​ $ 6,547 ​ Accrued expenses ​ 6,582 ​ 5,744 ​ Accrued salaries and wages ​ 3,478 ​ 2,181 ​ Current portion of long-term debt ​ ​ 2,386 ​ ​ 1,794 ​ Accrued income taxes ​ 1,635 ​ 1,148 ​ Total Current Liabilities ​ 20,176 ​ 17,414 ​ Long term debt, net of current portion ​ ​ 1,518 ​ ​ 2,110 ​ Deferred income taxes ​ 347 ​ 112 ​ Accrued income taxes ​ 925 ​ 1,188 ​ Long term operating lease liabilities ​ ​ 7,090 ​ ​ 7,113 ​ Total Liabilities ​ 30,056 ​ 27,937 ​ COMMITMENTS AND CONTINGENCIES (Note 13) ​ ​ ​ STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Common Stock, par value $ 0.01 per share; 40,000,000 shares authorized; 21,244,799 and 21,241,066 shares issued; and 18,351,084 and 18,347,351 shares outstanding, respectively ​ ​ 212 ​ ​ 212 ​ Additional paid-in capital ​ 18,201 ​ 17,766 ​ Retained earnings ​ 94,345 ​ 79,444 ​ Less: Treasury Stock, at cost ( 2,893,715 shares) ​ ( 19,521 ) ​ ( 19,521 ) ​ TOTAL STOCKHOLDERS’ EQUITY ​ 93,237 ​ 77,901 ​ TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY ​ $ 123,293 ​ $ 105,838 ​ ​ See accompanying notes to consolidated financial statements. ​ FS-5 Table of Contents NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2021 2020 ​ 2019 Net sales: ​ (in thousands, except for share and per share data) Equipment revenues ​ $ 80,131 $ 77,314 ​ $ 85,505 Service revenues ​ 33,904 ​ 24,045 ​ ​ 17,427 ​ ​ 114,035 ​ 101,359 ​ ​ 102,932 Cost of sales: ​ ​ ​ ​ Equipment related expenses ​ 58,998 ​ 53,434 ​ ​ 55,240 Service-related expenses ​ 4,886 ​ 4,333 ​ ​ 3,802 ​ ​ 63,884 ​ 57,767 ​ ​ 59,042 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Profit ​ 50,151 ​ 43,592 ​ ​ 43,890 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 7,620 ​ 7,257 ​ ​ 7,212 Selling, general, and administrative expenses ​ 25,196 ​ 23,670 ​ ​ 23,212 Impairment of intangible asset ​ ​ — ​ ​ 1,852 ​ ​ ​ — ​ ​ 32,816 ​ 32,779 ​ ​ 30,424 Operating Income ​ 17,335 ​ 10,813 ​ ​ 13,466 Other expense: ​ ​ ​ ​ ​ Interest and other expense, net ​ 5 ​ 9 ​ ​ 21 Income before Provision for Income Taxes ​ 17,330 ​ 10,804 ​ ​ 13,445 Provision for Income Taxes ​ 2,429 ​ 2,284 ​ ​ 1,222 Net Income ​ $ 14,901 ​ $ 8,520 ​ ​ $ 12,223 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income per share: ​ ​ ​ ​ Basic ​ $ 0.81 ​ $ 0.46 ​ ​ $ 0.66 Diluted ​ $ 0.81 ​ $ 0.46 ​ ​ $ 0.66 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of shares outstanding: ​ ​ ​ ​ Basic ​ 18,348,000 ​ 18,444,000 ​ ​ 18,574,000 Diluted ​ 18,404,000 ​ 18,493,000 ​ ​ 18,624,000 ​ See accompanying notes to consolidated financial statements. ​ FS-6 Table of Contents NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Years ended June 30, 2021, 2020 and 2019 ​ ​ (in thousands except for share data) ​ ​ Common Stock ​ ​ ​ ​ Treasury Stock ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ Paid-in ​ Number of ​ ​ ​ ​ Retained ​ ​ ​ ​ ​ Issued ​ Amount ​ Capital ​ Shares ​ Amount ​ Earnings ​ Total Balance at June 30, 2018 ​ 21,204,327 ​ $ 212 ​ $ 16,890 ​ ( 2,475,245 ) ​ $ ( 13,069 ) ​ $ 59,420 ​ $ 63,453 Implementation of ASC 606 ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 719 ) ​ ​ ( 719 ) Repurchase of treasury shares ​ — ​ ​ — ​ ​ — ​ ( 274,065 ) ​ ​ ( 3,998 ) ​ ​ — ​ ​ ( 3,998 ) Stock options exercised ​ 22,767 ​ ​ — ​ ​ 53 ​ — ​ ​ — ​ ​ — ​ ​ 53 Stock-based compensation expense ​ — ​ ​ — ​ ​ 160 ​ — ​ ​ — ​ ​ — ​ ​ 160 Net income ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 12,223 ​ ​ 12,223 Balances at June 30, 2019 ​ 21,227,094 ​ $ 212 ​ $ 17,103 ( 2,749,310 ) ​ $ ( 17,067 ) ​ $ 70,924 ​ $ 71,172 Repurchase of treasury shares ​ — ​ — ​ — ( 144,405 ) ​ ( 2,454 ) ​ — ​ ( 2,454 ) Stock options exercised 13,972 ​ — ​ 80 — ​ — ​ — ​ 80 Stock-based compensation expense — ​ — ​ 583 — ​ — ​ — ​ 583 Net income — ​ — ​ — — ​ — ​ 8,520 ​ 8,520 Balances at June 30, 2020 21,241,066 ​ $ 212 ​ $ 17,766 ( 2,893,715 ) ​ $ ( 19,521 ) ​ $ 79,444 ​ $ 77,901 Stock options exercised ​ 3,733 ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense — ​ — ​ 435 — ​ — ​ — ​ 435 Net income — ​ — ​ — — ​ — ​ 14,901 ​ 14,901 Balances at June 30, 2021 21,244,799 ​ $ 212 ​ $ 18,201 ( 2,893,715 ) ​ $ ( 19,521 ) ​ $ 94,345 ​ $ 93,237 ​ See accompanying notes to consolidated financial statements. ​ FS-7 Table of Contents NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ended June 30, ​ ​ 2021 2020 2019 ​ ​ (in thousands) ​ CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ ​ ​ Net income ​ $ 14,901 ​ $ 8,520 ​ $ 12,223 ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 1,696 ​ 1,495 ​ 1,409 ​ Impairment of intangible asset ​ ​ — ​ ​ 1,852 ​ ​ — ​ Loss on marketable securities ​ ​ 9 ​ ​ — ​ ​ — ​ (Recovery of) provision for doubtful accounts ​ ( 100 ) ​ 238 ​ ( 26 ) ​ Change to inventory obsolescence reserve ​ 519 ​ ( 124 ) ​ ( 272 ) ​ Deferred income taxes ​ 235 ​ 40 ​ 755 ​ Stock based compensation expense ​ 435 ​ 583 ​ 160 ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ Accounts receivable ​ ( 5,049 ) ​ 2,800 ​ ( 1,440 ) ​ Inventories ​ 8,794 ​ ( 6,793 ) ​ ( 5,991 ) ​ Prepaid expenses and other current assets ​ ( 359 ) ​ ( 168 ) ​ 318 ​ Other assets ​ — ​ — ​ ( 11 ) ​ Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes ​ 1,906 ​ 1,862 ​ 1,528 ​ Net Cash Provided by Operating Activities ​ 22,987 ​ 10,305 ​ 8,653 ​ CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ Purchases of property, plant, and equipment ​ ( 1,007 ) ​ ( 1,615 ) ​ ( 1,988 ) ​ Purchases of marketable securities ​ ​ ( 5,422 ) ​ ​ — ​ ​ — ​ Net Cash Used in Investing Activities ​ ( 6,429 ) ​ ( 1,615 ) ​ ( 1,988 ) ​ CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ Proceeds from long-term debt ​ — ​ 3,904 ​ — ​ Proceeds from stock option exercises ​ — ​ 80 ​ 53 ​ Cash paid for purchase of treasury stock ​ — ​ ( 2,454 ) ​ ( 3,998 ) ​ Net Cash Provided by (Used in) Financing Activities ​ — ​ 1,530 ​ ( 3,945 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase in Cash and Cash Equivalents ​ 16,558 ​ 10,220 ​ 2,720 ​ CASH AND CASH EQUIVALENTS - Beginning ​ 18,248 ​ 8,028 ​ 5,308 ​ CASH AND CASH EQUIVALENTS - Ending ​ $ 34,806 ​ $ 18,248 ​ $ 8,028 ​ SUPPLEMENTAL CASH FLOW INFORMATION ​ ​ ​ ​ Interest paid ​ $ 18 ​ $ 29 ​ $ 23 ​ Income taxes paid ​ $ 1,970 ​ $ 749 ​ $ 262 ​ Surrender of Common Shares ​ $ — ​ $ — ​ $ 8 ​ ​ See accompanying notes to consolidated financial statements. ​ FS-8 Table of Contents NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. 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 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 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. Actual results could differ from those estimates. Fair Value of Financial Instruments 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 $ 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 FS-9 Table of Contents 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 $ 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 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. 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. FS-10 Table of Contents 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 . 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 ​ Carrying Accumulated Net book Carrying Accumulated Net book Carrying Accumulated Net book ​ ​ value ​ amortization ​ value ​ value ​ amortization ​ value ​ value ​ amortization ​ value Customer relationships ​ $ 9,800 ​ $ ( 8,955 ) ​ $ 845 ​ $ 9,800 ​ $ ( 8,732 ) ​ $ 1,068 ​ $ 9,800 ​ $ ( 8,468 ) ​ $ 1,332 Trade name ​ ​ 4,048 ​ ( 202 ) ​ 3,846 ​ 4,048 ​ — ​ 4,048 ​ 5,900 ​ — ​ 5,900 ​ ​ $ 13,848 ​ $ ( 9,157 ) ​ $ 4,691 ​ $ 13,848 ​ $ ( 8,732 ) ​ $ 5,116 ​ $ 15,700 ​ $ ( 8,468 ) ​ $ 7,232 ​ 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 ; 2023 - $ 361,000 ; 2024 - $ 336,000 ; 2025 - $ 315,000 ; and 2026-$ 297,000 . 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 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 FS-11 Table of Contents 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" expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for fiscal years ended June 30, 2021, 2020 and 2019 was $ 1,306,000 , $ 1,722,000 and $ 2,047,000 , respectively. 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, 2021, 2020 and 2019 was $ 7,620,000 , $ 7,257,000 and $ 7,212,000 , respectively. Income Taxes 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 ​ ​ Net Income ​ Shares ​ Share ​ ​ 2021 2020 2019 2021 2020 2019 2021 2020 2019 Basic EPS ​ $ 14,901 ​ $ 8,520 ​ $ 12,223 ​ 18,348 ​ 18,444 ​ 18,574 ​ $ 0.81 ​ $ 0.46 ​ $ 0.66 Effect of Dilutive Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock Options ​ ​ — ​ — ​ — 56 49 50 ​ — ​ — ​ — Diluted EPS ​ $ 14,901 ​ $ 8,520 ​ $ 12,223 18,404 18,493 18,624 ​ $ 0.81 ​ $ 0.46 ​ $ 0.66 ​ 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 9. FS-12 Table of Contents 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. Dollar. 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. Dollar. 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, 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 has presented required geographical data in Note 14. Shipping and Handling Sales and Costs 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). Leases 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. 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 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 FS-13 Table of Contents 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 Adoption 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 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. 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 FS-14 Table of Contents 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended June 30, ​ ​ 2021 2020 2019 ​ Major Product Lines: ​ ​ ​ ​ ​ Intrusion and access alarm products ​ $ 36,794 ​ $ 31,310 ​ $ 31,557 ​ Door locking devices ​ 43,337 ​ 46,004 ​ 53,948 ​ Services ​ 33,904 ​ 24,045 ​ 17,427 ​ Total Revenues ​ $ 114,035 ​ $ 101,359 ​ $ 102,932 ​ ​ 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, 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: ​ ​ ​ ​ ​ ​ ​ June 30, ​ 2021 Net gains recognized during the period on marketable securities ​ $ — Less: 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 ​ ( 9 ) ​ ​ $ ( 9 ) ​ 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. FS-15 Table of Contents The following tables summarize the Company’s investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized ​ Cost Fair Value Gain (Loss) Marketable Securities ​ $ 5,422 ​ $ 5,413 ​ $ ( 9 ) ​ 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. Inventories, net of reserves consist of the following as of June 30, (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, June 30, ​ ​ 2021 ​ 2020 Component parts ​ $ 17,929 ​ $ 22,877 Work-in-process ​ 6,158 ​ 7,276 Finished product ​ 8,355 ​ 11,602 ​ ​ $ 32,442 ​ $ 41,755 ​ ​ ​ ​ ​ ​ ​ Classification of inventories, net of reserves: ​ ​ Current ​ $ 25,278 ​ $ 35,231 Non-current ​ 7,164 ​ 6,524 ​ ​ $ 32,442 ​ $ 41,755 ​ ​ ​ NOTE 6 - Property, Plant, and Equipment Property, plant and equipment consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 June 30, 2020 Useful Life in Years ​ ​ ​ ​ ​ ​ ​ ​ ​ Land ​ $ 904 ​ $ 904 ​ N/A Buildings ​ 8,911 ​ 8,911 ​ 30 to 40 Molds and dies ​ 7,416 ​ 7,337 ​ 3 to 5 Furniture and fixtures ​ 2,813 ​ 2,792 ​ 5 to 10 Machinery and equipment ​ 25,548 ​ 24,878 ​ 7 to 10 Building improvements ​ 2,409 ​ 2,173 ​ Shorter of the lease term or life of asset ​ ​ 48,001 ​ 46,995 ​ Less: accumulated depreciation and amortization ​ ( 40,165 ) ​ ( 38,907 ) ​ ​ ​ $ 7,836 ​ $ 8,088 ​ ​ 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. FS-16 Table of Contents NOTE 7 - Income Taxes The provision for income taxes is comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year ended June 30, ​ 2021 2020 2019 Current income taxes: ​ ​ ​ Federal ​ $ 1,915 ​ $ 1,715 ​ $ 310 State ​ 279 ​ 404 ​ 141 ​ ​ 2,194 ​ 2,119 ​ 451 Deferred income tax provision ​ 235 ​ 165 ​ 771 Provision for income taxes ​ $ 2,429 ​ $ 2,284 ​ $ 1,222 ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ ​ 2020 ​ 2019 ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ Pre-tax ​ ​ ​ ​ ​ Pre-tax ​ ​ ​ ​ ​ Pre-tax ​ ​ Amount Income ​ Amount Income ​ Amount Income Tax at Federal statutory rate ​ $ 3,639 ​ 21.0 % ​ $ 2,269 ​ 21.0 % ​ $ 2,822 ​ 21.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increases (decreases) in taxes resulting from: ​ ​ ​ ​ ​ ​ ​ Meals and entertainment ​ 29 0.2 % ​ ​ 44 0.4 % ​ ​ 49 0.3 % State income taxes, net of Federal income tax benefit ​ 146 0.8 % ​ ​ 112 1.0 % ​ ​ 103 0.8 % Foreign source income not subject to tax ​ ( 1,617 ) ( 9.3 ) % ​ ​ ( 1,213 ) ( 11.2 ) % ​ ​ ( 1,219 ) ( 9.1 ) % R&D Credit ​ ( 523 ) ( 3.0 ) % ​ ​ ( 523 ) ( 4.8 ) % ​ ​ ( 408 ) ( 3.0 ) % Foreign withholding tax ​ 205 1 % ​ ​ — — % ​ ​ — — % Release of accrued tax reserves ​ — — % ​ ​ — — % ​ ​ ( 151 ) ( 1.1 ) % Uncertain Tax Positions ​ 312 1.8 % ​ ​ 775 7 % ​ ​ — — % IRS examination settlements ​ — — % ​ ​ 832 7.7 % ​ ​ 12 0.1 % Other, net ​ 238 1.3 % ​ ​ ( 12 ) ( 0.1 ) % ​ ​ 14 0.1 % Effective tax rate ​ $ 2,429 14.0 % ​ $ 2,284 21.1 % ​ $ 1,222 9.1 % ​ Deferred tax assets and deferred tax liabilities at June 30, 2021 and 2020 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred Tax Assets (Liabilities) ​ 2021 2020 Accounts receivable ​ $ 43 ​ $ 40 Inventories ​ 346 ​ 374 Accrued liabilities ​ 374 ​ 262 Stock based compensation expense ​ 102 ​ 96 Intangibles ​ ( 454 ) ​ ( 300 ) Property, plant and equipment ​ ( 539 ) ​ ( 484 ) Revenue reserves ​ 394 ​ 308 Other deferred tax liabilities ​ ( 613 ) ​ ( 408 ) ​ ​ ( 347 ) ​ ( 112 ) Valuation allowance ​ — ​ — Net deferred tax liabilities ​ $ ( 347 ) ​ $ ( 112 ) ​ 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. FS-17 Table of Contents 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 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax Interest Total Balance of gross unrecognized tax benefits as of July 1, 2018 ​ $ 221 ​ $ — ​ $ 221 Decrease to unrecognized tax benefits resulting from release of R&D credits due to the IRS audit ​ ​ ( 151 ) ​ ​ — ​ ​ ( 151 ) Increases to unrecognized tax benefits resulting from the generation of additional R&D credits ​ 55 ​ ​ — ​ ​ 55 Balance of gross unrecognized tax benefits as of June 30, 2019 ​ $ 125 ​ $ — ​ $ 125 Increase to unrecognized tax benefits resulting from deemed dividends for investments in US property ​ ​ 682 ​ ​ 83 ​ ​ 765 Increases to unrecognized tax benefits resulting from the generation of additional R&D credits ​ 59 ​ — ​ 59 Balance of gross unrecognized tax benefits as of June 30, 2020 ​ $ 866 ​ $ 83 ​ $ 949 Decrease to unrecognized tax benefits from deemed dividends for investments in US property ​ ( 3 ) ​ ( 20 ) ​ ( 23 ) Decrease to unrecognized tax benefits resulting from the release of R&D credits due to the settled IRS audit ​ ( 185 ) ​ — ​ ( 185 ) Balance of gross unrecognized tax benefits as of June 30, 2021 ​ $ 678 ​ $ 63 ​ $ 741 ​ 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. As of June 30, 2021 the Company had approximately $ 60.4 million of undistributed earnings of foreign subsidiaries. FS-18 Table of Contents NOTE 8 - Long-Term Debt 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, 2021 and June 30, 2020 are as follows (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 ​ June 30, 2020 ​ Outstanding Interest Rate ​ Outstanding Interest Rate Revolving line of credit ​ $ — n/a ​ $ — n/a ​ Term loans ​ ​ 3,904 ​ 1 % ​ 3,904 ​ 1 % ​ ​ ​ 3,904 ​ ​ ​ ​ 3,904 ​ ​ ​ Less: current maturities ​ ​ ( 2,386 ) ​ ​ ​ ​ ( 1,794 ) ​ ​ ​ Long-term debt ​ $ 1,518 ​ ​ ​ $ 2,110 ​ ​ ​ ​ 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. 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. FS-19 Table of Contents 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 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 Risk-free interest rates ​ n/a % .6 % - 2.10 % 2.5 % - 3.10 % Expected lives ​ n/a ​ 10 years ​ 10 years ​ Expected volatility ​ n/a % 44 % - 46 % 48 % - 52 % Expected dividend yields ​ n/a % 0 % 0 % ​ The Company uses a weighted-average expected stock-price volatility assumption that is a combination of both current and historical implied volatilities of the underlying stock. The implied volatilities were obtained from publicly available data sources. For the weighted-average expected option life assumption, the Company considers the exercise behavior of past grants. The average risk-free interest rate is based on the U.S. Treasury Bond rate for the expected term of the options and the average dividend yield is based on historical experience. The following table reflects activity under the 2012 Plan for the fiscal years ended June 30,: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ ​ ​ Weighted average ​ ​ ​ ​ Weighted average ​ ​ ​ ​ Weighted average ​ Options exercise price Options exercise price Options exercise price Outstanding, beginning of year ​ ​ 117,840 ​ $ 18.84 ​ ​ 72,500 ​ $ 11.01 ​ ​ 57,200 ​ $ 7.09 Granted ​ ​ — ​ ​ — ​ ​ 70,940 ​ ​ 24.50 ​ ​ 29,000 ​ ​ 16.59 Forfeited ​ ​ ( 6,500 ) ​ ​ 13.82 ​ ​ ( 10,000 ) ​ ​ 19.84 ​ ​ — ​ ​ — Exercised ​ ​ ( 4,300 ) ​ 18.08 ​ ( 15,600 ) ​ 7.55 ​ ( 13,700 ) ​ 6.42 Outstanding, end of period ​ ​ 107,040 ​ $ 19.18 ​ 117,840 ​ $ 18.84 ​ 72,500 ​ $ 11.01 Exercisable, end of period ​ ​ 49,088 ​ $ 16.14 ​ 35,000 ​ $ 13.13 ​ 33,800 ​ $ 8.05 Weighted average fair value at grant date of options granted ​ ​ n/a ​ ​ ​ $ 13.43 ​ ​ ​ $ 9.15 ​ ​ Total intrinsic value of options exercised ​ $ 65,000 ​ ​ ​ ​ ​ 278,000 ​ ​ ​ ​ 160,000 ​ ​ Total intrinsic value of options outstanding ​ $ 1,840,000 ​ ​ ​ ​ $ 696,000 ​ ​ ​ $ 1,353,000 ​ ​ Total intrinsic value of options exercisable ​ $ 993,000 ​ ​ ​ ​ $ 389,000 ​ ​ ​ $ 731,000 ​ ​ ​ FS-20 Table of Contents The following table summarizes information about stock options outstanding under the 2012 Employee Plan at June 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options outstanding ​ Options exercisable ​ ​ Weighted average ​ ​ ​ ​ ​ ​ ​ Number ​ remaining ​ Weighted average ​ Number ​ Weighted average Range of exercise prices ​ outstanding ​ contractual life ​ exercise price ​ exercisable ​ exercise price $ 4.37 ‑ $ 33.59 ​ 107,040 ​ 7.4 ​ $ 19.18 ​ 49,088 ​ $ 16.14 ​ ​ 107,040 ​ 7.4 ​ $ 19.18 ​ 49,088 ​ $ 16.14 ​ 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. 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, 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 Risk-free interest rates n/a % 1.6 % n/a % Expected lives n/a ​ 10 years ​ n/a ​ Expected volatility n/a % 44 % n/a % Expected dividend yields n/a % 0 % n/a % ​ FS-21 Table of Contents The following table reflects activity under the 2012 Non-Employee Plan for the fiscal years ended June 30,: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ Weighted average ​ ​ Weighted average ​ ​ Weighted average ​ ​ Options ​ exercise price ​ Options ​ exercise price ​ Options ​ exercise price Outstanding, beginning of year ​ ​ 12,000 ​ $ 10.29 ​ ​ 10,200 ​ $ 7.99 ​ ​ 27,800 ​ $ 6.85 Granted ​ ​ — ​ ​ — ​ ​ 1,800 ​ ​ 23.35 ​ ​ — ​ ​ — Forfeited ​ ​ ( 4,800 ) ​ ​ 7.18 ​ ​ — ​ ​ — ​ ​ ( 1,800 ) ​ ​ 8.70 Exercised ​ ​ ( 1,200 ) ​ 8.70 ​ — ​ — ​ ( 15,800 ) ​ 5.91 Outstanding, end of period ​ ​ 6,000 ​ $ 13.10 ​ 12,000 ​ $ 10.29 ​ 10,200 ​ $ 7.99 Exercisable, end of period ​ ​ 3,120 ​ $ 12.08 ​ 5,760 ​ $ 8.35 ​ 3,000 ​ $ 6.27 Weighted average fair value at grant date of options granted ​ ​ n/a ​ ​ ​ ​ $ 12.94 ​ ​ ​ n/a ​ Total intrinsic value of options exercised ​ $ 31,000 ​ ​ ​ ​ ​ n/a ​ ​ $ 192,000 ​ Total intrinsic value of options outstanding ​ $ 140,000 ​ ​ ​ ​ $ 157,000 ​ ​ $ 221,000 ​ Total intrinsic value of options exercisable ​ $ 76,000 ​ ​ ​ ​ $ 87,000 ​ ​ $ 70,000 ​ ​ 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 ​ Weighted ​ ​ ​ Weighted ​ ​ Number ​ remaining ​ average exercise ​ Number ​ average exercise Range of exercise prices ​ outstanding contractual life ​ price exercisable ​ price $ 4.37 - $ 23.35 ​ 6,000 ​ 7.1 ​ $ 13.10 ​ 3,120 ​ $ 12.08 ​ ​ 6,000 ​ 7.1 ​ $ 13.10 ​ 3,120 ​ $ 12.08 ​ 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. 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, 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. FS-22 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 2019 Risk-free interest rates ​ n/a % 1.60 - 1.80 % 2.90 % Expected lives ​ n/a ​ 10 years ​ 10 years ​ Expected volatility ​ n/a % 44 - 45 % 50 % Expected dividend yields ​ n/a % — % — % ​ The following table reflects activity under the 2018 Non-Employee plan for the fiscal year ended June 30,: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ Weighted average ​ ​ Weighted average ​ ​ Weighted average ​ ​ Options exercise price ​ Options exercise price ​ Options exercise price Outstanding, beginning of year ​ ​ 48,400 ​ $ 23.48 ​ ​ 15,200 ​ $ 16.20 ​ ​ — ​ $ — Granted ​ ​ — ​ — ​ 33,200 ​ 26.82 ​ 20,000 ​ 16.20 Forfeited/Lapsed ​ ​ ( 11,750 ) ​ 23.36 ​ — ​ --- ​ ( 3,200 ) ​ 16.20 Exercised ​ ​ ( 1,600 ) ​ 16.20 ​ — ​ — ​ ( 1,600 ) ​ 16.20 Outstanding, end of period ​ ​ 35,050 ​ $ 23.85 ​ 48,400 ​ $ 23.48 ​ 15,200 ​ $ 16.20 Exercisable, end of period ​ ​ 14,980 ​ $ 23.36 ​ 12,240 ​ $ 21.96 ​ 2,400 ​ $ 16.20 Weighted average fair value at grant date of options granted ​ ​ n/a ​ ​ ​ ​ $ 15.09 ​ ​ ​ ​ $ 10.24 ​ ​ ​ Total intrinsic value of options exercised ​ $ 29,000 ​ ​ ​ ​ ​ n/a ​ ​ ​ ​ $ 24,000 ​ ​ ​ Total intrinsic value of options outstanding ​ $ 439,000 ​ ​ ​ ​ $ 110,000 ​ ​ ​ ​ $ 205,000 ​ ​ ​ Total intrinsic value of options exercisable ​ $ 195,000 ​ ​ ​ ​ $ 40,000 ​ ​ ​ ​ $ 32,000 ​ ​ ​ ​ 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 Weighted ​ Weighted ​ ​ Number ​ remaining ​ average exercise ​ Number ​ average exercise Range of exercise prices ​ outstanding ​ contractual life ​ price ​ exercisable ​ price $ 16.20 - $ 30.54 ​ 35,050 8.2 ​ $ 23.85 14,980 ​ $ 23.36 ​ ​ 35,050 8.2 ​ $ 23.85 14,980 ​ $ 23.36 ​ 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. FS-23 Table of Contents 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: ​ ​ ​ ​ ​ ​ 2021 Risk-free interest rates 0.62 % Expected lives 10 ​ Expected volatility 45 % Expected dividend yields 0 % ​ The following table reflects activity under the 2020 Non-Employee plan for the fiscal year ended June 30,: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ ​ ​ ​ ​ Weighted average ​ Options exercise price Outstanding, beginning of year ​ — ​ — Granted ​ 5,000 ​ $ 22.80 Exercised ​ — ​ — Outstanding, end of period ​ 5,000 ​ $ 22.80 Exercisable, end of period ​ 1,000 ​ $ 22.80 Weighted average fair value at grant date of options granted ​ $ 12.20 ​ Total intrinsic value of options exercised ​ n/a ​ Total intrinsic value of options outstanding ​ $ 68,000 ​ Total intrinsic value of options exercisable ​ $ 14,000 ​ ​ 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ remaining ​ Weighted average ​ Number ​ Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $ 22.80 5,000 9.2 ​ $ 22.80 1,000 ​ $ 22.80 ​ 5,000 9.2 ​ $ 22.80 1,000 ​ $ 22.80 ​ 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. 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, FS-24 Table of Contents 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 $ 138,000 , $ 133,000 and $ 133,000 for the years ended June 30, 2021, 2020 and 2019, respectively. NOTE 13 - Commitments and Contingencies Leases 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. 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. FS-25 Table of Contents 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 71 Years ​ Weighted-average discount rate ​ 3.55 % ​ The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2021 (in thousands): ​ ​ ​ ​ ​ Year Ending June 30, Amount 2022 ​ $ 282 2023 ​ 272 2024 ​ 263 2025 ​ 254 2026 ​ 245 Thereafter ​ ​ 6,057 Total ​ $ 7,373 ​ Operating lease expense totaled approximately $ 316,000 , $ 315,000 and $ 330,000 , for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. Litigation 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, 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. FS-26 Table of Contents 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 equipment. 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended June 30, ​ ​ 2021 2020 2019 ​ Sales to external customers (1): ​ ​ ​ ​ Domestic $ 112,618 ​ $ 99,496 ​ $ 100,716 ​ Foreign 1,417 ​ 1,863 ​ 2,216 ​ Total Net Sales $ 114,035 ​ $ 101,359 ​ $ 102,932 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 June 30, 2020 Identifiable assets: ​ ​ ​ ​ United States ​ $ 91,375 ​ $ 69,436 ​ Dominican Republic (2) ​ 31,918 ​ 36,402 ​ Total Identifiable Assets ​ $ 123,293 ​ $ 105,838 ​ ​ (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 ), operating lease assets (2021 = $ 7,373 ; 2020 = $ 7,395 ) and fixed assets (2021 = $ 3,208 ; 2020 = $ 3,481 ) located at the Company’s principal manufacturing facility in the Dominican Republic. ​ 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. 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. 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 . ​ ​ FS-27 Table of Contents ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None ​ ITEM 9A: CONTROL AND PROCEDURES 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 . 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. 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 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. ITEM 9B: OTHER INFORMATION None PART III ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 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 ​ Table of Contents 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. ITEM 11: 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. ITEM 12. 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. ITEM 13. 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. ITEM 14. 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. ​ ​ Table of Contents ​ PART IV ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) 1. Financial Statements The following consolidated financial statements of NAPCO Security Technologies, Inc. and its subsidiaries are included in Part II, Item 8: ​ Page Management Report on Internal Control FS-1 Report of Independent Registered Public Accounting Firm FS-2 Consolidated Financial Statements: ​ ​ Consolidated Balance Sheets as of June 30, 2021 and 202 0 FS-5 Consolidated Statements of Income for the Fiscal Years Ended June 30, 2021, 2020 and 2019 FS-6 Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended June 30, 2021, 2020 and 201 9 FS-7 Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2021, 2020 and 201 9 FS-8 Notes to Consolidated Financial Statements FS-9 ​ (a) 2. Financial Statement Schedules The following consolidated financial statement schedules of NAPCO Security Technologies, Inc. and its subsidiaries are included in Part II, Item 8: B. Supplementary Financial Data (a) 3. and (b). Exhibits ​ Management Contracts designated by asterisk. Exhibit No. Title Ex-3.(i) 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 Ex-3.(ii) 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 Ex-3.(iii) 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 ​ Table of Contents Ex 4.01 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 Ex 4.02 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 Ex 4.03 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 Ex 4.04 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 Ex 4.05 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 Ex 4.06 Continuing General Security Agreement Exhibit 4.06 to Report on Form 8-K (Commission file No. 0-10004) dated June 29, 2012 Ex 4.07 Reaffirmation of Collateral Documents Exhibit 4.07 to Report on Form 8-K (Commission file No. 0-10004) dated June 29, 2012 Ex 4.08 Reaffirmation of Negative Pledge Exhibit 4.08 to Report on Form 8-K (Commission file No. 0-10004) dated June 29, 2012 Ex 4.09 Amendment No. 3 to Third Amended and Restated Credit Agreement Item 1.01 (e) contained in Report on Form 8-K (Commission file No. 0-10004) dated June 28, 2016 Ex 4.10 Description of the Company’s Securities E-17 *Ex-10.A (ii) 2002 Employee Stock Option Plan Exhibit 10.A(II) to Report on Form 10-K (Commission file No. 0-10004) for the fiscal year ended June 30, 2008 *Ex-10.B 2012 Employee Stock Option Plan Appendix A to Proxy Statement dated October 29, 2012 for Annual Meeting of Stockholders to be held on December 11, 2012 *Ex-10.C 2012 Non-Employee Stock Option Plan Appendix B to Proxy Statement dated October 29, 2012 for Annual Meeting of Stockholders to be held on December 11, 2012 *Ex-10.D 2018 Non-Employee Stock Option Plan Appendix A to Proxy Statement dated October 29, 2018 for Annual Meeting of ​ Table of Contents Stockholders to be held on December 11, 2018 *Ex-10.E 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 *Ex-10.I 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 *Ex-10.M 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 *Ex-10.N 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 *Ex-10.O 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 *Ex-10.P Compensation Agreement between the Registrant and Stephen Spinelli dated April 6, 2020 E-24 Ex-14.0 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 Ex-21.0 Subsidiaries of the Registrant E-18 Ex-23.1 Consent of Independent Auditors E-19 Ex-31.1 Section 302 Certification of Chief Executive Officer E-20 Ex-31.2 Section 302 Certification of Chief Financial Officer E-21 Ex-32.1 Certification of Chief Executive Officer Pursuant to 18 USC Section 1350 and Section 906 of Sarbanes - Oxley Act of 2002 E-22 Ex-32.2 Certification of Chief Financial Officer Pursuant to 18 USC Section 1350 and Section 906 of Sarbanes - Oxley Act of 2002 E-23 Ex-101.INS XBRL Instance Document ** Ex-101.SCH XBRL Taxonomy Extension Schema Document** Ex-101.CAL XBRL Taxonomy Extension Calculation Linkbase Document** ​ Table of Contents Ex-101.LAB XBRL Taxonomy Extension Label Linkbase Document** Ex-101.PRE XBRL Taxonomy Extension Presentation Linkbase Document** Ex-101.DEF XBRL Taxonomy Extension Definition Linkbase Document** Ex-104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ​ ​ ​ SIGNATURES 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. (Registrant) ​ By: /s/ RICHARD SOLOWAY Richard Soloway Chairman of the Board of Directors, President and Secretary (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. ​ ​ Table of Contents Signature Title Date /s/ RICHARD SOLOWAY Chairman of the Board of Directors, September 13, 2021 Richard Soloway President and Secretary and Director (Principal Executive Officer) /s/ KEVIN S. BUCHEL Senior Vice President of Operations September 13, 2021 Kevin S. Buchel and Finance and Treasurer and Director (Principal Financial and Accounting Officer) /s/ PAUL STEPHEN BEEBER Director September 13, 2021 Paul Stephen Beeber /s/ RICK LAZIO Director September 13, 2021 Rick Lazio /s/ DONNA SOLOWAY Director September 13, 2021 Donna Soloway /s/ ROBERT UNGAR Director September 13, 2021 Robert Ungar /s/ ANDREW J. WILDER Director September 13, 2021 Andrew J. Wilder ​ ​ ​ ​ ​ ​ ​ ​