What changed in this filing

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Item 1. Financial Statements

2025-02-03 compared with 2024-11-04 · 268 added, 176 removed, 607 unchanged (42% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

September 30, 2024

December 31, 2024

June 30, 2024

4 unchanged sentences

Marketable securities

Accounts receivable, net of allowance for credit losses of $ 23 and $ 32 as of September 30, 2024 and June 30, 2024, respectively

Accounts receivable, net of allowance for credit losses of $ 20 and $ 32 as of December 31, 2024 and June 30, 2024, respectively

Income tax receivable

18 unchanged sentences

Common Stock, par value $ 0.01 per share;

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

100,000,000 shares authorized as of December 31, 2024 and June 30, 2024;

39,771,035 and 39,768,186 shares issued;

2 unchanged sentences

Retained earnings

Treasury Stock, at cost ( 3,086,967 and 2,893,715 shares as of September 30, 2024 and June 30, 2024, respectively)

Treasury Stock, at cost ( 3,369,614 and 2,893,715 shares as of December 31, 2024 and June 30, 2024, respectively)

Accumulated other comprehensive income

TOTAL STOCKHOLDERS’ EQUITY

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Three Months Ended September 30,

Three Months ended December 31,

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

10 unchanged sentences

Other income:

Interest and other income (expense), net

Interest and other income, net

Income before Provision for Income Taxes

2 unchanged sentences

Weighted average number of shares outstanding:

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Six Months Ended December 31,

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

Equipment revenues

Service revenues

Cost of sales:

Equipment-related expenses

Service-related expenses

Operating expenses:

Research and development

Selling, general, and administrative expenses

Total Operating Expenses

Operating Income

Other income:

Interest and other income, net

Income before Provision for Income Taxes

Provision for Income Taxes

Income per share:

Weighted average number of shares outstanding:

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Three Months ended December 31,

Six Months Ended December 31,

Other comprehensive income, net of tax

Net change in unrealized gains on available-for-sale debt securities, net of taxes of $ 7

Other comprehensive income, net of tax

Comprehensive income

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (unaudited)

Three months ended September 30, 2024 (in thousands, except for share data)

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

Treasury Stock

Other Comprehensive

Balances at June 30, 2024

6 unchanged sentences

( 3,086,967 )

Three months ended September 30, 2023 (in thousands, except share data)

Other comprehensive income, net of tax

Stock-based compensation expense

Stock options exercised

Purchase of treasury shares

Cash dividend ($ .125 per share)

Balances at December 31, 2024

( 3,369,614 )

Six months ended December 31, 2023 (in thousands, except share data)

Treasury Stock

Other Comprehensive

Balances at June 30, 2023

4 unchanged sentences

( 2,893,715 )

Stock-based compensation expense

Stock options exercised

Cash dividend ($ .08 per share)

Balances at December 31, 2023

( 2,893,715 )

See accompanying notes to condensed consolidated financial statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Three Months ended September 30,

Six Months ended December 31,

(in thousands)

37 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

September 30, 2024

December 31, 2024

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, cellular communication services for intrusion and fire alarm systems as well as a leading provider of school safety solutions.

Napco Security Technologies, Inc (“NAPCO”, “the Company”, “we”, “our”) is one of the leading manufacturers and designers of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems 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.

Our wireless communication services have led to substantial growth in our monthly recurring revenues.

We have experienced significant growth in recent years, primarily driven by our 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.

Significant Accounting Policies :

11 unchanged sentences

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, marketable securities, current receivables and payables and certain other short-term financial instruments approximate their fair value as of September 30, 2024 and June 30, 2024 due to their short-term maturities.

Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, marketable securities, current receivables and payables and certain other short-term financial instruments approximate their fair value as of December 31, 2024 and June 30, 2024 due to their short-term maturities.

Cash and Cash Equivalents and Investments – other

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

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

Such items may include liquid money market funds, certificate of deposit, U.S.

treasury securities and time deposit accounts.

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

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

Cash and cash equivalents include approximately $ 73,055,000 of short-term time deposits in money market funds as of September 30, 2024.

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

The Company classifies these highly liquid

investments with original maturities of three months or less as cash equivalents.

Cash and cash equivalents include approximately $ 74,620,000 of short-term time deposits, consisting of money market funds totaling $ 72,095,000 and $ 2,525,000 of U.S.

treasury securities as of December 31, 2024.

Cash and cash equivalents include approximately $ 46,518,000 of short-term time deposits, consisting of certificates of deposit totaling $ 5,402,000 and $ 41,116,000 in a money market

fund as of June 30, 2024.

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

Certificates of deposit with an original maturity greater than three months are classified as Investments-other.

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

September 30, 2024

December 31, 2024

June 30, 2024

Money Market Fund

Treasury Securities

Certificate of Deposits

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

September 30, 2024

December 31, 2024

June 30, 2024

1 unchanged sentence

Certificates of deposit are recorded at the original cost plus accrued interest.

The Company’s Certificates of deposits consist of the following as of (in thousands):

September 30, 2024

Balance Sheet Classification

Interest Rate

Maturity Date

Carrying Value

Cash and Cash Equivalents

Investments - other

4.60 % - 4.75 %

There were no certificate of deposits outstanding at December 31, 2024.

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

June 30, 2024

7 unchanged sentences

7/25/2024 - 10/24/2024

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of September 30, 2024 and June 30, 2024.

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of December 31, 2024 and June 30, 2024.

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 income (expense).

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 three months ended September 2024 and 2023, 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.

Investments in debt securities are classified as available-for-sale and realized gains and losses are recorded using the specific identification method.

Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income.

Fair value is calculated based on publicly available market information or other estimates determined by management.

If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost.

To determine credit losses, a systematic methodology is employed that considers available quantitative and qualitative evidence.

In addition, specific adverse conditions are considered related to the financial health of, and business outlook for, the investee.

If the Company plans to sell the security or it is more likely than not that the Company will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established.

If market, industry, and/or investee conditions deteriorate, we may incur future impairments.

Investments in equity securities with readily determinable fair values are measured at fair value.

Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative).

The Company performs a qualitative assessment on a periodic basis and

recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.

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

Accounts Receivable

Accounts receivable is stated net of the reserves for credit losses of $ 23,000 and $ 32,000 as of September 30, 2024 and June 30, 2024, respectively.

Accounts receivable is stated net of the reserves for credit losses of $ 20,000 and $ 32,000 as of December 31, 2024 and June 30, 2024, respectively.

In accordance with ASU No.

32 unchanged sentences

Intangible assets consisted of the follows (in thousands):

September 30, 2024

December 31, 2024

June 30, 2024

Customer relationships

Amortization expense for intangible assets subject to amortization was approximately $ 79,000 and $ 84,000 for the three months ended September 30, 2024 and 2023, respectively.

Amortization expense for intangible assets subject to amortization was approximately $ 79,000 and $ 84,000 for the three months ended December 31, 2024 and 2023, respectively.

Amortization expense for intangible assets subject to amortization was approximately $ 157,000 and $ 168,000 for the six months ended December 31, 2024 and 2023, respectively.

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

4 unchanged sentences

and 2030 - $ 202,000 .

The weighted average remaining amortization period for intangible assets was 14.6 years and 14.8 years at September 30, 2024 and June 30, 2024, respectively.

The weighted average remaining amortization period for intangible assets was 14.4 years and 14.8 years at December 31, 2024 and June 30, 2024, respectively.

Revenue Recognition

6 unchanged sentences

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

Reserves are established for the estimated returns, rebates and credits and such variable consideration is measured based on the expected value method.

Reserves are established for the estimated returns, rebates and credits and such variable consideration is measured based on the most likely amount method.

The Company analyzes product sales returns and is able to make reasonable and reliable estimates of product returns based on several factors including actual returns and expected return data communicated to the Company by its customers.

9 unchanged sentences

Shipping and Handling Sales and Costs

The Company records the amount billed to customers for shipping and handling in net sales ($ 89,000 and $ 83,000 in the three months ended September 30, 2024 and 2023, respectively);

and classifies the costs associated with these sales in cost of sales ($ 390,000 and $ 371,000 in the three months ended September 30, 2024 and 2023).

The Company records the amount billed to customers for shipping and handling in net sales ($ 80,000 and $ 103,000 in the three months ended December 31, 2024 and 2023, respectively, and $ 170,000 and $ 186,000 in the six months ended December 31, 2024 and 2023, respectively);

and classifies the costs associated with these sales in cost of sales ($ 353,000 and $ 389,000 in the three months ended December 31, 2024 and 2023, respectively and $ 743,000 and $ 760,000 in the six months ended December 31, 2024 and 2023, respectively).

Advertising and Promotional Costs

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

Advertising expense for the three months ended September 30, 2024 and 2023 was $ 890,000 and $ 761,000 , respectively.

Advertising expense for the three months ended December 31, 2024 and 2023 was $ 916,000 and $ 696,000 , respectively.

Advertising expense for the six months ended December 31, 2024 and 2023 was $ 1,806,000 and $ 1,457,000 , respectively.

Research and Development Costs

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

Company-sponsored R&D expense for the three months ended September 30, 2024 and 2023 was $ 3,057,000 and $ 2,437,000 , respectively.

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

5 unchanged sentences

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.

Treasury Stock

Treasury stock is accounted for using the cost method and recorded as a reduction to Stockholders’ equity on the Consolidated Balance Sheets.

Incremental direct costs to purchase treasury stock are included in the cost of the shares acquired.

To determine the cost of treasury stock that is either sold or re-issued, we use the first in, first out method.

When treasury stock is re-issued at a price higher than its cost, the increase is recorded in additional paid-in capital on the Consolidated Balance Sheets.

treasury stock is re-issued at a price lower than its cost, the decrease is recorded in additional paid-in capital to the extent that there are previously recorded increases to offset the decrease.

Any decreases in excess of that amount are recorded in retained earnings on the Consolidated Balance Sheets.

Net Income per Share

1 unchanged sentence

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

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended September 30, 2024 and 2023 (in thousands, except share and per share data):

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended December 31, 2024 and 2023 (in thousands, except share and per share data):

Weighted Average Shares

Net Income per Share

Effect of Dilutive Securities:

Stock Options

Options to purchase 120,000 and 67,500 shares of common stock were excluded for the three months ended December 31, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

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

The following provides a reconciliation of information used in calculating the per share amounts for the six months ended December 31, 2024 and 2023 (in thousands, except share and per share data):

Net Income per

2 unchanged sentences

Stock Options

Options to purchase 20,000 and 5,000 shares of common stock were excluded for the nine months ended September 30, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

Options to purchase 70,000 and 36,250 shares of common stock were excluded for the six months ended December 31, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

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

7 unchanged sentences

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

Stock-based compensation costs of $ 371,000 and $ 307,000 were recognized for the three months ended September 30, 2024 and 2023, respectively.

Stock-based compensation costs of $ 386,000 and $ 303,000 were recognized for the three months ended December 31, 2024 and 2023, respectively.

Stock-based compensation costs of $ 757,000 and $ 610,000 were recognized for the six months ended December 31, 2024 and 2023, respectively.

Foreign Currency

2 unchanged sentences

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

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three months ended September 30, 2024 or 2023.

Comprehensive Income

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

Accordingly, the Company’s comprehensive income approximates its net income for all periods presented.

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three and six months ended December 31, 2024 or 2023.

Segment Reporting

37 unchanged sentences

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

As of September 30, 2024 and June 30, 2024, the Company included refund liabilities of approximately $ 6,066,000 and $ 6,295,000 , respectively, in current liabilities.

As of September 30, 2024 and June 30, 2024, the Company included return-related assets of approximately $ 1,557,000 and $ 1,586,000 , respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 9 % and 4 % for the three months ended September 30, 2024 and 2023, respectively.

As of December 31, 2024 and June 30, 2024, the Company included refund liabilities of approximately $ 4,814,000 and $ 6,295,000 , respectively, in current liabilities.

As of December 31, 2024 and June 30, 2024, the Company included return-related assets of approximately $ 1,263,000 and $ 1,586,000 , respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 4 % and 6 % for the three months ended December 31, 2024 and 2023, respectively.

As a percentage of gross sales, returns, rebates and allowances were 7 % and 5 % for the six months ended December 31, 2024 and 2023, respectively.

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

2 unchanged sentences

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

Three months ended September 30,

Three months ended December 31,

Six months ended December 31,

Major Product Lines:

5 unchanged sentences

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

The Company had one customer with an accounts receivable balance that comprised of 15 % and 17 % as of September 30, 2024 and June 30, 2024.

The Company had one additional customer with an accounts receivable balance that comprised of 15 % as of September 30, 2024.

The Company had another additional customer with an accounts receivable balance that comprised of 12 % as of June 30, 2024.

Sales to any of these customers did not exceed 10% of net sales during the three months ended September 30, 2024 and 2023, respectively.

The Company had two customers with an accounts receivable balance that comprised of 11 % and 13 % as of December 31, 2024.

These same two customers had an accounts receivable balance that comprised of 17 % and 12 % as of June 30, 2024.

The Company had one additional customer with an accounts receivable balance that comprised of 13 % as of December 31, 2024.

Sales to any of these customers did not exceed 10% of net sales during the three or six months ended December 31, 2024 and 2023, respectively.

NOTE 4 – Fair Value Measurement

7 unchanged sentences

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

The following table presents the Company’s assets that were measured at fair value on a recurring basis at September 30, 2024 and June 30, 2024, respectively:

September 30, 2024

The following table presents the Company’s assets that were measured at fair value on a recurring basis at December 31, 2024 and June 30, 2024, respectively:

December 31, 2024

Cash equivalents

Certificate of deposits

Treasury Securities

Money market funds

Short-term investments

Certificate of deposits

Marketable securities

Treasury Securities

June 30, 2024

6 unchanged sentences

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

For the years ended June 30, 2024 and 2023, there were no transfers between Levels 1 and 2 investments and no transfers in or out of Level 3.

For the three and six months ending December 31, 2024 and 2023, there were no transfers between Levels 1 and 2 investments and no transfers in or out of Level 3.

NOTE 5 – Marketable Securities

The Company’s 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 recognized within the accompanying condensed consolidated statements of income for the three months ended September 30, 2024 and 2023, are as follows (in thousands):

Three months ended September 30,

Net gains recognized during the period on marketable securities

Net (losses) recognized during the period on marketable securities sold during the period

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

The following tables summarize the Company’s investments at September 30, 2024 and June 30, 2024, respectively (in thousands):

September 30, 2024

A summary of the fair value of the Company’s investment in marketable securities as of December 31, 2024 and June 30, 2024 is as follows:

December 31, 2024

June 30, 2024

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.

Available-for-sale securities in a loss position at September 30, 2024 and June 30, 2024 were as follows:

Continuous Loss Position for Less than 12 Months

Continuous Loss Position for 12 Months or More

Estimated Fair Value

Gross Unrealized Losses

Estimated Fair Value

Gross Unrealized Losses

September 30, 2024

Equity Securities

Debt Securities (available-for-sale)

Investments in Equity Securities

The disaggregated net gains and losses on the equity securities recognized within the accompanying condensed consolidated statements of income for the three and six months ended December 31, 2024 and 2023, are as follows (in thousands):

Three months ended December 31,

Six months ended December 31,

Net gains recognized during the period on equity securities

Net income (losses) recognized during the period on equity securities sold during the period

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

The following tables summarize the Company’s investments in equity securities at December 31, 2024 and June 30, 2024, respectively (in thousands):

December 31, 2024

June 30, 2024

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

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

Investments in Debt Securities

The Company had no investment in debt securities at June 30, 2024.

The following tables summarize the Company’s investments in debt securities at December 31, 2024 (in thousands):

Amortized Cost

Unrealized Gains

Unrealized Losses

Aggregate Fair Value

Treasury Securities

Included in Cash and cash equivalents

Included in Marketable securities

The debt investments all mature within one year or less, and the Company did not recognize any credit or non-credit related losses related to its debt securities during the three and six months ended December 31, 2024.

NOTE 6 - Inventories

1 unchanged sentence

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

September 30,

Component parts

2 unchanged sentences

Classification of inventories:

The reserve for excess and slow-moving inventory, which reduces inventory in our consolidated balance sheets were $ 4,820,000 and $ 5,026,000 as of September 30, 2024 and June 30, 2024, respectively.

The reserve for excess and slow-moving inventory, which reduces inventory in our consolidated balance sheets were $ 4,800,000 and $ 5,026,000 as of December 31, 2024 and June 30, 2024, respectively.

NOTE 7 – Property, Plant, and Equipment

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

September 30, 2024

December 31, 2024

June 30, 2024

6 unchanged sentences

accumulated depreciation and amortization

Depreciation and amortization expense on property, plant, and equipment was approximately $ 470,000 and $ 453,000 for the three months ended September 30, 2024 and 2023, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 506,000 and $ 467,000 for the three months ended December 31, 2024 and 2023, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 976,000 and $ 920,000 for the six months ended December 31, 2024 and 2023, respectively.

NOTE 8 - Income Taxes

3 unchanged sentences

In addition, changes in judgment from the evaluation of new information resulting in the recognition de-recognition or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change.

For the three months ended September 30, 2024 the Company recognized total pre-tax book income of $ 13,000,000 , comprised of $ 2,529,000 and $ 10,471,000 of domestic and foreign pre-tax book income, respectively.

For the six months ended December 31, 2024 the Company recognized total pre-tax book income of $ 25,092,000 , comprised of $ 4,306,000 and $ 20,786,000 of domestic and foreign pre-tax book income, respectively.

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 September 30, 2024, the Company had accrued interest totaling $ 209,000 , as well as $ 700,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period.

For the three months ended September 30, 2024, additional interest expense was accrued for in the amount of $ 15,000 .

As of December 31, 2024, the Company had accrued interest totaling $ 229,000 , as well as $ 754,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period.

For the six months ended December 31, 2024, additional tax liability and interest expense were accrued for in the amount of $ 54,000 and $ 35,000 , respectively.

The company has FIN 48 liabilities accrued due to historic Section 956 positions.

3 unchanged sentences

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

As of September 30, 2024, fiscal years 2021 and forward are still open for examination, in addition to fiscal year 2018, which is subject to a six year statute of limitations.

As of December 31, 2024, fiscal years 2021 and forward are still open for examination, in addition to fiscal year 2018, which is subject to a six year statute of limitations.

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.

5 unchanged sentences

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

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

As of December 31, 2024 and June 30, 2024, the Company has no outstanding debt.

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

11 unchanged sentences

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 three months ended September 30, 2024 and 2023, the Company recorded non-cash compensation expense of

$ 371,000 ($ 0.01 per basic and diluted share) and $ 307,000 ($ 0.01 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

For the three months ended December 31, 2024 and 2023, the Company recorded non-cash compensation expense of $ 386,000 ($ 0.01 per basic and diluted share) and $ 335,000 ($ 0.01 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

For the six months ended December 31, 2024 and 2023, the Company recorded non-cash compensation expense of $ 757,000 ($ 0.02 per basic and diluted share) and $ 610,000 ($ 0.01 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

2012 Employee Stock Option Plan

1 unchanged sentence

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

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

Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (“ISOs”) or non-incentive stock options, to 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 and a term of 10 years .

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.

Under the 2012 Employee Plan, stock options may be granted to 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 September 30, 2024, 361,036 stock options were outstanding, 198,060 stock options were exercisable and no further stock options were available for grant under this plan.

No stock options were granted during the three months ended September 30, 2024 and 2023, respectively.

No options may be granted under this plan after December 2022.

The following table reflects activity under the 2012 Employee Plan for the three months ended September 30:

At December 31, 2024, 361,036 stock options were outstanding, 265,660 stock options were exercisable and no further stock options were available for grant under this plan after December 2022.

The following table reflects activity under the 2012 Employee Plan for the six months ended December 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

A total of 2,000 and 0 stock options were exercised during the three months ended September 30, 2024 and 2023, respectively.

$ 54,000 cash was received from the option exercises during the three months ended September 30 ,2024.

The actual tax benefit realized for the tax deductions from option exercises during the three months ended September 30, 2024 and 2023 was $ 0 and $ 0 , respectively.

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at September 30, 2024:

A total of 2,000 stock options were exercised during both the six months ended December 31, 2024.

There were no stock options exercised during the three months ended December 31, 2024.

$ 54,000 cash was received from the option exercises during the six months ended December 31, 2024.

The actual tax benefit realized for the tax deductions from option exercises during both the three and six months ended December 31, 2024 was $ 0 .

A total of 31,600 stock options were exercised during both the three and six months ended December 31, 2023.

The 31,600 options that were exercised during the three and six months ended December 31, 2023 were settled by the Company withholding 20,567 from the shares issuable on exercise of the options.

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

No cash was received from the option exercises during both the three and six months ended December 31, 2023.

The actual tax benefit realized for the tax deductions from option exercises during both the three and six months ended December 31, 2023 was $ 52,000 .

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at December 31, 2024:

Options outstanding

8 unchanged sentences

$ 10.02 ‑ $ 26.94

As of September 30, 2024, there was $ 885,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan.

9,100 and 10,700 options vested during the three months ended September 30, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during the three months ended September 30, 2024 and 2023 was $ 112,000 and $ 124,000 , respectively

As of December 31, 2024, there was $ 677,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan.

67,600 and 76,700 options vested during the three and six months ended December 31, 2024.

The total grant date fair value of the options vesting during the three and six months ended December 31, 2024 was $ 670,000 and $ 782,000 , respectively.

74,000 and 84,700 options vested during the three and six months ended December 31, 2023.

The total grant date fair value of the options vesting during the three and six months ended December 31, 2023 was $ 724,000 and $ 849,000 , respectively.

2012 Non-Employee Stock Option Plan

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

At September 30, 2024, 20,400 stock options were outstanding, 16,560 stock options were exercisable and no further stock options were available for grant under this plan after December 2022.

The following table reflects activity under the 2012 Non-Employee Plan for the three months ended September 30:

At December 31, 2024, 20,400 stock options were outstanding, 18,480 stock options were exercisable and no further stock options were available for grant under this plan after December 2022.

The following table reflects activity under the 2012 Non-Employee Plan for the six months ended December 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

No stock options were exercised during the three months ended September 30, 2024 and 2023, respectively.

No cash was received from option exercises during the three months ended September 30, 2024 and 2023, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at September 30, 2024:

No stock options were exercised during the three and six months ended December 31, 2024 and 2023, respectively.

No cash was received from option exercises during the three and six months ended December 31, 2024 and 2023, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at December 31, 2024:

Options outstanding

6 unchanged sentences

$ 4.35 - $ 22.93

As of September 30, 2024, there was $ 19,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan.

No options vested during the three months ended September 30, 2024 and 2023, respectively.

As of December 31, 2024, there was $ 15,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan.

1,920 options vested during both the three and six months ended December 31, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 was $ 19,000 .

2018 Non-Employee Stock Option Plan

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

At September 30, 2024, 64,900 stock options were outstanding, 59,500 stock options were exercisable and 4,000 further stock options were available for grant under this plan.

There were no options granted during the three months ended September 30, 2024 and 2023.

At December 31, 2024, 64,900 stock options were outstanding, 62,200 stock options were exercisable and 4,000 further stock options were available for grant under this plan.

There were no options granted during the six months ended December 31, 2024 and 2023.

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

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

Risk-free interest rates

Expected lives

Expected volatility

Expected dividend yields

The following table reflects activity under the 2018 Non-Employee Plan for the three months ended September 30:

The following table reflects activity under the 2018 Non-Employee Plan for the six months ended December 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

No stock options were exercised during the three months ended September 30, 2024 and 2023, respectively.

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at September 30, 2024:

No stock options were exercised during both the three and six months ended December 31, 2024.

No cash was received from option exercises during both the three and six months ended December 31, 2024, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

A total of 1,600 stock options were exercised during the three and six months ended December 31, 2023.

The 1,600 options that were exercised during the three and six months ended December 31, 2023 were settled by the Company withholding 740 from the shares issuable on exercise of the options.

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

No cash was received from the option exercises during the three and six months ended December 31, 2023.

The actual tax benefit realized for the tax deductions from option exercises during the three and six months ended December 31, 2023 was $ 6,000 each period.

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at December 31, 2024:

Options outstanding

6 unchanged sentences

$ 8.10 - $ 22.93

As of September 30, 2024, there was $ 27,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan.

No options vested during the three months ended September 30, 2024, respectively.

As of December 31, 2024, there was $ 20,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan.

2,700 options vested during both the three and six months ended December 31, 2024.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 was $ 27,000 .

9,500 options vested during both the three and six months ended December 31, 2023, respectively.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2023 under this plan was $ 89,000 for both periods.

2020 Non-Employee Stock Option Plan

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

This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company's common

stock to be acquired by the holders of such awards.

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

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

1 unchanged sentence

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

At September 30, 2024, 51,900 stock options were outstanding, 34,140 stock options were exercisable and 45,100 stock options were available for grant under this plan.

No options were granted during the three months ended September 30, 2024 and 2023, respectively.

At December 31, 2024, 51,900 stock options were outstanding, 37,520 stock options were exercisable and 45,100 stock options were available for grant under this plan.

No options were granted during the six months ended December 31, 2024 and 2023, respectively.

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

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

Risk-free interest rates

Expected lives

Expected volatility

Expected dividend yields

The following table reflects activity under the 2020 Non-Employee Plan for the three months ended September 30:

The following table reflects activity under the 2020 Non-Employee Plan for the six months ended December 31:

Weighted average

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Total intrinsic value of options exercisable

A total of 3,000 and 0 stock options were exercised during the three months ended September 30, 2024 and 2023, respectively.

3,000 stock options exercised during the three months ended September 30, 2024 were settled by the company withholding 2,151 shares from the shares issuable on exercise of the options.

A total of 0 and 3,000 stock options were exercised during the three and six months ended December 31, 2024, respectively.

3,000 stock options exercised during the six months ended December 31, 2024 were settled by the company withholding 2,151 shares from the shares issuable on exercise of the options.

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

The actual tax benefit realized for the tax deductions from option exercises during the three months ended September 30, 2024 and 2023 was $ 7,000 and $ 0 , respectively.

The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at September 30, 2024:

The actual tax benefit realized for the tax deductions from option exercises during the three and six months ended December 31, 2024 was $ 0 and $ 7,000 , respectively.

No stock options were exercised during both the three and six months ended December 31, 2023.

No cash was received from option exercises during either of the three and six months ended December 31, 2023 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at December 31, 2024:

Options outstanding

8 unchanged sentences

$ 11.40 - $ 30.71

As of September 30, 2024, there was $ 163,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan.

7,000 options vested during both the three months ended September 30, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during the three months ended September 30, 2024 and 2023 under this plan was $ 79,000 each period.

As of December 31, 2024, there was $ 137,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan.

3,380 and 10,380 options vested during both of the three and six months ended December 31, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 was $ 34,000 and $ 113,000 , respectively.

2022 Employee Stock Option Plan

5 unchanged sentences

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

At September 30, 2024, 130,000 stock options were outstanding, 26,000 stock options were exercisable and 820,000 stock options were available for grant under this plan.

No stock options were granted during the three months ended September 30, 2024 and 2023, respectively.

At December 31, 2024, 130,000 stock options were outstanding, 28,000 stock options were exercisable and 820,000 stock options were available for grant under this plan.

No stock options were granted during the six months ended December 31, 2024.

There were 10,000 options granted during the three and six months ended December 31, 2023.

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

4 unchanged sentences

Expected dividend yields

The following table reflects activity under the 2022 Employee Plan for the three months ended September 30:

The following table reflects activity under the 2022 Employee Plan for the six months ended December 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

No options were exercised during the three months ended September 30, 2024 and 2023, respectively.

No cash was received from option exercises during the three months ended September 30, 2024 and 2023 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

The following table summarizes information about stock options outstanding under the 2022 Employee Plan at September 30, 2024:

No options were exercised during both the three and six months ended December 31, 2024 and 2023, respectively.

No cash was received from option exercises during both the three and six months ended December 31, 2024 and 2023 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

The following table summarizes information about stock options outstanding under the 2022 Employee Plan at December 31, 2024:

Options outstanding

8 unchanged sentences

$ 21.60 - $ 49.39

As of September 30, 2024, there was $ 1,955,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2022 Employee Plan.

No options vested during the three months ended September 30, 2024 and 2023, respectively.

As of December 31, 2024, there was $ 1,816,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2022 Employee Plan.

2,000 options vested during both the three and six months ended December 31, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 under this plan was $ 19,500 , respectively.

NOTE 11 – Stockholders’ Equity Transactions

The following tables summarizes information about dividends declared by the Company for the three months ended September 30, 2024 and the fiscal year ended June 30, 2024:

The following tables summarizes information about dividends declared by the Company for the six months ended December 31, 2024 and the fiscal year ended June 30, 2024:

Dividend Declaration Date

2 unchanged sentences

Per Share Cash Dividend Amount

November 1, 2024

December 12, 2024

January 3, 2025

August 22, 2024

11 unchanged sentences

September 22, 2023

The dividend payable from the dividend declared on August 22, 2024, has been settled subsequent to September 30, 2024.

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

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

During the three months ended September 30, 2024 the Company repurchased 193,252 shares of its outstanding common stock at a weighted average price of $ 37.67 .

Shares repurchased through September 30, 2024 are included in the Company’s Treasury Stock as of September 30, 2024.

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

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

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

Shares repurchased through the six months ended December 31, 2024, are included in the Company’s Treasury Stock as of December 31, 2024.

The Company currently has available 1,104,741 shares that can be repurchased under this authorization.

See Note 15, Subsequent Events, for an additional authorization.

The following tables summarizes information about shares repurchased by the Company for the three months ended September 30, 2024:

The following tables summarizes information about shares repurchased by the Company for the six months ended December 31, 2024:

Total Number of

7 unchanged sentences

September 10, 2024 - September 19, 2024

Total for the 3 months ended September 30, 2024

During the three months ended September 30, 2024, certain employees and directors exercised stock options under the Company's 2012 Employee and 2020 Non-Employee Stock Option Plans totaling 5,000 shares.

November 7, 2024 - December 19, 2024

Total for the 6 months ended December 31, 2024

During the six months ended December 31, 2024, certain employees and directors exercised stock options under the Company's 2012 Employee and 2020 Non-Employee Stock Option Plans totaling 5,000 shares.

Of the 5,000 shares exercised, 3,000 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees.

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

There were no stock option exercises from certain employees and directors during the three months ended December 31, 2024.

NOTE 12 - 401(k) Plan

1 unchanged sentence

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

Company contributions to this plan are discretionary and totaled $ 69,000 and $ 62,000 for the three months ended September 30, 2024 and 2023, respectively.

Company contributions to this plan are discretionary and totaled $ 69,000 and $ 58,000 for the three months ended December 31, 2024 and 2023, respectively.

Company contributions to this plan are discretionary and totaled $ 138,000 and $ 119,000 for the six months ended December 31, 2024 and 2023, respectively.

NOTE 13 - Commitments and Contingencies

5 unchanged sentences

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

For the three months ended September 30, 2024 and 2023 cash payments against operating lease liabilities totaled $ 57,000 and $ 86,000 , respectively.

For the three months ended December 31, 2024 and 2023 cash payments against operating lease liabilities totaled $ 115,000 and $ 86,000 , respectively.

For the six months ended December 31, 2024 and 2023 cash payments against operating lease liabilities totaled $ 172,000 and $ 171,000 , respectively.

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

1 unchanged sentence

Weighted-average discount rate

The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2024 (in thousands):

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2024 (in thousands):

Year Ending June 30,

1 unchanged sentence

Imputed interest

Operating lease expense totaled approximately $ 95,000 and $ 124,000 for the three months ended September 30, 2024 and 2023, respectively.

Operating lease expense totaled approximately $ 144,000 and $ 129,000 for the three months ended December 31, 2024 and 2023, respectively.

Operating lease expense totaled approximately $ 239,000 and $ 253,000 for the six months ended December 31, 2024 and 2023, respectively.

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

3 unchanged sentences

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

The Amended Complaint added claims under Sections 11, 12, and 15 of the Securities Act of 1933

in connection with the secondary public offering in February 2023.

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

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

1 unchanged sentence

The Company intends to vigorously defend against the action.

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

Soloway, et al., Case No.

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

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

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

The complaint also brings breach of fiduciary duty and unjust enrichment claims in connection with stock sales by the Company’s Chairman and Chief Executive Officer and its Chief Financial Officer and seeks indemnity and contribution.

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

Defendants’ motion to dismiss and/or stay the case is due on February 28, 2025.

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

10 unchanged sentences

The employment agreement with the SVP of Engineering expires in August 2026 and provides for an annual salary of $ 458,000 , 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 CFO 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.

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

NOTE 14 – Geographical Data

6 unchanged sentences

Financial Information Relating to Domestic and Foreign Operations (in thousands):

Three months ended September 30,

Three months ended December 31,

Six months ended December 31,

Sales to external customers (1) :

Total Net Sales

September 30, 2024

December 31, 2024

June 30, 2024

5 unchanged sentences

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

(2) Consists primarily of inventories (September 30, 2024 = $ 33,445 ;

June 30, 2024 = $ 33,584 ), operating lease right of use (September 30, 2024 = $ 5,410 ;

June 30, 2024 = $ 5,487 ) and fixed assets (September 30, 2024 = $ 3,543 ;

(2) Consists primarily of inventories (December 31, 2024 = $ 31,864 ;

June 30, 2024 = $ 33,584 ), operating lease right of use (December 31, 2024 = $ 5,335 ;

June 30, 2024 = $ 5,487 ) and fixed assets (December 31, 2024 = $ 4,312 ;

June 30, 2024 = $ 3,623 ) located at the Company’s principal manufacturing facility in the Dominican Republic.

1 unchanged sentence

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

On November 1, 2024 , the Company’s Board of Directors declared a cash dividend of $ .125 per share payable on January 3, 2025 to stockholders of record on December 12, 2024 .

Additionally, on November 1, 2024, the Company’s Board of Directors authorized the Company to repurchase up to 1,000,000 shares of its common stock in addition to the prior authorized repurchases described in Note 11.

On January 30, 2025 , the Company’s Board of Directors declared a cash dividend of $ .125 per share payable on April 3, 2025 to stockholders of record on March 12, 2025 .

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

What changed 10-Q

Item 1. Financial Statements