What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-08-25 compared with 2024-08-29 · 331 added, 243 removed, 924 unchanged (38% of the section changed)

8 unchanged sentences

Consolidated Balance Sheets as of June 30, 2025 and 2024

Consolidated Statements of Income for the Fiscal Years Ended June 30, 2024, 2023 and 2022

Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended June 30, 2024, 2023 and 2022

Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2024, 2023 and 2022

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

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

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

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

Notes to Consolidated Financial Statements

2 unchanged sentences

Opinion on the Financial Statements

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

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

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

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 29, 2024, expressed an adverse opinion on the Company's internal control over financial reporting because of a material weakness.

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

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

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

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 25, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

18 unchanged sentences

We identified the reserve for excess and slow-moving inventory as a critical audit matter because of the significant estimates and assumptions management makes to determine the reserve, specifically the reserve percentage and forecasted inventory usage.

This required a high degree of auditor judgment when performing audit procedures to evaluate the reasonableness of management’s reserve for excess and slow-moving inventory.

required a high degree of auditor judgment when performing audit procedures to evaluate the reasonableness of management’s reserve for excess and slow-moving inventory.

How the Critical Audit Matter Was Addressed in the Audit

11 unchanged sentences

August 25, 2025

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

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

Opinion on the Financial Statements

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

and Subsidiaries (the "Company") as of June 30, 2023, the related consolidated statements of income, stockholders’ equity, and cash flows, for each of the two years in the period ended June 30, 2023, and the related notes (collectively referred to as the "consolidated financial statements").

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

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

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

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

Basis for Opinion

3 unchanged sentences

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.

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

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

Our 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.

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

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

Our 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 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 opinion.

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

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

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

/s/ BAKER TILLY US, LLP

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Operating lease - Right-of-use asset

Liabilities and Stockholders' Equity

Current Liabilities

2 unchanged sentences

Accrued salaries and wages

Dividends payable

Accrued income taxes

Total Current Liabilities

1 unchanged sentence

Operating lease liability

TOTAL LIABILITIES

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Commitments and Contingencies (Note 14)

6 unchanged sentences

Retained earnings

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

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

Accumulated other comprehensive income

Total Stockholders' Equity

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Other Income:

Interest and other income (expense), net

Gain on extinguishment of debt

Interest and other income, net

Income before Provision for Income Taxes

5 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHNSIVE INCOME

Year Ended June 30,

Other comprehensive income, net of tax

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

Other comprehensive income, net of tax

Total Comprehensive income

See accompanying notes to consolidated financial statements.

NAPCO SECURITY TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Fiscal Years ended June 30, 2024, 2023 and 2022

Years ended June 30, 2025, 2024 and 2023

(in thousands except for share data)

Treasury Stock

Other Comprehensive

Balance at June 30, 2022

2 unchanged sentences

Stock-based compensation expense

Cash dividend ($ .0625 per share)

Balances at June 30, 2023

7 unchanged sentences

Stock-based compensation expense

Purchase of treasury shares

( 1,220,899 )

Cash dividend ($ .52 per share)

Other comprehensive income, net of tax

Balances at June 30, 2025

10 unchanged sentences

Gain on disposal of fixed asset

Interest expense (income) on other investments

Change in accrued Interest on other investments

Unrealized (gain) loss on marketable securities

(Recovery of) Provision for credit losses

Realized (gain) loss on sales of marketable securities

(Recovery of) credit losses

Change to inventory reserve

1 unchanged sentence

Stock-based compensation expense

Gain on extinguishment of debt

Changes in operating assets and liabilities:

8 unchanged sentences

Purchases of marketable securities

Proceeds from sales of marketable securities

Purchases of other investments

Redemption of other investments

Net Cash Used in Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES

Net Cash Provided by (Used in) Investing Activities

Cash Flows from Financing Activates

Proceeds from stock option exercises

Cash paid for dividend

Net Cash (Used in) Provided by Financing Activities

Dividends paid

Repurchase of common stock

Net Cash Used in Financing Activities

Net increase (decrease) in Cash and Cash Equivalents

4 unchanged sentences

Income taxes paid

Non-Cash Investing and Financing Transactions

Dividends declared and not paid

See accompanying notes to consolidated financial statements.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Nature of Business :

Napco Security Technologies, Inc (“NAPCO”, “the Company”, “we”, “us”) 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.

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.

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

We have established a national network of trusted independent security dealers and integrators that are experts at selling, installing and supporting our various technologies.

These dealers and installers are dependent on our platform for communication services to our radio communicators and smart security devices, and they pay us a monthly fee for these services to operate and manage their businesses efficiently.

Basis of Presentation:

The consolidated financial statements are prepared in conformity with U.S.

Generally Accepted Accounting Principles (“GAAP”) and pursuant to the regulations of the U.S.

Securities and Exchange Commission (“SEC”).

The consolidated financial statements include the accounts of NAPCO and its wholly-owned subsidiaries.

All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with 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.

We continuously evaluate our estimates and judgments based on historical experience, as well as other factors that we believe to be reasonable under the circumstances.

2 unchanged sentences

These estimates may change in the future if underlying assumptions or factors change, and actual results may differ from these estimates.

Significant Accounting Policies :

Fair Value of Financial Instruments

6 unchanged sentences

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

The Company’s cash and cash equivalents included approximately $ 46,518,000 of short-term time deposits, consisting of a certificate of deposit totaling $ 5,402,000 and $ 41,116,000 in money market funds as of June 30, 2024.

Cash and cash equivalents include approximately $ 15,242,000 of short-term time deposits, consisting of several certificates of deposit totaling $ 15,179,000 and $ 63,000 in a money market fund as of June 30, 2023.

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

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

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

8 unchanged sentences

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

The Company’s Certificate of Deposits consist of the following as of (in thousands):

June 30, 2024

Balance Sheet Classification

Interest Rate

Maturity Date

Carrying Value

Cash and Cash Equivalents

Investments - other

4.55 % - 4.75 %

7/25/2024 - 10/24/2024

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

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

June 30, 2024

4 unchanged sentences

Cash and Cash Equivalents

4.59 % - 5.00 %

7/30/2023 - 8/29/2023

Investments - other

1 unchanged sentence

7/25/2024 - 10/24/2024

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of June 30, 2024 and 2023.

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of June 30, 2025.

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 years ended June 30, 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

46 unchanged sentences

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.

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

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

Equipment Revenue

4 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.

7 unchanged sentences

Service Cost of Sales

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

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

Shipping and Handling Sales and Costs

5 unchanged sentences

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, 2024, 2023 and 2022 was $ 10,763,000 , $ 9,328,000 and $ 8,024,000 , respectively.

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

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

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

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

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

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

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

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

Under this method, income tax liabilities or receivables are recognized for the current year, in addition deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled.

When necessary, a valuation allowance is recorded to reduce deferred tax assets to the net amount that is believed is more likely than not to be realized.

That assessment considers the recognition of deferred tax assets on a jurisdictional basis.

Accordingly, in assessing the future taxable income on a jurisdictional basis, the Company considers the effect of the transfer pricing policies on that income.

The Company recognizes tax benefits from uncertain tax positions only if it believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

The Company’s policy is to adjust these unrecognized tax benefits in the period when facts and circumstances change, such as the closing of a tax audit, the expiration of statute of limitation for a relevant taxing authority to examine a tax position, or when additional information becomes available.

To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on the financial condition and operating results.

The provision for income taxes includes the effects of any accruals that we believe are appropriate, as well as the related interest and penalties.

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

excess of a deemed return on their tangible assets.

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

Net Income per Share

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

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

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

Segment Reporting

The Company operates and measures its results in one operating segment and therefore has one reportable segment:

the development, manufacture and sales of high-tech security devices and related cellular communication services for the devices.

The Company’s Chief Operating Decision Maker, (the President, Chief Operating Officer, and Chief Financial Officer) evaluates performance of the Company and makes decisions regarding the allocation of resources based on total Company results.

The Company has presented required geographical data in Note 15.

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

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

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

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

See Note 15 – Segment and geographical data for additional accounting policies and disclosures.

The Company determines at contract inception if an arrangement is a lease, or contains a lease, of an identified asset for which the Company has the right to obtain substantially all of the economic benefits from its use and the right to direct its use.

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

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

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

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

1 unchanged sentence

Recently Adopted 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 for new arrangements 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.

On February 9, 2024, the Company’s bank has shifted to the Benchmark Replacement as defined in the Fourth Amended and Restated Credit Agreement (“Amended Agreement”) with the bank.

The new benchmark rate is the Secured Overnight Financing Rate (SOFR) (see Note 9).

The adoption of the standard and the transition did not have a material impact on the condensed consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The update improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

The guidance requires that an acquiring entity in a business combination recognize and measure contract assets and contract liabilities acquired in accordance with Topic 606 as if it had originated the contract.

The amendments in this update were adopted at the beginning of fiscal 2024 and will be applied prospectively to applicable business combinations.

The Company determined that adoption of this update has not had a material impact on the Company's consolidated financial statements.

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

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

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

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The update expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

It further requires disclosure of the amount and description of its composition for other segment items, and interim disclosures of both a reportable segment’s profit or loss and assets.

The guidance requires disclosure of the title and position of the chief operating decision maker and how reported measures of segment profit or loss are used to assess performance and allocate resources.

This pronouncement is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning

after December 15, 2024, with early adoption permitted.

The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires public entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative , which modifies the disclosure or presentation requirements of a variety of Topics in the Codification.

Among the various codification amendments, Topic 470 Debt is applicable to the Company which requires the disclosure of amounts, terms and weighted-average interest rates of unused lines of credit.

The effective date is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirement by that date, with early adoption prohibited.

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

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes:

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

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

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

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

In November 2024, the FASB issued ASU No.

2024-03, Income Statement:

Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses , which improves disclosure requirements and mandates enhanced transparency about the types of expenses in commonly presented expense captions in financial statements.

This guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted and is effective on either a prospective basis or retrospective basis.

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

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

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NOTE 3 – Business and Credit Concentrations

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

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

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

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

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

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

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

The customer accounts receivable balance did not exceed 10% at June 30, 2022.

Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

The Company had a third customer with an accounts receivable balance that comprised 16 % of the Company’s accounts receivable at June 30, 2022.

The customer accounts receivable balance did not exceed 10% at June 30, 2024 or 2023.

Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2024, 2023 and 2022.

NOTE 4 – Fair Value Measurements

10 unchanged sentences

Cash equivalents

Certificate of deposits

Money market funds

Short-term investments

Certificate of deposits

Marketable securities

Treasury Securities

June 30, 2024

9 unchanged sentences

NOTE 5 – 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 years ended June 30, 2024, 2023 and 2022 are as follows (in thousands):

A summary of the fair value of the Company’s investment in marketable securities as of June 30, 2025 and 2024 is as follows:

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 consolidated statements of income for the years ended June 30, 2025, 2024 and 2023 are as follows (in thousands):

Year ended June 30,

Net gains recognized during the period on marketable securities

Net gains 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 marketable securities (in thousands):

Net gains recognized during the period on equity securities

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

The following tables summarize the Company’s investment in equity securities as of June 30, 2025 and 2024, respectively (in thousands):

June 30, 2025

2 unchanged sentences

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

Available-for-sale securities in a loss position at June 30, 2024 and 2023 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

June 30, 2024

June 30, 2023

Investments in Debt Securities

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

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

Amortized Cost

Unrealized Gains

Unrealized Losses

Aggregate Fair Value

Treasury Securities

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

NOTE 6 - Inventories

36 unchanged sentences

Foreign Source income not subject to Tax

Non-taxable debt extinguishment

Uncertain Tax Positions

20 unchanged sentences

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 and global intangible low-taxed income ("GILTI").

During the year ending June 30, 2024, the Company did no t increase or decrease its reserve for uncertain income tax positions.

During the year ending June 30, 2025, the Company decreased its reserve for uncertain income tax positions due to lapses in Federal and state statutes.

The result of this decrease was a tax benefit of $ 825,000 .

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

6 unchanged sentences

Increase to unrecognized tax benefits resulting from a state filing tax position

Decrease to unrecognized tax benefits resulting from an expiration of a statute

Balance of gross unrecognized tax benefits as of End of Year

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

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

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

NOTE 9 - Debt

1 unchanged sentence

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

The Amended Agreement also increases the available

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

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

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

4 unchanged sentences

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

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”).

The 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").

The PPP Loan and related extinguishment was accounted for in accordance with ASC 470 “Debt”.

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

During the year ended June 30, 2022, the PPP Loans were forgiven, in their entirety, in accordance with guidelines set forth in the PPP loan documents.

The Company recognized a gain on the extinguishment of debt during the fiscal year ended June 30, 2022 in the amount of $ 3,904,000 within the other (expense) income section in the accompanying condensed consolidated statements of income.

The SBA reserves the right to audit PPP forgiveness applications for a period of six years from the date of forgiveness.

It has indicated that it will audit all of those that are in excess of $2 million.

NOTE 10 - Stock Options

1 unchanged sentence

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

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

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

The implied volatilities were obtained from publicly available data sources.

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

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

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

2012 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 June 30, 2024, 363,036 stock options were outstanding, 190,960 stock options were exercisable and no further stock options were available for grant under this plan.

No options were granted under this plan during the year ended June 30, 2024.

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

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

3 unchanged sentences

Expected dividend yields

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

19 unchanged sentences

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

1,000 of the 29,000 stock options exercised during the fiscal year ended June 30, 2022, were settled by the Company withholding 153 from the shares issuable on exercise of the options.

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

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

19 unchanged sentences

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

At June 30, 2024, 20,400 stock options were outstanding, 16,560 stock options were exercisable and 0 stock options were available for grant under this plan.

No stock options were granted under this plan during the year ended June 30, 2024.

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

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

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

13 unchanged sentences

Total intrinsic value of options exercisable

0 , 0 and 9,600 options were granted during the fiscal years ended June 30, 2024, 2023 and 2022, respectively.

0 , 0 and 1,200 options were exercised during the fiscal years ended June 30, 2024, 2023 and 2022, respectively.

1,200 stock options exercised during the fiscal year ended June 30, 2022 were settled by the Company withholding 258 from the shares issuable on exercise of the options.

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

$ 0 was received from the remaining option exercises for each of the fiscal years ended June 30, 2024, 2023 and 2022, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 , $ 0 and $ 4,000 in fiscal 2024, 2023 and 2022 respectively.

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

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

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

17 unchanged sentences

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

No stock options were granted under this plan during the year ended June 30, 2024.

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

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

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

13 unchanged sentences

Total intrinsic value of options exercisable

0 , 0 and 23,500 options were granted during the fiscal years ended June 30, 2024, 2023 and 2022, respectively.

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

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

3 unchanged sentences

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

4,600 stock options exercised during the fiscal year ended June 30, 2022 were settled by the company withholding 2,075 from the shares issuable on exercise of the options.

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

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

18 unchanged sentences

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

No options were granted under this plan during the year ended June 30, 2024.

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:

20 unchanged sentences

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

No options were exercised during the fiscal years ended June 30, 2024, 2023 and 2022.

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

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

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

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

10 unchanged sentences

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

11,380 , 11,380 and 5,380 options vested during the years June 30, 2024, 2023 and 2022, respectively.

The total grant date fair value of the options vesting during the fiscal year ended June 30, 2024, 2023 and 2022 under this plan was $ 129,000 , $ 129,000 and $ 55,000 , respectively.

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

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

2022 Employee Stock Option Plan

1 unchanged sentence

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

Under this plan, the Company may grant stock options, which are intended to

qualify as incentive stock options (“ISOs”) or non-incentive stock options, to valued employees.

Under 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.

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.

2 unchanged sentences

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

130,000 options were granted under this plan during the year ended June 30, 2024.

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

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

7 unchanged sentences

Weighted average

exercise price

Outstanding, beginning of year

6 unchanged sentences

Total intrinsic value of options exercisable

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

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

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

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

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

10 unchanged sentences

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

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

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

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

NOTE 11 – Stockholders’ Equity Transactions

On May 2, 2024 , the Company’s Board of Directors declared a cash dividend of $ .10 per share payable on June 24, 2024 to stockholders of record on June 3, 2024 .

On February 1, 2024 , the Company’s Board of Directors declared a cash dividend of $ .10 per share payable on March 22, 2024 to stockholders of record on March 1, 2024 .

On November 2, 2023 , the Company’s Board of Directors declared a cash dividend of $ .08 per share payable on December 22, 2023 to stockholders of record on December 1, 2023 .

On August 18, 2023 , the Company’s Board of Directors declared a cash dividend of $ .08 per share payable on September 22, 2023 to stockholders of record on September 1, 2023 .

On May 5, 2023 , the Company’s Board of Directors declared a cash dividend of $ .0625 per share payable on June 12, 2023 to stockholders of record on May 22, 2023 .

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

Dividend Declaration Date

Stockholders of Record Date

Dividend Payable Date

Per Share Cash Dividend Amount

June 12, 2025

January 30, 2025

March 12, 2025

April 3, 2025

November 1, 2024

December 12, 2024

January 3, 2025

August 22, 2024

September 12, 2024

October 3, 2024

June 24, 2024

February 1, 2024

March 1, 2024

March 22, 2024

November 2, 2023

December 1, 2023

December 22, 2023

August 18, 2023

September 1, 2023

September 22, 2023

June 12, 2023

Common Shares Repurchases

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

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

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

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

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

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

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

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

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

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

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

Total Number of

Shares Purchased as

Number of Shares

Part of Publicly

that May Yet Be

Announced Plans or

Purchased Under

Plans or Programs

September 10, 2024 - September 19, 2024

November 7, 2024 - December 19, 2024

February 6, 2025 - March 20, 2025

Total for the Year ended June 30, 2025

Stock Option Exercises

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

4 unchanged sentences

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

During fiscal 2022, certain employees and directors exercised stock options under the Company's 2012 Employee and Non-Employee and 2018 Non-Employee Stock Option Plans totaling 34,800 shares.

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

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

2 unchanged sentences

In March 2024, the Company's President and Chairman sold 2,000,000 shares of our common stock as a selling stockholder in an underwritten secondary public offering at a public offering price of $ 40.75 per share.

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

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

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

3 unchanged sentences

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

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

NOTE 13 - 401(k) Plan

7 unchanged sentences

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

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

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

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

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

For the fiscal year ended June 30, 2025 and 2024, cash payments against operating lease liabilities totaled $ 345,000 and $ 343,000 , respectively.

7 unchanged sentences

Operating lease expense totaled approximately $ 486,000 , $ 512,000 and $ 458,000 , for the fiscal years ended June 30, 2025, 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.

The action, captioned Zornberg v.

NAPCO Security Technologies, Inc.

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

A lead plaintiff was appointed in November 2023 and lead plaintiff filed an Amended

Complaint on February 16, 2024.

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

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

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.

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

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

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

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

the remaining claims survived the motion to dismiss.

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

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, former Chief Financial Officer (who is currently the President and Chief Operating Officer), and certain current and former directors.

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

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

The Amended Complaint alleges, among other things, that the individual defendants breached their fiduciary duties and aided and abetted breach of fiduciary duties by allowing the Company to remain with ineffective internal

controls over financial reporting and inventory and by allowing for the dissemination of false and misleading financial information in public filings.

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

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

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

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

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

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

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

The action, captioned Patel v.

NAPCO Security Technologies, Inc.

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

The Court has not yet appointed a lead plaintiff.

The Company intends to vigorously defend against the action.

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.

3 unchanged sentences

As of June 30, 2025, the Company was obligated under three employment agreements and one severance agreement.

The employment agreements are with the Company’s CEO, Senior Vice President of Finance and Chief Accounting Officer (“SVP of Finance”), and the Senior Vice President of Engineering and Chief Technology Officer (“the SVP of Engineering”).

The severance agreement is with the Company’s President, COO and CFO.

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

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

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

2 unchanged sentences

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 Finance expires in June 2025 and provides for an annual salary of $ 350,000 .

Upon the anniversary date, if terminated by the Company without cause, the SVP of Finance is entitled to severance of six months’ salary and continued company-sponsored health insurance for six months from the date of termination.

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

The severance agreement is with the President, Chief Operating Officer and Chief Financial Officer and provides for, if terminated by the Company without cause or within three months of a change in corporate control of the Company, severance of nine months’ salary, based on a salary of $ 604,000 , continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions.

NOTE 15 - Geographical Data

The severance agreement is with the President and Chief Operating Officer and provides for, if terminated by the Company without cause or within three months of a change in corporate control of the Company, severance of nine months’ salary, based on a salary of $ 628,000 , continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions.

NOTE 15 – Segment and Geographical Data

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker.

We have one operating and reportable segment.

The Company’s CODM, (the President and Chief Operating Officer) evaluates performance of the Company and makes decisions regarding the allocation of resources based on total Company results.

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

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

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

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

Fiscal Year ended June 30,

(in thousands)

Cost of revenue

Compensation-related expenses (1)

Commission expenses

Marketing, advertising and other promotional expenses

Research and development (excluding compensation related benefits)

Selling, general, and administrative expenses (2)

Interest and other (income), net

Provision for Income Taxes

Segment Profit

(1) Excludes stock based compensation.

(2) Excludes compensation-related expenses, commission expenses and marketing, advertising and other promotional expenses.

Geographic Information for Revenue

The Company is engaged in one major line of business:

4 unchanged sentences

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

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

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.

The following table presents net sales by geographic area.

Fiscal Year ended June 30,

Sales to external customers:

United States

Total Net Sales

Identifiable assets:

Geographic Information for Long-Lived Assets

Long-lived assets include property and equipment, net and operating lease right-of-use assets, net.

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

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

As of June 30,

Long-lived assets:

United States

Dominican Republic

Total Identifiable Assets

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

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

(2) Consists primarily of inventories (2024 = $ 33,584 ;

2023 = $ 33,477 ), operating lease right of use (2024 = $ 5,487 ;

2023 = $ 5,797 ) and fixed assets (2024 = $ 3,623 ;

2023 = $ 3,958 ) located at the Company’s principal manufacturing facility in the Dominican Republic.

Total Long-lived assets

NOTE 16 – Subsequent Events

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Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures that are designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including the CEO and CFO, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report.

Based on that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures were not effective as of June 30, 2024, due to the material weakness in our internal control over financial reporting described below.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that the controls and procedures will meet their objectives.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the desired control objectives are met.

Further, the design of a control system is a resource constraint, therefore, in reaching a reasonable level of assurance, management applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Management, including our Chief Executive Officer (who is designated as our principal executive officer) and our Chief Financial Officer (who is designated as our principal financial officer), evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2025.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level, as of June 30, 2025.

Management’s Report on Internal Control over Financial Reporting

Management, including our CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a- 15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with U.S.

Under the supervision and with the participation of our management, including our CEO and CFO, we have conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO framework).

Based on evaluation under these criteria, management determined, based upon the existence of the material weakness described below, that we did not maintain effective internal control over financial reporting as of June 30, 2024.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

Current Year Material Weakness

Management identified a material weakness related to inventory costing.

The material weakness was a result of ineffective review of information used in the inventory costing process.

Remediation Plan of Current Year Material Weakness

Management, with the oversight of the audit committee of our Board of Directors, is currently designing and implementing reconciliation procedures to determine that the information used is complete and accurate and expects to complete these actions during fiscal 2025.

While the Company has begun the process to take measures which it believes will remediate the underlying cause of this material weakness, there can be no assurance as to when the remediation plan will be fully developed and implemented and whether such measures will be effective.

Until the Company’s remediation plan is fully implemented and effective, the Company will continue to devote time, attention and financial resources to this effort.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).

Management conducted an assessment of the effectiveness of our internal control over financial reporting as of June 30, 2025 based on the criteria set forth in “Internal Control-Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment, management has concluded that our internal control over financial reporting was effective as of June 30, 2025 based on those criteria.

Management reviewed the results of its assessment with our Audit Committee.

Deloitte & Touche LLP, our independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of June 30, 2025, and has issued an attestation report on our internal controls over financial reporting, which is included herein.

Remediation of Prior Year Material Weaknesses

The following material weaknesses as previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2023, have been remediated.

Our management, with the oversight of the audit committee of our Board of Directors, implemented procedures and controls, including:

● Improved the control activities related to information technology user access and program change management.

Specifically, we installed monitoring software that logs and tracks the activity of the administrative users and generates reports of all logged activity.

● Implemented quarterly review and reconciliation control activities over the completeness and accuracy of the forecasted sales and usage data utilized in the determination of the reserve for excess and slow-moving inventory.

Based upon the above, we believe the steps taken have improved the effectiveness of our internal control over financial reporting and determined that these new or redesigned controls are operating effectively.

Remediation of Previously Reported Material Weakness

As previously reported in Part II, Item 9A.

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

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

Changes in Internal Control over Financial Reporting

Other than the remediation of the material weaknesses in the internal controls described above, and the planned remediation of the current period material weakness, there were no changes in our internal control over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Napco Security Technologies, Inc.

Opinion on Internal Control over Financial Reporting

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and subsidiaries (the “Company”) as of June 30, 2025, 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, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, 2025, of the Company and our report dated August 25, 2025, expressed an unqualified opinion on those financial statements.

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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.

Material Weakness

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.

The following material weakness has been identified and included in management's assessment:

Management identified a material weakness related to inventory costing.

The material weakness was a result of ineffective review of information used in the inventory costing process.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended June 30, 2024, of the Company, and this report does not affect our report on such financial statements.

/s/ DELOITTE & TOUCHE LLP

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The Company adopted an Insider Trading Policy on May 6, 2021.

The policy was filed as an exhibit to the Company’s form 8-K filed on May 6, 2021.

The p o l i cy was filed as an exhibit to the Company’s form 8-K filed on May 6, 2021.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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

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

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

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Compensation Agreement between the Registrant and Andrew Vuono dated June 3, 2024

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

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

Two (2) Year Extension, dated April 27, 2024, of Employment Agreement between the Registrant and Michael Carrieri

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

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

Code of Ethics

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Incentive Compensation Clawback Policy

Exhibit 97 to Report on Form 10-K (Commission file No.

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

Inline XBRL Instance Document **

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(Principal Executive Officer)

President, Chief Operating Officer

President and Chief Operating Officer

August 25, 2025

and Chief Financial Officer

(Principal Financial and Accounting Officer)

/s/ PAUL STEPHEN BEEBER

/s/ ANDREW J.

Chief Financial Officer and

August 25, 2025

Paul Stephen Beeber

Chief Accounting Officer

(Principal Financial and Accounting Officer)

/s/ RICK LAZIO

9 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data