Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Sep. 10, 2021 | Dec. 31, 2020 | |
Document And Entity Information | |||
Document Type | 10-K/A | ||
Amendment Flag | true | ||
Amendment Description | Napco Security Technologies, Inc. ( “Company”) is filing this Amendment No. 1 on Form 10-K/A (the “Amendment”) to amend its Annual Report on Form 10-K for the fiscal year ended June 30, 2021, originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 13, 2021 (the “Original Report”). In filing this amendment, the Company is restating its previously issued audited financial statements for the periods contained therein to account changes to the Company’s inventory obsolescence reserve. Those previously issued financial statements should no longer be relied upon. Except as described below, all other information in, and the exhibits to, the Original Report remain unchanged. Accordingly, this Amendment should be read in conjunction with the Original Report and with our filings with the SEC made after the Original Report. This Amendment speaks as of the date of the Original Report and the Company has not updated the Original Report to reflect events occurring subsequent to the date of the Original Report. | ||
Document Annual Report | true | ||
Document Period End Date | Jun. 30, 2021 | ||
Entity File Number | 1-10004 | ||
Entity Registrant Name | NAPCO SECURITY TECHNOLOGIES, INC | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 11-2277818 | ||
Entity Address, Address Line One | 333 Bayview Avenue | ||
Entity Address, City or Town | Amityville | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 11701 | ||
City Area Code | 631 | ||
Local Phone Number | 842-9400 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Title of 12(b) Security | Common Stock, $0.01 par value | ||
Trading Symbol | NSSC | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Interactive Data Current | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Central Index Key | 0000069633 | ||
Current Fiscal Year End Date | --06-30 | ||
ICFR Auditor Attestation Flag | false | ||
Entity Public Float | $ 376,476,776 | ||
Entity Common Stock, Shares Outstanding | 36,702,168 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 34,806 | $ 18,248 |
Marketable securities | 5,413 | |
Accounts receivable, net of allowance for doubtful accounts of $226 and $326 at June 30, 2021 and June 30, 2020, respectively, and other reserves | 28,081 | 22,932 |
Inventories, net | 24,933 | 34,727 |
Prepaid expenses and other current assets | 2,408 | 2,049 |
Total Current Assets | 95,641 | 77,956 |
Inventories - non-current, net | 6,767 | 5,688 |
Property, plant and equipment, net | 7,836 | 8,088 |
Intangible assets, net | 4,691 | 5,116 |
Operating lease asset | 7,373 | 7,395 |
Other assets | 243 | 255 |
TOTAL ASSETS | 122,551 | 104,498 |
CURRENT LIABILITIES | ||
Accounts payable | 6,095 | 6,547 |
Accrued expenses | 6,582 | 5,743 |
Accrued salaries and wages | 3,478 | 2,181 |
Current portion of long-term debt | 2,386 | 1,794 |
Accrued income taxes | 1,709 | 1,239 |
Total Current Liabilities | 20,250 | 17,504 |
Long term debt, net of current portion | 1,518 | 2,110 |
Deferred income taxes | 380 | 43 |
Accrued income taxes | 925 | 1,188 |
Long term operating lease liabilities | 7,090 | 7,113 |
Total Liabilities | 30,163 | 27,958 |
COMMITMENTS AND CONTINGENCIES (Note 13) | ||
STOCKHOLDERS' EQUITY | ||
Common Stock, par value $0.01 per share; 40,000,000 shares authorized; 21,244,799 and 21,241,066 shares issued; and 18,351,084 and 18,347,351 shares outstanding, respectively | 396 | 396 |
Additional paid-in capital | 18,201 | 17,766 |
Retained earnings | 93,312 | 77,899 |
Less: Treasury Stock, at cost (2,893,715 shares) | (19,521) | (19,521) |
TOTAL STOCKHOLDERS' EQUITY | 92,388 | 76,540 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 122,551 | $ 104,498 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 226,000 | $ 326,000 |
Common stock, par value (per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 80,000,000 | 80,000,000 |
Common stock, issued (in shares) | 39,595,883 | 39,588,417 |
Common stock, outstanding (in shares) | 36,702,168 | 36,694,702 |
Treasury stock, shares | 2,893,715 | 2,893,715 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net sales: | |||
Revenues | $ 114,035,000 | $ 101,359,000 | $ 102,932,000 |
Cost of sales: | |||
Cost of sales | 63,287,000 | 58,515,000 | 58,732,000 |
Gross Profit | 50,748,000 | 42,844,000 | 44,200,000 |
Operating expenses: | |||
Research and development | 7,620,000 | 7,257,000 | 7,212,000 |
Selling, general, and administrative expenses | 25,196,000 | 23,670,000 | 23,212,000 |
Impairment of intangible asset | 1,852,000 | ||
Total Operating Expenses | 32,816,000 | 32,779,000 | 30,424,000 |
Operating Income | 17,932,000 | 10,065,000 | 13,776,000 |
Other expense: | |||
Interest and other expense, net | 5,000 | 9,000 | 21,000 |
Income before Provision for Income Taxes | 17,927,000 | 10,056,000 | 13,755,000 |
Provision for Income Taxes | 2,514,000 | 2,261,000 | 1,274,000 |
Net Income | $ 15,413,000 | $ 7,795,000 | $ 12,481,000 |
Income per share: | |||
Basic (in dollars per share) | $ 0.42 | $ 0.21 | $ 0.34 |
Diluted (in dollars per share) | $ 0.42 | $ 0.21 | $ 0.34 |
Weighted average number of shares outstanding: | |||
Basic (in shares) | 36,696,000 | 36,888,000 | 37,148,000 |
Diluted (in shares) | 36,808,000 | 36,986,000 | 37,248,000 |
Equipment | |||
Net sales: | |||
Revenues | $ 80,131,000 | $ 77,314,000 | $ 85,505,000 |
Cost of sales: | |||
Cost of sales | 58,401,000 | 54,182,000 | 54,930,000 |
Services | |||
Net sales: | |||
Revenues | 33,904,000 | 24,045,000 | 17,427,000 |
Cost of sales: | |||
Cost of sales | $ 4,886,000 | $ 4,333,000 | $ 3,802,000 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY - USD ($) $ in Thousands | Common StockPreviously Reported | Common Stock | Additional Paid-in CapitalPreviously Reported | Additional Paid-in Capital | Treasury StockPreviously Reported | Treasury Stock | Retained EarningsPreviously Reported | Retained EarningsRevision of Prior Period, Adjustment | Retained Earnings | Previously Reported | Revision of Prior Period, Adjustment | Total |
Balance at Jun. 30, 2018 | $ 212 | $ 396 | $ 16,890 | $ 16,890 | $ (13,069) | $ (13,069) | $ 59,420 | $ (894) | $ 58,342 | $ 63,453 | $ (894) | $ 62,559 |
Balance (in shares) at Jun. 30, 2018 | 21,204,327 | 39,514,939 | (2,475,245) | (2,475,245) | ||||||||
Repurchase of treasury shares | $ (3,998) | (3,998) | ||||||||||
Repurchase of treasury shares (in shares) | (274,065) | |||||||||||
Stock options exercised | 53 | 53 | ||||||||||
Stock options exercised (in shares) | 45,534 | |||||||||||
Stock-based compensation expense | 160 | 160 | ||||||||||
Net income | 12,481 | 12,481 | ||||||||||
Balance (Implementation of ASC 606) at Jun. 30, 2019 | (719) | (719) | ||||||||||
Balance at Jun. 30, 2019 | $ 396 | 17,103 | $ (17,067) | 70,104 | 70,536 | |||||||
Balance (in shares) at Jun. 30, 2019 | 39,560,473 | (2,749,310) | ||||||||||
Repurchase of treasury shares | $ (2,454) | (2,454) | ||||||||||
Repurchase of treasury shares (in shares) | (144,405) | |||||||||||
Stock options exercised | 80 | 80 | ||||||||||
Stock options exercised (in shares) | 27,944 | |||||||||||
Stock-based compensation expense | 583 | 583 | ||||||||||
Net income | 7,795 | 7,795 | ||||||||||
Balance at Jun. 30, 2020 | $ 396 | 17,766 | $ (19,521) | 77,899 | 76,540 | |||||||
Balance (in shares) at Jun. 30, 2020 | 39,588,417 | (2,893,715) | ||||||||||
Stock options exercised | ||||||||||||
Stock options exercised (in shares) | 7,466 | |||||||||||
Stock-based compensation expense | 435 | 435 | ||||||||||
Net income | 15,413 | $ 14,901 | 15,413 | |||||||||
Balance at Jun. 30, 2021 | $ 396 | $ 18,201 | $ (19,521) | $ 93,312 | $ 92,388 | |||||||
Balance (in shares) at Jun. 30, 2021 | 39,595,883 | (2,893,715) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 15,413,000 | $ 7,795,000 | $ 12,481,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 1,697,000 | 1,495,000 | 1,409,000 |
Impairment of intangible asset | 1,852,000 | ||
Loss on marketable securities | 9,000 | ||
(Recovery of) provision for doubtful accounts | (100,000) | 238,000 | (26,000) |
Change to inventory obsolescence reserve | (79,000) | 624,000 | (582,000) |
Deferred income taxes | 337,000 | (47,000) | 755,000 |
Stock based compensation expense | 435,000 | 583,000 | 160,000 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (5,049,000) | 2,800,000 | (1,440,000) |
Inventories | 8,794,000 | (6,793,000) | (5,991,000) |
Prepaid expenses and other current assets | (359,000) | (168,000) | 318,000 |
Other assets | (11,000) | ||
Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes | 1,889,000 | 1,926,000 | 1,580,000 |
Net Cash Provided by Operating Activities | 22,987,000 | 10,305,000 | 8,653,000 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Purchases of property, plant, and equipment | (1,007,000) | (1,615,000) | (1,988,000) |
Purchases of marketable securities | (5,422,000) | ||
Net Cash Used in Investing Activities | (6,429,000) | (1,615,000) | (1,988,000) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from long-term debt | 3,904,000 | ||
Proceeds from stock option exercises | 80,000 | 53,000 | |
Cash paid for purchase of treasury stock | (2,454,000) | (3,998,000) | |
Net Cash Provided by (Used in) Financing Activities | 1,530,000 | (3,945,000) | |
Net increase in Cash and Cash Equivalents | 16,558,000 | 10,220,000 | 2,720,000 |
CASH AND CASH EQUIVALENTS - Beginning | 18,248,000 | 8,028,000 | 5,308,000 |
CASH AND CASH EQUIVALENTS - Ending | 34,806,000 | 18,248,000 | 8,028,000 |
SUPPLEMENTAL CASH FLOW INFORMATION | |||
Interest paid | 18,000 | 29,000 | 23,000 |
Income taxes paid | $ 1,970,000 | $ 749,000 | 262,000 |
Surrender of Common Shares | $ 8,000 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2021 | |
Nature of Business and Summary of Significant Accounting Policies | |
Nature of Business and Summary of Significant Accounting Policies | NOTE 1 - Nature of Business and Summary of Significant Accounting Policies Nature of Business : Napco Security Technologies, Inc (“NAPCO”, “the Company”, “we”) is one of the leading manufacturers and designers of high-tech electronic security devices, as well as a leading provider of school safety solutions. We offer a diversified array of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. We have experienced significant growth in recent years, primarily driven by fast growing recurring service revenues generated from wireless communication services for intrusion and fire alarm systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as a result of on-campus shooting and violence in the U.S. The Company’s fiscal year begins on July 1 and ends on June 30. Historically, the end users of the Company’s products want to install its products prior to the summer; therefore sales of its products historically peak in the period April 1 through June 30, the Company’s fiscal fourth quarter, and are reduced in the period July 1 through September 30, the Company’s fiscal first quarter. In addition, demand for our products is affected by the housing and construction markets. Deterioration of the current economic conditions may also affect this trend. Our results for fiscal 2021 reflects the increase in customer demand after the creation of the challenging business environment resulting from the COVID-19 pandemic. While the Company believes this recovery will continue, there can be no assurances in the event of a return to building and construction restrictions that might result from a return to last year’s levels of COVID-19 cases. Significant Accounting Policies : Principles of Consolidation The consolidated financial statements include the accounts of Napco Security Technologies, Inc. and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. Accounting Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates include management’s judgments associated with reserves for sales returns and allowances, allowance for doubtful accounts, inventory reserves, valuation of Fair Value of Financial Instruments The methods and assumptions used to estimate the fair value of the following classes of financial instruments were: Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, current receivables and payables and certain other short-term financial instruments approximate their fair value as of June 30, 2021 and 2020 due to their short-term maturities. Cash and Cash Equivalents Cash and cash equivalents include approximately $63,000 and $460,000 of short-term time deposits at June 30, 2021 and 2020, respectively. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of June 30, 2021 and 2020. The Company has not historically experienced any credit losses with balances in excess of FDIC limits. Marketable Securities The Company’s marketable securities include investments in mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds Accounts Receivable Accounts receivable is stated net of the reserves for doubtful accounts of $226,000 and $326,000 as of June 30, 2021 and 2020, respectively. Our reserves for doubtful accounts are subjective critical estimates that have a direct impact on reported net earnings. These reserves are based upon the evaluation of our accounts receivable aging, specific exposures, sales levels and historical trends. Inventories Inventories are valued at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (FIFO) method. The reported net value of inventory includes finished saleable products, work-in-process and raw materials that will be sold or used in future periods. Inventory costs include raw materials, direct labor and overhead. The Company’s overhead expenses are applied based, in part, upon estimates of the proportion of those expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products. These proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and actual results could differ from those estimates. In addition, the Company records an inventory obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, product life cycles, requirements to support forecasted sales, and the ability to find alternate applications of its raw materials and to convert finished product into alternate versions of the same product to better match customer demand. In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events. There is inherent professional judgment and subjectivity made by both production and engineering members of management in determining the estimated obsolescence percentage. The Company also regularly reviews the period over which its inventories will be converted to sales. Any inventories expected to convert to sales beyond 12 months from the balance sheet date are classified as non-current. Property, Plant, and Equipment Property, plant, and equipment are carried at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred; costs of major renewals and improvements are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition is reflected in income. Depreciation is recorded over the estimated service lives of the related assets using primarily the straight-line method. Amortization of leasehold improvements is calculated by using the straight-line method over the estimated useful life of the asset or lease term, whichever is shorter. Long-Lived and Intangible Assets Long-lived assets are amortized over their useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets in question may not be recoverable. Impairment would be recorded in circumstances where undiscounted cash flows expected to be generated by an asset are less than the carrying value of that asset. Intangible assets determined to have indefinite lives were not amortized but were tested for impairment at least annually. The Company’s acquisition of substantially all of the assets and certain liabilities of G. Marks Hardware, Inc. (“Marks”) in August 2008 included intangible assets recorded at fair value on the date of acquisition. The customer relationships are amortized over their estimated useful lives of twenty years. At the acquisition date, the Marks trade name was deemed to have an indefinite life. During the 4th quarter of fiscal 2020, the Company determined that the trade-name was impaired. Accordingly, the Company recorded an impairment charge of $1,852,000 and reclassified the remaining balance of the underlying asset from indefinite-lived to a long-lived asset with a remaining useful life of 20 years as of June 30, 2020. Changes in intangible assets are as follows (in thousands): June 30, 2021 June 30, 2020 June 30, 2019 Carrying Accumulated Net book Carrying Accumulated Net book Carrying Accumulated Net book value amortization value value amortization value value amortization value Customer relationships $ 9,800 $ (8,955) $ 845 $ 9,800 $ (8,732) $ 1,068 $ 9,800 $ (8,468) $ 1,332 Trade name 4,048 (202) 3,846 4,048 — 4,048 5,900 — 5,900 $ 13,848 $ (9,157) $ 4,691 $ 13,848 $ (8,732) $ 5,116 $ 15,700 $ (8,468) $ 7,232 Amortization expense for intangible assets subject to amortization was approximately $425,000, $264,000 and $313,000 for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. Amortization expense for each of the next five fiscal years is estimated to be as follows: 2022-$390,000; 2023 - $361,000; 2024 - $336,000; 2025 - $315,000; and 2026-$297,000. The weighted average remaining amortization period for intangible assets was 16.9 years and 17.5 years at June 30, 2021 and 2020, respectively. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. For product sales, the Company typically transfers control at a point in time upon shipment or delivery of the product. For monthly communication services the Company satisfies its performance obligation as the services are rendered and therefore recognizes revenue over the monthly period. Typically timing of revenue recognition coincides with the timing of invoicing to the customers, at which time the Company has an unconditional right to consideration. As such, the Company typically records a receivable when revenue is recognized. The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for product sales is typically due within 30 and 180 days of the delivery date. Payment for monthly communication services is billed on a monthly basis and is typically due at the beginning of the month of service. The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months. The Company accepts returns for such defective products as well as for other limited circumstances. The Company also provides rebates to customers for meeting specified purchasing targets and other coupons or credits in limited circumstances. The Company establishes reserves for the estimated returns, rebates and credits and measures such variable consideration based on the expected value method using an analysis of historical data. Changes to the estimated variable consideration in subsequent periods are not material. The Company analyzes sales returns and is able to make reasonable and reliable estimates of product returns based on the Company’s past history. Estimates for sales returns are based on several factors including actual returns and based on expected return data communicated to it by its customers. Accordingly, the Company believes that its historical returns analysis is an accurate basis for its allowance for sales returns. Actual results could differ from those estimates. Advertising and Promotional Costs Advertising and promotional costs are included in "Selling, General and Administrative" expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for fiscal years ended June 30, 2021, 2020 and 2019 was $1,306,000, $1,722,000 and $2,047,000, respectively. Research and Development Costs Research and development costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income. Company-sponsored research and development expense for the fiscal years ended June 30, 2021, 2020 and 2019 was $7,620,000, $7,257,000 and $7,212,000, respectively. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. Net Income per Share as Restated Basic net income per common share (Basic EPS) is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding. The following provides a reconciliation of information used in calculating the per share amounts for the fiscal years ended June 30 (in thousands, except per share data): Weighted Average Net Income per Net Income Shares Share 2021 2020 2019 2021 2020 2019 2021 2020 2019 Basic EPS $ 15,413 $ 7,795 $ 12,481 36,696 36,888 37,148 $ 0.42 $ 0.21 $ 0.34 Effect of Dilutive Securities: Stock Options — — — 112 98 100 — — — Diluted EPS $ 15,413 $ 7,795 $ 12,481 36,808 36,986 37,248 $ 0.42 $ 0.21 $ 0.34 Options to purchase 40,000, 77,638 and 5,914 shares of common stock were excluded for the fiscal years ended June 30, 2021, 2020 and 2019, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive. These options were still outstanding at the end of the respective periods.Stock-Based Compensation The Company has established four share incentive programs as discussed in Note 9. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility and forfeiture rates, among other factors. Stock-based compensation costs of $435,000, $583,000 and $160,000 were recognized for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. Foreign Currency The Company has determined the functional currency of all foreign subsidiaries is the U.S. Dollar. All foreign operations are considered a direct and integral part or extension of the Company’s operations. The day-to-day operations of all foreign subsidiaries are dependent on the economic environment of the U.S. Dollar. Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the fiscal years ended June 30, 2021, 2020 or 2019. Comprehensive Income For the fiscal years ended June 30, 2021, 2020 and 20219, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income. Accordingly, the Company’s comprehensive income approximates its net income for all periods presented. Segment Reporting The Company’s reportable operating segments are determined based on the Company’s management approach. The management approach is based on the way that the chief operating decision maker organizes the segments within an enterprise for making operating decisions and assessing performance. The Company’s results of operations are reviewed by the chief operating decision maker on a consolidated basis and the Company operates in only one segment. The Company has presented required geographical data in Note 14. Shipping and Handling Sales and Costs The Company records the amount billed to customers for shipping and handling in net sales ($395,000, $452,000 and $430,000 in the fiscal years ended June 30, 2021, 2020 and 2019, respectively) and classifies the costs associated with these sales in cost of sales ($1,058,000, $1,034,000 and $1,115,000 in the fiscal years ended June 30, 2021, 2020 and 2019, respectively). Leases Effective July 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date. In addition, we elected the package of practical expedients million Recently Adopted Accounting Standards On July 1, 2019, we adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. We adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. For information regarding the impact of Topic 842 adoption, see Significant Accounting Policies - Leases and Note 13- Leases. Recently Issued Accounting Standards Reference Rate Reform (ASC Topic 848) In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”), which is expected to be phased out at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform. The amendments clarify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC Topic 848. Effective for the Company – This guidance can be applied for a limited time through December 31, 2022. The guidance will no longer be available to apply after December 31, 2022. Impact on consolidated financial statements – The Company is currently assessing the impact of applying this guidance on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance. |
Restatement of Previously Issue
Restatement of Previously Issued Financial Statements | 12 Months Ended |
Jun. 30, 2021 | |
Nature of Business and Summary of Significant Accounting Policies | |
Restatement of Previously Issued Financial Statements | NOTE 1A – Restatement of Previously Issued Financial Statements Subsequent to the filing of the Original Form 10-K, management reviewed its methodology for calculating its reserves for obsolete inventory. During this review, management identified changes related to the Company’s reserves for obsolete inventory that it deemed appropriate. The reserves reflected in the Company’s Original Form 10-K relied primarily on estimates developed by management, which were based on historic and institutional knowledge and judgements as to the potential for obsolescence for items deemed at risk. Upon management’s review, it was determined a systematic method of evaluation, which utilized historical data, including sales data and component parts usage, as well as product life cycles, trends and judgement, is more accurate. This resulted in changes to the Company’s reserves for obsolescence for fiscal years 2021, 2020 and 2019. The effects of these changes on the financial statements for these periods are shown in the tables below. Retained earning as of the beginning of fiscal 2019 has been adjusted by $894 related to the restatement of inventories ($901) net of tax effect of ($7). The table below sets forth the consolidated balance sheets information, including the balances originally reported and the restated balances as of June 30: June 30, 2021 June 30, 2020 (in thousands, except for share and per share data) As As previously As previously As reported restated reported restated Inventory - Current $ 25,278 $ 24,933 $ 35,231 $ 34,727 Inventory - Non-Current 7,164 6,767 6,524 5,688 Accrued income taxes 1,635 1,709 1,148 1,239 Deferred income taxes 347 380 112 43 Retained earnings 94,345 93,312 79,444 77,899 The table below sets forth the consolidated statements of income information, including the balances originally reported and the restated balances for the fiscal years ended June 30: June 30, 2021 (in thousands, except for share and per share data) As previously reported Restated Equipment Related Expenses $ 58,998 $ 58,401 Cost of Sales 63,884 63,287 Gross Profit 50,151 50,748 Operating Income 17,335 17,932 Income before provision for Income Taxes 17,330 17,927 Provision for Income Taxes 2,429 2,514 Net Income 14,901 15,413 Income per share: Basic $ 0.41 $ 0.42 Diluted $ 0.41 $ 0.42 June 30, 2020 (in thousands, except for share and per share data) As previously reported Restated Equipment Related Expenses $ 53,434 $ 54,182 Cost of Sales 57,767 58,515 Gross Profit 43,592 42,844 Operating Income 10,813 10,065 Income before provision for Income Taxes 10,804 10,056 Provision for Income Taxes 2,284 2,261 Net Income 8,520 7,795 Income per share: Basic $ 0.23 $ 0.21 Diluted $ 0.23 $ 0.21 June 30, 2019 (in thousands, except for share and per share data) As previously reported Restated Equipment Related Expenses $ 55,240 $ 54,930 Cost of Sales 59,042 58,732 Gross Profit 43,890 44,200 Operating Income 13,466 13,776 Income before provision for Income Taxes 13,445 13,755 Provision for Income Taxes 1,222 1,274 Net Income 12,223 12,481 Income per share: Basic $ 0.33 $ 0.34 Diluted $ 0.33 $ 0.34 The table below sets forth the consolidated statements of cash flows information, including the balances originally reported and the restated balances for the fiscal years ended June 30: June 30, 2021 (in thousands, except for share and per share data) As previously reported Restated Net income $ 14,901 $ 15,413 Change to inventory obsolescence reserve 519 (79) Deferred income taxes 235 337 Changes in operating assets and liabilities: Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes 1,906 1,889 Net Cash Provided by Operating Activities 22,987 22,987 June 30, 2020 (in thousands, except for share and per share data) As previously reported Restated Net income $ 8,520 $ 7,795 Change to inventory obsolescence reserve (124) 624 Deferred income taxes 40 (47) Changes in operating assets and liabilities: Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes 1,862 1,926 Net Cash Provided by Operating Activities 10,305 10,305 'June 30, 2019 (in thousands, except for share and per share data) As previously reported Restated Net income $ 12,223 $ 12,481 Change to inventory obsolescence reserve (272) (582) Deferred income taxes 755 755 Changes in operating assets and liabilities: Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes 1,528 1,580 Net Cash Provided by Operating Activities 8,653 8,653 In addition to the restated consolidated financial statements, the information contained in notes 5, 7 and 14 have been restated. |
Revenue Recognition and Contrac
Revenue Recognition and Contracts with Customers | 12 Months Ended |
Jun. 30, 2021 | |
Revenue Recognition and Contracts with Customers | |
Revenue Recognition and Contracts with Customers | NOTE 2 – Revenue Recognition and Contracts with Customers Adoption On July 1, 2018 the Company adopted new guidance on revenue from contracts with customers using the modified retrospective method applied to contracts that were not completed as of July 1, 2018. Results for reporting periods beginning after July 1, 2018 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. The Company recorded a net decrease to opening retained earnings of approximately $719,000 (net of tax benefit of $191,000) as of July 1, 2018, for the cumulative impact of adopting the new guidance. The impact primarily related to the change in the recognition and measurement of certain types of variable considerations, which resulted in the increase in sales allowance reserves (i.e. refund liabilities) by a net of $1,627,000 and increased other assets (i.e. return related assets) by approximately $716,000. The Company is engaged in one major line of business: the development, manufacture, and distribution of security products, encompassing access control systems, door security products, intrusion and fire alarm systems, alarm communication services, and video surveillance products for commercial and residential use. The Company also provides wireless communication service for intrusion and fire alarm systems on a monthly basis. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are primarily shipped from the United States. As of June 30, 2021 and 2020, the Company included refund liabilities of approximately $4,277,000 and $3,331,000, respectively, in current liabilities. As of June 30, 2021 and 2020, the Company included return-related assets of approximately $890,000 and $701,000, respectively, in other current assets. As a percentage of gross sales, sales returns, rebates and allowances were 10%, 9% and 8% for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. The Company disaggregates revenue from contracts with customers into major product lines. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in the accounting policy footnote, the Company’s business consists of one operating segment. Following is the disaggregation of revenues based on major product lines (in thousands): Year ended June 30, 2021 2020 2019 Major Product Lines: Intrusion and access alarm products $ 36,794 $ 31,310 $ 31,557 Door locking devices 43,337 46,004 53,948 Services 33,904 24,045 17,427 Total Revenues $ 114,035 $ 101,359 $ 102,932 |
Reserve for Doubtful Accounts
Reserve for Doubtful Accounts | 12 Months Ended |
Jun. 30, 2021 | |
Reserve for Doubtful Accounts | |
Reserve for Doubtful Accounts | NOTE 3 – Reserve for Doubtful Accounts An entity is more vulnerable to concentrations of credit risk if it is exposed to risk of loss greater than it would have had if it mitigated its risk through diversification of customers. The Company had one customer with an accounts receivable balance that comprised 19%, 24% and 19% of the Company’s accounts receivable at June 30, 2021, 2020 and 2019, respectively. Sales to this customer did not exceed 10% of net sales during fiscal year ended June 30, 2020. Sales to this customer comprised 10% of net sales during fiscal year ended June 30, 2021 and 2019. The Company had another customer with an accounts receivable balance that comprised 10% of the Company’s accounts receivable at June 30, 2021. Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2021, 2020 and 2019, respectively. The Company had another customer with an accounts receivable balance that comprised 10% of the Company’s accounts receivable at June 30, 2020. Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2021, 2020 and 2019, respectively. The Company had another customer with an accounts receivable balance that comprised 10% of the Company’s accounts receivable at June 30, 2021 and 2019. Sales to this customer did not exceed 10% of net sales in any of the fiscal years ended June 30, 2021, 2020 and 2019. |
Marketable Securities
Marketable Securities | 12 Months Ended |
Jun. 30, 2021 | |
Marketable Securities | |
Marketable Securities | NOTE 4 – Marketable Securities Marketable securities include investments in fixed income mutual funds, which are reported at their fair values. The disaggregated net gains and losses on the marketable securities recognize in the income statement for the year ended June 30, 2021, are as follows: June 30, 2021 Net gains recognized during the period on marketable securities $ — Less: Net gains recognized during the year on marketable securities sold during the period — Unrealized (losses) gains recognized during the reporting year on marketable securities still held at the reporting date (9) $ (9) The fair values of the Company’s marketable securities are determined as being the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Company utilizes the three-tier value hierarchy, as prescribed by US GAAP, which prioritizes the inputs used in measuring fair value as follows: ● ● ● The Company’s marketable securities, which are considered available-for-sale securities, are re-measured to fair value on a recurring basis and are valued using Level 1 inputs using quoted prices (unadjusted) for identical assets in active markets. The following tables summarize the Company’s investments: Unrealized Cost Fair Value Gain (Loss) Marketable Securities $ 5,422 $ 5,413 $ (9) Investment income is recognized when earned and consists principally of interest income from fixed income mutual funds. Realized gains and losses on sales of investments are determined on a specific identification basis. For the year ended June 30, 2021, there were no transfers between Levels 1 and 2 investments and no transfers in or out of Level 3. |
Inventories
Inventories | 12 Months Ended |
Jun. 30, 2021 | |
Inventories | |
Inventories | NOTE 5 - Inventories Inventories, net of reserves are valued at lower of cost (first-in, first-out method) or net realizable value. Inventories, net of reserves consist of the following as of (in thousands): June 30, June 30, 2021 2020 (as restated) Component parts $ 17,245 $ 21,677 Work-in-process 6,158 7,276 Finished product 8,297 11,462 $ 31,700 $ 40,415 Classification of inventories, net of reserves: Current $ 24,933 $ 34,727 Non-current 6,767 5,688 $ 31,700 $ 40,415 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 12 Months Ended |
Jun. 30, 2021 | |
Property, Plant, and Equipment | |
Property, Plant, and Equipment | NOTE 6 - Property, Plant, and Equipment Property, plant and equipment consist of the following (in thousands): June 30, 2021 June 30, 2020 Useful Life in Years Land $ 904 $ 904 N/A Buildings 8,911 8,911 30 to 40 Molds and dies 7,416 7,337 3 to 5 Furniture and fixtures 2,813 2,792 5 to 10 Machinery and equipment 25,548 24,878 7 to 10 Building improvements 2,409 2,173 Shorter of the lease term or life of asset 48,001 46,995 Less: accumulated depreciation and amortization (40,165) (38,907) $ 7,836 $ 8,088 Depreciation and amortization expense on property, plant, and equipment was approximately $1,260,000, $1,221,000 and $1,085,000 in fiscal 2021, 2020 and 2019, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | NOTE 7 - Income Taxes The provision for income taxes is comprised of the following as restated For the Year ended June 30, 2021 2020 2019 Current income taxes: Federal $ 1,912 $ 1,765 $ 334 State 265 418 151 2,177 2,183 485 Deferred income tax provision 337 78 789 Provision for income taxes $ 2,514 $ 2,261 $ 1,274 A reconciliation of the U.S. Federal statutory income tax rate to our actual effective tax rate on earnings before income taxes is as follows for the years ended June 30, as restated 2021 2020 2019 % of % of % of Pre-tax Pre-tax Pre-tax Amount Income Amount Income Amount Income Tax at Federal statutory rate $ 3,765 21.0 % $ 2,112 21.0 % $ 2,888 21.0 % Increases (decreases) in taxes resulting from: Meals and entertainment 29 0.2 % 44 0.4 % 49 0.4 % State income taxes, net of Federal income tax benefit 135 0.8 % 122 1.2 % 111 0.8 % Foreign source income not subject to tax (1,647) (9.2) % (1,089) (10.8) % (1,241) (9.0) % R&D Credit (523) (2.9) % (523) (4.7) % (408) (3.0) % Foreign withholding tax 205 1.1 % — — % — — % Release of accrued tax reserves — — % — — % (151) (1.1) % Uncertain Tax Positions 312 1.7 % 775 7.2 % — — % IRS examination settlements — — % 832 8.3 % 12 0.1 % Other, net 238 1.3 % (12) (0.1) % 14 0.1 % Effective tax rate $ 2,514 14.0 % $ 2,261 22.5 % $ 1,274 9.3 % Deferred tax assets and deferred tax liabilities at June 30, 2021 and 2020 are as follows as restated Deferred Tax Assets (Liabilities) 2021 2020 Accounts receivable $ 43 $ 40 Inventories 314 443 Accrued liabilities 374 262 Stock based compensation expense 102 96 Intangibles (454) (300) Property, plant and equipment (539) (484) Revenue reserves 393 308 Other deferred tax liabilities (613) (408) (380) (43) Valuation allowance — — Net deferred tax liabilities $ (380) $ (43) The Company has identified the United States and New York State as its major tax jurisdictions. Fiscal year 2018 and forward years are still open for examination. In addition, the Company has a wholly-owned subsidiary which operates in a Free Zone in the Dominican Republic (“DR”) and is exempt from DR income tax. The Company was audited by the IRS for the fiscal year 2016. In July 2019, the Company received Form 4549-A, Income Tax Examination Changes from the IRS proposing an adjustment to income for the fiscal 2016 tax year regarding deemed dividends based on its interpretation of Internal Revenue Code ("IRC") Section 956 arising from the intercompany balances on the books of the Company. In August 2019, the Company filed a formal protest with the IRS requesting an opportunity to appeal the examination findings to the Appeals Office. During fiscal year 2020, the Company settled the issue at Appeals. There was a provision recorded for the federal and state impact of $762,000 and $70,000, respectively. The Company was audited by the IRS for the fiscal year 2017. The Company received Form 4549-A, Income Tax Examination Changes from the IRS proposing an adjustment to income for the fiscal 2017 tax year regarding deemed dividends based on its interpretation under IRC Section 956 arising from the intercompany balances on the books of the Company. During the third quarter of fiscal 2021, the Company settled the issue and paid the IRS $399,000 . The Company reported the results of the IRS exam to all the jurisdictions in which it files and paid taxes and interest totaling $97,000. Subsequent to the quarter end, the Company paid the IRS $68,000 for interest. None of the payments were recorded to expense since liabilities had previously been established. The provision for income taxes represents Federal, foreign, and state and local income taxes. The effective rate differs from statutory rates due to the effect of tax rates in foreign jurisdictions, state and local income taxes, tax benefit of R&D credits, certain nondeductible expenses, uncertain tax positions, audit settlements and global intangible low-taxed income ("GILTI"). During the year ending June 30, 2021 the Company decreased its reserve for uncertain income tax positions by $208,000. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense and accrued income taxes. As of June 30, 2021, the Company had accrued interest totaling $63,000 and $678,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period. The Company does not expect that its unrecognized tax benefits will significantly change within the next twelve months. The Company claims R&D tax credits on eligible research and development expenditures. The R&D tax credits are recognized as a reduction to income tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows as restated Tax Interest Total Balance of gross unrecognized tax benefits as of July 1, 2018 $ 221 $ — $ 221 Decrease to unrecognized tax benefits resulting from release of R&D credits due to the IRS audit (151) — (151) Increases to unrecognized tax benefits resulting from the generation of additional R&D credits 55 — 55 Balance of gross unrecognized tax benefits as of June 30, 2019 $ 125 $ — $ 125 Increase to unrecognized tax benefits resulting from deemed dividends for investments in US property 682 83 765 Increases to unrecognized tax benefits resulting from the generation of additional R&D credits 59 — 59 Balance of gross unrecognized tax benefits as of June 30, 2020 $ 866 $ 83 $ 949 Decrease to unrecognized tax benefits from deemed dividends for investments in US property (3) (20) (23) Decrease to unrecognized tax benefits resulting from the release of R&D credits due to the settled IRS audit (185) — (185) Balance of gross unrecognized tax benefits as of June 30, 2021 $ 678 $ 63 $ 741 The Company plans to permanently reinvest a substantial portion of its foreign earnings and as such has not provided withholding tax on the permanently reinvested earnings. The Company has accrued $613,000 for withholding taxes on undistributed earnings that are not permanently reinvested. As of June 30, 2021 the Company had approximately $60.4 million of undistributed earnings of foreign subsidiaries. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Jun. 30, 2021 | |
Long-Term Debt | |
Long-Term Debt | NOTE 8 - Long-Term Debt As of June 30, 2021 and 2020, long-term debt consisted of a revolving line of credit of $11,000,000 (“Revolver Agreement”) which expires in June 2024 and term loans from the U.S. Small Business Administration totaling $3,904,000 through its Payroll Protection Program. Outstanding balances and interest rates as of June 30, 2021 and June 30, 2020 are as follows (dollars in thousands): June 30, 2021 June 30, 2020 Outstanding Interest Rate Outstanding Interest Rate Revolving line of credit $ — n/a $ — n/a Term loans 3,904 1 % 3,904 1 % 3,904 3,904 Less: current maturities (2,386) (1,794) Long-term debt $ 1,518 $ 2,110 The Revolver Agreement also provides for a LIBOR-based interest rate option of LIBOR plus 1.15% to 2.00%, depending on the ratio of outstanding debt to EBITDA, which is to be measured and adjusted quarterly, a prime rate-based option of the prime rate plus 0.25% and other terms and conditions as more fully described in the Revolver Agreement. The Company’s obligations under the Revolver Agreement continue to be secured by substantially all of its domestic assets, including but not limited to, deposit accounts, accounts receivable, inventory, equipment and fixtures and intangible assets. In addition, the Company’s wholly owned subsidiaries, with the exception of the Company’s foreign subsidiaries, have issued guarantees and pledges of all of their assets to secure the Company’s obligations under the Revolver Agreement. All of the outstanding common stock of the Company’s domestic subsidiaries and 65% of the common stock of the Company’s foreign subsidiaries has been pledged to secure the Company’s obligations under the Revolver Agreement. The Revolver Agreement contains various restrictions and covenants including, among others, restrictions on payment of dividends, restrictions on borrowings and compliance with certain financial ratios, as defined in the Revolver Agreement. In September 2020, the Company and its lender amended the Revolver Agreement, which had an expiration date of June 2021, to expire in June 2024. The amended Revolver Agreement also removed certain requirements and restrictions on the Company as well as removing the mortgage on the Company’s Amityville facility. During the fourth quarter of fiscal 2020, the Company received the proceeds of promissory notes dated between April 17, 2020 and May 7, 2020 (the "PPP Loan Agreement"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender). Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act and governed by the CARES Act, Section 7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the Small Business Association (“SBA”) implementing the PPP and acting as guarantor, or any other applicable loan program requirements, as defined in 13 CFR § 120.10, as amended from time to time. Pursuant to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $3,904,000 (the "PPP Loan"). Pursuant to the CARES Act, the loans may be forgiven by the SBA. The Company has applied to have the balance of the Loan forgiven. Following year-end, $2,850,000 of the PPP Loan was forgiven in accordance with guidelines set for in the PPP. The Company will recognize debt forgiveness in the first quarter of 2022 in the amount of $2,850,000 and will recognize further forgiveness income in the quarter that the remaing forgiveness application may be granted. While the Company believes that it meets to requirements for forgiveness, there can be no assurance that its remaining application will be granted. |
Stock Options
Stock Options | 12 Months Ended |
Jun. 30, 2021 | |
Stock Options | |
Stock Options | NOTE 9 - Stock Options as Restated The Company follows ASC 718 (“Share-Based Payment”), which requires that all share based payments to employees, including stock options, be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period. For the fiscal years ended June 30, 2021, 2020 and 2019, the Company recorded non-cash compensation expense of $435,000 ($0.01 per basic and diluted share), $583,000 ($0.02 per basic and diluted share) and $160,000 ($0.00 per basic and diluted share), respectively, relating to stock-based compensation. 2012 Employee Stock Option Plan In December 2012, the stockholders approved the 2012 Employee Stock Option Plan (the 2012 Employee Plan). The 2012 Employee Plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 1,900,000 shares of the Company’s common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (ISOs), to valued employees. Any plan participant who is granted ISOs and possesses more than 10% of the voting rights of the Company’s outstanding common stock must be granted an option with a price of at least 110% of the fair market value on the date of grant. Under the 2012 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2021, 214,080 stock options were outstanding, 98,176 stock options were exercisable and 1,476,920 stock options were available for grant under this plan. No options were granted under this plan during the year ended June 30, 2021. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2021 2020 2019 Risk-free interest rates n/a % .6% - 2.10 % 2.5% - 3.10 % Expected lives n/a 10 years 10 years Expected volatility n/a % 44% - 46 % 48% - 52 % Expected dividend yields n/a % 0 % 0 % The Company uses a weighted-average expected stock-price volatility assumption that is a combination of both current and historical implied volatilities of the underlying stock. The implied volatilities were obtained from publicly available data sources. For the weighted-average expected option life assumption, the Company considers the exercise behavior of past grants. The average risk-free interest rate is based on the U.S. Treasury Bond rate for the expected term of the options and the average dividend yield is based on historical experience. The following table reflects activity under the 2012 Plan for the fiscal years ended June 30,: 2021 2020 2019 Weighted average Weighted average Weighted average Options exercise price Options exercise price Options exercise price Outstanding, beginning of year 235,680 $ 9.42 145,000 $ 5.51 114,400 $ 3.55 Granted — — 141,880 12.25 58,000 8.30 Forfeited (13,000) 6.91 (20,000) 9.92 — — Exercised (8,600) 9.04 (31,200) 3.78 (27,400) 3.21 Outstanding, end of period 214,080 $ 9.59 235,680 $ 9.42 145,000 $ 5.51 Exercisable, end of period 98,176 $ 8.07 70,000 $ 6.57 67,600 $ 4.03 Weighted average fair value at grant date of options granted n/a $ 6.72 $ 4.58 Total intrinsic value of options exercised $ 65,000 278,000 160,000 Total intrinsic value of options outstanding $ 1,840,000 $ 696,000 $ 1,353,000 Total intrinsic value of options exercisable $ 993,000 $ 389,000 $ 731,000 The following table summarizes information about stock options outstanding under the 2012 Employee Plan at June 30, 2021: Options outstanding Options exercisable Weighted average Number remaining Weighted average Number Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $2.19 ‑ $16.80 214,080 7.4 $ 9.59 98,176 $ 8.07 214,080 7.4 $ 9.59 98,176 $ 8.07 As of June 30, 2021, there was $555,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan. 0 and 141,880 options were granted during the fiscal years ended June 30, 2021 and 2020, respectively. 8,600 stock options exercised during the fiscal year ended June 30, 2021, were settled by exchanging 4,604 shares of the Company’s common stock which were retired and returned to unissued status upon receipt. 7,200 of the 31,200 stock options exercised during the fiscal year ended June 30, 2020 were settled by exchanging 3,256 shares of the Company's common stock which were retired and returned to unissued status upon receipt. 16,400 of the 27,400 stock options exercised during the fiscal year ended June 30, 2019 were settled by exchanging 6,212 shares of the Company’s common stock which were retired and returned to unissued status upon receipt. The total grant date fair value of the options vesting during the fiscal years ended June 30, 2021, 2020 and 2019 under this plan was $244,000, $197,000 and $95,000, respectively. $0, $79,000 and $31,000 was received from option exercises for the fiscal years ended June 30, 2021, 2020 and 2019, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $0 for each of these periods. 2012 Non-Employee Stock Option Plan In December 2012, the stockholders approved the 2012 Non-Employee Stock Option Plan (the 2012 Non-Employee Plan). This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company’s common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries. Under the 2012 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2021, 12,000 stock options were outstanding, 6,240 stock options were exercisable and 9,600 stock options were available for grant under this plan. No options were granted under this plan during the year ended June 30, 2021. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2021 2020 2019 Risk-free interest rates n/a % 1.6 % n/a % Expected lives n/a 10 years n/a Expected volatility n/a % 44 % n/a % Expected dividend yields n/a % 0 % n/a % The following table reflects activity under the 2012 Non-Employee Plan for the fiscal years ended June 30,: 2021 2020 2019 Weighted average Weighted average Weighted average Options exercise price Options exercise price Options exercise price Outstanding, beginning of year 24,000 $ 5.15 20,400 $ 4.00 55,600 $ 3.43 Granted — — 3,600 11.68 — — Forfeited (9,600) 3.59 — — (3,600) 4.35 Exercised (2,400) 4.35 — — (31,600) 2.96 Outstanding, end of period 12,000 $ 6.55 24,000 $ 5.15 20,400 $ 4.00 Exercisable, end of period 6,240 $ 6.04 11,520 $ 4.18 6,000 $ 3.14 Weighted average fair value at grant date of options granted n/a $ 6.47 n/a Total intrinsic value of options exercised $ 31,000 n/a $ 192,000 Total intrinsic value of options outstanding $ 140,000 $ 157,000 $ 221,000 Total intrinsic value of options exercisable $ 76,000 $ 87,000 $ 70,000 The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at June 30, 2021: Options outstanding Options exercisable Weighted average Number remaining Weighted average Number Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $2.19 - $11.68 12,000 7.1 $ 6.55 6,240 $ 6.04 12,000 7.1 $ 6.55 6,240 $ 6.04 As of June 30, 2021, there was $15,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan. 0 and 3,600 options were granted during the fiscal years ended June 30, 2021 and 2020, respectively. 2,400 stock options exercised during the fiscal year ended June 30, 2021 were settled by exchanging 612 shares of the Company’s common stock which were retired and returned to unissued status upon receipt. 29,200 of the 31,600 stock options exercised during the fiscal year ended June 30, 2019 were settled by exchanging 9,664 shares of the Company common stock which were retired and returned to unissued status upon receipt. No options were exercised during the fiscal year ended June 30, 2020. The actual tax benefit realized for the tax deductions from option exercises was $6,000, $0 and $35,000 in fiscal 2021, 2020 and 2019, respectively.The total grant date fair value of the options vesting during each of the fiscal years ended June 30, 2021, 2020 and 2019 under this plan was $18,000, $18,000 and $22,000, respectively. 2018 Non-Employee Stock Option Plan In December 2018, the stockholders approved the 2018 Non-Employee Stock Option Plan (the “2018 Non-Employee Plan”). This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company's common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries. Under the 2018 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2021, 70,100 stock options were outstanding, 29,960 stock options were exercisable and 23,500 stock options were available for grant under this plan. No options were granted under this plan during the year ended June 30, 2021. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2021 2020 2019 Risk-free interest rates n/a % 1.60 - 1.80 % 2.90 % Expected lives n/a 10 years 10 years Expected volatility n/a % 44 - 45 % 50 % Expected dividend yields n/a % — % — % The following table reflects activity under the 2018 Non-Employee plan for the fiscal year ended June 30,: 2021 2020 2019 Weighted average Weighted average Weighted average Options exercise price Options exercise price Options exercise price Outstanding, beginning of year 96,800 $ 11.74 30,400 $ 8.10 — $ — Granted — — 66,400 13.41 40,000 8.10 Forfeited/Lapsed (23,500) 11.68 — — (6,400) 8.10 Exercised (3,200) 8.10 — — (3,200) 8.10 Outstanding, end of period 70,100 $ 11.93 96,800 $ 11.74 30,400 $ 8.10 Exercisable, end of period 29,960 $ 11.68 24,480 $ 10.98 4,800 $ 8.10 Weighted average fair value at grant date of options granted n/a $ 7.55 $ 5.12 Total intrinsic value of options exercised $ 29,000 n/a $ 24,000 Total intrinsic value of options outstanding $ 439,000 $ 110,000 $ 205,000 Total intrinsic value of options exercisable $ 195,000 $ 40,000 $ 32,000 The following table summarizes information about stock options outstanding under the 2018 Non- Employee Plan at June 30, 2021: Options outstanding Options exercisable Weighted average Number remaining Weighted average Number Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $8.10 - $15.27 70,100 8.2 $ 11.93 29,960 $ 11.68 70,100 8.2 $ 11.93 29,960 $ 11.68 As of June 30, 2021, there was $278,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan. 0, 66,400 and 40,000 options were granted during the fiscal years ended June 30, 2021, 2020 and 2019, respectively. 3,200 of the stock options exercised during the fiscal year ended June 30, 2021 were settled by exchanging 1,518 shares of the Company’s common stock which were retired and returned to unissued status upon receipt. 1,600 of the 3,200 stock options exercised during the fiscal year ended June 30, 2019 were settled by exchanging 790 shares of the Company’s common stock which were retired and returned to unissued status upon receipt. There were no options exercised during the fiscal year ended June 30, 2020. The actual tax benefit realized for the tax deductions from option exercises was $6,000, $0 $3,000 in fiscal 2021, 2020 and 2019, respectively. The total grant date fair value of the options vesting during the fiscal year ended June 30, 2021, 2020 and 2019 under this plan was $133,000, $133,000 and $41,000, respectively. 2020 Non-Employee Stock Option Plan In May 2020, the stockholders approved the 2020 Non-Employee Stock Option Plan (the “2020 Non-Employee Plan”). This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company's common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options to non-employee directors and consultants to the Company and its subsidiaries. Under the 2020 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At June 30, 2021, 10,000 stock options were outstanding, 2,000 stock options were exercisable and 90,000 stock options were available for grant under this plan. The fair value of each option granted during the fiscal year ended June 30, 2021 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2021 Risk-free interest rates 0.62 % Expected lives 10 Expected volatility 45 % Expected dividend yields 0 % The following table reflects activity under the 2020 Non-Employee plan for the fiscal year ended June 30,: 2021 Weighted average Options exercise price Outstanding, beginning of year — — Granted 10,000 $ 11.40 Exercised — — Outstanding, end of period 10,000 $ 11.40 Exercisable, end of period 2,000 $ 11.40 Weighted average fair value at grant date of options granted $ 6.10 Total intrinsic value of options exercised n/a Total intrinsic value of options outstanding $ 68,000 Total intrinsic value of options exercisable $ 14,000 The following table summarizes information about stock options outstanding under the 2020 Non- Employee Plan at June 30, 2021: Options outstanding Options exercisable Weighted average Number remaining Weighted average Number Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $11.40 10,000 9.2 $ 11.40 2,000 $ 11.40 10,000 9.2 $ 11.40 2,000 $ 11.40 As of June 30, 2021, there was $37,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan. 10,000 and 0 options were granted during the fiscal years ended June 30, 2021 and 2020, respectively. The total grant date fair value of the options vesting during the fiscal year ended June 30, 2021 and 2020 under this plan was $12,000 and $0, respectively. There were no options exercised in either of the fiscal years ended June 30, 2021 and 2020. |
Stockholders' Equity Transactio
Stockholders' Equity Transactions | 12 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity Transactions | |
Stockholders' Equity Transactions | NOTE 10 – Stockholders’ Equity Transactions On September 16, 2014 the Company’s board of directors authorized the repurchase of up to 2,000,000 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. Relative to the loan agreement described in Note 8, the Company’s lender gave its consent to this stock repurchase plan. During the fiscal year ended June 30, 2021 the Company did not repurchase any shares of its outstanding common stock. During the fiscal year ended June 30, 2020 the Company repurchased 288,810 shares of its outstanding common stock at a weighted average price of $8.50. Shares repurchased through June 30, 2021 are included in the Company’s Treasury Stock as of June 30, 2021 and 2020. Pursuant to the PPP Loan Agreement described in Note 8, the Company may not repurchase any of its shares of common stock until 12 months after the termination of the term loans described therein. During fiscal 2021, certain employees and Directors exercised stock options under the Company's 2012 Employee and Non-Employee and 2018 Non-employee Stock Option Plans totaling 14,200 shares. All of these exercises were completed as cashless exercises as allowed for under the Plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees. The number of shares surrendered by the optionees was 6,734 and was based upon the per share price on the effective date of the option exercise. During fiscal 2020, certain employees and Directors exercised stock options under the Company's 2012 Employee and Non-Employee Stock Option Plans totaling 31,200 shares. 7,200 of these exercises were completed as cashless exercises as allowed for under the Plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees. The number of shares surrendered by the optionees was 3,256 and was based upon the per share price on the effective date of the option exercise. During fiscal 2019, certain employees and Directors exercised stock options under the Company’s 2012 Employee and Non-Employee Stock Option Plans and the Company’s 2002 Employee Stock Option Plan totaling 62,200 shares. 47,200 of these exercises were completed as cashless exercises as allowed for under the Plans, where the exercise shares are issued by the Company in exchange for shares of the Company’s common stock that are owned by the optionees. The number of shares surrendered by the optionees was 16,666 and was based upon the per share price on the effective date of the option exercise. |
Related Party Transaction
Related Party Transaction | 12 Months Ended |
Jun. 30, 2021 | |
Related Party Transaction | |
Related Party Transaction | NOTE 11 – Related Party Transaction On December 15, 2020, 4,666,142 shares of common stock were sold in a secondary offering by the Company's President and Chairman. On December 21, 2020, the underwriters of the secondary offering fully exercised the option granted at the time of the secondary offering to purchase an additional 669,922 shares of common stock at the secondary offering price of $13.00 per share ("Greenshoe"), less underwriting discounts and commissions, which consists solely of shares sold by the Company's President and Chairman. The Company received no proceeds from the secondary offering or the Greenshoe, but incurred $289,000 in offering expenses, which are recorded in selling, general, and administrative expenses in the accompanying condensed consolidated statements of income. |
401(k) Plan
401(k) Plan | 12 Months Ended |
Jun. 30, 2021 | |
401(k) Plan | |
401(k) Plan | NOTE 12 - 401(k) Plan The Company maintains a 401(k) plan (“the Plan”) that covers all U.S. non-union employees with one or more years of service and is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code. Company contributions to this plan are discretionary and totaled $138,000, $133,000 and $133,000 for the years ended June 30, 2021, 2020 and 2019, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 13 - Commitments and Contingencies Leases Effective July 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date. In addition, we elected the package million Our lease obligation consists of a 99 year lease which commenced on April 26, 1993 with one of the Company’s foreign subsidiaries, expiring in 2092, for approximately four acres of land in the Dominican Republic at an annual cost of $288,000, on which the Company’s principal production facility is located. Operating leases are included in operating lease right-of-use assets, accrued expenses and operating lease liabilities, non-current on our condensed consolidated balance sheets. For the fiscal year ended June 30, 2021 and 2020, cash payments against operating lease liabilities totaled $288,000 and $240,000 respectively. Supplemental balance sheet information related to operating leases was as follows: Weighted-average remaining lease term 71 Years Weighted-average discount rate 3.55 % The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2021 (in thousands): Year Ending June 30, Amount 2022 $ 282 2023 272 2024 263 2025 254 2026 245 Thereafter 6,057 Total $ 7,373 Operating lease expense totaled approximately $316,000, $315,000 and $330,000, for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. Litigation In the normal course of business, the Company is a party to claims and/or litigation. Management believes that the settlement of such claims and/or litigation, considered in the aggregate, will not have a material adverse effect on the Company’s financial position and results of operations. Employment Agreements As of June 30, 2021, the Company was obligated under two employment agreements and one severance agreement. The employment agreements are with the Company’s CEO and the Senior Vice President of Engineering (“the SVP of Engineering”). The employment agreement with the CEO provides for an annual salary of $838,000, as adjusted for inflation; incentive compensation as may be approved by the Board of Directors from time to time and a termination payment in an amount up to 299% of the average of the prior five calendar year’s compensation, subject to certain limitations, as defined in the agreement. The employment agreement renews annually in August unless either party gives the other notice of non-renewal at least six months prior to the end of the applicable term. The employment agreement with the SVP of Engineering expires in August 2021 and provides for an annual salary of $347,000, and, if terminated by the Company without cause, severance of nine month’s salary and continued company-sponsored health insurance for six months from the date of termination. The severance agreement is with the Senior Vice President of Operations and Finance and provides for, if terminated by the Company without cause or within three months of a change in corporate control of the Company, severance of nine month’s salary, continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions. |
Geographical Data
Geographical Data | 12 Months Ended |
Jun. 30, 2021 | |
Geographical Data | |
Geographical Data | NOTE 14 - Geographical Data The Company is engaged in one major line of business: the development, manufacture, and distribution of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products for commercial and residential use. The Company also provides wireless communication service for intrusion and fire alarm systems. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are primarily shipped from the United States. The Company has customers worldwide with major concentrations in North America. Financial Information Relating to Domestic and Foreign Operations Year ended June 30, 2021 2020 2019 Sales to external customers (1): Domestic $ 112,618 $ 99,496 $ 100,716 Foreign 1,417 1,863 2,216 Total Net Sales $ 114,035 $ 101,359 $ 102,932 June 30, 2021 June 30, 2020 Identifiable assets, as restated: United States $ 90,941 $ 68,520 Dominican Republic (2) 31,610 35,978 Total Identifiable Assets $ 122,551 $ 104,498 (1) All of the Company’s sales originate in the United States and are shipped primarily from the Company’s facilities in the United States. There were no sales into any one foreign country in excess of 10% of total Net Sales. (2) Consists primarily of inventories (2021 = $20,712 ; 2020 = $24,821 ), operating lease assets (2021 = $ 7,373 ; 2020 = $ 7,395 ) and fixed assets (2021 = $3,208 ; 2020 = $3,481 ) located at the Company’s principal manufacturing facility in the Dominican Republic. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jun. 30, 2021 | |
Subsequent Events | |
Subsequent Events | NOTE 15 – Subsequent Events The Company has evaluated subsequent events occurring after the date of the consolidated financial statements for events requiring recording or disclosure in the consolidated financial statements. (a) During the fourth quarter of fiscal 2020, the Company received the proceeds of promissory notes dated between April 17, 2020 and May 7, 2020 (the "PPP Loan Agreement"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender). Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act and governed by the CARES Act, Section 7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the Small Business Association (“SBA”) implementing the PPP and acting as guarantor, or any other applicable loan program requirements, as defined in 13 CFR § 120.10, as amended from time to time. Pursuant to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $3,904,000 (the "PPP Loan"). Pursuant to the CARES Act, the loans may be forgiven by the SBA. Subsequent to June 30, 2021, the Company received notice from the SBA that its loans had been forgiven in full. Based on the guidance in FASB ASC 405-20-40-1, the proceeds from the loan will remain recorded as a liability until either (1) the loan is, in part or wholly, forgiven and the debtor has been “legally released” or (2) the debtor pays off the loan to the creditor. Accordingly, the Company will eliminate the liability and record a gain of $3,904,000 on the extinguishment of this debt in its fiscal quarter ended September 30, 2021. (b) In December 2021, the Company's Board of Directors approved a two-for-one stock split in the form of a 100% stock dividend of the Company’s common stock payable to stockholders of record on December 20, 2021. The additional shares were distributed on January 4, 2022. All share and per share amounts (except par value) have been retroactively adjusted to reflect the stock split. There was no net effect on total stockholders' equity as a result of the stock split. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2021 | |
Nature of Business and Summary of Significant Accounting Policies | |
Nature of Business | Nature of Business : Napco Security Technologies, Inc (“NAPCO”, “the Company”, “we”) is one of the leading manufacturers and designers of high-tech electronic security devices, as well as a leading provider of school safety solutions. We offer a diversified array of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. We have experienced significant growth in recent years, primarily driven by fast growing recurring service revenues generated from wireless communication services for intrusion and fire alarm systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as a result of on-campus shooting and violence in the U.S. The Company’s fiscal year begins on July 1 and ends on June 30. Historically, the end users of the Company’s products want to install its products prior to the summer; therefore sales of its products historically peak in the period April 1 through June 30, the Company’s fiscal fourth quarter, and are reduced in the period July 1 through September 30, the Company’s fiscal first quarter. In addition, demand for our products is affected by the housing and construction markets. Deterioration of the current economic conditions may also affect this trend. Our results for fiscal 2021 reflects the increase in customer demand after the creation of the challenging business environment resulting from the COVID-19 pandemic. While the Company believes this recovery will continue, there can be no assurances in the event of a return to building and construction restrictions that might result from a return to last year’s levels of COVID-19 cases. |
Principles of Consolidation | 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 | Accounting Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates include management’s judgments associated with reserves for sales returns and allowances, allowance for doubtful accounts, inventory reserves, valuation of |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The methods and assumptions used to estimate the fair value of the following classes of financial instruments were: Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, current receivables and payables and certain other short-term financial instruments approximate their fair value as of June 30, 2021 and 2020 due to their short-term maturities. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include approximately $63,000 and $460,000 of short-term time deposits at June 30, 2021 and 2020, respectively. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of June 30, 2021 and 2020. The Company has not historically experienced any credit losses with balances in excess of FDIC limits. |
Marketable Securities. | 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 |
Accounts Receivable | Accounts Receivable Accounts receivable is stated net of the reserves for doubtful accounts of $226,000 and $326,000 as of June 30, 2021 and 2020, respectively. Our reserves for doubtful accounts are subjective critical estimates that have a direct impact on reported net earnings. These reserves are based upon the evaluation of our accounts receivable aging, specific exposures, sales levels and historical trends. |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (FIFO) method. The reported net value of inventory includes finished saleable products, work-in-process and raw materials that will be sold or used in future periods. Inventory costs include raw materials, direct labor and overhead. The Company’s overhead expenses are applied based, in part, upon estimates of the proportion of those expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products. These proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and actual results could differ from those estimates. In addition, the Company records an inventory obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, product life cycles, requirements to support forecasted sales, and the ability to find alternate applications of its raw materials and to convert finished product into alternate versions of the same product to better match customer demand. In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events. There is inherent professional judgment and subjectivity made by both production and engineering members of management in determining the estimated obsolescence percentage. The Company also regularly reviews the period over which its inventories will be converted to sales. Any inventories expected to convert to sales beyond 12 months from the balance sheet date are classified as non-current. |
Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant, and equipment are carried at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred; costs of major renewals and improvements are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition is reflected in income. Depreciation is recorded over the estimated service lives of the related assets using primarily the straight-line method. Amortization of leasehold improvements is calculated by using the straight-line method over the estimated useful life of the asset or lease term, whichever is shorter. |
Long-Lived and Intangible Assets | Long-Lived and Intangible Assets Long-lived assets are amortized over their useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets in question may not be recoverable. Impairment would be recorded in circumstances where undiscounted cash flows expected to be generated by an asset are less than the carrying value of that asset. Intangible assets determined to have indefinite lives were not amortized but were tested for impairment at least annually. The Company’s acquisition of substantially all of the assets and certain liabilities of G. Marks Hardware, Inc. (“Marks”) in August 2008 included intangible assets recorded at fair value on the date of acquisition. The customer relationships are amortized over their estimated useful lives of twenty years. At the acquisition date, the Marks trade name was deemed to have an indefinite life. During the 4th quarter of fiscal 2020, the Company determined that the trade-name was impaired. Accordingly, the Company recorded an impairment charge of $1,852,000 and reclassified the remaining balance of the underlying asset from indefinite-lived to a long-lived asset with a remaining useful life of 20 years as of June 30, 2020. Changes in intangible assets are as follows (in thousands): June 30, 2021 June 30, 2020 June 30, 2019 Carrying Accumulated Net book Carrying Accumulated Net book Carrying Accumulated Net book value amortization value value amortization value value amortization value Customer relationships $ 9,800 $ (8,955) $ 845 $ 9,800 $ (8,732) $ 1,068 $ 9,800 $ (8,468) $ 1,332 Trade name 4,048 (202) 3,846 4,048 — 4,048 5,900 — 5,900 $ 13,848 $ (9,157) $ 4,691 $ 13,848 $ (8,732) $ 5,116 $ 15,700 $ (8,468) $ 7,232 Amortization expense for intangible assets subject to amortization was approximately $425,000, $264,000 and $313,000 for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. Amortization expense for each of the next five fiscal years is estimated to be as follows: 2022-$390,000; 2023 - $361,000; 2024 - $336,000; 2025 - $315,000; and 2026-$297,000. The weighted average remaining amortization period for intangible assets was 16.9 years and 17.5 years at June 30, 2021 and 2020, respectively. |
Revenue Recognition | Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. For product sales, the Company typically transfers control at a point in time upon shipment or delivery of the product. For monthly communication services the Company satisfies its performance obligation as the services are rendered and therefore recognizes revenue over the monthly period. Typically timing of revenue recognition coincides with the timing of invoicing to the customers, at which time the Company has an unconditional right to consideration. As such, the Company typically records a receivable when revenue is recognized. The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for product sales is typically due within 30 and 180 days of the delivery date. Payment for monthly communication services is billed on a monthly basis and is typically due at the beginning of the month of service. The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months. The Company accepts returns for such defective products as well as for other limited circumstances. The Company also provides rebates to customers for meeting specified purchasing targets and other coupons or credits in limited circumstances. The Company establishes reserves for the estimated returns, rebates and credits and measures such variable consideration based on the expected value method using an analysis of historical data. Changes to the estimated variable consideration in subsequent periods are not material. The Company analyzes sales returns and is able to make reasonable and reliable estimates of product returns based on the Company’s past history. Estimates for sales returns are based on several factors including actual returns and based on expected return data communicated to it by its customers. Accordingly, the Company believes that its historical returns analysis is an accurate basis for its allowance for sales returns. Actual results could differ from those estimates. |
Advertising and Promotional Costs | Advertising and Promotional Costs Advertising and promotional costs are included in "Selling, General and Administrative" expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for fiscal years ended June 30, 2021, 2020 and 2019 was $1,306,000, $1,722,000 and $2,047,000, respectively. |
Research and Development Costs | Research and Development Costs Research and development costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income. Company-sponsored research and development expense for the fiscal years ended June 30, 2021, 2020 and 2019 was $7,620,000, $7,257,000 and $7,212,000, respectively. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. |
Net Income per Share | Net Income per Share as Restated Basic net income per common share (Basic EPS) is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding. The following provides a reconciliation of information used in calculating the per share amounts for the fiscal years ended June 30 (in thousands, except per share data): Weighted Average Net Income per Net Income Shares Share 2021 2020 2019 2021 2020 2019 2021 2020 2019 Basic EPS $ 15,413 $ 7,795 $ 12,481 36,696 36,888 37,148 $ 0.42 $ 0.21 $ 0.34 Effect of Dilutive Securities: Stock Options — — — 112 98 100 — — — Diluted EPS $ 15,413 $ 7,795 $ 12,481 36,808 36,986 37,248 $ 0.42 $ 0.21 $ 0.34 |
Stock-Based Compensation | Options to purchase 40,000, 77,638 and 5,914 shares of common stock were excluded for the fiscal years ended June 30, 2021, 2020 and 2019, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive. These options were still outstanding at the end of the respective periods.Stock-Based Compensation The Company has established four share incentive programs as discussed in Note 9. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility and forfeiture rates, among other factors. Stock-based compensation costs of $435,000, $583,000 and $160,000 were recognized for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. |
Foreign Currency | Foreign Currency The Company has determined the functional currency of all foreign subsidiaries is the U.S. Dollar. All foreign operations are considered a direct and integral part or extension of the Company’s operations. The day-to-day operations of all foreign subsidiaries are dependent on the economic environment of the U.S. Dollar. Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the fiscal years ended June 30, 2021, 2020 or 2019. |
Comprehensive Income | Comprehensive Income For the fiscal years ended June 30, 2021, 2020 and 20219, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income. Accordingly, the Company’s comprehensive income approximates its net income for all periods presented. |
Segment Reporting | Segment Reporting The Company’s reportable operating segments are determined based on the Company’s management approach. The management approach is based on the way that the chief operating decision maker organizes the segments within an enterprise for making operating decisions and assessing performance. The Company’s results of operations are reviewed by the chief operating decision maker on a consolidated basis and the Company operates in only one segment. The Company has presented required geographical data in Note 14. |
Shipping and Handling Sales and Costs | Shipping and Handling Sales and Costs The Company records the amount billed to customers for shipping and handling in net sales ($395,000, $452,000 and $430,000 in the fiscal years ended June 30, 2021, 2020 and 2019, respectively) and classifies the costs associated with these sales in cost of sales ($1,058,000, $1,034,000 and $1,115,000 in the fiscal years ended June 30, 2021, 2020 and 2019, respectively). |
Leases | Leases Effective July 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date. In addition, we elected the package of practical expedients million |
Recently Adopted Accounting Standards and Recently Issued Accounting Standards | Recently Adopted Accounting Standards On July 1, 2019, we adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. We adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. For information regarding the impact of Topic 842 adoption, see Significant Accounting Policies - Leases and Note 13- Leases. Recently Issued Accounting Standards Reference Rate Reform (ASC Topic 848) In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”), which is expected to be phased out at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform. The amendments clarify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC Topic 848. Effective for the Company – This guidance can be applied for a limited time through December 31, 2022. The guidance will no longer be available to apply after December 31, 2022. Impact on consolidated financial statements – The Company is currently assessing the impact of applying this guidance on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance. |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Nature of Business and Summary of Significant Accounting Policies | |
Schedule of changes in intangible assets | June 30, 2021 June 30, 2020 June 30, 2019 Carrying Accumulated Net book Carrying Accumulated Net book Carrying Accumulated Net book value amortization value value amortization value value amortization value Customer relationships $ 9,800 $ (8,955) $ 845 $ 9,800 $ (8,732) $ 1,068 $ 9,800 $ (8,468) $ 1,332 Trade name 4,048 (202) 3,846 4,048 — 4,048 5,900 — 5,900 $ 13,848 $ (9,157) $ 4,691 $ 13,848 $ (8,732) $ 5,116 $ 15,700 $ (8,468) $ 7,232 |
Schedule of reconciliation of earnings per share | Weighted Average Net Income per Net Income Shares Share 2021 2020 2019 2021 2020 2019 2021 2020 2019 Basic EPS $ 15,413 $ 7,795 $ 12,481 36,696 36,888 37,148 $ 0.42 $ 0.21 $ 0.34 Effect of Dilutive Securities: Stock Options — — — 112 98 100 — — — Diluted EPS $ 15,413 $ 7,795 $ 12,481 36,808 36,986 37,248 $ 0.42 $ 0.21 $ 0.34 |
Restatement of Previously Iss_2
Restatement of Previously Issued Financial Statements (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Nature of Business and Summary of Significant Accounting Policies | |
Schedule of originally reported and restated balances | Subsequent to the filing of the Original Form 10-K, management reviewed its methodology for calculating its reserves for obsolete inventory. During this review, management identified changes related to the Company’s reserves for obsolete inventory that it deemed appropriate. The reserves reflected in the Company’s Original Form 10-K relied primarily on estimates developed by management, which were based on historic and institutional knowledge and judgements as to the potential for obsolescence for items deemed at risk. Upon management’s review, it was determined a systematic method of evaluation, which utilized historical data, including sales data and component parts usage, as well as product life cycles, trends and judgement, is more accurate. This resulted in changes to the Company’s reserves for obsolescence for fiscal years 2021, 2020 and 2019. The effects of these changes on the financial statements for these periods are shown in the tables below. Retained earning as of the beginning of fiscal 2019 has been adjusted by $894 related to the restatement of inventories ($901) net of tax effect of ($7). The table below sets forth the consolidated balance sheets information, including the balances originally reported and the restated balances as of June 30: June 30, 2021 June 30, 2020 (in thousands, except for share and per share data) As As previously As previously As reported restated reported restated Inventory - Current $ 25,278 $ 24,933 $ 35,231 $ 34,727 Inventory - Non-Current 7,164 6,767 6,524 5,688 Accrued income taxes 1,635 1,709 1,148 1,239 Deferred income taxes 347 380 112 43 Retained earnings 94,345 93,312 79,444 77,899 The table below sets forth the consolidated statements of income information, including the balances originally reported and the restated balances for the fiscal years ended June 30: June 30, 2021 (in thousands, except for share and per share data) As previously reported Restated Equipment Related Expenses $ 58,998 $ 58,401 Cost of Sales 63,884 63,287 Gross Profit 50,151 50,748 Operating Income 17,335 17,932 Income before provision for Income Taxes 17,330 17,927 Provision for Income Taxes 2,429 2,514 Net Income 14,901 15,413 Income per share: Basic $ 0.41 $ 0.42 Diluted $ 0.41 $ 0.42 June 30, 2020 (in thousands, except for share and per share data) As previously reported Restated Equipment Related Expenses $ 53,434 $ 54,182 Cost of Sales 57,767 58,515 Gross Profit 43,592 42,844 Operating Income 10,813 10,065 Income before provision for Income Taxes 10,804 10,056 Provision for Income Taxes 2,284 2,261 Net Income 8,520 7,795 Income per share: Basic $ 0.23 $ 0.21 Diluted $ 0.23 $ 0.21 June 30, 2019 (in thousands, except for share and per share data) As previously reported Restated Equipment Related Expenses $ 55,240 $ 54,930 Cost of Sales 59,042 58,732 Gross Profit 43,890 44,200 Operating Income 13,466 13,776 Income before provision for Income Taxes 13,445 13,755 Provision for Income Taxes 1,222 1,274 Net Income 12,223 12,481 Income per share: Basic $ 0.33 $ 0.34 Diluted $ 0.33 $ 0.34 The table below sets forth the consolidated statements of cash flows information, including the balances originally reported and the restated balances for the fiscal years ended June 30: June 30, 2021 (in thousands, except for share and per share data) As previously reported Restated Net income $ 14,901 $ 15,413 Change to inventory obsolescence reserve 519 (79) Deferred income taxes 235 337 Changes in operating assets and liabilities: Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes 1,906 1,889 Net Cash Provided by Operating Activities 22,987 22,987 June 30, 2020 (in thousands, except for share and per share data) As previously reported Restated Net income $ 8,520 $ 7,795 Change to inventory obsolescence reserve (124) 624 Deferred income taxes 40 (47) Changes in operating assets and liabilities: Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes 1,862 1,926 Net Cash Provided by Operating Activities 10,305 10,305 'June 30, 2019 (in thousands, except for share and per share data) As previously reported Restated Net income $ 12,223 $ 12,481 Change to inventory obsolescence reserve (272) (582) Deferred income taxes 755 755 Changes in operating assets and liabilities: Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes 1,528 1,580 Net Cash Provided by Operating Activities 8,653 8,653 |
Revenue Recognition and Contr_2
Revenue Recognition and Contracts with Customers (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Revenue Recognition and Contracts with Customers | |
Schedule of disaggregation of revenues | Year ended June 30, 2021 2020 2019 Major Product Lines: Intrusion and access alarm products $ 36,794 $ 31,310 $ 31,557 Door locking devices 43,337 46,004 53,948 Services 33,904 24,045 17,427 Total Revenues $ 114,035 $ 101,359 $ 102,932 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Marketable Securities | |
Schedule of net gains and losses of marketable securities | June 30, 2021 Net gains recognized during the period on marketable securities $ — Less: Net gains recognized during the year on marketable securities sold during the period — Unrealized (losses) gains recognized during the reporting year on marketable securities still held at the reporting date (9) $ (9) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Inventories | |
Schedule of inventory | June 30, June 30, 2021 2020 (as restated) Component parts $ 17,245 $ 21,677 Work-in-process 6,158 7,276 Finished product 8,297 11,462 $ 31,700 $ 40,415 Classification of inventories, net of reserves: Current $ 24,933 $ 34,727 Non-current 6,767 5,688 $ 31,700 $ 40,415 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Property, Plant, and Equipment | |
Schedule of property, plant and equipment | June 30, 2021 June 30, 2020 Useful Life in Years Land $ 904 $ 904 N/A Buildings 8,911 8,911 30 to 40 Molds and dies 7,416 7,337 3 to 5 Furniture and fixtures 2,813 2,792 5 to 10 Machinery and equipment 25,548 24,878 7 to 10 Building improvements 2,409 2,173 Shorter of the lease term or life of asset 48,001 46,995 Less: accumulated depreciation and amortization (40,165) (38,907) $ 7,836 $ 8,088 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Schedule of provision for income taxes | For the Year ended June 30, 2021 2020 2019 Current income taxes: Federal $ 1,912 $ 1,765 $ 334 State 265 418 151 2,177 2,183 485 Deferred income tax provision 337 78 789 Provision for income taxes $ 2,514 $ 2,261 $ 1,274 |
Schedule of effective income tax rate reconciliation | 2021 2020 2019 % of % of % of Pre-tax Pre-tax Pre-tax Amount Income Amount Income Amount Income Tax at Federal statutory rate $ 3,765 21.0 % $ 2,112 21.0 % $ 2,888 21.0 % Increases (decreases) in taxes resulting from: Meals and entertainment 29 0.2 % 44 0.4 % 49 0.4 % State income taxes, net of Federal income tax benefit 135 0.8 % 122 1.2 % 111 0.8 % Foreign source income not subject to tax (1,647) (9.2) % (1,089) (10.8) % (1,241) (9.0) % R&D Credit (523) (2.9) % (523) (4.7) % (408) (3.0) % Foreign withholding tax 205 1.1 % — — % — — % Release of accrued tax reserves — — % — — % (151) (1.1) % Uncertain Tax Positions 312 1.7 % 775 7.2 % — — % IRS examination settlements — — % 832 8.3 % 12 0.1 % Other, net 238 1.3 % (12) (0.1) % 14 0.1 % Effective tax rate $ 2,514 14.0 % $ 2,261 22.5 % $ 1,274 9.3 % |
Schedule of deferred tax assets and liabilities | Deferred Tax Assets (Liabilities) 2021 2020 Accounts receivable $ 43 $ 40 Inventories 314 443 Accrued liabilities 374 262 Stock based compensation expense 102 96 Intangibles (454) (300) Property, plant and equipment (539) (484) Revenue reserves 393 308 Other deferred tax liabilities (613) (408) (380) (43) Valuation allowance — — Net deferred tax liabilities $ (380) $ (43) |
Schedule of unrecognized tax benefits roll forward | Tax Interest Total Balance of gross unrecognized tax benefits as of July 1, 2018 $ 221 $ — $ 221 Decrease to unrecognized tax benefits resulting from release of R&D credits due to the IRS audit (151) — (151) Increases to unrecognized tax benefits resulting from the generation of additional R&D credits 55 — 55 Balance of gross unrecognized tax benefits as of June 30, 2019 $ 125 $ — $ 125 Increase to unrecognized tax benefits resulting from deemed dividends for investments in US property 682 83 765 Increases to unrecognized tax benefits resulting from the generation of additional R&D credits 59 — 59 Balance of gross unrecognized tax benefits as of June 30, 2020 $ 866 $ 83 $ 949 Decrease to unrecognized tax benefits from deemed dividends for investments in US property (3) (20) (23) Decrease to unrecognized tax benefits resulting from the release of R&D credits due to the settled IRS audit (185) — (185) Balance of gross unrecognized tax benefits as of June 30, 2021 $ 678 $ 63 $ 741 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Long-Term Debt | |
Schedule of debt instruments | June 30, 2021 June 30, 2020 Outstanding Interest Rate Outstanding Interest Rate Revolving line of credit $ — n/a $ — n/a Term loans 3,904 1 % 3,904 1 % 3,904 3,904 Less: current maturities (2,386) (1,794) Long-term debt $ 1,518 $ 2,110 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
2012 Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2021 2020 2019 Risk-free interest rates n/a % .6% - 2.10 % 2.5% - 3.10 % Expected lives n/a 10 years 10 years Expected volatility n/a % 44% - 46 % 48% - 52 % Expected dividend yields n/a % 0 % 0 % |
Schedule of plan activity | 2021 2020 2019 Weighted average Weighted average Weighted average Options exercise price Options exercise price Options exercise price Outstanding, beginning of year 235,680 $ 9.42 145,000 $ 5.51 114,400 $ 3.55 Granted — — 141,880 12.25 58,000 8.30 Forfeited (13,000) 6.91 (20,000) 9.92 — — Exercised (8,600) 9.04 (31,200) 3.78 (27,400) 3.21 Outstanding, end of period 214,080 $ 9.59 235,680 $ 9.42 145,000 $ 5.51 Exercisable, end of period 98,176 $ 8.07 70,000 $ 6.57 67,600 $ 4.03 Weighted average fair value at grant date of options granted n/a $ 6.72 $ 4.58 Total intrinsic value of options exercised $ 65,000 278,000 160,000 Total intrinsic value of options outstanding $ 1,840,000 $ 696,000 $ 1,353,000 Total intrinsic value of options exercisable $ 993,000 $ 389,000 $ 731,000 |
Schedule of options outstanding | Options outstanding Options exercisable Weighted average Number remaining Weighted average Number Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $2.19 ‑ $16.80 214,080 7.4 $ 9.59 98,176 $ 8.07 214,080 7.4 $ 9.59 98,176 $ 8.07 |
2012 Non-Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2021 2020 2019 Risk-free interest rates n/a % 1.6 % n/a % Expected lives n/a 10 years n/a Expected volatility n/a % 44 % n/a % Expected dividend yields n/a % 0 % n/a % |
Schedule of plan activity | 2021 2020 2019 Weighted average Weighted average Weighted average Options exercise price Options exercise price Options exercise price Outstanding, beginning of year 24,000 $ 5.15 20,400 $ 4.00 55,600 $ 3.43 Granted — — 3,600 11.68 — — Forfeited (9,600) 3.59 — — (3,600) 4.35 Exercised (2,400) 4.35 — — (31,600) 2.96 Outstanding, end of period 12,000 $ 6.55 24,000 $ 5.15 20,400 $ 4.00 Exercisable, end of period 6,240 $ 6.04 11,520 $ 4.18 6,000 $ 3.14 Weighted average fair value at grant date of options granted n/a $ 6.47 n/a Total intrinsic value of options exercised $ 31,000 n/a $ 192,000 Total intrinsic value of options outstanding $ 140,000 $ 157,000 $ 221,000 Total intrinsic value of options exercisable $ 76,000 $ 87,000 $ 70,000 |
Schedule of options outstanding | Options outstanding Options exercisable Weighted average Number remaining Weighted average Number Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $2.19 - $11.68 12,000 7.1 $ 6.55 6,240 $ 6.04 12,000 7.1 $ 6.55 6,240 $ 6.04 |
2018 Non-Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2021 2020 2019 Risk-free interest rates n/a % 1.60 - 1.80 % 2.90 % Expected lives n/a 10 years 10 years Expected volatility n/a % 44 - 45 % 50 % Expected dividend yields n/a % — % — % |
Schedule of plan activity | 2021 2020 2019 Weighted average Weighted average Weighted average Options exercise price Options exercise price Options exercise price Outstanding, beginning of year 96,800 $ 11.74 30,400 $ 8.10 — $ — Granted — — 66,400 13.41 40,000 8.10 Forfeited/Lapsed (23,500) 11.68 — — (6,400) 8.10 Exercised (3,200) 8.10 — — (3,200) 8.10 Outstanding, end of period 70,100 $ 11.93 96,800 $ 11.74 30,400 $ 8.10 Exercisable, end of period 29,960 $ 11.68 24,480 $ 10.98 4,800 $ 8.10 Weighted average fair value at grant date of options granted n/a $ 7.55 $ 5.12 Total intrinsic value of options exercised $ 29,000 n/a $ 24,000 Total intrinsic value of options outstanding $ 439,000 $ 110,000 $ 205,000 Total intrinsic value of options exercisable $ 195,000 $ 40,000 $ 32,000 |
Schedule of options outstanding | Options outstanding Options exercisable Weighted average Number remaining Weighted average Number Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $8.10 - $15.27 70,100 8.2 $ 11.93 29,960 $ 11.68 70,100 8.2 $ 11.93 29,960 $ 11.68 |
2020 Non-Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2021 Risk-free interest rates 0.62 % Expected lives 10 Expected volatility 45 % Expected dividend yields 0 % |
Schedule of plan activity | 2021 Weighted average Options exercise price Outstanding, beginning of year — — Granted 10,000 $ 11.40 Exercised — — Outstanding, end of period 10,000 $ 11.40 Exercisable, end of period 2,000 $ 11.40 Weighted average fair value at grant date of options granted $ 6.10 Total intrinsic value of options exercised n/a Total intrinsic value of options outstanding $ 68,000 Total intrinsic value of options exercisable $ 14,000 |
Schedule of options outstanding | Options outstanding Options exercisable Weighted average Number remaining Weighted average Number Weighted average Range of exercise prices outstanding contractual life exercise price exercisable exercise price $11.40 10,000 9.2 $ 11.40 2,000 $ 11.40 10,000 9.2 $ 11.40 2,000 $ 11.40 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Schedule of supplemental balance sheet information | Weighted-average remaining lease term 71 Years Weighted-average discount rate 3.55 % |
Schedule of maturities of lease liabilities | Year Ending June 30, Amount 2022 $ 282 2023 272 2024 263 2025 254 2026 245 Thereafter 6,057 Total $ 7,373 |
Geographical Data (Tables)
Geographical Data (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Geographical Data | |
Schedule of sales to external customers | Year ended June 30, 2021 2020 2019 Sales to external customers (1): Domestic $ 112,618 $ 99,496 $ 100,716 Foreign 1,417 1,863 2,216 Total Net Sales $ 114,035 $ 101,359 $ 102,932 |
Schedule of assets in individual foreign country by country | June 30, 2021 June 30, 2020 Identifiable assets, as restated: United States $ 90,941 $ 68,520 Dominican Republic (2) 31,610 35,978 Total Identifiable Assets $ 122,551 $ 104,498 |
Nature of Business and Summar_4
Nature of Business and Summary of Significant Accounting Policies (Details) | Jul. 01, 2019USD ($) | Jun. 30, 2021USD ($)segmentshares | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($) |
Accounting policies | ||||
Cash and cash equivalents, short term deposits | $ 63,000 | $ 460,000 | ||
Common stock, outstanding (in shares) | shares | 36,702,168 | 36,694,702 | ||
Allowance for doubtful accounts | $ 226,000 | $ 326,000 | ||
Payment terms (in days) | 30 and 180 | |||
Warranty term (in months) | 24 to 36 | |||
Stock-Based Compensation | ||||
Number of share incentive programs | four | |||
Stock based compensation expense | $ 435,000 | 583,000 | $ 160,000 | |
Foreign currency realized/unrealized gains(loss) | $ 0 | 0 | $ 0 | |
Segment Reporting | ||||
Operating segments (in segments) | segment | 1 | |||
Leases | ||||
Lease, Practical Expedients, Package [true false] | true | |||
Operating lease liability | $ 7,700,000 | |||
Operating lease asset | $ 7,700,000 | $ 7,373,000 | $ 7,395,000 | |
Accounting Standards Update 2016-02 | ||||
Leases | ||||
Lease, Practical Expedients, Package [true false] | true | |||
Operating lease liability | $ 7,700,000 | |||
Operating lease asset | $ 7,700,000 |
Nature of Business and Summar_5
Nature of Business and Summary of Significant Accounting Policies - Intangible Assets (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2008 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Intangible assets | ||||
Impairment of intangible asset | $ 1,852,000 | |||
Useful life | 20 years | 20 years | ||
Amortization expense | $ 425,000 | $ 264,000 | $ 313,000 | |
Changes in intangible assets | ||||
Carrying value | 13,848,000 | 13,848,000 | 15,700,000 | |
Accumulated amortization | (9,157,000) | (8,732,000) | (8,468,000) | |
Net book value | 4,691,000 | $ 5,116,000 | 7,232,000 | |
Future amortization expense | ||||
2023 | 390,000 | |||
2024 | 361,000 | |||
2025 | 336,000 | |||
2026 | 315,000 | |||
2026 | $ 297,000 | |||
Weighted average remaining period | 16 years 10 months 24 days | 17 years 6 months | ||
Customer relationships [Member] | ||||
Changes in intangible assets | ||||
Carrying value | $ 9,800,000 | $ 9,800,000 | 9,800,000 | |
Accumulated amortization | (8,955,000) | (8,732,000) | (8,468,000) | |
Net book value | 845,000 | 1,068,000 | 1,332,000 | |
Trade name | ||||
Changes in intangible assets | ||||
Carrying value | 4,048,000 | 4,048,000 | 5,900,000 | |
Accumulated amortization | (202,000) | |||
Net book value | $ 3,846,000 | $ 4,048,000 | $ 5,900,000 |
Nature of Business and Summar_6
Nature of Business and Summary of Significant Accounting Policies - Income Statement location (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Advertising and promotion costs | $ 1,306,000 | $ 1,722,000 | $ 2,047,000 |
Research and development | 7,620,000 | 7,257,000 | 7,212,000 |
Cost of sales | 63,287,000 | 58,515,000 | 58,732,000 |
Cost of sales [Member] | Shipping and Handling | |||
Cost of sales | 395,000 | 452,000 | 430,000 |
Sales revenue, net | Shipping and Handling | |||
Cost of sales | $ 1,058,000 | $ 1,034,000 | $ 1,115,000 |
Nature of Business and Summar_7
Nature of Business and Summary of Significant Accounting Policies - Net Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Nature of Business and Summary of Significant Accounting Policies | |||
Diluted EPS | $ 15,413 | $ 7,795 | $ 12,481 |
Weighted average | |||
Basic (in shares) | 36,696,000 | 36,888,000 | 37,148,000 |
Stock Options | 112,000 | 98,000 | 100,000 |
Diluted (in shares) | 36,808,000 | 36,986,000 | 37,248,000 |
Effect of Dilutive Securities: | |||
Basic (in dollars per share) | $ 0.42 | $ 0.21 | $ 0.34 |
Diluted (in dollars per share) | $ 0.42 | $ 0.21 | $ 0.34 |
Restatement of Previously Iss_3
Restatement of Previously Issued Financial Statements - Consolidated balance sheets (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Inventory - Current | $ 24,933 | $ 34,727 | ||
Inventory - Non-Current | 6,767 | 5,688 | ||
Retained earnings | 93,312 | 77,899 | ||
Shareholders Equity | 92,388 | 76,540 | $ 70,536 | $ 62,559 |
Previously Reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Inventory - Current | 25,278 | 35,231 | ||
Inventory - Non-Current | 7,164 | 6,524 | ||
Retained earnings | $ 94,345 | $ 79,444 | ||
Shareholders Equity | $ 63,453 |
Restatement of Previously Iss_4
Restatement of Previously Issued Financial Statements - Consolidated statements of income (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cost of sales | $ 63,287 | $ 58,515 | $ 58,732 |
Gross Profit | 50,748 | 42,844 | 44,200 |
Operating Income | 17,932 | 10,065 | 13,776 |
Provision for Income Taxes | 2,514 | 2,261 | 1,274 |
Net income | $ 15,413 | $ 7,795 | $ 12,481 |
Income per share: | |||
Basic (in dollars per share) | $ 0.42 | $ 0.21 | $ 0.34 |
Diluted (in dollars per share) | $ 0.42 | $ 0.21 | $ 0.34 |
Previously Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cost of sales | $ 63,884 | ||
Gross Profit | 50,151 | ||
Operating Income | 17,335 | ||
Provision for Income Taxes | 2,429 | ||
Net income | $ 14,901 |
Restatement of Previously Iss_5
Restatement of Previously Issued Financial Statements - Consolidated statements of cash flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income | $ 15,413 | $ 7,795 | $ 12,481 |
Change to inventory obsolescence reserve | (79) | 624 | (582) |
Deferred income taxes | 337 | (47) | 755 |
Changes in operating assets and liabilities: | |||
Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes | 1,889 | 1,926 | 1,580 |
Net Cash Provided by Operating Activities | 22,987 | $ 10,305 | $ 8,653 |
Previously Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income | 14,901 | ||
Change to inventory obsolescence reserve | 519 | ||
Deferred income taxes | 235 | ||
Changes in operating assets and liabilities: | |||
Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes | $ 1,906 |
Revenue Recognition and Contr_3
Revenue Recognition and Contracts with Customers - Adoption (Details) | Jul. 01, 2018USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) |
Revenue: Adoption | ||||
Operating segments (in segments) | segment | 1 | |||
Retained earnings | $ 93,312,000 | $ 77,899,000 | ||
Provision for Income Taxes | 2,514,000 | 2,261,000 | $ 1,274,000 | |
Refund liabilities | $ 4,277,000 | $ 3,331,000 | ||
Difference between Revenue Guidance in Effect | ||||
Revenue: Adoption | ||||
Right to recover | $ 716,000 | |||
Retained earnings | (719,000) | |||
Provision for Income Taxes | (191,000) | |||
Refund liabilities | $ 1,627,000 |
Revenue Recognition and Contr_4
Revenue Recognition and Contracts with Customers (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue: | |||
Refund liabilities | $ 4,277,000 | $ 3,331,000 | |
Sales revenue, net | Percentage of gross sales | Revenue from rights | |||
Revenue: | |||
Concentration risk (as a percent) | 10.00% | 9.00% | 8.00% |
Other current assets | |||
Revenue: | |||
Right to recover | $ 890,000 | $ 701,000 |
Revenue Recognition and Contr_5
Revenue Recognition and Contracts with Customers - Disaggregation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue: | |||
Revenues | $ 114,035 | $ 101,359 | $ 102,932 |
Intrusion and access alarm products | |||
Revenue: | |||
Revenues | 36,794 | 31,310 | 31,557 |
Door locking devices | |||
Revenue: | |||
Revenues | 43,337 | 46,004 | 53,948 |
Services | |||
Revenue: | |||
Revenues | $ 33,904 | $ 24,045 | $ 17,427 |
Reserve for Doubtful Accounts (
Reserve for Doubtful Accounts (Details) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accounts Receivable | Credit Concentration Risk | customer One | |||
Concentration risks | |||
Concentration risk (as a percent) | 19.00% | 24.00% | 19.00% |
Accounts Receivable | Credit Concentration Risk | customer Two | |||
Concentration risks | |||
Concentration risk (as a percent) | 10.00% | ||
Accounts Receivable | Credit Concentration Risk | customer Three | |||
Concentration risks | |||
Concentration risk (as a percent) | 10.00% | ||
Accounts Receivable | Credit Concentration Risk | customer Four | |||
Concentration risks | |||
Concentration risk (as a percent) | 10.00% | 10.00% | |
Net Sales | Customer Concentration Risk | customer One | |||
Concentration risks | |||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% |
Net Sales | Customer Concentration Risk | customer Two | |||
Concentration risks | |||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% |
Net Sales | Customer Concentration Risk | customer Three | |||
Concentration risks | |||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% |
Net Sales | Customer Concentration Risk | customer Four | |||
Concentration risks | |||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% |
Marketable Securities (Details)
Marketable Securities (Details) $ in Thousands | 12 Months Ended |
Jun. 30, 2021USD ($) | |
Marketable Securities | |
Unrealized (losses) gains recognized during the reporting year on marketable securities still held at the reporting date | $ (9) |
Marketable securities | $ (9) |
Marketable Securities - Fair Va
Marketable Securities - Fair Value (Details) | 12 Months Ended |
Jun. 30, 2021USD ($) | |
Marketable Securities: | |
Cost | $ 5,422,000 |
Fair Value | 5,413,000 |
Unrealized Gain (Loss) | (9,000) |
Transfers between levels 1 and 2 | 0 |
Transfers in or out of level 3 | 0 |
Fair Value, Inputs, Level 1 | |
Marketable Securities: | |
Cost | 5,422,000 |
Fair Value | 5,413,000 |
Unrealized Gain (Loss) | $ (9,000) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Inventories | ||
Component parts | $ 17,245 | $ 21,677 |
Work-in-process | 6,158 | 7,276 |
Finished product | 8,297 | 11,462 |
Inventory, net of reserves | 31,700 | 40,415 |
Current | 24,933 | 34,727 |
Non-current | 6,767 | 5,688 |
Total Inventory | $ 31,700 | $ 40,415 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property plant and equipment | |||
Gross | $ 48,001,000 | $ 46,995,000 | |
Less: accumulated depreciation and amortization | (40,165,000) | (38,907,000) | |
Net | 7,836,000 | 8,088,000 | |
Depreciation and amortization | 1,260,000 | 1,221,000 | $ 1,085,000 |
Land [Member] | |||
Property plant and equipment | |||
Gross | 904,000 | 904,000 | |
Buildings [Member] | |||
Property plant and equipment | |||
Gross | $ 8,911,000 | 8,911,000 | |
Buildings [Member] | Minimum [Member] | |||
Property plant and equipment | |||
Useful life | 30 years | ||
Buildings [Member] | Maximum [Member] | |||
Property plant and equipment | |||
Useful life | 40 years | ||
Molds and dies [Member] | |||
Property plant and equipment | |||
Gross | $ 7,416,000 | 7,337,000 | |
Molds and dies [Member] | Minimum [Member] | |||
Property plant and equipment | |||
Useful life | 3 years | ||
Molds and dies [Member] | Maximum [Member] | |||
Property plant and equipment | |||
Useful life | 5 years | ||
Furniture and fixtures | |||
Property plant and equipment | |||
Gross | $ 2,813,000 | 2,792,000 | |
Furniture and fixtures | Minimum [Member] | |||
Property plant and equipment | |||
Useful life | 5 years | ||
Furniture and fixtures | Maximum [Member] | |||
Property plant and equipment | |||
Useful life | 10 years | ||
Machinery and equipment | |||
Property plant and equipment | |||
Gross | $ 25,548,000 | 24,878,000 | |
Machinery and equipment | Minimum [Member] | |||
Property plant and equipment | |||
Useful life | 7 years | ||
Machinery and equipment | Maximum [Member] | |||
Property plant and equipment | |||
Useful life | 10 years | ||
Building improvements | |||
Property plant and equipment | |||
Gross | $ 2,409,000 | $ 2,173,000 | |
Useful life (estimated) | Shorter of the lease term or life of asset |
Income Taxes - Provision (Detai
Income Taxes - Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Taxes | |||
Provision for tax, federal | $ 1,912 | $ 1,765 | $ 334 |
Provision for tax, state | 265 | 418 | 151 |
Expense (benefit) | 2,177 | 2,183 | 485 |
Deferred tax, deferred expense | 337 | 78 | 789 |
Provision for Income Taxes | $ 2,514 | $ 2,261 | $ 1,274 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Amount | |||
Tax at Federal statutory rate | $ 3,765 | $ 2,112 | $ 2,888 |
Meals and entertainment | 29 | 44 | 49 |
State income taxes, net of Federal income tax benefit | 135 | 122 | 111 |
Foreign source income not subject to tax | (1,647) | (1,089) | (1,241) |
R&D Credit | (523) | (523) | (408) |
Foreign withholding tax | 205 | ||
Release of accrued tax reserves | (151) | ||
U.S. Federal Tax rate reduction | 312 | 775 | |
IRS examination settlements | 832 | 12 | |
Other, net | 238 | (12) | 14 |
Provision for income taxes | $ 2,514 | $ 2,261 | $ 1,274 |
% of Pre-tax Income | |||
Tax at Federal statutory rate | 21.00% | 21.00% | 21.00% |
Meals and entertainment | 0.20% | 0.40% | 0.40% |
State income taxes, net of Federal income tax benefit | 0.80% | 1.20% | 0.80% |
Foreign source income not subject to tax | (9.20%) | (10.80%) | (9.00%) |
R&D Credit | (2.90%) | (4.70%) | (3.00%) |
Foreign withholding tax | 1.10% | 0.00% | |
Release of accrued tax reserves | (1.10%) | ||
Uncertain Tax Positions | 1.70% | 7.20% | 0.00% |
IRS examination settlements | 8.30% | 0.10% | |
Other, net | 1.30% | (0.10%) | 0.10% |
Effective tax rate | 14.00% | 22.50% | 9.30% |
Income Taxes - Deferred (Detail
Income Taxes - Deferred (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Components of deferred tax assets and liabilities | ||
Accounts receivable | $ 43 | $ 40 |
Inventories | 314 | 443 |
Accrued liabilities | 374 | 262 |
Stock based compensation expense | 102 | 96 |
Intangibles | (454) | (300) |
Property, plant and equipment | (539) | (484) |
Revenue reserves | 393 | 308 |
Other deferred tax liabilities | (613) | (408) |
Deferred Tax Liabilities, Gross | (380) | (43) |
Deferred Income Tax Liabilities, Net | $ (380) | $ (43) |
Income Taxes - Unrecognized Rol
Income Taxes - Unrecognized Roll Forward (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Reconciliation of unrecognized tax benefits: | |||
Gross unrecognized, bgn | $ 866,000 | $ 125,000 | $ 221,000 |
Decrease due to release of R&D credits due to the IRS Audit | (185,000) | (151,000) | |
Increase (decrease) from deemed dividends for investments in US Property | (3,000) | 682,000 | 55,000 |
Increase from the generation of additional R&D credits | 59,000 | ||
Gross unrecognized, end | 678,000 | 866,000 | 125,000 |
Interest | |||
Unrecognized interest, bgn | 83,000 | 0 | 0 |
Unrecognized, accrued interest | 83,000 | ||
(Decrease) Unrecognized, accrued interest | (20,000) | ||
Unrecognized interest, end | 63,000 | 83,000 | 0 |
Total | |||
Total, bgn | 949,000 | 125,000 | 221,000 |
Decrease due to release of R&D credits due to the IRS Audit | (185,000) | (151,000) | |
Increase (decrease) to unrecognized tax benefits including interest | (23,000) | 765,000 | 55,000 |
Increase from the generation of additional R&D credits | 59,000 | ||
Total, end | $ 741,000 | $ 949,000 | $ 125,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income taxes | ||||||
Income Tax Expense (Benefit) | $ 2,514,000 | $ 2,261,000 | $ 1,274,000 | |||
Unrecognized, period increase (decrease) | (208,000) | |||||
Unrecognized interest, total | $ 63,000 | 63,000 | 83,000 | $ 0 | $ 0 | |
Unrecognized, future period | 678,000 | 678,000 | ||||
Provision for incremental Income tax liability | 613,000 | |||||
Undistributed earnings, foreign subsidiaries | 60,400,000 | $ 60,400,000 | ||||
Tax Year 2017 | ||||||
Income taxes | ||||||
Examination, interest expense | $ 68,000 | |||||
Domestic Tax Authority | Tax Year 2017 | ||||||
Income taxes | ||||||
Penalties and interest expense | $ 399,000 | |||||
State Jurisdiction | Tax Year 2017 | ||||||
Income taxes | ||||||
Penalties and interest expense | $ 97,000 | |||||
Internal Revenue Service | Domestic Tax Authority | Tax Year 2016 | ||||||
Income taxes | ||||||
Penalties and interest accrual | 762,000 | |||||
Internal Revenue Service | State Jurisdiction | Tax Year 2016 | ||||||
Income taxes | ||||||
Penalties and interest accrual | $ 70,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Long-term debt disclosure: | ||
Line of credit, maximum borrowing capacity | $ 11,000,000 | $ 11,000,000 |
Debt by current and non-current | ||
Outstanding | 3,904,000 | 3,904,000 |
Less: current maturities | (2,386,000) | (1,794,000) |
Long-term debt | 1,518,000 | 2,110,000 |
Term Loans | ||
Debt by current and non-current | ||
Outstanding | 3,904,000 | 3,904,000 |
Term Loans | Paycheck Protection Program | ||
Long-term debt disclosure: | ||
Debt instrument, face | $ 3,904,000 | $ 3,904,000 |
Revolver Agreement | ||
Long-term debt disclosure: | ||
Stock collateral (as a percent) | 65% | |
Revolver Agreement | LIBOR | ||
Long-term debt disclosure: | ||
Basis spread | 0.25% | |
Revolver Agreement | LIBOR | Minimum [Member] | ||
Long-term debt disclosure: | ||
Interest rate | 1.15% | |
Revolver Agreement | LIBOR | Maximum [Member] | ||
Long-term debt disclosure: | ||
Interest rate | 2.00% |
Stock Options - Fair Value (Det
Stock Options - Fair Value (Details) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
2012 Employee Stock Option Plan | |||
Stock option | |||
Risk-free interest rates, min | 0.60% | 2.50% | |
Risk-free interest rates, max | 2.10% | 3.10% | |
Expected lives | 10 years | 10 years | |
Expected volatility, min | 44.00% | 48.00% | |
Expected volatility, max | 46.00% | 52.00% | |
Expected dividend yields | 0.00% | 0.00% | |
2012 Non-Employee Stock Option Plan | |||
Stock option | |||
Expected lives | 10 years | ||
Expected volatility | 44.00% | ||
Expected dividend yields | 0.00% | ||
2018 Non-Employee Stock Option Plan | |||
Stock option | |||
Risk-free interest rates, min | 1.60% | ||
Risk-free interest rates, max | 1.80% | ||
Risk-free interest rates | 2.90% | ||
Expected lives | 10 years | 10 years | |
Expected volatility, min | 44.00% | ||
Expected volatility, max | 45.00% | ||
Expected volatility | 50.00% | ||
2020 Non-Employee Stock Option Plan | |||
Stock option | |||
Risk-free interest rates | 0.62% | ||
Expected lives | 10 years | ||
Expected volatility | 45.00% | ||
Expected dividend yields | 0.00% |
Stock Options - Activity (Detai
Stock Options - Activity (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
2012 Employee Stock Option Plan | |||
Options | |||
Outstanding, beginning of year | 235,680 | 145,000 | 114,400 |
Granted | 141,880 | 58,000 | |
Forfeited/Lapsed | (13,000) | (20,000) | |
Exercised | (8,600) | (31,200) | (27,400) |
Outstanding, end of period | 214,080 | 235,680 | 145,000 |
Exercisable, end of period | 98,176 | 70,000 | 67,600 |
Weighted average exercise price | |||
Weighted average exercise price, bgn | $ 9.42 | $ 5.51 | $ 3.55 |
Granted (per share) | 12.25 | 8.30 | |
Forfeited/Lapsed (per share) | 6.91 | 9.92 | |
Exercised (per share) | 9.04 | 3.78 | 3.21 |
Weighted average exercise price, end | 9.59 | 9.42 | 5.51 |
Exercisable, end of period, weighted average exercise price | $ 8.07 | 6.57 | 4.03 |
Additional disclosures | |||
Weighted average fair value at grant date of options granted | $ 6.72 | $ 4.58 | |
Total intrinsic value of options exercised | $ 65,000 | $ 278,000 | $ 160,000 |
Total intrinsic value of options outstanding | 1,840,000 | 696,000 | 1,353,000 |
Total intrinsic value of options exercisable | $ 993,000 | $ 389,000 | $ 731,000 |
2012 Non-Employee Stock Option Plan | |||
Options | |||
Outstanding, beginning of year | 24,000 | 20,400 | 55,600 |
Granted | 3,600 | ||
Forfeited/Lapsed | (9,600) | (3,600) | |
Exercised | (2,400) | (31,600) | |
Outstanding, end of period | 12,000 | 24,000 | 20,400 |
Exercisable, end of period | 6,240 | 11,520 | 6,000 |
Weighted average exercise price | |||
Weighted average exercise price, bgn | $ 5.15 | $ 4 | $ 3.43 |
Granted (per share) | 11.68 | 0 | |
Forfeited/Lapsed (per share) | 3.59 | 4.35 | |
Exercised (per share) | 4.35 | 2.96 | |
Weighted average exercise price, end | 6.55 | 5.15 | 4 |
Exercisable, end of period, weighted average exercise price | $ 6.04 | 4.18 | $ 3.14 |
Additional disclosures | |||
Weighted average fair value at grant date of options granted | $ 6.47 | ||
Total intrinsic value of options exercised | $ 31,000 | $ 192,000 | |
Total intrinsic value of options outstanding | 140,000 | $ 157,000 | 221,000 |
Total intrinsic value of options exercisable | $ 76,000 | $ 87,000 | $ 70,000 |
2018 Non-Employee Stock Option Plan | |||
Options | |||
Outstanding, beginning of year | 96,800 | 30,400 | |
Granted | 66,400 | 40,000 | |
Forfeited/Lapsed | (23,500) | (6,400) | |
Exercised | (3,200) | (3,200) | |
Outstanding, end of period | 70,100 | 96,800 | 30,400 |
Exercisable, end of period | 29,960 | 24,480 | 4,800 |
Weighted average exercise price | |||
Weighted average exercise price, bgn | $ 11.74 | $ 8.10 | |
Granted (per share) | 13.41 | $ 8.10 | |
Forfeited/Lapsed (per share) | 11.68 | 8.10 | |
Exercised (per share) | 8.10 | 8.10 | |
Weighted average exercise price, end | 11.93 | 11.74 | 8.10 |
Exercisable, end of period, weighted average exercise price | $ 11.68 | 10.98 | 8.10 |
Additional disclosures | |||
Weighted average fair value at grant date of options granted | $ 7.55 | $ 5.12 | |
Total intrinsic value of options exercised | $ 29,000 | $ 24,000 | |
Total intrinsic value of options outstanding | 439,000 | $ 110,000 | 205,000 |
Total intrinsic value of options exercisable | $ 195,000 | $ 40,000 | $ 32,000 |
2020 Non-Employee Stock Option Plan | |||
Options | |||
Granted | 10,000 | 0 | |
Exercised | 0 | 0 | |
Outstanding, end of period | 10,000 | ||
Exercisable, end of period | 2,000 | ||
Weighted average exercise price | |||
Granted (per share) | $ 11.40 | ||
Weighted average exercise price, end | 11.40 | ||
Exercisable, end of period, weighted average exercise price | 11.40 | ||
Additional disclosures | |||
Weighted average fair value at grant date of options granted | $ 6.10 | ||
Total intrinsic value of options outstanding | $ 68,000 | ||
Total intrinsic value of options exercisable | $ 14,000 |
Stock Options - Outstanding (De
Stock Options - Outstanding (Details) | 12 Months Ended |
Jun. 30, 2021$ / sharesshares | |
2012 Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 214,080 |
Weighted average remaining contractual life | 7 years 4 months 24 days |
Weighted average exercise price | $ 9.59 |
Number exercisable | shares | 98,176 |
Exercisable, Weighted average exercise price | $ 8.07 |
2012 Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | 2.19 |
Exercise price lower limit | $ 16.80 |
Options outstanding (in shares) | shares | 214,080 |
Weighted average remaining contractual life | 7 years 4 months 24 days |
Weighted average exercise price | $ 9.59 |
Number exercisable | shares | 98,176 |
Exercisable, Weighted average exercise price | $ 8.07 |
2012 Non-Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 12,000 |
Weighted average remaining contractual life | 7 years 1 month 6 days |
Weighted average exercise price | $ 6.55 |
Number exercisable | shares | 6,240 |
Exercisable, Weighted average exercise price | $ 6.04 |
2012 Non-Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | 2.19 |
Exercise price lower limit | $ 11.68 |
Options outstanding (in shares) | shares | 12,000 |
Weighted average remaining contractual life | 7 years 1 month 6 days |
Weighted average exercise price | $ 6.55 |
Number exercisable | shares | 6,240 |
Exercisable, Weighted average exercise price | $ 6.04 |
2018 Non-Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 70,100 |
Weighted average remaining contractual life | 8 years 2 months 12 days |
Weighted average exercise price | $ 11.93 |
Number exercisable | shares | 29,960 |
Exercisable, Weighted average exercise price | $ 11.68 |
2018 Non-Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | 8.10 |
Exercise price lower limit | $ 15.27 |
Options outstanding (in shares) | shares | 70,100 |
Weighted average remaining contractual life | 8 years 2 months 12 days |
Weighted average exercise price | $ 11.93 |
Number exercisable | shares | 29,960 |
Exercisable, Weighted average exercise price | $ 11.68 |
2020 Non-Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 10,000 |
Weighted average remaining contractual life | 9 years 2 months 12 days |
Weighted average exercise price | $ 11.40 |
Number exercisable | shares | 2,000 |
Exercisable, Weighted average exercise price | $ 11.40 |
2020 Non-Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | $ 11.40 |
Options outstanding (in shares) | shares | 10,000 |
Weighted average remaining contractual life | 9 years 2 months 12 days |
Weighted average exercise price | $ 11.40 |
Number exercisable | shares | 2,000 |
Exercisable, Weighted average exercise price | $ 11.40 |
Stock Options - Additional Info
Stock Options - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Option | ||||
Proceeds from stock option exercises | $ 80,000 | $ 53,000 | ||
2012 Employee Stock Option Plan | ||||
Stock Option | ||||
Outstanding (in shares) | 214,080 | 235,680 | 145,000 | 114,400 |
Exercisable, end of period | 98,176 | 70,000 | 67,600 | |
Granted | 141,880 | 58,000 | ||
Exercised | 8,600 | 31,200 | 27,400 | |
2012 Non-Employee Stock Option Plan | ||||
Stock Option | ||||
Outstanding (in shares) | 12,000 | 24,000 | 20,400 | 55,600 |
Exercisable, end of period | 6,240 | 11,520 | 6,000 | |
Granted | 3,600 | |||
Exercised | 2,400 | 31,600 | ||
2018 Non-Employee Stock Option Plan | ||||
Stock Option | ||||
Outstanding (in shares) | 70,100 | 96,800 | 30,400 | |
Exercisable, end of period | 29,960 | 24,480 | 4,800 | |
Granted | 66,400 | 40,000 | ||
Exercised | 3,200 | 3,200 | ||
2020 Non-Employee Stock Option Plan | ||||
Stock Option | ||||
Stock-based compensation expense, allocated | $ 37,000 | |||
Outstanding (in shares) | 10,000 | |||
Exercisable, end of period | 2,000 | |||
Granted | 10,000 | 0 | ||
Exercised | 0 | 0 | ||
Fair Value | $ 12,000 | $ 0 |
Stockholders' Equity Transact_2
Stockholders' Equity Transactions (Details) - shares | Jun. 30, 2021 | Jun. 30, 2020 |
Stockholders' Equity Transactions | ||
Common Stock Shares Outstanding | 36,702,168 | 36,694,702 |
401(k) Plan (Details)
401(k) Plan (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
401(k) Plan | |||
Employer contribution | $ 138,000 | $ 133,000 | $ 133,000 |
Commitments and Contingencies -
Commitments and Contingencies - Weighted - average lease term (Details) | Jun. 30, 2021 |
Commitments and Contingencies | |
Weighted-average remaining lease term | 71 years |
Weighted-average discount rate | 3.55% |
Commitments and Contingencies_2
Commitments and Contingencies - Lease liabilities (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Schedule, by years, of maturities of lease liabilities | |
2022 | $ 282 |
2023 | 272 |
2024 | 263 |
2025 | 254 |
2026 | 245 |
Thereafter | 6,057 |
Total | $ 7,373 |
Commitments and Contingencies_3
Commitments and Contingencies - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 01, 2019 | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease term | 99 years | |||
Annual minimum rent | $ 288,000 | |||
Operating Lease Payments | 288,000 | $ 240,000 | ||
Operating lease expense | 316,000 | 315,000 | $ 330,000 | |
Operating lease asset | 7,373,000 | 7,395,000 | $ 7,700,000 | |
Operating lease liability | 7,700,000 | |||
Accounting Standards Update 2016-02 | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease asset | 7,700,000 | |||
Operating lease liability | $ 7,700,000 | |||
Dominican Republic [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease asset | 7,373,000 | $ 7,395,000 | ||
Employment Contracts [Member] | Chief executive officer [Member] | ||||
Lessee, Lease, Description [Line Items] | ||||
Annual salary commitment | $ 838,000 | |||
Termination pay commitment rate applied to the average of the prior five calendar years compensation | 299.00% | |||
Employment Contracts [Member] | SVP of Engineering | ||||
Lessee, Lease, Description [Line Items] | ||||
Annual salary commitment | $ 347,000 |
Geographical Data (Details)
Geographical Data (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Domestic and Foreign Operations | |||
Net Sales | $ 114,035 | $ 101,359 | $ 102,932 |
Identifiable assets | 122,551 | 104,498 | |
United States [Member] | |||
Domestic and Foreign Operations | |||
Net Sales | 112,618 | 99,496 | 100,716 |
Identifiable assets | 90,941 | 68,520 | |
Foreign | |||
Domestic and Foreign Operations | |||
Net Sales | 1,417 | 1,863 | $ 2,216 |
Dominican Republic [Member] | |||
Domestic and Foreign Operations | |||
Identifiable assets | $ 31,610 | $ 35,978 |
Geographical Data - Additional
Geographical Data - Additional information (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 | Jul. 01, 2019 |
Domestic and Foreign Operations | |||
Inventories, net | $ 24,933 | $ 34,727 | |
Operating lease asset | 7,373 | 7,395 | $ 7,700 |
Fixed assets | 7,836 | 8,088 | |
Dominican Republic [Member] | |||
Domestic and Foreign Operations | |||
Inventories, net | 20,712 | 24,821 | |
Operating lease asset | 7,373 | 7,395 | |
Fixed assets | $ 3,208 | $ 3,481 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Term Loans | Paycheck Protection Program | ||
Subsequent Event [Line Items] | ||
Principal Amount | $ 3,904,000 | $ 3,904,000 |