Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Mar. 31, 2024 | May 03, 2024 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2024 | |
Entity File Number | 0-10004 | |
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 | 2024 | |
Document Fiscal Period Focus | Q3 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | NSSC | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0000069633 | |
Current Fiscal Year End Date | --06-30 | |
Entity Common Stock, Shares Outstanding | 36,872,639 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Jun. 30, 2023 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 55,518 | $ 35,955 |
Investments - other | 26,671 | 25,660 |
Marketable securities | 5,348 | 5,136 |
Accounts receivable, net of allowance for credit losses of $105 and $131 as of March 31, 2024 and June 30, 2023, respectively | 30,273 | 26,069 |
Inventories, net | 37,010 | 35,062 |
Income tax receivable | 75 | |
Prepaid expenses and other current assets | 3,379 | 3,402 |
Total Current Assets | 158,199 | 131,359 |
Inventories - non-current, net | 13,093 | 13,287 |
Property, plant and equipment, net | 8,978 | 9,308 |
Intangible assets, net | 3,686 | 3,939 |
Deferred income taxes | 4,983 | 2,652 |
Right-of-use asset | 5,564 | 5,797 |
Other assets | 289 | 312 |
TOTAL ASSETS | 194,792 | 166,654 |
CURRENT LIABILITIES | ||
Accounts payable | 6,913 | 8,061 |
Accrued expenses | 9,737 | 8,079 |
Accrued salaries and wages | 3,095 | 3,546 |
Accrued income taxes | 203 | |
Total Current Liabilities | 19,948 | 19,686 |
Accrued income taxes | 1,102 | 1,110 |
Long term right-of-use liability | 5,556 | 5,689 |
TOTAL LIABILITIES | 26,606 | 26,485 |
COMMITMENTS AND CONTINGENCIES (Note 13) | ||
STOCKHOLDERS' EQUITY | ||
Common Stock, par value $0.01 per share; 100,000,000 shares authorized as of March 31, 2024 and June 30, 2023; 39,766,354 and 39,663,812 shares issued; and 36,872,639 and 36,770,097 shares outstanding, respectively. | 398 | 397 |
Additional paid-in capital | 22,855 | 21,553 |
Retained earnings | 164,454 | 137,740 |
Less: Treasury Stock, at cost (2,893,715 shares) | (19,521) | (19,521) |
TOTAL STOCKHOLDERS' EQUITY | 168,186 | 140,169 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 194,792 | $ 166,654 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2024 | Jun. 30, 2023 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for credit losses | $ 105,000 | $ 131,000 |
Common stock, par (per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 39,766,354 | 39,663,812 |
Common stock, outstanding (in shares) | 36,872,639 | 36,770,097 |
Treasury stock, shares | 2,893,715 | 2,893,715 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Net sales: | ||||
Net sales | $ 49,267,000 | $ 43,532,000 | $ 138,490,000 | $ 125,339,000 |
Cost of sales: | ||||
Cost of sales | 22,783,000 | 22,253,000 | 64,581,000 | 75,140,000 |
Gross Profit | 26,484,000 | 21,279,000 | 73,909,000 | 50,199,000 |
Operating expenses: | ||||
Research and development | 2,757,000 | 2,314,000 | 7,736,000 | 6,964,000 |
Selling, general, and administrative expenses | 9,233,000 | 8,425,000 | 26,319,000 | 24,719,000 |
Total Operating Expenses | 11,990,000 | 10,739,000 | 34,055,000 | 31,683,000 |
Operating Income | 14,494,000 | 10,540,000 | 39,854,000 | 18,516,000 |
Other income: | ||||
Interest and other income, net | 637,000 | 437,000 | 1,806,000 | 521,000 |
Income before Provision for Income Taxes | 15,131,000 | 10,977,000 | 41,660,000 | 19,037,000 |
Provision for Income Taxes | 1,935,000 | 1,428,000 | 5,376,000 | 2,475,000 |
Net Income | $ 13,196,000 | $ 9,549,000 | $ 36,284,000 | $ 16,562,000 |
Income per share: | ||||
Basic (in dollars per share) | $ 0.36 | $ 0.26 | $ 0.99 | $ 0.45 |
Diluted (in dollars per share) | $ 0.36 | $ 0.26 | $ 0.98 | $ 0.45 |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 36,835,000 | 36,793,000 | 36,792,000 | 36,736,000 |
Diluted (in shares) | 37,118,000 | 37,082,000 | 37,032,000 | 36,983,000 |
Equipment | ||||
Net sales: | ||||
Net sales | $ 29,735,000 | $ 28,390,000 | $ 83,133,000 | $ 81,511,000 |
Cost of sales: | ||||
Cost of sales | 21,179,000 | 20,780,000 | 59,332,000 | 70,341,000 |
Services | ||||
Net sales: | ||||
Net sales | 19,532,000 | 15,142,000 | 55,357,000 | 43,828,000 |
Cost of sales: | ||||
Cost of sales | $ 1,604,000 | $ 1,473,000 | $ 5,249,000 | $ 4,799,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Total |
Balance at Jun. 30, 2022 | $ 396 | $ 20,005 | $ (19,521) | $ 112,911 | $ 113,791 |
Balance (in shares) at Jun. 30, 2022 | 39,628,197 | (2,893,715) | |||
Net income | 3,084 | 3,084 | |||
Stock-based compensation expense | 477 | 477 | |||
Stock options exercised | 45 | 45 | |||
Stock options exercised (in shares) | 8,480 | ||||
Balance at Sep. 30, 2022 | $ 396 | 20,527 | $ (19,521) | 115,995 | 117,397 |
Balance (in shares) at Sep. 30, 2022 | 39,636,677 | (2,893,715) | |||
Balance at Jun. 30, 2022 | $ 396 | 20,005 | $ (19,521) | 112,911 | 113,791 |
Balance (in shares) at Jun. 30, 2022 | 39,628,197 | (2,893,715) | |||
Net income | 16,562 | ||||
Balance at Mar. 31, 2023 | $ 397 | 21,220 | $ (19,521) | 129,473 | 131,569 |
Balance (in shares) at Mar. 31, 2023 | 39,661,495 | (2,893,715) | |||
Balance at Jun. 30, 2022 | $ 396 | 20,005 | $ (19,521) | 112,911 | 113,791 |
Balance (in shares) at Jun. 30, 2022 | 39,628,197 | (2,893,715) | |||
Balance at Jun. 30, 2023 | $ 397 | 21,553 | $ (19,521) | 137,740 | 140,169 |
Balance (in shares) at Jun. 30, 2023 | 39,663,812 | (2,893,715) | |||
Balance at Sep. 30, 2022 | $ 396 | 20,527 | $ (19,521) | 115,995 | 117,397 |
Balance (in shares) at Sep. 30, 2022 | 39,636,677 | (2,893,715) | |||
Net income | 3,929 | 3,929 | |||
Stock-based compensation expense | 335 | 335 | |||
Stock options exercised (in shares) | 2,756 | ||||
Balance at Dec. 31, 2022 | $ 396 | 20,862 | $ (19,521) | 119,924 | 121,661 |
Balance (in shares) at Dec. 31, 2022 | 39,639,433 | (2,893,715) | |||
Net income | 9,549 | 9,549 | |||
Stock-based compensation expense | 322 | 322 | |||
Stock options exercised | $ 1 | 36 | 37 | ||
Stock options exercised (in shares) | 22,062 | ||||
Balance at Mar. 31, 2023 | $ 397 | 21,220 | $ (19,521) | 129,473 | 131,569 |
Balance (in shares) at Mar. 31, 2023 | 39,661,495 | (2,893,715) | |||
Balance at Jun. 30, 2023 | $ 397 | 21,553 | $ (19,521) | 137,740 | 140,169 |
Balance (in shares) at Jun. 30, 2023 | 39,663,812 | (2,893,715) | |||
Net income | 10,478 | 10,478 | |||
Stock-based compensation expense | 307 | 307 | |||
Cash dividend | (2,942) | (2,942) | |||
Balance at Sep. 30, 2023 | $ 397 | 21,860 | $ (19,521) | 145,276 | 148,012 |
Balance (in shares) at Sep. 30, 2023 | 39,663,812 | (2,893,715) | |||
Balance at Jun. 30, 2023 | $ 397 | 21,553 | $ (19,521) | 137,740 | 140,169 |
Balance (in shares) at Jun. 30, 2023 | 39,663,812 | (2,893,715) | |||
Net income | 36,284 | ||||
Balance at Mar. 31, 2024 | $ 398 | 22,855 | $ (19,521) | 164,454 | 168,186 |
Balance (in shares) at Mar. 31, 2024 | 39,766,354 | (2,893,715) | |||
Balance at Sep. 30, 2023 | $ 397 | 21,860 | $ (19,521) | 145,276 | 148,012 |
Balance (in shares) at Sep. 30, 2023 | 39,663,812 | (2,893,715) | |||
Net income | 12,610 | 12,610 | |||
Stock-based compensation expense | 303 | 303 | |||
Stock options exercised (in shares) | 11,892 | ||||
Cash dividend | (2,941) | (2,941) | |||
Balance at Dec. 31, 2023 | $ 397 | 22,163 | $ (19,521) | 154,945 | 157,984 |
Balance (in shares) at Dec. 31, 2023 | 39,675,704 | (2,893,715) | |||
Net income | 13,196 | 13,196 | |||
Stock-based compensation expense | 266 | 266 | |||
Stock options exercised | $ 1 | 426 | 427 | ||
Stock options exercised (in shares) | 90,650 | ||||
Cash dividend | (3,687) | (3,687) | |||
Balance at Mar. 31, 2024 | $ 398 | $ 22,855 | $ (19,521) | $ 164,454 | $ 168,186 |
Balance (in shares) at Mar. 31, 2024 | 39,766,354 | (2,893,715) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||
Feb. 01, 2024 | Nov. 02, 2023 | Aug. 18, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY | ||||||
Cash dividend (in dollars per share) | $ 0.10 | $ 0.08 | $ 0.08 | $ 0.10 | $ 0.08 | $ 0.08 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 36,284,000 | $ 16,562,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,627,000 | 1,398,000 |
Gain on disposal of fixed asset | (15,000) | |
Interest income on other investments | 112,000 | (177,000) |
Unrealized (gain) loss on marketable securities | (52,000) | 23,000 |
(Recovery) of credit losses | (26,000) | (118,000) |
Change to inventory reserve | 634,000 | (85,000) |
Deferred income taxes | (2,331,000) | (1,400,000) |
Stock based compensation expense | 876,000 | 1,134,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,178,000) | 5,166,000 |
Inventories | (2,388,000) | (813,000) |
Prepaid expenses and other current assets | 23,000 | 228,000 |
Income tax receivable | 75,000 | (688,000) |
Other assets | 22,000 | 48,000 |
Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes | 354,000 | (8,847,000) |
Net Cash Provided by Operating Activities | 31,032,000 | 12,416,000 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property, plant, and equipment | (1,043,000) | (2,547,000) |
Proceeds from disposal of fixed asset | 38,000 | |
Purchases of marketable securities | (160,000) | (110,000) |
Purchases of other investments | (1,123,000) | (30,185,000) |
Redemption of other investments | 10,091,000 | |
Net Cash Used in Investing Activities | (2,326,000) | (22,713,000) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from stock option exercises | 427,000 | 82,000 |
Cash paid for dividend | (9,570,000) | |
Net Cash (Used in) Provided by Financing Activities | (9,143,000) | 82,000 |
Net increase (decrease) in Cash and Cash Equivalents | 19,563,000 | (10,215,000) |
CASH AND CASH EQUIVALENTS - Beginning | 35,955,000 | 41,730,000 |
CASH AND CASH EQUIVALENTS - Ending | 55,518,000 | 31,515,000 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Interest paid | 8,000 | 12,000 |
Income taxes paid | $ 7,437,000 | $ 6,421,000 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2024 | |
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, cellular communication services for intrusion and fire alarm systems as well as a leading provider of school safety solutions. We offer a diversified array of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. We have experienced significant growth in recent years, primarily driven by fast growing recurring service revenues generated from wireless communication services for intrusion and fire alarm systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as a result of on-campus shooting and violence in the U.S. Our wireless communication services have led to substantial growth in our monthly recurring revenues. The Company's fiscal year begins on July 1 and ends on June 30. Historically, the end users of the Company’s hardware products want to install these products prior to the summer; therefore, sales of these 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 may be affected by the housing and construction markets. Deterioration of the current economic conditions may also affect this trend. The monthly recurring service revenue, which is less susceptible to these fluctuations, allows us to generate a more consistent and predictable stream of income and mitigates the risk of fluctuation in market demand for our equipment products. 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 credit losses, overhead expenses applied to inventory, 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, marketable securities, current receivables and payables and certain other short-term financial instruments approximate their fair value as of March 31, 2024 and June 30, 2023 due to their short-term maturities. Cash and Cash Equivalents and Investments – other Cash and cash equivalents include approximately $36,106,000 of short-term time deposits, consisting of several certificates of deposit totaling $5,340,000 and $30,766,000 in money market funds as of March 31, 2024. Cash and cash equivalents include approximately $15,242,000 of short-term time deposits, consisting of several certificates of deposit totaling $15,179,000 and $63,000 in a money market fund as of June 30, 2023. The Company classifies these highly liquid investments with original maturities of three months or less as cash equivalents. Certificates of deposit with an original maturity greater than three months are classified as Investments-other. Cash and cash equivalents consist of the following as of (in thousands): March 31, 2024 June 30, 2023 Cash $ 19,412 $ 20,713 Money Market Fund 30,766 63 Certificates of Deposit 5,340 15,179 $ 55,518 $ 35,955 Investments-other consists of the following as of (in thousands): March 31, 2024 June 30, 2023 Certificates of Deposit $ 26,671 $ 25,660 $ 26,671 $ 25,660 Certificates of deposit are recorded at the original cost plus accrued interest. The Company’s Certificates of deposits consist of the following as of (in thousands): March 31, 2024 Balance Sheet Classification Interest Rate Maturity Date Cost Carrying Value Cash and Cash Equivalents 4.65% 5/22/2024 $ 5,313 $ 5,340 Investments - other 4.55% - 5.40% 4/24/2024 - 9/23/2024 26,484 26,671 The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of March 31, 2024 and June 30, 2023. The Company has not historically experienced any credit losses with balances in excess of FDIC limits. Marketable Securities The Company’s marketable securities include investments in mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds. The Company’s marketable securities are reported at fair value with the related unrealized and realized gains and losses included in other expense (income). Realized gains or losses on mutual funds are determined on a specific identification basis. The Company would record an impairment charge if the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary. During the three and nine months ended March 31, 2024, the Company did not record an impairment charge regarding its investment in marketable securities because management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary. Accounts Receivable Accounts receivable is stated net of the reserves for credit losses of $105,000 and $131,000 as of March 31, 2024 and June 30, 2023, respectively. Our reserves for credit losses 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 cycle, 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 consisted of the follows (in thousands): March 31, 2024 June 30, 2023 Carrying Accumulated Net book Carrying Accumulated Net book value amortization value value amortization value Customer relationships $ 9,800 (9,403) $ 397 $ 9,800 (9,302) $ 498 Trade name 4,048 (759) 3,289 4,048 (607) 3,441 $ 13,848 $ (10,162) $ 3,686 $ 13,848 $ (9,909) $ 3,939 Amortization expense for intangible assets subject to amortization was approximately $84,000 and $90,000 for the three months ended March 31, 2024 and 2023, respectively. Amortization expense for intangible assets subject to amortization was approximately $253,000 and $271,000 for the nine months ended March 31, 2024 and 2023, respectively. Amortization expense for each of the next five fiscal years is estimated to be as follows: 2024 - $336,000; 2025 - $315,000; 2026 - $297,000; 2027 - $283,000; and 2028 - $269,000. The weighted average remaining amortization period for intangible assets was 15.0 years and 15.5 years at March 31, 2024 and June 30, 2023, 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 or in 30 days for customers with an open account. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include product returns and sales incentives, such as volume rebates and discounts, and early-payment discounts. 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, rebates and credits and is able to make reasonable and reliable estimates of product returns based on the Company’s past history. Estimates for sales returns, rebates and credits are based on several factors including actual returns, rebates and credits and based on expected return data communicated to it by its customers. Accordingly, the Company believes that its historical returns, rebates and credits 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" (“SG&A”) expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for the three months ended March 31, 2024 and 2023 was $395,000 and $926,000, respectively. Advertising expense for the nine months ended March 31, 2024 and 2023 was $1,852,000 and $2,185,000, respectively. Research and Development Costs Research and development (“R&D”) costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income. Company-sponsored R&D expense for the three months ended March 31, 2024 and 2023 was $2,757,000 and $2,314,000, respectively. Company-sponsored R&D expense for the nine months ended March 31, 2024 and 2023 was $7,736,000 and $6,964,000, respectively. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. Net Income per Share Basic net income per common share (Basic EPS) is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding. The following provides a reconciliation of information used in calculating the per share amounts for the three months ended March 31, 2024 and 2023 (in thousands, except share and per share data): Net Income Weighted Average Shares Net Income per Share 2024 2023 2024 2023 2024 2023 Basic EPS $ 13,196 $ 9,549 36,835 36,793 $ 0.36 $ 0.26 Effect of Dilutive Securities: Stock Options — — 283 289 — — Diluted EPS $ 13,196 $ 9,549 37,118 37,082 $ 0.36 $ 0.26 Options to purchase 0 shares of common stock were excluded for both the three months ended March 31, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive. These options were still outstanding at the end of the period. The following provides a reconciliation of information used in calculating the per share amounts for the nine months ended March 31, 2024 and 2023 (in thousands, except share and per share data): Weighted Average Net Income per Net Income Shares Share 2024 2023 2024 2023 2024 2023 Basic EPS $ 36,284 $ 16,562 36,792 36,736 $ 0.99 $ 0.45 Effect of Dilutive Securities: Stock Options — — 240 247 (0.01) — Diluted EPS $ 36,284 $ 16,562 37,032 36,983 $ 0.98 $ 0.45 Options to purchase 24,167 and 8,379 shares of common stock were excluded for the nine months ended March 31, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive. These options were still outstanding at the end of the period. Stock-Based Compensation The Company has established five 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 $266,000 and $322,000 were recognized for the three months ended March 31, 2024 and 2023, respectively. Stock-based compensation costs of $876,000 and $1,134,000 were recognized for the nine months ended March 31, 2024 and 2023, 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 three and nine months ended March 31, 2024 or 2023. Comprehensive Income For the three and nine months ended March 31, 2024 and 2023, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income. Accordingly, the Company’s comprehensive income approximates its net income for all periods presented. 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 ($93,000 and $106,000 in the three months ended March 31, 2024 and 2023, respectively, and $279,000 and $346,000 in the nine months ended March 31, 2024 and 2023, respectively); and classifies the costs associated with these sales in cost of sales ($421,000 and $437,000 in the three months ended March 31, 2024 and 2023, respectively, and $1,181,000 and $1,285,000 in the nine months ended March 31, 2024 and 2023, respectively). Leases The Company records a right of use asset and corresponding liability for the operating lease on our Consolidated Balance Sheets, excluding short-term leases (leases with terms of 12 months or less) as described under ASU No. 2016-02, Leases (Topic 842) 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 for new arrangements at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. On February 9, 2024, the Company’s bank has shifted to the Benchmark Replacement as defined in the Fourth Amended and Restated Credit Agreement (“Amended Agreement”) |
Revenue Recognition and Contrac
Revenue Recognition and Contracts with Customers | 9 Months Ended |
Mar. 31, 2024 | |
Revenue Recognition and Contracts with Customers | |
Revenue Recognition and Contracts with Customers | NOTE 2 – Revenue Recognition and Contracts with Customers 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. All of these products and services are used for commercial, residential, institutional, industrial and governmental applications, and are sold primarily to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are primarily shipped from the United States. As of March 31, 2024 and June 30, 2023, the Company included refund liabilities of approximately $5,224,000 and $5,521,000, respectively, in current liabilities. As of March 31, 2024 and June 30, 2023, the Company included return-related assets of approximately $1,316,000 and $1,338,000, respectively, in other current assets. As a percentage of gross sales, returns, rebates and allowances were 6% and 8% for the three months ended March 31, 2024 and 2023, respectively. As a percentage of gross sales, returns, rebates and allowances were 6% for both the nine months ended March 31, 2024 and 2023, 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): Three months ended March 31, Nine months ended March 31, 2024 2023 2024 2023 Major Product Lines: Intrusion and access alarm products $ 10,139 $ 11,530 $ 30,693 $ 36,405 Door locking devices 19,596 16,860 52,440 45,106 Services 19,532 15,142 55,357 43,828 Total Revenues $ 49,267 $ 43,532 $ 138,490 $ 125,339 |
Business and Credit Concentrati
Business and Credit Concentrations | 9 Months Ended |
Mar. 31, 2024 | |
Business and Credit Concentrations | |
Business and Credit Concentrations | NOTE 3 – Business and Credit Concentrations An entity is more vulnerable to concentrations of credit risk if it is exposed to risk of loss greater than it would have had if it mitigated its risk through diversification of customers. Such risks of loss manifest themselves differently, depending on the nature of the concentration, and vary in significance. The Company had two customers with an accounts receivable balance that comprised of 16% and 11% as of March 31, 2024. As of June 30, 2023, the accounts receivable balance with these respective customers were 19% and 14%. Sales to either of these customers did not exceed 10% of net sales during the three and nine months ended March 31, 2024. Sales to one of these customers was 12% and 10% of net sales during the three and nine months ended March 31, 2023. |
Marketable Securities
Marketable Securities | 9 Months Ended |
Mar. 31, 2024 | |
Marketable Securities | |
Marketable Securities | NOTE 4 – Marketable Securities The Company’s marketable securities include investments in fixed income mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds, and are reported at their fair values. The disaggregated net gains and losses on the marketable securities recognized within the accompanying condensed consolidated statements of income for the three and nine months ended March 31, 2024 and 2023, are as follows (in thousands): Three months ended March 31, Nine months ended March 31, 2024 2023 2024 2023 Net gains recognized during the period on marketable securities $ 42 $ 32 $ 160 $ 110 Less: Net gains recognized during the period on marketable securities sold during the period — — — — Unrealized gains (losses) recognized during the reporting period on marketable securities still held at the reporting date (18) 95 52 (23) $ 24 $ 127 $ 212 $ 87 The fair values of the Company’s marketable securities are determined as being the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Company utilizes the three-tier value hierarchy, as prescribed by US GAAP, which prioritizes the inputs used in measuring fair value as follows: • Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. The Company’s marketable securities, which are considered available-for-sale securities, are re-measured to fair value on a recurring basis and are valued using Level 1 inputs using quoted prices (unadjusted) for identical assets in active markets. The following tables summarize the Company’s investments at March 31, 2024 and June 30, 2023, respectively (in thousands): March 31, 2024 June 30, 2023 Unrealized Unrealized Cost Fair Value Gain (Loss) Cost Fair Value Gain (Loss) Mutual Funds - Level 1 $ 5,811 5,348 $ (463) $ 5,651 $ 5,136 $ (515) 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. |
Inventories
Inventories | 9 Months Ended |
Mar. 31, 2024 | |
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 (in thousands): March 31, June 30, 2024 2023 Component parts $ 34,669 $ 29,939 Work-in-process 7,529 7,726 Finished product 7,905 10,684 $ 50,103 $ 48,349 Classification of inventories, net of reserves: Current $ 37,010 $ 35,062 Non-current 13,093 13,287 $ 50,103 $ 48,349 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 9 Months Ended |
Mar. 31, 2024 | |
Property, Plant, and Equipment | |
Property, Plant, and Equipment | NOTE 6 – Property, Plant, and Equipment Property, plant and equipment consist of the following (in thousands): March 31, 2024 June 30, 2023 Useful Life in Years Land $ 904 $ 904 N/A Buildings 8,911 8,911 30 to 40 Molds and dies 7,539 7,517 3 to 5 Furniture and fixtures 3,626 3,387 5 to 10 Machinery and equipment 29,197 28,574 3 to 10 Building improvements 3,129 3,078 Shorter of the lease term or life of asset 53,306 52,371 Less: accumulated depreciation and amortization (44,328) (43,063) $ 8,978 $ 9,308 Depreciation and amortization expense on property, plant, and equipment was approximately $454,000 and $380,000 for the three months ended March 31, 2024 and 2023, respectively. Depreciation and amortization expense on property, plant and equipment was approximately $1,374,000 and $1,127,000 for the nine months ended March 31, 2024 and 2023, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2024 | |
Income Taxes | |
Income Taxes | NOTE 7 - Income Taxes 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 state and local income taxes, tax rates in foreign jurisdictions, global intangible low-taxed income (“GILTI”), tax benefit of R&D credits, and certain nondeductible expenses. Our effective tax rate will change from quarter to quarter based on recurring and non-recurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation, and state and local income taxes. In addition, changes in judgment from the evaluation of new information resulting in the recognition de-recognition or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change. For the nine months ended March 31, 2024 the Company recognized total pre-tax book income of $41,660,000, comprised of $5,412,000 and $36,248,000 of domestic and foreign pre-tax book income, respectively. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense and accrued income taxes. As of March 31, 2024, the Company had accrued interest totaling $198,000, as well as $700,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period. For the nine months ended March 31, 2024, additional interest expense was accrued for in the amount of $59,000. The Company does not expect that our unrecognized tax benefits will change within the next twelve months due to statute of limitation lapses. We file a consolidated U.S. income tax return and tax returns in certain state and local and foreign jurisdictions. As of March 31, 2024, we remain subject to examination in all tax jurisdictions for all relevant jurisdictional statutes for fiscal years 2018 and thereafter. In December 2022, the Company received a letter from the IRS (“IRS”) notifying it that the IRS has closed its examination of the Company’s income tax return for fiscal year ended June 30, 2020. There has been no changes proposed in relation to this examination. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Mar. 31, 2024 | |
Long-Term Debt | |
Long-Term Debt | NOTE 8 - Long-Term Debt On February 9, 2024, the Company and its primary bank, HSBC Bank USA National Association (“HSBC”), agreed to amend and restate the existing Third Amended and Restated Credit Agreement (“Agreement”) dated June 29, 2012, as amended, between the Registrant and HSBC with the Fourth Amended and Restated Credit Agreement (“Amended Agreement”). The Amended Agreement extends the term of the Agreement from June 28, 2024, to February 9, 2029. The Amended Agreement also increases the available revolving credit line from $11,000,000 to $20,000,000 and replaces the LIBOR benchmark rate with the Secured Overnight Financing Rate (SOFR) benchmark rate. The Amended Agreement provides for a SOFR-based interest rate option of SOFR plus 1.2645% to 1.3645%, depending on the Fixed Charge Coverage Ratio, which is to be measured and adjusted quarterly, a prime rate-based interest rate option of the prime rate, as defined in the Amended Agreement, and other terms and conditions as more fully described in the Amended Agreement. The Company’s obligations under the Amended Agreement continue to be secured by substantially all 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, except for the Company’s foreign subsidiaries, have issued guarantees and pledges of all their assets to secure the Company’s obligations under the Amended Agreement. All the outstanding common stock of the Company’s domestic subsidiaries and 65% of the common stock of the Company’s foreign subsidiaries have been pledged to secure the Company’s obligations under the Amended Agreement. The Amended Agreement contains various restrictions and covenants including, but not limited to, compliance with certain financial rations, restrictions on payment of dividends and restrictions on borrowings. During the fourth quarter of fiscal 2020, the Company received the proceeds of promissory notes dated between April 17, 2020 and May 7, 2020 (the "PPP Loan Agreement"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender). Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act and governed by the CARES Act, Section 7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the Small Business Association (“SBA”) implementing the PPP and acting as guarantor, or any other applicable loan program requirements, as defined in 13 CFR § 120.10, as amended from time to time. Pursuant to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $3,904,000 (the "PPP Loan"). The PPP Loan and related extinguishment was accounted for in accordance with ASC 470 “Debt”. Pursuant to the CARES Act, the loans may be forgiven by the SBA. During the year ended June 30, 2022, the PPP Loans were forgiven, in their entirety, in accordance with guidelines set forth in the PPP loan documents. The Company recognized a gain on the extinguishment of debt during the quarter ended September 30, 2021 in the amount of $3,904,000 within the other (expense) income section in the accompanying condensed consolidated statements of income. The SBA reserves the right to audit PPP forgiveness applications for a period of six years from the date of forgiveness. It has indicated that it will audit all of those that are in excess of $2 million. |
Stock Option
Stock Option | 9 Months Ended |
Mar. 31, 2024 | |
Stock Option | |
Stock Option | NOTE 9 - Stock Options The Company follows ASC 718 (“Share-Based Payment”), which requires that all share-based payments to employees, including stock options, be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period. For the three months ended March 31, 2024 and 2023, the Company recorded non-cash compensation expense of $266,000 ($0.01 per basic and diluted diluted diluted per basic and diluted 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”) or non-incentive stock options, to valued employees. Any plan participant who is granted ISOs and possesses more than 10% of the voting rights of the Company’s outstanding common stock must be granted an option with a price of at least 110% of the fair market value on the date of grant and a term of 10 years. Under the 2012 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At March 31, 2024, 363,036 stock options were outstanding, 178,984 stock options were exercisable and no further stock options were available for grant under this plan. No stock options were granted during the three and nine months ended March 31, 2024. 0 and 37,500 options were granted during the three and nine months ended March 31, 2023, respectively. No options may be granted under this plan after December 2022. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2024 2023 Risk-free interest rates n/a 3.03 % Expected lives n/a 7.27 Years Expected volatility n/a 43 % Expected dividend yields n/a 0 % The following table reflects activity under the 2012 Employee Plan for the nine months ended March 31: 2024 2023 Weighted average Weighted average Options exercise price Options exercise price Outstanding, beginning of year 521,580 $ 19.37 523,080 $ 18.59 Granted — — 37,500 $ 26.94 Forfeited/Lapsed (11,000) $ 3.15 — — Exercised (147,544) $ 15.43 (38,000) $ 10.63 Outstanding, end of period 363,036 $ 21.47 522,580 $ 19.34 Exercisable, end of period 178,984 $ 21.59 236,652 $ 17.47 Weighted average fair value at grant date of options granted n/a $ 13.36 Total intrinsic value of options exercised $ 3,972,000 $ 787,000 Total intrinsic value of options outstanding $ 6,787,000 $ 9,531,000 Total intrinsic value of options exercisable $ 3,323,000 $ 4,760,000 A total of 115,944 and 147,544 stock options were exercised during the three and nine months ended March 31, 2024. 77,944 of the 115,944 options that were exercised during the three months ended March 31, 2024 were settled by the Company withholding 26,002 from the shares issuable on exercise of the options. 109,544 of the 147,544 options that were exercised during the nine months ended March 31, 2024 were settled by the Company withholding 46,570 from the shares issuable on exercise of the options. The withheld shares of Common Stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. For the remaining 38,000 shares exercised during the three and nine months ended March 31, 2024, $427,000 cash was received from the option exercises. The actual tax benefit realized for the tax deductions from option exercises during the three and nine months ended March 31, 2024 was $67,000 and $119,000, respectively. 30,800 and 38,000 stock options were exercised during the three and nine months ended March 31, 2023, respectively. 27,600 of the 30,800 options that were exercised during the three months ended March 31, 2023 were settled by the Company withholding 9,943 from the shares issuable on exercise of the options. 29,600 of the 38,000 options that were exercised during the nine months ended March 31, 2023 were settled by the Company withholding 10,150 from the shares issuable on exercise of the options. The withheld shares of Common Stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. $36,000 and $81,000 cash was received from the option exercises during the three and nine months ended March 31, 2023. The actual tax benefit realized for the tax deductions from option exercises during the three and nine months ended March 31, 2023 was $0 for both periods. The following table summarizes information about stock options outstanding under the 2012 Employee Plan at March 31, 2024: 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 $10.02 ‑ $26.94 363,036 7.41 $ 21.47 178,984 $ 21.59 363,036 7.41 $ 21.47 178,984 $ 21.59 As of March 31, 2024, there was $1,306,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan. No options were granted during the three and nine months ended March 31, 2024. 0 and 37,500 options were granted during the three and nine months ended March 31, 2023. 5,200 and 89,900 options vested during the three and nine months ended March 31, 2024. The total grant date fair value of the options vesting during the three and nine months ended March 31, 2024 was $33,000 and $881,000, respectively. 5,200 and 97,900 options vested during the three and nine months ended March 31, 2023, respectively. The total grant date fair value of the options vesting during the three and nine months ended March 31, 2023 under this plan was $33,000 and $916,000, respectively. 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 March 31, 2024, 20,400 stock options were outstanding, 16,560 stock options were exercisable and no further stock options were available for grant under this plan. There were no options granted during the three and nine months ended March 31, 2024 and 2023. No options may be granted under this plan after December 2022. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2024 2023 Risk-free interest rates n/a n/a Expected lives n/a n/a Expected volatility n/a n/a Expected dividend yields n/a n/a The following table reflects activity under the 2012 Non-Employee Plan for the nine months ended March 31: 2024 2023 Weighted average Weighted average Options exercise price Options exercise price Outstanding, beginning of year 20,400 $ 14.39 20,400 $ 14.39 Granted — — — — Forfeited/Lapsed — — — — Exercised — — — — Outstanding, end of period 20,400 $ 14.39 20,400 $ 14.39 Exercisable, end of period 16,560 $ 12.41 13,920 $ 10.99 Weighted average fair value at grant date of options granted n/a n/a Total intrinsic value of options exercised n/a n/a Total intrinsic value of options outstanding $ 526,000 $ 473,000 Total intrinsic value of options exercisable $ 460,000 $ 370,000 No stock options were exercised during the three and nine months ended March 31, 2024 and 2023, respectively. No cash was received from option exercises during the three and nine months ended March 31, 2024 and 2023, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $0 for both periods. The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at March 31, 2024: Options outstanding Options exercisable Weighted average Weighted Weighted Number remaining average exercise Number average exercise Range of exercise prices outstanding contractual life price exercisable price $4.35 - $22.93 20,400 5.90 $ 14.39 16,560 $ 12.41 20,400 5.90 $ 14.39 16,560 $ 12.41 As of March 31, 2024, there was $29,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan. No options were granted during the three and nine months ended March 31, 2024 and 2023, respectively. 720 and 2,640 options vested during the three and nine months ended March 31, 2024 and 2023, respectively. The total grant date fair value of the options vesting during the three and nine months ended March 31, 2024 and 2023 under this plan was $5,000 and 24,000, 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 March 31, 2024, 71,900 stock options were outstanding, 62,500 stock options were exercisable and no further stock options were available for grant under this plan. There were no options granted during the three and nine months ended March 31, 2024 and 2023. No options may be granted under this plan after December 2028. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2024 2023 Risk-free interest rates n/a n/a Expected lives n/a n/a Expected volatility n/a n/a Expected dividend yields n/a n/a The following table reflects activity under the 2018 Non-Employee Plan for the nine months ended March 31: 2024 2023 Weighted average Weighted average Options exercise price Options exercise price Outstanding, beginning of year 75,000 $ 14.83 89,000 $ 14.91 Granted — — — — Forfeited/Lapsed — — — — Exercised (3,100) $ 18.98 (11,500) $ 15.14 Outstanding, end of period 71,900 $ 14.65 77,500 $ 14.88 Exercisable, end of period 62,500 $ 13.41 53,220 $ 13.03 Weighted average fair value at grant date of options granted n/a n/a Total intrinsic value of options exercised $ 59,000 $ 164,000 Total intrinsic value of options outstanding $ 1,834,000 $ 1,760,000 Total intrinsic value of options exercisable $ 1,672,000 $ 1,307,000 A total of 1,500 and 3,100 stock options were exercised during the three and nine months ended March 31, 2024. The 1,500 options that were exercised during the three months ended March 31, 2024 were settled by the Company withholding 792 from the shares issuable on exercise of the options. The 3,100 options that were exercised during the nine months ended March 31, 2024 were settled by the Company withholding 1,532 from the shares issuable on exercise of the options. The withheld shares of Common Stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. No cash was received from the option exercises during the three and nine months ended March 31, 2024. The actual tax benefit realized for the tax deductions from option exercises during the three and nine months ended March 31, 2024 was $6,000 and $12,000, respectively. 1,600 and 11,500 options were exercised during the three and nine months ended March 31, 2023, respectively. The 1,600 options that were exercised during the three months ended March 31, 2023, were settled by the Company withholding 395 from the shares issuable on exercise of the options. The 11,500 options that were exercised during the nine months ended March 31, 2023, were settled by the Company withholding 6,052 from the shares issuable on exercise of the options. The withheld shares of Common Stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. No cash was received from option exercises during the three and nine months ended March 31, 2023, and the actual tax benefit realized for the tax deductions from option exercises was $8,000 and $34,000, respectively. The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at March 31, 2024: Options outstanding Options exercisable Weighted average Weighted Weighted Number remaining average exercise Number average exercise Range of exercise prices outstanding contractual life price exercisable price $8.10 - $22.93 71,900 5.99 $ 14.65 62,500 $ 13.41 71,900 5.99 $ 14.65 62,500 $ 13.41 As of March 31, 2024, there was $71,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan. No options were granted during the three and nine months ended March 31, 2024 and 2023, respectively. 5,380 and 14,880 options vested during the three and nine months ended March 31, 2024, respectively. The total grant date fair value of the options vesting during the three and nine months ended March 31, 2024 under this plan was $35,000 and $124,000, respectively. 5,380 and 19,680 options vested during the three and nine months ended March 31, 2023, respectively. The total grant date fair value of the options vesting during the three and nine months ended March 31, 2023 under this plan was $35,000 and $149,000, 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 March 31, 2024, 56,900 stock options were outstanding, 30,140 stock options were exercisable and 43,100 stock options were available for grant under this plan. No options were granted during the three and nine months ended March 31, 2024. 5,000 and 30,000 options were granted during the three and nine months ended March 31, 2023, respectively. No options may be granted under this plan after May 2030. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2024 2023 Risk-free interest rates n/a 3.03 - 3.40 % Expected lives n/a 7.23 - 7.27 Years Expected volatility n/a 43 % Expected dividend yields n/a 0 % The following table reflects activity under the 2020 Non-Employee Plan for the nine months ended March 31: 2024 2023 Weighted average Weighted average Options exercise price Options exercise price Outstanding, beginning of year 56,900 $ 23.35 26,900 $ 18.64 Granted — — 30,000 $ 27.57 Forfeited/Lapsed — — — — Exercised — — — — Outstanding, end of period 56,900 $ 23.35 56,900 $ 23.35 Exercisable, end of period 30,140 $ 21.72 18,760 $ 20.73 Weighted average fair value at grant date of options granted n/a $ 13.74 Total intrinsic value of options exercised n/a n/a Total intrinsic value of options outstanding $ 957,000 $ 810,000 Total intrinsic value of options exercisable $ 556,000 $ 316,000 No stock options were exercised during the three and nine months ended March 31, 2024 and 2023. No cash was received from option exercises during either of the three and nine months ended March 31, 2024 or 2023 and the actual tax benefit realized for the tax deductions from option exercises was $0 for both periods. The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at March 31, 2024: 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 - $30.71 56,900 7.84 $ 23.35 30,140 $ 21.72 56,900 7.84 $ 23.35 30,140 $ 21.72 As of March 31, 2024, there was $248,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan. No stock options were granted during the three and nine months ended March 31, 2024. 5,000 and 30,000 stock options were granted during the three and nine months ended March 31, 2023, respectively. 1,000 and 11,380 options vested during the three and nine months ended March 31, 2024 and 2023, respectively. The total grant date fair value of the options vesting during the three and nine months ended March 31, 2024 and 2023 under this plan was $16,000 and $129,000, respectively. 2022 Employee Stock Option Plan In December 2022, the stockholders approved the 2022 Employee Stock Option Plan (the “2022 Employee Plan”). The plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 950,000 shares of the Company’s common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (“ISOs”) or non-incentive stock options, to valued employees. 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 2022 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 March 31, 2024, 10,000 stock options were outstanding, 2,000 stock options were exercisable and 940,000 stock options were available for grant under this plan. No stock options were granted during the three months ended March 31, 2024. There were 10,000 options granted during the nine months ended March 31, 2024. No options may be granted under this plan after December 2032. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2024 Risk-free interest rates 4.66 % Expected lives 5.76 Years Expected volatility 48.71 % Expected dividend yields 1.48 % The following table reflects activity under the 2022 Employee Plan for the nine months ended March 31: 2024 Weighted average Options exercise price Outstanding, beginning of year 5,000 $ 40.01 Granted 10,000 $ 21.60 Forfeited/Lapsed (5,000) $ (40.01) Exercised — — Outstanding, end of period 10,000 $ 21.60 Exercisable, end of period 2,000 $ 21.60 Weighted average fair value at grant date of options granted $ 9.75 Total intrinsic value of options exercised n/a Total intrinsic value of options outstanding $ 186,000 Total intrinsic value of options exercisable $ 37,000 No options were exercised during the three and nine months ended March 31, 2024. No cash was received from option exercises during the three and nine months ended March 31, 2024 and the actual tax benefit realized for the tax deductions from option exercises was $0. The following table summarizes information about stock options outstanding under the 2022 Employee Plan at March 31, 2024: 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 $21.60 10,000 9.52 $ 21.60 2,000 $ 21.60 10,000 9.52 $ 21.60 2,000 $ 21.60 As of March 31, 2024, there was $68,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2022 Employee Plan. No options were granted during the three months ended March 31, 2024. 10,000 options were granted during the nine months ended March 31, 2024. No options vested during the three months ended March 31, 2024. 2,000 options vested during the nine months ended March 31, 2024, respectively. The total grant date fair value of the options vesting during the three and nine months ended March 31, 2024 under this plan was $0 and $19,500, respectively. |
Stockholders' Equity Transactio
Stockholders' Equity Transactions | 9 Months Ended |
Mar. 31, 2024 | |
Stockholders' Equity Transactions | |
Stockholders' Equity Transactions | NOTE 10 – Stockholders’ Equity Transactions On August 18, 2023, the Company’s Board of Directors declared a cash dividend of $.08 per share payable on September 22, 2023 to stockholders of record on September 1, 2023. On November 2, 2023, the Company’s Board of Directors declared a cash dividend of $.08 per share payable on December 22, 2023 to stockholders of record on December 1, 2023. On February 1, 2024, the Company’s Board of Directors declared a cash dividend of $.10 per share payable on March 22, 2024 to stockholders of record on March 1, 2024. During the three months ended March 31, 2024, certain employees and directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plans totaling 117,444 shares. Of the 117,444 shares exercised, 79,444 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees. The number of shares withheld by the Company was 26,794 and was based upon the aggregate fair market value on the date of exercise equal to the purchase price being paid. During the nine months ended March 31, 2024, certain employees and directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plans totaling 150,644 shares. Of the 150,644 shares exercised, 112,644 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees. The number of shares withheld by the Company was 48,101 and was based upon the aggregate fair market value on the date of exercise equal to the purchase price being paid. During fiscal 2023, certain employees and directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plans totaling 53,000 shares. 43,600 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees. The number of shares withheld by the Company was 17,385 and was based upon the aggregate fair market value on the date of exercise equal to the purchase price being paid. |
Related Party Transaction
Related Party Transaction | 9 Months Ended |
Mar. 31, 2024 | |
Related Party Transaction | |
Related Party Transaction | NOTE 11 – Related Party Transaction In March 2024, the Company's President and Chairman sold 2,000,000 shares of our common stock as a selling stockholder in an underwritten secondary public offering at a public offering price of $40.75 per share. In connection with such offering, the selling stockholder has granted the underwriters an option to purchase additional shares (the “Greenshoe Option” up to an additional 300,000 shares of their common stock. On April 8, 2024, the underwriters exercised the Greenshoe Options, pursuant to which the selling stockholder sold an additional 50,000 shares. The Company did not sell any shares in the offering and received no proceeds from the offerings, but the Company incurred $372,000 in offering expenses, which are recorded in SG&A in the accompanying condensed consolidation statements of income during the three and nine months ended March 31, 2024, respectively. In February 2023, the Company's President and Chairman and the Company’s Executive Vice President and Chief Financial Officer sold 2,300,000 and 100,000 shares of our common stock, respectively, as selling stockholders in an underwritten secondary public offering at a public offering price of $31.50 per share. The Company did not sell any shares in the offering and received no proceeds from the offerings, but the Company incurred $496,000 in offering expenses, which are recorded in SG&A in the accompanying condensed consolidation statements of income during the nine months ended March 31, 2023, respectively. |
401(k) Plan
401(k) Plan | 9 Months Ended |
Mar. 31, 2024 | |
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. employees and is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code. Company contributions to this plan are discretionary and totaled $72,000 and $64,000 for the three months ended March 31, 2024 and 2023, respectively. Company contributions to this plan totaled $191,000 and $187,000 for the nine months ended March 31, 2024 and 2023, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 13 - Commitments and Contingencies Leases Our lease obligation consists of a 99-year Operating leases are included in operating lease right-of-use assets, accrued expenses and operating lease liabilities, non-current on our condensed consolidated balance sheets. For the three months ended March 31, 2024 and 2023 cash payments against operating lease liabilities totaled $57,000 and $85,000, respectively. For the nine months ended March 31, 2024 and 2023 cash payments against operating lease liabilities totaled $228,000 and $249,000, respectively. Supplemental balance sheet information related to operating leases was as follows: Weighted-average remaining lease term 68 Years Weighted-average discount rate 6.25 % The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2024 (in thousands): Year Ending June 30, Amount 2024 $ 77 2025 299 2026 282 2027 267 2028 253 Thereafter 4,386 Total $ 5,564 Operating lease expense totaled approximately $127,000 and $123,000 for the three months ended March 31, 2024 and 2023, respectively. Operating lease expense totaled approximately $380,000 and $334,000 for the nine months ended March 31, 2024 and 2023, respectively. Litigation On August 29, 2023, a purported class action, brought on behalf of a putative class who acquired publicly traded NAPCO securities between November 7, 2022 and August 18, 2023, was filed in the United States District Court for the Eastern District of New York against the Company, its Chairman and Chief Executive Officer, and its Chief Financial Officer. The action, captioned Zornberg v. NAPCO Security Technologies, Inc. et al., asserts securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with statements made in the Company’s quarterly reports and earnings releases during the period of November 7, 2022 through May 8, 2023. A lead plaintiff was appointed in November 2023 and lead plaintiff filed an Amended Complaint on February 16, 2024. The Amended Complaint added claims under Sections 11, 12, and 15 of the Securities Act of 1933 in connection with the secondary public offering in February 2023. These additional claims are brought against the defendants named in the initial complaint, as well as the directors who allegedly signed the offering materials (prospectuses and registration statement in connection with the offering), and the underwriters for the offering. The Company filed a motion to dismiss the Amended Complaint on April 26, 2024. The Company intends to vigorously defend against the action. With respect to all litigation and related matters, the Company records a liability when the Company believes it is probable that a liability has been incurred and the amount can be reasonably estimated. As of the end of the period covered by this report, the Company has not recorded a liability for the matter disclosed in this note. It is possible that the Company could be required to pay damages, incur other costs or establish accruals in amounts that could not be reasonably estimated as of the end of the period covered by this report. Employment Agreements As of March 31, 2024, the Company was obligated under two employment agreements and one severance agreement with executive officers of the Company. The employment agreements are with the Company’s CEO, and the Senior Vice President of Engineering (“the SVP of Engineering”) and the severance agreement is with the Company’s Executive Vice President of Operations and Chief Financial Officer (“CFO”). The employment agreement with the CEO provides for an annual salary of $942,000, 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 2024 and provides for an annual salary of $390,000, and, if terminated by the Company without cause, severance of nine month’s salary and continued company-sponsored health insurance for six months from the date of termination. The severance agreement is with the CFO and provides for, if terminated by the Company without cause or within three months of a change in corporate control of the Company, severance of nine month’s salary, continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions. |
Geographical Data
Geographical Data | 9 Months Ended |
Mar. 31, 2024 | |
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, video surveillance products and wireless communication service for intrusion and fire alarm systems. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold primarily to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are shipped from the United States. The Company has customers worldwide with major concentrations in North America. Financial Information Relating to Domestic and Foreign Operations (in thousands): Three months ended March 31, Nine months ended March 31, 2024 2023 2024 2023 Sales to external customers (1) Domestic $ 49,004 $ 43,228 $ 137,666 $ 124,373 Foreign 263 304 824 966 Total Net Sales $ 49,267 $ 43,532 $ 138,490 $ 125,339 March 31, 2024 June 30, 2023 Identifiable assets: United States $ 148,492 $ 122,995 Dominican Republic (2) 46,300 43,659 Total Identifiable Assets $ 194,792 $ 166,654 (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 (March 31, 2024 = $36,424 ; June 30, 2023 = $33,477 ), operating lease assets (March 31, 2024 = $5,564 ; June 30, 2023 = $5,797 ) and fixed assets (March 31, 2024 = $3,700 ; June 30, 2023 = $3,958 ) located at the Company’s principal manufacturing facility in the Dominican Republic. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Mar. 31, 2024 | |
Subsequent Events | |
Subsequent Events | NOTE 15 - Subsequent Events The Company has evaluated subsequent events occurring after the end of the period covered by the condensed consolidated financial statements for events requiring recording or disclosure in the condensed consolidated financial statements. On May 2, 2024, the Company’s Board of Directors declared a cash dividend of $.10 per share payable on June 24, 2024 to stockholders of record on June 3, 2024. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2024 | |
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, cellular communication services for intrusion and fire alarm systems as well as a leading provider of school safety solutions. We offer a diversified array of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. We have experienced significant growth in recent years, primarily driven by fast growing recurring service revenues generated from wireless communication services for intrusion and fire alarm systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as a result of on-campus shooting and violence in the U.S. Our wireless communication services have led to substantial growth in our monthly recurring revenues. The Company's fiscal year begins on July 1 and ends on June 30. Historically, the end users of the Company’s hardware products want to install these products prior to the summer; therefore, sales of these 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 may be affected by the housing and construction markets. Deterioration of the current economic conditions may also affect this trend. The monthly recurring service revenue, which is less susceptible to these fluctuations, allows us to generate a more consistent and predictable stream of income and mitigates the risk of fluctuation in market demand for our equipment products. |
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 credit losses, overhead expenses applied to inventory, 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, marketable securities, current receivables and payables and certain other short-term financial instruments approximate their fair value as of March 31, 2024 and June 30, 2023 due to their short-term maturities. |
Cash and Cash Equivalents and Investments - other | Cash and Cash Equivalents and Investments – other Cash and cash equivalents include approximately $36,106,000 of short-term time deposits, consisting of several certificates of deposit totaling $5,340,000 and $30,766,000 in money market funds as of March 31, 2024. Cash and cash equivalents include approximately $15,242,000 of short-term time deposits, consisting of several certificates of deposit totaling $15,179,000 and $63,000 in a money market fund as of June 30, 2023. The Company classifies these highly liquid investments with original maturities of three months or less as cash equivalents. Certificates of deposit with an original maturity greater than three months are classified as Investments-other. Cash and cash equivalents consist of the following as of (in thousands): March 31, 2024 June 30, 2023 Cash $ 19,412 $ 20,713 Money Market Fund 30,766 63 Certificates of Deposit 5,340 15,179 $ 55,518 $ 35,955 Investments-other consists of the following as of (in thousands): March 31, 2024 June 30, 2023 Certificates of Deposit $ 26,671 $ 25,660 $ 26,671 $ 25,660 Certificates of deposit are recorded at the original cost plus accrued interest. The Company’s Certificates of deposits consist of the following as of (in thousands): March 31, 2024 Balance Sheet Classification Interest Rate Maturity Date Cost Carrying Value Cash and Cash Equivalents 4.65% 5/22/2024 $ 5,313 $ 5,340 Investments - other 4.55% - 5.40% 4/24/2024 - 9/23/2024 26,484 26,671 The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of March 31, 2024 and June 30, 2023. 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. The Company’s marketable securities are reported at fair value with the related unrealized and realized gains and losses included in other expense (income). Realized gains or losses on mutual funds are determined on a specific identification basis. The Company would record an impairment charge if the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary. During the three and nine months ended March 31, 2024, the Company did not record an impairment charge regarding its investment in marketable securities because management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary. |
Accounts Receivable | Accounts Receivable Accounts receivable is stated net of the reserves for credit losses of $105,000 and $131,000 as of March 31, 2024 and June 30, 2023, respectively. Our reserves for credit losses 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 cycle, 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 consisted of the follows (in thousands): March 31, 2024 June 30, 2023 Carrying Accumulated Net book Carrying Accumulated Net book value amortization value value amortization value Customer relationships $ 9,800 (9,403) $ 397 $ 9,800 (9,302) $ 498 Trade name 4,048 (759) 3,289 4,048 (607) 3,441 $ 13,848 $ (10,162) $ 3,686 $ 13,848 $ (9,909) $ 3,939 Amortization expense for intangible assets subject to amortization was approximately $84,000 and $90,000 for the three months ended March 31, 2024 and 2023, respectively. Amortization expense for intangible assets subject to amortization was approximately $253,000 and $271,000 for the nine months ended March 31, 2024 and 2023, respectively. Amortization expense for each of the next five fiscal years is estimated to be as follows: 2024 - $336,000; 2025 - $315,000; 2026 - $297,000; 2027 - $283,000; and 2028 - $269,000. The weighted average remaining amortization period for intangible assets was 15.0 years and 15.5 years at March 31, 2024 and June 30, 2023, 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 or in 30 days for customers with an open account. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include product returns and sales incentives, such as volume rebates and discounts, and early-payment discounts. 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, rebates and credits and is able to make reasonable and reliable estimates of product returns based on the Company’s past history. Estimates for sales returns, rebates and credits are based on several factors including actual returns, rebates and credits and based on expected return data communicated to it by its customers. Accordingly, the Company believes that its historical returns, rebates and credits 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" (“SG&A”) expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for the three months ended March 31, 2024 and 2023 was $395,000 and $926,000, respectively. Advertising expense for the nine months ended March 31, 2024 and 2023 was $1,852,000 and $2,185,000, respectively. |
Research and Development Costs | Research and Development Costs Research and development (“R&D”) costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income. Company-sponsored R&D expense for the three months ended March 31, 2024 and 2023 was $2,757,000 and $2,314,000, respectively. Company-sponsored R&D expense for the nine months ended March 31, 2024 and 2023 was $7,736,000 and $6,964,000, 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 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 three months ended March 31, 2024 and 2023 (in thousands, except share and per share data): Net Income Weighted Average Shares Net Income per Share 2024 2023 2024 2023 2024 2023 Basic EPS $ 13,196 $ 9,549 36,835 36,793 $ 0.36 $ 0.26 Effect of Dilutive Securities: Stock Options — — 283 289 — — Diluted EPS $ 13,196 $ 9,549 37,118 37,082 $ 0.36 $ 0.26 Options to purchase 0 shares of common stock were excluded for both the three months ended March 31, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive. These options were still outstanding at the end of the period. The following provides a reconciliation of information used in calculating the per share amounts for the nine months ended March 31, 2024 and 2023 (in thousands, except share and per share data): Weighted Average Net Income per Net Income Shares Share 2024 2023 2024 2023 2024 2023 Basic EPS $ 36,284 $ 16,562 36,792 36,736 $ 0.99 $ 0.45 Effect of Dilutive Securities: Stock Options — — 240 247 (0.01) — Diluted EPS $ 36,284 $ 16,562 37,032 36,983 $ 0.98 $ 0.45 Options to purchase 24,167 and 8,379 shares of common stock were excluded for the nine months ended March 31, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive. These options were still outstanding at the end of the period. |
Stock-Based Compensation | Stock-Based Compensation The Company has established five 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 $266,000 and $322,000 were recognized for the three months ended March 31, 2024 and 2023, respectively. Stock-based compensation costs of $876,000 and $1,134,000 were recognized for the nine months ended March 31, 2024 and 2023, 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 three and nine months ended March 31, 2024 or 2023. |
Comprehensive Income | Comprehensive Income For the three and nine months ended March 31, 2024 and 2023, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income. Accordingly, the Company’s comprehensive income approximates its net income for all periods presented. |
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 ($93,000 and $106,000 in the three months ended March 31, 2024 and 2023, respectively, and $279,000 and $346,000 in the nine months ended March 31, 2024 and 2023, respectively); and classifies the costs associated with these sales in cost of sales ($421,000 and $437,000 in the three months ended March 31, 2024 and 2023, respectively, and $1,181,000 and $1,285,000 in the nine months ended March 31, 2024 and 2023, respectively). |
Leases | Leases The Company records a right of use asset and corresponding liability for the operating lease on our Consolidated Balance Sheets, excluding short-term leases (leases with terms of 12 months or less) as described under ASU No. 2016-02, Leases (Topic 842) |
Recently Issued Accounting Standards | 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 for new arrangements at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. On February 9, 2024, the Company’s bank has shifted to the Benchmark Replacement as defined in the Fourth Amended and Restated Credit Agreement (“Amended Agreement”) |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Nature of Business and Summary of Significant Accounting Policies | |
Schedule of cash and cash equivalents | Cash and cash equivalents consist of the following as of (in thousands): March 31, 2024 June 30, 2023 Cash $ 19,412 $ 20,713 Money Market Fund 30,766 63 Certificates of Deposit 5,340 15,179 $ 55,518 $ 35,955 |
Schedule of investments - other | Investments-other consists of the following as of (in thousands): March 31, 2024 June 30, 2023 Certificates of Deposit $ 26,671 $ 25,660 $ 26,671 $ 25,660 |
Schedule of certificates of deposit | March 31, 2024 Balance Sheet Classification Interest Rate Maturity Date Cost Carrying Value Cash and Cash Equivalents 4.65% 5/22/2024 $ 5,313 $ 5,340 Investments - other 4.55% - 5.40% 4/24/2024 - 9/23/2024 26,484 26,671 |
Schedule of intangible assets | Intangible assets consisted of the follows (in thousands): March 31, 2024 June 30, 2023 Carrying Accumulated Net book Carrying Accumulated Net book value amortization value value amortization value Customer relationships $ 9,800 (9,403) $ 397 $ 9,800 (9,302) $ 498 Trade name 4,048 (759) 3,289 4,048 (607) 3,441 $ 13,848 $ (10,162) $ 3,686 $ 13,848 $ (9,909) $ 3,939 |
Schedule of reconciliation of earnings per share | The following provides a reconciliation of information used in calculating the per share amounts for the three months ended March 31, 2024 and 2023 (in thousands, except share and per share data): Net Income Weighted Average Shares Net Income per Share 2024 2023 2024 2023 2024 2023 Basic EPS $ 13,196 $ 9,549 36,835 36,793 $ 0.36 $ 0.26 Effect of Dilutive Securities: Stock Options — — 283 289 — — Diluted EPS $ 13,196 $ 9,549 37,118 37,082 $ 0.36 $ 0.26 The following provides a reconciliation of information used in calculating the per share amounts for the nine months ended March 31, 2024 and 2023 (in thousands, except share and per share data): Weighted Average Net Income per Net Income Shares Share 2024 2023 2024 2023 2024 2023 Basic EPS $ 36,284 $ 16,562 36,792 36,736 $ 0.99 $ 0.45 Effect of Dilutive Securities: Stock Options — — 240 247 (0.01) — Diluted EPS $ 36,284 $ 16,562 37,032 36,983 $ 0.98 $ 0.45 |
Revenue Recognition and Contr_2
Revenue Recognition and Contracts with Customers (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Revenue Recognition and Contracts with Customers | |
Schedule of disaggregation of revenues | Three months ended March 31, Nine months ended March 31, 2024 2023 2024 2023 Major Product Lines: Intrusion and access alarm products $ 10,139 $ 11,530 $ 30,693 $ 36,405 Door locking devices 19,596 16,860 52,440 45,106 Services 19,532 15,142 55,357 43,828 Total Revenues $ 49,267 $ 43,532 $ 138,490 $ 125,339 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Marketable Securities | |
Schedule of net gains and losses of marketable securities | Three months ended March 31, Nine months ended March 31, 2024 2023 2024 2023 Net gains recognized during the period on marketable securities $ 42 $ 32 $ 160 $ 110 Less: Net gains recognized during the period on marketable securities sold during the period — — — — Unrealized gains (losses) recognized during the reporting period on marketable securities still held at the reporting date (18) 95 52 (23) $ 24 $ 127 $ 212 $ 87 |
Schedule of fair value of marketable securities | The following tables summarize the Company’s investments at March 31, 2024 and June 30, 2023, respectively (in thousands): March 31, 2024 June 30, 2023 Unrealized Unrealized Cost Fair Value Gain (Loss) Cost Fair Value Gain (Loss) Mutual Funds - Level 1 $ 5,811 5,348 $ (463) $ 5,651 $ 5,136 $ (515) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Inventories | |
Schedule of inventory | 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 (in thousands): March 31, June 30, 2024 2023 Component parts $ 34,669 $ 29,939 Work-in-process 7,529 7,726 Finished product 7,905 10,684 $ 50,103 $ 48,349 Classification of inventories, net of reserves: Current $ 37,010 $ 35,062 Non-current 13,093 13,287 $ 50,103 $ 48,349 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Property, Plant, and Equipment | |
Schedule of property, plant and equipment | Property, plant and equipment consist of the following (in thousands): March 31, 2024 June 30, 2023 Useful Life in Years Land $ 904 $ 904 N/A Buildings 8,911 8,911 30 to 40 Molds and dies 7,539 7,517 3 to 5 Furniture and fixtures 3,626 3,387 5 to 10 Machinery and equipment 29,197 28,574 3 to 10 Building improvements 3,129 3,078 Shorter of the lease term or life of asset 53,306 52,371 Less: accumulated depreciation and amortization (44,328) (43,063) $ 8,978 $ 9,308 |
Stock Option (Tables)
Stock Option (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
2012 Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2024 2023 Risk-free interest rates n/a 3.03 % Expected lives n/a 7.27 Years Expected volatility n/a 43 % Expected dividend yields n/a 0 % |
Schedule of plan activity | 2024 2023 Weighted average Weighted average Options exercise price Options exercise price Outstanding, beginning of year 521,580 $ 19.37 523,080 $ 18.59 Granted — — 37,500 $ 26.94 Forfeited/Lapsed (11,000) $ 3.15 — — Exercised (147,544) $ 15.43 (38,000) $ 10.63 Outstanding, end of period 363,036 $ 21.47 522,580 $ 19.34 Exercisable, end of period 178,984 $ 21.59 236,652 $ 17.47 Weighted average fair value at grant date of options granted n/a $ 13.36 Total intrinsic value of options exercised $ 3,972,000 $ 787,000 Total intrinsic value of options outstanding $ 6,787,000 $ 9,531,000 Total intrinsic value of options exercisable $ 3,323,000 $ 4,760,000 |
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 $10.02 ‑ $26.94 363,036 7.41 $ 21.47 178,984 $ 21.59 363,036 7.41 $ 21.47 178,984 $ 21.59 |
2012 Non-Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2024 2023 Risk-free interest rates n/a n/a Expected lives n/a n/a Expected volatility n/a n/a Expected dividend yields n/a n/a |
Schedule of plan activity | 2024 2023 Weighted average Weighted average Options exercise price Options exercise price Outstanding, beginning of year 20,400 $ 14.39 20,400 $ 14.39 Granted — — — — Forfeited/Lapsed — — — — Exercised — — — — Outstanding, end of period 20,400 $ 14.39 20,400 $ 14.39 Exercisable, end of period 16,560 $ 12.41 13,920 $ 10.99 Weighted average fair value at grant date of options granted n/a n/a Total intrinsic value of options exercised n/a n/a Total intrinsic value of options outstanding $ 526,000 $ 473,000 Total intrinsic value of options exercisable $ 460,000 $ 370,000 |
Schedule of options outstanding | Options outstanding Options exercisable Weighted average Weighted Weighted Number remaining average exercise Number average exercise Range of exercise prices outstanding contractual life price exercisable price $4.35 - $22.93 20,400 5.90 $ 14.39 16,560 $ 12.41 20,400 5.90 $ 14.39 16,560 $ 12.41 |
2018 Non-Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2024 2023 Risk-free interest rates n/a n/a Expected lives n/a n/a Expected volatility n/a n/a Expected dividend yields n/a n/a |
Schedule of plan activity | 2024 2023 Weighted average Weighted average Options exercise price Options exercise price Outstanding, beginning of year 75,000 $ 14.83 89,000 $ 14.91 Granted — — — — Forfeited/Lapsed — — — — Exercised (3,100) $ 18.98 (11,500) $ 15.14 Outstanding, end of period 71,900 $ 14.65 77,500 $ 14.88 Exercisable, end of period 62,500 $ 13.41 53,220 $ 13.03 Weighted average fair value at grant date of options granted n/a n/a Total intrinsic value of options exercised $ 59,000 $ 164,000 Total intrinsic value of options outstanding $ 1,834,000 $ 1,760,000 Total intrinsic value of options exercisable $ 1,672,000 $ 1,307,000 |
Schedule of options outstanding | Options outstanding Options exercisable Weighted average Weighted Weighted Number remaining average exercise Number average exercise Range of exercise prices outstanding contractual life price exercisable price $8.10 - $22.93 71,900 5.99 $ 14.65 62,500 $ 13.41 71,900 5.99 $ 14.65 62,500 $ 13.41 |
2020 Non-Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2024 2023 Risk-free interest rates n/a 3.03 - 3.40 % Expected lives n/a 7.23 - 7.27 Years Expected volatility n/a 43 % Expected dividend yields n/a 0 % |
Schedule of plan activity | 2024 2023 Weighted average Weighted average Options exercise price Options exercise price Outstanding, beginning of year 56,900 $ 23.35 26,900 $ 18.64 Granted — — 30,000 $ 27.57 Forfeited/Lapsed — — — — Exercised — — — — Outstanding, end of period 56,900 $ 23.35 56,900 $ 23.35 Exercisable, end of period 30,140 $ 21.72 18,760 $ 20.73 Weighted average fair value at grant date of options granted n/a $ 13.74 Total intrinsic value of options exercised n/a n/a Total intrinsic value of options outstanding $ 957,000 $ 810,000 Total intrinsic value of options exercisable $ 556,000 $ 316,000 |
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 - $30.71 56,900 7.84 $ 23.35 30,140 $ 21.72 56,900 7.84 $ 23.35 30,140 $ 21.72 |
2022 Employee Stock Option Plan | |
Stock Option | |
Schedule of fair value and valuation assumptions | 2024 Risk-free interest rates 4.66 % Expected lives 5.76 Years Expected volatility 48.71 % Expected dividend yields 1.48 % |
Schedule of plan activity | 2024 Weighted average Options exercise price Outstanding, beginning of year 5,000 $ 40.01 Granted 10,000 $ 21.60 Forfeited/Lapsed (5,000) $ (40.01) Exercised — — Outstanding, end of period 10,000 $ 21.60 Exercisable, end of period 2,000 $ 21.60 Weighted average fair value at grant date of options granted $ 9.75 Total intrinsic value of options exercised n/a Total intrinsic value of options outstanding $ 186,000 Total intrinsic value of options exercisable $ 37,000 |
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 $21.60 10,000 9.52 $ 21.60 2,000 $ 21.60 10,000 9.52 $ 21.60 2,000 $ 21.60 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies | |
Schedule of supplemental balance sheet information | Weighted-average remaining lease term 68 Years Weighted-average discount rate 6.25 % |
Schedule of maturities of lease liabilities | The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2024 (in thousands): Year Ending June 30, Amount 2024 $ 77 2025 299 2026 282 2027 267 2028 253 Thereafter 4,386 Total $ 5,564 |
Geographical Data (Tables)
Geographical Data (Tables) | 9 Months Ended |
Mar. 31, 2024 | |
Geographical Data | |
Schedule of sales to external customers | Financial Information Relating to Domestic and Foreign Operations (in thousands): Three months ended March 31, Nine months ended March 31, 2024 2023 2024 2023 Sales to external customers (1) Domestic $ 49,004 $ 43,228 $ 137,666 $ 124,373 Foreign 263 304 824 966 Total Net Sales $ 49,267 $ 43,532 $ 138,490 $ 125,339 (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. |
Schedule of assets in individual foreign country by country | March 31, 2024 June 30, 2023 Identifiable assets: United States $ 148,492 $ 122,995 Dominican Republic (2) 46,300 43,659 Total Identifiable Assets $ 194,792 $ 166,654 Consists primarily of inventories (March 31, 2024 = $36,424 ; June 30, 2023 = $33,477 ), operating lease assets (March 31, 2024 = $5,564 ; June 30, 2023 = $5,797 ) and fixed assets (March 31, 2024 = $3,700 ; June 30, 2023 = $3,958 ) located at the Company’s principal manufacturing facility in the Dominican Republic. |
Nature of Business and Summar_4
Nature of Business and Summary of Significant Accounting Policies (Details) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) segment | Mar. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | |
Accounting policies | |||||
Allowance for credit losses | $ 105,000 | $ 105,000 | $ 131,000 | ||
Warranty term | In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include product returns and sales incentives, such as volume rebates and discounts, and early-payment discounts. | ||||
Stock-Based Compensation | |||||
Number of share incentive programs | five | ||||
Stock based compensation expense | 266,000 | $ 322,000 | $ 876,000 | $ 1,134,000 | |
Foreign currency realized/unrealized gains(loss) | $ 0 | $ 0 | $ 0 | $ 0 | |
Segment Reporting | |||||
Number of operating segments (in segments) | segment | 1 | ||||
Equipment | |||||
Accounting policies | |||||
Payment terms | typically due within 30 and 180 days of the delivery date | ||||
Services | |||||
Accounting policies | |||||
Payment terms | typically due at the beginning of the month of service or in 30 days for customers with an open account |
Nature of Business and Summar_5
Nature of Business and Summary of Significant Accounting Policies - Cash and Cash Equivalents and Investments (Details) - USD ($) | Mar. 31, 2024 | Jun. 30, 2023 |
Accounting policies | ||
Short-term time deposits | $ 36,106,000 | $ 15,242,000 |
Cash | 19,412,000 | 20,713,000 |
Certificate of Deposits | 5,340,000 | 15,179,000 |
Money Market Fund | 30,766,000 | 63,000 |
Cash and Cash Equivalents, at Carrying Value, Total | 55,518,000 | 35,955,000 |
Investments - other | 26,671,000 | 25,660,000 |
Certificate of Deposits | ||
Accounting policies | ||
Investments - other | $ 26,671,000 | $ 25,660,000 |
Cash and Cash Equivalents | ||
Accounting policies | ||
Interest Rate | 4.65% | |
Cost | $ 5,313,000 | |
Cash and Cash Equivalents | Minimum | ||
Accounting policies | ||
Interest Rate | 4.65% | |
Cash and Cash Equivalents | Carrying Value | ||
Accounting policies | ||
Carrying Value | $ 5,340,000 | |
Interest-Bearing Deposits | ||
Accounting policies | ||
Cost | $ 26,484,000 | |
Interest-Bearing Deposits | Minimum | ||
Accounting policies | ||
Interest Rate | 4.55% | |
Interest-Bearing Deposits | Maximum | ||
Accounting policies | ||
Interest Rate | 5.40% | |
Interest-Bearing Deposits | Carrying Value | ||
Accounting policies | ||
Carrying Value | $ 26,671,000 |
Nature of Business and Summar_6
Nature of Business and Summary of Significant Accounting Policies - Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | |
Intangible assets | |||||
Amortization expense | $ 84,000 | $ 90,000 | $ 253,000 | $ 271,000 | |
Changes in intangible assets | |||||
Carrying value | 13,848,000 | 13,848,000 | $ 13,848,000 | ||
Accumulated amortization | (10,162,000) | (10,162,000) | (9,909,000) | ||
Net book value | 3,686,000 | 3,686,000 | $ 3,939,000 | ||
Future amortization expense | |||||
2024 | 336,000 | 336,000 | |||
2025 | 315,000 | 315,000 | |||
2026 | 297,000 | 297,000 | |||
2027 | 283,000 | 283,000 | |||
2028 | 269,000 | $ 269,000 | |||
Weighted average remaining period | 15 years | 15 years 6 months | |||
Customer relationships | |||||
Changes in intangible assets | |||||
Carrying value | 9,800,000 | $ 9,800,000 | $ 9,800,000 | ||
Accumulated amortization | (9,403,000) | (9,403,000) | (9,302,000) | ||
Net book value | 397,000 | 397,000 | 498,000 | ||
Trade name | |||||
Changes in intangible assets | |||||
Carrying value | 4,048,000 | 4,048,000 | 4,048,000 | ||
Accumulated amortization | (759,000) | (759,000) | (607,000) | ||
Net book value | $ 3,289,000 | $ 3,289,000 | $ 3,441,000 |
Nature of Business and Summar_7
Nature of Business and Summary of Significant Accounting Policies - Income Statement location (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Research and development | $ 2,757,000 | $ 2,314,000 | $ 7,736,000 | $ 6,964,000 |
Net sales | 49,267,000 | 43,532,000 | 138,490,000 | 125,339,000 |
Cost of sales | 22,783,000 | 22,253,000 | 64,581,000 | 75,140,000 |
Selling, General and Administrative Expenses | ||||
Advertising and promotion costs | 395,000 | 926,000 | 1,852,000 | 2,185,000 |
Operating Expenses | ||||
Research and development | 2,757,000 | 2,314,000 | 7,736,000 | 6,964,000 |
Cost of sales | Shipping and Handling | ||||
Cost of sales | 421,000 | 437,000 | 1,181,000 | 1,285,000 |
Sales revenue, net | Shipping and Handling | ||||
Net sales | $ 93,000 | $ 106,000 | $ 279,000 | $ 346,000 |
Nature of Business and Summar_8
Nature of Business and Summary of Significant Accounting Policies - Net Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Nature of Business and Summary of Significant Accounting Policies | ||||
Basic EPS | $ 13,196 | $ 9,549 | $ 36,284 | $ 16,562 |
Diluted EPS | $ 13,196 | $ 9,549 | $ 36,284 | $ 16,562 |
Weighted average | ||||
Weighted Average Shares, Basic EPS | 36,835,000 | 36,793,000 | 36,792,000 | 36,736,000 |
Weighted Average Shares, Stock Options | 283,000 | 289,000 | 240,000 | 247,000 |
Weighted Average Shares, Diluted EPS | 37,118,000 | 37,082,000 | 37,032,000 | 36,983,000 |
Effect of Dilutive Securities: | ||||
Basic (in dollars per share) | $ 0.36 | $ 0.26 | $ 0.99 | $ 0.45 |
Stock Options (in dollars per share) | (0.01) | |||
Diluted (in dollars per share) | $ 0.36 | $ 0.26 | $ 0.98 | $ 0.45 |
Excluded from diluted EPS | 0 | 0 | 24,167 | 8,379 |
Revenue Recognition and Contr_3
Revenue Recognition and Contracts with Customers (Details) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2024 USD ($) | Mar. 31, 2023 | Mar. 31, 2024 USD ($) segment | Mar. 31, 2023 | Jun. 30, 2023 USD ($) | |
Revenue: | |||||
Number of operating segments (in segments) | segment | 1 | ||||
Sales returns, rebates and allowances as a percentage of gross sales | 6% | 8% | 6% | 6% | |
Current Liabilities | |||||
Revenue: | |||||
Refund liabilities | $ 5,224,000 | $ 5,224,000 | $ 5,521,000 | ||
Other current assets | |||||
Revenue: | |||||
Return-related assets | $ 1,316,000 | $ 1,316,000 | $ 1,338,000 |
Revenue Recognition and Contr_4
Revenue Recognition and Contracts with Customers - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue: | ||||
Revenues | $ 49,267 | $ 43,532 | $ 138,490 | $ 125,339 |
Intrusion and access alarm products | ||||
Revenue: | ||||
Revenues | 10,139 | 11,530 | 30,693 | 36,405 |
Door locking devices | ||||
Revenue: | ||||
Revenues | 19,596 | 16,860 | 52,440 | 45,106 |
Services | ||||
Revenue: | ||||
Revenues | $ 19,532 | $ 15,142 | $ 55,357 | $ 43,828 |
Business and Credit Concentra_2
Business and Credit Concentrations (Details) - customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | |
Accounts Receivable | Credit Concentration Risk | ||||
Business and Credit Concentrations | ||||
Number of customers | 2 | |||
Accounts Receivable | Credit Concentration Risk | Customer One | ||||
Business and Credit Concentrations | ||||
Concentration risk (as a percent) | 16% | 19% | ||
Accounts Receivable | Credit Concentration Risk | Customer Two | ||||
Business and Credit Concentrations | ||||
Concentration risk (as a percent) | 11% | 14% | ||
Sales | Customer Concentration Risk | Customer One | ||||
Business and Credit Concentrations | ||||
Concentration risk (as a percent) | 12% | 10% |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Marketable Securities | ||||
Net gains recognized during the period on marketable securities | $ 42 | $ 32 | $ 160 | $ 110 |
Unrealized gains (losses) recognized during the reporting period on marketable securities still held at the reporting date | (18) | 95 | 52 | (23) |
Marketable securities | $ 24 | $ 127 | $ 212 | $ 87 |
Marketable Securities - Investm
Marketable Securities - Investments (Details) - Mutual Funds - Level 1 - USD ($) $ in Thousands | Mar. 31, 2024 | Jun. 30, 2023 |
Net Investment Income [Line Items] | ||
Cost | $ 5,811 | $ 5,651 |
Fair Value | 5,348 | 5,136 |
Unrealized Gain (Loss) | $ (463) | $ (515) |
Inventories - Types (Details)
Inventories - Types (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Jun. 30, 2023 |
Inventories | ||
Component parts | $ 34,669 | $ 29,939 |
Work-in-process | 7,529 | 7,726 |
Finished product | 7,905 | 10,684 |
Inventories, net of reserves | $ 50,103 | $ 48,349 |
Inventories - Classification (D
Inventories - Classification (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Jun. 30, 2023 |
Inventories | ||
Current | $ 37,010 | $ 35,062 |
Non-current | 13,093 | 13,287 |
Inventories, net of reserves | $ 50,103 | $ 48,349 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | |
Property plant and equipment | |||||
Gross | $ 53,306,000 | $ 53,306,000 | $ 52,371,000 | ||
Less: accumulated depreciation and amortization | (44,328,000) | (44,328,000) | (43,063,000) | ||
Net | 8,978,000 | 8,978,000 | 9,308,000 | ||
Depreciation and amortization | 454,000 | $ 380,000 | 1,374,000 | $ 1,127,000 | |
Land | |||||
Property plant and equipment | |||||
Gross | 904,000 | 904,000 | 904,000 | ||
Buildings | |||||
Property plant and equipment | |||||
Gross | $ 8,911,000 | $ 8,911,000 | 8,911,000 | ||
Buildings | Minimum | |||||
Property plant and equipment | |||||
Useful life | 30 years | 30 years | |||
Buildings | Maximum | |||||
Property plant and equipment | |||||
Useful life | 40 years | 40 years | |||
Molds and dies | |||||
Property plant and equipment | |||||
Gross | $ 7,539,000 | $ 7,539,000 | 7,517,000 | ||
Molds and dies | Minimum | |||||
Property plant and equipment | |||||
Useful life | 3 years | 3 years | |||
Molds and dies | Maximum | |||||
Property plant and equipment | |||||
Useful life | 5 years | 5 years | |||
Furniture and fixtures | |||||
Property plant and equipment | |||||
Gross | $ 3,626,000 | $ 3,626,000 | 3,387,000 | ||
Furniture and fixtures | Minimum | |||||
Property plant and equipment | |||||
Useful life | 5 years | 5 years | |||
Furniture and fixtures | Maximum | |||||
Property plant and equipment | |||||
Useful life | 10 years | 10 years | |||
Machinery and equipment | |||||
Property plant and equipment | |||||
Gross | $ 29,197,000 | $ 29,197,000 | 28,574,000 | ||
Machinery and equipment | Minimum | |||||
Property plant and equipment | |||||
Useful life | 3 years | 3 years | |||
Machinery and equipment | Maximum | |||||
Property plant and equipment | |||||
Useful life | 10 years | 10 years | |||
Building improvements | |||||
Property plant and equipment | |||||
Gross | $ 3,129,000 | $ 3,129,000 | $ 3,078,000 | ||
Property Plant And Equipment Estimated Useful Lives | us-gaap:UsefulLifeShorterOfTermOfLeaseOrAssetUtilityMember | us-gaap:UsefulLifeShorterOfTermOfLeaseOrAssetUtilityMember |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Income taxes | ||||
Income tax expense | $ 1,935,000 | $ 1,428,000 | $ 5,376,000 | $ 2,475,000 |
Interest expense accrued | 198,000 | 198,000 | ||
Unrecognized net tax benefits | 700,000 | 700,000 | ||
Examination, interest expense | 59,000 | |||
Income before Provision for Income Taxes | $ 15,131,000 | $ 10,977,000 | 41,660,000 | $ 19,037,000 |
Domestic Tax Authority | ||||
Income taxes | ||||
Income before Provision for Income Taxes | 5,412,000 | |||
Foreign tax authority | ||||
Income taxes | ||||
Income before Provision for Income Taxes | $ 36,248,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Mar. 31, 2024 | Feb. 09, 2024 | Feb. 08, 2024 | Jun. 30, 2023 | Jun. 30, 2020 | |
The Revolver Agreement | ||||||
Long-term debt disclosure: | ||||||
Line of credit, maximum borrowing capacity | $ 20,000,000 | $ 11,000,000 | ||||
Stock collateral (as a percent) | 65% | |||||
Revolving line of credit: | ||||||
Revolving line of credit | $ 0 | $ 0 | ||||
The Revolver Agreement | SOFR | Minimum | ||||||
Long-term debt disclosure: | ||||||
Basis spread | 1.2645% | |||||
The Revolver Agreement | SOFR | Maximum | ||||||
Long-term debt disclosure: | ||||||
Basis spread | 1.3645% | |||||
Paycheck Protection Program | ||||||
Long-term debt disclosure: | ||||||
Loan forgiven | $ 3,904,000 | |||||
Revolving line of credit: | ||||||
Long-term debt | $ 3,904,000 |
Stock Option - Plan Information
Stock Option - Plan Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Dec. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | May 31, 2020 | Dec. 31, 2018 | Dec. 31, 2012 | |
Stock Option | ||||||||||
Stock-based compensation expense, allocated | $ 266,000 | $ 322,000 | $ 876,000 | $ 1,134,000 | ||||||
Basic earnings per share from share based compensation costs | $ 0.01 | $ 0.01 | $ 0.02 | $ 0.03 | ||||||
Diluted earnings per share from share based compensation costs | $ 0.01 | $ 0.01 | $ 0.02 | $ 0.03 | ||||||
Proceeds from stock option exercises | $ 427,000 | $ 82,000 | ||||||||
2012 Employee Stock Option Plan | ||||||||||
Stock Option | ||||||||||
Shares authorized (in shares) | 1,900,000 | 1,900,000 | ||||||||
Premium on fair market value (as a percent) | 110% | |||||||||
Term | 10 years | |||||||||
Vesting rights percentage | 20% | |||||||||
Outstanding (in shares) | 363,036 | 522,580 | 363,036 | 522,580 | 521,580 | 523,080 | ||||
Exercisable, end of period | 178,984 | 236,652 | 178,984 | 236,652 | ||||||
Available for grant (in shares) | 0 | 0 | ||||||||
Granted | 0 | 0 | 0 | 37,500 | ||||||
Exercised | 115,944 | 30,800 | 147,544 | 38,000 | ||||||
Number of Stock options settled by withholding of shares | 77,944 | 27,600 | 109,544 | 29,600 | ||||||
Withheld (in shares) | 26,002 | 9,943 | 46,570 | 10,150 | ||||||
Shares converted (in shares) | 38,000 | 38,000 | ||||||||
Deferred tax benefit | $ 67,000 | $ 0 | $ 119,000 | $ 0 | ||||||
Unearned stock based compensation | $ 1,306,000 | $ 1,306,000 | ||||||||
Vested | 5,200 | 5,200 | 89,900 | 97,900 | ||||||
Fair Value | $ 33,000 | $ 33,000 | $ 881,000 | $ 916,000 | ||||||
Proceeds from stock option exercises | $ 427,000 | $ 36,000 | $ 427,000 | $ 81,000 | ||||||
2012 Employee Stock Option Plan | Options granted after December 2022 | ||||||||||
Stock Option | ||||||||||
Granted | 0 | |||||||||
2012 Non-Employee Stock Option Plan | ||||||||||
Stock Option | ||||||||||
Shares authorized (in shares) | 100,000 | |||||||||
Threshold percentage of voting rights | 10% | |||||||||
Term | 10 years | |||||||||
Vesting rights percentage | 20% | |||||||||
Outstanding (in shares) | 20,400 | 20,400 | 20,400 | 20,400 | 20,400 | 20,400 | ||||
Exercisable, end of period | 16,560 | 13,920 | 16,560 | 13,920 | ||||||
Available for grant (in shares) | 0 | 0 | ||||||||
Granted | 0 | 0 | 0 | 0 | ||||||
Exercised | 0 | 0 | 0 | 0 | ||||||
Deferred tax benefit | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
Unearned stock based compensation | $ 29,000 | $ 29,000 | ||||||||
Vested | 720 | 2,640 | 720 | 2,640 | ||||||
Fair Value | $ 5,000 | $ 24,000 | $ 5,000 | $ 24,000 | ||||||
Proceeds from stock option exercises | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
2012 Non-Employee Stock Option Plan | Options granted after December 2022 | ||||||||||
Stock Option | ||||||||||
Granted | 0 | |||||||||
2018 Non-Employee Stock Option Plan | ||||||||||
Stock Option | ||||||||||
Shares authorized (in shares) | 100,000 | |||||||||
Term | 10 years | |||||||||
Vesting rights percentage | 20% | |||||||||
Outstanding (in shares) | 71,900 | 77,500 | 71,900 | 77,500 | 75,000 | 89,000 | ||||
Exercisable, end of period | 62,500 | 53,220 | 62,500 | 53,220 | ||||||
Available for grant (in shares) | 0 | 0 | ||||||||
Granted | 0 | 0 | 0 | 0 | ||||||
Exercised | 1,500 | 1,600 | 3,100 | 11,500 | ||||||
Number of Stock options settled by withholding of shares | 1,500 | 1,600 | 3,100 | 11,500 | ||||||
Withheld (in shares) | 792 | 395 | 1,532 | 6,052 | ||||||
Deferred tax benefit | $ 6,000 | $ 8,000 | $ 12,000 | $ 34,000 | ||||||
Unearned stock based compensation | $ 71,000 | $ 71,000 | ||||||||
Vested | 5,380 | 5,380 | 14,880 | 19,680 | ||||||
Fair Value | $ 35,000 | $ 35,000 | $ 124,000 | $ 149,000 | ||||||
Proceeds from stock option exercises | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
2018 Non-Employee Stock Option Plan | Options granted after December 2028 | ||||||||||
Stock Option | ||||||||||
Granted | 0 | |||||||||
2020 Non-Employee Stock Option Plan | ||||||||||
Stock Option | ||||||||||
Shares authorized (in shares) | 100,000 | |||||||||
Term | 10 years | |||||||||
Vesting rights percentage | 20% | |||||||||
Outstanding (in shares) | 56,900 | 56,900 | 56,900 | 56,900 | 56,900 | 26,900 | ||||
Exercisable, end of period | 30,140 | 18,760 | 30,140 | 18,760 | ||||||
Available for grant (in shares) | 43,100 | 43,100 | ||||||||
Granted | 0 | 5,000 | 0 | 30,000 | ||||||
Exercised | 0 | 0 | 0 | 0 | ||||||
Deferred tax benefit | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
Unearned stock based compensation | $ 248,000 | $ 248,000 | ||||||||
Vested | 1,000 | 1,000 | 11,380 | |||||||
Fair Value | $ 16,000 | $ 129,000 | ||||||||
Proceeds from stock option exercises | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
2020 Non-Employee Stock Option Plan | Options granted after May 2030 | ||||||||||
Stock Option | ||||||||||
Granted | 0 | |||||||||
2022 Employee Stock Option Plan | ||||||||||
Stock Option | ||||||||||
Shares authorized (in shares) | 950,000 | |||||||||
Premium on fair market value (as a percent) | 110% | |||||||||
Threshold percentage of voting rights | 10% | |||||||||
Term | 10 years | |||||||||
Vesting rights percentage | 20% | |||||||||
Outstanding (in shares) | 10,000 | 10,000 | 5,000 | |||||||
Exercisable, end of period | 2,000 | 2,000 | ||||||||
Available for grant (in shares) | 940,000 | 940,000 | ||||||||
Granted | 0 | 0 | 10,000 | |||||||
Exercised | 0 | 0 | ||||||||
Deferred tax benefit | $ 0 | $ 0 | ||||||||
Unearned stock based compensation | $ 68,000 | $ 68,000 | ||||||||
Vested | 0 | 2,000 | ||||||||
Fair Value | $ 0 | $ 19,500 | ||||||||
Proceeds from stock option exercises | $ 0 | |||||||||
2022 Employee Stock Option Plan | Options granted after December 2032 | ||||||||||
Stock Option | ||||||||||
Granted | 0 |
Stock Option - Fair Value Assum
Stock Option - Fair Value Assumptions (Details) | 9 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
2012 Employee Stock Option Plan | ||
Stock option | ||
Risk-free interest rates | 3.03% | |
Expected lives | 7 years 3 months 7 days | |
Expected volatility | 43% | |
Expected dividend yields | 0% | |
2020 Non-Employee Stock Option Plan | ||
Stock option | ||
Expected volatility | 43% | |
Expected dividend yields | 0% | |
2020 Non-Employee Stock Option Plan | Minimum | ||
Stock option | ||
Expected lives | 7 years 2 months 23 days | |
2020 Non-Employee Stock Option Plan | Maximum | ||
Stock option | ||
Expected lives | 7 years 3 months 7 days | |
2022 Employee Stock Option Plan | ||
Stock option | ||
Risk-free interest rates | 4.66% | |
Expected lives | 5 years 9 months 3 days | |
Expected volatility | 48.71% | |
Expected dividend yields | 1.48% |
Stock Option - Activity (Detail
Stock Option - Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | |
2012 Employee Stock Option Plan | |||||
Options | |||||
Outstanding, beginning of year | 521,580 | 523,080 | 523,080 | ||
Granted | 0 | 0 | 0 | 37,500 | |
Forfeited/Lapsed | (11,000) | ||||
Exercised | (115,944) | (30,800) | (147,544) | (38,000) | |
Outstanding, end of period | 363,036 | 522,580 | 363,036 | 522,580 | 521,580 |
Exercisable, end of period | 178,984 | 236,652 | 178,984 | 236,652 | |
Weighted average exercise price | |||||
Weighted average exercise price, beginning of year | $ 19.37 | $ 18.59 | $ 18.59 | ||
Granted (per share) | 26.94 | ||||
Forfeited/Lapsed (per share) | 3.15 | ||||
Exercised (per share) | 15.43 | 10.63 | |||
Weighted average exercise price, end of period | $ 21.47 | $ 19.34 | 21.47 | 19.34 | $ 19.37 |
Exercisable, end of period, weighted average exercise price | $ 21.59 | $ 17.47 | $ 21.59 | 17.47 | |
Additional disclosures | |||||
Weighted average fair value at grant date of options granted | $ 13.36 | ||||
Total intrinsic value of options exercised | $ 3,972,000 | $ 787,000 | |||
Total intrinsic value of options outstanding | $ 6,787,000 | $ 9,531,000 | 6,787,000 | 9,531,000 | |
Total intrinsic value of options exercisable | $ 3,323,000 | $ 4,760,000 | $ 3,323,000 | $ 4,760,000 | |
2012 Non-Employee Stock Option Plan | |||||
Options | |||||
Outstanding, beginning of year | 20,400 | 20,400 | 20,400 | ||
Granted | 0 | 0 | 0 | 0 | |
Exercised | 0 | 0 | 0 | 0 | |
Outstanding, end of period | 20,400 | 20,400 | 20,400 | 20,400 | 20,400 |
Exercisable, end of period | 16,560 | 13,920 | 16,560 | 13,920 | |
Weighted average exercise price | |||||
Weighted average exercise price, beginning of year | $ 14.39 | $ 14.39 | $ 14.39 | ||
Exercised (per share) | 0 | ||||
Weighted average exercise price, end of period | $ 14.39 | $ 14.39 | 14.39 | 14.39 | $ 14.39 |
Exercisable, end of period, weighted average exercise price | $ 12.41 | $ 10.99 | $ 12.41 | $ 10.99 | |
Additional disclosures | |||||
Total intrinsic value of options outstanding | $ 526,000 | $ 473,000 | $ 526,000 | $ 473,000 | |
Total intrinsic value of options exercisable | $ 460,000 | $ 370,000 | $ 460,000 | $ 370,000 | |
2018 Non-Employee Stock Option Plan | |||||
Options | |||||
Outstanding, beginning of year | 75,000 | 89,000 | 89,000 | ||
Granted | 0 | 0 | 0 | 0 | |
Exercised | (1,500) | (1,600) | (3,100) | (11,500) | |
Outstanding, end of period | 71,900 | 77,500 | 71,900 | 77,500 | 75,000 |
Exercisable, end of period | 62,500 | 53,220 | 62,500 | 53,220 | |
Weighted average exercise price | |||||
Weighted average exercise price, beginning of year | $ 14.83 | $ 14.91 | $ 14.91 | ||
Exercised (per share) | 18.98 | 15.14 | |||
Weighted average exercise price, end of period | $ 14.65 | $ 14.88 | 14.65 | 14.88 | $ 14.83 |
Exercisable, end of period, weighted average exercise price | $ 13.41 | $ 13.03 | $ 13.41 | $ 13.03 | |
Additional disclosures | |||||
Total intrinsic value of options exercised | $ 59,000 | $ 164,000 | |||
Total intrinsic value of options outstanding | $ 1,834,000 | $ 1,760,000 | 1,834,000 | 1,760,000 | |
Total intrinsic value of options exercisable | $ 1,672,000 | $ 1,307,000 | $ 1,672,000 | $ 1,307,000 | |
2020 Non-Employee Stock Option Plan | |||||
Options | |||||
Outstanding, beginning of year | 56,900 | 26,900 | 26,900 | ||
Granted | 0 | 5,000 | 0 | 30,000 | |
Exercised | 0 | 0 | 0 | 0 | |
Outstanding, end of period | 56,900 | 56,900 | 56,900 | 56,900 | 56,900 |
Exercisable, end of period | 30,140 | 18,760 | 30,140 | 18,760 | |
Weighted average exercise price | |||||
Weighted average exercise price, beginning of year | $ 23.35 | $ 18.64 | $ 18.64 | ||
Granted (per share) | 27.57 | ||||
Weighted average exercise price, end of period | $ 23.35 | $ 23.35 | 23.35 | 23.35 | $ 23.35 |
Exercisable, end of period, weighted average exercise price | $ 21.72 | $ 20.73 | $ 21.72 | 20.73 | |
Additional disclosures | |||||
Weighted average fair value at grant date of options granted | $ 13.74 | ||||
Total intrinsic value of options outstanding | $ 957,000 | $ 810,000 | $ 957,000 | $ 810,000 | |
Total intrinsic value of options exercisable | $ 556,000 | $ 316,000 | $ 556,000 | $ 316,000 | |
2022 Employee Stock Option Plan | |||||
Options | |||||
Outstanding, beginning of year | 5,000 | ||||
Granted | 0 | 0 | 10,000 | ||
Forfeited/Lapsed | (5,000) | ||||
Exercised | 0 | 0 | |||
Outstanding, end of period | 10,000 | 10,000 | 5,000 | ||
Exercisable, end of period | 2,000 | 2,000 | |||
Weighted average exercise price | |||||
Weighted average exercise price, beginning of year | $ 40.01 | ||||
Granted (per share) | 21.60 | ||||
Forfeited/Lapsed (per share) | 40.01 | ||||
Weighted average exercise price, end of period | $ 21.60 | 21.60 | $ 40.01 | ||
Exercisable, end of period, weighted average exercise price | $ 21.60 | 21.60 | |||
Additional disclosures | |||||
Weighted average fair value at grant date of options granted | $ 9.75 | ||||
Total intrinsic value of options outstanding | $ 186,000 | $ 186,000 | |||
Total intrinsic value of options exercisable | $ 37,000 | $ 37,000 |
Stock Option - Exercise Price R
Stock Option - Exercise Price Range (Details) | 9 Months Ended |
Mar. 31, 2024 $ / shares shares | |
2012 Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 363,036 |
Weighted average remaining contractual life | 7 years 4 months 28 days |
Weighted average exercise price | $ 21.47 |
Number exercisable | shares | 178,984 |
Exercisable, Weighted average exercise price | $ 21.59 |
2012 Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | 26.94 |
Exercise price lower limit | $ 10.02 |
2012 Non-Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 20,400 |
Weighted average remaining contractual life | 5 years 10 months 24 days |
Weighted average exercise price | $ 14.39 |
Number exercisable | shares | 16,560 |
Exercisable, Weighted average exercise price | $ 12.41 |
2012 Non-Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | 22.93 |
Exercise price lower limit | $ 4.35 |
2018 Non-Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 71,900 |
Weighted average remaining contractual life | 5 years 11 months 26 days |
Weighted average exercise price | $ 14.65 |
Number exercisable | shares | 62,500 |
Exercisable, Weighted average exercise price | $ 13.41 |
2018 Non-Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | 22.93 |
Exercise price lower limit | $ 8.10 |
Options outstanding (in shares) | shares | 71,900 |
Weighted average remaining contractual life | 5 years 11 months 26 days |
Weighted average exercise price | $ 14.65 |
Number exercisable | shares | 62,500 |
Exercisable, Weighted average exercise price | $ 13.41 |
2020 Non-Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 56,900 |
Weighted average remaining contractual life | 7 years 10 months 2 days |
Weighted average exercise price | $ 23.35 |
Number exercisable | shares | 30,140 |
Exercisable, Weighted average exercise price | $ 21.72 |
2020 Non-Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | 30.71 |
Exercise price lower limit | $ 11.40 |
2022 Employee Stock Option Plan | |
Share based compensation, exercise prices | |
Options outstanding (in shares) | shares | 10,000 |
Weighted average remaining contractual life | 9 years 6 months 7 days |
Weighted average exercise price | $ 21.60 |
Number exercisable | shares | 2,000 |
Exercisable, Weighted average exercise price | $ 21.60 |
2022 Employee Stock Option Plan | Exercise price range | |
Share based compensation, exercise prices | |
Exercise price upper limit | $ 21.60 |
Options outstanding (in shares) | shares | 10,000 |
Weighted average remaining contractual life | 9 years 6 months 7 days |
Weighted average exercise price | $ 21.60 |
Number exercisable | shares | 2,000 |
Exercisable, Weighted average exercise price | $ 21.60 |
Stockholders' Equity Transact_2
Stockholders' Equity Transactions (Details) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Feb. 01, 2024 | Nov. 02, 2023 | Aug. 18, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Mar. 31, 2024 | Jun. 30, 2023 | |
Equity | ||||||||
Common Stock Shares Outstanding | 36,872,639 | 36,872,639 | 36,770,097 | |||||
Common Stock, Dividends, Per Share, Declared | $ 0.10 | $ 0.08 | $ 0.08 | $ 0.10 | $ 0.08 | $ 0.08 | ||
Certain employees and directors | ||||||||
Equity | ||||||||
Exercised | 117,444 | 150,644 | 53,000 | |||||
Exercised, cashless | 79,444 | 112,644 | 43,600 | |||||
Withheld (in shares) | 26,794 | 48,101 | 17,385 |
Related Party Transaction (Deta
Related Party Transaction (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Mar. 31, 2024 | Feb. 28, 2023 | Mar. 31, 2023 | |
President and Chairman | |||
Related party transaction | |||
Number of common stock sold | 2,000,000 | ||
Public offering price per share | $ 40.75 | ||
Proceeds from the offering | $ 0 | ||
President and Chairman | Selling, General and Administrative Expenses | |||
Related party transaction | |||
Offering expenses | $ 372,000 | ||
President and Chairman | Green Shoe Option | |||
Related party transaction | |||
Number of common stock sold | 300,000 | ||
President and Chairman | Over allotment | |||
Related party transaction | |||
Shares of common stock issued | 50,000 | ||
President And Chairman & Executive Vice President And Chief Financial Officer | |||
Related party transaction | |||
Public offering price per share | $ 31.50 | ||
Proceeds from the offering | $ 0 | ||
Offering expenses | $ 496,000 | ||
President And Chairman | |||
Related party transaction | |||
Number of common stock sold | 2,300,000 | ||
Executive Vice President And Chief Financial Officer | |||
Related party transaction | |||
Number of common stock sold | 100,000 |
401(k) Plan (Details)
401(k) Plan (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
401(k) Plan | ||||
Employer contribution | $ 72,000 | $ 64,000 | $ 191,000 | $ 187,000 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 14, 2022 USD ($) | Sep. 13, 2022 USD ($) | Mar. 31, 2024 USD ($) a | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) a | Mar. 31, 2023 USD ($) | |
Commitments and Contingencies | ||||||
Operating lease term | 99 years | 99 years | ||||
Area of land | a | 4 | 4 | ||||
Annual minimum rent | $ 235,000 | $ 235,000 | ||||
Annual service charges | $ 105,000 | $ 53,000 | ||||
Percentage of service charges increase | 2% | |||||
Deduction of operating lease asset and liability, remeasurement | $ 1,300,000 | |||||
Operating lease payments | $ 57,000 | $ 85,000 | $ 228,000 | $ 249,000 | ||
Operating lease expense | $ 127,000 | $ 123,000 | $ 380,000 | $ 334,000 | ||
Weighted-average remaining lease term | 68 years | 68 years | ||||
Weighted-average discount rate | 6.25% | 6.25% |
Commitments and Contingencies_2
Commitments and Contingencies - Lease maturities (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Schedule, by years, of maturities of lease liabilities | |
2024 | $ 77 |
2025 | 299 |
2026 | 282 |
2027 | 267 |
2028 | 253 |
Thereafter | 4,386 |
Total | $ 5,564 |
Commitments and Contingencies_3
Commitments and Contingencies - Litigation, etc. (Details) | 9 Months Ended |
Mar. 31, 2024 USD ($) agreement | |
Loss Contingencies | |
Number of employment agreement | agreement | 2 |
Number of severance agreement | agreement | 1 |
Termination pay commitment rate applied to the average of the prior five calendar years compensation | 299% |
Minimum number of months either party gives the other notice of non-renewal | 6 |
Chief executive officer | |
Loss Contingencies | |
Annual salary commitment | $ 942,000 |
SVP of Engineering | |
Loss Contingencies | |
Number of months of salary if terminated by the company without cause | 9 |
Number of months of health insurance terminated benefit | 6 |
Employment Contracts | SVP of Engineering | |
Loss Contingencies | |
Annual salary commitment | $ 390,000 |
Geographical Data (Details)
Geographical Data (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) segment | Mar. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | |
Domestic and Foreign Operations | |||||
Number of operating segments (in segments) | segment | 1 | ||||
Net Sales | $ 49,267 | $ 43,532 | $ 138,490 | $ 125,339 | |
Identifiable Assets | 194,792 | 194,792 | $ 166,654 | ||
United States | |||||
Domestic and Foreign Operations | |||||
Net Sales | 49,004 | 43,228 | 137,666 | 124,373 | |
Identifiable Assets | 148,492 | 148,492 | 122,995 | ||
Foreign | |||||
Domestic and Foreign Operations | |||||
Net Sales | 263 | $ 304 | 824 | $ 966 | |
Dominican Republic | |||||
Domestic and Foreign Operations | |||||
Identifiable Assets | $ 46,300 | $ 46,300 | $ 43,659 |
Geographical Data - Additional
Geographical Data - Additional information (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Jun. 30, 2023 |
Domestic and Foreign Operations | ||
Inventories, net | $ 37,010 | $ 35,062 |
Operating lease assets | 5,564 | 5,797 |
Fixed assets | 8,978 | 9,308 |
Dominican Republic | ||
Domestic and Foreign Operations | ||
Inventories, net | 36,424 | 33,477 |
Operating lease assets | 5,564 | 5,797 |
Fixed assets | $ 3,700 | $ 3,958 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | 3 Months Ended | ||||||
May 02, 2024 | Feb. 01, 2024 | Nov. 02, 2023 | Aug. 18, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | |
Subsequent Event | |||||||
Common Stock, Dividends, Per Share, Declared | $ 0.10 | $ 0.08 | $ 0.08 | $ 0.10 | $ 0.08 | $ 0.08 | |
Subsequent Event | |||||||
Subsequent Event | |||||||
Common Stock, Dividends, Per Share, Declared | $ 0.10 |