Napco Security (NSSC) 10-Q 2025 Q2 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: December 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                        TO                         .

Commission File number:                0-10004                     

NAPCO SECURITY TECHNOLOGIES, INC.

(Exact name of Registrant as specified in its charter)

Delaware	11-2277818
(State or other jurisdiction of	(IRS Employer Identification
incorporation of organization)	Number)
333 Bayview Avenue
Amityville, New York	11701
(Address of principal executive offices)	(Zip Code)

(631) 842-9400

(Registrant’s telephone number including area code)

(Former name, former address and former fiscal year if

changed from last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	NSSC	Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:            Yes ⌧           No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).             Yes ⌧             No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ⌧ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ⌧

Number of shares outstanding of each of the issuer’s classes of common stock, as of: January 31, 2025

COMMON STOCK, $.01 PAR VALUE PER SHARE     36,401,421

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

		Page
PART I:  FINANCIAL INFORMATION
ITEM 1.	Financial Statements	3
	NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES INDEX – December 31, 2024
	Condensed Consolidated Balance Sheets as of December 31, 2024 and June 30, 2024 (unaudited)	3
	Condensed Consolidated Statements of Income for the Three Months ended December 31, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Statements of Income for the Six Months ended December 31, 2024 and 2023 (unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months ended December 31, 2024 and 2023 (unaudited)	6
	Condensed Consolidated Statements of Stockholders Equity for the Six Months Ended December 31, 2024 and 2023 (unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2024 and 2023 (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	34
ITEM 4.	Controls and Procedures	35
PART II:  OTHER INFORMATION
ITEM 1.	Legal Proceedings	36
ITEM 1A.	Risk Factors	36
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
ITEM 3.	Defaults Upon Senior Securities	36
ITEM 4.	Mine Safety Disclosures	36
ITEM 5.	Other Information	36
ITEM 6.	Exhibits	37
SIGNATURE PAGE		38

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PART I:           FINANCIAL INFORMATION

Item 1.  Financial Statements

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	December 31, 2024		June 30, 2024
	(in thousands, except share data)
CURRENT ASSETS
Cash and cash equivalents	$	86,019	$	65,341
Investments - other		—		26,980
Marketable securities		13,176		5,398
Accounts receivable, net of allowance for credit losses of $20 and $32 as of December 31, 2024 and June 30, 2024, respectively		23,456		31,898
Inventories		37,634		34,804
Income tax receivable		1,195		73
Prepaid expenses and other current assets		3,252		4,269
Total Current Assets		164,732		168,763
Inventories - non-current		12,040		15,109
Property, plant and equipment, net		9,915		9,077
Intangible assets, net		3,445		3,602
Deferred income taxes		7,012		5,428
Operating lease - Right-of-use asset		5,335		5,487
Other assets		205		286
TOTAL ASSETS	$	202,684	$	207,752
CURRENT LIABILITIES
Accounts payable	$	4,551	$	7,977
Accrued expenses		8,680		10,345
Accrued salaries and wages		4,032		3,907
Dividend payable		4,554		—
Total Current Liabilities		21,817		22,229
Accrued income taxes		1,223		1,122
Operating lease liability		5,417		5,512
TOTAL LIABILITIES		28,457		28,863
COMMITMENTS AND CONTINGENCIES (Note 13)
STOCKHOLDERS’ EQUITY
Common Stock, par value $0.01 per share; 100,000,000 shares authorized as of December 31, 2024 and June 30, 2024; 39,771,035 and 39,768,186 shares issued; and 36,401,421 and 36,874,471 shares outstanding, respectively.		398		398
Additional paid-in capital		24,523		23,712
Retained earnings		186,788		174,300
Less: Treasury Stock, at cost (3,369,614 and 2,893,715 shares as of December 31, 2024 and June 30, 2024, respectively)		(37,529)		(19,521)
Accumulated other comprehensive income		47		—
TOTAL STOCKHOLDERS’ EQUITY		174,227		178,889
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	202,684	$	207,752

See accompanying notes to condensed consolidated financial statements.

3

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Three Months ended December 31,
	2024		2023
	(in thousands, except for share and per share data)
Net sales:
Equipment revenues	$	21,725	$	29,007
Service revenues		21,208		18,540
		42,933		47,547
Cost of sales:
Equipment related expenses		16,606		20,656
Service-related expenses		1,838		1,879
		18,444		22,535
Gross Profit		24,489		25,012
Operating expenses:
Research and development		3,107		2,542
Selling, general, and administrative expenses		10,211		8,665
Total Operating Expenses		13,318		11,207
Operating Income		11,171		13,805
Other income:
Interest and other income, net		921		729
Income before Provision for Income Taxes		12,092		14,534
Provision for Income Taxes		1,625		1,924
Net Income	$	10,467	$	12,610
Income per share:
Basic	$	0.29	$	0.34
Diluted	$	0.28	$	0.34
Weighted average number of shares outstanding:
Basic		36,538,000		36,829,000
Diluted		36,776,000		37,018,000

4

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Six Months Ended December 31,
	2024		2023
	(in thousands, except for share and per share data)
Net sales:
Equipment revenues	$	44,642	$	53,398
Service revenues		42,294		35,825
		86,936		89,223
Cost of sales:
Equipment-related expenses		34,116		38,153
Service-related expenses		3,715		3,645
		37,831		41,798
Gross Profit		49,105		47,425
Operating expenses:
Research and development		6,164		4,979
Selling, general, and administrative expenses		19,914		17,086
Total Operating Expenses		26,078		22,065
Operating Income		23,027		25,360
Other income:
Interest and other income, net		2,065		1,169
Income before Provision for Income Taxes		25,092		26,529
Provision for Income Taxes		3,440		3,441
Net Income	$	21,652	$	23,088
Income per share:
Basic	$	0.59	$	0.63
Diluted	$	0.59	$	0.62
Weighted average number of shares outstanding:
Basic		36,706,000		36,743,000
Diluted		36,983,000		36,962,000

See accompanying notes to condensed consolidated financial statements.

5

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

	Three Months ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Net Income	$	10,467	$	12,610	$	21,652	$	23,088
Other comprehensive income, net of tax				—				—
Net change in unrealized gains on available-for-sale debt securities, net of taxes of $7		47		—		47		—
Other comprehensive income, net of tax		47		—		47		—
Comprehensive income	$	10,514	$	12,610	$	21,699	$	23,088

6

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (unaudited)

	Six months ended December 31, 2024 (in thousands, except for share data)
	Common Stock					Treasury Stock
	Number of			Additional							Accumulated
	Shares			Paid-in		Number of			Retained		Other Comprehensive
	Issued	Amount		Capital		Shares	Amount		Earnings		Income		Total
Balances at June 30, 2024	39,768,186	$	398	$	23,712	(2,893,715)	$	(19,521)	$	174,300	$	—	$	178,889
Net income	—		—		—	—		—		11,185		—		11,185
Stock-based compensation expense	—		—		371	—		—		—		—		371
Stock options exercised	2,849		—		54	—		—		—		—		54
Purchase of treasury shares	—		—		—	(193,252)		(7,280)		—		—		(7,280)
Cash dividend ($.125 per share)	—		—		—	—		—		(4,610)		—		(4,610)
Balances at September 30, 2024	39,771,035	$	398	$	24,137	(3,086,967)	$	(26,801)	$	180,875	$	—	$	178,609
Net income	—		—		—	—		—		10,467		—		10,467
Other comprehensive income, net of tax	—		—		—	—		—		—		47		47
Stock-based compensation expense	—		—		386	—		—		—		—		386
Stock options exercised	—		—		—	—		—		—		—		—
Purchase of treasury shares	—		—		—	(282,647)		(10,728)		—		—		(10,728)
Cash dividend ($.125 per share)	—		—		—	—		—		(4,554)		—		(4,554)
Balances at December 31, 2024	39,771,035	$	398	$	24,523	(3,369,614)	$	(37,529)	$	186,788	$	47	$	174,227

	Six months ended December 31, 2023 (in thousands, except share data)
	Common Stock					Treasury Stock
	Number of			Additional							Accumulated
	Shares			Paid-in		Number of			Retained		Other Comprehensive
	Issued	Amount		Capital		Shares	Amount		Earnings		Income		Total
Balances at June 30, 2023	39,663,812	$	397	$	21,553	(2,893,715)	$	(19,521)	$	137,740	$	—	$	140,169
Net income	—		—		—	—		—		10,478		—		10,478
Stock-based compensation expense	—		—		307	—		—		—		—		307
Cash dividend ($.08 per share)	—		—		—	—		—		(2,942)		—		(2,942)
Balances at September 30, 2023	39,663,812	$	397	$	21,860	(2,893,715)	$	(19,521)	$	145,276	$	—	$	148,012
Net income	—		—		—	—		—		12,610		—		12,610
Stock-based compensation expense	—		—		303	—		—		—		—		303
Stock options exercised	11,892		—		—	—		—		—		—		—
Cash dividend ($.08 per share)	—		—		—	—		—		(2,941)		—		(2,941)
Balances at December 31, 2023	39,675,704	$	397	$	22,163	(2,893,715)	$	(19,521)	$	154,945	$	—	$	157,984

See accompanying notes to condensed consolidated financial statements

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Six Months ended December 31,
	2024		2023
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	21,652	$	23,088
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,133		1,088
Interest (income) expense on other investments		(194)		(17)
Unrealized (gain) loss on marketable securities		(82)		(71)
(Recovery of) credit losses		(12)		(35)
Change to inventory reserve		(184)		720
Deferred income taxes		(1,584)		(1,405)
Stock based compensation expense		757		610
Changes in operating assets and liabilities:
Accounts receivable		8,454		(1,448)
Inventories		422		(5,005)
Prepaid expenses and other current assets		1,017		(124)
Income tax receivable		(1,129)		(292)
Other assets		81		20
Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes		(4,807)		1,564
Net Cash Provided by Operating Activities		25,524		18,693
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment		(1,814)		(682)
Purchases of marketable securities		(7,642)		(117)
Purchases of other investments		(78)		(655)
Redemption of other investments		27,252		—
Net Cash Provided by (Used in) Investing Activities		17,718		(1,454)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock option exercises		54		—
Cash paid for dividend		(4,610)		(5,883)
Cash paid for purchase of treasury shares		(18,008)		—
Net Cash Used in Financing Activities		(22,564)		(5,883)
Net increase in Cash and Cash Equivalents		20,678		11,356
CASH AND CASH EQUIVALENTS - Beginning		65,341		35,955
CASH AND CASH EQUIVALENTS - Ending	$	86,019	$	47,311
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	$	15	$	4
Income taxes paid	$	6,051	$	5,165
Non-Cash Investing and Financing Transactions
Cash dividends declared and not paid	$	4,554	$	—

See accompanying notes to condensed consolidated financial statements.

8

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

December 31, 2024

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

Nature of Business:

Napco Security Technologies, Inc (“NAPCO”, “the Company”, “we”, “our”) is one of the leading manufacturers and designers of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems as well as a leading provider of school safety solutions. We offer a diversified array of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. We have experienced significant growth in recent years, primarily driven by our recurring service revenues generated from wireless communication services for intrusion and fire alarm systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as a result of on-campus shooting and violence in the U.S.

Significant Accounting Policies:

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. We continuously evaluate our estimates and judgments based on historical experience, as well as other factors that we believe to be reasonable under the circumstances. The results of our evaluation form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. 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 intangible assets, share based compensation and income taxes. These estimates may change in the future if underlying assumptions or factors change, and actual results may differ from these estimates.

Fair Value of Financial Instruments

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

Cash and Cash Equivalents and Investments – other

All financial instruments purchased with an original maturity of three months or less at the time of purchase are considered cash equivalents. Such items may include liquid money market funds, certificate of deposit, U.S. treasury securities and time deposit accounts. Investments that are classified as cash equivalents are carried at cost, which approximates fair value. Certificate of deposits with an original maturity greater than three months are classified as Investments – other.

Cash and cash equivalents include approximately $74,620,000 of short-term time deposits, consisting of money market funds totaling $72,095,000 and $2,525,000 of U.S. treasury securities as of December 31, 2024. Cash and cash equivalents include approximately $46,518,000 of short-term time deposits, consisting of certificates of deposit totaling $5,402,000 and $41,116,000 in a money market

9

fund as of June 30, 2024. The Company classifies these highly liquid investments with original maturities of three months or less as cash equivalents. Certificates of deposit with an original maturity greater than three months are classified as Investments-other.

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

	December 31, 2024		June 30, 2024
Cash	$	11,399	$	18,823
Money Market Fund		72,095		41,116
U.S. Treasury Securities		2,525		—
Certificate of Deposits		—		5,402
	$	86,019	$	65,341

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

	December 31, 2024		June 30, 2024
Certificate of Deposits	$	—	$	26,980
	$	—	$	26,980

Certificates of deposit are recorded at the original cost plus accrued interest. There were no certificate of deposits outstanding at December 31, 2024. The Company’s certificates of deposits as of June 30, 2024 consist of the following (in thousands):

June 30, 2024
Balance Sheet Classification	Interest Rate		Maturity Date		Cost		Carrying Value
Cash and Cash Equivalents		4.70%		8/22/2024	$	5,374	$	5,402
Investments - other		4.55% - 4.75%		7/25/2024 - 10/24/2024		26,709		26,980

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of December 31, 2024 and June 30, 2024. The Company has not historically experienced any credit losses with balances in excess of FDIC limits.

Marketable Securities

Investments in debt securities are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. To determine credit losses, a systematic methodology is employed that considers available quantitative and qualitative evidence. In addition, specific adverse conditions are considered related to the financial health of, and business outlook for, the investee. If the Company plans to sell the security or it is more likely than not that the Company will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, we may incur future impairments.

Investments in equity securities with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). The Company performs a qualitative assessment on a periodic basis and

10

recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in other income (expense), net.

Accounts Receivable

Accounts receivable is stated net of the reserves for credit losses of $20,000 and $32,000 as of December 31, 2024 and June 30, 2024, respectively. In accordance with ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), the Company recognizes an allowance for credit losses for trade receivables to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on the credit losses expected to arise over the life of the asset which includes consideration of past events and historical loss experience, current events and also future events based on our expectation as of the balance sheet date. Receivables are written off when the Company determined that such receivables are deemed uncollectible. The Company pools its receivables based on similar risk characteristics in estimating its expected credit losses. In situations where a receivable does not share the same risk characteristics with other receivables, the Company measures those receivables individually. The Company also continuously evaluates such pooling decisions and adjusts as needed from period to period as risk characteristics change.

The Company utilizes the loss rate method in determining its lifetime expected credit losses on its receivables. This method is used for calculating an estimate of losses based primarily on the Company’s historical loss experience. In determining its loss rates, the Company evaluates information related to its historical losses, adjusted for current conditions and further adjusted for the period of time that can be reasonably forecasted. Qualitative and quantitative adjustments related to current conditions and the reasonable and supportable forecast period consider all the following: past due receivables, the customer creditworthiness, changes in the terms of receivables, effect of other external forces such as competition, and legal and regulatory requirements on the level of estimated credit losses in the existing receivables.

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.

The Company records a reserve for excess and slow-moving inventory, which represents any excess of the cost of the inventory over its estimated realizable value. This reserve is calculated using an estimated excess and slow-moving 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 excess and slow-moving percentage (See Note 6).

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.

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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):

	December 31, 2024						June 30, 2024
	Carrying		Accumulated		Net book		Carrying		Accumulated		Net book
	value		amortization		value		value		amortization		value
Customer relationships	$	9,800	$	(9,492)	$	308	$	9,800	$	(9,436)	$	364
Trade name		4,048		(911)		3,137		4,048		(810)		3,238
	$	13,848	$	(10,403)	$	3,445	$	13,848	$	(10,246)	$	3,602

Amortization expense for intangible assets subject to amortization was approximately $79,000 and $84,000 for the three months ended December 31, 2024 and 2023, respectively. Amortization expense for intangible assets subject to amortization was approximately $157,000 and $168,000 for the six months ended December 31, 2024 and 2023, respectively. Amortization expense for each of the next five fiscal years is estimated to be as follows: 2026 - $297,000; 2027 - $283,000; 2028 - $269,000; 2029 - $210,000; and 2030 - $202,000. The weighted average remaining amortization period for intangible assets was 14.4 years and 14.8 years at December 31, 2024 and June 30, 2024, respectively.

Revenue Recognition

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.

Equipment Revenue

Equipment revenue, which includes shipping and handling costs, is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer, which is typically the date of shipment of the related equipment when the product is picked up by the carrier or customer. A provision for product returns, credits and rebates is recorded as a reduction of equipment revenue in the same period the revenue is recognized.

The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months, and 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. Reserves are established for the estimated returns, rebates and credits and such variable consideration is measured based on the most likely amount method.

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

Service Revenue

Service revenue is primarily generated from the sale of monthly cellular communication services to customers. Those sales predominantly contain a single performance obligation and revenue is recognized ratably with the delivery of cellular communication service over the related monthly period, and when ownership, risks and rewards transfer to the customer.

The services are billed monthly, and customers have the right to cancel the cellular communication services at any time, however the contract with the customer does not provide for a refund.

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Cost of Sales

Equipment Cost of Sales

Equipment cost of sales is primarily comprised of direct materials and supplies consumed in the manufacturing of products, as well as manufacturing labor, depreciation expense and direct and indirect overhead expenses necessary to acquire and convert the purchased materials and supplies into finished products.

Service Cost of Sales

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

Shipping and Handling Sales and Costs

The Company records the amount billed to customers for shipping and handling in net sales ($80,000 and $103,000 in the three months ended December 31, 2024 and 2023, respectively, and $170,000 and $186,000 in the six months ended December 31, 2024 and 2023, respectively); and classifies the costs associated with these sales in cost of sales ($353,000 and $389,000 in the three months ended December 31, 2024 and 2023, respectively and $743,000 and $760,000 in the six months ended December 31, 2024 and 2023, respectively).

Advertising and Promotional Costs

Advertising and promotional costs are included in "Selling, General and Administrative" (“SG&A”) expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for the three months ended December 31, 2024 and 2023 was $916,000 and $696,000, respectively. Advertising expense for the six months ended December 31, 2024 and 2023 was $1,806,000 and $1,457,000, respectively.

Research and Development Costs

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

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.

Treasury Stock

Treasury stock is accounted for using the cost method and recorded as a reduction to Stockholders’ equity on the Consolidated Balance Sheets. Incremental direct costs to purchase treasury stock are included in the cost of the shares acquired.

To determine the cost of treasury stock that is either sold or re-issued, we use the first in, first out method. When treasury stock is re-issued at a price higher than its cost, the increase is recorded in additional paid-in capital on the Consolidated Balance Sheets. When

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treasury stock is re-issued at a price lower than its cost, the decrease is recorded in additional paid-in capital to the extent that there are previously recorded increases to offset the decrease. Any decreases in excess of that amount are recorded in retained earnings on the Consolidated Balance Sheets.

Net Income per Share

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 December 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	$	10,467	$	12,610	36,538	36,829	$	0.29	$	0.34
Effect of Dilutive Securities:
Stock Options		—		—	238	189		(0.01)		—
Diluted EPS	$	10,467	$	12,610	36,776	37,018	$	0.28	$	0.34

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

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

							Net Income per
	Net Income				Weighted Average Shares		Share
	2024		2023		2024	2023	2024		2023
Basic EPS	$	21,652	$	23,088	36,706	36,743	$	0.59	$	0.63
Effect of Dilutive Securities:
Stock Options		—		—	277	219		—		(0.01)
Diluted EPS	$	21,652	$	23,088	36,983	36,962	$	0.59	$	0.62

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

Stock-Based Compensation

The Company has established five share incentive programs as discussed in Note 10.

Stock-based awards exchanged for services are accounted for under the fair value method. Accordingly, stock-based compensation cost is measured at the grant date based on the estimated fair value of the award. The expense for awards is recognized over the requisite service period (generally the vesting period of the award). The Company has elected to treat awards with only service conditions and with graded vesting as one award. Consequently, the total compensation expense is recognized straight-line over the entire vesting period, so long as the compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date.

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

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Stock-based compensation costs of $386,000 and $303,000 were recognized for the three months ended December 31, 2024 and 2023, respectively. Stock-based compensation costs of $757,000 and $610,000 were recognized for the six months ended December 31, 2024 and 2023, respectively.

Foreign Currency

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 six months ended December 31, 2024 or 2023.

Segment Reporting

The Company operates and measures its results in one operating segment and therefore has one reportable segment: the development, manufacture and sales of high-tech security devices and related cellular communication services for the devices. The Company’s Chief Operating Decision Maker, (the President, Chief Operating Officer, and Chief Financial Officer) evaluates performance of the Company and makes decisions regarding the allocation of resources based on total Company results. The Company has presented required geographical data in Note 14.

Leases

The Company determines at contract inception if an arrangement is a lease, or contains a lease, of an identified asset for which the Company has the right to obtain substantially all of the economic benefits from its use and the right to direct its use. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, while lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. The implicit discount rate in the Company’s leases generally cannot readily be determined, and therefore the Company uses its incremental borrowing rate based on information available at lease commencement date in determining the present value of future payments. If the Company has options to renew or terminate certain leases, those options are included in the determination of lease term when it is reasonably certain that the Company will exercise such options. The Company does not separate lease and non-lease components in determining ROU assets or lease liabilities for real estate leases. Additionally, the Company does not recognize ROU assets or lease liabilities for leases with original terms or renewals of one year or less. See Note 13 – Commitments and Contingencies; Leases for additional accounting policies and disclosures.

Legal and Other Contingencies

The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The update expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. It further requires disclosure of the amount and description of its composition for other segment items, and interim disclosures of both a reportable segment’s profit or loss and assets. The guidance requires disclosure of the title and position of the chief operating decision maker and how reported measures of segment profit or loss are used to assess performance and allocate resources. This pronouncement is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

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In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

The Company is evaluating other pronouncements recently issued but not yet adopted. The adoption of these pronouncements is not expected to have a material impact on our consolidated financial statements.

NOTE 2 – Revenue Recognition and Contracts with Customers

The Company is engaged in the development, manufacture, and distribution of security products, encompassing access control systems, door security products, intrusion and fire alarm systems, alarm communication services, and video surveillance products for commercial and residential use. The Company also provides wireless communication service for intrusion and fire alarm systems on a monthly basis. These products 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 December 31, 2024 and June 30, 2024, the Company included refund liabilities of approximately $4,814,000 and $6,295,000, respectively, in current liabilities. As of December 31, 2024 and June 30, 2024, the Company included return-related assets of approximately $1,263,000 and $1,586,000, respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 4% and 6% for the three months ended December 31, 2024 and 2023, respectively. As a percentage of gross sales, returns, rebates and allowances were 7% and 5% for the six months ended December 31, 2024 and 2023, respectively.

The Company disaggregates revenue from contracts with customers into major product lines. 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 December 31,				Six months ended December 31,
	2024		2023		2024		2023
Major Product Lines:
Intrusion and access alarm products	$	7,556	$	11,258	$	16,619	$	20,554
Door locking devices		14,169		17,749		28,023		32,844
Services		21,208		18,540		42,294		35,825
Total Revenues	$	42,933	$	47,547	$	86,936	$	89,223

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 11% and 13% as of December 31, 2024. These same two customers had an accounts receivable balance that comprised of 17% and 12% as of June 30, 2024. The Company had one additional customer with an accounts receivable balance that comprised of 13% as of December 31, 2024. Sales to any of these customers did not exceed 10% of net sales during the three or six months ended December 31, 2024 and 2023, respectively.

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NOTE 4 – Fair Value Measurement

Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. The Company is required to classify certain assets and liabilities based on the following fair value hierarchy:

● Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

● Level 2: Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

● Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.

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

	Level 1	Level 2	Level 3	Total
December 31, 2024
Cash equivalents
U.S. Treasury Securities	2,525,000	-	-	2,525,000
Money market funds	72,095,000	-	-	72,095,000
Total	74,620,000	-	-	74,620,000
Marketable securities
U.S. Treasury Securities	7,528,000	-	-	7,528,000
Mutual funds	5,648,000	-	-	5,648,000
Total	13,176,000	-	-	13,176,000
June 30, 2024
Cash equivalents
Certificate of deposits	5,402,000	-	-	5,402,000
Money market funds	41,116,000	-	-	41,116,000
Total	46,518,000	-	-	46,518,000
Short-term investments
Certificate of deposits	26,980,000	-	-	26,980,000
Total	26,980,000	-	-	26,980,000
Marketable securities
Mutual funds	5,398,000	-	-	5,398,000
Total	5,398,000	-	-	5,398,000

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

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

NOTE 5 – Marketable Securities

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

	December 31, 2024		June 30, 2024
Equity Securities	$	5,648	$	5,398
Debt Securities (available-for-sale)		7,528		—
	$	13,176	$	5,398

Investments in Equity Securities

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

	Three months ended December 31,				Six months ended December 31,
	2024		2023		2024		2023
Net gains recognized during the period on equity securities	$	57	$	75	$	168	$	117
Less: Net income (losses) recognized during the period on equity securities sold during the period		—		—		—		—
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date		(76)		128		81		71
	$	(19)	$	203	$	249	$	188

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

	December 31, 2024						June 30, 2024
					Unrealized						Unrealized
	Cost		Fair Value		Gain (Loss)		Cost		Fair Value		Gain (Loss)
Mutual Funds	$	5,899		5,648	$	(251)	$	5,857	$	5,398	$	(459)

Investment income is recognized when earned and consists principally of dividend income from fixed income mutual funds. Realized gains and losses on sales of investments are determined on a specific identification basis.

Investments in Debt Securities

The Company had no investment in debt securities at June 30, 2024. The following tables summarize the Company’s investments in debt securities at December 31, 2024 (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
U.S. Treasury Securities	$	9,976	$	53	$	—	$	10,029
Included in Cash and cash equivalents	$	2,501	$	-	$	—	$	2,501
Included in Marketable securities	$	7,475	$	53	$	—	$	7,528

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

NOTE 6 - Inventories

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):

	December 31,		June 30,
	2024		2024
Component parts	$	32,203	$	32,283
Work-in-process		7,607		7,509
Finished product		9,864		10,121
	$	49,674	$	49,913
Classification of inventories:
Current	$	37,634	$	34,804
Non-current		12,040		15,109
	$	49,674	$	49,913

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

NOTE 7 – Property, Plant, and Equipment

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

	December 31, 2024		June 30, 2024		Useful Life in Years
Land	$	904	$	904	N/A
Buildings		8,911		8,911	30 to 40
Molds and dies		7,548		7,539	3 to 5
Furniture and fixtures		3,702		3,613	5 to 10
Machinery and equipment		30,854		29,761	3 to 10
Building improvements		3,657		3,129	Shorter of the lease term or life of asset
		55,576		53,857
Less: accumulated depreciation and amortization		(45,661)		(44,780)
	$	9,915	$	9,077

Depreciation and amortization expense on property, plant, and equipment was approximately $506,000 and $467,000 for the three months ended December 31, 2024 and 2023, respectively. Depreciation and amortization expense on property, plant, and equipment was approximately $976,000 and $920,000 for the six months ended December 31, 2024 and 2023, respectively.

NOTE 8 - Income Taxes

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.

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

The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense and accrued income taxes. As of December 31, 2024, the Company had accrued interest totaling $229,000, as well as $754,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period. For the six months ended December 31, 2024, additional tax liability and interest expense were accrued for in the amount of $54,000 and $35,000, respectively.

The company has FIN 48 liabilities accrued due to historic Section 956 positions. These positions would not be reversed until the earlier of when the statute of limitation lapses noting that Section 956 adjustments are subject to a 6-year period under the constructive dividend rules, or the position is effectively settled via an IRS audit. Based on the tax returns filed in April of 2019, the six year statute of limitations would expire during Q4 of June 30, 2025.

We file a consolidated U.S. income tax return and tax returns in certain state and local and foreign jurisdictions. As of December 31, 2024, fiscal years 2021 and forward are still open for examination, in addition to fiscal year 2018, which is subject to a six year statute of limitations. In addition, the Company has a wholly-owned subsidiary which operates in a Free Zone in the Dominican Republic (“DR”) and is exempt from DR income tax.

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.

NOTE 9 - 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. As of December 31, 2024 and June 30, 2024, the Company has no outstanding debt.

The Amended Agreement provides for a SOFR-based interest rate option of SOFR plus 1.2645% to 1.3645%, depending on the Fixed Charge Coverage Ratio, which is to be measured and adjusted quarterly, a prime rate-based interest rate option of the prime rate, as defined in the Amended Agreement, and other terms and conditions as more fully described in the Amended Agreement. 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 Fiscal 2020, the Company received the proceeds of promissory notes (the "PPP Loan Agreement"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender). The Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act. 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, and during Fiscal 2022, the PPP Loans were forgiven, in their entirety, in accordance with guidelines set forth in the PPP Loan Agreement. In accordance with the CARES Act, the federal government reserves the right to audit any forgiveness of PPP Loan’s for a period of six years from the date of forgiveness, and it has indicated that it intends to audit loans that were in excess of $2 million.

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NOTE 10 - 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 December 31, 2024 and 2023, the Company recorded non-cash compensation expense of $386,000 ($0.01 per basic and diluted share) and $335,000 ($0.01 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income. For the six months ended December 31, 2024 and 2023, the Company recorded non-cash compensation expense of $757,000 ($0.02 per basic and diluted share) and $610,000 ($0.01 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

2012 Employee Stock Option Plan

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

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

	2024				2023
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		363,036	$	21.47		521,580	$	19.37
Forfeited/Lapsed		—		—		(11,000)	$	3.15
Exercised		(2,000)	$	26.94		(31,600)	$	22.13
Outstanding, end of period		361,036	$	21.44		478,980	$	19.56
Exercisable, end of period		265,660	$	21.36		289,728	$	18.58
Weighted average fair value at grant date of options granted		n/a				n/a
Total intrinsic value of options exercised	$	35,000			$	375,000
Total intrinsic value of options outstanding	$	5,100,000			$	7,034,000
Total intrinsic value of options exercisable	$	3,772,000			$	4,539,000

A total of 2,000 stock options were exercised during both the six months ended December 31, 2024. There were no stock options exercised during the three months ended December 31, 2024.  $54,000 cash was received from the option exercises during the six months ended December 31, 2024. The actual tax benefit realized for the tax deductions from option exercises during both the three and six months ended December 31, 2024 was $0. A total of 31,600 stock options were exercised during both the three and six months ended December 31, 2023. The 31,600 options that were exercised during the three and six months ended December 31, 2023 were settled by the Company withholding 20,567 from the shares issuable on exercise of the options. The withheld shares of common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. No cash was received from the option exercises during both the three and six months ended December 31, 2023. The actual tax benefit realized for the tax deductions from option exercises during both the three and six months ended December 31, 2023 was $52,000.

21

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at December 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	361,036	6.65	$	21.44	265,660	$	21.36
	361,036	6.65	$	21.44	265,660	$	21.36

As of December 31, 2024, there was $677,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan. 67,600 and 76,700 options vested during the three and six months ended December 31, 2024. The total grant date fair value of the options vesting during the three and six months ended December 31, 2024 was $670,000 and $782,000, respectively. 74,000 and 84,700 options vested during the three and six months ended December 31, 2023. The total grant date fair value of the options vesting during the three and six months ended December 31, 2023 was $724,000 and $849,000, respectively.

2012 Non-Employee Stock Option Plan

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

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

	2024				2023
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		20,400	$	14.39		20,400	$	14.39
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		—		—
Outstanding, end of period		20,400	$	14.39		20,400	$	14.39
Exercisable, end of period		18,480	$	13.50		15,840	$	12.44
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	$	432,000			$	405,000
Total intrinsic value of options exercisable	$	408,000			$	345,000

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

22

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at December 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	5.14	$	14.39	18,480	$	13.50
	20,400	5.14	$	14.39	18,480	$	13.50

As of December 31, 2024, there was $15,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan. 1,920 options vested during both the three and six months ended December 31, 2024 and 2023, respectively. The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 was $19,000.

2018 Non-Employee Stock Option Plan

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

There were no options granted during the six months ended December 31, 2024 and 2023. No options may be granted under this plan after December 2028.

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

	2024				2023
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		68,900	$	14.54		75,000	$	14.83
Granted		—		—		—		—
Forfeited/Lapsed		(4,000)	$	22.93		—		—
Exercised		—				(1,600)	$	15.27
Outstanding, end of period		64,900	$	14.02		73,400	$	14.82
Exercisable, end of period		62,200	$	13.63		58,620	$	13.81
Weighted average fair value at grant date of options granted		n/a				n/a
Total intrinsic value of options exercised		n/a			$	28,000
Total intrinsic value of options outstanding	$	1,398,000			$	1,426,000
Total intrinsic value of options exercisable	$	1,364,000			$	1,198,000

No stock options were exercised during both the three and six months ended December 31, 2024. No cash was received from option exercises during both the three and six months ended December 31, 2024, and the actual tax benefit realized for the tax deductions from option exercises was $0. A total of 1,600 stock options were exercised during the three and six months ended December 31, 2023. The 1,600 options that were exercised during the three and six months ended December 31, 2023 were settled by the Company withholding 740 from the shares issuable on exercise of the options. The withheld shares of Common Stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. No cash was received from the option exercises during the three and six months ended December 31, 2023. The actual tax benefit realized for the tax deductions from option exercises during the three and six months ended December 31, 2023 was $6,000 each period.

23

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at December 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	64,900	5.10	$	14.02	62,200	$	13.63
	64,900	5.10	$	14.02	62,200	$	13.63

As of December 31, 2024, there was $20,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan. 2,700 options vested during both the three and six months ended December 31, 2024. The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 was $27,000. 9,500 options vested during both the three and six months ended December 31, 2023, respectively. The total grant date fair value of the options vesting during both the three and six months ended December 31, 2023 under this plan was $89,000 for both periods.

2020 Non-Employee Stock Option Plan

In May 2020, the stockholders approved the 2020 Non-Employee Stock Option Plan (the “2020 Non-Employee Plan”). This plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 100,000 shares of the Company's common stock to be acquired by the holders of such awards. 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 December 31, 2024, 51,900 stock options were outstanding, 37,520 stock options were exercisable and 45,100 stock options were available for grant under this plan.

No options were granted during the six months ended December 31, 2024 and 2023, respectively. No options may be granted under this plan after May 2030.

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

	2024				2023
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		56,900	$	23.35		56,900	$	23.35
Granted		—		—		—		—
Forfeited/Lapsed		(2,000)	$	26.94		—		—
Exercised		(3,000)	$	26.94		—		—
Outstanding, end of period		51,900	$	23.00		56,900	$	23.35
Exercisable, end of period		37,520	$	21.55		29,140	$	21.41
Weighted average fair value at grant date of options granted		n/a				n/a
Total intrinsic value of options exercised	$	32,000				n/a
Total intrinsic value of options outstanding	$	652,000			$	620,000
Total intrinsic value of options exercisable	$	525,000			$	374,000

A total of 0 and 3,000 stock options were exercised during the three and six months ended December 31, 2024, respectively. 3,000 stock options exercised during the six months ended December 31, 2024 were settled by the company withholding 2,151 shares from the shares issuable on exercise of the options. The withheld shares of common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid. The actual tax benefit realized for the tax deductions from option exercises during the three and six months ended December 31, 2024 was $0 and $7,000, respectively. No stock options were exercised during both the three and six months ended December 31, 2023. No cash was received from option exercises during either of the three and six months ended December 31, 2023 and the actual tax benefit realized for the tax deductions from option exercises was $0 for both periods.

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The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at December 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	51,900	7.03	$	23.00	37,520	$	21.55
	51,900	7.03	$	23.00	37,520	$	21.55

As of December 31, 2024, there was $137,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan. 3,380 and 10,380 options vested during both of the three and six months ended December 31, 2024 and 2023, respectively. The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 was $34,000 and $113,000, respectively. 

2022 Employee Stock Option Plan

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

No stock options were granted during the six months ended December 31, 2024. There were 10,000 options granted during the three and six months ended December 31, 2023. No options may be granted under this plan after December 2032. 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	4.66	%
Expected lives	n/a	5.76 Years
Expected volatility	n/a	48.71	%
Expected dividend yields	n/a	1.48	%

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

	2024				2023
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		130,000	$	41.38		5,000	$	40.01
Granted		—		—		10,000	$	21.60
Forfeited/Lapsed		—		—		(5,000)	$	40.01
Exercised		—		—		—		—
Outstanding, end of period		130,000	$	41.38		10,000	$	21.60
Exercisable, end of period		28,000	$	39.96		2,000	$	21.60
Weighted average fair value at grant date of options granted		n/a			$	9.75
Total intrinsic value of options exercised		n/a				n/a
Total intrinsic value of options outstanding	$	140,000			$	127,000
Total intrinsic value of options exercisable	$	56,000			$	25,300

25

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

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

	Options outstanding				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 - $49.39	130,000	9.30	$	41.38	28,000	$	39.96
	130,000	9.30	$	41.38	28,000	$	39.96

As of December 31, 2024, there was $1,816,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2022 Employee Plan. 2,000 options vested during both the three and six months ended December 31, 2024 and 2023, respectively. The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 under this plan was $19,500, respectively.

NOTE 11 – Stockholders’ Equity Transactions

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

Dividend Declaration Date	Stockholders of Record Date	Dividend Payable Date	Per Share Cash Dividend Amount
November 1, 2024	December 12, 2024	January 3, 2025	$0.125
August 22, 2024	September 12, 2024	October 3, 2024	$0.125
May 2, 2024	June 3, 2024	June 24, 2024	$ 0.10
February 1, 2024	March 1, 2024	March 22, 2024	$ 0.10
November 2, 2023	December 1, 2023	December 22, 2023	$ 0.08
August 18, 2023	September 1, 2023	September 22, 2023	$ 0.08

On September 16, 2014 the Company’s board of directors authorized the repurchase of up to 2 million of the approximately 38.8 million shares of the Company’s common stock then outstanding. Such repurchases may be made from time to time in the open market or in privately negotiated transactions subject to market conditions and the market price of the common stock. In December of Fiscal 2018, the board of directors authorized the repurchase of up to an additional 1 million shares. In November of Fiscal 2025, the board authorized the repurchase of up to an additional 1 million shares. During the first quarter of the fiscal year ended June 30, 2025, the Company repurchased 193,252 shares of its outstanding common stock at a weighted average price of $37.67. During the second quarter of the fiscal year ended June 30, 2025, the Company repurchased 282,647 shares of its outstanding common stock at a weighted average price of $37.95. Shares repurchased through the six months ended December 31, 2024, are included in the Company’s Treasury Stock as of December 31, 2024. The Company currently has available 1,104,741 shares that can be repurchased under this authorization.

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

			Total Number of	Maximum
	Total		Shares Purchased as	Number of Shares
	Number of	Average	Part of Publicly	that May Yet Be
	Shares	Price Paid	Announced Plans or	Purchased Under
Period	Purchased	per Share	Programs	Plans or Programs
September 10, 2024 - September 19, 2024	193,252	$ 37.67	193,252	1,104,741
November 7, 2024 - December 19, 2024	282,647	$ 37.95	282,647	1,104,741
Total for the 6 months ended December 31, 2024	475,899	$ 37.84	475,899	1,104,741

26

During the six months ended December 31, 2024, certain employees and directors exercised stock options under the Company's 2012 Employee and 2020 Non-Employee Stock Option Plans totaling 5,000 shares. Of the 5,000 shares exercised, 3,000 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees. The number of shares withheld by the Company was 2,151 and was based upon the aggregate fair market value on the date of exercise equal to the purchase price being paid. There were no stock option exercises from certain employees and directors during the three months ended December 31, 2024.

NOTE 12 - 401(k) Plan

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 $69,000 and $58,000 for the three months ended December 31, 2024 and 2023, respectively. Company contributions to this plan are discretionary and totaled $138,000 and $119,000 for the six months ended December 31, 2024 and 2023, respectively.

NOTE 13 - Commitments and Contingencies

Leases

Our lease obligation consists of a 99-year lease, entered into by one of the Company’s foreign subsidiaries, for approximately four acres of land in the Dominican Republic on which the Company’s principal production facility is located. The lease, which commenced on April 26, 1993 and expires in 2092, initially had an annual base rent of approximately $235,000 plus $53,000 in annual service charges. On September 14, 2022, a lease modification was executed which provides for an annual base rent of $235,000 plus $105,000 in annual service charges. The service charges increase 2% annually over the remaining life of the lease. The modification resulted in a remeasurement of the operating lease asset and liability and the effect was a reduction to the asset and liability of $1.3 million.

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

For the three months ended December 31, 2024 and 2023 cash payments against operating lease liabilities totaled $115,000 and $86,000, respectively. For the six months ended December 31, 2024 and 2023 cash payments against operating lease liabilities totaled $172,000 and $171,000, respectively.

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

Weighted-average remaining lease term	67 Years
Weighted-average discount rate	6.25	%

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

Year Ending June 30,	Amount
2025	$	172
2026		346
2027		349
2028		351
2029		353
Thereafter		29,665
Total future minimum lease payments	$	31,236
Less: Imputed interest		25,901
Total	$	5,335

Operating lease expense totaled approximately $144,000 and $129,000 for the three months ended December 31, 2024 and 2023, respectively. Operating lease expense totaled approximately $239,000 and $253,000 for the six months ended December 31, 2024 and 2023, respectively.

27

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.

On November 26, 2024, a putative derivative lawsuit captioned Minzer v. Soloway, et al., Case No. 2024-1218, was filed in the Court of Chancery in the State of Delaware against the Company’s Chairman and Chief Executive Officer, Chief Financial Officer, and certain current and former directors.  The Company is a “Nominal Defendant” in the lawsuit.  The complaint alleges, among other things, that the defendants breached their fiduciary duties and aided and abetted breach of fiduciary duties by allowing the Company to remain with ineffective internal controls over financial reporting and inventory and by allowing for the dissemination of false and misleading financial information in public filings.  The complaint also brings breach of fiduciary duty and unjust enrichment claims in connection with stock sales by the Company’s Chairman and Chief Executive Officer and its Chief Financial Officer and seeks indemnity and contribution.  The Company’s status as a “Nominal Defendant” in the action reflects the fact that the lawsuit is maintained by the named plaintiff on behalf of the Company and that the plaintiff seeks damages on the Company’s behalf. Defendants’ motion to dismiss and/or stay the case is due on February 28, 2025.

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

The Company is obligated under three employment agreements and one severance agreement with executive officers of the Company. The employment agreements are with the Company’s CEO, Senior Vice President of Finance and Chief Accounting Officer (“SVP of Finance”) and the Senior Vice President of Engineering and Chief Technology Officer (“the SVP of Engineering”) and the severance agreement is with the Company’s President, Chief Operating Officer and Chief Financial Officer (“CFO”).

The employment agreement with the CEO provides for an annual salary of $971,000, 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 Finance expires in June 2025 and provides for an annual salary of $350,000. Upon the anniversary date, if terminated by the Company without cause, the SVP of Finance is entitled to severance of six months’ salary and continued company-sponsored health insurance for six months from the date of termination.

The employment agreement with the SVP of Engineering expires in August 2026 and provides for an annual salary of $458,000, and, if terminated by the Company without cause, severance of nine month’s salary and continued company-sponsored health insurance for six months from the date of termination.

28

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

NOTE 14 – Geographical Data

The Company is engaged in one major line of business: the development, manufacture, and distribution of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products for commercial and residential use. The Company also provides wireless communication service for intrusion and fire alarm systems. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are primarily shipped from the United States. The Company has customers worldwide with major concentrations in North America.

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

	Three months ended December 31,				Six months ended December 31,
	2024		2023		2024		2023
Sales to external customers (1):
Domestic	$	42,679	$	47,291	$	86,367	$	88,661
Foreign		254		256		569		562
Total Net Sales	$	42,933	$	47,547	$	86,936	$	89,223

	December 31, 2024		June 30, 2024
Identifiable assets:
United States	$	160,536	$	164,365
Dominican Republic (2)		42,148		43,387
Total Identifiable Assets	$	202,684	$	207,752

(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 (December 31, 2024 = $31,864; June 30, 2024 = $33,584), operating lease right of use (December 31, 2024 = $5,335; June 30, 2024 = $5,487) and fixed assets (December 31, 2024 = $4,312; June 30, 2024 = $3,623) located at the Company’s principal manufacturing facility in the Dominican Republic.

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

29

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q and the documents we incorporate by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements, other than statements of historical fact, included or incorporated in this prospectus regarding our strategy, future operations, clinical trials, collaborations, intellectual property, cash resources, financial position, future revenues, projected costs, prospects, plans, and objectives of management are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “plans,” “expects,” “intends,” “may,” “could,” “should,” “potential,” “likely,” “projects,” “continue,” “will,” “schedule,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee that we will achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may be beyond our control, and which may cause our actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. There are a number of important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. See “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2024 for more information. These factors and the other cautionary statements made in this prospectus and the documents we incorporate by reference should be read as being applicable to all related forward-looking statements whenever they appear in this prospectus and the documents we incorporate by reference. In addition, any forward-looking statements represent our estimates only as of the date that this prospectus is filed with the SEC and should not be relied upon as representing our estimates as of any subsequent date. We do not assume any obligation to update any forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.

Overview

Napco is a leading manufacturer and designer of high-tech electronic security devices, wireless communication services for intrusion and fire alarm systems as well as a 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, used for commercial, residential, institutional, industrial and governmental applications. We have experienced significant growth in recent years, primarily driven by our recurring service revenues from wireless communication services for intrusion and fire alarm systems.

NAPCO has established a heritage and proven record in the professional security community for reliably delivering both advanced technology and high-quality security solutions. We are dedicated to developing innovative technology and producing the next generation of reliable security solutions that utilize remote communications and wireless networks.

Highlights from the three and six months ended December 31, 2024 compared with the comparable periods in fiscal 2024 included:

● Net sales decreased 9.7% to $42.9 million and 2.6% to $86.9 million, for the three and six months.

● Recurring service revenue (“RSR”) increased 14.4% and 18.1% to $21.2 and $42.3 million for the three and six months.

● Total gross profit margin increased from 52.6% to 57.0% and 53.2% to 56.5% for the three and six months.

● Gross margin for RSR increased to 91.3% and 91.2% as compared to 89.9% and 89.8% for the three and six months.

● Generated $25.5 million in cash flows from operations for the six months ended December 31, 2024 as compared to $18.7 in fiscal 2024.

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Industry Trends

Our industry is dynamic and highly competitive, with frequent changes in both technologies and business models. Each industry shift is an opportunity to conceive new products, new technologies, or new ideas that can further transform the industry and our business. Napco continually innovates through a broad range of research and development activities that seek to identify and address the changing demands of customers, industry trends, and competitive forces.

Economic Conditions and Other Factors

We are subject to the effects of general macroeconomic and market conditions.

The markets for security devices and services are dynamic and highly competitive. Our competitors are continually developing new products and solutions for consumers and businesses. We must continue to evolve and adapt to respond to customer and user preferences over an extended time in pace with this changing environment.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are fully described in Note 1 to the Company’s consolidated financial statements included in its 2024 Annual Report on Form 10-K.

Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires a high degree of judgment, either in the application and interpretation of existing accounting literature or in the development of estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. We continuously evaluate our estimates and judgments based on historical experience, as well as other factors that we believe to be reasonable under the circumstances. The results of our evaluation form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. 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 intangible assets, share based compensation and income taxes. These estimates may change in the future if underlying assumptions or factors change, and actual results may differ from these estimates.

Results of Operations

	Three months ended December 31,								Six months ended December 31,
	(dollars in thousands)								(dollars in thousands)
							% Increase/								% Increase/
	2024			2023			(decrease)		2024			2023			(decrease)
Net sales: equipment revenues	$	21,725		$	29,007		(25.1)	%	$	44,642		$	53,398		(16.4)	%
service revenues		21,208			18,540		14.4	%		42,294			35,825		18.1	%
Total net sales		42,933			47,547		(9.7)	%		86,936			89,223		(2.6)	%
Gross Profit: equipment		5,119			8,351		(38.7)	%		10,526			15,245		(31.0)	%
services		19,370			16,661		16.3	%		38,579			32,180		19.9	%
Total gross profit		24,489			25,012		(2.1)	%		49,105			47,425		3.5	%
Gross profit as a % of net sales:		57.0	%		52.6	%	8.4	%		56.5	%		53.2	%	6.2	%
equipment		23.6	%		28.8	%	(18.1)	%		23.6	%		28.5	%	(17.2)	%
services		91.3	%		89.9	%	1.6	%		91.2	%		89.8	%	1.6	%
Research and development		3,107			2,542		22.2	%		6,164			4,979		23.8	%
Selling, general and administrative		10,211			8,665		17.8	%		19,914			17,086		16.6	%
Selling, general and administrative as a percentage of net sales		23.8	%		18.2	%	30.8	%		22.9	%		19.1	%	19.9	%
Operating income		11,171			13,805		(19.1)	%		23,027			25,360		(9.2)	%
Interest and other income, net		921			729		26.3	%		2,065			1,169		76.6	%
Provision for income taxes		1,625			1,924		(15.5)	%		3,440			3,441		(0.0)	%
Net income		10,467			12,610		(17.0)	%		21,652			23,088		(6.2)	%

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Net Sales

Three Months Ended December 31, 2024:

Net sales for the three months ended December 31, 2024 decreased $4,614,000 to $42,933,000 as compared to $47,547,000 in the comparable period. Net equipment revenues for the three months ended December 31, 2024, decreased $7,282,000 to $21,725,000 as compared to $29,007,000 in the comparable period. The decrease in net equipment sales was primarily due to decreases in intrusion and access alarm products of $3,702,000 and door locking devices of $3,580,000. The reduction is attributable to reduced sales by two of the Company’s larger distributors, one of which reduced all purchases to reduce existing inventory levels, and a second distributor who was completing a management restructuring which resulted in reduced purchases. In addition, the timing of project work has impacted sales of custom door locking devices.

Net service revenues for the three months ended December 31, 2024, increased $2,668,000 to $21,208,000 as compared to $18,540,000 in the Comparable period. The increase in net service revenues was due to an increase in the number of our cellular (radio) communication devices put into service and activated.

Six Months Ended December 31, 2024:

Net sales for the six months ended December 31, 2024 decreased $2,287,000 to $86,936,000 as compared to $89,223,000 in the comparable period. Net equipment revenues for the six months ended December 31, 2024, decreased $8,756,000 to $44,642,000 as compared to $53,398,000 in the comparable period. The decrease in net equipment sales was primarily due to decreases in intrusion and access alarm products of $3,936,000 and door locking devices of $4,821,000. The reduction is attributable to reduced sales by two of the Company’s larger distributors, one of which reduced all purchases to reduce existing inventory levels, and a second distributor who was completing a management restructuring which resulted in reduced purchases. In addition, the timing of project work has impacted sales of custom door locking devices.

Net service revenues for the six months ended December 31, 2024, increased $6,469,000 to $42,294,000 as compared to $35,825,000 in the comparable period. The increase in net service revenues was due to an increase in the number of our cellular (radio) communication devices put into service and activated.

Gross Profit

Three Months Ended December 31, 2024

Overall gross profit for the three months ended December 31, 2024 decreased $523,000 to $24,489,000, or 57.0% of net sales, as compared to $25,012,000, or 52.6% of net sales, for the comparable period.

Gross profit from equipment sales was $5,119,000, or 23.6% of equipment sales, as compared to $8,351,000, or 28.8% of net equipment sales, for the comparable period. The decrease in gross profit percentage from equipment sales is primarily a result of product mix and lower absorption of fixed overhead costs. In addition, door locking products historically result in higher margin percentages as compared to access alarm products and specifically cellular (radio) communicator devices, which also result in future increases in recurring communication services revenue.

Gross profit on service revenues was $19,370,000, or 91.3% of net service revenues, as compared to $16,661,000, or 89.9% of net service revenues, for the comparable period a year ago. The increase in gross profit percentage was a result of renegotiation of royalty arrangements and volume rebates received from carriers.

Six Months Ended December 31, 2024:

Overall gross profit for the six months ended December 31, 2024 increased $1,680,000 to $49,105,000, or 56.5% of net sales, as compared to $47,425,000, or 53.2% of net sales, for the comparable period.

Gross profit from equipment sales was $10,526,000, or 23.6% of equipment sales, as compared to $15,245,000, or 28.5% of equipment sales, for the comparable period. The decrease in gross profit percentage from equipment sales is primarily a result of

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product mix and lower absorption of fixed overhead costs. In addition, door locking products historically result in higher margin percentages as compared to access alarm products and specifically cellular (radio) communicator devices, which also result in future increases in recurring alarm communication services revenue.

Gross profit on service revenues was $38,579,000, or 91.2% of net service revenues, as compared to $32,180,000, or 89.8% of net service revenues, for the comparable period a year ago. The increase in gross profit percentage was a result of renegotiation of royalty arrangements and volume rebates received from carriers.

Research and Development

Research and development expenses for the three months ended December 31, 2024 increased by $565,000 to $3,107,000, or 7.2% of net sales, as compared to $2,542,000, or 5.3% of net sales, for the comparable period. The increase in research and development expenses was primarily a result of annual compensation increases and hiring of additional resources.

Research and development expenses for the six months ended December 31, 2024 increased by $1,185,000 to $6,164,000, or 7.1% of net sales, as compared to $4,979,000, or 5.6% of net sales, for the comparable period. The increase in research and development expenses was primarily a result of annual compensation increases and hiring of additional resources.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses for the three months ended December 31, 2024 increased by $1,546,000 to $10,211,000 as compared to $8,665,000 for the comparable period. The increase in SG&A expenses was primarily attributable to compensation increases and hiring of additional staff, increases in advertising and insurance costs, partially offset by decreases in professional fees.

Selling, general and administrative (“SG&A”) expenses for the six months ended December 31, 2024 increased by $2,828,000 to $19,914,000 as compared to $17,086,000 for the comparable period. The increase in SG&A expenses was primarily attributable to compensation increases and hiring of additional staff, increases in advertising and insurance costs, partially offset by decreases in professional fees.

Other Income (Expense)

Interest and other income, net for the three months ended December 31, 2024 increased by $192,000 to income of $921,000 as compared to income of $729,000 for the comparable period. The increase in income was primarily due to an increase in interest income on short-term investments as a result of higher interest rates and larger deposit balances.

Interest and other income, net for the six months ended December 31, 2024 increased by $896,000 to income of $2,065,000 as compared to income of $1,169,000 for the comparable period. The increase in income was primarily due to an increase in interest income on short-term investments as a result of higher interest rates and larger deposit balances.

Income Taxes

The Company’s provision for income taxes for the three months ended December 31, 2024 decreased by $299,000 to $1,625,000 as compared to $1,924,000 for the same period a year ago. The decrease in the provision for income taxes for the three months was primarily due to lower taxable income in the U.S. The Company’s effective rate for income tax was 13.4% and 13.2% for the three months ended December 31, 2024 and 2023 respectively. The Company’s effective tax rate for the three months ended December 31, 2024 increased as a result of higher non-deductible stock based compensation.

The Company’s provision for income taxes for the six months ended December 31, 2024 of $3,440,000 remained consistent as compared to $3,441,000 for the same period a year ago. The Company’s effective rate for income tax was 13.7% and 13.0% for the six months ended December 31, 2024 and 2023 respectively. The Company’s effective tax rate for the six months ended December 31, 2024 increased as a result of higher non-deductible stock based compensation.

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Liquidity and Capital Resources

Our cash and cash equivalents increased by $20,678,000 during the six months ended December 31, 2024, and our cash and cash equivalents and short-term investments as of December 31, 2024 was $99,195,000. We believe that our projected cash flow from operations, combined with our cash and short-term investments, will be sufficient to meet our projected working capital requirements, contractual obligations, and other cash flow needs for the next twelve months.

As of December 31, 2024, the Company’s available revolving credit line was $20,000,000, which expires in February 2029, none of which has been drawn. The Company has no outstanding debt.

A summary of the cash flow activity for the six months ended December 31, 2024 and 2023 is as follows:

Cash Flows from Operating Activities

Net cash provided by operating activities was $25.5 million for the six months ended December 31, 2024 and was due to net income of $21.7 million and increase in cash flow from changes in operating assets and liabilities of $4.0 million offset by adjustments for non-cash items of $.2 million. The changes in operating assets and liabilities were largely attributable to decreases in accounts receivables, inventories and prepaid expenses partially offset by increases in income tax receivable and decreases in accounts payable and accrued expenses.

Net cash provided by operating activities was $18.7 million for the six months ended December 31, 2023 and was due to net income of $23.1 million and adjustments for non-cash items of $.9 million, partially offset by a decrease in cash flow from operating activities due to changes in operating assets and liabilities of $5.3 million. The changes in operating assets and liabilities was largely attributable to a decrease in accounts receivable and inventories partially offset by an increase in and accounts payable and accrued expenses.

Cash Flows from Investing Activities

The net cash provided by investing activities of $17.7 million during the six months ended December 31, 2024 was primarily attributable to the redemption of other investments ($27.3 million) partially offset by expenditures used for capital expenditures ($1.8 million) and purchase of investments ($7.6 million). The cash used in investing activities of $1.4 million during the six months ended December 31, 2023, was primarily attributable to expenditures used for capital expenditures and purchase of investments. The change in use of cash for investing activities from 2023 to 2024 was a increase in the redemption of investments in term deposits (other investments).

Cash Flows from Financing Activities

The cash used in financing activities of $22.6 million for the six months ended December 31, 2024 was primarily related to the purchase of treasury shares. The cash used in financing activities of $5.9 million for the six months ended December 31, 2023 was primarily related to the payment of stockholder dividends.

Contractual Obligations and Commitments

As of December 31, 2024, the Company had no material commitments for capital expenditures or inventory purchases other than purchase orders issued in the normal course of business. On April 26, 1993, the Company's foreign subsidiary entered into a 99-year land lease of approximately 4 acres of land in the Dominican Republic, on which the Company’s principle manufacturing facility is located, at an annual base rent of approximately $235,000 and $105,000 in annual service charges. The service charges increase 2% annually over the remaining life of the lease.

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates primarily relates to our investment portfolio. We internally manage our investment portfolios considering investment opportunities and risks, tax consequences, and overall financing strategies. Our investment

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portfolio includes equity securities and U.S. treasury securities with a total fair value of approximately $15.7 million at December 31, 2024. These securities are subject to interest rate risk and, based on our investment portfolio at December 31, 2024, a 100 basis point increase in interest rates would result in a decrease in the fair value of the portfolio of approximately $314,000. While an increase in interest rates may reduce the fair value of the investment portfolio, we will not realize the losses in the Consolidated Statements of Income unless the individual fixed-income securities are sold prior to recovery or the loss is determined to be other-than-temporary.

Currency Exchange Risk

We conduct business with non-U.S. customers, however all foreign sales transactions by the Company are denominated in U.S. dollars. As such, the Company has shifted foreign currency exposure onto its foreign customers.

If changes in exchange rates were to negatively effect these customers, the Company could have trouble collecting unsecured receivables, and or experience the cancellation of existing orders or the loss of future orders. The foregoing could materially adversely affect the Company's business, financial condition and results of operations.

We are also exposed to foreign currency risk relative to expenses incurred in Dominican Pesos ("RD$"), the local currency of the Company's production facility in the Dominican Republic. The result of a 10% strengthening or weakening in the U.S. dollar to the RD$ would result in an annual increase or decrease in income from operations of approximately $889,000.

ITEM 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure as of December 31, 2024. Management applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. Based on that evaluation, management concluded that such disclosure controls and procedures were not effective, at the reasonable assurance level, as of December 31, 2024, as a result of the material weaknesses in internal control over financial reporting discussed below.

Previously Identified Material Weaknesses in Internal Control over Financial Reporting

As disclosed in our Annual Report on Form 10-K for the year ended June 30, 2024, management identified a material weakness in internal control related to inventory costing. The material weakness was a result of ineffective review of information used in the inventory costing process.

Plans for Remediation of Material Weakness

Management, with the oversight of the audit committee of our Board of Directors, has designed and implemented reconciliation procedures to determine that the information used in the costing of inventory is complete and accurate. We expect the steps taken to date will remediate the underlying cause of this material weakness and will improve the effectiveness of our internal control over financial reporting.

The material weakness cannot be considered remediated until applicable controls have operated for a sufficient period of time that would allow management to test and conclude that these controls are operating effectively. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting in the areas affected by the material weakness, and the Company will continue to devote time, attention and financial resources to this effort.

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Changes in Internal Control over Financial Reporting

During the quarter ended December 31, 2024, there were no changes in the Company’s internal controls over financial reporting, except for the remediation efforts described above, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting except as described above.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

The information called for by this item is incorporated herein by reference to Note 13, Commitments and Contingencies, in the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors

Information regarding the Company’s Risk Factors are set forth in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 as well as the Form 424(b)(7) Prospectus, filed on March 7, 2024. There has been no material change in the risk factors previously disclosed in the Company’s Form 10-K and Form 424(b)(7) for the three and six months ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On September 16, 2014 the Company’s board of directors authorized the repurchase of up to 2 million of the approximately 38.8 million shares of the Company’s common stock then outstanding. Such repurchases may be made from time to time in the open market or in privately negotiated transactions subject to market conditions and the market price of the common stock. In December of Fiscal 2018, the board of directors authorized the repurchase of up to an additional 1 million shares. In November of Fiscal 2025, the board authorized the repurchase of up to an additional 1 million shares. During the first quarter of the fiscal year ended June 30, 2025, the Company repurchased 193,252 shares of its outstanding common stock at a weighted average price of $37.67. During the second quarter of the fiscal year ended June 30, 2025, the Company repurchased 282,647 shares of its outstanding common stock at a weighted average price of $37.95. Shares repurchased through the six months ended December 31, 2024, are included in the Company’s Treasury Stock as of December 31, 2024. The Company currently has available 1,104,741 shares that can be repurchased under this authorization.

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

			Total Number of	Maximum
	Total		Shares Purchased as	Number of Shares
	Number of	Average	Part of Publicly	that May Yet Be
	Shares	Price Paid	Announced Plans or	Purchased Under
Period	Purchased	per Share	Programs	Plans or Programs
September 10, 2024 - September 19, 2024	193,252	$ 37.67	193,252	1,104,741
November 7, 2024 - December 19, 2024	282,647	$ 37.95	282,647	1,104,741
Total for the 6 months ended December 31, 2024	475,899	$ 37.84	475,899	1,104,741

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None

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Item 6. Exhibits

31.1	Certification Pursuant to Rule 13a-14(a)/15d-14(a) of Richard L. Soloway, Chairman of the Board and President
31.2	Certification Pursuant to Rule 13a-14(a)/15d-14(a) of Kevin S. Buchel, Executive Vice President and Chief Financial Officer
32.1	Section 1350 Certifications
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

February 3, 2025

NAPCO SECURITY TECHNOLOGIES, INC.

(Registrant)

By:	/s/ RICHARD L. SOLOWAY
	Richard L. Soloway
	Chairman of the Board of Directors & Chief Executive Officer
	(Chief Executive Officer)
By:	/s/ KEVIN S. BUCHEL
	Kevin S. Buchel
	President, Chief Operating Officer & Chief Financial Officer
	(Principal Financial and Accounting Officer)

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