NAPCO Security Technologies(NSSC) - 2025 Q4 - Annual Report

FORM 10-K Filing Information Details NAPCO's Form 10-K filing, including registrant data, market value, and shares outstanding Registrant Information Official filing details for NAPCO's Form 10-K, covering incorporation, executive offices, Nasdaq listing, and filer status - Registrant: NAPCO SECURITY TECHNOLOGIES, INC.[2] - Trading Symbol: NSSC on The Nasdaq Stock Market LLP[2] - Filer Status: Large accelerated filer[3] Market Value and Shares Outstanding Reports aggregate market value of common equity held by non-affiliates and total shares outstanding as of specific dates Key Stock Information | Metric | Value | | :------------------------------------------------ | :------------------- | | Aggregate Market Value (non-affiliates, Dec 31, 2024) | $1,238,078,616 | | Closing Price (Dec 31, 2024) | $35.56 per share | | Outstanding Shares (Aug 22, 2025) | 35,656,421 shares | Documents Incorporated by Reference Outlines documents, specifically the proxy statement, incorporated by reference into the Form 10-K Proxy Statement Incorporation Portions of the 2025 Annual Meeting proxy statement will be incorporated into Part III of this Form 10-K - Portions of the 2025 Annual Meeting of Stockholders proxy statement will be incorporated by reference into Part III of this Form 10-K[8] Special Note Regarding Forward-Looking Statements Disclaimer on forward-looking statements, highlighting inherent risks and the company's non-obligation to update them Forward-Looking Statements Disclaimer Report contains forward-looking statements subject to risks and uncertainties, with no obligation for public updates - The Annual Report contains forward-looking statements about future events, strategy, operations, financial position, revenues, costs, prospects, plans, and objectives[9] - These statements are subject to risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially[9] - The company assumes no obligation to publicly update any forward-looking statements, except as required by law[10] Summary of Risks Affecting Our Performance Key risks include fluctuating results, intense competition, recurring revenue growth challenges, and distributor reliance - Expected fluctuation in quarterly and annual results could cause stock price volatility[13] - Highly competitive markets with larger competitors may hinder effective competition[13] - Inability to sustain growth of recurring service revenue, a major driver of revenue and profitability[13] - Reliance on distributors means adverse changes in relationships could affect financial performance[13] - Challenges in gaining widespread or timely market acceptance of new products and building brand[13] - Dependence on the effort and continuing service of senior management members[14] PART I Covers business operations, risk factors, unresolved staff comments, cybersecurity, properties, and legal proceedings Business Overview NAPCO is a leading manufacturer of electronic security devices and cellular communication services, focusing on mandatory systems - NAPCO is a leading manufacturer and designer of high-tech electronic security devices, cellular communication services for alarm systems, and school safety solutions[15] Financial Highlights (Fiscal Years Ended June 30) | Metric | FY2025 (Millions) | FY2024 (Millions) | FY2023 (Millions) | | :------------------- | :------------------ | :------------------ | :------------------ | | Net Sales | $181.6 | $188.8 | $170.0 | | Net Income | $43.4 | $49.8 | $27.1 | - Recurring communication services revenue increased 44% from fiscal 2023 to fiscal 2025, with a gross margin of approximately 91% in FY2025, representing 48% of total revenue[19] - The company's strategy focuses on mandatory (non-elective) systems, IoT-driven connectivity services, and security solutions for the healthcare industry[37] - Approximately 7% of revenues are spent on research and development[38] Company Overview and Financial Performance NAPCO specializes in high-tech security, with FY2025 net sales and net income decreasing - NAPCO manufactures and designs high-tech electronic security devices, cellular communication services for alarm systems, and school safety solutions[15] Net Sales and Net Income Trends (FY2023-FY2025) | Metric | FY2025 (Millions) | FY2024 (Millions) | FY2023 (Millions) | | :--------- | :------------------ | :------------------ | :------------------ | | Net Sales | $181.6 | $188.8 | $170.0 | | Net Income | $43.4 | $49.8 | $27.1 | - The decrease in net sales from FY2024 to FY2025 was driven by a $17.8 million decrease in equipment sales, offset by a $10.6 million increase in recurring communication services[16] Product and Service Offerings NAPCO offers a comprehensive suite of security products, including door locks, alarm equipment, and cellular communication services - Key product categories include standalone and networked digital door locks, standard and custom locksets, panic devices, door closers, intrusion alarm equipment, and intrusion/fire alarm cellular communication devices and services[18] - The company also provides integrated cellular intrusion alarm systems and door controllers with hosted services for access control[18] Recurring Service Revenue Growth Monthly recurring service revenue increased 44% from FY2023 to FY2025, boasting a 91% gross margin - Monthly recurring service revenue from cellular and cloud access for alarm communicators increased 44% from fiscal 2023 to fiscal 2025[19] - Recurring service revenue had a gross margin of approximately 91% for FY2025 and represented approximately 48% of total revenue[19] - The majority of recurring revenue is generated through the sale, installation, and activation of StarLink cellular communication devices[20] Door Security Product Range NAPCO manufactures diverse door locking devices, including electronic and mechanical locks, for standalone or networked use - Manufactures microprocessor-based electronic door locks (push button, card reader, bio-metric), door alarms, mechanical door locks, and deadbolt locks[23] - Some microprocessor-based door locks can be networked with the Company's access control systems and controlled remotely[23] Intrusion and Fire Alarm System Components NAPCO's alarm systems include detectors, control panels, and keypads, with integrated cellular communication devices - Alarm systems consist of detectors, control panels, digital keypads, and signaling equipment, with a trend towards integrated cellular communication devices[24] - Products include automatic communicators, cellular communication devices, control panels, and combination control panels/digital communicators and digital keypad systems[25] - Combination format offers cost efficiency, reliability, and ease of installation due to microcomputer technology[26] Access Control System Functionality Systems manage entry via identification readers, control panels, and electronic locks, maintaining an activity log - Systems include identification readers (card, hand scanners), a control panel, a PC-based computer, and electronically activated door-locking devices[27] - Functionality involves data validation for access granting/denial and electronic logging of access activity[27] Video Surveillance System Offerings NAPCO's video surveillance systems feature cameras, control panels, and monitors, with recording and remote access options - Systems include video cameras, a control panel, a video monitor or PC, with advanced options for recording and remote communication[28] - The company designs, engineers, and markets software and control panels, and resells video cameras, PC-based computers, and peripheral equipment[28] School and Public Safety Solutions NAPCO offers security products for schools and public spaces, addressing demand for campus-wide lockdown capabilities - The school security and public safety market is important, with increased budgets due to 'active shooter' incidents[29] - NAPCO offers standalone LocDown locks, Networx wireless locks, and enterprise-class access control with cellular connectivity for schools[30] - The security equipment and services market for education has reached over $3 billion and is still in early stages[29] Competitive Landscape and Advantages Highly competitive industry, but NAPCO differentiates by offering an integrated platform of key building security products - The security products industry is highly competitive with approximately 12 other manufacturers, many with substantially greater financial resources[31] - NAPCO's competitive advantage is manufacturing all key building security products (Intrusion Alarms, Access Control, Connectivity, and Locking devices) under one integrated platform[31][33] - Competition factors include features, quality, reliability, pricing, innovative and technological advances, and technical support services[36] Manufacturing and Operational Facilities Over 90% of products are manufactured in the Dominican Republic, with R&D and support in New York - Over 90% of products are manufactured in a vertically integrated, low-cost facility in the Dominican Republic, located in a free zone[34] - U.S. headquarters in Amityville, New York, handles managerial, administrative, R&D, design, sales administration, technical services, finance, procurement, manufacturing control, warehousing, and shipping[35] - The U.S. facility's ability to provide timely and effective technical support is a competitive advantage[35] Strategic Focus Areas NAPCO's strategy centers on mandatory security systems, IoT-driven connectivity, and expanding into healthcare security solutions - Strategy focuses on mandatory (non-elective) systems, IoT-driven connectivity services, and high growth/margin categories[37] - Leverages in-house engineering and software capabilities (micro-coding, enterprise software, mobile apps, cellular communications) to create recurring revenue opportunities[37] - Expanding into security solutions for the healthcare industry, including anti-ligature lockets for hospitals and correctional facilities[37] Research and Development Investment Approximately 7% of revenues are dedicated to R&D, crucial for developing new proprietary technology and products - Success depends on developing new and proprietary technology and products[38] - Approximately 7% of revenues are spent on research and development[38] Human Capital Management As of June 30, 2025, NAPCO had 1,061 employees, focusing on talent retention through benefits and training Employee Count (as of June 30, 2025) | Location | Full-time Employees | | :----------------- | :------------------ | | United States | 290 | | Dominican Republic | 771 | | Total | 1,061 | - 41 U.S. employees are covered by a collective bargaining agreement[39] - Strategies for talent retention include comprehensive benefits, competitive wages, incentive programs, performance reviews, and training[42] Regulatory Compliance NAPCO's business is subject to various regulations, with compliance not expected to materially impact its financial condition - The company is subject to various federal, state, local, and international regulatory requirements[43] - Compliance with these regulations is not expected to have a material adverse effect on the company[43] Marketing and Sales Channels NAPCO markets products through sales staff to independent distributors and dealers, engaging in direct sales and trade shows - Sales and marketing staff of approximately 63 employees[44] - Products are sold primarily to independent distributors, wholesalers, and dealers of security alarm and hardware equipment, with approximately 1,800 active direct customers[44] - Marketing activities include direct sales, training for partners, advertising in technical trade publications, and participation in trade shows[44] Raw Material Sourcing and Inventory Component parts are sourced from U.S. and Asian suppliers, with critical component inventories maintained from multiple sources - Component parts are sourced from U.S. and Asian suppliers, typically shipped directly to the Dominican Republic facility[45] - The company maintains inventories of all critical components and is not dependent on any one source for raw materials[45] Corporate Information and Public Filings NAPCO Security Technologies, Inc., founded in 1969, makes SEC filings available free on its investor website - Founded in 1969, incorporated in 1971 as NAPCO Security Systems, Inc., and renamed NAPCO Security Technologies, Inc. in 2008[46] - Executive offices are located at 333 Bayview Ave, Amityville, New York[47] - Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments are available free of charge on the company's investor website[47][48][49] Risk Factors Investing in NAPCO stock involves risks from economic conditions, competition, recurring revenue growth, distributor reliance, and operational challenges - General economic and market conditions, including potential recessions and geopolitical events, could adversely affect revenue, profit, and cash flow[51][52][53] - The security products industry is highly competitive, with many larger competitors, posing a risk to effective competition and market share[54][55] - Inability to sustain the growth of recurring service revenue, a significant driver of profitability, is a key risk[64] - Reliance on independent distributors means adverse changes in relationships or their financial health could negatively impact sales and financial performance[66][67][69] - Operating a manufacturing facility in the Dominican Republic exposes the company to risks such as labor availability, regulatory compliance, natural disasters, and political/economic instability[74][75][80] - New U.S. tariffs (e.g., 10% baseline tariff announced April 2, 2025) could increase product costs and impact margins, supply chain, and consumer demand[77] - Cybersecurity incidents and disruptions to information systems could compromise data, expose the company to liability, and adversely impact financial condition, operations, and reputation[85][87][88] - The company's success is largely dependent on the effort and continuing service of its senior management members, particularly Mr. Richard Soloway (CEO) and Mr. Kevin Buchel (President & COO)[89][90][91] Unresolved Staff Comments There are no unresolved staff comments from the SEC regarding NAPCO's filings - No unresolved staff comments[107] Cybersecurity NAPCO maintains a comprehensive cyber risk management program, overseen by the Audit Committee, to assess and manage cybersecurity threats - Maintains a cyber risk management program integrated into overall risk management, overseen by the Audit Committee[108][114] - Relies on a multidisciplinary team (information security, legal, management, third-party providers) for threat identification, assessment, and management[109] - Implemented annual security awareness training, phishing awareness programs, network activity monitoring tools, and an incident response plan[109][110] - Partners with a third-party vendor for cybersecurity and risk management as a managed service, due to the company's size and internal IT staff[111] - As of the report date, the company is not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition[113] Properties NAPCO owns executive offices and production facilities in New York and the Dominican Republic, deemed adequate for future needs - Owns a 100,000 square foot facility in Amityville, New York, for executive offices, production, and warehousing[116] - Owns a 180,000 square foot production and warehousing facility in the Dominican Republic, operating under a 99-year land lease expiring in 2092[117] - A majority of products are manufactured in the Dominican Republic facility, utilizing U.S. quality control standards[117] Legal Proceedings Information on legal proceedings is incorporated by reference from Note 14, "Commitments and Contingencies," in the financial statements - Legal proceedings discussion is incorporated by reference from Note 14, 'Commitments and Contingencies'[119] Mine Safety Disclosure This item is not applicable to NAPCO's operations - Not Applicable[120] PART II Covers market information for common equity, management's discussion and analysis, market risk disclosures, and financial statements Market for Common Equity, Stockholder Matters, and Equity Purchases NAPCO's stock trades on NASDAQ, with a history of dividends and an active share repurchase program - Common stock is quoted on The NASDAQ Global Select Market under the symbol 'NSSC'[122] - As of August 22, 2025, there were approximately 46 stockholders of record[122] Recent Cash Dividends Declared | Declaration Date | Record Date | Payable Date | Per Share Cash Dividend Amount | | :--------------- | :---------- | :----------- | :----------------------------- | | May 2, 2025 | June 12, 2025 | July 3, 2025 | $0.14 | | January 30, 2025 | March 12, 2025 | April 3, 2025 | $0.125 | | 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 | | May 5, 2023 | May 22, 2023 | June 12, 2023 | $0.0625 | Equity Compensation Plan Information (as of June 30, 2025) | Plan Category | Securities to be Issued Upon Exercise of Outstanding Options (a) | Weighted Average Exercise Price of Outstanding Options (b) | Securities Remaining Available for Future Issuance (Excluding Column (a)) | | :-------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :----------------------------------------------------------------------- | | Equity compensation plans approved by security holders | 628,236 | $24.70 | 869,100 | | Equity compensation plans not approved by security holders | — | — | — | | Total | 628,236 | $24.70 | 869,100 | Management's Discussion and Analysis MD&A highlights a 4% net sales decrease in FY2025, offset by 14% recurring service revenue growth, with strong liquidity - Net sales for FY2025 decreased 4% to $181.6 million, while recurring service revenue (RSR) increased 14% to $86.3 million[131] - Gross margin for recurring service revenue was 91.0% in FY2025, significantly higher than equipment revenue's 23.6%[131] - Net income decreased 13% to $43.4 million in FY2025[131] - The U.S. announced a new universal baseline tariff of 10% on April 2, 2025, which includes imports from the Dominican Republic, expected to increase product costs and impact margins[130] Cash and Cash Equivalents & Short-Term Investments (in thousands) | Category | June 30, 2025 | June 30, 2024 | | :------------------- | :-------------- | :-------------- | | Cash | $16,726 | $18,823 | | Money Market Fund | $66,355 | $41,116 | | Certificate of Deposits | $— | $5,402 | | Total | $83,081 | $65,341 | - Net cash provided by operating activities increased to $53.5 million in FY2025 from $45.4 million in FY2024[147][148] - The company has no outstanding debt and an available revolving credit line of $20 million expiring in February 2029[151] MD&A Overview and Fiscal 2025 Highlights NAPCO, a leading security device manufacturer, saw net sales decrease by 4% in FY2025, while recurring service revenue increased - NAPCO is a leading manufacturer and designer of high-tech electronic security devices, wireless communication services, and school safety solutions[126] - Significant growth in recent years, primarily driven by recurring service revenues from wireless communication services[126] Fiscal Year 2025 Highlights vs. 2024 | Metric | FY2025 | Change YoY | | :-------------------------- | :------- | :--------- | | Net sales | $181.6 million | -4% | | Recurring service revenue (RSR) | $86.3 million | +14% | | Gross margin for RSR | 91.0% | +0.5% | | Gross margin for equipment revenue | 23.6% | -19.6% | | Net income | $43.4 million | -13% | Industry Dynamics and Innovation The security industry is dynamic and competitive, prompting NAPCO to continuously invest in R&D for innovation - The industry is dynamic and highly competitive, with frequent changes in technologies and business models[128] - NAPCO continually strives to innovate through R&D to address changing customer demands, industry trends, and competitive forces[128] Economic and Geopolitical Impacts NAPCO is affected by macroeconomic conditions and new U.S. tariffs, impacting costs and margins - Subject to effects of general macroeconomic and market conditions[129] - A new universal baseline tariff of 10% was announced by the U.S. on April 2, 2025, impacting imports from the Dominican Republic[130] - Tariffs are anticipated to increase product costs, impact product margins, disturb ocean shipping capacity, and create inflationary effects[130] Key Accounting Policies and Estimates Financial statement preparation involves significant judgment in estimates for sales returns, credit losses, and inventory valuation - Critical estimates include 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[135] - Equipment revenue is recognized at a single point in time upon transfer of control (typically shipment date), with provisions for returns, credits, and rebates[138] - Service revenue from monthly cellular communication services is recognized ratably over the monthly service period[141] - Inventories are valued at the lower of cost or net realizable value (FIFO method), with a reserve for excess and slow-moving inventory based on age, historical trends, and forecasted sales[143][144] Liquidity and Capital Management NAPCO maintains strong liquidity with $83.1 million in cash and equivalents, no outstanding debt, and a $20 million credit line Cash and Short-Term Investments (in thousands) | Category | June 30, 2025 | June 30, 2024 | | :------------------- | :-------------- | :-------------- | | Cash | $16,726 | $18,823 | | Money Market Fund | $66,355 | $41,116 | | Certificate of Deposits | $— | $5,402 | | Total | $83,081 | $65,341 | Cash Flow Activities (in thousands) | Activity | FY2025 | FY2024 | | :-------------------------------- | :------- | :------- | | Net Cash Provided by Operating Activities | $53,527 | $45,368 | | Net Cash Provided by (Used in) Investing Activities | $14,585 | $(3,151) | | Net Cash Used in Financing Activities | $(50,372) | $(12,831) | - Financing activities in FY2025 included $13.6 million in dividends paid and $36.8 million for common stock repurchases[150] - The company has an available revolving credit line of $20 million, expiring in February 2029, with no outstanding debt[151] Liquidity Ratios (as of June 30) | Ratio | 2025 | 2024 | | :---------------- | :------- | :------- | | Current Ratio | 6.8 to 1 | 7.6 to 1 | | Sales to Receivables | 6.0 to 1 | 5.9 to 1 | Fiscal 2025 vs. Fiscal 2024 Performance In FY2025, net sales decreased by 3.8% due to lower equipment sales, while service revenues increased, impacting net income Key Financial Performance (Fiscal Year Ended June 30, in thousands) | Metric | 2025 | 2024 | % Change | | :------------------------------------------ | :------- | :------- | :--------- | | Net sales: equipment revenues | $95,291 | $113,071 | (15.7)% | | Net sales: service revenues | $86,330 | $75,749 | 14.0% | | Total Net Sales | $181,621 | $188,820 | (3.8)% | | Gross Profit: equipment | $22,496 | $33,209 | (32.3)% | | Gross Profit: services | $78,534 | $68,545 | 14.6% | | Total Gross Profit | $101,030 | $101,754 | (0.7)% | | Gross profit as a % of net sales | 55.6% | 53.9% | 3.2% | | Research and development | $12,581 | $10,763 | 16.9% | | Selling, general and administrative | $42,190 | $37,173 | 13.5% | | Operating Income | $46,259 | $53,818 | (14.0)% | | Interest and other income (expense), net | $3,810 | $2,568 | 48.4% | | Provision for income taxes | $6,663 | $6,568 | 1.4% | | Net income | $43,406 | $49,818 | (12.9)% | - Decrease in net equipment sales was primarily due to reduced sales of door-locking products ($11.5 million) and intrusion products, attributed to distributor destocking and project timing[156][157][158] - Increase in net service revenues was due to an increase in activated cellular communication devices[159] - R&D expenses increased by $1.8 million (16.9%) due to higher personnel-related expenses and additional engineering staff[162] - SG&A expenses increased by $5.0 million (13.5%) due to personnel-related expenses, insurance, advertising, and legal fees[163] Market Risk Disclosures NAPCO faces interest rate risk on its fixed-income portfolio and foreign currency risk from Dominican Peso expenses, potentially impacting income - Exposure to interest rate risk from a $16.1 million fixed-income investment portfolio; a 100 basis point increase in interest rates could decrease fair value by approximately $322,000[167] - All foreign sales transactions are denominated in U.S. dollars, shifting foreign currency exposure to customers[168] - Exposed to foreign currency risk from expenses in Dominican Pesos (RD$); a 10% USD strengthening/weakening against RD$ could impact income from operations by approximately $844,000 annually[170] Financial Statements and Supplementary Data Presents audited consolidated financial statements for FY2025, 2024, and 2023, including balance sheets and income statements - Includes audited consolidated financial statements: Balance Sheets, Statements of Income, Comprehensive Income, Stockholders' Equity, and Cash Flows for fiscal years ended June 30, 2025, 2024, and 2023[171] - Deloitte & Touche LLP issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting as of June 30, 2025[173][174] - A critical audit matter identified was the reserve for excess and slow-moving inventory due to significant management estimates and assumptions[178][179] Consolidated Balance Sheets (Selected Data, in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :-------------- | :-------------- | | Total Current Assets | $162,444 | $168,763 | | Total Assets | $198,141 | $207,752 | | Total Current Liabilities | $24,057 | $22,229 | | Total Liabilities | $29,535 | $28,863 | | Total Stockholders' Equity | $168,606 | $178,889 | Consolidated Statements of Income (Selected Data, in thousands) | Metric | FY2025 | FY2024 | FY2023 | | :------------------------------------------ | :------- | :------- | :------- | | Net Sales | $181,621 | $188,820 | $169,997 | | Gross Profit | $101,030 | $101,754 | $73,233 | | Operating Income | $46,259 | $53,818 | $30,325 | | Net Income | $43,406 | $49,818 | $27,127 | | Basic EPS | $1.20 | $1.35 | $0.74 | | Diluted EPS | $1.19 | $1.34 | $0.73 | Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | FY2025 | FY2024 | FY2023 | | :-------------------------------- | :------- | :------- | :------- | | Net Cash Provided by Operating Activities | $53,527 | $45,368 | $24,700 | | Net Cash Provided by (Used in) Investing Activities | $14,585 | $(3,151) | $(28,262) | | Net Cash Used in Financing Activities | $(50,372) | $(12,831) | $(2,213) | | Net increase (decrease) in Cash and Cash Equivalents | $17,740 | $29,386 | $(5,775) | | Cash and Cash Equivalents - Ending | $83,081 | $65,341 | $35,955 | Changes in and Disagreements with Accountants Confirms no changes in or disagreements with the company's accountants regarding financial disclosure No Disagreements with Accountants There have been no changes in or disagreements with accountants on accounting and financial disclosure matters - No unresolved staff comments[326] Controls and Procedures Details evaluation of disclosure controls, management's report on internal control, and remediation efforts Evaluation of Disclosure Controls and Procedures Management concluded that NAPCO's disclosure controls and procedures were effective as of June 30, 2025 - Management, including the CEO and CFO, evaluated and concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[327] Management's Report on Internal Control over Financial Reporting Management and Deloitte & Touche LLP both concluded internal control over financial reporting was effective - Management concluded that internal control over financial reporting was effective as of June 30, 2025, based on COSO criteria[328] - Deloitte & Touche LLP issued an unqualified attestation report on the effectiveness of internal controls over financial reporting[329] Remediation of Material Weakness The previously reported material weakness related to inventory costing information has been successfully remediated - The previously reported material weakness related to ineffective review of inventory costing information has been successfully remediated as of June 30, 2025[330][331] - Remediation involved implementing reconciliation procedures to ensure completeness and accuracy of inventory costing information[331] Changes in Internal Control No material changes occurred in internal controls over financial reporting during the quarter ended June 30, 2025 - No material changes in internal controls over financial reporting during the quarter ended June 30, 2025, except for remediation efforts[332] Other Information Includes details on the company's insider trading policy Insider Trading Policy The company adopted an Insider Trading Policy on May 6, 2021, filed as an exhibit to Form 8-K - Adopted an Insider Trading Policy on May 6, 2021, filed as an exhibit to Form 8-K[341] PART III Incorporates by reference information on directors, executive compensation, security ownership, related transactions, and accounting fees Directors, Executive Officers and Corporate Governance Information on directors, executive officers, corporate governance, and Code of Ethics is incorporated from the Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement[342][345] - A Code of Ethics, applicable to senior executive and financial officers, is posted on the company's website[343] Executive Compensation Executive and director compensation information is incorporated by reference from the Proxy Statement - Executive compensation and director compensation information is incorporated by reference from the Proxy Statement[346] Security Ownership and Related Stockholder Matters Details on beneficial ownership and equity compensation plan information are incorporated from the Proxy Statement and Item 5 - Information on beneficial ownership of common stock is incorporated by reference from the Proxy Statement[347] - Equity Compensation Plan Information as of June 30, 2024, is included in Item 5[348] Related Transactions and Director Independence Information regarding director independence, board structure, and related person transactions is incorporated from the Proxy Statement - Information on director independence, board structure, related person transactions, and executive compensation transactions is incorporated by reference from the Proxy Statement[349] Principal Accounting Fees and Services Information on principal accountant fees and Audit Committee's pre-approval policy for services is incorporated from the Proxy Statement - Information on principal accountant fees and Audit Committee policy on pre-approval of services is incorporated by reference from the Proxy Statement[350] PART IV Includes a comprehensive list of exhibits and financial statement schedules, along with the required signatures for the Form 10-K Exhibits and Financial Statement Schedules Lists all financial statements, schedules, and exhibits included in or incorporated by reference into the Form 10-K - Lists consolidated financial statements of NAPCO Security Technologies, Inc. and its subsidiaries, included in Part II, Item 8[351] - Includes a detailed list of exhibits, such as Certificate of Amendment of Certificate of Incorporation, By-Laws, Credit Agreements, Stock Option Plans, Employment Agreements, Code of Ethics, and Certifications[352][354][355][356][357] Signatures The report is duly signed by NAPCO Security Technologies, Inc.'s authorized officers and directors as of August 25, 2025 - The report is signed by Richard Soloway (Chairman of the Board, Director and Secretary, Principal Executive Officer), Kevin S. Buchel (President and Chief Operating Officer), Andrew J. Vuono (Chief Financial Officer and Chief Accounting Officer, Principal Financial and Accounting Officer), and other Directors[359][360] - Date of signing: August 25, 2025[359][360]