10-Q

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: September 30, 2023

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: November 8, 2023

COMMON STOCK, $.01 PAR VALUE PER SHARE     36,770,097

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

			Page
PART I:  FINANCIAL INFORMATION
	ITEM 1.	Financial Statements	3
		NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES INDEX –September 30, 2023
		Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and June 30, 2023	3
		Condensed Consolidated Statements of Income for the Three Months ended September 30, 2023 and 2022 (unaudited)	4
		Condensed Consolidated Statements of Stockholders Equity for the Three Months Ended September 30, 2023 and 2022 (unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2023 and 2022 (unaudited)	6
		Notes to Condensed Consolidated Financial Statements (unaudited)	7
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	28
	ITEM 4.	Controls and Procedures	28
PART II:  OTHER INFORMATION
	ITEM 1.	Legal Proceedings	29
	ITEM 1A.	Risk Factors	29
	ITEM 6.	Exhibits	30
SIGNATURE PAGE			31

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PART I:           FINANCIAL INFORMATION

Item 1.  Financial Statements

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2023
	(unaudited)		June 30, 2023
	(in thousands, except share data)
CURRENT ASSETS
Cash and cash equivalents	$	43,577	$	35,955
Investments - other		25,931		25,660
Marketable securities		5,121		5,136
Accounts receivable, net of allowance for credit losses of $107 and $131 as of September 30, 2023 and June 30, 2023, respectively		22,921		26,069
Inventories, net		36,946		35,062
Income tax receivable		205		75
Prepaid expenses and other current assets		3,072		3,402
Total Current Assets		137,773		131,359
Inventories - non-current, net		17,201		13,287
Property, plant and equipment, net		9,112		9,308
Intangible assets, net		3,855		3,939
Deferred income taxes		2,732		2,652
Operating lease asset		5,722		5,797
Other assets		294		312
TOTAL ASSETS	$	176,689	$	166,654
CURRENT LIABILITIES
Accounts payable	$	11,084	$	8,061
Accrued expenses		7,636		8,079
Accrued salaries and wages		3,176		3,546
Total Current Liabilities		21,896		19,686
Accrued income taxes		1,133		1,110
Long term operating lease liabilities		5,648		5,689
TOTAL LIABILITIES		28,677		26,485
COMMITMENTS AND CONTINGENCIES (Note 13)
STOCKHOLDERS’ EQUITY
Common Stock, par value $0.01 per share; 100,000,000 shares authorized as of September 30, 2023 and June 30, 2023; 39,663,812 shares issued; and 36,770,097 shares outstanding as of each date.		397		397
Additional paid-in capital		21,860		21,553
Retained earnings		145,276		137,740
Less: Treasury Stock, at cost (2,893,715 shares)		(19,521)		(19,521)
TOTAL STOCKHOLDERS’ EQUITY		148,012		140,169
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	176,689	$	166,654

See accompanying notes to condensed consolidated financial statements.

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NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Three Months ended September 30,
	2023		2022
	(in thousands, except for share and per share data)
Net sales:
Equipment revenues	$	24,391	$	25,687
Service revenues		17,285		13,806
		41,676		39,493
Cost of sales:
Equipment related expenses		17,497		23,266
Service-related expenses		1,766		1,661
		19,263		24,927
Gross Profit		22,413		14,566
Operating expenses:
Research and development		2,437		2,428
Selling, general, and administrative expenses		8,421		8,490
Total Operating Expenses		10,858		10,918
Operating Income		11,555		3,648
Other income (expense):
Interest and other income (expense), net		440		(103)
Income before Provision for Income Taxes		11,995		3,545
Provision for Income Taxes		1,517		461
Net Income	$	10,478	$	3,084
Income per share:
Basic	$	0.28	$	0.08
Diluted	$	0.28	$	0.08
Weighted average number of shares outstanding:
Basic		36,827,000		36,762,000
Diluted		37,076,000		36,990,000

See accompanying notes to condensed consolidated financial statements.

4

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (unaudited)

	Three months ended September 30, 2023 (in thousands, except for share data)
	Common Stock					Treasury Stock
	Number of			Additional
	Shares			Paid-in		Number of			Retained
	Issued	Amount		Capital		Shares	Amount		Earnings		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	—		—		—	—		—		(2,942)		(2,942)
Balances at September 30, 2023	39,663,812	$	397	$	21,860	(2,893,715)	$	(19,521)	$	145,276	$	148,012

	Three months ended September 30, 2022 (in thousands, except share data)
	Common Stock					Treasury Stock
	Number of			Additional
	Shares			Paid-in		Number of			Retained
	Issued	Amount		Capital		Shares	Amount		Earnings		Total
Balances at June 30, 2022	39,628,197	$	396	$	20,005	(2,893,715)	$	(19,521)	$	112,911	$	113,791
Net income	—		—		—	—		—		3,084		3,084
Stock-based compensation expense	—		—		477	—		—		—		477
Stock options exercised	8,480		—		45	—		—		—		45
Balances at September 30, 2022	39,636,677	$	396	$	20,527	(2,893,715)	$	(19,521)	$	115,995	$	117,397

See accompanying notes to condensed consolidated financial statements.

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NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Three Months ended September 30,
	2023		2022
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	10,478	$	3,084
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		537		457
Gain on disposal of fixed asset		—		(15)
Interest income on other investments		76		(8)
Unrealized loss on marketable securities		57		153
(Recovery) of credit losses		(24)		(27)
Change to inventory reserve		822		(252)
Deferred income taxes		(80)		(417)
Stock based compensation expense		307		477
Changes in operating assets and liabilities:
Accounts receivable		3,172		7,903
Inventories		(6,620)		(10,197)
Prepaid expenses and other current assets		330		(2)
Income tax receivable		(130)		(662)
Other assets		17		(27)
Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes		2,267		(2,432)
Net Cash Provided by (Used in) Operating Activities		11,209		(1,965)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment		(256)		(372)
Proceeds from disposal of fixed asset		—		38
Purchases of marketable securities		(42)		(10,028)
Purchases of other investments		(347)		—
Net Cash Used in Investing Activities		(645)		(10,362)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock option exercises		—		45
Cash paid for dividend		(2,942)		—
Net Cash (Used in) Provided by Financing Activities		(2,942)		45
Net increase (decrease) in Cash and Cash Equivalents		7,622		(12,282)
CASH AND CASH EQUIVALENTS - Beginning		35,955		41,730
CASH AND CASH EQUIVALENTS - Ending	$	43,577	$	29,448
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	$	—	$	4
Income taxes paid	$	1,703	$	3,398

See accompanying notes to condensed consolidated financial statements.

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NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

September 30, 2023

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

Nature of Business:

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

The Company's fiscal year begins on July 1 and ends on June 30. Historically, the end users of the Company’s hardware products want to install these products prior to the summer; therefore, sales of these products historically peak in the period April 1 through June 30, the Company's fiscal fourth quarter, and are reduced in the period July 1 through September 30, the Company's fiscal first quarter. In addition, demand for all of our products may be affected by the housing and construction markets. Deterioration of the current economic conditions may also affect this trend. The monthly recurring service revenue, which is less susceptible to these fluctuations, allows us to generate a more consistent and predictable stream of income and mitigates the risk of fluctuation in market demand for our equipment products.

Significant Accounting Policies:

Principles of Consolidation

The consolidated financial statements include the accounts of Napco Security Technologies, Inc. and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates include management’s judgments associated with reserves for sales returns and allowances, allowance for credit losses, overhead expenses applied to inventory, inventory reserves, valuation of intangible assets, share based compensation and income taxes. Actual results could differ from those 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, current receivables and payables and certain other short-term financial instruments approximate their fair value as of September 30, 2023 and June 30, 2023 due to their short-term maturities. Long-term debt and lease liabilities reflect fair value based on prevailing market rates.

Cash and Cash Equivalents and Investments – other

Cash and cash equivalents include approximately $15,630,000 of short-term time deposits, consisting of several certificates of deposit totaling $15,366,000 and $264,000 in money market funds as of September 30, 2023. Cash and cash equivalents include approximately $15,242,000 of short-term time deposits, consisting of several certificates of deposit totaling $15,179,000 and $63,000 in a money

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market fund as of June 30, 2023. The Company classifies these highly liquid investments with original maturities of three months or less as cash equivalents. Certificates of deposit with an original maturity greater than three months are classified as Investments-other.

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

	September 30, 2023		June 30, 2023
Cash	$	27,947	$	20,713
Money Market Fund		264		63
Certificates of Deposit		15,366		15,179
	$	43,577	$	35,955

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

	September 30, 2023		June 30, 2023
Certificates of Deposit	$	25,931	$	25,660
	$	25,931	$	25,660

Certificates of deposit are recorded at the original cost plus accrued interest. The Company’s Certificates of deposits consist of the following as of (in thousands):

September 30, 2023
Balance Sheet Classification	Interest Rate		Maturity Date		Cost		Carrying Value
Cash and Cash Equivalents		4.77% - 5.25%		11/22/2023 - 11/27/2023	$	15,312	$	15,366
Investments - other		5.00% - 5.40%		10/23/2023 - 3/21/2024		25,706		25,931

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of September 30, 2023 and June 30, 2023. The Company has not historically experienced any credit losses with balances in excess of FDIC limits.

Marketable Securities

The Company’s marketable securities include investments in mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds. The Company’s marketable securities are reported at fair value with the related unrealized and realized gains and losses included in other expense (income). Realized gains or losses on mutual funds are determined on a specific identification basis. The Company would record an impairment charge if the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary. During the three months ended September 30, 2023, the Company did not record an impairment charge regarding its investment in marketable securities because

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management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary.

Accounts Receivable

Accounts receivable is stated net of the reserves for credit losses of $107,000 and $131,000 as of September 30, 2023 and June 30, 2023, respectively. Our reserves for credit losses are subjective critical estimates that have a direct impact on reported net earnings. These reserves are based upon the evaluation of our accounts receivable aging, specific exposures, sales levels and historical trends.

Inventories

Inventories are valued at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (FIFO) method. The reported net value of inventory includes finished saleable products, work-in-process and raw materials that will be sold or used in future periods. Inventory costs include raw materials, direct labor and overhead. The Company’s overhead expenses are applied based, in part, upon estimates of the proportion of those expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products. These proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and actual results could differ from those estimates.

In addition, the Company records an inventory obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, product life cycle, requirements to support forecasted sales, and the ability to find alternate applications of its raw materials and to convert finished product into alternate versions of the same product to better match customer demand. In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events. There is inherent professional judgment and subjectivity made by both production and engineering members of management in determining the estimated obsolescence percentage.

The Company also regularly reviews the period over which its inventories will be converted to sales. Any inventories expected to convert to sales beyond 12 months from the balance sheet date are classified as non-current.

Property, Plant, and Equipment

Property, plant, and equipment are carried at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred; costs of major renewals and improvements are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition is reflected in income.

Depreciation is recorded over the estimated service lives of the related assets using primarily the straight-line method. Amortization of leasehold improvements is calculated by using the straight-line method over the estimated useful life of the asset or lease term, whichever is shorter.

Long-Lived and Intangible Assets

Long-lived assets are amortized over their useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets in question may not be recoverable. Impairment would be recorded in circumstances

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where undiscounted cash flows expected to be generated by an asset are less than the carrying value of that asset. Intangible assets determined to have indefinite lives were not amortized but were tested for impairment at least annually.

Intangible assets consisted of the follows (in thousands):

	September 30, 2023						June 30, 2023
	Carrying		Accumulated		Net book		Carrying		Accumulated		Net book
	value		amortization		value		value		amortization		value
Customer relationships	$	9,800		(9,335)	$	465	$	9,800		(9,302)	$	498
Trade name		4,048		(658)		3,390		4,048		(607)		3,441
	$	13,848	$	(9,993)	$	3,855	$	13,848	$	(9,909)	$	3,939

Amortization expense for intangible assets subject to amortization was approximately $84,000 and $90,000 for the three months ended September 30, 2023 and 2022, respectively. Amortization expense for each of the next five fiscal years is estimated to be as follows: 2024 - $336,000; 2025 - $315,000; 2026 - $297,000; 2027 - $283,000; and 2028 - $269,000. The weighted average remaining amortization period for intangible assets was 15.3 years and 15.5 years at September 30, 2023 and June 30, 2023, respectively.

Revenue Recognition

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

For product sales, the Company typically transfers control at a point in time upon shipment or delivery of the product. For monthly communication services the Company satisfies its performance obligation as the services are rendered and therefore recognizes revenue over the monthly period.

Typically timing of revenue recognition coincides with the timing of invoicing to the customers, at which time the Company has an unconditional right to consideration. As such, the Company typically records a receivable when revenue is recognized.

The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for product sales is typically due within 30 and 180 days of the delivery date. Payment for monthly communication services is billed on a monthly basis and is typically due at the beginning of the month of service or in 30 days for customers with an open account.

The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months. The Company accepts returns for such defective products as well as for other limited circumstances. The Company also provides rebates to customers for meeting specified purchasing targets and other coupons or credits in limited circumstances. The Company establishes reserves for the estimated returns, rebates and credits and measures such variable consideration based on the expected value method using an analysis of historical data. Changes to the estimated variable consideration in subsequent periods are not material.

The Company analyzes sales returns and is able to make reasonable and reliable estimates of product returns based on the Company’s past history. Estimates for sales returns are based on several factors including actual returns and based on expected return data communicated to it by its customers. Accordingly, the Company believes that its historical returns analysis is an accurate basis for its allowance for sales returns. Actual results could differ from those estimates.

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Advertising and Promotional Costs

Advertising and promotional costs are included in "Selling, General and Administrative" expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for the three months ended September 30, 2023 and 2022 was $761,000 and $754,000, respectively.

Research and Development Costs

Research and development (“R&D”) costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income. Company-sponsored R&D expense for the three months ended September 30, 2023 and 2022 was $2,437,000 and $2,428,000, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Net Income per Share

Basic net income per common share (Basic EPS) is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended September 30, 2023 and 2022 (in thousands, except share and per share data):

	Net Income				Weighted Average Shares		Net Income per Share
	2023		2022		2023	2022	2023		2022
Basic EPS	$	10,478	$	3,084	36,827	36,762	$	0.28	$	0.08
Effect of Dilutive Securities:
Stock Options		—		—	249	228		—		—
Diluted EPS	$	10,478	$	3,084	37,076	36,990	$	0.28	$	0.08

Options to purchase 5,000 and 62,500 shares of common stock were excluded for the three months ended September 30, 2023 and 2022, 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.

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Stock-Based Compensation

The Company has established five share incentive programs as discussed in Note 9.

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility and forfeiture rates, among other factors.

Stock-based compensation costs of $307,000 and $477,000 were recognized for the three months ended September 30, 2023 and 2022, 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 months ended September 30, 2023 or 2022.

Comprehensive Income

For the three months ended September 30, 2023 and 2022, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income. Accordingly, the Company’s comprehensive income approximates its net income for all periods presented.

Segment Reporting

The Company’s reportable operating segments are determined based on the Company’s management approach. The management approach is based on the way that the chief operating decision maker organizes the segments within an enterprise for making operating decisions and assessing performance. The Company’s results of operations are reviewed by the chief operating decision maker on a consolidated basis and the Company operates in only one segment. The Company has presented required geographical data in Note 14.

Shipping and Handling Sales and Costs

The Company records the amount billed to customers for shipping and handling in net sales ($83,000 and $112,000 in the three months ended September 30, 2023 and 2022, respectively); and classifies the costs associated with these sales in cost of sales ($371,000 and $394,000 in the three months ended September 30, 2023 and 2022, respectively).

Leases

The Company records lease assets and corresponding lease liabilities for the operating lease on our Consolidated Balance Sheets, excluding short-term leases (leases with terms of 12 months or less) as described under ASU No. 2016-02, Leases (Topic 842). Lease payments are discounted using a third-party secured incremental borrowing rate based on information available at lease commencement. The Company analyzes whether or not amendments to existing leases classify as a Lease Modification or a full or partial termination of the existing lease. See Note 13 – Commitments and Contingencies; Leases for additional accounting policies and disclosures.

Recently Issued Accounting Standards

Reference Rate Reform (ASC Topic 848)

In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”), which is expected to be phased out for new arrangements at the

12

end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate.

The Company’s bank has notified the Company that its LIBOR option, which was available to it through June 30, 2023, has shifted to the Benchmark Replacement as defined in the agreement with the bank. The new benchmark rate is the Secured Overnight Financing Rate (SOFR) (see Note 8). The Company does not believe that this transition will have a material impact on its financial condition.

NOTE 2 – Revenue Recognition and Contracts with Customers

The Company is engaged in one major line of business: the development, manufacture, and distribution of security products, encompassing access control systems, door security products, intrusion and fire alarm systems, alarm communication services, and video surveillance products for commercial and residential use. The Company also provides wireless communication service for intrusion and fire alarm systems on a monthly basis. All of these products and services are used for commercial, residential, institutional, industrial and governmental applications, and are sold primarily to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are primarily shipped from the United States.

As of September 30, 2023 and June 30, 2023, the Company included refund liabilities of approximately $3,833,000 and $5,521,000, respectively, in current liabilities. As of September 30, 2023 and June 30, 2023, the Company included return-related assets of approximately $1,201,000 and $1,338,000, respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 4% and 5% for the three months ended September 30, 2023 and 2022, 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 September 30,
	2023		2022
Major Product Lines:
Intrusion and access alarm products	$	9,297	$	13,532
Door locking devices		15,094		12,155
Services		17,285		13,806
Total Revenues	$	41,676	$	39,493

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 13% and 10% as of September 30, 2023. As of June 30, 2023, the accounts receivable balance with these respective customers were 19% and 14%. Sales to either of these customers did not exceed 10% of net sales during the three months ended September 30, 2023, however sales to one of these two customers were 12% for the three months ended September 30, 2022. There were no other customers who had sales that comprised of 10% or more of net sales for the 3 months ended September 30, 2023 and 2022.

NOTE 4 – Marketable Securities

The Company’s marketable securities include investments in fixed income mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds, and are reported at their fair values. The disaggregated net gains and losses

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on the marketable securities recognized within the accompanying condensed consolidated statements of income for the three months ended September 30, 2023 and 2022, are as follows (in thousands):

	Three months ended September 30,
	2023		2022
Net gains recognized during the period on marketable securities	$	42	$	—
Less: Net gains recognized during the period on marketable securities sold during the period		—		—
Unrealized gains (losses) recognized during the reporting period on marketable securities still held at the reporting date		(57)		(153)
	$	(15)	$	(153)

The fair values of the Company’s marketable securities are determined as being the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Company utilizes the three-tier value hierarchy, as prescribed by US GAAP, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s marketable securities, which are considered available-for-sale securities, are re-measured to fair value on a recurring basis and are valued using Level 1 inputs using quoted prices (unadjusted) for identical assets in active markets.

The following tables summarize the Company’s investments at September 30, 2023 and June 30, 2023, respectively (in thousands):

	September 30, 2023						June 30, 2023
					Unrealized						Unrealized
	Cost		Fair Value		Gain (Loss)		Cost		Fair Value		Gain (Loss)
Mutual Funds - Level 1	$	5,693		5,121	$	(572)	$	5,651	$	5,136	$	(515)

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

NOTE 5 - Inventories

Inventories, net of reserves are valued at lower of cost (first-in, first-out method) or net realizable value. Inventories, net of reserves consist of the following (in thousands):

	September 30,		June 30,
	2023		2023
Component parts	$	33,566	$	29,939
Work-in-process		8,089		7,726
Finished product		12,492		10,684
	$	54,147	$	48,349
Classification of inventories, net of reserves:
Current	$	36,946	$	35,062
Non-current		17,201		13,287
	$	54,147	$	48,349

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NOTE 6 – Property, Plant, and Equipment

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

	September 30, 2023		June 30, 2023		Useful Life in Years
Land	$	904	$	904	N/A
Buildings		8,911		8,911	30 to 40
Molds and dies		7,517		7,517	3 to 5
Furniture and fixtures		3,447		3,387	5 to 10
Machinery and equipment		28,739		28,574	3 to 10
Building improvements		3,110		3,078	Shorter of the lease term or life of asset
		52,628		52,371
Less: accumulated depreciation and amortization		(43,516)		(43,063)
	$	9,112	$	9,308

Depreciation and amortization expense on property, plant, and equipment was approximately $453,000 and $367,000 for the three months ended September 30, 2023 and 2022, respectively.

NOTE 7 - Income Taxes

The provision for income taxes represents Federal, foreign, and state and local income taxes. The effective rate differs from statutory rates due to the effect of state and local income taxes, tax rates in foreign jurisdictions, global intangible low-taxed income (“GILTI”), tax benefit of R&D credits, and certain nondeductible expenses. Our effective tax rate will change from quarter to quarter based on recurring and non-recurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation, and state and local income taxes. In addition, changes in judgment from the evaluation of new information resulting in the recognition de-recognition or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change.

For the three months ended September 30, 2023 and September 30, 2022, the Company recognized net income tax expense of $1,517,000 and $461,000, 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 September 30, 2023, the Company had accrued interest totaling $162,000, as well as $700,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period. For the three months ended September 30, 2023, additional interest expense was accrued for in the amount of $23,000.

The Company does not expect that our unrecognized tax benefits will change within the next twelve months due to statute of limitation lapses. We file a consolidated U.S. income tax return and tax returns in certain state and local and foreign jurisdictions. As of September 30, 2023, we remain subject to examination in all tax jurisdictions for all relevant jurisdictional statutes for fiscal years 2018 and thereafter.

In December 2022, the Company received a letter from the IRS (“IRS”) notifying it that the IRS has closed it's 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 8 - Long-Term Debt

As of September 30, 2023 and June 30, 2023, the Company had a revolving line of credit of $11,000,000 (“Revolver Agreement”) which expires in June 2024.

The Revolver Agreement also provides for a LIBOR-based interest rate option of LIBOR plus 1.15% to 2.00%, depending on the ratio of outstanding debt to EBITDA, which is to be measured and adjusted quarterly, a prime rate-based option of the prime rate plus 0.25% and other terms and conditions as more fully described in the Revolver Agreement. The Company’s obligations under the Revolver Agreement continue to be secured by substantially all of its domestic assets, including but not limited to, deposit accounts, accounts receivable, inventory, equipment and fixtures and intangible assets. In addition, the Company’s wholly owned subsidiaries, with the

15

exception of the Company’s foreign subsidiaries, have issued guarantees and pledges of all of their assets to secure the Company’s obligations under the Revolver Agreement. All of the outstanding common stock of the Company’s domestic subsidiaries and 65% of the common stock of the Company’s foreign subsidiaries has been pledged to secure the Company’s obligations under the Revolver Agreement. The Revolver Agreement contains various restrictions and covenants including, among others, restrictions on payment of dividends, restrictions on borrowings and compliance with certain financial ratios, as defined in the Revolver Agreement. In September 2020, the Company and its lender amended the Revolver Agreement, which had an expiration date of June 2021, to expire in June 2024. The amended Revolver Agreement also removed certain requirements and restrictions on the Company as well as removing the mortgage on the Company’s Amityville facility.

During the fourth quarter of fiscal 2020, the Company received the proceeds of promissory notes dated between April 17, 2020 and May 7, 2020 (the "PPP Loan Agreement"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender). Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act and governed by the CARES Act, Section 7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the Small Business Association (“SBA”) implementing the PPP and acting as guarantor, or any other applicable loan program requirements, as defined in 13 CFR § 120.10, as amended from time to time. Pursuant to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $3,904,000 (the "PPP Loan"). The PPP Loan and related extinguishment was accounted for in accordance with ASC 470 “Debt”.

Pursuant to the CARES Act, the loans may be forgiven by the SBA. During the year ended June 30, 2022, the PPP Loans were forgiven, in their entirety, in accordance with guidelines set forth in the PPP loan documents. The Company recognized a gain on the extinguishment of debt during the quarter ended September 30, 2021 in the amount of $3,904,000 within the other (expense) income section in the accompanying condensed consolidated statements of income. The SBA reserves the right to audit PPP forgiveness applications for a period of six years from the date of forgiveness. It has indicated that it will audit all of those that are in excess of $2 million.

NOTE 9 - Stock Option

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 September 30, 2023 and 2022, the Company recorded non-cash compensation expense of $307,000 ($0.01 per basic and diluted share) and $477,000 ($0.01 per basic and diluted share), respectively, relating to stock-based compensation.

2012 Employee Stock Option Plan

In December 2012, the stockholders approved the 2012 Employee Stock Option Plan (the 2012 Employee Plan). The 2012 Employee Plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 1,900,000 shares of the Company’s common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (“ISOs”) or non-incentive stock options, to valued employees. Any plan participant who is granted ISOs and possesses more than 10% of the voting rights of the Company’s outstanding common stock must be granted an option with a price of at least 110% of the fair market value on the date of grant and a term of 10 years.

Under the 2012 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At September 30, 2023, 521,580 stock options were outstanding, 258,328 stock options were exercisable and no further stock options were available for grant under this plan.

16

0 and 37,500 options were granted during the three months ended September 30, 2023 and 2022, respectively. No options may be granted under this plan after December 2022. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2023	2022
Risk-free interest rates	n/a	3.03	%
Expected lives	n/a	7.27 Years
Expected volatility	n/a	43	%
Expected dividend yields	n/a	0	%

The following table reflects activity under the 2012 Employee Plan for the three months ended September 30:

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		521,580	$	19.37		523,080	$	18.59
Granted		—		—		37,500	$	26.94
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		(5,200)	$	8.64
Outstanding, end of period		521,580	$	19.37		555,380	$	19.25
Exercisable, end of period		258,328	$	17.40		183,852	$	15.26
Weighted average fair value at grant date of options granted		n/a			$	13.36
Total intrinsic value of options exercised		n/a			$	107,000
Total intrinsic value of options outstanding	$	1,763,000			$	5,684,000
Total intrinsic value of options exercisable	$	1,358,000			$	2,586,000

0 and 5,200 stock options were exercised during the three months ended September 30, 2023 and 2022, respectively. $45,000 cash was received from the option exercises during the three months ended September 30, 2022. The actual tax benefit realized for the tax deductions from option exercises during the three months ended September 30, 2022 was $0.

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at September 30, 2023:

	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
$3.15 ‑ $26.94	521,580	7.42	$	19.37	258,328	$	17.40
	521,580	7.42	$	19.37	258,328	$	17.40

As of September 30, 2023, there was $1,738,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan. 0 and 37,500 options were granted during the three months ended September 30, 2023 and 2022, respectively. 10,700 and 12,300 options vested during the three months ended September 30, 2023 and 2022, respectively. The total grant date fair value of the options vesting during the three months ended September 30, 2023 and 2022 under this plan was $124,000 and $129,000, 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

17

option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At September 30, 2023, 20,400 stock options were outstanding, 13,920 stock options were exercisable and no further stock options were available for grant under this plan.

There were no options granted during the three months ended September 30, 2023 or 2022. No options may be granted under this plan after December 2022. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2023	2022
Risk-free interest rates	n/a	n/a
Expected lives	n/a	n/a
Expected volatility	n/a	n/a
Expected dividend yields	n/a	n/a

The following table reflects activity under the 2012 Non-Employee Plan for the three months ended September 30:

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		20,400	$	14.39		20,400	$	14.39
Granted		—		—		—		—
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		—		—
Outstanding, end of period		20,400	$	14.39		20,400	$	14.39
Exercisable, end of period		13,920	$	10.99		11,280	$	8.92
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	$	167,000			$	300,000
Total intrinsic value of options exercisable	$	159,000			$	227,000

No stock options were exercised during the three months ended September 30, 2023 or 2022, respectively. No cash was received from option exercises during the three months ended September 30, 2023 or 2022, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $0 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at September 30, 2023:

	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	6.40	$	14.39	13,920	$	10.99
	20,400	6.40	$	14.39	13,920	$	10.99

As of September 30, 2023, there was $40,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan. No options were granted during the three months ended September 30, 2023 and 2022, respectively. No options vested during the three months ended September 30, 2023 and 2022.

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

18

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 September 30, 2023, 75,000 stock options were outstanding, 50,720 stock options were exercisable and no further stock options were available for grant under this plan.

There were no options granted during the three months ended September 30, 2023 and 2022. No options may be granted under this plan after December 2028. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2023	2022
Risk-free interest rates	n/a	n/a
Expected lives	n/a	n/a
Expected volatility	n/a	n/a
Expected dividend yields	n/a	n/a

The following table reflects activity under the 2018 Non-Employee Plan for the nine months ended September 30:

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		75,000	$	14.83		89,000	$	14.91
Granted		—		—		—		—
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		(6,300)	$	14.41
Outstanding, end of period		75,000	$	14.83		82,700	$	14.95
Exercisable, end of period		50,720	$	12.87		38,740	$	12.75
Weighted average fair value at grant date of options granted		n/a				n/a
Total intrinsic value of options exercised		n/a			$	99,000
Total intrinsic value of options outstanding	$	570,000			$	1,169,000
Total intrinsic value of options exercisable	$	480,000			$	633,000

0 and 6,300 options were exercised during the three months ended September 30, 2023 and 2022, respectively. The 6,300 options that were exercised during the three months ended September 30, 2022, were settled by exchanging 3,020 shares of the Company’s common stock which were retired and returned to unissued status upon receipt. No cash was received from option exercises during the three months ended September 30, 2022, and the actual tax benefit realized for the tax deductions from option exercises was $21,000.

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at September 30, 2023:

	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	75,000	6.51	$	14.83	50,720	$	12.87
	75,000	6.51	$	14.83	50,720	$	12.87

As of September 30, 2023, there was $104,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan. No options were granted during the three months ended September 30, 2023 and 2022, respectively. No options vested during the three months ended September 30, 2023 and 2022.

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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 September 30, 2023, 56,900 stock options were outstanding, 25,760 stock options were exercisable and 43,100 stock options were available for grant under this plan.

0 and 25,000 options were granted during the three months ended September 30, 2023 and 2022, respectively. No options may be granted under this plan after May 2030. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2023	2022
Risk-free interest rates	n/a	3.03	%
Expected lives	n/a	7.27 Years
Expected volatility	n/a	43	%
Expected dividend yields	n/a	0	%

The following table reflects activity under the 2020 Non-Employee Plan for the three months ended September 30:

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		56,900	$	23.35		26,900	$	18.64
Granted		—		—		25,000	$	26.94
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		—		—
Outstanding, end of period		56,900	$	23.35		51,900	$	22.64
Exercisable, end of period		25,760	$	21.21		14,380	$	19.51
Weighted average fair value at grant date of options granted		n/a			$	13.36
Total intrinsic value of options exercised		n/a				n/a
Total intrinsic value of options outstanding	$	109,000			$	334,000
Total intrinsic value of options exercisable	$	87,000			$	138,000

No stock options were exercised during the three months ended September 30, 2023 or 2022. No cash was received from option exercises during either of the three months ended September 30, 2023 or 2022 and the actual tax benefit realized for the tax deductions from option exercises was $0 for both periods.

The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at September 30, 2023:

	Options outstanding				Options exercisable
		Weighted average
	Number	remaining	Weighted average		Number	Weighted average
Range of exercise prices	outstanding	contractual life	exercise price		exercisable	exercise price
$11.40 - $30.71	56,900	8.34	$	23.35	25,760	$	21.21
	56,900	8.34	$	23.35	25,760	$	21.21

As of September 30, 2023, there was $312,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan. 0 and 25,000 options were granted during the three months ended September

20

30, 2023 and 2022, respectively. 7,000 options vested during both the three months ended September 30, 2023 and 2022. The total grant date fair value of the options vesting during the three months ended September 30, 2023 and 2022, under this plan was $79,000 each period.

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 September 30, 2023, there were no stock options outstanding or exercisable and 950,000 stock options were available for grant under this plan.

There were no options granted during the three months ended September 30, 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:

	2023
Risk-free interest rates	n/a
Expected lives	n/a
Expected volatility	n/a
Expected dividend yields	n/a

The following table reflects activity under the 2022 Employee Plan for the three months ended September 30:

	2023
			Weighted average
	Options		exercise price
Outstanding, beginning of year		5,000	$	40.01
Granted		—		—
Forfeited/Lapsed		(5,000)	$	(40.01)
Exercised		—		—
Outstanding, end of period		—		—
Exercisable, end of period		—		—
Weighted average fair value at grant date of options granted		n/a
Total intrinsic value of options exercised		n/a
Total intrinsic value of options outstanding		n/a
Total intrinsic value of options exercisable		n/a

No options were exercised during the three months ended September 30, 2023. No cash was received from option exercises during the three months ended September 30, 2023 and the actual tax benefit realized for the tax deductions from option exercises was $0.

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The following table summarizes information about stock options outstanding under the 2022 Employee Plan at September 30, 2023:

	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
n/a	—	—	$	—	—	$	—
	—	—	$	—	—	$	—

As of September 30, 2023, there was $0 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2022 Employee Plan. No options were granted during the three months ended September 30, 2023. No options vested during the three months ended September 30, 2023.

NOTE 10 – Stockholders’ Equity Transactions

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. During the three months ended September 30, 2023 and the fiscal year ended June 30, 2023, the Company did not repurchase any shares of its outstanding common stock.

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

There were no options exercised by certain employees and directors during the three months ended September 30, 2023. During fiscal 2023, certain employees and directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plans totaling 53,000 shares. 43,600 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees. The number of shares surrendered by the optionees was 17,385 and was based upon the per share price on the effective date of the option exercise.

NOTE 11 – Related Party Transaction

In February 2023, the Company's President and Chairman and the Company’s Executive Vice President and Chief Financial Officer sold 2,300,000 and 100,000 shares of our common stock, respectively, as selling stockholders in an underwritten secondary public offering at a public offering price of $31.50 per share. The Company did not sell any shares in the offering and received no proceeds from the offerings.

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 $62,000 and $63,000 for the three months ended September 30, 2023 and 2022, 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.

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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 September 30, 2023 and 2022 cash payments against operating lease liabilities totaled $86,000 and $72,000, respectively.

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

Weighted-average remaining lease term	69 Years
Weighted-average discount rate	6.25	%

The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2023 (in thousands):

Year Ending June 30,	Amount
2024	$	235
2025		299
2026		282
2027		267
2028		253
Thereafter		4,386
Total	$	5,722

Operating lease expense totaled approximately $124,000 and $80,000 for the three months ended September 30, 2023 and 2022, respectively.

Litigation

In the normal course of business, the Company is a party to claims and/or litigation. Management believes that the settlement of such claims and/or litigation, considered in the aggregate, will not have a material adverse effect on the Company’s financial position and results of operations.

On August 18, 2023, the Company announced that it would be restating its financial statements for the quarters ending September 30, 2022, December 31, 2022 and March 31, 2023. Following this announcement, 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. On October 30, 2023, five plaintiffs filed applications to be lead plaintiff in the action. The Company intends to vigorously defend against the action.

Employment Agreements

As of September 30, 2023, the Company was obligated under two employment agreements and one severance agreement. The employment agreements are with the Company’s CEO, Cand the Senior Vice President of Engineering (“the SVP of Engineering”) and the severance agreement is with the Company’s Executive Vice President of Operations and Chief Financial Officer (“CFO”). The employment agreement with the CEO provides for an annual salary of $872,000, as adjusted for inflation; incentive compensation as may be approved by the Board of Directors from time to time and a termination payment in an amount up to 299% of the average of the prior five calendar year’s compensation, subject to certain limitations, as defined in the agreement. The employment agreement renews annually in August unless either party gives the other notice of non-renewal at least six months prior to the end of the applicable term.

The employment agreement with the SVP of Engineering expires in August 2024 and provides for an annual salary of $361,000, 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.

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

NOTE 14 – Geographical Data

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

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

	Three months ended September 30,
	2023		2022
Sales to external customers (1):
Domestic	$	41,371	$	39,259
Foreign		305		234
Total Net Sales	$	41,676	$	39,493

	September 30, 2023		June 30, 2023
Identifiable assets:
United States	$	129,254	$	122,995
Dominican Republic (2)		47,435		43,659
Total Identifiable Assets	$	176,689	$	166,654

(1) All of the Company’s sales originate in the United States and are shipped primarily from the Company’s facilities in the United States. There were no sales into any one foreign country in excess of 10% of total Net Sales.

(2) Consists primarily of inventories (September 30, 2023 = $37,385; June 30, 2023 = $33,477), operating lease assets (September 30, 2023 = $5,722; June 30, 2023 = $5,797) and fixed assets (September 30, 2023 = $3,851; June 30, 2023 = $3,958) 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 date of the condensed consolidated financial statements for events requiring recording or disclosure in the condensed consolidated financial statements.

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

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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, 2023 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 Security Technologies, Inc (“NAPCO”, “the Company”, “we”) is one of the leading manufacturers and designers of high-tech electronic security devices, cellular communication services for intrusion and fire alarm systems as well as a 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 principally to independent distributors, dealers and installers of security equipment. We have experienced significant growth in recent years, primarily driven by fast growing recurring service revenues generated from wireless communication services for intrusion and fire alarm systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as a result of on-campus shooting and violence in the U.S. Our wireless communication services have led to the substantial growth in our monthly recurring revenues.

Since 1969, NAPCO has established a heritage and proven record in the professional security community for reliably delivering both advanced technology and high-quality security solutions, building many of the industry’s widely recognized brands, such as NAPCO Security Systems, Alarm Lock, Continental Access, Marks USA, and other popular product lines: including Gemini and F64-Series hardwire/wireless intrusion systems and iSee Video internet video solutions. We are also dedicated to developing innovative technology and producing the next generation of reliable security solutions that utilize remote communications and wireless networks, including our StarLink, iBridge, and more recently the iSecure product lines. Today, millions of businesses, institutions, homes, and people around the globe are protected by products from the NAPCO Group of Companies.

Economic and Other Factors

We are subject to the effects of general economic and market conditions. If the U.S. or international economic conditions deteriorate, our revenue, profit and cash-flow levels could be materially adversely affected in future periods. In the event of such deterioration, many of our current or potential future customers may experience serious cash flow problems and as a result may, modify, delay or cancel purchases of our products. Additionally, customers may not be able to pay, or may delay payment of, accounts receivable that are owed to us. If such events do occur, they may result in our fixed and semi-variable expenses becoming too high in relation to our revenues and cash flows.

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Seasonality

The Company's fiscal year begins on July 1 and ends on June 30. Historically, the end users of the Company’s hardware products want to install these products prior to the summer; therefore, sales of these products historically peak in the period April 1 through June 30, the Company's fiscal fourth quarter, and are reduced in the period July 1 through September 30, the Company's fiscal first quarter. Our monthly recurring service revenue, which is less susceptible to these fluctuations, allows us to generate a more consistent and predictable income stream.

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 2023 Annual Report on Form 10-K. Management believes these critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Results of Operations

	Three months ended September 30,
	(dollars in thousands)
							% Increase/
	2023			2022			(decrease)
Net sales: equipment revenues	$	24,391		$	25,687		(5.0)	%
service revenues		17,285			13,806		25.2	%
Total net sales		41,676			39,493		5.5	%
Gross Profit: equipment		6,894			2,421		184.8	%
services		15,519			12,145		27.8	%
Total gross profit		22,413			14,566		53.9	%
Gross profit as a % of net sales:		53.8	%		36.9	%	45.8	%
equipment		28.3	%		9.4	%	199.9	%
services		89.8	%		88.0	%	2.1	%
Research and development		2,437			2,428		0.4	%
Selling, general and administrative		8,421			8,490		(0.8)	%
Selling, general and administrative as a percentage of net sales		20.2	%		21.5	%	(6.0)	%
Operating income		11,555			3,648		216.7	%
Interest and other income (expense), net		440			(103)		(527.2)	%
Provision for income taxes		1,517			461		229.1	%
Net income		10,478			3,084		239.8	%

Net Sales for the three months ended September 30, 2023 increased by $2,183,000, or 5.5%, to $41,676,000 as compared to $39,493,000 for the same period a year ago. The increase in sales for the three months ended September 30, 2023 was due primarily to revenue increases in recurring communication services ($3,479,000), Alarm Lock brand door-locking products ($2,111,000), Marks brand door-locking products ($828,000), and Continental brand access control products ($79,000) as partially offset by a decrease in Napco brand intrusion products ($4,314,000).

The Company's gross profit increased by $7,847,000 to $22,413,000, or 53.8% of net sales, for the three months ended September 30, 2023 as compared to $14,566,000, or 36.9% of net sales, for the same period a year ago. Gross profit on equipment sales was $6,894,000, or 28.3% of net equipment sales, for the three months ended September 30, 2023 and $2,421,000, or 9.4% of net equipment sales, for the same period a year ago. Gross profit on service revenues was $15,519,000, or 89.8% of net service revenues, for the three months ended September 30, 2023 and $12,145,000, or 88.0% of net service revenues, for the same period a year ago. The increase in gross profit in dollars and as a percentage of net sales on equipment revenues during the three months ended September 30, 2023 primarily resulted from a favorable shift in the proportion of sales to the Company’s door-locking products, which typically have higher margins than intrusion products, as well as from lower costs of certain components as compared to the same period a year ago when the Company was still feeling the effects of the global supply chain shortages. The price of these components had increased during the supply chain disruptions that occurred during the three months ended September 30, 2022. The increase in gross profit in dollars and as a percentage of net sales on service revenues during the three months ended September 30,

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2023 was primarily the result of the increase in revenues as described above as well as a greater proportion of those revenues being generated by the Company’s fire radios, which generate higher monthly service charges than those of the Company’s intrusion radios. The increases in total Gross Profit and total Gross Profit as a Percentage of Net Sales resulted from the increases described above.

Research and development expenses for the three months ended September 30, 2023 remained relatively consistent at $2,437,000, or 5.8% of net sales, as compared to $2,428,000, or 6.1% of net sales, for the same period a year ago.

Selling, general and administrative (“SG&A”) expenses for the three months ended September 30, 2023 remained relatively consistent at $8,421,000 as compared to $8,490,000 for the same period a year ago. SG&A expenses as a percentage of net sales decreased to 20.2% for the three months ended September 30, 2023 as compared to 21.5% for the same period a year ago. The decrease as a percentage of net sales was due primarily to the increase in net sales without the need to increase to increase SG&A expenses.

Interest and other income (expense), net for the three months ended September 30, 2023 increased by $543,000 to income of $440,000 as compared to expense of $103,000 for the same period a year ago. The increase in income for the three months was primarily due to an increase in interest income on certificates of deposits.

The Company’s provision for income taxes for the three months ended September 30, 2023 increased by $1,056,000 to $1,517,000 as compared to $461,000 for the same period a year ago. The increase in the provision for income taxes for the three months was primarily due to higher taxable income in the U.S. The Company’s effective rate for income tax was 12.6% and 13.0% for the three months ended September 30, 2023 and 2022 respectively.

Net income for the three months ended September 30, 2023 increased by $7,394,000 to $10,478,000 or $0.28 per diluted share as compared to $3,084,000 or $0.08 per diluted share for the same period a year ago. The increase in net income for the three months ended September 30, 2023 was primarily due to the items described above.

Liquidity and Capital Resources

The Company has cash, certificates of deposit (“CD”) which mature within 12 months, and marketable securities which aggregate to $74 million. During the three months ended September 30, 2023, the Company utilized a portion of its cash balance at June 30, 2023 ($646,000 of $35,955,000) to purchase marketable securities and other investments ($389,000) and property, plant and equipment ($257,000). The securities and investments consist of money market accounts, CD’s and time deposits. During the three months ended September 30, 2023, the Company generated cash flows from operations of $11,210,000. The Company believes its current working capital, cash flows from operations and its revolving credit agreement will be sufficient to fund the Company’s operations through the next twelve months.

Accounts receivable at September 30, 2023 decreased by $3,148,000 to $22,921,000 as compared to $26,069,000 at June 30, 2023. This decrease is primarily the result of the higher sales volume of equipment during the quarter ended June 30, 2023, which is typically the Company’s highest, as compared to the quarter ended September 30, 2023.

Inventories, which include both current and non-current portions, increased by $5,798,000 to $54,147,000 at September 30, 2023 as compared to $48,349,000 at June 30, 2023. The increase was due primarily to a build-up of inventory of the Company’s radio products in order to mitigate potential supply chain interruptions of these products. The increase was also due to the ongoing shortages of certain component parts and the Company purchasing large quantities of these hard-to-source component parts when they became available. As these challenges have begun to subside, the Company has reduced the quantities of these components being purchased and believes it’s inventory levels will decrease.

Accounts payable and accrued expenses, not including income taxes payable, increased by $2,210,000 to $21,896,000 as of September 30, 2023 as compared to $19,686,000 as of June 30, 2023. This increase is primarily due to an increase in accounts payable, which relates to the Company’s recent purchases relating to its newly introduced Prima intrusion alarm products as well as recent purchases of components for the Company’s radio products.

As of September 30, 2023 and 2022, long-term debt consisted of a revolving line of credit of $11,000,000 (“Revolver Agreement”), with no amounts outstanding, which expires in June 2024. The revolving credit facility contains various restrictions and covenants

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including, among others, restrictions on borrowings and compliance with certain financial ratios, as defined in the agreement. The Company’s long-term debt is described more fully in Note 8 to the condensed consolidated financial statements.

As of September 30, 2023, the Company had no material commitments for capital expenditures or inventory purchases other than purchase orders issued in the normal course of business. In addition, the Company’s balance sheet reflects a refund liability of $3,833,000 as of September 30, 2023 for customer returns and promotional credits which is more fully discussed in Note 2 to the condensed consolidated financial statements.

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

The Company's principal financial instrument is long-term debt (consisting of a revolving credit facility) that provides for interest based on the prime rate or SOFR as described in the agreement. The Company is affected by market risk exposure primarily through the effect of changes in interest rates on amounts payable by the Company under these credit facilities.

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. As a result, if exchange rates move against foreign customers, the Company could experience difficulty collecting unsecured accounts receivable, 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 $887,000.

ITEM 4: 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. Management necessarily applied 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.

At the conclusion of the period ended September 30, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. As disclosed in our Annual Report on Form 10-K for the year ended June 30, 2023, management identified three material weaknesses in internal control.

One material weakness in internal control related to ineffective information technology general controls (ITGCs) in the area of user access and lack of effective program change-management over certain information technology (IT) systems that support the Company’s financial reporting processes. Our business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted. We believe that these control deficiencies were a result of: IT control processes lacking sufficient documentation and risk-assessment procedures to assess changes in the IT environment and program change management of personnel that could impact internal controls over financial reporting.

The second material weakness in internal control related to the reserve for excess and slow-moving inventory. This control deficiency was a result of a lack of effective review and reconciliation controls over the forecasted sales and usage data.

In addition to the foregoing, during the Company’s closing of its books for the period ended June 30, 2023, management identified a third material weakness related to the Company’s Cost of Goods Sold (“COGS”) and Inventory during the first three quarters of fiscal 2023. COGS reflected in the Company’s Original Form 10-Q was based on inventory costing as of June 30, 2022. However, in the period following June 30, 2022, substantial fluctuations occurred in certain material costs. Our inventory costing process did not identify these fluctuations in a timely manner resulting in Inventory being overstated and COGS being understated and resulting in an overstated gross profit, operating income, income before the provision for income taxes and net income for the first three quarters of fiscal 2023. While the Company has begun the process to take measures which it believes will remediate the underlying causes of this material weakness, there can be no assurance as to when the remediation plan will be fully developed and implemented and whether such measures will be effective. Until the Company’s remediation plan is fully implemented and effective, the Company will continue to devote time, attention and financial resources to these efforts.

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Based on these material weaknesses, the Company’s management has concluded that at September 30, 2023 the Company’s internal controls over financial reporting were not effective.

Management, together with external consultants, is currently designing and implementing additional controls and procedures to remediate these items and expects to complete these actions during fiscal 2024. While the Company has begun the process to take measures which it believes will remediate the underlying causes of these material weaknesses, there can be no assurance as to when the remediation plans will be fully developed and implemented and whether such measures will be effective. Until the Company’s remediation plans are fully implemented and effective, the Company will continue to devote time, attention and financial resources to these efforts.

During the three months ended September 30, 2023, there were no changes in the Company’s internal controls over financial reporting 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

In the normal course of business, the Company is a party to claims and/or litigation. Management believes that the settlement of such claims and/or litigation, considered in the aggregate, will not have a material adverse effect on the Company’s financial position and results of operations.

On August 18, 2023, the Company announced that it would be restating its financial statements for the quarters ending September 30, 2022, December 31, 2022 and March 31, 2023.  Following this announcement, 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.  On October 30, 2023, five plaintiffs filed applications to be lead plaintiff in the action.  The Company intends to vigorously defend against the action.

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, 2023. There has been no material change in the risk factors previously disclosed in the Company’s Form 10-K for the three months ended September 30, 2023.

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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.

November 9, 2023

NAPCO SECURITY TECHNOLOGIES, INC.

(Registrant)

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

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EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Richard Soloway, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Napco Security Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2023

/s/RICHARD L. SOLOWAY

Richard Soloway

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Kevin S. Buchel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Napco Security Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2023

/s/KEVIN S. BUCHEL

Kevin S. Buchel

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Napco Security Technologies, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2023, filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, RICHARD L. SOLOWAY, Chief Executive Officer of the Company, certify, that to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  November 9, 2023

/s/RICHARD L. SOLOWAY

Richard L. Soloway, Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Napco Security Technologies, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2023, filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, KEVIN S. BUCHEL, Chief Financial Officer of the Company, certify, that to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 9, 2023

/s/KEVIN S. BUCHEL

Kevin S. Buchel, Chief Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Sep. 30, 2023	Nov. 08, 2023
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Entity File Number	0-10004
Entity Registrant Name	NAPCO SECURITY TECHNOLOGIES, INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	11-2277818
Entity Address, Address Line One	333 Bayview Avenue
Entity Address, City or Town	Amityville
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11701
City Area Code	631
Local Phone Number	842-9400
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	NSSC
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0000069633
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		36,770,097

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023
CURRENT ASSETS
Cash and cash equivalents	$ 43,577	$ 35,955
Investments - other	25,931	25,660
Marketable securities	5,121	5,136
Accounts receivable, net of allowance for credit losses of $107 and $131 as of September 30, 2023 and June 30, 2023, respectively	22,921	26,069
Inventories, net	36,946	35,062
Income tax receivable	205	75
Prepaid expenses and other current assets	3,072	3,402
Total Current Assets	137,773	131,359
Inventories - non-current, net	17,201	13,287
Property, plant and equipment, net	9,112	9,308
Intangible assets, net	3,855	3,939
Deferred income taxes	2,732	2,652
Operating lease asset	5,722	5,797
Other assets	294	312
TOTAL ASSETS	176,689	166,654
CURRENT LIABILITIES
Accounts payable	11,084	8,061
Accrued expenses	7,636	8,079
Accrued salaries and wages	3,176	3,546
Total Current Liabilities	21,896	19,686
Accrued income taxes	1,133	1,110
Long term operating lease liabilities	5,648	5,689
TOTAL LIABILITIES	28,677	26,485
COMMITMENTS AND CONTINGENCIES (Note 13)
STOCKHOLDERS' EQUITY
Common Stock, par value $0.01 per share; 100,000,000 shares authorized as of September 30, 2023 and June 30, 2023; 39,663,812 shares issued; and 36,770,097 shares outstanding as of each date.	397	397
Additional paid-in capital	21,860	21,553
Retained earnings	145,276	137,740
Less: Treasury Stock, at cost (2,893,715 shares)	(19,521)	(19,521)
TOTAL STOCKHOLDERS' EQUITY	148,012	140,169
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 176,689	$ 166,654

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2023	Jun. 30, 2023
CONDENSED CONSOLIDATED BALANCE SHEETS
Allowance for credit losses	$ 107,000	$ 131,000
Common stock, par (per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, issued (in shares)	39,663,812	39,663,912
Common stock, outstanding (in shares)	36,770,097	36,770,097
Treasury stock, shares	2,893,715	2,893,715

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($)	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Net sales:
Net sales	$ 41,676,000	$ 39,493,000
Cost of sales:
Cost of sales	19,263,000	24,927,000
Gross Profit	22,413,000	14,566,000
Operating expenses:
Research and development	2,437,000	2,428,000
Selling, general, and administrative expenses	8,421,000	8,490,000
Total Operating Expenses	10,858,000	10,918,000
Operating Income	11,555,000	3,648,000
Other income (expense):
Interest and other income (expense), net	440,000	(103,000)
Income before Provision for Income Taxes	11,995,000	3,545,000
Provision for Income Taxes	1,517,000	461,000
Net Income	$ 10,478,000	$ 3,084,000
Income per share:
Basic (in dollars per share)	$ 0.28	$ 0.08
Diluted (in dollars per share)	$ 0.28	$ 0.08
Weighted average number of shares outstanding:
Basic (in shares)	36,827,000	36,762,000
Diluted (in shares)	37,076,000	36,990,000
Equipment
Net sales:
Net sales	$ 24,391,000	$ 25,687,000
Cost of sales:
Cost of sales	17,497,000	23,266,000
Services
Net sales:
Net sales	17,285,000	13,806,000
Cost of sales:
Cost of sales	$ 1,766,000	$ 1,661,000

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Total
Balance at Jun. 30, 2022	$ 396	$ 20,005	$ (19,521)	$ 112,911	$ 113,791
Balance (in shares) at Jun. 30, 2022	39,628,197		(2,893,715)
Net income				3,084	3,084
Stock-based compensation expense		477			477
Stock options exercised		45			45
Stock options exercised (in shares)	8,480
Balance at Sep. 30, 2022	$ 396	20,527	$ (19,521)	115,995	117,397
Balance (in shares) at Sep. 30, 2022	39,636,677		(2,893,715)
Balance at Jun. 30, 2023	$ 397	21,553	$ (19,521)	137,740	140,169
Balance (in shares) at Jun. 30, 2023	39,663,812		(2,893,715)
Net income				10,478	10,478
Stock-based compensation expense		307			$ 307
Stock options exercised (in shares)					0
Cash Dividend				(2,942)	$ (2,942)
Balance at Sep. 30, 2023	$ 397	$ 21,860	$ (19,521)	$ 145,276	$ 148,012
Balance (in shares) at Sep. 30, 2023	39,663,812		(2,893,715)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 10,478,000	$ 3,084,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	537,000	457,000
Gain on disposal of fixed asset		(15,000)
Interest income on other investments	76,000	(8,000)
Unrealized loss (gain) on marketable securities	57,000	153,000
(Recovery) reserve of credit losses	(24,000)	(27,000)
Change to inventory reserve	822,000	(252,000)
Deferred income taxes	(80,000)	(417,000)
Stock based compensation expense	307,000	477,000
Changes in operating assets and liabilities:
Accounts receivable	3,172,000	7,903,000
Inventories	(6,620,000)	(10,197,000)
Prepaid expenses and other current assets	330,000	(2,000)
Income tax receivable	(130,000)	(662,000)
Other assets	17,000	(27,000)
Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes	2,267,000	(2,432,000)
Net Cash Provided by (Used in) Operating Activities	11,209,000	(1,965,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment	(256,000)	(372,000)
Proceeds from disposal of fixed asset		38,000
Purchases of marketable securities	(42,000)	(10,028,000)
Purchases of other investments	(347,000)
Net Cash Used in Investing Activities	(645,000)	(10,362,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock option exercises		45,000
Cash paid for dividend	(2,942,000)
Net Cash (Used in) Provided by Financing Activities	(2,942,000)	45,000
Net increase (decrease) in Cash and Cash Equivalents	7,622,000	(12,282,000)
CASH AND CASH EQUIVALENTS - Beginning	35,955,000	41,730,000
CASH AND CASH EQUIVALENTS - Ending	43,577,000	29,448,000
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid		4,000
Income taxes paid	$ 1,703,000	$ 3,398,000

XML

Nature of Business and Summary of Significant Accounting Policies

3 Months Ended

Sep. 30, 2023

Nature of Business and Summary of Significant Accounting Policies

Nature of Business and Summary of Significant Accounting Policies

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

Nature of Business:

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

The Company's fiscal year begins on July 1 and ends on June 30. Historically, the end users of the Company’s hardware products want to install these products prior to the summer; therefore, sales of these products historically peak in the period April 1 through June 30, the Company's fiscal fourth quarter, and are reduced in the period July 1 through September 30, the Company's fiscal first quarter. In addition, demand for all of our products may be affected by the housing and construction markets. Deterioration of the current economic conditions may also affect this trend. The monthly recurring service revenue, which is less susceptible to these fluctuations, allows us to generate a more consistent and predictable stream of income and mitigates the risk of fluctuation in market demand for our equipment products.

Significant Accounting Policies:

Principles of Consolidation

The consolidated financial statements include the accounts of Napco Security Technologies, Inc. and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates include management’s judgments associated with reserves for sales returns and allowances, allowance for credit losses, overhead expenses applied to inventory, inventory reserves, valuation of intangible assets, share based compensation and income taxes. Actual results could differ from those 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, current receivables and payables and certain other short-term financial instruments approximate their fair value as of September 30, 2023 and June 30, 2023 due to their short-term maturities. Long-term debt and lease liabilities reflect fair value based on prevailing market rates.

Cash and Cash Equivalents and Investments – other

Cash and cash equivalents include approximately $15,630,000 of short-term time deposits, consisting of several certificates of deposit totaling $15,366,000 and $264,000 in money market funds as of September 30, 2023. Cash and cash equivalents include approximately $15,242,000 of short-term time deposits, consisting of several certificates of deposit totaling $15,179,000 and $63,000 in a money

market fund as of June 30, 2023. The Company classifies these highly liquid investments with original maturities of three months or less as cash equivalents. Certificates of deposit with an original maturity greater than three months are classified as Investments-other.

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

	September 30, 2023		June 30, 2023
Cash	$	27,947	$	20,713
Money Market Fund		264		63
Certificates of Deposit		15,366		15,179
	$	43,577	$	35,955

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

	September 30, 2023		June 30, 2023
Certificates of Deposit	$	25,931	$	25,660
	$	25,931	$	25,660

Certificates of deposit are recorded at the original cost plus accrued interest. The Company’s Certificates of deposits consist of the following as of (in thousands):

September 30, 2023
Balance Sheet Classification	Interest Rate		Maturity Date		Cost		Carrying Value
Cash and Cash Equivalents		4.77% - 5.25%		11/22/2023 - 11/27/2023	$	15,312	$	15,366
Investments - other		5.00% - 5.40%		10/23/2023 - 3/21/2024		25,706		25,931

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of September 30, 2023 and June 30, 2023. The Company has not historically experienced any credit losses with balances in excess of FDIC limits.

Marketable Securities

The Company’s marketable securities include investments in mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds. The Company’s marketable securities are reported at fair value with the related unrealized and realized gains and losses included in other expense (income). Realized gains or losses on mutual funds are determined on a specific identification basis. The Company would record an impairment charge if the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary. During the three months ended September 30, 2023, the Company did not record an impairment charge regarding its investment in marketable securities because

management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary.

Accounts Receivable

Accounts receivable is stated net of the reserves for credit losses of $107,000 and $131,000 as of September 30, 2023 and June 30, 2023, respectively. Our reserves for credit losses are subjective critical estimates that have a direct impact on reported net earnings. These reserves are based upon the evaluation of our accounts receivable aging, specific exposures, sales levels and historical trends.

Inventories

Inventories are valued at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (FIFO) method. The reported net value of inventory includes finished saleable products, work-in-process and raw materials that will be sold or used in future periods. Inventory costs include raw materials, direct labor and overhead. The Company’s overhead expenses are applied based, in part, upon estimates of the proportion of those expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products. These proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and actual results could differ from those estimates.

In addition, the Company records an inventory obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, product life cycle, requirements to support forecasted sales, and the ability to find alternate applications of its raw materials and to convert finished product into alternate versions of the same product to better match customer demand. In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events. There is inherent professional judgment and subjectivity made by both production and engineering members of management in determining the estimated obsolescence percentage.

The Company also regularly reviews the period over which its inventories will be converted to sales. Any inventories expected to convert to sales beyond 12 months from the balance sheet date are classified as non-current.

Property, Plant, and Equipment

Property, plant, and equipment are carried at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred; costs of major renewals and improvements are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition is reflected in income.

Depreciation is recorded over the estimated service lives of the related assets using primarily the straight-line method. Amortization of leasehold improvements is calculated by using the straight-line method over the estimated useful life of the asset or lease term, whichever is shorter.

Long-Lived and Intangible Assets

Long-lived assets are amortized over their useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets in question may not be recoverable. Impairment would be recorded in circumstances

where undiscounted cash flows expected to be generated by an asset are less than the carrying value of that asset. Intangible assets determined to have indefinite lives were not amortized but were tested for impairment at least annually.

Intangible assets consisted of the follows (in thousands):

	September 30, 2023						June 30, 2023
	Carrying		Accumulated		Net book		Carrying		Accumulated		Net book
	value		amortization		value		value		amortization		value
Customer relationships	$	9,800		(9,335)	$	465	$	9,800		(9,302)	$	498
Trade name		4,048		(658)		3,390		4,048		(607)		3,441
	$	13,848	$	(9,993)	$	3,855	$	13,848	$	(9,909)	$	3,939

Amortization expense for intangible assets subject to amortization was approximately $84,000 and $90,000 for the three months ended September 30, 2023 and 2022, respectively. Amortization expense for each of the next five fiscal years is estimated to be as follows: 2024 - $336,000; 2025 - $315,000; 2026 - $297,000; 2027 - $283,000; and 2028 - $269,000. The weighted average remaining amortization period for intangible assets was 15.3 years and 15.5 years at September 30, 2023 and June 30, 2023, respectively.

Revenue Recognition

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

For product sales, the Company typically transfers control at a point in time upon shipment or delivery of the product. For monthly communication services the Company satisfies its performance obligation as the services are rendered and therefore recognizes revenue over the monthly period.

Typically timing of revenue recognition coincides with the timing of invoicing to the customers, at which time the Company has an unconditional right to consideration. As such, the Company typically records a receivable when revenue is recognized.

The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for product sales is typically due within 30 and 180 days of the delivery date. Payment for monthly communication services is billed on a monthly basis and is typically due at the beginning of the month of service or in 30 days for customers with an open account.

The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months. The Company accepts returns for such defective products as well as for other limited circumstances. The Company also provides rebates to customers for meeting specified purchasing targets and other coupons or credits in limited circumstances. The Company establishes reserves for the estimated returns, rebates and credits and measures such variable consideration based on the expected value method using an analysis of historical data. Changes to the estimated variable consideration in subsequent periods are not material.

The Company analyzes sales returns and is able to make reasonable and reliable estimates of product returns based on the Company’s past history. Estimates for sales returns are based on several factors including actual returns and based on expected return data communicated to it by its customers. Accordingly, the Company believes that its historical returns analysis is an accurate basis for its allowance for sales returns. Actual results could differ from those estimates.

Advertising and Promotional Costs

Advertising and promotional costs are included in "Selling, General and Administrative" expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for the three months ended September 30, 2023 and 2022 was $761,000 and $754,000, respectively.

Research and Development Costs

Research and development (“R&D”) costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income. Company-sponsored R&D expense for the three months ended September 30, 2023 and 2022 was $2,437,000 and $2,428,000, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Net Income per Share

Basic net income per common share (Basic EPS) is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended September 30, 2023 and 2022 (in thousands, except share and per share data):

	Net Income				Weighted Average Shares		Net Income per Share
	2023		2022		2023	2022	2023		2022
Basic EPS	$	10,478	$	3,084	36,827	36,762	$	0.28	$	0.08
Effect of Dilutive Securities:
Stock Options		—		—	249	228		—		—
Diluted EPS	$	10,478	$	3,084	37,076	36,990	$	0.28	$	0.08

Options to purchase 5,000 and 62,500 shares of common stock were excluded for the three months ended September 30, 2023 and 2022, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive. These options were still outstanding at the end of the period.

Stock-Based Compensation

The Company has established five share incentive programs as discussed in Note 9.

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility and forfeiture rates, among other factors.

Stock-based compensation costs of $307,000 and $477,000 were recognized for the three months ended September 30, 2023 and 2022, 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 months ended September 30, 2023 or 2022.

Comprehensive Income

For the three months ended September 30, 2023 and 2022, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income. Accordingly, the Company’s comprehensive income approximates its net income for all periods presented.

Segment Reporting

The Company’s reportable operating segments are determined based on the Company’s management approach. The management approach is based on the way that the chief operating decision maker organizes the segments within an enterprise for making operating decisions and assessing performance. The Company’s results of operations are reviewed by the chief operating decision maker on a consolidated basis and the Company operates in only one segment. The Company has presented required geographical data in Note 14.

Shipping and Handling Sales and Costs

The Company records the amount billed to customers for shipping and handling in net sales ($83,000 and $112,000 in the three months ended September 30, 2023 and 2022, respectively); and classifies the costs associated with these sales in cost of sales ($371,000 and $394,000 in the three months ended September 30, 2023 and 2022, respectively).

Leases

The Company records lease assets and corresponding lease liabilities for the operating lease on our Consolidated Balance Sheets, excluding short-term leases (leases with terms of 12 months or less) as described under ASU No. 2016-02, Leases (Topic 842). Lease payments are discounted using a third-party secured incremental borrowing rate based on information available at lease commencement. The Company analyzes whether or not amendments to existing leases classify as a Lease Modification or a full or partial termination of the existing lease. See Note 13 – Commitments and Contingencies; Leases for additional accounting policies and disclosures.

Recently Issued Accounting Standards

Reference Rate Reform (ASC Topic 848)

In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”), which is expected to be phased out for new arrangements at the

end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate.

The Company’s bank has notified the Company that its LIBOR option, which was available to it through June 30, 2023, has shifted to the Benchmark Replacement as defined in the agreement with the bank. The new benchmark rate is the Secured Overnight Financing Rate (SOFR) (see Note 8). The Company does not believe that this transition will have a material impact on its financial condition.

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Revenue Recognition and Contracts with Customers

3 Months Ended

Sep. 30, 2023

Revenue Recognition and Contracts with Customers

Revenue Recognition and Contracts with Customers

NOTE 2 – Revenue Recognition and Contracts with Customers

The Company is engaged in one major line of business: the development, manufacture, and distribution of security products, encompassing access control systems, door security products, intrusion and fire alarm systems, alarm communication services, and video surveillance products for commercial and residential use. The Company also provides wireless communication service for intrusion and fire alarm systems on a monthly basis. All of these products and services are used for commercial, residential, institutional, industrial and governmental applications, and are sold primarily to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are primarily shipped from the United States.

As of September 30, 2023 and June 30, 2023, the Company included refund liabilities of approximately $3,833,000 and $5,521,000, respectively, in current liabilities. As of September 30, 2023 and June 30, 2023, the Company included return-related assets of approximately $1,201,000 and $1,338,000, respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 4% and 5% for the three months ended September 30, 2023 and 2022, 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 September 30,
	2023		2022
Major Product Lines:
Intrusion and access alarm products	$	9,297	$	13,532
Door locking devices		15,094		12,155
Services		17,285		13,806
Total Revenues	$	41,676	$	39,493

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Business and Credit Concentrations

3 Months Ended

Sep. 30, 2023

Business and Credit Concentrations

Business and Credit Concentrations

NOTE 3 – Business and Credit Concentrations

An entity is more vulnerable to concentrations of credit risk if it is exposed to risk of loss greater than it would have had if it mitigated its risk through diversification of customers. Such risks of loss manifest themselves differently, depending on the nature of the concentration, and vary in significance. The Company had two customers with an accounts receivable balance that comprised of 13% and 10% as of September 30, 2023. As of June 30, 2023, the accounts receivable balance with these respective customers were 19% and 14%. Sales to either of these customers did not exceed 10% of net sales during the three months ended September 30, 2023, however sales to one of these two customers were 12% for the three months ended September 30, 2022. There were no other customers who had sales that comprised of 10% or more of net sales for the 3 months ended September 30, 2023 and 2022.

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Marketable Securities

3 Months Ended

Sep. 30, 2023

Marketable Securities

Marketable Securities

NOTE 4 – Marketable Securities

The Company’s marketable securities include investments in fixed income mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds, and are reported at their fair values. The disaggregated net gains and losses

on the marketable securities recognized within the accompanying condensed consolidated statements of income for the three months ended September 30, 2023 and 2022, are as follows (in thousands):

	Three months ended September 30,
	2023		2022
Net gains recognized during the period on marketable securities	$	42	$	—
Less: Net gains recognized during the period on marketable securities sold during the period		—		—
Unrealized gains (losses) recognized during the reporting period on marketable securities still held at the reporting date		(57)		(153)
	$	(15)	$	(153)

The fair values of the Company’s marketable securities are determined as being the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Company utilizes the three-tier value hierarchy, as prescribed by US GAAP, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s marketable securities, which are considered available-for-sale securities, are re-measured to fair value on a recurring basis and are valued using Level 1 inputs using quoted prices (unadjusted) for identical assets in active markets.

The following tables summarize the Company’s investments at September 30, 2023 and June 30, 2023, respectively (in thousands):

	September 30, 2023						June 30, 2023
					Unrealized						Unrealized
	Cost		Fair Value		Gain (Loss)		Cost		Fair Value		Gain (Loss)
Mutual Funds - Level 1	$	5,693		5,121	$	(572)	$	5,651	$	5,136	$	(515)

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

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Inventories

3 Months Ended

Sep. 30, 2023

Inventories

Inventories

NOTE 5 - Inventories

Inventories, net of reserves are valued at lower of cost (first-in, first-out method) or net realizable value. Inventories, net of reserves consist of the following (in thousands):

	September 30,		June 30,
	2023		2023
Component parts	$	33,566	$	29,939
Work-in-process		8,089		7,726
Finished product		12,492		10,684
	$	54,147	$	48,349
Classification of inventories, net of reserves:
Current	$	36,946	$	35,062
Non-current		17,201		13,287
	$	54,147	$	48,349

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Property, Plant, and Equipment

3 Months Ended

Sep. 30, 2023

Property, Plant, and Equipment

Property, Plant, and Equipment

NOTE 6 – Property, Plant, and Equipment

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

	September 30, 2023		June 30, 2023		Useful Life in Years
Land	$	904	$	904	N/A
Buildings		8,911		8,911	30 to 40
Molds and dies		7,517		7,517	3 to 5
Furniture and fixtures		3,447		3,387	5 to 10
Machinery and equipment		28,739		28,574	3 to 10
Building improvements		3,110		3,078	Shorter of the lease term or life of asset
		52,628		52,371
Less: accumulated depreciation and amortization		(43,516)		(43,063)
	$	9,112	$	9,308

Depreciation and amortization expense on property, plant, and equipment was approximately $453,000 and $367,000 for the three months ended September 30, 2023 and 2022, respectively.

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Income Taxes

3 Months Ended

Sep. 30, 2023

Income Taxes

Income Taxes

NOTE 7 - Income Taxes

The provision for income taxes represents Federal, foreign, and state and local income taxes. The effective rate differs from statutory rates due to the effect of state and local income taxes, tax rates in foreign jurisdictions, global intangible low-taxed income (“GILTI”), tax benefit of R&D credits, and certain nondeductible expenses. Our effective tax rate will change from quarter to quarter based on recurring and non-recurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation, and state and local income taxes. In addition, changes in judgment from the evaluation of new information resulting in the recognition de-recognition or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change.

For the three months ended September 30, 2023 and September 30, 2022, the Company recognized net income tax expense of $1,517,000 and $461,000, 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 September 30, 2023, the Company had accrued interest totaling $162,000, as well as $700,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period. For the three months ended September 30, 2023, additional interest expense was accrued for in the amount of $23,000.

The Company does not expect that our unrecognized tax benefits will change within the next twelve months due to statute of limitation lapses. We file a consolidated U.S. income tax return and tax returns in certain state and local and foreign jurisdictions. As of September 30, 2023, we remain subject to examination in all tax jurisdictions for all relevant jurisdictional statutes for fiscal years 2018 and thereafter.

In December 2022, the Company received a letter from the IRS (“IRS”) notifying it that the IRS has closed it's 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.

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Long-Term Debt

3 Months Ended

Sep. 30, 2023

Long-Term Debt

Long-Term Debt

NOTE 8 - Long-Term Debt

As of September 30, 2023 and June 30, 2023, the Company had a revolving line of credit of $11,000,000 (“Revolver Agreement”) which expires in June 2024.

The Revolver Agreement also provides for a LIBOR-based interest rate option of LIBOR plus 1.15% to 2.00%, depending on the ratio of outstanding debt to EBITDA, which is to be measured and adjusted quarterly, a prime rate-based option of the prime rate plus 0.25% and other terms and conditions as more fully described in the Revolver Agreement. The Company’s obligations under the Revolver Agreement continue to be secured by substantially all of its domestic assets, including but not limited to, deposit accounts, accounts receivable, inventory, equipment and fixtures and intangible assets. In addition, the Company’s wholly owned subsidiaries, with the

exception of the Company’s foreign subsidiaries, have issued guarantees and pledges of all of their assets to secure the Company’s obligations under the Revolver Agreement. All of the outstanding common stock of the Company’s domestic subsidiaries and 65% of the common stock of the Company’s foreign subsidiaries has been pledged to secure the Company’s obligations under the Revolver Agreement. The Revolver Agreement contains various restrictions and covenants including, among others, restrictions on payment of dividends, restrictions on borrowings and compliance with certain financial ratios, as defined in the Revolver Agreement. In September 2020, the Company and its lender amended the Revolver Agreement, which had an expiration date of June 2021, to expire in June 2024. The amended Revolver Agreement also removed certain requirements and restrictions on the Company as well as removing the mortgage on the Company’s Amityville facility.

During the fourth quarter of fiscal 2020, the Company received the proceeds of promissory notes dated between April 17, 2020 and May 7, 2020 (the "PPP Loan Agreement"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender). Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act and governed by the CARES Act, Section 7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the Small Business Association (“SBA”) implementing the PPP and acting as guarantor, or any other applicable loan program requirements, as defined in 13 CFR § 120.10, as amended from time to time. Pursuant to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $3,904,000 (the "PPP Loan"). The PPP Loan and related extinguishment was accounted for in accordance with ASC 470 “Debt”.

Pursuant to the CARES Act, the loans may be forgiven by the SBA. During the year ended June 30, 2022, the PPP Loans were forgiven, in their entirety, in accordance with guidelines set forth in the PPP loan documents. The Company recognized a gain on the extinguishment of debt during the quarter ended September 30, 2021 in the amount of $3,904,000 within the other (expense) income section in the accompanying condensed consolidated statements of income. The SBA reserves the right to audit PPP forgiveness applications for a period of six years from the date of forgiveness. It has indicated that it will audit all of those that are in excess of $2 million.

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Stock Option

3 Months Ended

Sep. 30, 2023

Stock Option

Stock Option

NOTE 9 - Stock Option

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 September 30, 2023 and 2022, the Company recorded non-cash compensation expense of $307,000 ($0.01 per basic and diluted share) and $477,000 ($0.01 per basic and diluted share), respectively, relating to stock-based compensation.

2012 Employee Stock Option Plan

In December 2012, the stockholders approved the 2012 Employee Stock Option Plan (the 2012 Employee Plan). The 2012 Employee Plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 1,900,000 shares of the Company’s common stock to be acquired by the holders of such awards. Under this plan, the Company may grant stock options, which are intended to qualify as incentive stock options (“ISOs”) or non-incentive stock options, to valued employees. Any plan participant who is granted ISOs and possesses more than 10% of the voting rights of the Company’s outstanding common stock must be granted an option with a price of at least 110% of the fair market value on the date of grant and a term of 10 years.

Under the 2012 Employee Plan, stock options may be granted to valued employees with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable, in whole or in part, at 20% per year beginning on the date of grant. An option granted under this plan shall vest in full upon a “change in control” as defined in the plan. At September 30, 2023, 521,580 stock options were outstanding, 258,328 stock options were exercisable and no further stock options were available for grant under this plan.

0 and 37,500 options were granted during the three months ended September 30, 2023 and 2022, respectively. No options may be granted under this plan after December 2022. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2023	2022
Risk-free interest rates	n/a	3.03	%
Expected lives	n/a	7.27 Years
Expected volatility	n/a	43	%
Expected dividend yields	n/a	0	%

The following table reflects activity under the 2012 Employee Plan for the three months ended September 30:

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		521,580	$	19.37		523,080	$	18.59
Granted		—		—		37,500	$	26.94
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		(5,200)	$	8.64
Outstanding, end of period		521,580	$	19.37		555,380	$	19.25
Exercisable, end of period		258,328	$	17.40		183,852	$	15.26
Weighted average fair value at grant date of options granted		n/a			$	13.36
Total intrinsic value of options exercised		n/a			$	107,000
Total intrinsic value of options outstanding	$	1,763,000			$	5,684,000
Total intrinsic value of options exercisable	$	1,358,000			$	2,586,000

0 and 5,200 stock options were exercised during the three months ended September 30, 2023 and 2022, respectively. $45,000 cash was received from the option exercises during the three months ended September 30, 2022. The actual tax benefit realized for the tax deductions from option exercises during the three months ended September 30, 2022 was $0.

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at September 30, 2023:

	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
$3.15 ‑ $26.94	521,580	7.42	$	19.37	258,328	$	17.40
	521,580	7.42	$	19.37	258,328	$	17.40

As of September 30, 2023, there was $1,738,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan. 0 and 37,500 options were granted during the three months ended September 30, 2023 and 2022, respectively. 10,700 and 12,300 options vested during the three months ended September 30, 2023 and 2022, respectively. The total grant date fair value of the options vesting during the three months ended September 30, 2023 and 2022 under this plan was $124,000 and $129,000, 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 September 30, 2023, 20,400 stock options were outstanding, 13,920 stock options were exercisable and no further stock options were available for grant under this plan.

There were no options granted during the three months ended September 30, 2023 or 2022. No options may be granted under this plan after December 2022. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2023	2022
Risk-free interest rates	n/a	n/a
Expected lives	n/a	n/a
Expected volatility	n/a	n/a
Expected dividend yields	n/a	n/a

The following table reflects activity under the 2012 Non-Employee Plan for the three months ended September 30:

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		20,400	$	14.39		20,400	$	14.39
Granted		—		—		—		—
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		—		—
Outstanding, end of period		20,400	$	14.39		20,400	$	14.39
Exercisable, end of period		13,920	$	10.99		11,280	$	8.92
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	$	167,000			$	300,000
Total intrinsic value of options exercisable	$	159,000			$	227,000

No stock options were exercised during the three months ended September 30, 2023 or 2022, respectively. No cash was received from option exercises during the three months ended September 30, 2023 or 2022, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $0 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at September 30, 2023:

	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	6.40	$	14.39	13,920	$	10.99
	20,400	6.40	$	14.39	13,920	$	10.99

As of September 30, 2023, there was $40,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan. No options were granted during the three months ended September 30, 2023 and 2022, respectively. No options vested during the three months ended September 30, 2023 and 2022.

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 September 30, 2023, 75,000 stock options were outstanding, 50,720 stock options were exercisable and no further stock options were available for grant under this plan.

There were no options granted during the three months ended September 30, 2023 and 2022. No options may be granted under this plan after December 2028. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2023	2022
Risk-free interest rates	n/a	n/a
Expected lives	n/a	n/a
Expected volatility	n/a	n/a
Expected dividend yields	n/a	n/a

The following table reflects activity under the 2018 Non-Employee Plan for the nine months ended September 30:

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		75,000	$	14.83		89,000	$	14.91
Granted		—		—		—		—
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		(6,300)	$	14.41
Outstanding, end of period		75,000	$	14.83		82,700	$	14.95
Exercisable, end of period		50,720	$	12.87		38,740	$	12.75
Weighted average fair value at grant date of options granted		n/a				n/a
Total intrinsic value of options exercised		n/a			$	99,000
Total intrinsic value of options outstanding	$	570,000			$	1,169,000
Total intrinsic value of options exercisable	$	480,000			$	633,000

0 and 6,300 options were exercised during the three months ended September 30, 2023 and 2022, respectively. The 6,300 options that were exercised during the three months ended September 30, 2022, were settled by exchanging 3,020 shares of the Company’s common stock which were retired and returned to unissued status upon receipt. No cash was received from option exercises during the three months ended September 30, 2022, and the actual tax benefit realized for the tax deductions from option exercises was $21,000.

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at September 30, 2023:

	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	75,000	6.51	$	14.83	50,720	$	12.87
	75,000	6.51	$	14.83	50,720	$	12.87

As of September 30, 2023, there was $104,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan. No options were granted during the three months ended September 30, 2023 and 2022, respectively. No options vested during the three months ended September 30, 2023 and 2022.

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 September 30, 2023, 56,900 stock options were outstanding, 25,760 stock options were exercisable and 43,100 stock options were available for grant under this plan.

0 and 25,000 options were granted during the three months ended September 30, 2023 and 2022, respectively. No options may be granted under this plan after May 2030. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2023	2022
Risk-free interest rates	n/a	3.03	%
Expected lives	n/a	7.27 Years
Expected volatility	n/a	43	%
Expected dividend yields	n/a	0	%

The following table reflects activity under the 2020 Non-Employee Plan for the three months ended September 30:

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		56,900	$	23.35		26,900	$	18.64
Granted		—		—		25,000	$	26.94
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		—		—
Outstanding, end of period		56,900	$	23.35		51,900	$	22.64
Exercisable, end of period		25,760	$	21.21		14,380	$	19.51
Weighted average fair value at grant date of options granted		n/a			$	13.36
Total intrinsic value of options exercised		n/a				n/a
Total intrinsic value of options outstanding	$	109,000			$	334,000
Total intrinsic value of options exercisable	$	87,000			$	138,000

No stock options were exercised during the three months ended September 30, 2023 or 2022. No cash was received from option exercises during either of the three months ended September 30, 2023 or 2022 and the actual tax benefit realized for the tax deductions from option exercises was $0 for both periods.

The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at September 30, 2023:

	Options outstanding				Options exercisable
		Weighted average
	Number	remaining	Weighted average		Number	Weighted average
Range of exercise prices	outstanding	contractual life	exercise price		exercisable	exercise price
$11.40 - $30.71	56,900	8.34	$	23.35	25,760	$	21.21
	56,900	8.34	$	23.35	25,760	$	21.21

As of September 30, 2023, there was $312,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan. 0 and 25,000 options were granted during the three months ended September

30, 2023 and 2022, respectively. 7,000 options vested during both the three months ended September 30, 2023 and 2022. The total grant date fair value of the options vesting during the three months ended September 30, 2023 and 2022, under this plan was $79,000 each period.

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 September 30, 2023, there were no stock options outstanding or exercisable and 950,000 stock options were available for grant under this plan.

There were no options granted during the three months ended September 30, 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:

	2023
Risk-free interest rates	n/a
Expected lives	n/a
Expected volatility	n/a
Expected dividend yields	n/a

The following table reflects activity under the 2022 Employee Plan for the three months ended September 30:

	2023
			Weighted average
	Options		exercise price
Outstanding, beginning of year		5,000	$	40.01
Granted		—		—
Forfeited/Lapsed		(5,000)	$	(40.01)
Exercised		—		—
Outstanding, end of period		—		—
Exercisable, end of period		—		—
Weighted average fair value at grant date of options granted		n/a
Total intrinsic value of options exercised		n/a
Total intrinsic value of options outstanding		n/a
Total intrinsic value of options exercisable		n/a

No options were exercised during the three months ended September 30, 2023. No cash was received from option exercises during the three months ended September 30, 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 September 30, 2023:

	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
n/a	—	—	$	—	—	$	—
	—	—	$	—	—	$	—

As of September 30, 2023, there was $0 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2022 Employee Plan. No options were granted during the three months ended September 30, 2023. No options vested during the three months ended September 30, 2023.

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Stockholders' Equity Transactions

3 Months Ended

Sep. 30, 2023

Stockholders' Equity Transactions

Stockholders' Equity Transactions

NOTE 10 – Stockholders’ Equity Transactions

On September 16, 2014, the Company’s board of directors authorized the repurchase of up to 2 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. During the three months ended September 30, 2023 and the fiscal year ended June 30, 2023, the Company did not repurchase any shares of its outstanding common stock.

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

There were no options exercised by certain employees and directors during the three months ended September 30, 2023. During fiscal 2023, certain employees and directors exercised stock options under the Company's 2012 Employee and 2018 Non-Employee Stock Option Plans totaling 53,000 shares. 43,600 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees. The number of shares surrendered by the optionees was 17,385 and was based upon the per share price on the effective date of the option exercise.

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Related Party Transaction

3 Months Ended

Sep. 30, 2023

Related Party Transaction

Related Party Transaction

NOTE 11 – Related Party Transaction

In February 2023, the Company's President and Chairman and the Company’s Executive Vice President and Chief Financial Officer sold 2,300,000 and 100,000 shares of our common stock, respectively, as selling stockholders in an underwritten secondary public offering at a public offering price of $31.50 per share. The Company did not sell any shares in the offering and received no proceeds from the offerings.

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401(k) Plan

3 Months Ended

Sep. 30, 2023

401(k) Plan

401(k) Plan

NOTE 12 - 401(k) Plan

The Company maintains a 401(k) plan (“the Plan”) that covers all U.S. employees and is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code. Company contributions to this plan are discretionary and totaled $62,000 and $63,000 for the three months ended September 30, 2023 and 2022, respectively.

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Commitments and Contingencies

3 Months Ended

Sep. 30, 2023

Commitments and Contingencies

Commitments and Contingencies

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 September 30, 2023 and 2022 cash payments against operating lease liabilities totaled $86,000 and $72,000, respectively.

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

Weighted-average remaining lease term	69 Years
Weighted-average discount rate	6.25	%

The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2023 (in thousands):

Year Ending June 30,	Amount
2024	$	235
2025		299
2026		282
2027		267
2028		253
Thereafter		4,386
Total	$	5,722

Operating lease expense totaled approximately $124,000 and $80,000 for the three months ended September 30, 2023 and 2022, respectively.

Litigation

In the normal course of business, the Company is a party to claims and/or litigation. Management believes that the settlement of such claims and/or litigation, considered in the aggregate, will not have a material adverse effect on the Company’s financial position and results of operations.

On August 18, 2023, the Company announced that it would be restating its financial statements for the quarters ending September 30, 2022, December 31, 2022 and March 31, 2023. Following this announcement, 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. On October 30, 2023, five plaintiffs filed applications to be lead plaintiff in the action. The Company intends to vigorously defend against the action.

Employment Agreements

As of September 30, 2023, the Company was obligated under two employment agreements and one severance agreement. The employment agreements are with the Company’s CEO, Cand the Senior Vice President of Engineering (“the SVP of Engineering”) and the severance agreement is with the Company’s Executive Vice President of Operations and Chief Financial Officer (“CFO”). The employment agreement with the CEO provides for an annual salary of $872,000, as adjusted for inflation; incentive compensation as may be approved by the Board of Directors from time to time and a termination payment in an amount up to 299% of the average of the prior five calendar year’s compensation, subject to certain limitations, as defined in the agreement. The employment agreement renews annually in August unless either party gives the other notice of non-renewal at least six months prior to the end of the applicable term.

The employment agreement with the SVP of Engineering expires in August 2024 and provides for an annual salary of $361,000, and, if terminated by the Company without cause, severance of nine month’s salary and continued company-sponsored health insurance for six months from the date of termination.

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

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Geographical Data

3 Months Ended

Sep. 30, 2023

Geographical Data

Geographical Data

NOTE 14 – Geographical Data

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

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

	Three months ended September 30,
	2023		2022
Sales to external customers (1):
Domestic	$	41,371	$	39,259
Foreign		305		234
Total Net Sales	$	41,676	$	39,493

	September 30, 2023		June 30, 2023
Identifiable assets:
United States	$	129,254	$	122,995
Dominican Republic (2)		47,435		43,659
Total Identifiable Assets	$	176,689	$	166,654

(1) All of the Company’s sales originate in the United States and are shipped primarily from the Company’s facilities in the United States. There were no sales into any one foreign country in excess of 10% of total Net Sales.

(2) Consists primarily of inventories (September 30, 2023 = $37,385; June 30, 2023 = $33,477), operating lease assets (September 30, 2023 = $5,722; June 30, 2023 = $5,797) and fixed assets (September 30, 2023 = $3,851; June 30, 2023 = $3,958) located at the Company’s principal manufacturing facility in the Dominican Republic.

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Subsequent Events

3 Months Ended

Sep. 30, 2023

Subsequent Events

Subsequent Events

NOTE 15 - Subsequent Events

The Company has evaluated subsequent events occurring after the date of the condensed consolidated financial statements for events requiring recording or disclosure in the condensed consolidated financial statements.

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

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Nature of Business and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2023

Nature of Business and Summary of Significant Accounting Policies

Nature of Business

Nature of Business:

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

The Company's fiscal year begins on July 1 and ends on June 30. Historically, the end users of the Company’s hardware products want to install these products prior to the summer; therefore, sales of these products historically peak in the period April 1 through June 30, the Company's fiscal fourth quarter, and are reduced in the period July 1 through September 30, the Company's fiscal first quarter. In addition, demand for all of our products may be affected by the housing and construction markets. Deterioration of the current economic conditions may also affect this trend. The monthly recurring service revenue, which is less susceptible to these fluctuations, allows us to generate a more consistent and predictable stream of income and mitigates the risk of fluctuation in market demand for our equipment products.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Napco Security Technologies, Inc. and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.

Accounting Estimates

Accounting Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates include management’s judgments associated with reserves for sales returns and allowances, allowance for credit losses, overhead expenses applied to inventory, inventory reserves, valuation of intangible assets, share based compensation and income taxes. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The methods and assumptions used to estimate the fair value of the following classes of financial instruments were: Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, current receivables and payables and certain other short-term financial instruments approximate their fair value as of September 30, 2023 and June 30, 2023 due to their short-term maturities. Long-term debt and lease liabilities reflect fair value based on prevailing market rates.

Cash and Cash Equivalents and Investments - other

Cash and Cash Equivalents and Investments – other

Cash and cash equivalents include approximately $15,630,000 of short-term time deposits, consisting of several certificates of deposit totaling $15,366,000 and $264,000 in money market funds as of September 30, 2023. Cash and cash equivalents include approximately $15,242,000 of short-term time deposits, consisting of several certificates of deposit totaling $15,179,000 and $63,000 in a money

market fund as of June 30, 2023. The Company classifies these highly liquid investments with original maturities of three months or less as cash equivalents. Certificates of deposit with an original maturity greater than three months are classified as Investments-other.

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

	September 30, 2023		June 30, 2023
Cash	$	27,947	$	20,713
Money Market Fund		264		63
Certificates of Deposit		15,366		15,179
	$	43,577	$	35,955

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

	September 30, 2023		June 30, 2023
Certificates of Deposit	$	25,931	$	25,660
	$	25,931	$	25,660

Certificates of deposit are recorded at the original cost plus accrued interest. The Company’s Certificates of deposits consist of the following as of (in thousands):

September 30, 2023
Balance Sheet Classification	Interest Rate		Maturity Date		Cost		Carrying Value
Cash and Cash Equivalents		4.77% - 5.25%		11/22/2023 - 11/27/2023	$	15,312	$	15,366
Investments - other		5.00% - 5.40%		10/23/2023 - 3/21/2024		25,706		25,931

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of September 30, 2023 and June 30, 2023. The Company has not historically experienced any credit losses with balances in excess of FDIC limits.

Marketable Securities

Marketable Securities

The Company’s marketable securities include investments in mutual funds, which invest primarily in various government and corporate obligations, stocks and money market funds. The Company’s marketable securities are reported at fair value with the related unrealized and realized gains and losses included in other expense (income). Realized gains or losses on mutual funds are determined on a specific identification basis. The Company would record an impairment charge if the cost of the available-for-sale securities exceeds the estimated fair value of the securities and the decline in value is determined to be other-than-temporary. During the three months ended September 30, 2023, the Company did not record an impairment charge regarding its investment in marketable securities because

management believes, based on its evaluation of the circumstances, that the decline in fair value below the cost of certain of the Company’s marketable securities is temporary.

Accounts Receivable

Accounts Receivable

Accounts receivable is stated net of the reserves for credit losses of $107,000 and $131,000 as of September 30, 2023 and June 30, 2023, respectively. Our reserves for credit losses are subjective critical estimates that have a direct impact on reported net earnings. These reserves are based upon the evaluation of our accounts receivable aging, specific exposures, sales levels and historical trends.

Inventories

Inventories

Inventories are valued at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (FIFO) method. The reported net value of inventory includes finished saleable products, work-in-process and raw materials that will be sold or used in future periods. Inventory costs include raw materials, direct labor and overhead. The Company’s overhead expenses are applied based, in part, upon estimates of the proportion of those expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products. These proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and actual results could differ from those estimates.

In addition, the Company records an inventory obsolescence reserve, which represents any excess of the cost of the inventory over its estimated realizable value. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends, product life cycle, requirements to support forecasted sales, and the ability to find alternate applications of its raw materials and to convert finished product into alternate versions of the same product to better match customer demand. In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events. There is inherent professional judgment and subjectivity made by both production and engineering members of management in determining the estimated obsolescence percentage.

The Company also regularly reviews the period over which its inventories will be converted to sales. Any inventories expected to convert to sales beyond 12 months from the balance sheet date are classified as non-current.

Property, Plant, and Equipment

Property, Plant, and Equipment

Property, plant, and equipment are carried at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred; costs of major renewals and improvements are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition is reflected in income.

Depreciation is recorded over the estimated service lives of the related assets using primarily the straight-line method. Amortization of leasehold improvements is calculated by using the straight-line method over the estimated useful life of the asset or lease term, whichever is shorter.

Long-Lived and Intangible Assets

Long-Lived and Intangible Assets

Long-lived assets are amortized over their useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets in question may not be recoverable. Impairment would be recorded in circumstances

where undiscounted cash flows expected to be generated by an asset are less than the carrying value of that asset. Intangible assets determined to have indefinite lives were not amortized but were tested for impairment at least annually.

Intangible assets consisted of the follows (in thousands):

	September 30, 2023						June 30, 2023
	Carrying		Accumulated		Net book		Carrying		Accumulated		Net book
	value		amortization		value		value		amortization		value
Customer relationships	$	9,800		(9,335)	$	465	$	9,800		(9,302)	$	498
Trade name		4,048		(658)		3,390		4,048		(607)		3,441
	$	13,848	$	(9,993)	$	3,855	$	13,848	$	(9,909)	$	3,939

Amortization expense for intangible assets subject to amortization was approximately $84,000 and $90,000 for the three months ended September 30, 2023 and 2022, respectively. Amortization expense for each of the next five fiscal years is estimated to be as follows: 2024 - $336,000; 2025 - $315,000; 2026 - $297,000; 2027 - $283,000; and 2028 - $269,000. The weighted average remaining amortization period for intangible assets was 15.3 years and 15.5 years at September 30, 2023 and June 30, 2023, respectively.

Revenue Recognition

Revenue Recognition

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

For product sales, the Company typically transfers control at a point in time upon shipment or delivery of the product. For monthly communication services the Company satisfies its performance obligation as the services are rendered and therefore recognizes revenue over the monthly period.

Typically timing of revenue recognition coincides with the timing of invoicing to the customers, at which time the Company has an unconditional right to consideration. As such, the Company typically records a receivable when revenue is recognized.

The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for product sales is typically due within 30 and 180 days of the delivery date. Payment for monthly communication services is billed on a monthly basis and is typically due at the beginning of the month of service or in 30 days for customers with an open account.

The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months. The Company accepts returns for such defective products as well as for other limited circumstances. The Company also provides rebates to customers for meeting specified purchasing targets and other coupons or credits in limited circumstances. The Company establishes reserves for the estimated returns, rebates and credits and measures such variable consideration based on the expected value method using an analysis of historical data. Changes to the estimated variable consideration in subsequent periods are not material.

The Company analyzes sales returns and is able to make reasonable and reliable estimates of product returns based on the Company’s past history. Estimates for sales returns are based on several factors including actual returns and based on expected return data communicated to it by its customers. Accordingly, the Company believes that its historical returns analysis is an accurate basis for its allowance for sales returns. Actual results could differ from those estimates.

Advertising and Promotional Costs

Advertising and Promotional Costs

Advertising and promotional costs are included in "Selling, General and Administrative" expenses in the consolidated statements of income and are expensed as incurred. Advertising expense for the three months ended September 30, 2023 and 2022 was $761,000 and $754,000, respectively.

Research and Development Costs

Research and Development Costs

Research and development (“R&D”) costs incurred by the Company are charged to expense as incurred and are included in operating expenses in the consolidated statements of income. Company-sponsored R&D expense for the three months ended September 30, 2023 and 2022 was $2,437,000 and $2,428,000, respectively.

Income Taxes

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Net Income per Share

Net Income per Share

Basic net income per common share (Basic EPS) is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended September 30, 2023 and 2022 (in thousands, except share and per share data):

	Net Income				Weighted Average Shares		Net Income per Share
	2023		2022		2023	2022	2023		2022
Basic EPS	$	10,478	$	3,084	36,827	36,762	$	0.28	$	0.08
Effect of Dilutive Securities:
Stock Options		—		—	249	228		—		—
Diluted EPS	$	10,478	$	3,084	37,076	36,990	$	0.28	$	0.08

Options to purchase 5,000 and 62,500 shares of common stock were excluded for the three months ended September 30, 2023 and 2022, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive. These options were still outstanding at the end of the period.

Stock-Based Compensation

Stock-Based Compensation

The Company has established five share incentive programs as discussed in Note 9.

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility and forfeiture rates, among other factors.

Stock-based compensation costs of $307,000 and $477,000 were recognized for the three months ended September 30, 2023 and 2022, respectively.

Foreign Currency

Foreign Currency

The Company has determined the functional currency of all foreign subsidiaries is the U.S. Dollar. All foreign operations are considered a direct and integral part or extension of the Company’s operations. The day-to-day operations of all foreign subsidiaries are dependent on the economic environment of the U.S. Dollar. Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three months ended September 30, 2023 or 2022.

Comprehensive Income

Comprehensive Income

For the three months ended September 30, 2023 and 2022, the Company’s operations did not give rise to material items includable in comprehensive income, which were not already included in net income. Accordingly, the Company’s comprehensive income approximates its net income for all periods presented.

Segment Reporting

Segment Reporting

The Company’s reportable operating segments are determined based on the Company’s management approach. The management approach is based on the way that the chief operating decision maker organizes the segments within an enterprise for making operating decisions and assessing performance. The Company’s results of operations are reviewed by the chief operating decision maker on a consolidated basis and the Company operates in only one segment. The Company has presented required geographical data in Note 14.

Shipping and Handling Sales and Costs

Shipping and Handling Sales and Costs

The Company records the amount billed to customers for shipping and handling in net sales ($83,000 and $112,000 in the three months ended September 30, 2023 and 2022, respectively); and classifies the costs associated with these sales in cost of sales ($371,000 and $394,000 in the three months ended September 30, 2023 and 2022, respectively).

Leases

Leases

The Company records lease assets and corresponding lease liabilities for the operating lease on our Consolidated Balance Sheets, excluding short-term leases (leases with terms of 12 months or less) as described under ASU No. 2016-02, Leases (Topic 842). Lease payments are discounted using a third-party secured incremental borrowing rate based on information available at lease commencement. The Company analyzes whether or not amendments to existing leases classify as a Lease Modification or a full or partial termination of the existing lease. See Note 13 – Commitments and Contingencies; Leases for additional accounting policies and disclosures.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Reference Rate Reform (ASC Topic 848)

In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”), which is expected to be phased out for new arrangements at the

end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate.

The Company’s bank has notified the Company that its LIBOR option, which was available to it through June 30, 2023, has shifted to the Benchmark Replacement as defined in the agreement with the bank. The new benchmark rate is the Secured Overnight Financing Rate (SOFR) (see Note 8). The Company does not believe that this transition will have a material impact on its financial condition.

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Nature of Business and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Sep. 30, 2023

Nature of Business and Summary of Significant Accounting Policies

Schedule of cash and cash equivalents

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

	September 30, 2023		June 30, 2023
Cash	$	27,947	$	20,713
Money Market Fund		264		63
Certificates of Deposit		15,366		15,179
	$	43,577	$	35,955

Schedule of investments - other

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

	September 30, 2023		June 30, 2023
Certificates of Deposit	$	25,931	$	25,660
	$	25,931	$	25,660

Schedule of certificates of deposit

September 30, 2023
Balance Sheet Classification	Interest Rate		Maturity Date		Cost		Carrying Value
Cash and Cash Equivalents		4.77% - 5.25%		11/22/2023 - 11/27/2023	$	15,312	$	15,366
Investments - other		5.00% - 5.40%		10/23/2023 - 3/21/2024		25,706		25,931

Schedule of intangible assets

Intangible assets consisted of the follows (in thousands):

	September 30, 2023						June 30, 2023
	Carrying		Accumulated		Net book		Carrying		Accumulated		Net book
	value		amortization		value		value		amortization		value
Customer relationships	$	9,800		(9,335)	$	465	$	9,800		(9,302)	$	498
Trade name		4,048		(658)		3,390		4,048		(607)		3,441
	$	13,848	$	(9,993)	$	3,855	$	13,848	$	(9,909)	$	3,939

Schedule of reconciliation of earnings per share

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended September 30, 2023 and 2022 (in thousands, except share and per share data):

	Net Income				Weighted Average Shares		Net Income per Share
	2023		2022		2023	2022	2023		2022
Basic EPS	$	10,478	$	3,084	36,827	36,762	$	0.28	$	0.08
Effect of Dilutive Securities:
Stock Options		—		—	249	228		—		—
Diluted EPS	$	10,478	$	3,084	37,076	36,990	$	0.28	$	0.08

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Revenue Recognition and Contracts with Customers (Tables)

3 Months Ended

Sep. 30, 2023

Revenue Recognition and Contracts with Customers

Schedule of disaggregation of revenues

Following is the disaggregation of revenues based on major product lines (in thousands):

	Three months ended September 30,
	2023		2022
Major Product Lines:
Intrusion and access alarm products	$	9,297	$	13,532
Door locking devices		15,094		12,155
Services		17,285		13,806
Total Revenues	$	41,676	$	39,493

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Marketable Securities (Tables)

3 Months Ended

Sep. 30, 2023

Marketable Securities

Schedule of net gains and losses of marketable securities

The disaggregated net gains and losses on the marketable securities recognized within the accompanying condensed consolidated statements of income for the three months ended September 30, 2023 and 2022, are as follows (in thousands):

	Three months ended September 30,
	2023		2022
Net gains recognized during the period on marketable securities	$	42	$	—
Less: Net gains recognized during the period on marketable securities sold during the period		—		—
Unrealized gains (losses) recognized during the reporting period on marketable securities still held at the reporting date		(57)		(153)
	$	(15)	$	(153)

Schedule of fair value of marketable securities

The following tables summarize the Company’s investments at September 30, 2023 and June 30, 2023, respectively (in thousands):

	September 30, 2023						June 30, 2023
					Unrealized						Unrealized
	Cost		Fair Value		Gain (Loss)		Cost		Fair Value		Gain (Loss)
Mutual Funds - Level 1	$	5,693		5,121	$	(572)	$	5,651	$	5,136	$	(515)

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Inventories (Tables)

3 Months Ended

Sep. 30, 2023

Inventories

Schedule of inventory

Inventories, net of reserves are valued at lower of cost (first-in, first-out method) or net realizable value. Inventories, net of reserves consist of the following (in thousands):

	September 30,		June 30,
	2023		2023
Component parts	$	33,566	$	29,939
Work-in-process		8,089		7,726
Finished product		12,492		10,684
	$	54,147	$	48,349
Classification of inventories, net of reserves:
Current	$	36,946	$	35,062
Non-current		17,201		13,287
	$	54,147	$	48,349

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Property, Plant, and Equipment (Tables)

3 Months Ended

Sep. 30, 2023

Property, Plant, and Equipment

Schedule of property, plant and equipment

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

	September 30, 2023		June 30, 2023		Useful Life in Years
Land	$	904	$	904	N/A
Buildings		8,911		8,911	30 to 40
Molds and dies		7,517		7,517	3 to 5
Furniture and fixtures		3,447		3,387	5 to 10
Machinery and equipment		28,739		28,574	3 to 10
Building improvements		3,110		3,078	Shorter of the lease term or life of asset
		52,628		52,371
Less: accumulated depreciation and amortization		(43,516)		(43,063)
	$	9,112	$	9,308

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Stock Option (Tables)

3 Months Ended

Sep. 30, 2023

2012 Employee Stock Option Plan

Stock Option

Schedule of fair value and valuation assumptions

	2023	2022
Risk-free interest rates	n/a	3.03	%
Expected lives	n/a	7.27 Years
Expected volatility	n/a	43	%
Expected dividend yields	n/a	0	%

Schedule of plan activity

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		521,580	$	19.37		523,080	$	18.59
Granted		—		—		37,500	$	26.94
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		(5,200)	$	8.64
Outstanding, end of period		521,580	$	19.37		555,380	$	19.25
Exercisable, end of period		258,328	$	17.40		183,852	$	15.26
Weighted average fair value at grant date of options granted		n/a			$	13.36
Total intrinsic value of options exercised		n/a			$	107,000
Total intrinsic value of options outstanding	$	1,763,000			$	5,684,000
Total intrinsic value of options exercisable	$	1,358,000			$	2,586,000

Schedule of options outstanding

	Options outstanding				Options exercisable
		Weighted average
	Number	remaining	Weighted average		Number	Weighted average
Range of exercise prices	outstanding	contractual life	exercise price		exercisable	exercise price
$3.15 ‑ $26.94	521,580	7.42	$	19.37	258,328	$	17.40
	521,580	7.42	$	19.37	258,328	$	17.40

2012 Non-Employee Stock Option Plan

Stock Option

Schedule of fair value and valuation assumptions

	2023	2022
Risk-free interest rates	n/a	n/a
Expected lives	n/a	n/a
Expected volatility	n/a	n/a
Expected dividend yields	n/a	n/a

Schedule of plan activity

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		20,400	$	14.39		20,400	$	14.39
Granted		—		—		—		—
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		—		—
Outstanding, end of period		20,400	$	14.39		20,400	$	14.39
Exercisable, end of period		13,920	$	10.99		11,280	$	8.92
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	$	167,000			$	300,000
Total intrinsic value of options exercisable	$	159,000			$	227,000

Schedule of options outstanding

	Options outstanding				Options exercisable
		Weighted average	Weighted			Weighted
	Number	remaining	average exercise		Number	average exercise
Range of exercise prices	outstanding	contractual life	price		exercisable	price
$4.35 - $22.93	20,400	6.40	$	14.39	13,920	$	10.99
	20,400	6.40	$	14.39	13,920	$	10.99

2018 Non-Employee Stock Option Plan

Stock Option

Schedule of fair value and valuation assumptions

	2023	2022
Risk-free interest rates	n/a	n/a
Expected lives	n/a	n/a
Expected volatility	n/a	n/a
Expected dividend yields	n/a	n/a

Schedule of plan activity

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		75,000	$	14.83		89,000	$	14.91
Granted		—		—		—		—
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		(6,300)	$	14.41
Outstanding, end of period		75,000	$	14.83		82,700	$	14.95
Exercisable, end of period		50,720	$	12.87		38,740	$	12.75
Weighted average fair value at grant date of options granted		n/a				n/a
Total intrinsic value of options exercised		n/a			$	99,000
Total intrinsic value of options outstanding	$	570,000			$	1,169,000
Total intrinsic value of options exercisable	$	480,000			$	633,000

Schedule of options outstanding

	Options outstanding				Options exercisable
		Weighted average	Weighted			Weighted
	Number	remaining	average exercise		Number	average exercise
Range of exercise prices	outstanding	contractual life	price		exercisable	price
$8.10 - $22.93	75,000	6.51	$	14.83	50,720	$	12.87
	75,000	6.51	$	14.83	50,720	$	12.87

2020 Non-Employee Stock Option Plan

Stock Option

Schedule of fair value and valuation assumptions

	2023	2022
Risk-free interest rates	n/a	3.03	%
Expected lives	n/a	7.27 Years
Expected volatility	n/a	43	%
Expected dividend yields	n/a	0	%

Schedule of plan activity

	2023				2022
			Weighted average				Weighted average
	Options		exercise price		Options		exercise price
Outstanding, beginning of year		56,900	$	23.35		26,900	$	18.64
Granted		—		—		25,000	$	26.94
Forfeited/Lapsed		—		—		—		—
Exercised		—		—		—		—
Outstanding, end of period		56,900	$	23.35		51,900	$	22.64
Exercisable, end of period		25,760	$	21.21		14,380	$	19.51
Weighted average fair value at grant date of options granted		n/a			$	13.36
Total intrinsic value of options exercised		n/a				n/a
Total intrinsic value of options outstanding	$	109,000			$	334,000
Total intrinsic value of options exercisable	$	87,000			$	138,000

Schedule of options outstanding

	Options outstanding				Options exercisable
		Weighted average
	Number	remaining	Weighted average		Number	Weighted average
Range of exercise prices	outstanding	contractual life	exercise price		exercisable	exercise price
$11.40 - $30.71	56,900	8.34	$	23.35	25,760	$	21.21
	56,900	8.34	$	23.35	25,760	$	21.21

2022 Employee Stock Option Plan

Stock Option

Schedule of fair value and valuation assumptions

	2023
Risk-free interest rates	n/a
Expected lives	n/a
Expected volatility	n/a
Expected dividend yields	n/a

Schedule of plan activity

	2023
			Weighted average
	Options		exercise price
Outstanding, beginning of year		5,000	$	40.01
Granted		—		—
Forfeited/Lapsed		(5,000)	$	(40.01)
Exercised		—		—
Outstanding, end of period		—		—
Exercisable, end of period		—		—
Weighted average fair value at grant date of options granted		n/a
Total intrinsic value of options exercised		n/a
Total intrinsic value of options outstanding		n/a
Total intrinsic value of options exercisable		n/a

Schedule of options outstanding

	Options outstanding				Options exercisable
		Weighted average
	Number	remaining	Weighted average		Number	Weighted average
Range of exercise prices	outstanding	contractual life	exercise price		exercisable	exercise price
n/a	—	—	$	—	—	$	—
	—	—	$	—	—	$	—

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Commitments and Contingencies (Tables)

3 Months Ended

Sep. 30, 2023

Commitments and Contingencies

Schedule of supplemental balance sheet information

Weighted-average remaining lease term	69 Years
Weighted-average discount rate	6.25	%

Schedule of maturities of lease liabilities

The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2023 (in thousands):

Year Ending June 30,	Amount
2024	$	235
2025		299
2026		282
2027		267
2028		253
Thereafter		4,386
Total	$	5,722

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Geographical Data (Tables)

3 Months Ended

Sep. 30, 2023

Geographical Data

Schedule of sales to external customers

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

	Three months ended September 30,
	2023		2022
Sales to external customers (1):
Domestic	$	41,371	$	39,259
Foreign		305		234
Total Net Sales	$	41,676	$	39,493

(1) All of the Company’s sales originate in the United States and are shipped primarily from the Company’s facilities in the United States. There were no sales into any one foreign country in excess of 10% of total Net Sales.

Schedule of assets in individual foreign country by country

	September 30, 2023		June 30, 2023
Identifiable assets:
United States	$	129,254	$	122,995
Dominican Republic (2)		47,435		43,659
Total Identifiable Assets	$	176,689	$	166,654

(2) Consists primarily of inventories (September 30, 2023 = $37,385; June 30, 2023 = $33,477), operating lease assets (September 30, 2023 = $5,722; June 30, 2023 = $5,797) and fixed assets (September 30, 2023 = $3,851; June 30, 2023 = $3,958) located at the Company’s principal manufacturing facility in the Dominican Republic.

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Nature of Business and Summary of Significant Accounting Policies (Details)	3 Months Ended
	Sep. 30, 2023 USD ($) segment	Sep. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)
Accounting policies
Allowance for credit losses	$ 107,000		$ 131,000
Warranty term	The Company provides limited standard warranty for defective products, usually for a period of 24 to 36 months
Stock-Based Compensation
Number of share incentive programs	five
Stock based compensation expense	$ 307,000	$ 477,000
Foreign currency realized/unrealized gains(loss)	$ 0	$ 0
Segment Reporting
Number of operating segments (in segments) | segment	1
Equipment
Accounting policies
Payment terms	typically due within 30 and 180 days of the delivery date
Services
Accounting policies
Payment terms	typically due at the beginning of the month of service or in 30 days for customers with an open account

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Nature of Business and Summary of Significant Accounting Policies - Cash and Cash Equivalents and Investments (Details) - USD ($)	Sep. 30, 2023	Jun. 30, 2023
Accounting policies
Short-term time deposits	$ 15,630,000	$ 15,242,000
Cash	27,947,000	20,713,000
Certificate of Deposits	15,366,000	15,179,000
Money Market Fund	264,000	63,000
Cash and Cash Equivalents, at Carrying Value, Total	43,577,000	35,955,000
Investments - other	25,931,000	25,660,000
Certificate of Deposits
Accounting policies
Investments - other	25,931,000	$ 25,660,000
Cash and Cash Equivalents
Accounting policies
Cost	$ 15,312,000
Cash and Cash Equivalents | Minimum
Accounting policies
Interest Rate	4.77%
Cash and Cash Equivalents | Maximum
Accounting policies
Interest Rate	5.25%
Cash and Cash Equivalents | Carrying Value
Accounting policies
Carrying Value	$ 15,366,000
Interest-Bearing Deposits
Accounting policies
Cost	$ 25,706,000
Interest-Bearing Deposits | Minimum
Accounting policies
Interest Rate	5.00%
Interest-Bearing Deposits | Maximum
Accounting policies
Interest Rate	5.40%
Interest-Bearing Deposits | Carrying Value
Accounting policies
Carrying Value	$ 25,931,000

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Nature of Business and Summary of Significant Accounting Policies - Intangible Assets (Details) - USD ($)	3 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023
Intangible assets
Amortization expense	$ 84,000	$ 90,000
Changes in intangible assets
Carrying value	13,848,000		$ 13,848,000
Accumulated amortization	(9,993,000)		(9,909,000)
Net book value	3,855,000		$ 3,939,000
Future amortization expense
2024	336,000
2025	315,000
2026	297,000
2027	283,000
2028	$ 269,000
Weighted average remaining period	15 years 3 months 18 days		15 years 6 months
Customer relationships
Changes in intangible assets
Carrying value	$ 9,800,000		$ 9,800,000
Accumulated amortization	(9,335,000)		(9,302,000)
Net book value	465,000		498,000
Trade name
Changes in intangible assets
Carrying value	4,048,000		4,048,000
Accumulated amortization	(658,000)		(607,000)
Net book value	$ 3,390,000		$ 3,441,000

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Nature of Business and Summary of Significant Accounting Policies - Income Statement location (Details) - USD ($)	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Research and development	$ 2,437,000	$ 2,428,000
Net sales	41,676,000	39,493,000
Cost of sales	19,263,000	24,927,000
Selling, General and Administrative Expenses
Advertising and promotion costs	761,000	754,000
Operating Expenses
Research and development	2,437,000	2,428,000
Cost of sales | Shipping and Handling
Cost of sales	371,000	394,000
Sales revenue, net | Shipping and Handling
Net sales	$ 83,000	$ 112,000

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Nature of Business and Summary of Significant Accounting Policies - Net Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Nature of Business and Summary of Significant Accounting Policies
Basic EPS	$ 10,478	$ 3,084
Diluted EPS	$ 10,478	$ 3,084
Weighted average
Weighted Average Shares, Basic EPS	36,827,000	36,762,000
Weighted Average Shares, Stock Options	249,000	228,000
Weighted Average Shares, Diluted EPS	37,076,000	36,990,000
Effect of Dilutive Securities:
Basic (in dollars per share)	$ 0.28	$ 0.08
Diluted (in dollars per share)	$ 0.28	$ 0.08
Excluded from diluted EPS	5,000	62,500

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Revenue Recognition and Contracts with Customers (Details)	3 Months Ended
	Sep. 30, 2023 USD ($) segment	Sep. 30, 2022	Jun. 30, 2023 USD ($)
Revenue:
Number of operating segments (in segments) | segment	1
Sales returns, rebates and allowances as a percentage of gross sales	4.00%	5.00%
Current Liabilities
Revenue:
Refund liabilities	$ 3,833,000		$ 5,521,000
Other current assets
Revenue:
Return-related assets	$ 1,201,000		$ 1,338,000

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Revenue Recognition and Contracts with Customers - Disaggregation (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Revenue:
Revenues	$ 41,676	$ 39,493
Intrusion and access alarm products
Revenue:
Revenues	9,297	13,532
Door locking devices
Revenue:
Revenues	15,094	12,155
Services
Revenue:
Revenues	$ 17,285	$ 13,806

XML

Business and Credit Concentrations (Details) - customer	3 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2022
Accounts Receivable | Credit Concentration Risk
Business and Credit Concentrations
Number of customers	2
Accounts Receivable | Credit Concentration Risk | Customer One
Business and Credit Concentrations
Concentration risk (as a percent)	13.00%		19.00%
Accounts Receivable | Credit Concentration Risk | Customer Two
Business and Credit Concentrations
Concentration risk (as a percent)	10.00%		14.00%
Accounts Receivable | Customer Concentration Risk | Customer Three [Member]
Business and Credit Concentrations
Concentration risk (as a percent)		12.00%
Sales | Customer Concentration Risk
Business and Credit Concentrations
Number of customers		2

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Marketable Securities (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Marketable Securities
Net gains recognized during the period on marketable securities	$ 42
Unrealized gains (losses) recognized during the reporting period on marketable securities still held at the reporting date	(57)	$ (153)
Marketable securities	$ (15)	$ (153)

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Marketable Securities - Investments (Details) - Mutual Funds - Level 1 - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023
Net Investment Income [Line Items]
Cost	$ 5,693	$ 5,651
Fair Value	5,121	5,136
Unrealized Gain (Loss)	$ (572)	$ (515)

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Inventories - Types (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023
Inventories
Component parts	$ 33,566	$ 29,939
Work-in-process	8,089	7,726
Finished product	12,492	10,684
Inventories, net of reserves	$ 54,147	$ 48,349

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Inventories - Classification (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022
Inventories
Current	$ 36,946	$ 35,062	$ 33,477
Non-current	17,201	13,287
Inventories, net of reserves	$ 54,147	$ 48,349

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Property, Plant, and Equipment (Details) - USD ($)	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023
Property plant and equipment
Gross	$ 52,628,000		$ 52,371,000
Less: accumulated depreciation and amortization	(43,516,000)		(43,063,000)
Net	9,112,000		9,308,000
Depreciation and amortization	453,000	$ 367,000
Land
Property plant and equipment
Gross	904,000		904,000
Buildings
Property plant and equipment
Gross	$ 8,911,000		8,911,000
Buildings | Minimum
Property plant and equipment
Useful life	30 years
Buildings | Maximum
Property plant and equipment
Useful life	40 years
Molds and dies
Property plant and equipment
Gross	$ 7,517,000		7,517,000
Molds and dies | Minimum
Property plant and equipment
Useful life	3 years
Molds and dies | Maximum
Property plant and equipment
Useful life	5 years
Furniture and fixtures
Property plant and equipment
Gross	$ 3,447,000		3,387,000
Furniture and fixtures | Minimum
Property plant and equipment
Useful life	5 years
Furniture and fixtures | Maximum
Property plant and equipment
Useful life	10 years
Machinery and equipment
Property plant and equipment
Gross	$ 28,739,000		28,574,000
Machinery and equipment | Minimum
Property plant and equipment
Useful life	3 years
Machinery and equipment | Maximum
Property plant and equipment
Useful life	10 years
Building improvements
Property plant and equipment
Gross	$ 3,110,000		$ 3,078,000
Property Plant And Equipment Estimated Useful Lives	us-gaap:UsefulLifeShorterOfTermOfLeaseOrAssetUtilityMember

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Income Taxes (Details) - USD ($)	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Income Taxes
Income tax expense	$ 1,517,000	$ 461,000
Interest expense accrued	162,000
Unrecognized net tax benefits	700,000
Examination, interest expense	$ 23,000

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Long-Term Debt (Details) - USD ($)	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2021	Jun. 30, 2023	Jun. 30, 2020
The Revolver Agreement
Long-term debt disclosure:
Line of credit, maximum borrowing capacity	$ 11,000,000		$ 11,000,000
Stock collateral (as a percent)	65%
The Revolver Agreement | LIBOR | Minimum
Long-term debt disclosure:
Basis spread	1.15%
The Revolver Agreement | LIBOR | Maximum
Long-term debt disclosure:
Basis spread	2.00%
The Revolver Agreement | Prime rate
Long-term debt disclosure:
Basis spread	0.25%
Paycheck Protection Program
Long-term debt disclosure:
Loan forgiven		$ 3,904,000
Revolving line of credit:
Long-term debt				$ 3,904,000

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Stock Option - Plan Information (Details) - USD ($)	1 Months Ended	3 Months Ended
	Dec. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2021	May 31, 2020	Dec. 31, 2018	Dec. 31, 2012
Stock Option
Stock-based compensation expense, allocated		$ 307,000	$ 477,000
Basic earnings per share from share based compensation costs		$ 0.01	$ 0.01
Diluted earnings per share from share based compensation costs		$ 0.01	$ 0.01
Exercised		0
Proceeds from stock option exercises			$ 45,000
2012 Employee Stock Option Plan
Stock Option
Shares authorized (in shares)		1,900,000
Premium on fair market value (as a percent)		110.00%
Term		10 years
Vesting rights percentage		20.00%
Outstanding (in shares)		521,580	555,380			523,080
Exercisable, end of period		258,328	183,852
Available for grant (in shares)		0
Granted		0	37,500
Exercised		0	5,200
Deferred tax benefit			$ 0
Unearned stock based compensation		$ 1,738,000
Vested		10,700	12,300
Fair Value		$ 124,000	$ 129,000
Proceeds from stock option exercises			$ 45,000
2012 Employee Stock Option Plan | Options granted after December 2022
Stock Option
Granted		0
2012 Non-Employee Stock Option Plan
Stock Option
Shares authorized (in shares)									100,000
Threshold percentage of voting rights		10.00%
Term		10 years
Vesting rights percentage		20.00%
Outstanding (in shares)		20,400	20,400	20,400	20,400
Exercisable, end of period		13,920	11,280
Available for grant (in shares)		0
Granted		0	0
Exercised		0	0
Deferred tax benefit		$ 0	$ 0
Unearned stock based compensation		$ 40,000
Vested		0	0
Proceeds from stock option exercises		$ 0	$ 0
2012 Non-Employee Stock Option Plan | Options granted after December 2022
Stock Option
Granted		0
2018 Non-Employee Stock Option Plan
Stock Option
Shares authorized (in shares)								100,000
Term		10 years
Vesting rights percentage		20.00%
Outstanding (in shares)		75,000	82,700	75,000	89,000
Exercisable, end of period		50,720	38,740
Available for grant (in shares)		0
Granted		0	0
Exercised		0	6,300
Shares converted (in shares)			3,020
Deferred tax benefit			$ 21,000
Unearned stock based compensation		$ 104,000
Vested		0	0
Proceeds from stock option exercises			$ 0
2018 Non-Employee Stock Option Plan | Options granted after December 2028
Stock Option
Granted		0
2020 Non-Employee Stock Option Plan
Stock Option
Shares authorized (in shares)							100,000
Term		10 years
Vesting rights percentage		20.00%
Outstanding (in shares)		56,900	51,900	56,900		26,900
Exercisable, end of period		25,760	14,380
Available for grant (in shares)		43,100
Granted		0	25,000
Exercised		0	0
Deferred tax benefit		$ 0	$ 0
Unearned stock based compensation		$ 312,000
Vested		7,000	7,000
Fair Value		$ 79,000	$ 79,000
Proceeds from stock option exercises		$ 0	$ 0
2020 Non-Employee Stock Option Plan | Options granted after May 2030
Stock Option
Granted		0
2022 Employee Stock Option Plan
Stock Option
Shares authorized (in shares)	950,000
Premium on fair market value (as a percent)	110.00%
Threshold percentage of voting rights	10.00%
Term	10 years
Vesting rights percentage	20.00%
Outstanding (in shares)		0		5,000
Available for grant (in shares)		950,000
Granted		0
Exercised		0
Deferred tax benefit		$ 0
Unearned stock based compensation		$ 0
Vested		0
Proceeds from stock option exercises		$ 0
2022 Employee Stock Option Plan | Options granted after December 2032
Stock Option
Granted		0

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Stock Option - Fair Value Assumptions (Details)	3 Months Ended
	Sep. 30, 2022
2012 Employee Stock Option Plan
Stock option
Risk-free interest rates	3.03%
Expected lives	7 years 3 months 7 days
Expected volatility	43.00%
Expected dividend yields	0.00%
2020 Non-Employee Stock Option Plan
Stock option
Risk-free interest rates	3.03%
Expected lives	7 years 3 months 7 days
Expected volatility	43.00%
Expected dividend yields	0.00%

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Stock Option - Activity (Details) - USD ($)	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Options
Exercised	0
2012 Employee Stock Option Plan
Options
Granted	0	37,500
Exercised	0	(5,200)
Outstanding, end of period	521,580	555,380
Exercisable, end of period	258,328	183,852
Weighted average exercise price
Weighted average exercise price, beginning of year	$ 19.37
Granted (per share)		$ 26.94
Exercised (per share)		8.64
Weighted average exercise price, end of period	19.37	19.25
Exercisable, end of period, weighted average exercise price	$ 17.40	15.26
Additional disclosures
Weighted average fair value at grant date of options granted		$ 13.36
Total intrinsic value of options exercised		$ 107,000
Total intrinsic value of options outstanding	$ 1,763,000	5,684,000
Total intrinsic value of options exercisable	$ 1,358,000	$ 2,586,000
2012 Non-Employee Stock Option Plan
Options
Outstanding, beginning of year	20,400	20,400
Granted	0	0
Exercised	0	0
Outstanding, end of period	20,400	20,400
Exercisable, end of period	13,920	11,280
Weighted average exercise price
Weighted average exercise price, beginning of year	$ 14.39	$ 14.39
Exercised (per share)	0
Weighted average exercise price, end of period	14.39	14.39
Exercisable, end of period, weighted average exercise price	$ 10.99	$ 8.92
Additional disclosures
Total intrinsic value of options outstanding	$ 167,000	$ 300,000
Total intrinsic value of options exercisable	$ 159,000	$ 227,000
2018 Non-Employee Stock Option Plan
Options
Outstanding, beginning of year	75,000	89,000
Granted	0	0
Exercised	0	(6,300)
Outstanding, end of period	75,000	82,700
Exercisable, end of period	50,720	38,740
Weighted average exercise price
Weighted average exercise price, beginning of year	$ 14.83	$ 14.91
Exercised (per share)		14.41
Weighted average exercise price, end of period	14.83	14.95
Exercisable, end of period, weighted average exercise price	$ 12.87	$ 12.75
Additional disclosures
Total intrinsic value of options exercised		$ 99,000
Total intrinsic value of options outstanding	$ 570,000	1,169,000
Total intrinsic value of options exercisable	$ 480,000	$ 633,000
2020 Non-Employee Stock Option Plan
Options
Outstanding, beginning of year	56,900
Granted	0	25,000
Exercised	0	0
Outstanding, end of period	56,900	51,900
Exercisable, end of period	25,760	14,380
Weighted average exercise price
Weighted average exercise price, beginning of year	$ 23.35
Granted (per share)		$ 26.94
Weighted average exercise price, end of period	23.35	22.64
Exercisable, end of period, weighted average exercise price	$ 21.21	19.51
Additional disclosures
Weighted average fair value at grant date of options granted		$ 13.36
Total intrinsic value of options outstanding	$ 109,000	$ 334,000
Total intrinsic value of options exercisable	$ 87,000	$ 138,000
2022 Employee Stock Option Plan
Options
Outstanding, beginning of year	5,000
Granted	0
Forfeited/Lapsed	(5,000)
Exercised	0
Outstanding, end of period	0
Weighted average exercise price
Weighted average exercise price, beginning of year	$ 40.01
Forfeited/Lapsed (per share)	$ (40.01)

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Stock Option - Exercise Price Range (Details)	3 Months Ended
	Sep. 30, 2023 $ / shares shares
2012 Employee Stock Option Plan
Share based compensation, exercise prices
Options outstanding (in shares) | shares	521,580
Weighted average remaining contractual life	7 years 5 months 1 day
Weighted average exercise price	$ 19.37
Number exercisable | shares	258,328
Exercisable, Weighted average exercise price	$ 17.40
2012 Employee Stock Option Plan | Exercise price range
Share based compensation, exercise prices
Exercise price upper limit	26.94
Exercise price lower limit	$ 3.15
Options outstanding (in shares) | shares	521,580
Weighted average remaining contractual life	7 years 5 months 1 day
Weighted average exercise price	$ 19.37
Number exercisable | shares	258,328
Exercisable, Weighted average exercise price	$ 17.40
2012 Non-Employee Stock Option Plan
Share based compensation, exercise prices
Options outstanding (in shares) | shares	20,400
Weighted average remaining contractual life	6 years 4 months 24 days
Weighted average exercise price	$ 14.39
Number exercisable | shares	13,920
Exercisable, Weighted average exercise price	$ 10.99
2012 Non-Employee Stock Option Plan | Exercise price range
Share based compensation, exercise prices
Exercise price upper limit	22.93
Exercise price lower limit	$ 4.35
Options outstanding (in shares) | shares	20,400
Weighted average remaining contractual life	6 years 4 months 24 days
Weighted average exercise price	$ 14.39
Number exercisable | shares	13,920
Exercisable, Weighted average exercise price	$ 10.99
2018 Non-Employee Stock Option Plan
Share based compensation, exercise prices
Options outstanding (in shares) | shares	75,000
Weighted average remaining contractual life	6 years 6 months 3 days
Weighted average exercise price	$ 14.83
Number exercisable | shares	50,720
Exercisable, Weighted average exercise price	$ 12.87
2018 Non-Employee Stock Option Plan | Exercise price range
Share based compensation, exercise prices
Exercise price upper limit	22.93
Exercise price lower limit	$ 8.10
Options outstanding (in shares) | shares	75,000
Weighted average remaining contractual life	6 years 6 months 3 days
Weighted average exercise price	$ 14.83
Number exercisable | shares	50,720
Exercisable, Weighted average exercise price	$ 12.87
2020 Non-Employee Stock Option Plan
Share based compensation, exercise prices
Options outstanding (in shares) | shares	56,900
Weighted average remaining contractual life	8 years 4 months 2 days
Weighted average exercise price	$ 23.35
Number exercisable | shares	25,760
Exercisable, Weighted average exercise price	$ 21.21
2020 Non-Employee Stock Option Plan | Exercise price range
Share based compensation, exercise prices
Exercise price upper limit	30.71
Exercise price lower limit	$ 11.40
Options outstanding (in shares) | shares	56,900
Weighted average remaining contractual life	8 years 4 months 2 days
Weighted average exercise price	$ 23.35
Number exercisable | shares	25,760
Exercisable, Weighted average exercise price	$ 21.21
2022 Employee Stock Option Plan
Share based compensation, exercise prices
Weighted average remaining contractual life	0 years
2022 Employee Stock Option Plan | Exercise price range
Share based compensation, exercise prices
Weighted average remaining contractual life	0 years

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Stockholders' Equity Transactions (Details) - $ / shares	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Jun. 30, 2022	Nov. 02, 2023	Aug. 18, 2023	Jun. 30, 2023	Sep. 16, 2014
Equity
Authorized to be repurchased (in shares)						2,000,000
Common Stock Shares Outstanding	36,770,097				36,770,097	38,800,000
Stock repurchased (in shares)	0	0
Exercised	0
Dividends payable per share			$ 0.08	$ 0.08
Certain employees and directors
Equity
Exercised	53,000
Exercised, cashless	43,600
Surrendered (in shares)	17,385

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Related Party Transaction (Details) - Over allotment	1 Months Ended
	Feb. 28, 2023 USD ($) $ / shares shares
Related party transaction
Public offering price per share | $ / shares	$ 31.50
Proceeds from the offering | $	$ 0
President And Chairman
Related party transaction
Number of common stock sold	2,300,000
Executive Vice President And Chief Financial Officer
Related party transaction
Number of common stock sold	100,000

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401(k) Plan (Details) - USD ($)	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
401(k) Plan
Employer contribution	$ 62,000	$ 63,000

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Commitments and Contingencies - Leases (Details)			3 Months Ended
	Sep. 14, 2022 USD ($)	Sep. 13, 2022 USD ($)	Sep. 30, 2023 USD ($) a	Sep. 30, 2022 USD ($)
Commitments and Contingencies
Operating lease term			99 years
Area of land | a			4
Annual minimum rent	$ 235,000	$ 235,000
Annual service charges	$ 105,000	$ 53,000
Percentage of service charges increase	2.00%
Deduction of operating lease asset and liability, remeasurement	$ 1,300,000
Operating lease payments			$ 86,000	$ 72,000
Operating lease expense			$ 124,000	$ 80,000
Weighted-average remaining lease term			69 years
Weighted-average discount rate			6.25%

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Commitments and Contingencies - Lease maturities (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Schedule, by years, of maturities of lease liabilities
2024	$ 235
2025	299
2026	282
2027	267
2028	253
Thereafter	4,386
Total	$ 5,722

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Commitments and Contingencies - Litigation, etc. (Details)	3 Months Ended
	Sep. 30, 2023 USD ($) agreement
Loss Contingencies [Line Items]
Number of employment agreement | agreement	2
Number of severance agreement | agreement	1
Termination pay commitment rate applied to the average of the prior five calendar years compensation	299.00%
Minimum number of months either party gives the other notice of non-renewal	6
Chief executive officer
Loss Contingencies [Line Items]
Annual salary commitment	$ 872,000
SVP of Engineering
Loss Contingencies [Line Items]
Number of months of salary if terminated by the company without cause	9
Number of months of health insurance terminated benefit	6
Employment Contracts | SVP of Engineering
Loss Contingencies [Line Items]
Annual salary commitment	$ 361,000

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Geographical Data (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2023 USD ($) segment	Sep. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)
Domestic and Foreign Operations
Number of operating segments (in segments) | segment	1
Net Sales	$ 41,676	$ 39,493
Identifiable Assets	176,689		$ 166,654
United States
Domestic and Foreign Operations
Net Sales	41,371	39,259
Identifiable Assets	129,254		122,995
Foreign
Domestic and Foreign Operations
Net Sales	305	$ 234
Dominican Republic
Domestic and Foreign Operations
Identifiable Assets	$ 47,435		$ 43,659

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Geographical Data - Additional information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022
Domestic and Foreign Operations
Inventories, net	$ 36,946	$ 35,062	$ 33,477
Operating lease asset	5,722	5,797
Fixed assets	9,112	9,308
Dominican Republic
Domestic and Foreign Operations
Inventories, net	37,385
Operating lease asset	5,722	5,797
Fixed assets	$ 3,851	$ 3,958

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Subsequent Events (Details) - $ / shares	Nov. 02, 2023	Aug. 18, 2023
Subsequent Events
Dividends payable per share	$ 0.08	$ 0.08