# NAPCO SECURITY TECHNOLOGIES, INC (NSSC)

Informational only - not investment advice.

CIK: 0000069633
SIC: 3669 Communications Equipment, NEC
SIC breadcrumb: [Manufacturing](/division/D/) > [Electronic And Other Electrical Equipment And Components, Except Computer Equipment](/major-group/36/) > [SIC 3669 Communications Equipment, NEC](/industry/3669/)
Latest 10-K filed: 2025-08-25
SEC page: https://www.sec.gov/edgar/browse/?CIK=69633
Filing source: https://www.sec.gov/Archives/edgar/data/69633/000155837025011750/nssc-20250630x10k.htm

## At a glance

FY2025 · period end 2025-06-30 · filed 2025-08-25 · accession 0001558370-25-011750 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000069633.json

| Metric | Value | FY | Provenance |
| --- | ---: | ---: | --- |
| Revenue | 181,621,000 USD | 2025 | verified |
| Net income | 43,406,000 USD | 2025 | verified |
| Assets | 198,141,000 USD | 2025 | verified |
| Free cash flow | 51,411,000 USD | 2025 | computed |
| Net margin | 23.90% | 2025 | computed |
| Operating margin | 25.47% | 2025 | computed |
| Revenue YoY | -3.81% | 2025 | computed |
| ROE | 25.74% | 2025 | computed |

Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Operating margin = operating income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity.

No market price, no rating, no forecast on this site. Not investment advice.

### Peer percentile fingerprint

| Ratio | NSSC | Peer median | Percentile | N |
| --- | ---: | ---: | ---: | ---: |
| Net margin | 23.9% | 4.4% | 87 | 135 |
| Operating margin | 25.5% | 4.4% | 88 | 128 |
| Revenue growth | -3.8% | 10.2% | 13 | 142 |
| FCF margin | 28.3% | 8.0% | 93 | 138 |
| ROE | 25.7% | 5.4% | 86 | 136 |
| ROA | 21.9% | 2.7% | 97 | 143 |
| Liabilities / equity | 0.18 | 0.81 | 14 | 138 |
| Current ratio | 6.75 | 2.59 | 88 | 144 |

Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC major-group 36 Electronic And Other Electrical Equipment And Components, Except Computer Equipment, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking.

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 181621000 | USD | 2025 | 2025-08-25 |
| Net income | 43406000 | USD | 2025 | 2025-08-25 |
| Assets | 198141000 | USD | 2025 | 2025-08-25 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-08-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000069633.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  |  | 20,715,000 | 87,374,000 | 91,746,000 | 102,932,000 | 101,359,000 | 114,035,000 | 143,593,000 | 169,997,000 | 188,820,000 | 181,621,000 |
| Net income |  |  |  | 5,773,000 | 5,599,000 | 7,649,000 | 12,481,000 | 7,795,000 | 15,413,000 | 19,599,000 | 27,127,000 | 49,818,000 | 43,406,000 |
| Operating income |  |  |  | 6,323,000 | 6,378,000 | 8,414,000 | 13,776,000 | 10,065,000 | 17,932,000 | 18,225,000 | 30,325,000 | 53,818,000 | 46,259,000 |
| Gross profit |  |  |  | 27,584,000 | 36,301,000 | 37,995,000 | 44,200,000 | 42,844,000 | 50,748,000 | 59,156,000 | 73,233,000 | 101,754,000 | 101,030,000 |
| Diluted EPS |  |  |  | 0.31 | 0.30 | 0.41 | 0.34 | 0.21 | 0.42 | 0.53 | 0.73 | 1.34 | 1.19 |
| Operating cash flow |  |  |  |  | 2,448,000 | 7,865,000 | 8,653,000 | 10,305,000 | 22,987,000 | 8,332,000 | 24,700,000 | 45,368,000 | 53,527,000 |
| Capital expenditures |  |  |  | 693,000 | 1,414,000 | 1,280,000 | 1,988,000 | 1,615,000 | 1,007,000 | 1,482,000 | 2,962,000 | 1,594,000 | 2,116,000 |
| Dividends paid |  |  |  |  |  |  |  |  |  |  | 2,298,000 | 13,258,000 | 13,632,000 |
| Share buybacks | 435,000 | 285,000 | 2,194,000 | 1,108,000 | 0.00 | 1,337,000 | 3,998,000 | 2,454,000 |  |  |  |  | 36,794,000 |
| Assets |  |  |  | 64,769,000 | 70,862,000 | 73,269,000 | 85,908,000 | 104,498,000 | 122,551,000 | 148,576,000 | 166,654,000 | 207,752,000 | 198,141,000 |
| Liabilities |  |  |  | 13,496,000 | 13,973,000 | 9,816,000 | 14,736,000 | 27,958,000 | 30,163,000 | 34,785,000 | 26,485,000 | 28,863,000 | 29,535,000 |
| Stockholders' equity |  |  |  | 51,273,000 | 56,889,000 | 62,559,000 | 70,536,000 | 76,540,000 | 92,388,000 | 113,791,000 | 140,169,000 | 178,889,000 | 168,606,000 |
| Cash and cash equivalents |  |  |  | 3,454,000 | 3,454,000 | 5,308,000 | 8,028,000 | 18,248,000 | 34,806,000 | 41,730,000 | 35,955,000 | 65,341,000 | 83,081,000 |
| Free cash flow |  |  |  |  | 1,034,000 | 6,585,000 | 6,665,000 | 8,690,000 | 21,980,000 | 6,850,000 | 21,738,000 | 43,774,000 | 51,411,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  |  | 27.87% | 6.41% | 8.34% | 12.13% | 7.69% | 13.52% | 13.65% | 15.96% | 26.38% | 23.90% |
| Operating margin |  |  |  | 30.52% | 7.30% | 9.17% | 13.38% | 9.93% | 15.72% | 12.69% | 17.84% | 28.50% | 25.47% |
| Return on equity |  |  |  | 11.26% | 9.84% | 12.23% | 17.69% | 10.18% | 16.68% | 17.22% | 19.35% | 27.85% | 25.74% |
| Return on assets |  |  |  | 8.91% | 7.90% | 10.44% | 14.53% | 7.46% | 12.58% | 13.19% | 16.28% | 23.98% | 21.91% |
| Liabilities / equity |  |  |  | 0.26 | 0.25 | 0.16 | 0.21 | 0.37 | 0.33 | 0.31 | 0.19 | 0.16 | 0.18 |
| Current ratio |  |  |  | 5.10 | 4.90 | 5.71 | 4.55 | 4.45 | 4.72 | 4.52 | 6.67 | 7.59 | 6.75 |

## As-reported value updates

3 tracked differences above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period.

Ledger: /company/NSSC/revisions/


## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000069633.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q3 | 2022-03-31 |  |  | 0.09 | reported discrete quarter |
| 2023-Q1 | 2022-09-30 |  |  | 0.17 | reported discrete quarter |
| 2023-Q2 | 2022-12-31 |  |  | 0.23 | reported discrete quarter |
| 2023-Q3 | 2023-03-31 | 43,532,000 | 9,549,000 | 0.26 | reported discrete quarter |
| 2023-Q4 | 2023-06-30 | 44,658,000 | 10,565,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2023-09-30 | 41,676,000 | 10,478,000 | 0.28 | reported discrete quarter |
| 2024-Q2 | 2023-12-31 | 47,547,000 | 12,610,000 | 0.34 | reported discrete quarter |
| 2024-Q3 | 2024-03-31 | 49,267,000 | 13,196,000 | 0.36 | reported discrete quarter |
| 2024-Q4 | 2024-06-30 | 50,330,000 | 13,534,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q2 | 2024-12-31 | 42,933,000 | 10,467,000 | 0.28 | reported discrete quarter |
| 2025-Q3 | 2025-03-31 | 43,961,000 | 10,122,000 | 0.28 | reported discrete quarter |
| 2025-Q4 | 2025-06-30 | 50,724,000 | 11,632,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-09-30 | 49,168,000 | 12,165,000 | 0.34 | reported discrete quarter |
| 2026-Q2 | 2025-12-31 | 48,172,000 | 13,503,000 | 0.38 | reported discrete quarter |
| 2026-Q3 | 2026-03-31 | 49,167,000 | -408,000 | -0.01 | reported discrete quarter |

## Filed narrative (10-K & 10-Q)

## Business

Verbatim Item 1 Business section from NSSC's latest 10-K: [/company/NSSC/business/](/company/NSSC/business/).

## Risk Factors

Verbatim Item 1A Risk Factors from NSSC's latest 10-K: [/company/NSSC/risk-factors/](/company/NSSC/risk-factors/).

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/69633/000110465926055383/nssc-20260331x10q.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-05-05
Report date: 2026-03-31

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

Forward Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations together with (1) our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q, or Quarterly Report, and (2) the audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended June 30, 2025 included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 filed on August 25, 2025, or Annual Report, with the Securities and Exchange Commission, or SEC.

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “believes,” “anticipates,” “plans,” “expects,” “intends,” “could,” “may,” “will,” and similar expressions are intended to identify forward-looking statements, including statements concerning our business and the expected performance characteristics, specifications, reliability, market acceptance, market growth, specific uses, user feedback, and market position of our products and technology. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a discrepancy include, but are not limited to, those discussed in “Part II—Item 1A—Risk Factors” and “Liquidity and Capital Resources” below.

All forward-looking statements in this document are based on information available to us as of the date hereof, such information may be limited or incomplete, and we assume no obligation to update any such forward-looking statements. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report. Unless expressly stated or the context otherwise requires, the terms “we,” “our,” “us,” the “Company,” and “Napco” refer to Napco Security Technologies, Inc. and our subsidiaries.

Overview

NAPCO 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 principally to independent distributors, dealers and installers of security equipment. We have established a national network of trusted independent security dealers and integrators that are experts at selling, installing and supporting our various technologies. These dealers are dependent on our platform for communication services to our radio communicators and smart security devices, and they pay us a monthly fee for these services.

Since 1969, NAPCO has established a heritage and proven record in the professional security community for 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, NAPCO Access Pro, Marks USA, and other popular product lines.  We are dedicated to developing innovative technology and producing the next generation of reliable security solutions that utilize remote communications and wireless networks.

Highlights from the three and nine months ended March 31, 2026 compared with the comparable period included:

[[GREPCENT_TABLE]]
[["","\u25cf","Total revenue increased 11.8% and 11.9% to $49.2 million and $146.5 million, respectively."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Equipment revenue increased 8.4% and 10.9% to $24.2 million and $74.3 million, respectively, while recurring service revenues (\u201cRSR\u201d) increased 15.4% and 13.0% to $24.9 million and $72.2 million, respectively."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Total gross profit margin increased from 57.2% to 60.0% and from 56.7% to 58.4% for the three and nine months ended March 31, 2026 and 2025, respectively."]]
[[/GREPCENT_TABLE]]

28

Table of Contents

Industry Landscape

Our industry is dynamic and highly competitive; our competitors are continually developing new products and solutions for consumers and businesses with frequent changes in both technologies and business models. Each industry shift is an opportunity to conceive new products, new technologies, or new ideas that can further transform the industry and our business. Napco continually innovates through a broad range of research and development activities that seek to identify and address the changing demands of customers, industry trends, and competitive forces to adapt and respond to customer and user preferences over an extended time in pace with this changing environment... We must continue to evolve and

Economic Conditions and Other Factors

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

The United States economy continues to experience various macroeconomic pressures, including pricing pressure from tariffs and inflation, sustained high interest rates, increased fuel costs and general economic and political uncertainty.

On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were invalid, and in March 2026, the U.S. Court of International Trade further ruled that importers that paid such tariffs are due refunds. Although we may be entitled to refunds of previously paid IEEPA tariffs, the amount and timing of any such refunds remain uncertain, and as of March 31, 2026, we have not recorded any amounts related to potential recoveries. Following these rulings, new tariffs under other laws and on imports from more countries were imposed, in addition to existing non-IEEPA tariffs. 

We will continue to monitor these developments and assess their potential impacts, and are actively monitoring the changing global trade policies and the effects they may have on our business and broader macroeconomic environment; we have not experienced a material impact on our financial position to date and do not expect them to have a material detrimental impact on our business operations in the near term. However, given the uncertainty surrounding global markets because of U.S. tariff policy, we do not have clarity at this point over the potential medium to long term impacts our business may face. The availability of certain goods could be affected if foreign suppliers choose to limit their exposure to U.S. markets in response to unfavorable trade policies, which could negatively impact our supplier’s ability to deliver materials or manufacture equipment for us and, therefore, delay or impede our product deliveries.

Additionally, increased fuel costs resulting from the conflict in Iran and geopolitical tensions in the region has increased macroeconomic uncertainty generally and may lead to higher freight expense and cost pressure on the products offered by the Company. These pressures have impacted, and may continue to impact in the future, the Company’s business, financial condition and results of operations.

Furthermore, rising inflation, slower economic growth and increases in unemployment that may result from global trade disruptions could further deflate consumer demand and impact on the demand for our products.

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 2025 Annual Report on Form 10-K.

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

29

Table of Contents

Results of Operations

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A (excerpt)

Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/69633/000155837025011750/nssc-20250630x10k.htm
Complete FY 2025 MD&A: /company/NSSC/mda/fy2025/

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high
Filing date: 2025-08-25
Report date: 2025-06-30

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Napco Security Technologies, Inc. (“NAPCO”). MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements (Item 8 of this Form 10-K). This section generally discusses the results of our operations for the year ended June 30, 2025 compared to the year ended June 30, 2024. For a discussion of the year ended June 30, 2024 compared to the year ended June 30, 2023, please refer to, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2024.

Overview

Napco is a leading manufacturer and designer of high-tech electronic security devices, wireless communication services for intrusion and fire alarm systems as well as a provider of school safety solutions. We offer a diversified array of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products, used for commercial, residential, institutional, industrial and governmental applications. We have experienced significant growth in recent years, primarily driven by our recurring service revenues  from wireless communication services for intrusion and fire alarm systems.

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

Highlights from fiscal year 2025 compared with fiscal year 2024 included:

[[GREPCENT_TABLE]]
[["","\u25cf","Net sales for the year decreased 4% to $181.6 million."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Recurring service revenue (\u201cRSR\u201d) for the year increased 14% to $86.3 million."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Gross margin for recurring service revenue was 91.0% for fiscal 2025."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Gross margin for equipment revenue was 23.6% as compared to 29.4%."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Net income decreased 13% to $43.4 million."]]
[[/GREPCENT_TABLE]]

Industry Landscape

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

Economic Conditions and Other Factors

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

On April 2, 2025, the U.S. announced a new universal baseline tariff of 10%, (which includes imports from the Dominican Republic where we manufacture most of our products) plus significant additional country-specific tariffs for select trading partners, on all U.S. imports. The reciprocal country-specific tariffs were subsequently paused for 90 days on most countries. The uncertainty around the long-term tariff rates that could be applied to our importation of products into the U.S. presents significant challenges to our operations and supply chain and could impact future result. We cannot predict what additional actions might be considered or implemented by the U.S. or its trade partners, particularly in the current geopolitical environment. We anticipate that the imposition of the baseline 10% tariff will increase the cost of our products and could impact product margins. The uncertainty could also cause disturbances in ocean shipping capacity that could affect our ability to secure ocean freight containers for our products, and create inflationary effects on our costs, in addition to the direct impact of tariffs. We are closely monitoring the evolving tariff landscape and

​

Table of Contents

attempting to mitigate these impacts, including using pricing adjustments, sourcing strategies and other cost-mitigation measures. However, there can be no assurance that we will be able to fully mitigate the impacts of such tariffs or that the imposition of tariffs, and the resulting economic impact on the U.S. market and consumer, will not be material to our financial results.

We primarily source our manufacturing materials from Asia, including Taiwan, India and China, with additional sourcing from other producers throughout the world. There have been significant enacted and proposed reciprocal tariffs on certain of these countries. At this time, the overall impact on our business related to tariffs remains uncertain and depends on multiple factors, including the duration and potential expansion of current tariffs, future changes to tariff rates, scope, or enforcement, reciprocal measures by impacted trade partners, inflationary effects, changes to consumer purchasing behavior, and the effectiveness of our responses in managing these challenges.

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

Refer to Risk Factors (Part I, Item 1A of this Form 10-K) for a discussion of these factors and other risks.

Critical Accounting Policies and Estimates

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

We consider the following significant accounting policies to be critical because of their complexity and the high degree of judgment involved in maintaining them.

Revenue Recognition

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

Equipment Revenue

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

The Company provides a limited standard warranty for defective products, usually for a period of 24 to 36 months, and accepts returns for such defective products as well as for other limited circumstances. The Company also provides rebates to customers for meeting specified purchasing targets and other coupons or credits in limited circumstances. Reserves are established for the estimated returns, rebates and credits and such variable consideration is measured based on the most likely amount method.

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

​

Table of Contents

Service Revenue

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

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

Inventory Valuation

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

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

Legal and Other Contingencies

The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. In determining whether a loss should be accrued we evaluate, among other factors, the degree of probabili

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]

Read the full FY 2025 MD&A: /company/NSSC/mda/fy2025/
All MD&A years: /company/NSSC/mda/


## MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page.

- [FY 2024 MD&A](/company/NSSC/mda/fy2024/): filed 2024-08-29; accession 0001558370-24-012547 (https://www.sec.gov/Archives/edgar/data/69633/000155837024012547/nssc-20240630x10k.htm)
- [FY 2023 MD&A](/company/NSSC/mda/fy2023/): filed 2023-09-08; accession 0001558370-23-015591 (https://www.sec.gov/Archives/edgar/data/69633/000155837023015591/nssc-20230630x10k.htm)
- [FY 2022 MD&A](/company/NSSC/mda/fy2022/): filed 2022-08-29; accession 0001558370-22-014041 (https://www.sec.gov/Archives/edgar/data/69633/000155837022014041/nssc-20220630x10k.htm)
- [FY 2021 MD&A](/company/NSSC/mda/fy2021/): filed 2021-09-13; accession 0001558370-21-012426 (https://www.sec.gov/Archives/edgar/data/69633/000155837021012426/nssc-20210630x10k.htm)




## Macro cross-references

Indicators mapped to this company's SIC classification (industry 3669 Communications Equipment, NEC) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim.

- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm

Macro-to-micro threads including this sector: [Inflation (CPI / PCE / PPI)](/thread/inflation-cpi-pce-ppi/), [US labor market](/thread/us-labor-market/), [Growth & output](/thread/growth-output/), [Money & trade](/thread/money-trade/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/), [Industrial orders & inventories](/thread/industrial-orders/), [Trade & external](/thread/trade-external/).

All macro indicators: /indicators/


## For LLMs & downloads

Markdown twin: /company/NSSC.md · JSON record: /company/NSSC.json · verified financials: /company/NSSC/financials.json / /company/NSSC/financials.csv · machine TOC for the whole site: /llms.txt