NAPCO Security Technologies Responds to Short Seller Report

By Bobby Samwell • Friday, September 06 15:15 • Permanent Link

NAPCO Security Technologies recently responded to a report issued by Fuzzy Panda, an activist short seller, cautioning its shareholders against being misled by the allegations made in the report. The company emphasized that the report referenced an old class action lawsuit that had been disclosed months earlier and stated that there was no new information presented.

NAPCO highlighted its record revenues and earnings in its 10-K filing for the year ending June 30, 2024, reporting $97.7 million of cash on its balance sheet at year-end. The company also increased its quarterly dividend by 25% to $.125 per share. Additionally, the financial statements for the year included an unqualified opinion, signifying a clean bill of health from auditors.

The company has made strides in addressing control activities related to financial processes and information technology, successfully remediating material weaknesses reported in the previous fiscal year. However, a new material weakness related to the procedural review of information used in the inventory costing process was identified, and management is in the process of developing a plan to address this.

NAPCO addressed specific allegations made in the short seller's report, refuting claims about the hiring of its new Senior Vice President of Finance and Chief Accounting Officer and the suspicion surrounding its recurring revenue profit margin. The company clarified that the new hire's background and stock options were misrepresented, and the profit margin on recurring revenue was scrutinized as part of a recent investigation.

Despite the challenges posed by the short seller's report, NAPCO emphasized its commitment to driving positive momentum and increased profits. The company remains focused on advancing its successful strategy and enhancing shareholder value within the commercial security, school security, and residential security markets. Today the company's shares have moved -0.4% to a price of $34.37. For the full picture, make sure to review Napco Security Technologies's 8-K report.

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