Company: NSSC
Filing Date: 2025-03-14
Form Type: CORRESP
Source: 0001558370-25-003019
Chunk: 3

Company: NAPCO SECURITY TECHNOLOGIES, INC
Filing Date: 2025-03-14
Form: CORRESP
Chunk 3
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 expenses necessary to operate its business when calculating its non-GAAP financial measures. As an example, the Company considers legal expenses occurring during the ordinary course of business to include recurring fees relating to product development, warranty and compliance, regulatory compliance (including SEC filings), data privacy, real estate matters, and employment advisory work. The Company also incurs legal expenses in connection with litigation during the ordinary course of business, including but not limited to commercial litigation and disputes, and labor and employment litigation and disputes, which are considered routine. While the Company is involved in routine legal matters, certain matters, as described above, have arisen that are significantly outside the Company’s normal operating activities. In determining whether expenses directly related to the Company’s litigation do not constitute normal, recurring, expenses necessary to operate the business, the Company considers the frequency, scope and complexity of the case or related cases.

3

For the periods referenced in the Staff’s comment, the expenses excluded when calculating non-GAAP financial measures have primarily been related to the Class Action/Putative Derivative and the Short-Seller Investigation. The Company plans to continue to adjust for expenditures related to the Class Action/Putative Derivative in the future and, in response to the Staff’s comment, will reference the Class Action/Putative Derivative with specificity in the footnote describing adjustments for litigation and related costs in its future disclosures. If the Class Action/Putative Derivative is not dismissed additional costs associated with the Class Action/Putative Derivative may span over an extended period and impact multiple fiscal periods. That said, the Company does not consider these potential expenses as recurring since they are related to a discrete and clearly defined matter. Each of the matters discussed above has been assessed on a case-by-case basis.

The Class Action/Putative Derivative suit is disclosed in Note 13 – Commitments and Contingencies under the heading Litigation on Page 28 of the Company’s Form 10-Q for the quarterly period ending December 31, 2024, and in Note 14 – Commitments and Contingencies under the heading Litigation on Pages FS-31 and FS-32 of the Company’s Form 10-K for the fiscal year ending June 30, 2024 .

In regards to the Short-Seller Investigation, we reference the Staff to the Company’s 8-K filing date September 6, 2024 (Commission File Number 0-10004) and Exhibit 99.1 Statement filed on the Company’s website.

The adjustment for the Employee Regulatory Matter