Company: NSSC
Filing Date: 2025-03-14
Form Type: CORRESP
Source: 0001558370-25-003019
Chunk: 4

Company: NAPCO SECURITY TECHNOLOGIES, INC
Filing Date: 2025-03-14
Form: CORRESP
Chunk 4
---
 is related to the following:

In June 2024, the Company’s Former Vice President of Finance and Controller (the “Employee”) reached an agreement with the Staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) to settle allegations that the Employee sold shares of the Company’s common stock while in possession of material non-public information. The Employee did not admit nor deny the Commission’s allegations but agreed to disgorge certain alleged gains from the sale and paid a monetary penalty and other ancillary relief. The Employee is no longer the Company’s Vice President of Finance or the Controller but remains employed by the Company. The agreement related solely to the Employee’s action and not the Company. The Company incurred legal costs in conjunction with cooperating in the Commission’s investigation.

The Company believes that adjusting expenses related to the matters described above is appropriate given the unusual and unanticipated nature of the related expenditures and is beneficial for users of the Company’s financial statements as these expenses (net) are not indicative of the Company’s ongoing operational performance. By adjusting these expenses, the Company’s period-to-period results from business operations become more comparable, helping to form a better understanding of the Company’s underlying financial results and performance. Further, although some of these litigation and related expenses have been incurred over an extended period and impact multiple fiscal periods, the Company does not consider these expenses as recurring since they are related to a limited set of discrete and clearly defined matters. Moreover, in determining to adjust for these matters, the Company considered that similarly sized and complex matters are uncommon for the Company.

With respect to the Staff’s comment to provide disclosure of the Company’s nonrecurring legal expenses (income) in its MD&A disclosure in future filings, the Company has not typically presented Adjusted EBITDA in its periodic reports and thus does not believe that it is necessary to discuss with specificity the nonrecurring legal expenses (income) that are reflected as adjustments in its calculation of Adjusted EBITDA in its MD&A disclosure. That said, to the extent that nonrecurring legal expenses (income) become a material factor that impact any line item that is discussed in the context of the Company’s MD&A disclosure, in response to the Staff’s comment, the Company will enhance its disclosure to discuss the nature of these nonrecurring expenses (income).

<div align='center'>4</div>

For the reasons noted above, the Company believes that these litigation-related adjustments do not cause its non-GAAP financial measures to be misleading or inconsistent with the