Kaskela Law LLC is investigating NAPCO Security Technologies, Inc. (NASDAQ: NSSC) (“NAPCO” or the “Company”) on behalf of the company’s long-term shareholders.

Recently a securities fraud complaint was filed against NAPCO on behalf of certain investors who purchased shares of the company’s stock between November 7, 2022 and August 18, 2023.   According to the complaint, during that time period NAPCO and certain of the Company’s senior executive officers violated the securities laws when they “engaged in a scheme to reverse-engineer and artificially manage NAPCO’s financial results by retaining sold product at the end of the quarter and improperly counting it as inventory, which overstated the Company’s reported inventory and understated its cost of goods sold––and in turn, inflated NAPCO’s income.”

On August 18, 2023, NAPCO announced that it would need to restate its interim financial statements for the first three quarters of fiscal 2023, and that its previously issued financial results for those quarters “should no longer be relied upon.”  The Company further disclosed that its inventories had been overstated and its cost of goods sold had been understated, “resulting in overstated gross profit, operating income and net income,” and admitted that a previously undisclosed material weakness existed in its internal controls over financial reporting.  Following this disclosure, shares of the NAPCO’s stock fell $17.30 per share, or more than 45% in value, to close on August 21, 2023 at $21.11 per share, on unusually heavy trading volume.

Shortly thereafter, on September 1, 2023, the Company filed amended quarterly reports, which confirmed the severity of its financial misstatements. The restatement showed that during the Class Period, NAPCO’s (i) net income had been overstated by approximately 115%; (ii) income per share had been overstated by as much as 112%; (iii) operating income had been overstated by as much as 118%; and (iv) gross profit and gross margins had been overstated by as much as 35%.

The investigation seeks to determine whether the members of NAPCO’s board of directors violated the securities laws and/or breached their fiduciary duties in connection with the above alleged misconduct.

NAPCO shareholders who purchased or acquired their NSSC shares prior to May 1, 2023 are encouraged to contact Kaskela Law LLC (D. Seamus Kaskela, Esq. or Adrienne Bell, Esq.) at (484) 229 – 0750, or by completing the form on this page, to receive additional information about this investigation and their legal rights and options.

CONTACT:

KASKELA LAW LLC
D. Seamus Kaskela, Esq.
([email protected])
Adrienne Bell, Esq.
([email protected])
18 Campus Blvd., Suite 100
Newtown Square, PA 19073
(484) 229 – 0750