09/06/2024 | Press release | Distributed by Public on 09/06/2024 06:18
September 6, 2024 -- We encourage NAPCO shareholders not to be misled by the recent report issued by Fuzzy Panda, an activist short seller that is seeking to profit by driving down our Company's share price based on unsupported allegations.
There is no new news here. Fuzzy Panda's misleading report references an old class action lawsuit that the Company disclosed months ago. The allegations are centered around incorrect statements from a disgruntled former employee who, based on the admissions made by Plaintiffs in the Class Action complaint, has no knowledge of NAPCO's accounting processes or financial statement preparation.
The short seller previously made similar allegations in a letter received weeks prior to our Form 10-K filing. Our Audit Committee immediately hired a global law firm to conduct an independent investigation into the allegations included in the short seller's letter, many of which were repeated in the report. Following a thorough investigation, the law firm found no evidence to support the short seller's allegations.
NAPCO filed its 10-K on August 29, 2024, reporting record revenues and earnings. We reported $97.7 million of cash on our balance sheet at year end, and the NAPCO Board of Directors increased the Company's quarterly dividend by 25% to $.125 per share. The financial statements for the year ending June 30, 2024 includes an unqualified opinion.
NAPCO hired an experienced financial services professional with audit and financial controls expertise. We have implemented quarterly review and reconciliation of control activities to ensure the completeness and accuracy of forecasted sales and usage data to determine reserve for excess and slow-moving inventory. We have improved control activities related to information technology user access and program change management. Importantly, we have successfully remediated the material weaknesses in our controls that were reported in our Form 10-K for the fiscal year ended June 30, 2023. In our recently filed Form 10-K, we also identified a new material weakness related to the procedural review of information used in the inventory costing process; management is in the process of developing a plan to remediate such material weakness, which we expect will be in place by the end of our second fiscal quarter.
The Company believes it is important to set the record straight regarding certain distortions and inaccuracies, among many, in the short seller's report:
Our business continues to perform well, and we look forward to continuing to drive positive momentum and increased profits. We remain focused on advancing our successful strategy and enhancing shareholder value by capitalizing on the growing investment opportunities across the commercial security, school security, and residential security markets.