Napco (NSSC) Navigates Distributor Inventory Shifts Amidst Ongoing Investor Lawsuit - Hagens Berman

San Francisco, California--(Newsfile Corp. - May 20, 2025) - Security systems manufacturer Napco Security Technologies, Inc. (NASDAQ: NSSC), already facing a securities class action lawsuit stemming from earlier disclosures about its distribution network, reported mixed results for its third quarter of fiscal year 2025 on May 5. This new development underscores the challenges the company is currently navigating amidst ongoing legal scrutiny.

Hagens Berman urges Napco investors who suffered substantial losses to submit your losses now.

Class Period: Feb. 5, 2024 - Feb. 3, 2025
Lead Plaintiff Deadline: June 24, 2025
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Napco's Decline in Sales

While Napco reported quarterly results beating Wall Street's revenue expectations, it disclosed that its sales fell by 10.8% year on year to $43.96 million. According to President and Chief Financial Officer Kevin Buchel, the dip in equipment sales was primarily attributable to inventory adjustments made by some of Napco's key distributors. This explanation comes at a sensitive time for the company, which is currently grappling with a securities class action lawsuit filed earlier this year.

Napco Security Technologies, Inc. (NSSC) Securities Class Action

The lawsuit, styled Patel v. Napco Security Technologies, Inc., et al., No. 1:25-cv-02308 (E.D.N.Y.), seeks to represent investors who purchased Napco securities between February 5, 2024, and February 3, 2025. The legal action was initiated following a significant downturn in Napco's stock price after the company reported a sharp decline in its second-quarter fiscal 2025 earnings and margins on February 3rd. That disclosure, which also revealed issues within Napco's distribution network, triggered a precipitous 26% drop in the company's share value in a single trading day.

The core of the investor lawsuit centers on the accuracy and propriety of Napco's statements concerning its sales and forecasting practices. The complaint alleges that Napco made false and misleading statements and failed to disclose crucial information regarding its ability to forecast demand for its hardware products and the potential impact of demand fluctuations on its ambitious margin projections for fiscal year 2026.