What NAPCO Security Technologies, Inc. told the SEC could break it.

NAPCO concentrates essentially all production in one location: its Dominican Republic facility manufactures over 90% of its products and houses 771 of its 1,061 employees, with finished goods shipped 6–8 days to its Amityville, NY hub. While the DR plant is vertically integrated, sits in a tax-advantaged free zone, and is built to withstand a Category 5 hurricane, this is a single-site, single-country manufacturing concentration: a hurricane, labor disruption, political/economic event, or free-zone tax-status change in the DR could halt the bulk of NAPCO's output with no alternative plant. A high single-site manufacturing concentration.

“Our manufacturing facility located in the Dominican Republic (“D.R.”) manufactures over 90% of our products.”

Because over 90% of NAPCO's products are manufactured in the Dominican Republic and imported into the U.S., it is directly exposed to U.S. import tariffs. On April 2, 2025 the U.S. announced a new 10% universal baseline tariff — explicitly including imports from the DR — plus significant additional country-specific tariffs. Tariff costs already pressured equipment gross margins in Q4 fiscal 2025 (and prompted a price increase that pulled forward distributor orders). Uncertainty over long-term tariff rates on its DR imports presents significant challenges to operations and supply chain. A realized, quantified trade-policy exposure tightly coupled to its single-country manufacturing base.

“On April 2, 2025, the U.S. announced a new universal baseline tariff of 10%, (which includes imports from the Dominican Republic where we manufacture most of our products) plus significant additional country-specific tariffs for select trading partners, on all U.S. imports.”