Napco Security Technologies, a supplier of high performance electronic security equipment for more than 30 years, issued an update to shareholders in the following letter:
We recently completed our fiscal year 2010 on June 30th and while it will be a couple of months before we report our fully audited results, what we know at this time is that we expect to report improved sales as compared to last year's fourth quarter.
Our research and development continues to create new product offerings. Specifically, we are putting the finishing touches on several new products to be introduced for the next major industry show in the fall, the International Security Conference (ISC) East, to be held in New York City. We plan on officially introducing these products in the coming months, once they are ready for commercialization. Many of these products were originally designed with ways to capture recurring revenue opportunities for Napco and we believe that we will continue to focus our R&D efforts into those markets as they are win-win for Napco and its customers, the dealers, whom also are seeking ways to improve their top lines. One new recurring revenue product we will be introducing very soon, has cutting edge technology, featuring a new super slim “wireless” remote touchscreen “tablet” style keypad which controls the burglar and fire alarm systems and also can show the homeowner or business owner visitors at door entrances as well as viewing rooms inside the premises which have cameras installed in them.
Our existing products with recurring revenue opportunities continue to expand. While these revenues represent less than 10 percent of overall business, we have been laying the proper groundwork in preparation for further growth for these types of products and services. Specifically, we recently had to implement new software to administer the payment plans and other bookkeeping issues related to this new income stream for Napco, because the amounts of recurring revenue transactions has grown too large to do this work by normal means. Making these upgrades now enable us to leverage this division going forward and be positioned for potential rapid growth.
Looking ahead, we believe that our exciting new product offerings, along with the final integration of Marks' production from the U.S. to our company-owned facility in the Dominican Republic, will add value to our company's position in the marketplace and build Napco into the premier provider of unique top-notch, cutting-edge security technology products. We are putting the finishing touches on the integration of the Marks' move and expect it to be completed in the coming months. Upon the completion of this integration of Marks, shareholders of Napco should expect cost savings of approximate US$2 million per year.
We continue to believe that our long-term growth prospects are strong and that the demand for security and protection products and services are on the rise due to the difficult economic environment which has created less police visibility due to federal, state and city budget constraints. As a result, property managers and homeowners alike will seek out our dealers and only improve the value proposition Napco's products have to offer.