What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-03-27 compared with 2024-03-14 · 214 added, 202 removed, 169 unchanged (71% of the section changed)

5 unchanged sentences

We describe certain of these risks and uncertainties in this section, although we may be adversely affected by other risks or uncertainties that are not presently known to us, that we have failed to appreciate, or that we currently consider immaterial.

Disclosures of risks should not be interpreted to imply that the risks have not already materialized.

These risk factors should be read in conjunction with the MD&A in Part II, Item 7 of this Annual Report on Form 10-K, and the Consolidated Financial Statements and notes thereto.

This Annual Report on Form 10-K is qualified in its entirety by these risk factors.

Risks Related to our Business, Operations and Financial Condition

We depend on the success of our LMR product line.

We currently depend on our LMR products as our sole source of sales.

We currently depend on our LMR products as our primary source of sales.

A decline in the price of and/or demand for LMR products, as a result of competition, technological change, the introduction of new products by us or others or a failure to manage product transitions successfully, could have a material adverse effect on our business, financial condition and results of operations.

19 unchanged sentences

An increase in the demand for P25 products could benefit competitors that are better financed and positioned to meet such demand.

P-25 products have been brought to the market by an increasing number of our competitors.

Our first P25 portable radio was brought to market in 2003, and in recent years we introduced a new line of P25 products, the BKR Series.

8 unchanged sentences

If we are unable to successfully keep up with these changes, our business, financial condition and results of operations could be materially adversely affected.

We may not be able to manage our growth.

Our strategic growth initiatives, which may include expansion of our existing operations and acquisitions and other business transactions may disrupt or otherwise have a negative impact on our business, financial condition and results of operations.

We hope to grow rapidly, and the failure to manage our growth could materially and adversely affect our business, financial condition and results of operations.

Our business plan contemplates, among other things, leveraging our products and technology for growth in our customer base and sales, as well as expanding our range of products and services.

This growth, if it materializes, could significantly challenge our management, employees, operations and financial capabilities.

In the event of this expansion, we have to continue to implement and improve our operating systems and to expand, train, and manage our employee base.

If we are unable to manage and integrate our expanding operations effectively, our business, results of operations and financial condition could be materially and adversely affected.

Additionally, our ability to attract customers and increase revenue from our products and services depends in part on our ability to enhance and improve such products and services and to introduce new features and technologies, including our planned expansion of the SaaS business unit and new BKR series products.

The success of new products, technologies, enhancements and developments depends on several factors, including, but not limited to our anticipation of market changes and demands for product features, adequate quality testing, sufficient customer demand, cost effectiveness in our product development efforts and the proliferation of new technologies that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently or more securely.

Any delays in the planned release dates of our products and services could result in adverse publicity, loss of sales or delay in market acceptance of our products and services, any of which could cause us to lose existing customers or impair our ability to attract new customers.

In addition, the introduction of new products and services by competitors or the development of entirely new offerings could make our products and technologies obsolete or adversely affect our ability to compete.

Any delay or failure in the introduction of enhancements, functionality or infrastructure developments could harm our business, results of operations and financial condition.

We do not have any acquisitions currently pending, and there can be no assurance that we will complete any future acquisitions or other business transactions or that any such transactions which are completed will prove favorable to our business.

We intend to seek shareholder approval for any such transactions only when so required by applicable law or regulation.

Any acquisitions of businesses and their respective assets also involve the risks that the businesses and assets acquired may prove to be less valuable than we expect, and we may assume unknown or unexpected liabilities, costs and problems.

We also face risks related to our BKRplay branded smartphone application.

We rely on third parties maintaining open marketplaces, including the Apple App Store and Google Play, to make BKRplay branded smartphone application available for download.

We cannot assure you that the marketplaces through which we distribute our mobile application will maintain their current structures or that such marketplaces will not charge us fees to list our application for download.

In addition, any defects in our mobile application and the technology powering it may adversely affect our business.

Tools, code, subroutines and processes contained within our mobile application may contain defects not yet discovered or contained in updates and new versions.

Our introduction of updates and new versions with defects or quality problems may result in adverse publicity, reduced downloads and use, product development costs, loss of or delay in market acceptance of our products and technologies or claims by customers or others against us.

Such problems or claims may have a material and adverse effect on our business, prospects, financial condition and results from operations.

We depend heavily on sales to the U.S.

3 unchanged sentences

We may be unable to maintain this government business.

Our ability to maintain our government business will depend on many factors outside of our control, including competitive factors, changes in government personnel making contract decisions, spending limits and political factors.

The loss of sales to the U.S.

18 unchanged sentences

Among the causes for debarment are violations of various laws or policies, including those related to procurement integrity, U.S.

Government security regulations, employment practices, protection of criminal justice data, protection of the environment, accuracy of records, proper recording of costs, foreign corruption and the False Claims Act.

Government security regulations, including certain cybersecurity certifications and requirements, employment practices, protection of criminal justice data, protection of the environment, accuracy of records, proper recording of costs, foreign corruption and the False Claims Act.

Generally, U.S.

8 unchanged sentences

Failure to comply with these laws could cost us opportunities to seek certain government sales opportunities or even result in fines, prosecution or debarment.

Changes in U.S.

trade policy, including changes to existing trade agreements and any resulting changes in international trade relations, may have a material adverse effect on us.

may continue to alter its approach to international trade, which may impact existing bilateral or multi-lateral trade agreements and treaties with foreign countries.

has imposed tariffs on certain foreign goods and may increase tariffs or impose new ones, and certain foreign governments have retaliated and may continue to do so.

We derive a majority of our revenues from international sales, which makes us especially vulnerable to increased tariffs.

Changes in U.S.

trade policy have created ongoing turmoil in international trade relations, and it is unclear what future actions governments will or will not take with respect to tariffs or other international trade agreements and policies.

Ongoing or new trade wars or other governmental action related to tariffs or international trade agreements or policies could reduce demand for our products and services, increase our costs, reduce our profitability, adversely impact our supply chain or otherwise have a material adverse effect on our business and results of operations.

Our business is subject to the economic, political, and other risks of manufacturing products in foreign countries.

We engage in business with manufacturers, some of which are located in other countries.

Approximately 16% of our material, subassembly and product procurements in 2023 were sourced internationally.

Accordingly, we are subject to special considerations and risks not typically associated with companies operating solely in the U.S.

These include the risks associated with the political, economic, legal, health and other conditions in such foreign countries, among others.

Our business, financial condition and operating results may be materially and adversely affected by, among other things, changes in the general political, social, health and economic conditions in foreign countries in which we maintain sourcing relationships, unfavorable changes in U.S.

trade legislation and regulations, the imposition of governmental economic sanctions on countries in which we do business or other trade barriers, threats of war, terrorism or governmental instability, labor disruptions, the impact of public health epidemics on employees and the global economy, which may cause our manufacturers or suppliers to temporarily suspend operations in the affected region, potentially negatively impacting our product launch timing and shipments, currency controls, fluctuating exchange rates with respect to contracts not denominated in U.S.

dollars, and unanticipated or unfavorable changes in government policies with respect to laws and regulations, anti-inflation measures and method of taxation.

If we were unable to navigate foreign regulatory environments, or if we were unable to enforce our contract rights in foreign countries, our business could be adversely impacted.

Any of these events could interrupt our manufacturing process and cause operational disruptions, increase prices for manufacturing, reduce our sales or otherwise have an adverse effect on our operating performance.

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine and the Israeli–Palestinian conflict in the Middle-East.

Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from conflicts in Ukraine, the Middle-East or any other geopolitical tensions.

and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflict between Russia and Ukraine and Israel and Palestinian state.

Although the length and impact of the ongoing military conflicts is highly unpredictable, the conflict in both of these regions could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

We are continuing to monitor the situations in Ukraine, Israel and globally to assess its potential impact, if any, on our business.

Additionally, Russia’s prior annexation of Crimea, recent recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic, including agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system.

Additional potential sanctions and penalties have also been proposed and/or threatened.

Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds.

Any of the above-mentioned factors could affect our business, prospects, financial condition, and operating results.

Our business may be materially adversely affected by global geopolitical conditions resulting from the ongoing Russia-Ukraine conflict and the conflict in the Middle East.

and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflict between Russia and Ukraine and in the Middle East.

Although the length and impact of the ongoing military conflicts is highly unpredictable, the conflict in both of these regions has led to and could continue to result in market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

Additionally, resulting sanctions have, and additional sanctions could, adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.

We are continuing to monitor the situations in Ukraine, the Middle East and globally to assess the potential impact, if any, on our business.

The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial.

Any such disruptions may also magnify the impact of other risks described in this Annual Report on Form 10-K.

Cyber-attacks and other security threats and disruptions could have a material adverse effect on our business.

As a supplier of LMR products to federal, state and municipality agencies, we face a multitude of security threats, including cybersecurity threats ranging from attacks common to most industries, such as ransomware and denial-of-service, to attacks from more advanced and persistent, highly organized adversaries, including nation state actors, which target the defense contractors and other critical infrastructure sectors.

The sophistication of the threats continue to evolve and grow, including the risk associated with the use of emerging technologies, such as artificial intelligence and quantum computing, for nefarious purposes.

In addition to cybersecurity threats, we face threats to the security of our facilities and employees from sabotage or other disruptions, any of which could adversely affect our business.

The improper conduct of our employees or others working on behalf of us who have access to sensitive information could also adversely affect our business and reputation.

Our customers, suppliers, subcontractors and manufacturing partners experience similar security threats.

If we are unable to protect sensitive information, including complying with evolving information security, data protection and privacy regulations, our customers or governmental authorities could investigate the adequacy of our threat mitigation and detection processes and procedures;

and could bring actions against us for noncompliance with applicable laws and regulations.

Moreover, depending on the severity of an incident, our customers’ data, our employees’ data, our intellectual property (including trade secrets and research, development and engineering know-how), and other third-party data (such as subcontractors, suppliers and vendors) could be compromised, which could adversely affect our business.

LMR products we provide to customers also carry cybersecurity risks, including risks that they could be breached or fail to detect, prevent or combat attacks, which could result in losses to our customers and claims against us, and could harm our relationships with our customers and financial results.

Given the persistence, sophistication, volume and novelty of threats we face, we may not be successful in preventing or mitigating an attack that could have a material adverse effect on us and the costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means.

The public safety aspects of our business and much of the data we protect increase and create different risks relative to other industries.

Changes in U.S.

federal, state and local and foreign tax law could adversely affect our business and financial condition.

The laws, rules, and regulations dealing with U.S.

federal, state and local and foreign income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.

Treasury Department.

Changes to tax laws (which changes may have immediate and/or retroactive application) could adversely affect us or the holders of our common stock.

In recent years, many changes have been made to applicable tax laws and changes are likely to continue to occur in the future.

It cannot be predicted whether, when, in what form, or with what effective dates, new tax laws may be enacted, or regulations and rulings may be enacted, promulgated or issued under existing or new tax laws, which could result in an increase in our tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law or in the interpretation thereof.

Any outbreak or worsening of an outbreak of contagious diseases, or other adverse public health developments, could have a material and adverse effect on our business operations, financial condition and results of operations.

For example, in December 2019, a novel strain of the coronavirus (COVID-19) surfaced, which spread globally and was declared a pandemic by the World Health Organization in March 2020.

In response to COVID-19, national and local governments around the world instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders, and recommendations to practice social distancing.

We are considered an “essential business” that is supporting first responders and our manufacturing operations have remained open throughout the pandemic.

We implemented certain policies at our offices in accordance with best practices to accommodate, and at times mandate, social distancing, wearing face masks, and remote work practices.

Among other things, we have invested in employee safety equipment, additional cleaning supplies and measures, adjusted production lines and workplaces as necessary and adapted new processes for interactions with our suppliers and customers to safely manage our operations.

Any employees that test positive for COVID-19 are quarantined and, if possible, work remotely in accordance with accepted safety practices until after passing subsequent testing.

In planning for the possible disruption of our business, we took steps to reduce expenses and control costs throughout the Company in 2022.

During 2022, worldwide shortages of materials, particularly semiconductors and integrated circuits, resulted in limited supplies, extended lead times, and increased our costs and inventory levels for certain components used in our products.

While, generally, we were able to procure the material necessary to manufacture our products and fulfill customer orders, there were delays and longer delivery times within our supply chain that reached a peak in 2022.

The impact on our operations of such shortages significantly impacted our manufacturing operations and financial results.

Continued progression of these circumstances could result in a decline in customer orders, as our customers could shift purchases to lower-priced or other perceived value offerings or reduce their purchases and inventories due to decreased budgets, reduced access to credit or various other factors, and impair our ability to manufacture our products, which could have a material adverse impact on our results of operations and cash flow.

While the impacts of COVID-19 are reflected in our results of operations for 2023 and 2022 respectively, we cannot separate the direct COVID-19 impacts from other factors that cause our performance to vary from quarter to quarter.

The ultimate duration and impact of the COVID-19 pandemic on our supply chain and geopolitical factors to our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration and severity of the geopolitical factors on the global economy, which are uncertain and cannot be predicted at this time.

Furthermore, the extent to which our mitigation efforts for these uncertainties are successful, if at all, is not presently ascertainable, but could have an adverse impact on the Company’s business, financial condition and results of operations.

We carry substantial quantities of inventory, and inaccurate estimates of necessary inventory could materially harm our business, financial condition and operating results.

8 unchanged sentences

In addition, a significant increase in inflation rates or currency fluctuations could have an adverse impact on the profitability of longer-term contracts.

Our investment strategy may not be successful, which could adversely impact our financial condition.

We may invest part of our cash balances in public companies.

For example, as of December 31, 2023, we held an investment in the Series B common interests of FG Financial Holdings, LLC (“FG Holdings LLC”).

These types of investments carry more risk than holding our cash balances as bank deposits or, for example, such conservative investments as treasury bonds or money market funds.

There can be no assurance that we will be able to maintain or enhance the value or the performance of the companies in which we have invested or in which we may invest in the future, or that we will be able to achieve returns or benefits from these investments.

We may lose all or part of our investment relating to such companies if their value decreases as a result of their financial performance or for any other reason.

If our interests differ from those of other investors in companies over which we do not have control, we may be unable to affect any change at those companies.

We are not required to meet any diversification standards, and our investments may become concentrated.

If our investment strategy is not successful or we achieve less than expected returns from these investments, it could have a material adverse effect on us.

The Board of Directors may also change our investment strategy at any time, and such changes could further increase our exposure, which could adversely impact us.

Fundamental Global GP, LLC (“FG”), with its affiliates, is our largest stockholder, and its interests may differ from the interests of our other stockholders.

The interests of FG may differ from the interests of our other stockholders.

As of December 31, 2023, FG and its affiliates, owners and managers together hold approximately 15% of the Company’s outstanding shares of common stock.

Kyle Cerminara, Chief Executive Officer, Co-Founder, and Partner of FG, was Chairman of our Board of Directors until December 14, 2023.

As a result of its ownership position FG could exert influence over matters submitted for stockholder approval, including the election of our directors and other corporate actions such as significant stock issuances, reorganizations, mergers and asset sales, and over our business, operations and management, including our strategic plans for the business.

FG may have interests that differ from those of our other stockholders and may vote in a way with which our other stockholders disagree and which may be averse to their interests.

FG’s ownership position may also have the effect of delaying, preventing or deterring a change of control of the Company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of the Company and might ultimately affect the market price of our common stock.

If we are unable to maintain our brand and reputation, our business, results of operations and prospects could be materially harmed.

4 unchanged sentences

Damage to our reputation could also arise from actual or perceived legal violations or product safety issues, cybersecurity breaches, actual or perceived poor employee relations, actual or perceived poor service, actual or perceived poor privacy practices, operational or sustainability issues, actual or perceived ethical issues or other events within or outside of our control that generate negative publicity with respect to us.

Any event that has the potential to negatively impact on our reputation could lead to lost sales, loss of new opportunities and retention and recruiting difficulties.

Any event that has the potential to negatively impact our reputation could lead to lost sales, loss of new opportunities and retention and recruiting difficulties.

If we fail to promote and maintain our brand and reputation successfully, our business, results of operations and prospects could be materially harmed.

We face a number of risks related to challenging economic conditions.

Current economic conditions in the U.S.

and elsewhere remain uncertain.

These challenging economic conditions could materially and adversely impact our business, liquidity and financial condition in a number of ways, including:

and global economy, as well as our business and results from operations, may be negatively impacted by a variety of factors, including inflation, interest rate uncertainty, supply chain and labor disruptions, unemployment rates, labor and materials shortages, banking instability, geopolitical events and uncertainty, such as the Ukraine-Russia conflict and the conflict in the Middle East, any U.S.

government shutdown, any downgrades in the U.S.

government's sovereign credit rating, public health crises and an economic downturn or recession.

These challenging economic conditions could materially and adversely impact our business, liquidity and financial condition in a number of ways, including, but not limited to, the following:

Inflation could adversely affect our profitability:

1 unchanged sentence

In an inflationary environment, our cost of capital, labor and materials can increase and the purchasing power of our cash resources can decline, which can have an adverse impact on our business or financial results.

We are taking steps that we expect will enable us to maintain acceptable operating margins despite the inability to raise prices.

We continue to take steps that we expect will enable us to maintain acceptable operating margins despite the inability to raise prices.

However, it is possible that those steps will not be successful, and that the combination of inflation and reduced demand for our LMR products will adversely affect our profitability.

10 unchanged sentences

Limited access by us to credit and capital :

The credit markets may limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all.

Conditions in the credit markets, including high interest rates, may limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all.

From time to time, we also have cash in financial institutions in excess of federally insured limits, which funds might be at risk of loss should such financial institutions face financial difficulties.

The terms of the credit agreement with Alterna Capital Solutions, LLC contain restrictive covenants that may limit our operating flexibility or that of our subsidiaries.

On November 22, 2022, our subsidiaries, BK Technologies, Inc.

and RELM Communications, Inc.

(the “Subsidiaries”), entered into an Invoice Purchase and Security Agreement (“IPSA”) with Alterna Capital Solutions, LLC (“Alterna”) for a one-year line of credit with total maximum funding up to $15 million, with an interest rate of Prime plus 1.85%, and other monthly administrative fees.

In November 2023, the IPSA was extended for one year.

The IPSA line of credit is an accounts receivable and inventory financing facility, with the borrowing base of up to 85% of eligible accounts receivable and up to 75% of net orderly liquidation value of inventory, not to exceed 100% of eligible accounts receivable.

The Company used funds obtained from the IPSA line of credit to replace the existing JPMC Credit Agreement (the “JPMC Credit Agreement”) and for working capital for the business.

The IPSA also has covenants concerning additional financing and indebtedness restrictions.

The IPSA provides for the payment of fees by the Subsidiaries and includes customary representations and warranties, indemnification provisions, covenants and events of default.

Subject in some cases to cure periods, amounts outstanding under the IPSA may be accelerated for typical defaults including, but not limited to, the failure to make payments when due, the failure to perform any covenant, the inaccuracy of representations and warranties, the occurrence of debtor-relief proceedings, and the occurrence of unpermitted liens against the purchased accounts receivable and collateral.

The Subsidiaries have granted Alterna a security interest in all of their respective personal property to secure their obligations under the IPSA.

The Subsidiaries entered into a cross-guarantee, guaranteeing each other’s obligations under the IPSA, and BK also provided a guaranty of the Subsidiaries’ obligations under the IPSA.

In general, the IPSA could have an adverse effect on our financial condition or results of operations.

We depend on a limited number of manufacturers and on a limited number of suppliers of components to produce our products, and the inability to obtain adequate and timely delivery of supplies and manufactured products could have a material adverse effect on us.

We contract with manufacturers to produce portions of our products.

Our use of contract manufacturers exposes us to certain risks, including shortages of manufacturing capacity, reduced control over delivery schedules, quality assurance, production yield and costs.

If any of our manufacturers terminate production or cannot meet our production requirements, we may have to rely on other contract manufacturing sources or identify and qualify new contract manufacturers.

The lead-time required to qualify a new manufacturer could range from approximately two to six months.

Despite efforts to do so, we may not be able to identify or qualify new contract manufacturers in a timely and cost-effective manner, and these new manufacturers may not allocate sufficient capacity to us in order to meet our requirements.

Any significant delay in our ability to obtain adequate quantities of our products from our current or alternative contract manufacturers could have a material adverse effect on our business, financial condition and results of operations.

Approximately 95% of our material, subassembly, and product procurements in 2023 were sourced from twelve suppliers.

We place purchase orders from time to time with these suppliers and have no guaranteed supply arrangements.

Disruption or termination of the supply of these components could delay shipments of our products.

The lead-time required for some of our proprietary components is up to as long as twelve to eighteen months.

If we are unable to accurately predict our component needs, or if our component supply is disrupted, we may miss market opportunities by not being able to meet the demand for our products.

This may damage our relationships with current and prospective customers and have a material adverse effect on our business, financial condition and results of operations.

We may not be able to manage our growth.

Acquisitions and other business transactions may disrupt or otherwise have a negative impact on our business, financial condition and results of operations.

We intend to seek stockholder approval for any such transactions only when so required by applicable law or regulation.

Any acquisitions of businesses and their respective assets also involve the risks that the businesses and assets acquired may prove to be less valuable than we expect and we may assume unknown or unexpected liabilities, costs and problems.

We hope to grow rapidly, and the failure to manage our growth could materially and adversely affect our business, financial condition and results of operations.

Our business plan contemplates, among other things, leveraging our products and technology for growth in our customer base and sales.

This growth, if it materializes, could significantly challenge our management, employees, operations and financial capabilities.

In the event of this expansion, we have to continue to implement and improve our operating systems and to expand, train, and manage our employee base.

If we are unable to manage and integrate our expanding operations effectively, our business, results of operations and financial condition could be materially and adversely affected.

The terms of the credit agreement with Fifth Third Bank, National Association contain restrictive covenants that may limit our operating flexibility or that of our subsidiaries.

On October 30, 2024, our subsidiary, BK Technologies, Inc.

(the “Subsidiary”), entered into a Revolving Loan Commitment (“RLC”) with Fifth Third Bank, National Association, (“Fifth Third”) for a one-year line of credit with total maximum funding up to $6 million, with an interest rate of the Secured Overnight Financing Rate (SOFR) plus 2.5% per annum.

The Company will use funds obtained from the RLC for general business purposes and working capital needs.

The RLC has covenants concerning additional financing and indebtedness restrictions and financial covenants providing for a maximum funded debt ratio of 2.00 to 1.00.

The RLC provides for the payment of fees by the Subsidiary and includes customary representations and warranties, indemnification provisions, covenants and events of default.

Subject in some cases to cure periods, amounts outstanding under the RLC may be accelerated for typical defaults including, but not limited to, the failure to make payments when due, the failure to perform any covenant, the inaccuracy of representations and warranties, the occurrence of debtor-relief proceedings, and the occurrence of unpermitted liens.

The Subsidiary's repayment obligations under the RLC are guaranteed by the Company and Relm Communications, Inc.

and secured by a pledge of essentially all of the assets of the Subsidiary, the Company and Relm Communications, Inc.

In general, the RLC could have an adverse effect on our financial condition or results of operations.

If our products contain defects or otherwise fail to perform as expected, we could be liable for damages and incur unanticipated warranty, recall and other related expenses, our reputation could be damaged, we could lose market share and, as a result, our financial condition or results of operations could suffer.

9 unchanged sentences

Environmental, social and governance matters may impact our business and reputation.

Increasingly, in addition to the importance of their financial performance, companies are being judged by their performance on a variety of environmental, social and governance (“ESG”) matters, which are considered to contribute to the long-term sustainability of companies’ performance.

A variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized.

In addition, investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of ESG measures to their investment decisions.

Topics taken into account in such assessments include, among others, companies’ efforts and impacts on climate change and human rights, ethics and compliance with law, diversity and the role of companies’ board of directors in supervising various sustainability issues.

ESG goals and values are embedded in our core mission and vision, and we consider their potential impact on the sustainability of our business over time and the potential impact of our business on society.

However, in light of investors’ increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet society’s expectations as to our proper role.

This could lead to the risk of litigation or reputational damage relating to our ESG policies or performance.

Further, possible actions to address ESG issues may not maximize short-term financial results and may yield financial results that conflict with the market’s expectations.

We have and may in the future make business decisions that may reduce our short-term financial results if we believe that the decisions are consistent with our ESG goals, which we believe will improve our financial results over the long term.

These decisions may not be consistent with the short-term expectations of our stockholders and may not produce the long-term benefits that we expect, in which case our business, financial condition, and operating results could be harmed.

There has been increased focus from our stakeholders, including investors, consumers and employees, on our environmental, social and governance policies and practices.

Additionally, public interest and legislative pressure related to public companies' environmental, social and governance practices continues to grow.

If our environmental, social and governance policies and practices fail to meet regulatory requirements or stakeholders' evolving expectations and standards for responsible corporate citizenship, our brand, reputation and employee retention may be negatively impacted, and customers and suppliers may be unwilling to do business with us.

At the same time, there also exists anti-environmental, social and governance, including anti-diversity, equity and inclusion, sentiment among certain stakeholders and government institutions, and we may face scrutiny, reputational risk, lawsuits or market access restrictions from these parties regarding any environmental, social and governance, including diversity, equity and inclusion, initiatives we may adopt.

The increased focus by stakeholders on sustainability matters could have short- and long-term impacts on our business, operations and reputation.

Inconsistency of legislation and regulations among jurisdictions, including anti-environmental, social and governance policies or legislation, and any additional regulations may also affect the costs of compliance with such laws and regulations.

Any assessment of the potential impact of future sustainability-related legislation, regulations or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change where we operate.

Retention of our executive officers and key personnel is critical to our business.

6 unchanged sentences

Our inability to effectively integrate the newly hired or promoted senior managers or other employees into our business process, controls and systems could have a material adverse effect on us.

We rely on a combination of contract, trademark and trade secret laws to protect our intellectual property rights, and failure to effectively utilize or successfully assert these rights could negatively impact us.

Currently, we have four approved and four pending applications for US patents.

We have several trademarks related to the names “BK Technologies,” “BK Radio” and “Radios for Heroes”.

We have applied for trademarks related to the names “BKR”, “BKRplay” and “InteropONE”.

As part of our confidentiality procedures, we generally enter into nondisclosure agreements with our employees, distributors and customers and limit access to and distribution of our proprietary information.

We also rely on trade secret laws to protect our intellectual property rights.

There is a risk that we may be unable to prevent another party from manufacturing and selling competing products or otherwise violating our intellectual property rights.

Our intellectual property rights, and any additional rights we may obtain in the future, may be invalidated, circumvented or challenged in the future.

It may also be particularly difficult to protect our products and intellectual property under the laws of certain countries in which our products are or may be manufactured or sold.

Our failure to perfect or successfully assert intellectual property rights could harm our competitive position and could negatively impact us.

Rising health care costs may have a material adverse effect on us.

The costs of employee health care insurance have been increasing in recent years due to rising health care costs, legislative changes and general economic conditions.

We cannot predict what other health care programs and regulations ultimately will be implemented at the federal or state level or the effect of any future legislation or regulation in the U.S.

on our business, financial condition and results of operations.

In addition, we cannot predict when or if Congress will repeal and/or replace certain health care programs and regulations at the federal level and the impact such changes would have on our business.

A continued increase in health care costs could have a material adverse effect on us.

The insurance that we maintain may not fully cover all potential exposures.

3 unchanged sentences

In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.

Our stock price is vulnerable to significant fluctuations, including due to our fluctuating quarterly operating results.

Our quarterly operating results may fluctuate significantly from quarter to quarter and may be below the expectations of the investment community, resulting in volatility for the market price for our common stock.

Other factors affecting the volatility of our stock price include:

future announcements concerning us or our competitors;

the announcement or introduction of technological innovations or new products by us or our competitors, including announcements regarding the status of our BKR Series product line;

changes in product pricing policies by us or our competitors;

changes in earnings estimates by us or our competitors or by securities analysts;

additions or departures of our key personnel;

sales of our common stock.

In addition, the stock market is subject to price and volume fluctuations affecting the market price for the stock of many companies generally, which often are unrelated to operating performance.

During the period from January 1, 2020 to December 31, 2023, the trading price of our common stock ranged from $8.30 to $23.05.

Many factors may cause our stock price to fluctuate, including those discussed above, variations in quarterly results;

the hiring or departure of key personnel;

acquisitions or strategic alliances involving us or our competitors;

market conditions in our industry;

and the global macroeconomic and geopolitical environment.

Broad market fluctuations may adversely affect our stock price.

When the market price of a company’s stock drops significantly, stockholders often institute securities litigation against that company.

Any such litigation could cause us to incur significant expenses defending against the claim, divert the time and attention of our management and result in significant damages.

Any failure to maintain effective internal control over financial reporting and disclosure controls and procedures could have a material adverse effect on our business .

We are required to maintain internal control over financial reporting and disclosure controls and procedures in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

We, along with our independent registered public accounting firm, have identified a material weakness in our internal control over financial reporting that pertained to our income tax provision.

See further discussion regarding the material weakness in “Item 9A.

Controls and Procedures” included in this report.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Material weaknesses could adversely impact our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC.

While we are taking steps to remediate the material weakness and enhance our disclosure controls and procedures and our internal control over financial reporting, we cannot provide any assurance that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will not identify additional significant deficiencies and material weaknesses in our internal control over financial reporting in the future.

Any failure of our internal controls could result in material misstatements in our consolidated financial statements, significant deficiencies, material weaknesses, costs, failure to timely meet our periodic reporting obligations and erosion of investor confidence.

Such failure could also negatively affect the market price and trading liquidity of our common stock, subject us to civil and criminal investigations and penalties and could have a material adverse effect on our business, financial condition, results of operations or cash flow.

Natural disasters, acts of war or terrorism and other catastrophic events beyond our control could have a material adverse effect on our operations and financial condition.

The occurrence of one or more natural disasters, such as fires, hurricanes, tornados, tsunamis, floods and earthquakes;

geo-political events, such as civil unrest in a country in which our suppliers or manufacturers are located, or acts of war or terrorism (wherever located around the world) or military activities disrupting transportation, communication or utility systems or otherwise causing damage to our business, employees, suppliers, manufacturers and customers;

or other highly disruptive events, such as nuclear accidents, pandemics, unusual weather conditions or cyber-attacks, could have a material adverse effect on our business, financial condition and results of operations.

Such events could result, among other things, in operational disruptions, physical damage to or destruction or disruption of one or more of our properties or properties used by third parties in connection with the supply of products or services to us, the lack of an adequate workforce in parts or all of our operations and communications and transportation disruptions.

The occurrence of one or more natural disasters or other extreme weather events, such as fires, hurricanes, tornados, tsunamis, floods and earthquakes;

geo-political events and political instability, such as civil unrest in a country in which our suppliers or manufacturers are located, or acts of war or terrorism (wherever located around the world) or military activities disrupting transportation, communication or utility systems or otherwise causing damage to our business, employees, suppliers, manufacturers and customers;

or other highly disruptive events, such as nuclear accidents, pandemics and other health crises, tariffs and other trade barriers or restrictions, or cyber-attacks, could have a material adverse effect on our business, financial condition and results of operations.

Such events could have, and in the future result, among other things, in operational disruptions, physical damage to or destruction or disruption of one or more of our properties or properties used by third parties in connection with the supply of products or services to us, the lack of an adequate workforce in parts or all of our operations and communications and transportation disruptions.

These factors could also cause consumer confidence and spending to decrease or result in increased volatility in the U.S.

and global financial markets and economy.

In addition, although preventative measures may help to mitigate damage from these types of catastrophic events, we cannot provide any assurance that any measures that we may take will be successful, and delays in recovery may be significant.

Furthermore, the insurance we maintain may not be adequate to cover or losses resulting from any business interruption, including those resulting from a natural disaster or other severe weather event, and recurring extreme weather events or other adverse events could reduce the availability or increase the cost of insurance.

Such occurrences could have a material adverse effect on us and could also have indirect consequences, such as increases in the costs of insurance, if they result in significant loss of property or other insurable damage.

We have deferred tax assets that we may not be able to utilize under certain circumstances.

If we incur future operating losses, we may be required to provide some or all of our deferred tax assets with a valuation allowance, resulting in additional non-cash income tax expense.

The change in the valuation allowance may have a material impact on future net income or loss.

As a holding company, BK Technologies Corporation is dependent on the operations and funds of its subsidiaries.

On March 28, 2019, we completed a reorganization pursuant to which BK Technologies Corporation became a holding company with no business operations of its own.

BK Technologies Corporation’s only significant assets are the outstanding equity interests in BK Technologies, Inc.

and any other future subsidiaries of BK Technologies Corporation.

As a result, we rely on cash flows from subsidiaries to meet our obligations, including payment of dividends to our stockholders.

The holding company reorganization was intended to create a more efficient corporate structure and increase operational flexibility.

The anticipated benefits of this reorganization may not be obtained if circumstances prevent us from taking advantage of the opportunities that we expect it may afford us.

As a result, we may incur the costs of a holding company structure without realizing the anticipated benefits, which could adversely affect our reputation, financial condition, and results of operations.

In addition, if there is an insolvency, liquidation, or other reorganization of any of our subsidiaries, our stockholders likely will have no right to proceed against their assets.

Creditors of those subsidiaries will be entitled to payment in full from the sale or other disposal of the assets of those subsidiaries before we, as an equity holder, would be entitled to receive any distribution from that sale or disposal.

Technology-Related Risks

Cyber-attacks and other security threats and disruptions could have a material adverse effect on our business.

The sophistication of these threats continue to evolve and grow, including the risk associated with the use of emerging technologies, such as artificial intelligence and quantum computing, for nefarious purposes.

In addition to cybersecurity threats, we face threats to the security of our facilities and employees from sabotage or other disruptions, any of which could adversely affect our business.

The improper conduct of our employees or others working on behalf of us who have access to sensitive information could also adversely affect our business and reputation.

Our customers, suppliers, subcontractors and manufacturing partners experience similar security threats.

and could bring actions against us for noncompliance with applicable laws and regulations.

The LMR products we provide to customers also carry cybersecurity risks, including risks that they could be breached or fail to detect, prevent or combat attacks, which could result in losses to our customers and claims against us, and could harm our relationships with our customers, overall reputation and financial results.

The public safety aspects of our business and much of the data we protect increase and create different risks relative to other industries.

A security breach or other significant disruption of our information technology systems, or those of our distributors, manufacturers, suppliers and other partners, caused by cyber-attack or other means, could have a negative impact on our operations, sales and results of operations.

From time to time, we may experience cyber-attacks on our information technology systems and the information systems of our distributors, manufacturers, suppliers and other partners, whose systems we do not control.

These systems are vulnerable to damage, unauthorized access or interruption from a variety of sources, including, but not limited to, continually evolving cyber-attacks (including social engineering and phishing attempts), attempts to gain unauthorized access to data, cyber intrusion, computer viruses, security breach, misconduct by employees or other insiders with access to our data, energy blackouts, natural disasters, terrorism, sabotage, war and telecommunication failures.

From time to time, we have experienced, and expect to continue to experience, cyber-attacks on our information technology systems and the information systems of our distributors, manufacturers, suppliers and other partners, whose systems we do not control.

These systems are vulnerable to damage, unauthorized access or interruption from a variety of sources, including, but not limited to, continually evolving cyber-attacks (including social engineering and phishing attempts), attempts to gain unauthorized access to data, cyber intrusion, computer viruses, and/or malicious or destructive code, ransomware or other malware, or denial-of-service attacks, security breach, misconduct by employees or other insiders with access to our data, energy blackouts, natural disasters, terrorism, sabotage, war and telecommunication failures.

Cyber-attacks are rapidly evolving and becoming increasingly sophisticated.

1 unchanged sentence

A cyber-attack or other significant disruption involving our information technology systems or those of our distributors, manufacturers, suppliers or other partners, could result in disruptions in critical systems, corruption or loss of data, theft of data, funds or intellectual property, and unauthorized release of our or our customers’ proprietary, confidential or sensitive information.

Such incidents could also lead to widespread technology outages, interruptions or other failures of operational, communication or other systems globally and across companies and industries.

Such unauthorized access to, or release of, this information could expose us to data loss, disrupt our operations, allow others to unfairly compete with us, subject us to litigation, government enforcement actions, regulatory penalties and costly response measures, and could seriously disrupt our operations.

2 unchanged sentences

Any or all of the foregoing could have a negative impact on our business, financial condition, results of operations and cash flows.

Because the techniques used to obtain unauthorized access to, or disable, degrade or sabotage, information technology systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques, implement adequate preventative measures or remediate any intrusion on a timely or effective basis.

Moreover, the development and maintenance of these preventative and detective measures is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.

Furthermore, to the extent artificial intelligence capabilities continue to improve and are increasingly adopted, they may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks, including the use of generative artificial intelligence to conduct more sophisticated social engineering attacks on the Company or third parties.

In addition, vulnerabilities may be introduced from the use of artificial intelligence by us and third parties on which we rely.

Moreover, the development and maintenance of preventative and detective measures is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.

We, therefore, remain potentially vulnerable to additional known or yet unknown threats, as in some instances, we, our distributors, manufacturers, suppliers and other partners, may be unaware of an incident or its magnitude and effects.

2 unchanged sentences

We may not be able to successfully integrate and launch these new systems as planned without disruption to our operations.

Our distributors, manufacturers, suppliers and other partners face similar threats and growing requirements.

Because we do not control such third parties and our ability to monitor their cybersecurity is limited, we cannot ensure the cybersecurity measures they take will be sufficient to protect any information we share with them or prevent any disruption arising from a technology failure, cyber-attack or other information security breach.

We depend on such parties to implement adequate controls and safeguards to protect against and report cyber incidents.

If such parties fail to deter, detect or report cyber incidents in a timely manner, we may suffer from financial and other harm, including to our information, operations, performance, employees and reputation.

We also incur costs in order to comply with cybersecurity or data privacy regulations or with requirements imposed by business partners.

Data privacy and cybersecurity laws in the U.S.

and internationally are constantly changing, and the implementation of these laws has become more complex.

For instance, many states have enacted laws requiring companies to notify individuals of data security breaches of their personal data, and the SEC requires disclosure of material cybersecurity incidents.

These mandatory disclosures regarding a security breach often lead to widespread negative publicity, which may cause our customers to lose confidence in the effectiveness of our data security measures.

Any security breach, whether successful or not, would harm our reputation and could damage our competitive position and cause the loss of customers.

In addition, any such breach, or any material failure on our part to comply with applicable laws, could subject us to litigation, government investigation or enforcement actions or other regulatory sanctions, regulatory penalties or fines, or costly response measures.

Any such occurrence could have a material adverse effect on us.

Furthermore, in order to comply with current or newly enacted laws, we may be subject to increased costs as a result of continually evaluating our policies and processes and adapting to new requirements that are or become applicable to us.

Risks Related to Our Labor and Supply Chain

Our business is subject to the economic, political, and other risks of manufacturing products in foreign countries.

We engage in business with manufacturers, some of which are located in other countries.

Approximately 17% of our material, subassembly and product procurements in

2024 were sourced internationally.

Accordingly, we are subject to special considerations and risks not typically associated with companies operating solely in the U.S.

These include the risks associated with the political, economic, legal, health and other conditions in such foreign countries, among others.

trade legislation and regulations, including increased tariffs, the imposition of governmental economic sanctions on countries in which we do business or other trade restrictions or barriers, threats of war, terrorism or governmental instability, labor disruptions, the impact of public health crises on employees and the global economy, which may cause our manufacturers or suppliers to temporarily suspend operations in the affected region, potentially negatively impacting our product launch timing and shipments, currency controls, fluctuating exchange rates with respect to contracts not denominated in U.S.

dollars, and unanticipated or unfavorable changes in government policies with respect to laws and regulations, anti-inflation measures and method of taxation.

If we were unable to navigate foreign regulatory environments, or if we were unable to enforce our contract rights in foreign countries, our business could be adversely impacted.

We contract with manufacturers to produce portions of our products.

For example, during 2023, we entered into the EW MSA, pursuant to which we transitioned the manufacturing production of certain LMR products and accessories to EW, which was completed in the third quarter of 2024.

Our use of contract manufacturers exposes us to certain risks, including shortages of manufacturing capacity, reduced control over delivery schedules, quality assurance, production yield and costs.

The lead-time required to qualify a new manufacturer could range from approximately two to six months.

In addition, our dependence on limited and sole source suppliers of components involves several risks, including a potential inability to obtain an adequate supply of components, price increases, late deliveries and poor component quality, as well as the impact of increased tariffs and the imposition of other trade barriers and restrictions.

The Company relies upon a limited number of manufacturers to produce its products and on a limited number of component suppliers.

Some of these manufacturers and suppliers are in other countries.

Approximately 17.0% of the Company’s material, subassembly and product procurements in 2024 were sourced internationally, of which approximately 79.9% were sourced from seven suppliers.

We place purchase orders from time to time with these suppliers and have no guaranteed supply arrangements.

Disruption or termination of the supply of these components could delay shipments of our products.

The lead-time required for some of our proprietary components is up to as long as twelve to eighteen months.

If we are unable to accurately predict our component needs, or if our component supply is disrupted, we may miss market opportunities by not being able to meet the demand for our products.

This may damage our relationships with current and prospective customers and have a material adverse effect on our business, financial condition and results of operations.

We may be unable to obtain components and parts that are verified to be Democratic Republic of Congo ( “ DRC ” ) conflict-free, which could result in reputational damage.

The Dodd-Frank Wall Street Reform and Consumer Protection Act includes disclosure requirements regarding the use of tin, tantalum, tungsten and gold (which are defined as “conflict minerals”) in our products and whether these materials originated from the DRC or an adjoining country.

The SEC rules necessitate a complex compliance process and related administrative expense for a company once it determines a conflict mineral is necessary to the functionality or production of a product that the company manufactures or contracts to manufacture.

These requirements could affect the sourcing, availability and cost of minerals used in the manufacture of certain of our products, and we may not be able to obtain conflict-free products or supplies in sufficient quantities or at competitive prices for our operations.

We have incurred, and will continue to incur, costs associated with complying with these supply chain due diligence procedures.

In addition, because our supply chain is complex, if we discover that our products include minerals that have been identified as “not found to be DRC conflict-free” or we are unable to determine whether such minerals are included in our products, we may face reputational challenges with our customers, stockholders and other stakeholders as a result.

Legal and Regulatory Risks

Changes in U.S.

trade policy, including the imposition of new or additional tariffs on imported goods, may have a material adverse effect on us.

The U.S.'s trade policy, including the imposition of new or additional tariffs, is currently in flux, following the recent change in U.S.

Presidential administration.

Changes in U.S.

trade policy may lead to significant increases in tariffs for imported goods, as well as retaliatory tariffs and other trade barriers and restrictions by trading partners.

The current presidential administration has imposed additional tariffs on certain products from China, as well as significant tariffs on products from Mexico and Canada, which are currently on hold.

The imposition of such tariffs strained international relations and increased the risk that foreign governments implement retaliatory tariffs on goods imported from the U.S.

We derive a majority of our revenues from products comprised of electronic components from foreign sources, which makes us especially vulnerable to increased tariffs.

Ongoing or new trade wars or other governmental action related to tariffs imposed by the U.S.

or other countries or changes to international trade agreements or policies could reduce demand for our products and services, increase our costs, reduce our profitability, adversely impact our supply chain, which could have a material adverse effect on our business and results of operations.

Changes in U.S.

federal, state and local and foreign tax law could adversely affect our business and financial condition.

The laws, rules, and regulations dealing with U.S.

federal, state and local and foreign income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.

Treasury Department.

Changes to tax laws (which changes may have immediate and/or retroactive application) could adversely affect us or the holders of our common stock.

In recent years, many changes have been made to applicable tax laws and changes are likely to continue to occur in the future.

Currently, we have five approved and four pending applications for U.S.

patents and two international pending patent applications.

We have several trademarks related to the names “BK Technologies,” “BK Radio” and “Radios for Heroes.” We seek to trademark registrations to protect our proprietary positions whenever possible and wherever practical.