What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-27 compared with 2024-03-14 · 355 added, 242 removed, 500 unchanged (54% of the section changed)

1 unchanged sentence

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Stockholders and Board of Directors

BK Technologies Corporation

1 unchanged sentence

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of BK Technologies Corporation (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of BK Technologies Corporation and subsidiaries (the “Company”) as of December 31, 2024, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the adjustments to the 2023 consolidated financial statements of the Company to retrospectively apply the change in accounting related to the Company’s adoption of ASU 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures as described in Note 1.

In our opinion, such adjustments are appropriate and have been properly applied.

We were not engaged to audit, review or apply any procedures to the 2023 consolidated financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2023 consolidated financial statements taken as a whole.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As a part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As a part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Stockholders and Board of Directors

BK Technologies Corporation

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Slow-Moving, Excess, and Obsolete Inventory

As disclosed in Note 1 of the Company’s consolidated financial statements, the Company records an estimated allowance for slow-moving, excess, and obsolete inventory to state the Company’s inventories at the lower of cost or net realizable value.

The Company relies on, among other things, past usage/sales experience, future sales forecasts, and its strategic business plan to develop the estimate.

As more fully disclosed in Notes 1 and 2 of the notes to the Company’s consolidated financial statements, the Company records an estimated allowance for slow-moving, excess, and obsolete inventory to state the Company’s inventories at the lower of cost or net realizable value.

The Company relies on, among other things, past sales and usage experience, significant assumptions such as future sales and usage forecasts, and its strategic business plan to develop the estimate.

As a result of management’s assessment, the Company recorded an allowance for slow-moving, excess, and obsolete inventory of approximately $1,694,000 as of December 31, 2024.

Auditing management’s estimate of the allowance for slow-moving, excess, and obsolete inventory involved subjective evaluation and high degree of auditor judgement due to significant assumptions involved in estimating future inventory turnover and sales.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

We obtained an understanding and evaluated the design of internal controls that address the risks of material misstatement relating to recording inventory at the lower of cost or net realizable value.

We tested the accuracy and completeness of the underlying data used in calculating the allowance, including testing of a sample of inventory usage transactions, and recomputed the allowance calculation.

We also evaluated the Company’s ability to accurately estimate the assumptions used to develop the estimate by comparing historical allowance amounts to the history of actual inventory write-offs.

Furthermore, we reviewed management’s business plan and forecasts of future sales, including expected changes in technology and product lines.

Assessment of Realizability of Deferred Tax Assets

As disclosed in Note 8 of the Company’s consolidated financial statements, the Company records and measures net deferred tax assets based on estimated realizability.

Valuation allowances are provided to the extent that it is more likely than not that some portion, or all, of deferred tax assets will not be realized.

The Company recorded approximately $4,116,000 in net deferred tax assets after recording a valuation allowance of approximately $4,398,000 as of December 31, 2023.

Auditing management’s assessment of the realizability of deferred tax assets involved subjective estimation and high degree of auditor judgment in determining whether sufficient future taxable income, including projected pre-tax income, will be generated to support the realization of the existing deferred tax assets before expiration.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

We obtained an understanding and evaluated the design of internal controls that address the risks of material misstatement relating to the realizability of deferred tax assets, including controls over management’s projections of pre-tax income, and related entity-level controls.

We also evaluated the assumptions used by the Company to develop projections of future taxable income, and tested the completeness and accuracy of the underlying data used in the projections, including comparing the projections of pre-tax income with the actual results of prior periods.

In addition, we analyzed the nature of items giving rise to deferred tax assets and considered related expiration dates, as applicable.

Furthermore, we evaluated management’s business plan and analysis of current economic and industry trends, including the impact of geopolitical tensions, and compared projections of future pre-tax income to other forecasted financial information prepared by management.

We identified the allowance for slow-moving, excess, and obsolete inventory as a critical audit matter.

Our principal consideration for this determination is the high degree of auditor judgement and subjectivity involved in evaluating management’s significant assumptions related to estimating the allowance, particularly as it relates to evaluating assumptions related to future inventory turnover and sales.

The following are the primary procedures we performed to address this critical audit matter:

● We obtained an understanding and evaluated the design and implementation of internal controls relating to recording inventory at the lower of cost or net realizable value.

● We evaluated the completeness and accuracy of the underlying data used in development of the allowance for slow-moving, excess, and obsolete inventory, including the mathematical accuracy of the calculation.

● For a sample of raw materials, work-in-progress (WIP) and finished goods inventory at year-end, we compared recorded amounts to supporting documentation for original cost.

● We evaluated the reasonableness of the Company’s estimate by comparing historical allowance amounts to the history of actual inventory write-offs.

● We evaluated the reasonableness of management’s business plan and forecasts of future sales assumptions, including expected changes in technology and product lines, and whether the assumptions used were reasonable considering historical sales and expectations regarding future sales.

We have served as the Company’s auditor since 2024.

/s/ Forvis Mazars, LLP

Orlando, Florida

March 27, 2025

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

BK Technologies Corporation

West Melbourne, Florida

Opinion on the Consolidated Financial Statements

We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 1, the accompanying consolidated balance sheet of BK Technologies Corporation (the “Company”) as of December 31, 2023, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements referred to above, before the effects of the adjustments to retrospectively apply the change in accounting (as described in Note 1), present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting (as described in Note 1), and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustment are appropriate and have been properly applied.

Those adjustments were audited by Forvis Mazars, LLP.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company’s auditor from 2015 to 2024.

/s/ MSL, P.A.

6 unchanged sentences

Cash and cash equivalents

$ 7,075 $ 3,456

Trade accounts receivable, net

Inventories, net

17,636 23,952

Prepaid expenses and other current assets

Total current assets

36,941 37,202

Property, plant and equipment, net

1 unchanged sentence

Deferred tax assets, net

Capitalized product development cost

$ 51,499 $ 49,408

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

$ 6,327 $ 9,822

Accrued compensation and related taxes

6 unchanged sentences

Total current liabilities

Notes payable, net of current portion

13,974 20,418

Long-term operating lease liabilities

1 unchanged sentence

Total liabilities

21,668 28,097

Commitments and contingencies

9 unchanged sentences

Additional paid-in capital

49,386 48,602

Accumulated deficit

Treasury stock, at cost, 290,080 shares as of December 31, 2023, and 2022, respectively

( 15,850 ) ( 24,209 )

Treasury stock, at cost, 342,080 and 290,080 shares as of December 31, 2024, and 2023, respectively

( 6,053 ) ( 5,402 )

Total stockholders’ equity

29,831 21,311

Total liabilities and stockholders’ equity

$ 51,499 $ 49,408

See notes to consolidated financial statements.

6 unchanged sentences

Total operating expenses

Operating loss

Operating income (loss)

Other (expense) income:

4 unchanged sentences

Total other expense

Loss before income taxes

Provision for income tax (expense)

Net loss per share-basic and diluted

Weighted average shares outstanding-basic and diluted

Income (loss) before income taxes

Provision for income tax benefit (expense)

Net income (loss)

Net income (loss) per share-basic

Net income (loss) per share-diluted

Weighted average shares outstanding-basic

Weighted average shares outstanding-diluted

See notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

(in thousands, except share and per share data)

Common Stock Shares

Common Stock Amount

Accumulated Deficit

Balance as December 31, 2021

(in thousands, except share data)

Balance at December 31, 2022

Common stock issued

Common stock issued-stock options

Common stock issued-restricted stock units

1 unchanged sentence

Shared-based compensation expense-restricted stock units

Dividends declared ($0.03 per share)

Common stock warrants issued

Balance at December 31, 2023

Common stock issued

Common stock issued-stock options

Common stock issued-restricted stock units

Common stock issued-warrants exercised

Share-based compensation expense-stock options

Shared-based compensation expense-restricted stock units

Common stock warrants issued

Treasury shares

Balance at December 31, 2024

5 unchanged sentences

Operating activities

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Allowance for credit losses

Inventory allowance

Amortization of deferred finance and other assets

Deferred tax expense

Amortization of deferred finance costs and other assets

Deferred tax benefit

Depreciation and amortization

1 unchanged sentence

Share-based compensation expense-restricted stock units

Unrealized loss on investment

Loss on investments

(Gain) on sale of equipment

2 unchanged sentences

Prepaid expenses and other current assets

Capitalized product development cost

Operating lease ROU assets and lease liabilities

4 unchanged sentences

Accrued other expenses and other current liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing activities

2 unchanged sentences

Financing activities

Dividends paid

Proceeds from issuance of common stock

Proceeds from issuance of common stock options

Proceeds from issuance of common stock warrants

1 unchanged sentence

Repayment of credit facility and notes payable

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net change in cash and cash equivalents

24 unchanged sentences

The Company consolidates entities in which it has a controlling financial interest.

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a variable interest entity (“VIE”) or a voting interest entity.

VIEs are entities in which (i) the total equity investment at risk is not sufficient to enable the entity to finance its activities independently, or (ii) the at-risk equity holders do not have the normal characteristics of a controlling financial interest.

A controlling financial interest in a VIE is present when an enterprise has one or more variable interests that have both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The enterprise with a controlling financial interest is the primary beneficiary and consolidates the VIE.

Voting interest entities lack one or more of the characteristics of a VIE.

The usual condition for a controlling financial interest is ownership of a majority voting interest for a corporation or a majority of kick-out or participating rights for a limited partnership.

When the Company does not have a controlling financial interest in an entity but exerts significant influence over the entity’s operating and financial policies (generally defined as owning a voting or economic interest of between 20% to 50% ), the Company’s investment is accounted for under the equity method of accounting.

If the Company does not have a controlling financial interest in, or exert significant influence over, an entity, the Company accounts for its investment at fair value, if the fair value option was elected, or at cost.

Through September 30, 2022, the Company was the sole limited partner in FGI 1347 Holdings, LP (“1347 LP”), a consolidated VIE.

As disclosed in Note 6, the Company ceased to be the limited partner of 1347 LP as of September 30, 2022.

Inventories are stated at the lower of cost (determined by the average cost method) or net realizable value.

4 unchanged sentences

The Company then establishes an allowance based upon several factors, including, but not limited to, business forecasts, inventory quantities, and historic usage profile.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

Supplemental to the aforementioned analysis, specific inventory items are reviewed individually by management.

14 unchanged sentences

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

BK TECHNOLOGIES CORPORATION

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

Allowance for Credit Losses

8 unchanged sentences

Based on information available, management believes the allowance for credit losses as of December 31, 2024 and 2023 is adequate.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

Revenue Recognition

22 unchanged sentences

If the Company fails to achieve the future results anticipated in the calculation and valuation of net deferred tax assets, the Company may be required to increase the valuation allowance related to its deferred tax assets in the future.

The Company recognizes a tax position in its financial statements when the tax position, based solely upon its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority.

Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved through negotiation or litigation with taxing authority, or upon expiration of statutes of limitations.

Derecognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more than not threshold of being sustained.

Concentration of Credit Risk

4 unchanged sentences

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8 unchanged sentences

Some of these manufacturers and suppliers are in other countries.

Approximately 16.0% of the Company’s material, subassembly and product procurements in 2023 were sourced internationally, of which approximately 94.8% were sourced from twelve suppliers.

For 2022, approximately 17.0% of the Company’s material, subassembly and product procurements were sourced internationally, of which approximately 80.6% were sourced from five suppliers .

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.

For 2023 , approximately 16.0 % of the Company’s material, subassembly and product procurements were sourced internationally, of which approximately 94.8 % were sourced from twelve suppliers.

Purchase orders denominated in U.S.

6 unchanged sentences

The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, investments, accounts payable, accrued expenses, notes payable, and other liabilities.

As of December 31, 2023 and 2022, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, notes payable, and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.

As of December 31, 2024 and 2023 , the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.

Prior to September 14, 2022, the Company held an investment in the common stock of FG Financial Group, Inc.

1 unchanged sentence

The Company used observable market data assumptions (Level 1 inputs, as defined in accounting guidance) that it believes market participants would use in pricing its investment in FGF.

Effective September 14, 2022, the Company made an investment in Series B common membership interests of FG Financial Holdings, LLC (“FG Holdings LLC”).

As further discussed in Note 6, the Company records the investment according to guidance provided by ASC 820 “Fair Value Measurement”, as the Company does not have a controlling financial interest in, nor exerts significant influence over the activities of FG Holdings LLC.

The investment in Series B common membership interests of FG Holdings LLC is reported using net asset value (“NAV”) of interests held by the Company at period-end.

The NAV is calculated using the observable fair value of the underlying stock of FGF held by FG Holdings LLC, plus uninvested cash, less liabilities, further adjusted through allocations based on distribution preferences, as defined in operating agreement of FG Holdings LLC.

The NAV is used as a practical expedient and has not been classified within the fair value hierarchy.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

The Company incurred operating losses during 2023 and 2022 and reported negative cash flows from operations during 2022.

The Company’s operating results have been negatively impacted by the worldwide shortages of materials, in particular semiconductors and integrated circuits, extended lead times, and increased costs and inventory levels for certain components.

On November 22, 2022, the Company’s subsidiaries, BK Technologies, Inc.

Effective September 14, 2022, the Company made an investment in Series B common membership interests of FG Financial Holdings, LLC (“FG Holdings LLC”), an entity related to the former chairman of the Company's Board of Directors.

As further discussed in Note 7, the Company recorded the investment according to guidance provided by ASC 820 “Fair Value Measurement”, as the Company did not have a controlling financial interest in, nor exerted significant influence over the activities of FG Holdings LLC.

The investment in Series B common membership interests of FG Holdings LLC was reported using net asset value (“NAV”) of interests held by the Company at period-end.

The NAV was calculated using the observable fair value of the underlying stock of FGF held by FG Holdings LLC, plus uninvested cash, less liabilities, further adjusted through allocations based on distribution preferences, as defined in operating agreement of FG Holdings LLC.

The NAV was used as a practical expedient and has not been classified within the fair value hierarchy.

On January 25, 2024, the Company redeemed its Series B common membership interests (the “Interests”) in FG Holdings LLC and withdrew from FG Holdings LLC.

In exchange for the Interests, the Company received 52,000 shares of the Company’s Common Stock, with an approximate fair value of $ 650 on the date of the transaction and recorded a realized loss of $ 91 on the investment during the first quarter of 2024.

The shares received by the Company are held as treasury stock, increasing the total number of treasury shares held by the Company to 342,080 .

The Company recognized operating income of $ 7.8 million during 2024 and an operating loss of $ 0.8 million during 2023 .

The Company’s 2023 operating results were negatively impacted by the worldwide shortages of materials, in particular semiconductors and integrated circuits, extended lead times, and increased costs and inventory levels for certain components due to supply chain disruptions in 2022 and early in 2023.

On October 30, 2024, the Company's wholly owned subsidiary, BK Technologies, Inc.

entered into a new Revolving Loan Commitment agreement with Fifth Third Bank, N.A., providing for a one -year revolving line of credit with a maximum commitment of $ 6,000 , with an accordion feature, if certain conditions are met, for up to an additional $ 4,000 of borrowing capacity, totaling a maximum commitment of $ 10,000 .

On November 22, 2022, the Company’s wholly owned 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 .

The Company used funds obtained from the Line of Credit to replace the existing JPMC Credit Agreement which expired on January 31, 2023 (see Note 5).

(the “Subsidiaries”), entered into an Invoice Purchase and Security Agreement (“IPSA”) with Alterna Capital Solutions, LLC (“Alterna”), providing for a one -year line of credit with total maximum funding up to $ 15,000 (the “Line of Credit”).

On November 22, 2023, the IPSA was renewed for one more year.

The IPSA was paid off in September 2024.

Management believes that cash and cash equivalents currently available, combined with anticipated cash to be generated from operations, and borrowing ability are sufficient to meet the Company’s working capital requirements in the foreseeable future.

The Company generally relies on cash from operations, commercial debt, and equity offerings, to the extent available, to satisfy its liquidity needs and to meet its payment obligations The Company may engage in public or private offerings of equity or debt securities to maintain or increase its liquidity and capital resources.

The Company generally relies on cash from operations, commercial debt, and equity offerings to the extent available, to satisfy its liquidity needs and to meet its payment obligations.

The Company may engage in public or private offerings of equity or debt securities to maintain or increase its liquidity and capital resources.

However, financial and economic conditions, including those resulting from the current inflationary environment and current geopolitical tension, could impact our ability to raise capital or debt financing, if needed, on acceptable terms or at all.

BK TECHNOLOGIES CORPORATION

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

Reverse Stock Split

10 unchanged sentences

Included in SG&A expenses for the years ended December 31, 2024 and 2023 are engineering, research and development costs of $ 7,841 and $ 9,334 , respectively.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

Share-Based Compensation

6 unchanged sentences

Earnings (loss) per share amounts are computed and presented for all periods in accordance with ASC 260 “Earnings per Share”.

BK TECHNOLOGIES CORPORATION

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

Comprehensive Income (loss)

8 unchanged sentences

The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

ASU 2016-13 introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial assets, including financial assets arising from revenue transactions, such as accounts receivable.

The new expected credit loss methodology, which is based on a combination of historical experience, current conditions and reasonable and supportable forecasts, replaced the incurred loss model for measuring and recognizing expected credit losses.

This ASU is effective for the Company for 2023, and management incorporated this guidance into its methodology for estimating its accounts receivable allowances.

Based on historical trends, the financial condition of the Company’s customers and management’s expectations of economic and industry factors affecting the Company’s customers, the adoption of ASU 2016-13 did not have a material effect on the Company’s consolidated financial statements.

In November 2023, the FASB issued Accounting Standards Update (ASU) 2023 - 07 Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The new standard became effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company evaluated the requirements for ASU 2023 - 07 and reported one reportable segment and included required disclosures.

Segment Reporting Disclosures

The Company has one reportable segment - Land Mobile Radio (LMR) Products and Solutions.

The LMR segment provides radio devises that are hand-held (portable) or installed in vehicles (mobile) and operate on private radio systems that are P25 compliant.

The Company derives revenue primarily in North America and manages the business activities on a consolidated basis.

The LMR radio products are used by public safety agencies of the federal government, state and local municipality P25 compliant radio systems.

The radio systems operate on frequencies managed by the Federal Communications Commission (FCC).

The Company’s chief operating decision maker is the senior executive committee that includes the chief technology officer, chief financial officer, and the chief executive officer.

The accounting policies of the LMR segment are the same as those described in the summary of significant accounting policies.

The chief operating decision maker assesses performance for the LMR segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The chief operating decision maker uses operating income (loss) and net income (loss) to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the LMR segment or into other parts of the entity, the development of public safety applications utilizing cellular technology or for acquisitions.

Net income (loss) is used to monitor budget versus actual results.

The chief operating decision maker also uses net income (loss) in competitive analysis by benchmarking to the Company’s competitors.

The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.

The table below summarizes the significant categories regularly reviewed by the CODM for the years ended December 31, 2024, and 2023:

$ 76,592 $ 74,094

Cost of products

47,542 51,858

29,050 22,236

Engineering and product development

Marketing and selling

General and administrative

Selling, general and administrative expenses

21,222 23,013

Operating income (loss)

7,828 ( 777 )

Other (expense) income (a)

( 362 ) ( 659 )

Income tax (expense) benefit

Segment net income (loss)

$ 8,450 $ ( 1,490 )

Reconciliation of profit or loss

Adjustments and reconciling item

Loss on investments

( 91 ) ( 740 )

Consolidated net income (loss)

$ 8,359 $ ( 2,230 )

(a) Other segment items included interest expense and foreign currency exchange gains/(losses)

BK TECHNOLOGIES CORPORATION

5 unchanged sentences

Finished goods

$ 3,194 $ 4,622

Work in process

Raw materials

10,232 11,055

$ 17,636 $ 23,952

Changes in the allowance for slow-moving, excess, and obsolete inventory are as follows:

1 unchanged sentence

Balance, beginning of year

$ 1,838 $ 1,247

Charged to cost of sales

1 unchanged sentence

Balance, end of year

During the year ended December 31, 2022, the Company recorded one-time, non-cash write-offs of new product developmental materials and inventory of $ 900 related to the BKR products, $ 646 was recorded in Selling, general and administrative expenses and $ 254 was recorded as a cost of products.

$ 1,694 $ 1,838

During the year ended December 31, 2024, the Company wrote off $ 511 of inventory that had been fully allowed for previously, which had no impact to the Company's consolidated balance sheets or consolidated statements of operations.

Allowance for Credit Losses

Changes in the allowance for doubtful accounts are composed of the following:

Changes in the allowance for credit losses are composed of the following:

Years Ended December 31,

7 unchanged sentences

Machinery and equipment

18,977 17,793

Gross Property, Plant, and Equipment

19,681 18,452

Less accumulated depreciation and amortization

( 14,770 ) ( 13,086 )

Property, plant and equipment, net

$ 4,911 $ 5,366

Depreciation and amortization expense relating to property, plant and equipment for the years ended December 31, 2024 and 2023 was approximately $ 1,692 and $ 1,635 respectively.

1 unchanged sentence

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Capitalized Product Development Costs

The Company accounts for the costs of Land Mobile Radio (LMR) multi-band development within its products in accordance with ASC Topic 350 - 30, “ Intangibles – Goodwill and Other,” under which certain LMR multi-band radio development costs incurred subsequent to the establishment of technological feasibility are capitalized and amortized over the estimated lives of the related products.

The Company determined technological feasibility was established for multi-band LMR radio products by the introduction of the BKR 9000 multi-band portable product to the market in June 2023, as specified by Topic 350 - 30.

Upon the general release of the LMR multi-band mobile radio product currently in development to customers, development costs for that product will be amortized over periods not exceeding ten years, based on future revenue of the product.

Capitalized product development costs were $ 1,321 as of December 31, 2024.

Credit Facilities

On October 30, 2024, BK Technologies, Inc., a wholly owned subsidiary of the Company, as the borrower, entered into a new credit facility with Fifth Third Bank, National Association, as the lender (the “Fifth Third Revolving Loan Commitment”).

The Fifth Third Revolving Loan Commitment provides for a one -year revolving line of credit with a maximum commitment of $ 6,000 , with an accordion feature, if certain conditions are met, for up to an additional $ 4,000 of borrowing capacity, totaling a maximum commitment of $ 10,000 .

Each advance shall accrue interest on the outstanding principal amount thereof at a rate of SOFR plus 2.5 % per annum.

Each advance may be prepaid at any time without penalty and the entire line of credit commitment may be permanently terminated by BK Technologies, Inc.

at any time upon 10 days’ prior written notice to the lender without penalty.

BK Technologies, Inc.’s repayment obligations under the credit facility are guaranteed by the Company and RELM Communications, Inc.

and secured by a pledge of essentially all of the assets of BK Technologies, Inc., the Company and RELM Communications, Inc.

(collectively, the “Loan Parties”).

The Loan Parties are subject to customary negative covenants, including with respect to their ability to incur additional indebtedness, encumber and dispose of their assets and enter into affiliate transactions.

BK Technologies, Inc.

must also comply with a maximum total funded debt ratio of 2.00 to 1.00 and a minimum fixed charge coverage ratio of 1.20 to 1.00, each measured at the end of every fiscal quarter.

As of December 31, 2024, the Company was in compliance with the debt covenants and there was no outstanding borrowing balance.

On November 22, 2022, the Subsidiaries entered into the IPSA with Alterna.

On November 28, 2022, the Subsidiaries and Alterna entered into a rider to the IPSA, to modify the IPSA to, among other things, provide a credit facility for up to 75% of net orderly liquidation value of inventory, not to exceed 100% of the eligible accounts receivable balance .

The IPSA, which provides for a one-year Line of Credit with a maximum capacity of up to $ 15 million renews, unless canceled by either party, as provided in the agreement.

The Line of Credit bears an interest rate of Prime plus 1.85 %.

The effective borrowing rate under the IPSA was 10.35 % as of December 31, 2023.

On November 28, 2022, the Subsidiaries and Alterna entered into a rider to the IPSA, to modify the IPSA to, among other things, provided a credit facility for up to 75 % of net orderly liquidation value of inventory, not to exceed 100 % of the eligible accounts receivable balance.

The IPSA, which provided for a one -year Line of Credit with a maximum capacity of up to $ 15,000 was renewed in November 2023 and paid in full on September 30, 2024.

The Line of Credit bore an interest rate of Prime plus 1.85 %.

Interest and related servicing fees for years ended December 31, 2024 and 2023 , were approximately $ 356 and $ 648 , respectively.

Under the arrangement, the Company may transfer eligible short-term trade receivables to the conduit, with full recourse, on a daily basis in exchange for cash.

Generally, at the transfer date, the Company may receive cash equal to approximately 85 % of the value of the transferred receivables.

The Company accounts for the transfers of receivables as a secured borrowing due to the Company’s continuing involvement with the accounts receivable.

On November 22, 2023 the IPSA was renewed for one year.

On January 13, 2020, the Company’s subsidiary, BK Technologies, Inc., executed Credit Agreement (the “Original Credit Agreement”) with JPMorgan Chase Bank, N.A.

(“JPMC”) and a Line of Credit Note in favor of JPMC in an aggregate principal amount of up to $5,000,000 (the “Original Note”), each dated as of January 13, 2020 .

The Original Note had a maturity date of January 31, 2021.

On January 26, 2021, BK Technologies, Inc.

and JPMC entered into a Note Modification Agreement (the “Modification”), to modify the Original Note to, among other things, extend the maturity date of the Original Note to January 31, 2022.

Then, on January 21, 2022, BK Technologies, Inc.

and JPMC entered into a First Amendment to Credit Agreement (the “Amendment”) to, among other things, extend the maturity date to January 31, 2023.

Also on January 31, 2022, BK Technologies, Inc.

delivered to JPMC a related Line of Credit Note (the “Note” and collectively with the Original Credit Agreement, as modified by the Modification and the Amendment, the “Credit Agreement”), in replacement, renewal and extension of the Original Note, as previously modified, which had a maturity date of January 31, 2023.

The outstanding balance of $ 4.5 million was paid off in November 2022 with funds received from the IPSA funding.

During 2023 and 2022, the Company transferred receivables having an aggregate face value of $ 67.4 and $ 12.2 million, respectively, to the conduit and received proceeds of $ 74.6 and $ 10.4 million, respectively, which also includes draws on available inventory funding.

Under the arrangement, the Company could transfer eligible short-term trade receivables to the conduit, with full recourse, on a daily basis in exchange for cash.

Generally, at the transfer date, the Company could receive cash equal to approximately 85 % of the value of the transferred receivables.

The Company accounted for the transfers of receivables as a secured borrowing due to the Company’s continuing involvement with the accounts receivable.

During 2024 and 2023 , the Company transferred receivables having an aggregate face value of $ 49,700 and $ 67,400 , respectively, to the conduit and received proceeds of $ 46,400 and $ 74,600 , respectively, which also includes draws on available inventory funding.

There were no losses incurred on these transfers during 2024 and 2023 , respectively.

As of December 31, 2023, the outstanding borrowings under the IPSA were approximately $ 6.5 million and the outstanding principal amount of receivables transferred under the IPSA amounted to $ 6.2 million.

The Company terminated the IPSA in October 2024 upon entering into the credit facility with Fifth Third Bank.

Notes Payable

On April 6, 2021, BK Technologies, Inc., a wholly owned subsidiary of the Company, and JPMC, as a lender, entered into a Master Loan Agreement in the amount of $ 743 to finance various items of manufacturing equipment (the “JPMC Credit Agreement”).

On April 6, 2021, BK Technologies, Inc., a wholly owned subsidiary of the Company, and JP Morgan Chase Bank, N.A., as a lender, entered into a Master Loan Agreement in the amount of $ 743 to finance various items of manufacturing equipment (the “JPMC Credit Agreement”).

The Company used funds obtained from the Line of Credit to replace the JPMC Credit Agreement.

This note payable was paid in full on June 27, 2023.

On September 25, 2019, BK Technologies, Inc., a wholly owned subsidiary of BK Technologies Corporation, and U.S.

On September 25, 2019, BK Technologies, Inc., a wholly owned subsidiary of the Company, and U.S.

Bank Equipment Finance, a division of U.S.

Bank National Association, as a lender, entered into a Master Loan Agreement in the amount of $ 425 to finance various items of equipment.

The loan is collateralized by the equipment purchased using the proceeds.

The Master Loan Agreement is payable in 60 monthly principal and interest payments of approximately $ 8 beginning on October 25, 2019 and maturing on September 25, 2024 , and bears a fixed interest rate of 5.11 %.

Bank National Association, as a lender, entered into a Master Loan Agreement in the amount of $ 425 to finance various items of manufacturing equipment.

The loan was collateralized by the equipment purchased using the proceeds.

The Master Loan Agreement was payable in 60 equal monthly principal and interest payments of approximately $ 8 beginning on October 25, 2019, was scheduled to mature on September 25, 2024, and bore a fixed interest rate of 5.11 %.

This note payable was paid in full on June 24, 2024

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

The following table summarizes the notes payable principal repayments subsequent to December 31, 2023:

Total payments

The Company held an investment in a limited partnership, FGI 1347 Holdings, LP (“1347 LP”), of which the Company was the sole limited partner.

1347 LP was established for the purpose of investing in securities, and its sole primary asset was shares of FG Financial Group, Inc.

On January 25, 2024, the Company redeemed its Series B common membership interests (the “Interests”) in FG Holdings LLC and withdrew from FG Holdings LLC.

In exchange for its Interests, the Company received 52,000 shares of the Company’s Common Stock, with an approximate fair value of $ 650 on the date of the transaction and recorded a realized loss of $ 91 on the investment during the first quarter of 2024.

The shares received by the Company are held as treasury stock, increasing the total number of treasury shares held by the Company to 342,080 .

The investment in the Series B common membership interests of FG Holdings LLC was measured using the NAV practical expedient in accordance with ASC 820 Fair Value Measurement and has not been classified within the fair value hierarchy.

FG Holdings LLC invested in the common and preferred stock of FG Financial Group, Inc.

FGF) (“FGF”).

These shares were purchased in March and May 2018 for approximately $ 3,741 .

Affiliates of Fundamental Global GP, LLC (“FG”), a significant stockholder of the Company, served as the general partner and the investment manager of 1347 LP, and the Company was the sole limited partner.

As the sole limited partner, the Company was entitled to 100% of net assets held by 1347 LP.

FG has not received any management fees or performance fees or expense reimbursement for its services to the limited partnership arising in connection with 1347 LP’s operations, as provided by the partnership agreement, upon approval by the Company’s Board of Directors.

The Company accounted for the investment in FGF, made through 1347 LP, as a consolidated VIE.

The enterprise with a controlling financial interest is the primary beneficiary and consolidates the VIE.

On September 14, 2022, FG contributed all of the shares of FGF held by 1347 LP to FG Holdings, LLC with an approximate value of $ 945 , based on the published price of FGF stock, in exchange for Series B Common Interests of FG Holdings LLC, with an equivalent value.

The Company recognized a loss of $ 850 in September 30, 2022 as a result..

The investment in the Series B common membership interests of FG Holdings LLC is measured using the NAV practical expedient in accordance with ASC 820 Fair Value Measurement and has not been classified within the fair value hierarchy.

FG Holdings LLC invests in the common and preferred stock of FGF.

FG Holdings LLC’s structure provides for Series A preferred interests, which (i) accrue a return of eight percent per annum on the unreturned capital contributions by Series A holders, (ii) have preference in the order of distributions of contributed capital, and (iii) are entitled to receive an additional distribution equal to 20 % of any positive profits / gains in excess of the eight percent above with respect to the capital provided by the holders of Series A preferred membership interests.

The Series B common membership interests follow Series A in the order of distributions and are entitled to receive (i) cumulative distributions equal to the aggregate capital contributions by the Series B common membership holders, (ii) a pro rata share of the total return / gain based on capital contributed by the Series B common membership interests, and (iii) an additional return equal to 1.5 times the Series A of positive profits / gains described above, distributed in proportion to the percentage of Series B common interests owned by the Series B holder.

There is no defined redemption frequency, and the Company cannot redeem or transfer its investment without the prior written consent of FG Holdings LLC' managers, who are FG affiliates.

Distributions may be made to members at such times and amounts as determined by the managers, and shall be based on the most recent NAV.

The Company does not have any unfunded commitments related to this investment.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

On September 30, 2022, Series B Common Interests of FG Holdings LLC were distributed in-kind to the Company as the sole limited partner of 1347 LP, and the Company consented to withdraw from 1347 LP, as the limited partner.

As a result, the Company recognized a loss on deconsolidation of 1347 LP of approximately $ 43 .

FG Holdings LLC’s structure provided for Series A preferred interests, which accrued a return of eight percent per annum and received 20 % of positive profits with respect to the total return in the capital provided by the holders of Series A preferred membership interests.

The Series B common membership interests received cumulative distributions equal to the aggregate capital contributions by the Series B common membership interest equal to the total return on capital provided by the Series B common membership interests.

Series B common membership interests also received an additional return equal to 1.5 times the Series A of positive profits described above.

There was no defined redemption frequency, and the Company could not redeem or transfer its investment without the prior written consent of FG Holdings LLC' managers, who were related parties.

Distributions could have been made to members at such times and amounts as determined by the managers, and were based on the most recent NAV.

The Company did not have any unfunded commitments related to this investment.

As of December 31, 2023, the members and affiliates of FG Holdings LLC beneficially owned in the aggregate 5,666,111 shares of FGF's common stock, representing approximately 55 % of FGF's outstanding shares.

Additionally, FG and its affiliates constitute the largest stockholder of the Company.

Kyle Cerminara, who served as a director of the Company and chairman of the Board of Directors until December 14, 2023, is Chief Executive Officer, Co-Founder and Partner of FG and serves as chairman of the board of directors of FG Group Holdings Inc., the entity that is the majority Series B member in FG Holdings LLC.

Cerminara also serves as a manager of FG Holdings LLC and chairman of the board of directors of FGF.

During the years ended December 31, 2023 and 2022, the Company recognized a loss of approximately $ 740 and $ 313 , respectively, due to changes in the unrealized loss on investments.

On January 25, 2024, the Company redeemed its Series B common membership interests (the “Interests”) of FG Holdings LLC and withdrew from FG Holdings LLC.

In exchange for its Interests, the Company received 52,000 shares of the Company’s Common Stock, with an approximate fair value of $ 651 on the date of the transaction and recorded a realized loss of $ 91 on the investment during the first quarter of 2024.

Additionally, FG and its affiliates constituted the largest stockholder of the Company, as of December 31, 2023.

FG and its affiliates exited its investment in the Company in June 2024.

Kyle Cerminara, who served as a director of the Company and chairman of the Board of Directors until December 14, 2023, was Chief Executive Officer, Co-Founder, and Partner of FG and served as chairman of the board of directors of FG Group Holdings Inc., the entity that was a majority Series B member in FG Holdings ILC.

Cerminara also serveds as a manager of FG Holdings, LLC and chairman of the board of directors of FGF.

During the year ended December 31, 2024 and 2023 , the Company recognized a realized loss of approximately $ 91 and an unrealized loss of approximately $ 740 due to changes on investments, respectively.

The Company accounts for its leasing arrangements in accordance with Topic 842, “Leases”.

7 unchanged sentences

The lease has the expiration date of June 30, 2027.

The lease includes an option for one additional extension period of five ( 5 ) years commencing July 1, 2027 and terminating at midnight June 30, 2032.

Rental, maintenance and tax expenses for this facility were approximately $ 625 and $ 596 in 2024 and 2023 , respectively.

1 unchanged sentence

Annual rental, maintenance and tax expenses for the facility were approximately $ 224 and $ 212 in 2024 and 2023 , respectively.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Leases (Continued)

Lease costs consist of the following:

2 unchanged sentences

Total lease cost

BK TECHNOLOGIES CORPORATION

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Leases (Continued)

Supplemental cash flow information related to leases was as follows:

11 unchanged sentences

Years Ended December 31,

$ ( 984 ) $ 54

A reconciliation of the statutory U.S.

3 unchanged sentences

income tax rate

21.00 % 21.00 %

State taxes, net of federal benefit

9.42 % ( 1.34 )%

Permanent differences

0.84 % ( 0.87 )%

Change in valuation allowance

Change in tax credits and state NOLs

Impact from accounting method change and expired options

( 48.79 )% ( 48.01 )%

Change in tax credits

( 4.59 )% 16.59 %

Uncertain tax position

Impact from rate changes

( 10.48 )% 10.14 %

Effective income tax rate

( 13.35 )% ( 2.49 )%

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7 unchanged sentences

Section 263A costs

Additional K-1 temporary adjustment

Capitalized research and development expenses

Net ROU asset and lease liability

Unrealized loss

Capital loss carryforward

Asset reserves:

Inventory allowance

State depreciation

Accrued expenses:

3 unchanged sentences

Less valuation allowance

( 802 ) ( 4,398 )

Total deferred tax assets

Deferred tax liabilities:

( 798 ) ( 748 )

Total deferred tax liabilities

( 798 ) ( 748 )

Net deferred tax assets

As of December 31, 2023, the Company had a net deferred tax asset of approximately $ 4,864 (net of valuation allowance) offset by deferred tax liabilities of $ 748 derived from accelerated tax depreciation.

This asset is primarily composed of net operating loss carryforwards (“NOLs”), research and development tax credits, and deferred revenue, net of a valuation allowance of approximately $ 4,398 .

The NOLs total approximately $ 8,030 for federal and $ 6,120 for state purposes, with expirations starting in 2022 for state purposes.

State NOLs of $ 1,870 expired in 2022.

During 2022, the Company generated $ 9,261 of federal NOLs and during 2023, the Company utilized $ 4,911 of federal NOLs.

$ 6,788 $ 4,116

As of December 31, 2024, the Company had deferred tax assets of approximately $ 7,586 offset by deferred tax liabilities of $ 798 .

This asset is primarily composed of capitalization of research and development expenses and deferred revenue.

The liability is composed of the effect of differences in amortization and depreciation utilized for tax purposes.

During 2024, the Company utilized $ 7,915 of federal NOLs and during 2023 the Company utilized $ 4,911 of federal NOLs.

The deferred tax asset amounts are based upon management’s conclusions regarding, among other considerations, the Company’s current and anticipated customer base, contracts, and product introductions, certain tax planning strategies, and management’s estimates of future earnings based on information currently available, as well as recent operating results during 2024, 2023, and 2022.

GAAP requires that all positive and negative evidence be analyzed to determine if, based on the weight of available evidence, the Company is more likely than not to realize the benefit of the deferred tax asset.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Income Taxes (Continued)

Management’s analysis of all available evidence, both positive and negative, provides support that the Company does not have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax asset.

Accordingly, as of December 31, 2023, a valuation allowance has been established totaling approximately $4,398.

Based on the analysis of all available evidence, both positive and negative, the Company has concluded that, except for the capital loss carryforward of approximately $ 802 , it currently does have the ability to generate sufficient taxable income in the necessary period to utilize the benefits for the deferred tax assets.

Accordingly, the Company recorded a decrease in the valuation allowance of $ 3,596 as of December 31, 2024.

The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets may be deemed appropriate in the future.

If the Company incurs future losses, it may be necessary to record additional valuation allowance amounts related to the deferred tax assets recognized as of December 31, 2024.

Should the factors underlying management’s analysis change, future valuation adjustments to the Company’s net deferred tax asset may be necessary.

If future losses are incurred, it may be necessary to record an additional valuation allowance related to the Company’s net deferred tax asset recorded as of December 31, 2024 .

It cannot presently be estimated what, if any, changes to the valuation of the Company’s deferred tax asset may be deemed appropriate in the future.

The 2023 federal and state NOLs and tax credit carryforwards could be subject to limitation if, within any three-year period prior to the expiration of the applicable carryforward period, there is a greater than 50% change in ownership of the Company by any stockholder with 5% or greater ownership.

The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax asset may be deemed appropriate in the future.

The Company performed a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by GAAP.

In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return or planned to be taken in a future tax return that has not been reflected in measuring income tax expense for financial reporting purposes.

As a result of this review, on January 1, 2024, the Company is not aware of any uncertain tax positions that would require additional liabilities or which such classification would be required.

The amount of unrecognized tax positions did not change as of December 31, 2023, and the Company does not believe there will be any material changes in its unrecognized tax positions over the next twelve months.

BK TECHNOLOGIES CORPORATION

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Income Taxes (Continued)

A reconciliation of the beginning and ending amount of our unrecognized tax benefits is as follows:

Balance at January 1

Additions based on tax positions related to the current year

Additions for tax positions of prior years

Balance at December 31,

As of December 31, 2024, the Company recorded approximately $ 1,419 of unrecognized tax benefits, a net increase of $ 1,419 from $- 0 - as of December 31, 2023.

If the Company recognized its tax positions, approximately $ 1,419 would favorably impact the tax rate.

Penalties and tax-related interest expense, of which there were no material amounts for the years ended December 31, 2024 , and 2023 , are reported as a component of income tax expense (benefit).

4 unchanged sentences

The resolution of a matter would be recognized as an adjustment to the provision for income taxes and the effective tax rate in the period of resolution.

The calendar years 2020, 2021, and 2022 are still open to IRS examination under the statute of limitations.

The calendar years 2019 through 2023 are still open to IRS examination under the statute of limitations.

The last IRS examination on the Company’s 2007 calendar year was closed with no change.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Income (Loss) Per Share

1 unchanged sentence

Years Ended December 31,

Net loss from continuing operations numerator for basic and diluted earnings per share

Denominator for basic loss per share weighted average shares

Net income (loss) from continuing operations numerator for basic and diluted earnings per share

$ 8,359 $ ( 2,230 )

Denominator for basic income (loss) per share weighted average shares

3,553,303 3,426,622

Effect of dilutive securities:

Denominator for diluted loss per share weighted average shares

Basic and diluted loss per share

Approximately 202,600 stock options and 19,587 restricted stock units for the year ended December 31, 2023 and 200,300 stock options and 41,129 restricted stock units for the year ended December 31, 2022, were excluded from the calculation because they were anti-dilutive.

Options, restricted stock units, and warrants

Denominator for diluted income (loss) per share weighted average shares

3,710,644 3,426,622

Basic income (loss) per share

$ 2.35 $ ( 0.65 )

Diluted income (loss) per share

$ 2.25 $ ( 0.65 )

Approximately 202,600 stock options and 19,587 restricted stock units for the year ended December 31, 2023 were excluded from the calculation because they were anti-dilutive ( none for the year ended December 31, 2024).

Share-Based Compensation

1 unchanged sentence

The Company has an employee and non-employee director incentive compensation equity plan.

Related to these programs, the Company recorded $ 200 and $ 271 of share-based employee compensation expense during the years ended December 31, 2023 and 2022, respectively, which is included as a component of cost of products and SG&A expenses in the accompanying consolidated statements of operations.

Related to these programs, the Company recorded $ 286 a nd $ 200 of share-based employee compensation expense related to stock options during the years ended December 31, 2024 and 2023 , respectively, which is included as a component of cost of products and SG&A expenses in the accompanying consolidated statements of operations.

No amount of share-based employee compensation expense was capitalized as part of capital expenditures or inventory for the years presented.

3 unchanged sentences

The dividend yield assumption is based on the Company’s expectations of dividend payouts at the grant date.

In 2022, the Company paid dividends on January 10, for a dividend declared in 2021, May 16, August 8 and November 8.

The Company has estimated its future stock option exercises.

3 unchanged sentences

Expected Volatility

56.8 % 55.8 %

Expected Dividends

1 unchanged sentence

Risk-Free Rate

4.08 % 3.67 %

Estimated Forfeitures

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

A summary of stock option activity under the Company’s equity compensation plans as of December 31, 2024 , and changes during the year ended December 31, 2024 , are presented below:

Stock Options

Fair Value ($)

Stock Options

As of January 1, 2024

202,600 14.76 7.60 5.94 37,773

105,313 16.01 6.80 5.78 9,661

97,287 13.41 8.47 6.12 28,112

Period activity

115,900 12.31 — 7.29 —

6,200 13.57 — 6.01 —

27,200 16.25 — 6.98 —

As of December 31, 2024

285,100 13.65 7.72 6.39 5,884,764

109,840 15.23 6.25 5.46 2,093,685

175,260 12.66 8.63 6.97 3,791,078

Range of Exercise Prices

($) Per Share

Stock Options

Range of Exercise Prices

($) Per Share

11.51 - 15.53 247,300 12.82 8.21

16.20 - 25.50 37,800 19.06 4.50

285,100 13.65 7.72

Range of Exercise Prices

Stock Options

($) Per Share

11.51 - 15.53 76,240 13.39

16.20 - 25.50 33,600 19.41

109,840 15.23

The weighted-average grant-date fair value per option granted during the years ended December 31, 2024 and 2023 was $ 6.39 and $ 5.94 , respectively.

There were 4,000 and no stock options exercised during the years ended December 31, 2023 and 2022, respectively.

There were 6,200 and 4,000 stock options exercised during the years ended December 31, 2024 and 2023 , respectively.

Restricted Stock Units

In connection with the restricted stock units granted to non-employee directors, the Company accrues compensation expense based on the estimated number of shares expected to be issued, utilizing the most current information available to the Company at the date of the consolidated financial statements.

In connection with the restricted stock units (sometimes referred to as "RSUs") granted to non-employee directors, the Company accrues compensation expense based on the estimated number of shares expected to be issued, utilizing the most current information available to the Company at the date of the consolidated financial statements.

The Company estimates the fair value of the restricted stock unit awards based upon the market price of the underlying common stock on the date of grant.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Share-Based Compensation (Continued)

A summary of non-vested restricted stock under the Company’s non-employee director share-based incentive compensation plan is as follows:

A summary of non-vested restricted stock units under the Company’s non-employee director share-based incentive compensation plan is as follows:

Weighted Average

Year ended December 31, 2024

Number of Shares

Weighted Average Grant Date

Price per Share

Unvested as of January 1, 2024

19,587 $ 13.22

Vested and issued

( 33,801 ) 11.74

Cancelled/forfeited

Unvested as of December 31, 2024

44,546 $ 12.99

Weighted Average

Year ended December 31, 2023

Number of Shares

Weighted Average

Price per Share

Unvested at January 1, 2023

41,129 $ 13.20

45,412 $ 12.37

Vested and issued

( 66,954 ) $ 12.63

Cancelled/forfeited

Unvested at December 31, 2023

During the years ended December 31, 2023 and 2022, the Company also issued 7,040 and 7,680 RSU’s, respectively, under a consulting agreement for advisory services to the Board of Directors.

19,587 $ 13.22

During the year ended December 31, 2024 and 2023 , the Company also issued 8,960 RSUs under a consulting agreement for advisory services to the Board of Directors.

The principal of the consulting firm was elected as the Chairman of the Board of Directors in December 2023.

During 2023, the Company’s Board of Directors approved the Executive Salary Swap Plan to prospectively swap a portion of certain executive’s salaries for a 12 month period (10% minimum, up to 50%) otherwise payable in cash for a grant of RSUs (with each RSU representing a contingent right to receive one share of the Company’s Common Stock) at a fixed rate of $10 per share, rounded down to the nearest whole RSU .

The Restricted Stock Units vest at the date of the grant.

The Company issued 6,739 under this arrangement through December 31 , 2023.

During 2024 and 2023, the Company’s Board of Directors approved the Executive Salary Swap Plan to prospectively swap a portion of certain executive’s salaries for a 12 month period ( 10 % minimum, up to 50 %) otherwise payable in cash for a grant of RSUs (with each RSU representing a contingent right to receive one share of the Company’s Common Stock) at a fixed rate of $ 10 per share, rounded down to the nearest whole RSU.

The Restricted Stock Units vested at the date of the grant.

The Company issued 13,979 and 6,739 RSUs under this arrangement during December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023 , there was approximately $ 1,419 and $ 682 , respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including stock options and restricted stock units.

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Other Equity Transactions

On January 25, 2024, the Company redeemed its "Interests" of FG Holdings LLC and withdrew from FG Holdings LLC.

The shares received by the Company are held as treasury stock, increasing the total number of treasury shares held by the Company to 342,080 .

On November 6, 2023, the Company entered into a Master Supply Agreement (the “MSA”) and Transition Services Agreement (the “TSA,” and together with the MSA, the “Agreements”) with East West Manufacturing, LLC, a Georgia limited liability company (“East West”).

Pursuant to the Agreements, the Company will transition its West Melbourne, Florida manufacturing activities to East West’s facilities, and East West will become the exclusive third-party manufacturer of the Company’s radio product line under a three-year arrangement.

In connection with the Agreements, the Company and East West entered into a Stock Purchase Agreement (the “SPA”), pursuant to which East West purchased 77,520 shares of the Company’s common stock (the “BKTI Stock”) for an investment of $ 1,000,000 .

The number of shares of BKTI Stock was determined based upon a price per share of $ 12.90 , which is equal to the average of the closing price of BKTI Stock on the NYSE American exchange for the 30 most recent trading days prior to November 6, 2023, rounded up to the nearest whole number of shares.

Pursuant to the Agreements, the Company transitioned its West Melbourne, Florida manufacturing activities to East West’s facilities, and East West became the exclusive third -party manufacturer of the Company’s radio product line under a three -year arrangement.

The number of shares of common stock was determined based upon a price per share of $ 12.90 , which is equal to the average of the closing price of the Company's common stock on the NYSE American exchange for the 30 most recent trading days prior to November 6, 2023, rounded up to the nearest whole number of shares.

Additionally, East West purchased a warrant (“Warrant”), with a five -year term to purchase up to 135,300 shares of the Company’s common stock at an exercise price per share of $ 15.00 .

The consideration for the Warrant is payment equal to (a) One Million Dollars ($ 1,000,000 ) minus (b) (i) the amount of any outstanding accounts payable by Company to East West and (ii) the amount of any excess or obsolete inventory of Company currently held by East West (solely to the extent not otherwise taken into account pursuant to the MSA or any other agreement between the Company and East West).

The payment included a $950 reduction in accounts payable and $50 in cash.

The BKTI Stock, the Warrant and the shares issuable upon exercise of the Warrant are deemed to be issued to an accredited investor in a private placement exempt from the registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (“Securities Act”).

The Company’s reliance upon Section 4(a)(2) of the Securities Act is based in part upon the following factors:

The consideration for the Warrant was payment equal to (a) $ 1,000 minus (b) (i) the amount of any outstanding accounts payable by the Company to East West and (ii) the amount of any excess or obsolete inventory of the Company held by East West (solely to the extent not otherwise taken into account pursuant to the MSA or any other agreement between the Company and East West).

The payment consisted of a $ 950 reduction in accounts payable and $ 50 in cash.

The common stock, the Warrant and the shares issuable upon exercise of the Warrant were deemed to be issued to an accredited investor in a private placement exempt from the registration pursuant to Section 4 (a)( 2 ) of the Securities Act of 1933, as amended (“Securities Act”).

The Company’s reliance upon Section 4 (a)( 2 ) of the Securities Act was based in part upon the following factors:

(a) the issuance of the securities was in connection with isolated private transactions which did not involve any public offering;

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BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Other Equity Transactions (Continued)

The warrant issued to EastWest Manufacturing LLC was classified as a component of permanent equity in the Company's Consolidated Balance Sheets as it is a freestanding financial instrument that is immediately exercisable, does not embody an obligation for the Company to repurchase its own shares and permits the holders to receive a fixed number of shares of common stock upon exercise.

All of the shares underlying the warrants have not been included in the weighted-average number of shares of common stock used to calculate net loss per share, basic and diluted, attributable to common stockholders because the shares would be anti-dilutive.

The Warrant issued to East West was classified as a component of permanent equity in the Company's Consolidated Balance Sheets as it is a freestanding financial instrument that is immediately exercisable, does not embody an obligation for the Company to repurchase its own shares and permits the holders to receive a fixed number of shares of common stock upon exercise.

For year ended 2023, all of the shares underlying the Warrant had not been included in the weighted-average number of shares of common stock used to calculate net loss per share, basic and diluted, attributable to common stockholders because the shares would have been anti-dilutive.

The Company used the Black-Scholes-Merton option valuation model to calculate the fair value of a stock warrant grant, using the assumptions noted in the following table.

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These sales were primarily to the various government agencies, including those within the United States Department of Defense, the United States Forest Service, the United States Department of Interior, and the United States Department of Homeland Security.

In addition, one commercial customer accounted for approximately 13 % of net sales for the year ended December 31, 2024 and approximately 24 % of accounts receivable at December 31, 2024.

Another commercial customer accounted for approximately 15 % of accounts receivable at December 31, 2024.

There were no commercial customers accounting for more than 10% of net sales for the year ended December 31, 2023.

One commercial customer accounted for approximately 16 % of accounts receivable at December 31, 2023.

Retirement Plan

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Under this agreement, the Company is obligated to pay a royalty for each product sold that utilizes the technology covered by this agreement, which started in June 2023.

The Company paid $0.03 in 2023 .

The Company paid $ 4 and $ 0.03 in 2024 and 2023, respectively.

The agreement is for three years and can be automatically renewed for one year at the end of its initial term unless either party provides at least 120 days’ prior written notice of its election not to extend the initial term.

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BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

DECEMBER 31, 2024 AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Changes in the Company’s liability for its standard two -year and five -year product warranties during the years ended December 31, 2024 and 2023 are as follows:

$ 722 $ 1,149 $ ( 863 ) $ 1,008

$ 591 $ 165 $ ( 34 ) $ 722

Legal Proceedings

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There were no pending material claims or legal matters as of December 31, 2024 .

Geopolitical Tensions and COVID-19

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.

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 in the Middle East.

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.

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.

Capital Programs

On December 17, 2021 a share repurchase program was authorized under which the Company may repurchase up to an aggregate of $ 5 million of its common shares.

On December 17, 2021 a share repurchase program was authorized under which the Company may repurchase up to an aggregate of $ 5,000 of its common shares.

Share repurchases under this program were authorized to begin immediately.

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As of December 31, 2024 , the Company has completed no share repurchases under this program.

Pursuant to the Company’s capital return program, during 2021, the Company’s Board of Directors declared a quarterly dividend on the Company’s common stock of $ 0.03 per share on December 17.

The dividend was payable to stockholders of record as of January 10, 2022.

The dividend was paid on January 24, 2022.

Pursuant to the Company’s capital return program, during 2022, the Company’s Board of Directors declared quarterly dividends on the Company’s common stock of $ 0.03 per share on April 7, June 30, and September 29.

The dividends were payable to stockholders of record as of May 2, 2022, July 25, 2022, and October 25, 2022, respectively.

These dividends were paid on May 16, 2022, August 8, 2022 and November 8, 2022.

The Company announced the suspension of its quarterly cash dividend program in March 2023.

Subsequent events

On January 25, 2024, the Company redeemed its Series B common membership interests (the “Interests”) of FG Holdings LLC and withdrew from FG Holdings LLC.

The shares received by the Company will be held as treasury stock, increasing the total number of treasury shares held by the Company to 342,080 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data