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Item 9A. Controls and Procedures

2025-03-27 compared with 2024-03-14 · 75 added, 57 removed, 101 unchanged (57% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer (who serves as our principal executive officer) and Chief Financial Officer (who serves as our principal financial and accounting officer) have evaluated the effectiveness of our disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15(e)) as of December 31, 2023.

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2023.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.

Our internal control system was designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to a change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

An internal control material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the consolidated financial statements will not be prevented or detected.

Our management, including our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023, and concluded that our internal control over financial reporting was effective as of December 31, 2023.

In making the assessment of internal control over financial reporting, management used the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were not effective due to the material weakness related to proper design and implementation of certain controls over income tax provision and management’s review of the income tax provision described below.

Management ’ s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) of the Exchange Act.

Our internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of financial statements for external purposes in accordance with U.S.

generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance that the objectives of the internal control system are met.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024.

In making this assessment, management used the framework set forth in the report entitled Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring.

During this assessment and as a result of the external audit of our 2024 financial results, management identified a material weakness in our internal control over financial reporting, which is discussed further below.

As a result of the material weakness, management concluded that our internal control over financial reporting was not effective as of December 31, 2024.

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

We identified a material weakness in internal control related to the proper design and implementation of certain controls over financial reporting related to the income tax provision and management’s review of the income tax provision.

This deficiency resulted in an elevated risk that a material misstatement of our annual or interim financial statements would not be prevented or detected by other compensating controls.

Notwithstanding the identified material weakness, we believe the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, results of operations, and cash flows for the periods presented in conformity with U.S.

generally accepted accounting principles.

This Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this Form 10-K.

Plan of Remediation of Material Weakness in Internal Control Over Financial Reporting

Following the identification and communication of the material weakness described above, management commenced remediation actions relating to the material weakness beginning in the first quarter of fiscal year 2025, as follows:

Management, with the assistance of a third party, will perform an evaluation of the processes and procedures around our processes and internal control design gaps, and recommend process enhancements, specifically related to income tax provisions.

We are enhancing our review processes for complex accounting transactions by enhancing access to accounting literature and identification of third-party professionals with whom to consult with regarding complex accounting applications to supplement existing accounting professionals.

We will utilize additional services of external consultants for non-routine and\or technical accounting issues for income tax provisions as they arise.

The income tax provision material weakness identified above will not be considered fully remediated until these additional controls and procedures have operated effectively for a sufficient period of time and management has concluded, through testing, that these controls are effective.

Our management will monitor the effectiveness of our remediation plans and will make changes management determines to be appropriate.

No assurance can be made that our remediation efforts will be completed in a timely manner or that the updated controls and procedures associated with such efforts will be deemed adequate after being subjected to testing.

If not remediated, this income tax provision material weakness could result in material misstatements to our annual or interim consolidated financial statements that may not be prevented or detected on a timely basis or result in a delayed filing of required periodic reports.

If we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to litigation or investigations by the NYSE American, the SEC, or other regulatory authorities, which could require additional financial and management resources.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) that occurred during the fourth fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described above.

Inherent Limitation on the Effectiveness of Internal Control

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely.

Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances.

In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

Other Information.

During the quarter ended December 31, 2024, none of the Company's directors or executive officers adopted, modified or terminated any "Rule 10b5 - 1 trading arrangement" or "non-Rule 10b5 - 1 trading arrangement" (each as defined in Item 408 of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

2 unchanged sentences

Information about our Directors and Executive Officers will be contained in the “Proposal 1:

Election of Directors” and “Corporate Governance-Board of Directors Independence” sections of our definitive proxy statement, to be filed in connection with our 2024 annual meeting of stockholders and is incorporated herein by reference.

Election of Directors,” "Executive Compensation-Information about our Executive Officers" and “Corporate Governance-Family Relationships” and "-Legal Proceedings" sections of our definitive proxy statement, to be filed in connection with our 2025 annual meeting of stockholders, and is incorporated herein by reference.

Delinquent Section 16(a) Reports

2 unchanged sentences

We have a separately designated standing audit committee.

Information about our audit committee (including its charter) and the audit committee financial expert will be contained in the “Corporate Governance-Meetings and Committees of the Board of Directors” section of our definitive proxy statement, to be filed in connection with our 2024 annual meeting of stockholders and is incorporated herein by reference.

Information about our audit committee (including its charter) and the audit committee financial expert will be contained in the “Corporate Governance-Meetings and Committees of the Board of Directors-Audit Committee” section of our definitive proxy statement, to be filed in connection with our 2025 annual meeting of stockholders, and is incorporated herein by reference.

Insider Trading Policies and Procedures

Information about our insider trading policies and procedures will be contained in the "Corporate Governance-Insider Trading Policies and Procedures" section of our definitive proxy statement, to be filed in connection with our 2025 annual meeting of stockholders and is incorporated herein by reference.

Code of Conduct

5 unchanged sentences

Executive Compensation.

The information required by this item will be contained in the “Executive Compensation,” “Summary Compensation Table for 2022-2023,” “Outstanding Equity Awards at 2023 Fiscal Year-End,” “Retirement Benefits for 2023,” “Potential Payments Upon Termination or in Connection With a Change of Control,” “Director Compensation for 2023” and “Corporate Governance-Meetings and Committees of the Board of Directors-Compensation Committee” sections of our definitive proxy statement, to be filed in connection with our 2024 annual meeting of stockholders, and is incorporated herein by reference.

The information required by this item will be contained in the “Executive Compensation” and “Director Compensation" sections of our definitive proxy statement, to be filed in connection with our 2025 annual meeting of stockholders, and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

3 unchanged sentences

Principal Accounting Fees and Services.

The information required by this item will be contained in the “Fees Paid to Our Independent Registered Public Accounting Firm” and “Corporate Governance—Meetings and Committees of the Board of Directors—Audit Committee” sections of our definitive proxy statement, to be filed in connection with our 2024 annual meeting of stockholders, and is incorporated herein by reference.

The information required by this item will be contained in the “Fees Paid to Our Independent Registered Public Accounting Firm” sections of our definitive proxy statement, to be filed in connection with our 2025 annual meeting of stockholders, and is incorporated herein by reference.

Exhibits and Financial Statement Schedules.

1 unchanged sentence

Consolidated Financial Statements listed below:

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered Public Accounting Firm (Forvis Mazars, LLP, PCAOB ID:

Report of Former Independent Registered Public Accounting Firm (MSL, P.A., PCAOB ID:

Consolidated Balance Sheets as of December 31, 2024 and 2023

26 unchanged sentences

Form of Restricted Stock Unit Agreement under the BK Technologies Corporation 2017 Incentive Compensation Plan (incorporated by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K12B filed March 28, 2019)

Relocation Agreement, dated December 31, 2019, between the Company and Henry R.

(Randy) Willis (incorporated by reference from Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018)

Employment Agreement, executed March 20, 2019, by and between BK Technologies, Inc.

and Timothy A.

Vitou (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 21, 2019)

Employment Agreement, executed March 20, 2019, by and between BK Technologies, Inc.

and William P.

Kelly (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed March 21, 2019)

Employment Agreement, executed March 20, 2019, by and between BK Technologies, Inc.

and Randy Willis (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 21, 2019)

Form of Stock Option Agreement under the BK Technologies Corporation 2017 Incentive Compensation Plan (January 2025)

Employment Agreement, dated October 31, 2019, by and between BK Technologies, Inc.

2 unchanged sentences

Suzuki (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 20, 2021)

Separation Agreement and General Release, dated January 11, 2022, between William P.

Kelly and BK Technologies, Inc.

(incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 11, 2022)

First Amendment to Employment Agreement, dated January 24, 2022, between John M.

1 unchanged sentence

(incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 30, 2022)

First Amendment to Employment Agreement, dated January 24, 2022, between Timothy A.

Vitou and BK Technologies, Inc.

(incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 30, 2022)

First Amendment to Employment Agreement, dated January 24, 2022, between Henry R.

(Randy) Willis and BK Technologies, Inc.

(incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed June 30, 2022)

Employment Agreement dated effective November 7, 2022, between BK Technologies Corporation, BK Technologies, Inc.

Malmanger (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 3, 2022)

Separation Agreement and General Release between the Company and Mr.

Vitou dated October 12, 2023 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 13, 2023)

Invoice Purchase and Security Agreement, dated November 22, 2022, between BK Technologies, Inc., RELM Communications, Inc., and Alterna Capital Solutions LLC (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 30, 2022)

Guaranty, dated November 22, 2022, by BK Technologies, Inc., and RELM Communications, Inc., in favor of Alterna Capital Solutions LLC (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed November 30, 2022)

Commercial Guaranty, dated November 22, 2022, by BK Technologies Corporation in favor of Alterna Capital Solutions LLC (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed November 30, 2022)

Master Supply Agreement between the Company and East West dated November 6, 2023 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 8, 2023)

Transition Services Agreement between the Company and East West dated November 6, 2023 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 8, 2023)

Stock Purchase Agreement dated November 6, 2023, between Company and East West (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 8, 2023)

Master Supply Agreement between the Company and East West Manufacturing, LLC dated November 6, 2023 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 8, 2023)

Transition Services Agreement between the Company and East West Manufacturing, LLC dated November 6, 2023 (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed November 8, 2023)

Stock Purchase Agreement dated November 6, 2023, between Company and East West Manufacturing, LLC (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed November 8, 2023)

Warrant dated November 6, 2023 (incorporated by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K filed November 8, 2023)

Sales Agreement, dated January 31, 2023, by and between the Company and ThinkEquity LLC (incorporated by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed January 31, 2023)

Credit Agreement, dated October 30, 2024, by and between BK Technologies, Inc.

and Fifth Third Bank, National Association, (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on November 4, 2024)

Revolving Credit Promissory Note, dated October 30, 2024, by and between BK Technologies, Inc.

and Fifth Third Bank, National Association, (incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on November 4, 2024)

Continuing Guaranty Agreement, dated October 30, 2024, by and between BK Technologies, Inc.

and Fifth Third Bank, National Association, (incorporated by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K, filed on November 4, 2024)

Security Agreement, dated October 30, 2024, by and between BK Technologies, Inc.

and Fifth Third Bank, National Association, (incorporated by reference from Exhibit 10.4 to the Company's Current Report on Form 8-K, filed on November 4, 2024)

Form of Indemnification Agreement

Form of Non-Employee Director Stock Option Agreement under the BK Technologies Corporation 2017 Incentive Compensation Plan (January 2025)

Letter from MSL, P.A.

dated November 6, 2024 (incorporated by reference from Exhibit 16.1 to the Company's Current Report on Form 8-K, filed on November 6, 2024)

BK Technologies Insider Trading Policy

Subsidiaries of the Company

Consent of MSL, P.A.

relating to the Company’s Registration Statements on Form S-8 (Registration No.

333-274799, Registration No.

333-218765, and Registration No.

Consent of Forvis Mazars, LLP, Independent Registered Public Accounting Firm

Consent of MSL, P.A., Independent Registered Public Accounting Firm

Power of Attorney (included on signature page)

6 unchanged sentences

BK Technologies Corporation Clawback Policy

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

XBRL Taxonomy Definition Linkbase Document

XBRL Cover Page Interactive Data File

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Taxonomy Definition Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Included with this filing.

1 unchanged sentence

+ Management contract or compensatory plan or arrangement.

#Portions of this exhibit (indicated by bracketed asterisks) are omitted in accordance with the rules of the SEC because they are both not material and the Company customarily and actually treats such information as private or confidential.

8 unchanged sentences

Suzuki and Scott A.

Malmanger, and each of them, his attorneys-in-fact, each with the power of substitution, for him and in his name, place and stead, in any and all capacities, to sign this annual report on Form 10-K and any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents or any of them or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Malmanger, and each of them, his or her attorneys-in-fact, each with the power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this annual report on Form 10-K and any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents or any of them or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

6 unchanged sentences

March 27, 2025

Joseph Jackson

March 27, 2025

Joseph Jackson

/s/ Charles T.

March 27, 2025

Joseph Jackson

March 27, 2025

Joseph Jackson

March 27, 2025

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 9A. Controls and Procedures