BK Technologies Corp 10-K

Item 8. Financial Statements and Supplementary Data. 23 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of BK Technologies Corporation West Melbourne, Florida Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of BK Technologies Corporation (the “Company”) as of December 31, 2025, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2025, and the related notes (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Prior Period Financial Statements The financial statements of the Company as of and for the year ended December 31, 2024 were audited by other auditors whose report dated March 27, 2025 expressed an unqualified opinion on those statements. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 the U.S. 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 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 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters 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 judgements. We determined that there were no critical audit matters. /s/ Cherry Bekaert LLP We have served as the Company’s auditor since 2025. Tampa, Florida March 12, 2026 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders, Board of Directors, and Audit Committee BK Technologies Corporation Opinion on the Consolidated Financial Statements 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. 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. 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 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 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 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 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. We served as the Company’s auditor from 2024 to 2025. /s/ Forvis Mazars, LLP Orlando, Florida March 27, 2025 F-2 Table of Contents BK TECHNOLOGIES CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except share data) December 31, December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 22,788 $ 7,075 Trade accounts receivable, net 7,221 7,349 Inventories, net 15,862 17,636 Prepaid expenses and other current assets 3,099 4,881 Total current assets 48,970 36,941 Property, plant and equipment, net 4,170 4,911 Operating lease right-of-use (ROU) assets 1,502 1,128 Deferred tax assets, net 5,230 6,788 Capitalized software and systems integration costs 3,417 1,321 Other assets 471 410 Total assets $ 63,760 $ 51,499 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 4,781 $ 6,327 Accrued compensation and related taxes 2,423 2,289 Accrued warranty expense 760 1,008 Accrued other expenses and other current liabilities 335 1,894 Short-term operating lease liabilities 610 571 Deferred revenue 2,728 1,885 Total current liabilities 11,637 13,974 Long term operating lease liabilities 965 714 Deferred revenue 6,460 6,980 Total liabilities 19,062 21,668 Commitments and contingencies Stockholders’ equity: Preferred stock; $ 1.00 par value; 1,000,000 authorized shares; none issued or outstanding — — Common stock; $ 0.60 par value; 10,000,000 authorized shares; 4,092,056 and 3,913,959 issued and 3,733,733 and 3,571,879 outstanding shares as of December 31, 2025 and 2024, respectively 2,455 2,348 Additional paid-in capital 51,803 49,386 Accumulated deficit ( 2,314 ) ( 15,850 ) Treasury stock, at cost, 358,323 and 342,080 shares as of December 31, 2025, and 2024, respectively ( 7,246 ) ( 6,053 ) Total stockholders’ equity 44,698 29,831 Total liabilities and stockholders’ equity $ 63,760 $ 51,499 See notes to consolidated financial statements. F-3 Table of Contents BK TECHNOLOGIES CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Years Ended December 31, 2025 2024 Sales, net $ 86,139 $ 76,592 Expenses Cost of products 44,112 47,542 Gross margin 42,027 29,050 Selling, general, and administrative expenses: Engineering and product development 10,570 7,841 Marketing and selling 7,553 6,206 General and administrative 7,917 7,175 Total selling, general and administrative expenses 26,040 21,222 Operating income 15,987 7,828 Other income (expense): Net interest income (expense) 265 ( 266 ) Gain on disposal of property, plant, and equipment — 2 (Loss) on investments — ( 91 ) Other (expense) ( 135 ) ( 98 ) Total other income (expense) 130 ( 453 ) Income before income taxes 16,117 7,375 Provision for income tax (expense) benefit ( 2,581 ) 984 Net income $ 13,536 $ 8,359 Net income per share-basic $ 3.69 $ 2.35 Net income per share-diluted $ 3.44 $ 2.25 Weighted average shares outstanding-basic 3,672 3,553 Weighted average shares outstanding-diluted 3,937 3,711 See notes to consolidated financial statements. F-4 Table of Contents BK TECHNOLOGIES CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (in thousands, except share data) Additional Common Stock Common Stock Paid-In Accumulated Treasury Shares Amount Capital Deficit Stock Total Balance at December 31, 2023 3,867,082 $ 2,320 $ 48,602 $ ( 24,209 ) $ ( 5,402 ) $ 21,311 Common stock issued-stock options 4,637 2 30 — — 32 Common stock issued-restricted stock units 33,799 20 ( 20 ) — — — Common stock issued-warrants exercised 8,441 6 ( 6 ) — — — Share-based compensation expense-stock options — — 286 — — 286 Shared-based compensation expense-restricted stock units — — 494 — — 494 Treasury shares — — — — ( 651 ) ( 651 ) Net income — — — 8,359 — 8,359 Balance at December 31, 2024 3,913,959 2,348 49,386 ( 15,850 ) ( 6,053 ) 29,831 Common stock issued-stock options 32,899 19 579 — — 598 Common stock issued-restricted stock units 55,015 33 ( 33 ) — — — Common stock issued-warrants exercised 90,183 55 ( 55 ) — — — Share-based compensation expense-stock options — — 1,030 — — 1,030 Shared-based compensation expense-restricted stock units — — 896 — — 896 Treasury shares — — — — 55 55 Repurchase of common stock ( 1,248 ) ( 1,248 ) Net income — — — 13,536 — 13,536 Balance at December 31, 2025 4,092,056 $ 2,455 $ 51,803 $ ( 2,314 ) $ ( 7,246 ) $ 44,698 See notes to consolidated financial statements. F-5 Table of Contents BK TECHNOLOGIES CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2025 2024 Operating activities Net income $ 13,536 $ 8,359 Adjustments to reconcile net income to net cash provided by operating activities: Allowance for credit losses 59 122 Inventory allowance 890 367 Amortization of deferred finance and other assets — 75 Deferred tax expense (benefit) 1,558 ( 2,672 ) Depreciation and amortization 1,778 1,692 Share-based compensation expense-stock options 1,030 286 Share-based compensation expense-restricted stock units 896 494 Loss on investment — 91 (Gain) on sale of equipment — ( 2 ) Changes in operating assets and liabilities: Trade accounts receivable 69 431 Inventories 884 5,949 Prepaid expenses and other current assets 1,782 ( 2,989 ) Other assets ( 61 ) 12 Operating lease ROU assets and lease liabilities ( 84 ) ( 68 ) Accounts payable ( 1,546 ) ( 3,495 ) Accrued compensation and related taxes 134 987 Accrued warranty expense ( 248 ) 286 Deferred revenue 323 1,309 Accrued other expenses and other current liabilities ( 1,559 ) 1,531 Net cash provided by operating activities 19,441 12,765 Investing activities Purchases of property, plant and equipment ( 1,039 ) ( 1,235 ) Capitalized software and systems integration costs ( 2,096 ) ( 1,321 ) Proceeds for disposal of property, plant and equipment 2 — Net cash (used in) investing activities ( 3,133 ) ( 2,556 ) Financing activities Proceeds from exercise of common stock options 598 32 Repurchase of common stock ( 1,193 ) — Proceeds from credit facility and notes payable — 46,359 Repayment of credit facility and notes payable — ( 52,981 ) Net cash (used in) financing activities ( 595 ) ( 6,590 ) Net change in cash and cash equivalents 15,713 3,619 Cash and cash equivalents, beginning of year 7,075 3,456 Cash and cash equivalents, end of year $ 22,788 $ 7,075 Supplemental disclosure Interest paid $ — $ 357 Non-cash financing activity Common stock issued under restricted stock units $ 732 $ 376 Cashless exercise of stock options, warrants and related conversion of net shares to stockholders’ equity $ 146 $ 30 See notes to consolidated financial statements. F-6 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 1. Summary of Significant Accounting Policies Description of Business BK Technologies Corporation (collectively with its subsidiaries, the “Company”) is a holding company. The primary business of its wholly owned operating subsidiary, BK Technologies, Inc., is the designing, manufacturing and marketing of wireless communications equipment primarily consisting of two -way land mobile radios and related products, which are sold in two primary markets: ( 1 ) the government and public safety market, and ( 2 ) the business and industrial market. The Company has only one reportable business segment. On March 28, 2019, BK Technologies, Inc., the predecessor of BK Technologies Corporation, implemented a holding company reorganization, which resulted in BK Technologies Corporation becoming the direct parent company of, and the successor issuer to, BK Technologies, Inc. For the purpose of this report, references to the “Company” or its management or business at any period prior to the holding company reorganization ( March 28, 2019) refer to those of BK Technologies, Inc. as the predecessor company and its subsidiaries and thereafter to those of BK Technologies Corporation and its subsidiaries, except as otherwise specified or to the extent the context otherwise indicates. Principles of Consolidation The accounts of the Company have been included in the accompanying consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates entities in which it has a controlling financial interest. 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. Inventories Inventories are stated at the lower of cost (determined by the average cost method) or net realizable value. Freight costs are classified as a component of the cost of products in the accompanying consolidated statements of operations. The allowance for slow-moving, excess and obsolete inventory is used to state the Company’s inventories at the lower of cost or net realizable value. Because the amount of inventory that will actually be recouped through sales cannot be known with certainty at any particular time, the Company relies on past sales experience, future sales forecasts, and its strategic business plans. Generally, in analyzing inventory levels, inventory is classified as having been used or unused during the past year. The Company then establishes an allowance based upon several factors, including, but not limited to, business forecasts, inventory quantities, and historic usage profile. Supplemental to the aforementioned analysis, specific inventory items are reviewed individually by management. Based on the review, considering business levels, future prospects, new products and technology changes, management, using its business judgment, may adjust the valuation of specific inventory items to reflect an accurate valuation estimate. Management also performs a determination of the net realizable value for all finished goods with a selling price below cost. For all such items, the inventory is valued at not more than the selling price less cost, if any, to sell. Property, Plant and Equipment Property, plant and equipment is carried at cost less accumulated depreciation. Expenditures for maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the resulting gain or loss is reflected in operations for the period. Depreciation and amortization are generally computed on the straight-line method using lives of 3 to 10 years for machinery and equipment and 5 to 8 years for leasehold improvements. Impairment of Long-Lived Assets Management regularly reviews long-lived assets and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value, which considers the discounted future net cash flows. No long-lived assets were considered impaired at December 31, 2025 and 2024 . Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. F- 7 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 1. Summary of Significant Accounting Policies (Continued) Allowance for Credit Losses The Company records an allowance for credit losses based on specifically identified amounts that the Company believes to be uncollectible. The Company records an allowance for credit losses for its financial instruments, which are primarily composed of trade accounts receivable. The measurement and recognition of credit losses involves the use of judgment and represents management’s estimate of expected lifetime credit losses based on historical experience and trends, current conditions, and forecasts. The Company’s assessment of expected credit losses includes consideration of historical credit loss experience, the aging of account balances, customer concentrations, customer credit-worthiness, current and expected economic, market and industry factors affecting the Company’s customers, including their financial condition. The Company evaluates its experience with historical losses and then applies this historical loss ratio to financial assets with similar characteristics. The Company may also establish an allowance for credit losses for specific receivables when it is probable that the receivable will not be collected and the loss can be reasonably estimated. If the Company’s actual collections experience changes, revisions to the allowance may be required. Amounts are written off against the allowance when all attempts to collect a receivable have failed, and reversals of previously reserved amounts are recognized if a specifically reserved item is settled for an amount exceeding the previous estimate. Based on information available, management believes the allowance for credit losses as of December 31, 2025 and 2024 is adequate. Revenue Recognition The Company recognizes revenues in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014 - 09, “Revenue from Contracts with Customers” and the additional related ASUs (“ASC 606” ), which replaced previous revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under accounting principles generally accepted in the United States of America (“GAAP”). These standards provide guidance on recognizing revenue, including a five -step method to determine when revenue recognition is appropriate: Step 1: Identify the contract with the customer; Step 2: Identify the performance obligations in the contract; Step 3: Determine the transaction price; Step 4: Allocate the transaction price to the performance obligations; and Step 5: Recognize revenue as the Company satisfies a performance obligation. ASC 606 provides that sales revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company generally satisfies performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service. For extended warranties, sales revenue associated with the warranty is deferred at the time of sale and later recognized on a straight-line basis over the extended warranty period. Some contracts include installation services, which are completed in a short period of time and the revenue is recognized when the installation is complete. Customary payment terms are granted to customers, based on credit evaluations. Currently, the Company does not have any contracts where revenue is recognized, but the customer payment is contingent on a future event. The Company periodically reviews its revenue recognition procedures to assure that such procedures are in accordance with GAAP. Surcharges collected on certain sales to government customers and remitted to governmental agencies are not included in revenues or in costs and expenses. Income Taxes The Company accounts for income taxes using the asset and liability method specified by GAAP. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply in the period in which the deferred tax asset or liability is expected to be realized. The effect of changes in net deferred tax assets and liabilities is recognized on the Company’s consolidated balance sheets and consolidated statements of operations in the period in which the change is recognized. Valuation allowances are provided to the extent that impairment of tax assets is more likely than not. In determining whether a tax asset is realizable, the Company considers, among other things, estimates of future earnings based on information currently available, current and anticipated customers, contracts and new product introductions, as well as recent operating results and certain tax planning strategies. 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 The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. At December 31, 2025 and 2024 , accounts receivable from governmental customers were approximately $ 4,154 and $ 600 , respectively. Generally, receivables are due within 30 days. Credit losses relating to customers have been consistently within management’s expectations. F- 8 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 1. Summary of Significant Accounting Policies (Continued) The Company primarily maintains cash balances at one financial institution. Accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250. From time to time, the Company has had cash in financial institutions in excess of federally insured limits. As of December 31, 2025 , the Company had cash and cash equivalents in excess of FDIC limits of $ 22,288 . Manufacturing and Raw Materials The Company relies upon a limited number of manufacturers to produce its products and on a limited number of component suppliers. Some of these manufacturers and suppliers are in other countries. Approximately 15.2 % of the Company’s material, subassembly and product procurements in 2025 were sourced internationally, of which approximately 64.4 % were sourced from three suppliers. For 2024 , approximately 17.0 % of the Company’s material, subassembly and product procurements were sourced internationally, of which approximately 79.9 % were sourced from seven suppliers. Purchase orders denominated in U.S. dollars are placed with these suppliers from time to time and there are no guaranteed supply arrangements or commitments. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Significant estimates include accounts receivable allowances, inventory obsolescence allowance, warranty allowance, and income tax accruals. Actual results could differ from those estimates. Fair Value of Financial Instruments 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, 2025 and 2024 , 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. (Nasdaq: FGF) (“FGF”), which investment was held by the Company through 1347 LP. 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 exchanged its common shares held in FGF and received 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 its own Common Stock that was held by FGF, 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. Liquidity The Company recognized operating income of $ 15,987 during 2025 and $ 7,828 during 2024 . 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. On October 30, 2025, BK Technologies, Inc., as the borrower, entered into an amendment to its revolving credit facility with Fifth Third Bank, National Association, as the lender (as amended, the “Fifth Third Credit Agreement”). The Fifth Third Credit Agreement provides for a three -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 $ 8,000 of borrowing capacity, totaling a maximum commitment of $ 14,000 . Each advance shall accrue interest on the outstanding principal amount thereof at a rate of SOFR plus a range of 1.75 % to 2.25 % per annum, based on certain total debt coverage ratios. 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. There were no borrowings under the Fifth Third Credit Agreement as of December 31, 2025, and as of the date of filing this report. 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”), 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. 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. F- 9 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 1. Summary of Significant Accounting Policies (Continued) Advertising and Promotion Costs The cost for advertising and promotion is expensed as incurred. Advertising and promotion expenses are classified as part of selling, general and administrative (“SG&A”) expenses in the accompanying consolidated statements of operations. For the years ended December 31, 2025 and 2024 , such expenses totaled $ 621 and $ 496 , respectively. Share-Based Compensation The Company accounts for share-based arrangements in accordance with GAAP, which requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which the employee is required to provide service in exchange for the award requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Earnings Per Share Earnings per share amounts are computed and presented for all periods in accordance with ASC 260 “Earnings per Share”. Product Warranty The Company offers two -year and five -year standard warranties to its customers, depending on the specific product and terms of the customer purchase agreement. The Company’s typical warranties require it to repair and replace defective products during the warranty period at no cost to the customer. At the time the product revenue is recognized, the Company records a liability for estimated costs under its warranties. The costs are estimated based on historical experience. The Company periodically assesses the adequacy of its recorded liability for product warranties and adjusts the amount as necessary. Recent Accounting Pronouncements 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 December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company has adopted the ASU and has made the applicable disclosure, as required, in its Annual Report Form 10 -K for the year ended December 31, 2025. The adoption of ASU 2023 - 09 did not have a material effect on our consolidated financial statements. In November 2024, the FASB issued ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses, an accounting standard update to improve income statement expenses disclosures. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company does not expect the adoption of ASU 2024 - 03 to have a material effect on its consolidated financial statements. F- 10 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 1. Summary of Significant Accounting Policies (Continued) S egment Reporting Disclosures The Company has one reportable segment - Land Mobile Radio (LMR) Products and Solutions. The LMR segment provides radio devices 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 and net income 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 is used to monitor budget versus actual results. The chief operating decision maker also uses net income 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 chief operating decision maker for the years ended December 31, 2025, and 2024: 2025 2024 Sales, net $ 86,139 $ 76,592 Cost of products 44,112 47,542 Gross margin 42,027 29,050 Engineering and product development 10,570 7,841 Marketing and selling 7,553 6,206 General and administrative 7,917 7,175 Selling, general and administrative expenses 26,040 21,222 Operating income 15,987 7,828 Other income (expense) (a) 130 ( 362 ) Income tax (expense) benefit ( 2,581 ) 984 Segment net income $ 13,536 $ 8,450 Reconciliation of profit or loss Adjustments and reconciling item Loss on investments — ( 91 ) Consolidated net income $ 13,536 $ 8,359 (a) Other segment items included interest income (expense) and foreign currency exchange gains/(losses) F- 11 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 1. Summary of Significant Accounting Policies (Continued) Revision of Previously Issued Financial Statements Certain immaterial revisions have been made to the 2024 consolidated statement of cash flows. Specifically, there was an increase in net cash provided by operating activities related to capitalized software and system integration costs, which was fully offset by an increase in cash flows used in investing activities related to the same item. The changes were presentation only and had no impact on previously reported net income, total assets, total liabilities, stockholders’ equity or net change in cash and cash equivalents. Reclassifications Certain reclassifications have been made to the 2024 consolidated financial statements to conform to the 2025 consolidated financial statement presentation. These reclassifications had no effect on net income reported for the year ended December 31, 2024. 2. Inventories, net Inventories, which are presented net of allowance for slow moving, excess and obsolete inventory, consisted of the following: December 31, December 31, 2025 2024 Finished goods $ 5,898 $ 3,428 Work in process 3,016 4,610 Raw materials 8,083 11,292 16,997 19,330 Inventory reserve ( 1,135 ) ( 1,694 ) $ 15,862 $ 17,636 Changes in the allowance for slow-moving, excess, and obsolete inventory are as follows: Years Ended December 31, 2025 2024 Balance, beginning of year $ 1,694 $ 1,838 Charged to cost of sales 890 367 Disposal of inventory ( 1,449 ) ( 511 ) Balance, end of year $ 1,135 $ 1,694 During the year ended December 31, 2025 and 2024, the Company wrote off $ 1,449 and $ 511 , respectively, 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. 3. Allowance for Credit Losses Changes in the allowance for credit losses are composed of the following: Years Ended December 31, 2025 2024 Balance, beginning of year $ 50 $ 50 Provision for credit losses 59 122 Uncollectible accounts written off ( 59 ) ( 122 ) Balance, end of year $ 50 $ 50 4. Property, Plant and Equipment, net Property, plant and equipment, net include the following: December 31, 2025 2024 Leasehold improvements $ 741 $ 704 Machinery and equipment 19,528 18,977 Gross Property, Plant, and Equipment 20,269 19,681 Less accumulated depreciation and amortization ( 16,099 ) ( 14,770 ) Property, plant and equipment, net $ 4,170 $ 4,911 Depreciation and amortization expense relating to property, plant and equipment for the years ended December 31, 2025 and 2024 was approximately $ 1,778 and $ 1,692 respectively. During the year ended December 31, 2024 , the Company removed from its records approximately $ 8 of fully depreciated machinery and equipment and none in the year ended December 31, 2025 . F- 12 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 5. Capitalized Software and Systems Integration 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 software and systems integration 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, software and systems integration costs for that product will be amortized over periods not exceeding ten years, based on future revenue of the product. Capitalized software and systems integration costs were $ 2,096 and $ 1,321 during the years ended December 31, 2025 and 2024, respectively. 6. Debt Credit Facilities 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. On October 30, 2025, BK Technologies, Inc., as the borrower, entered into an amendment to its revolving credit facility with Fifth Third Bank, National Association, as the lender (as amended, the “Fifth Third Credit Agreement”). The Fifth Third Credit Agreement provides for a three -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 $ 8,000 of borrowing capacity, totaling a maximum commitment of $ 14,000 . Each advance shall accrue interest on the outstanding principal amount thereof at a rate of SOFR plus a range of 1.75 % to 2.25 % per annum, based on certain total debt coverage ratios. 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. There were no borrowings under the Fifth Third Credit Agreement as of December 31, 2025. BK Technologies, Inc.’s repayment obligations under the credit facility are guaranteed by the Company and secured by a pledge of essentially all of the assets of BK Technologies, Inc., and the Company. BK Technologies Inc. and the Company 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. As of December 31, 2025, the Company believes that it 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, 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 the year ended December 31, 2024, was approximately $ 356 . 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 the year ended December 31, 2024 , the Company transferred receivables having an aggregate face value of $ 49,700 , to the conduit and received proceeds of $ 46,400 , which also includes draws on available inventory funding. There were no losses incurred on these transfers during the year ended December 31, 2024 . The Company terminated the IPSA in October 2024 upon entering into the credit facility with Fifth Third Bank. Note Payable 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 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 F- 13 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 7. Investments 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 its own Common Stock that was held by FGF, 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. 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. (Nasdaq: FGF) (“FGF”). 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 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. Mr. 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. Mr. Cerminara also served as a manager of FG Holdings, LLC and chairman of the board of directors of FGF. During the year ended December 31, 2024, the Company recognized a realized loss of approximately $ 91 . 8. Leases The Company accounts for its leasing arrangements in accordance with ASC Topic 842, “Leases”. The Company leases manufacturing and office facilities and equipment under operating leases and determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of its leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has lease agreements with lease and non-lease components, which are accounted for separately. The Company leases approximately 54,000 square feet ( not in thousands) of industrial space in West Melbourne, Florida, under a non-cancellable operating lease. 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 $ 677 and $ 625 in 2025 and 2024 , respectively. In February 2026, we entered into a new lease relating to this property, pursuant to which we will lease approximately 31,500 square feet ( not in thousands) of industrial space at 7100 Technology Drive in West Melbourne, Florida. The lease will commence in February 2027, has a term of 125 months, and includes two five year renewal options. In February 2020, the Company entered into a lease for 6,857 square feet ( not in thousands) of office space at Sawgrass Technology Park, 1619 NW 136th Avenue in Sunrise, Florida, for a period of 64 months commencing July 1, 2020. The Company executed a lease extension agreement on September 24, 2025, that extended existing terms until an additional 1,514 square feet ( not in thousands) of expansion premises is available for occupation by the Company. At the date that the expansion premises are available for occupancy, the Company will begin a new lease extension period for an additional sixty-two ( 62 ) month term, for approximately 8,371 total square feet ( not in thousands). The lease extension includes two ( 2 ) additional five ( 5 ) year renewal options, at the sole discretion of the Company. The lease liability and right-of-use asset as of December 31, 2025, include payments for renewal periods that are reasonably certain to be exercised, in accordance with ASC 842. Annual rental, maintenance and tax expenses for the facility were approximately $ 225 and $ 224 in 2025 and 2024 , respectively. Lease costs consist of the following: December 31, 2025 2024 Operating lease cost $ 541 $ 543 Variable lease cost 134 133 Total lease cost $ 675 $ 676 F- 14 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 8. Leases (Continued) Supplemental cash flow information related to leases was as follows: December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows (fixed payments) $ 625 $ 611 Operating cash flows (liability reduction) 571 528 Other information related to operating leases was as follows: December 31, 2025 2024 Weighted average remaining lease term (in years) 2.39 2.36 Weighted average discount rate 5.50% 5.50% Maturity of operating lease liabilities as of December 31, 2025 were as follows: Year ending December 31, 2026 $ 666 2027 435 2028 196 2029 199 2029 203 Thereafter 34 Total payments 1,733 Less: imputed interest ( 158 ) Total liability $ 1,575 9. Income Taxes The components of income before provision for income taxes are as follows: Years Ended December 31, 2025 2024 Domestic 16,117 7,375 Income before income taxes 16,117 7,375 Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes relate to differences between the basis of assets and liabilities for financial and income tax reporting which will be either taxable or deductible when the assets or liabilities are recovered or settled. F- 15 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 9. Income Taxes (Continued) The income tax expense (benefit) is summarized as follows: Years Ended December 31, 2025 2024 Current: Federal $ 55 $ 489 State 968 1,199 1,023 1,688 Deferred: Federal 1,377 ( 1,581 ) State 181 ( 1,091 ) 1,558 ( 2,672 ) $ 2,581 $ ( 984 ) Beginning in 2025 annual reporting, we adopted ASU 2023 - 09 prospectively. See Note 1 - Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements for additional details on the adoption of ASU 2023 - 09. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023 - 09 for the year ended December 31, 2025 is as follows: Year Ended December 31, 2025 Amount Percent U.S. federal statutory income tax rate 3,385 21.00 % State and local income taxes 1 , net of federal income tax effect 1,012 6.28 % Tax credits Research and development tax credits ( 157 ) -0.98 % Nontaxable or nondeductible items Share-based Compensation ( 338 ) -2.10 % Other 25 0.16 % Changes in unrecognized tax benefits ( 1,419 ) -8.80 % Other adjustments Deferred only - Stock based compensation 240 1.49 % Deferred only - Section 174 ( 183 ) -1.13 % Other 16 -0.24 % Effective tax rate 2,581 15.67 % 1 California and Florida account for greater than 50% of the tax effect in this category. A reconciliation of the U.S. federal statutory income tax rates to our effective tax rate for the year ended December 31, 2024 is as follows: Year Ended December 31, 2024 Statutory U.S. income tax rate 21.00 % State taxes, net of federal benefit 9.42 % Permanent differences 0.84 % Change in valuation allowance ( 48.79 )% Change in tax credits ( 4.59 )% Uncertain tax position 19.25 % Impact from rate changes ( 10.48 )% Effective income tax rate ( 13.35 )% Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023 - 09 for the year ended December 31, 2025 is as follows: Year Ended December 31, 2025 Federal 972 State California 1,190 Florida 302 New Mexico 122 Oregon 108 Idaho 111 Other states 313 Cash paid for income taxes, net of refunds received 3,118 F- 16 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 9. Income Taxes (Continued) The components of the deferred income tax assets (liabilities) are as follows: Years Ended December 31, 2025 2024 Deferred tax assets: R&D Tax Credits $ 1,877 $ 300 Capitalized software and systems integration costs - 3,378 Lease Liability 434 343 Capital loss Carryforward 851 802 Inventory allowance 312 454 Nonqualified Stock Options 341 463 Deferred warranty revenue 2,738 2,638 Net operating losses 633 - Other 199 194 Deferred Tax Assets 7,385 8,572 Less: Valuation allowance ( 826 ) ( 802 ) Total Deferred Tax Assets 6,559 7,770 Deferred Tax Liabilities: ROU Asset ( 414 ) ( 301 ) Capitalized software and systems integration costs ( 275 ) - Depreciation ( 640 ) ( 681 ) Total deferred tax liabilities ( 1,329 ) ( 982 ) Total Deferred Tax Assets/(Liabilities) $ 5,230 $ 6,788 As of December 31, 2025, the Company had deferred tax assets of approximately $ 6,559 offset by deferred tax liabilities of $ 1,329 . This asset is primarily composed of capitalization of research and development expenses, stock compensation, and deferred revenue. The liability is composed of the effect of differences in amortization and depreciation utilized for tax purposes. During 2025 and 2024, the Company utilized $ 0 and $ 7,915 of federal NOLs, respectively. 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 2025, 2024, and 2023. 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. 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 $ 851 , 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 an increase in the valuation allowance of $ 24 as of December 31, 2025. 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, 2025. 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, 2025 . 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. F- 17 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 9. Income Taxes (Continued) A reconciliation of the beginning and ending amount of our unrecognized tax benefits is as follows: Years Ended December 31, 2025 2024 Unrecognized tax benefits as of January 1 $ 1,419 $ - (Decreases) increases related to prior year tax positions ( 1,419 ) 1,265 Increases related to current year tax positions - 154 Decreases related to settlements of prior year tax positions - - Decreases related to lapses of statute of limitations - - Balance at December 31, - 1,419 As of December 31, 2025, the Company recorded approximately $ 0 of unrecognized tax benefits, a net decrease of $ 1,419 from $ 1,419 as of December 31, 2024. The Company completed an updated R&D credit study, which provided sufficient support for the underlying R&D credit positions. As a result, the prior‑year unrecognized tax benefit is no longer required, and the ending balance as of 12/31/2025 is $ 0 . 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 in 2024. Penalties and tax-related interest expense, of which there were no material amounts for the years ended December 31, 2025 , and 2024 , are reported as a component of income tax expense (benefit). The Company files federal income tax returns, as well as multiple state and local jurisdiction tax returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution on any particular uncertain tax position, the Company believes that its allowances for income taxes reflect the most probable outcome. The Company adjusts these allowances, as well as the related interest, in light of changing facts and circumstances. 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 2022 through 2024 are still open to IRS examination under the statute of limitations. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company does not anticipate the bill will have a material impact on the financial statements. Under OBBBA, the Company is permitted to claim 100% bonus depreciation and fully deduct domestic research expenditures under Section 174A. These provisions accelerate tax deductions but do not create permanent tax differences; therefore, the impact is timing‑related only and does not materially affect the Company’s 2025 income tax provision. . 10. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: Years Ended December 31, 2025 2024 Numerator: Net income for basic and diluted earnings per share $ 13,536 $ 8,359 Denominator: Denominator for basic earnings per share weighted average shares 3,672,239 3,553,303 Effect of dilutive securities: Options, restricted stock units, and warrants 264,575 157,341 Denominator for diluted earnings per share weighted average shares 3,936,814 3,710,644 Basic earnings per share $ 3.69 $ 2.35 Diluted earnings per share $ 3.44 $ 2.25 Approximately 1,955 stock options and 0 restricted stock units for the year ended December 31, 2025 were excluded from the calculation because they were anti-dilutive. For the year ended December 31, 2024, no stock options and restrictive stock options were excluded. F- 18 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 11. Non-Cash Share-Based Compensation The Company’s stockholders approved the BK Technologies Corporation 2025 Incentive Compensation Plan (the “2025 Plan”) at the 2025 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) held on June 18, 2025. The 2025 Plan was previously approved by the Company’s Board of Directors (the “Board”). The 2025 Plan replaces the 2017 Incentive Compensation Plan (the “Prior Plan”). No new awards will be granted under the Prior Plan after the date of the Annual Meeting. However, all awards granted under the Prior Plan that were outstanding on the date of the Annual Meeting will remain outstanding in accordance with their terms. The 2025 Plan authorizes the grant of equity-based and cash-based compensation awards to officers, directors, and employees of, and consultants to, the Company and its subsidiaries. Awards under the 2025 Plan may be granted in the form of stock options, stock appreciation rights, restricted shares, restricted share units, other share-based awards, and cash-based awards. There are 500,000 shares of the Company’s common stock reserved for issuance under the 2025 Plan. No awards may be granted under the 2025 Plan after March 11, 2035. The stockholders of the Company also approved the BK Technologies Corporation Employee Stock Purchase Plan (the “ESPP”) at the Annual Meeting held on June 18, 2025. The ESPP was previously approved by the Board. The objective of the ESPP is to offer eligible employees of the Company and its designated subsidiaries the ability to purchase shares of the Company’s common stock at a discount, subject to various limitations under the ESPP. There are 150,000 shares of the Company’s common stock authorized for issuance under the ESPP. As of December 31, 2025, the Company issued 2,892 shares of common stock from its treasury share account pursuant to the ESPP . Stock Options The Company has an employee and non-employee director incentive compensation equity plan. Related to these programs, the Company recorded $ 1,030 a nd $ 286 of share-based employee compensation expense related to stock options during the years ended December 31, 2025 and 2024 , 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. The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The share-based employee compensation expense recorded in the years ended December 31, 2025 and 2024 was calculated using the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time, commensurate with the expected life of the stock options. The dividend yield assumption is based on the Company’s expectations of dividend payouts at the grant date. The Company has estimated its future stock option exercises. The expected term of option grants is based upon the observed and expected time to the date of post vesting exercises and forfeitures of options by the Company’s employees. The risk-free interest rate is derived from the average U.S. Treasury rate for the period, which approximates the rate at the time of the stock option grant. FY 2025 FY 2024 Expected Volatility 67.6 % 56.8 % Expected Dividends 0 % 0 % Expected Term (in years) 7.2 6.5 Risk-Free Rate 4.19 % 4.08 % Estimated Forfeitures 0.0 % 0.0 % A summary of stock option activity under the Company’s equity compensation plans as of December 31, 2025 , and changes during the year ended December 31, 2025 , are presented below: Wgt. Avg. Wgt. Avg. Wgt Avg. Exercise Remaining Grant Date Aggregate Price ($) Contractual Fair Value ($) Intrinsic Stock Options Per Share Life (Years) Per Share Value ($) As of January 1, 2025 Outstanding 285,100 13.65 7.72 6.39 5,884,764 Vested 109,840 15.23 6.25 5.46 2,093,685 Nonvested 175,260 12.66 8.63 6.97 3,791,078 Period activity Issued 223,944 41.78 9.41 41.78 — Exercised 32,951 15.03 — 15.03 1,305,513 Forfeited 11,070 19.90 — 19.39 262,663 Expired 4,380 14.72 — 14.72 150,829 As of December 31, 2025 Outstanding 460,643 27.08 2.60 27.08 21,885,394 Vested 128,766 18.13 6.29 18.13 7,269,512 Nonvested 331,877 30.55 30.55 8.78 14,615,882 F- 19 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 11. Share-Based Compensation (Continued) Outstanding: Wgt. Avg. Wgt. Avg. Exercise Remaining Range of Exercise Prices Stock Options Price ($) Contractual ($) Per Share Outstanding Per Share Life (Years) 11.51 26.63 240,149 13.48 6.84 26.34 41.15 39,328 34.18 9.08 41.16 55.97 180,166 43.42 9.52 55.98 70.78 1,000 70.78 9.66 460,643 27.08 8.08 Exercisable: Wgt. Avg. Exercise Range of Exercise Prices Stock Options Price ($) ($) Per Share Exercisable Per Share 11.51 26.63 112,509 14.57 41.16 55.97 16,257 42.81 128,766 18.13 The weighted-average grant-date fair value per option granted during the years ended December 31, 2025 and 2024 was $ 41.78 and $ 6.39 , respectively. There were 32,951 and 6,200 stock options exercised during the years ended December 31, 2025 and 2024 , respectively. Restricted Stock Units 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. 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 Grant Date Year ended December 31, 2025 Number of Shares Price per Share Unvested as of January 1, 2025 44,546 $ 12.99 Granted 44,250 24.77 Vested and issued ( 47,607 ) 13.70 Cancelled/forfeited — — Unvested as of December 31, 2025 41,189 $ 16.97 During 2024, 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 ( 5 % minimum, up to 25 %) 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 $ 12 per share, rounded down to the nearest whole RSU. The Restricted Stock Units vested at the date of the grant. The Company issued 2,882 and 3,764 RSUs under this arrangement for the year ended December 31, 2025, and 2024. 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 vested at the date of the grant. The Company did not issue RSUs under this arrangement for the year ended December 31, 2025 and issued 13,979 RSUs under this arrangement for the period ended December 31, 2024. As of December 31, 2025 and 2024 , there was approximately $ 5,900 and $ 1,419 , respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including stock options and restricted stock units. This compensation cost is expected to be recognized approximately over one to 2.6 years. F- 20 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 12. Other Equity Transactions On January 25, 2024, the Company redeemed its "Interests" of FG Holdings LLC and withdrew from FG Holdings LLC. In exchange for its Interests, the Company received 52,000 shares of its own Common Stock that was held by FGF, 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. 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 issued a warrant to East West 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 warrant was classified as a component of permanent equity in the Company's Consolidated Balance Sheets as it was a freestanding financial instrument that was immediately exercisable, did not embody an obligation for the Company to repurchase its own shares and permitted the holders to receive a fixed number of shares of common stock upon exercise. In May 2025, East West exercised its warrant in full. 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. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time, commensurate with the expected life of the stock warrant. The dividend yield assumption is based on the Company’s expectations of no dividend payouts at the grant date. The stock price was the closing price of the common stock on the date of the warrant agreement and the strike price and the expected term was defined in the warrant agreement. The risk-free interest rate is derived from the 90 day U.S. Treasury rate at the date of the stock warrant grant. FY 2024 Expected Volatility 67.2 % Expected Dividends 0 % Stock price $ 34.29 Strike price $ 15.00 Expected Term (in years) 3.8 Risk-Free Rate 4.34 % 13. Significant Customers Sales to the U.S. Government were primarily to various government agencies, including those within the United States Department of Defense ("DoD"), the United States Forest Service ("USFS"), the United States Department of Interior ("DoI"), and the United States Department of Homeland Security ("DHS"). The following table summarizes customer concentration of net revenues: 2025 2024 Revenue as a percent of total revenue United States government agencies 29 % 38 % Customer A 13 % * Customer B * 13 % * Less than 10% of total revenues. The following table summarizes customer concentration of receivables 2025 2024 Receivables as a percent of total receivables United States government agencies 48 % * Customer A * 24 % Customer B * 15 % * Less than 10% of total receivables. At December 31, 2025 there were no commercial customers accounting for more than 10% of total receivables F- 21 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 14. Retirement Plan The Company sponsors a participant contributory retirement 401 (k) plan, which is available to all employees. The Company’s contribution to the plan is either a percentage of the participant’s contribution ( 50 % of the participant’s contribution up to a maximum of 6 %) or a discretionary amount. For the years ended December 31, 2025 and 2024 , total contributions made by the Company were $ 214 and $ 199 , respectively. 15. Commitments and Contingencies Royalty Commitment In 2003, the Company entered into a technology license related to its development of digital products. Under this agreement, the Company is obligated to pay a royalty for each product sold that utilizes the technology covered by this agreement. The Company paid $ 178 and $ 181 for the years ended December 31, 2025 and 2024 , respectively. The agreement has an indefinite term and can be terminated by either party under certain conditions. In 2022, the Company entered into a technology license related to its development of multi-band products. 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 $ 7 and $ 4 in 2025 and 2024, 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. Thereafter, either party can terminate the agreement by providing a written notice of non-renewal of at least 60 days’ prior to the end of the then current term. Purchase Commitments The Company has purchase commitments for inventory totaling $ 11,159 as of December 31, 2025, which are expected to be satisfied over the following 3 months. Self-Insured Health Benefits The Company maintains a self-insured health benefit plan for its employees. This plan is administered by a third party. As of December 31, 2025 , the plan had a stop-loss provision insuring losses beyond $ 90 per employee per year and an aggregate stop-loss of $ 2,185 . As of December 31, 2025 and 2024 , the Company recorded an accrual for estimated claims in the amount of approximately $ 238 and $ 336 , respectively, in accrued other expenses and other current liabilities on the Company’s consolidated balance sheets. This amount represents the Company’s estimate of incurred but not reported claims as of December 31, 2025 and 2024 . Liability for Product Warranties Changes in the Company’s liability for its standard two -year and five -year product warranties during the years ended December 31, 2025 and 2024 are as follows: Balance at Balance at Beginning of Warranties Warranties End of Year Issued Settled Year 2025 $ 1,008 $ 269 $ ( 517 ) $ 760 2024 $ 722 $ 1,149 $ ( 863 ) $ 1,008 Legal Proceedings From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of its business. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, the Company does not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, the Company’s ultimate liability in connection with these matters is not expected to have a material adverse effect on the Company’s results of operations, financial position or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to the Company’s results of operations for a particular period, depending upon the size of the loss or the Company’s income for that particular period. On February 3, 2026, the Company filed a complaint with the United States District Court for the Eastern District of Texas, alleging patent infringement against AT&T Mobility LLC and AT&T Services, Inc. (collectively, “AT&T”) and requesting monetary and injunctive relief. AT&T has not responded to the Company’s complaint, as of the date of this filing. Geopolitical Tensions U.S. 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. F- 22 Table of Contents BK TECHNOLOGIES CORPORATION YEARS ENDED DECEMBER 31, 2025 AND 2024 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share data and percentages) 16. Capital Programs 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. Repurchases may be made through a variety of methods, which could include open market purchases, accelerated share repurchase transactions, negotiated block transactions, Rule 10b5 - 1 plans, other transactions that may be structured through investment banking institutions or privately negotiated, or a combination of the foregoing. The program does not have an expiration date. Any repurchases would be funded using cash on hand and cash from operations. The actual timing, manner and number of shares repurchased under the program will be determined by management and the Board of Directors at their discretion, and will depend on several factors, including the market price of the Company’s common shares, general market and economic conditions, alternative investment opportunities, and other business considerations in accordance with applicable securities laws and exchange rules. The authorization of the share repurchase program does not require the Company to acquire any particular number of shares and repurchases may be suspended or terminated at any time at the Company’s discretion. As of December 31, 2025 , the Company has completed 19,135 share repurchases under this program. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.