BK Technologies Corp 10-Q

Item 1. FINANCIAL STATEMENTS (UNAUDITED) BK TECHNOLOGIES CORPORATION Condensed Consolidated Balance Sheets ( In thousands, except share data) March 31, December 31, 2026 2025 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 28,980 $ 22,788 Trade accounts receivable, net 7,159 7,221 Inventories, net 15,000 15,862 Prepaid expenses and other current assets 3,505 3,099 Total current assets 54,644 48,970 Property, plant and equipment, net 4,250 4,170 Operating lease right-of-use (ROU) assets 1,377 1,502 Deferred tax assets, net 4,887 5,230 Capitalized software and systems integration costs, net 3,097 3,417 Other assets 520 471 Total assets $ 68,775 $ 63,760 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 6,592 $ 4,781 Accrued compensation and related taxes 1,998 2,423 Accrued warranty expense 641 760 Accrued other expenses and other current liabilities 654 335 Short-term operating lease liabilities 613 610 Deferred revenue 2,753 2,728 Total current liabilities 13,251 11,637 Long-term operating lease liabilities 830 965 Deferred revenue, net of current portion 6,981 6,460 Total liabilities 21,062 19,062 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; 4,105,556 and 4,092,056 issued, and 3,744,151 and 3,733,733 outstanding shares as of March 31, 2026 and December 31, 2025, respectively 2,463 2,455 Additional paid-in capital 52,271 51,803 Retained earnings (accumulated deficit) 448 ( 2,314 ) Treasury stock, at cost, 361,405 shares as of March 31, 2026, and 358,323 shares as of December 31, 2025 ( 7,469 ) ( 7,246 ) Total stockholders’ equity 47,713 44,698 Total liabilities and stockholders’ equity $ 68,775 $ 63,760 See Accompanying Notes to Condensed Consolidated Financial Statements. 3 Table of Contents BK TECHNOLOGIES CORPORATION Condensed Consolidated Statements of Operations ( In thousands, except share and per share data ) ( Unaudited ) Three Months Ended March 31, March 31, 2026 2025 Sales, net $ 21,293 $ 19,054 Cost of products 10,263 10,104 Gross margin 11,030 8,950 Selling, general and administrative expenses: Engineering and product development 3,664 2,537 Marketing and selling 1,819 1,723 General and administrative 2,258 1,774 Total selling, general and administrative expenses 7,741 6,034 Operating income 3,289 2,916 Other income (expense): Interest income, net 169 3 Other expense ( 14 ) ( 117 ) Total other income (expense), net 155 ( 114 ) Income before income taxes 3,444 2,802 Provision for income tax expense ( 682 ) ( 670 ) Net income $ 2,762 $ 2,132 Earnings per share-basic: $ 0.74 $ 0.60 Earnings per share-diluted: $ 0.69 $ 0.55 Weighted average shares outstanding-basic 3,740,728 3,572,576 Weighted average shares outstanding-diluted 4,009,370 3,893,143 See Accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents BK Technologies Corporation Condensed Consolidated Statements of Changes in Equity (In thousands, except share and per share data) (Unaudited) Common Common Additional Retained Earnings Stock Stock Paid-In (Accumulated Treasury Shares Amount Capital Deficit) Stock Total Balance at December 31, 2025 4,092,056 $ 2,455 $ 51,803 $ ( 2,314 ) $ ( 7,246 ) $ 44,698 Common stock issued under restricted stock units 9,780 6 ( 6 ) — — — Stock option exercises 3,720 2 55 — — 57 Share-based compensation expense-stock options — — 362 — — 362 Share-based compensation expense-restricted stock units — — 57 — — 57 Repurchase of common stock — — — — ( 223 ) ( 223 ) Net income — — — 2,762 — 2,762 Balance at March 31, 2026 4,105,556 2,463 52,271 448 ( 7,469 ) 47,713 Common Common Additional Stock Stock Paid-In Accumulated Treasury Shares Amount Capital Deficit Stock Total Balance at December 31, 2024 3,913,959 $ 2,348 $ 49,386 $ ( 15,850 ) $ ( 6,053 ) $ 29,831 Common stock issued under restricted stock units 13,764 7 ( 7 ) — — — Stock option exercises 1,148 1 12 — — 13 Share-based compensation expense-stock options — — 118 — — 118 Share-based compensation expense-restricted stock units — — 275 — — 275 Net income — — — 2,132 — 2,132 Balance at March 31, 2025 3,928,871 2,356 49,784 ( 13,718 ) ( 6,053 ) 32,369 See Accompanying Notes to Condensed Consolidated Financial Statements. 5 Table of Contents BK TECHNOLOGIES CORPORATION Condensed Consolidated Statements of Cash Flows ( In thousands ) ( Unaudited ) Three Months Ended March 31, March 31, 2026 2025 Operating activities Net income $ 2,762 $ 2,132 Adjustments to reconcile net income to net cash provided by operating activities: Inventories allowances 263 32 Deferred taxes expense (benefit) 343 ( 1,544 ) Depreciation and amortization 716 427 Share-based compensation expense-stock options 362 118 Share-based compensation expense-restricted stock units 57 275 Changes in operating assets and liabilities: Trade accounts receivable, net 62 ( 2,822 ) Inventories 599 1,371 Prepaid expenses and other current assets ( 406 ) 402 Other assets ( 49 ) ( 1 ) Operating lease ROU assets and lease liabilities ( 7 ) ( 19 ) Accounts payable 1,811 784 Long-term uncertain tax position liability — 1,419 Accrued compensation and related taxes ( 425 ) ( 534 ) Accrued warranty expense ( 119 ) ( 16 ) Deferred revenue 546 ( 302 ) Accrued other expenses and other current liabilities 319 818 Net cash provided by operating activities 6,834 2,540 Investing activities Purchases of property, plant, and equipment ( 476 ) ( 268 ) Capitalized software and systems integration costs — ( 440 ) Net cash used in investing activities ( 476 ) ( 708 ) Financing activities Proceeds from exercise of common stock options 57 13 Repurchase of common stock ( 223 ) — Net cash (used in) provided by financing activities ( 166 ) 13 Net change in cash and cash equivalents 6,192 1,845 Cash and cash equivalents, beginning of period 22,788 7,075 Cash and cash equivalents, end of period $ 28,980 $ 8,920 Supplemental disclosure Cash paid for interest $ — $ — Non-cash financing activity Common stock issued under restricted stock units $ 120 $ 138 Cashless exercise of stock options, warrants and related conversion of net shares to stockholders' equity $ — $ 3 See Accompanying Notes to Condensed Consolidated Financial Statements. 6 Table of Contents BK TECHNOLOGIES CORPORATION Notes to Condensed Consolidated Financial Statements Three Months Ended March 31, 2026 and 2025 Unaudited (In thousands, except share and per share data and percentages or as otherwise noted) Note 1. Condensed Consolidated Financial Statements Basis of Presentation The condensed consolidated balance sheet as of March 31, 2026 , the condensed consolidated statements of operations for the three months ended March 31, 2026 , and 2025 , the condensed consolidated statement of changes in stockholders' equity for the three months ended March 31, 2026 , and 2025 , and the condensed consolidated statements of cash flows for the three months ended March 31, 2026 , and 2025 , have been prepared by BK Technologies Corporation (the “Company,” “we,” “us,” “our”), and are unaudited but include all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations, and cash flows for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2025 , has been derived from the Company’s audited consolidated financial statements at that date. These condensed consolidated financial statements have been prepared in accordance with the requirements of Article 8 of Regulation S- X and the instructions to Form 10 -Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10 -K for the fiscal year ended December 31, 2025 , as filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026. The results of operations for the three months ended March 31, 2026 , and 2025 , are not necessarily indicative of the operating results for a full year. Significant Accounting Policies There have been no material changes to the Company’s significant accounting policies during the three -months ended March 31, 2026, as compared to those disclosed in the consolidated financial statements included in the Company’s Annual Report on the Form 10 -K for the year ended December 31, 2025. Principles of Consolidation The accounts of the Company have been included in the accompanying condensed 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. Fair Value of Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, and other liabilities. As of March 31, 2026 , and December 31, 2025 , 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. 7 Table of Contents Recent Accounting Pronouncements The Company does not discuss recent pronouncements that are not anticipated to have a material impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. 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. Segment 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 Project 25 ( "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 agencies on their 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 executive officer, chief financial officer, and the chief technology 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. 8 Table of Contents The table below summarizes the significant categories regularly reviewed by the chief operating decision maker for the three months ended March 31, 2026, and 2025, respectively: Three Months Ended March 31, 2026 March 31, 2025 Sales, net $ 21,293 $ 19,054 Cost of products 10,263 10,104 Gross margin 11,030 8,950 Engineering and product development 3,664 2,537 Marketing and selling 1,819 1,723 General and administrative 2,258 1,774 Selling, general and administrative expenses 7,741 6,034 Operating income 3,289 2,916 Other income (expense) (a) 155 ( 114 ) Income tax (expense) ( 682 ) ( 670 ) Segment net income $ 2,762 $ 2,132 Reconciliation of profit Adjustments and reconciling items - - Consolidated net income $ 2,762 $ 2,132 (a) Other segment items include interest income (expense) and foreign currency exchange gains/losses Note 2. Significant Events and Transactions On October 30, 2024, a wholly owned subsidiary of the Company entered into a new credit facility with Fifth Third Bank, National Association, which provided for a one -year revolving line of credit with a maximum commitment of $ 6 million, with an accordion feature, if certain conditions are met, for up to a maximum commitment of $ 10 million. On October 30, 2025, the subsidiary entered into an amendment to the credit facility, which provided for a three -year extension of the agreement and revised the availability under the $ 6 million revolving credit facility, if certain conditions are met, to increase the accordion feature for a maximum commitment of $ 14 million, among other things. 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. The Company has not utilized funding and there were no borrowings under the RLC agreement as of March 31, 2026, and as of the date of filing this report 9 Table of Contents Note 3. Inventories, Net Inventories, which are presented net of allowance for slow moving, excess, and obsolete inventory, consisted of the following: March 31, 2026 December 31, 2025 Finished goods $ 5,581 $ 5,898 Work in process 3,346 3,016 Raw materials 7,471 8,083 16,398 16,997 Inventory reserve ( 1,398 ) ( 1,135 ) $ 15,000 $ 15,862 Allowances for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or net realizable value. Note 4. Income Taxes The Company's tax provision and the resulting effective tax rate for interim periods is determined based on its estimate annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The provision for income taxes consists of federal and state taxes in the US, California, Florida, and various other states. 10 Table of Contents Note 4. Income Taxes (continued) For the three months ended March 31, 2026, the Company recorded an income tax expense of $ 682 , resulting in an effective tax rate of 19.8 %. The Company's taxable income is generated in the United States and taxed at a federal and state statutory rate of 27.5 %. Relative to federal and state statutory rate, the effective tax rate for the three months ended March 31, 2026, was reduced by the tax impact of research and development tax credits and stock compensation exercises and vestings. For the three months ended March 31, 2025, the Company recorded an income tax expense of $ 670 . The effective tax rate for the three months ended March 31, 2025, was 24.8 %. Relative to the federal and state statutory rate, the effective tax rate for the three months ended March 31, 2025, was primarily impacted by the tax benefit for research and development tax credits for 2025 as compared to projected income before tax. 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 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 March 31, 2026. 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's policy is to recognize interest and penalties associated with uncertain tax benefits as part of income tax provision and included accrued interest and penalties with the related income tax liability on the Company's Condensed Consolidated Balance Sheets. To date, the Company has not recognized any interest and penalties in its Condensed Consolidated Statement of Operations, nor has it accrued for or made payments for interest and penalties. The Company recorded $ 0 and $ 1,419 unrecognized tax benefits as of March 31, 2026 and 2025, respectively. The Company imports certain materials and products that are subject to U.S. government tariffs and import duties. On February 20, 2026, a US federal court ordered the U.S. government to begin refunding certain tariffs. The Company believes that some of the tariffs it has paid may be eligible for refund; however, the amount and timing of any potential refunds are uncertain. Accordingly, the Company has not recorded, nor plans to record, any benefit related to possible tariff refunds at this time. 11 Table of Contents Note 5. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended March 31, 2026 March 31, 2025 Numerator: Net income for basic and diluted earnings per share $ 2,762 $ 2,132 Denominator for basic earnings per share weighted average shares 3,740,728 3,572,576 Effect of dilutive securities: Options, restricted stock units, and warrants 268,642 320,567 Denominator for diluted earnings per share weighted average shares 4,009,370 3,893,143 Basic earnings per share $ 0.74 $ 0.60 Diluted earnings per share $ 0.69 $ 0.55 Approximately 1,016 stock options and 1,081 restricted stock units for the three months ended March 31, 2026, and approximately 0 stock options and 0 restricted stock units for the three months ended March 31, 2025, were excluded from the calculation because they were anti-dilutive. 12 Table of Contents Note 6. Non-Cash Share-Based Employee Compensation Stock Options The Company has employee and non-employee director share-based incentive compensation plans. Related to these programs, the Company recorded non-cash share-based employee compensation expense of $ 362 for the three months ended March 31, 2026 , compared with $ 118 for the same period last year. The Company considers its non-cash share-based employee compensation expenses as a component of cost of products and selling, general and administrative expenses. There was no non-cash share-based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented. A summary of activity under the Company’s stock option plans during the three months ended March 31, 2026 , is presented below: Shares/Options Weighted Average Exercise Price ($) Per Share Weighted Average FMV @ Grant ($) Per Share Weighted Average Fair Value ($) Per Share Weighted Average Remaining Contractual Term (Years) Weighted Average Remaining Vesting Term (Years) Aggregate Intrinsic Value ($) Beginning Outstanding 460,643 27.08 27.08 15.32 7.80 2.0856 21,885 Performance Addition 0.00 - - - 0.00 - - Awarded 2,500 76.86 76.86 52.66 9.84 3.0023 - Forfeited 12,480 32.26 32.26 21.00 - - 561 Expired 0.00 - - - - - - Exercised / Released 3,720 15.62 15.62 8.49 - - 245 Ending Outstanding 446,943 27.31 27.31 15.43 7.84 2.6869 21,156 Ending Vested 159,946 18.15 18.15 9.15 6.40 - 9,034 Ending UnVested 286,997 32.42 32.42 18.93 8.64 - 12,121 Vested and Expected to Vest 446,943 27.31 27.31 15.43 7.84 - 21,156 Exercisable 159,946 18.15 18.15 9.15 6.40 - 9,034 Restricted Stock Units The Company recorded non-cash restricted stock unit compensation expense of $ 57 and $ 275 for the three months ended March 31, 2026 , and 2025, respectively. A summary of non-vested restricted stock under the Company’s non-employee director share-based incentive compensation plan is as follows: Weighted Average Number of Grant Date Shares Price per Share Unvested as of January 1, 2026 41,189 $ 16.97 Granted 12,009 76.62 Vested and issued ( 9,780 ) 12.27 Cancelled/forfeited ( 5,000 ) 51.65 Unvested as of March 31, 2026 38,418 $ 32.30 13 Table of Contents Note 7. Commitments and Contingencies Legal Matters From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of its business. We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our 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, we do 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, our ultimate liability in connection with these matters is not expected to have a material adverse effect on our 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 our results of operations for a particular period, depending upon the size of the loss or our 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. As of the date of filing of this report on Form 10 -Q, AT&T has responded to the Company’s complaint and is reviewing resolution alternatives. Purchase Commitments As of March 31, 2026 , the Company had purchase commitments for inventory totaling approximately $ 17,636 , which are expected to be satisfied in the second quarter 2026. Significant Customers The following table summarizes customer concentration of net revenues Three Months Ended March 31, 2026 March 31, 2025 Revenue as a percent of total revenue United States government agencies 43.0 % 10.9 % Customer A 39.0 % 23.1 % Customer B — 11.2 % The following table summarizes customer concentration of receivables March 31, 2026 March 31, 2025 Receivables as a percent of total receivables United States government agencies 7.0 % 8.7 % Customer A 60.8 % 25.8 % Customer B — 13.3 % 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 are 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. Macroeconomic Trends The Company continues to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, the introduction of or changes in tariffs or trade barriers and global or local recession. Such changes in domestic and global macroeconomic conditions may lead to increased costs for the business. Additionally, these macroeconomic trends could adversely affect the Company’s customers, which could impact their willingness to spend on the Company’s products and services, or their ability to make payments, which could harm the collection of accounts receivable and financial results. The world’s financial markets remain susceptible to significant stresses, resulting in reductions in available credit and government spending, economic downturn or stagnation, foreign currency fluctuations and volatility in the valuations of securities generally. As a result, the Company’s ability to access capital markets and other funding sources in the future may not be available on commercially reasonable terms, if at all. The rapid development and fluidity of these situations precludes any prediction as to the ultimate impact they will have on the Company’s business, financial condition, results of operation and cash flows, which will depend largely on future developments. 14 Table of Contents Note 8. Leases 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 an expiration date of June 30, 2027. The lease terms include an option to extend the lease agreement for an additional five ( 5 ) year term commencing July 1, 2027 and terminating at midnight June 30, 2032. Annual rental, maintenance, and tax expenses for the facility are approximately $ 610 . 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 “Sawgrass Lease”). In September 2025, the Company entered into an amendment to the Sawgrass Lease to lease an additional 1,514 square feet ( not in thousands) of office space and to extend the lease term an additional 62 months, commencing on the date construction on the additional leased area is completed (the “Sawgrass Amendment”). Pursuant to the Sawgrass Amendment, the annual rental, maintenance, and tax expenses for the facility will be approximately $ 180 for the first year of the extended term and will increase approximately 3.0 % for each subsequent 12 -month period. Lease costs consisted of the following: Three Months Ended March 31, 2026 March 31, 2025 Operating lease cost $ 158 $ 136 Variable lease cost 34 33 Total lease cost $ 192 $ 169 15 Table of Contents Note 8. Leases (continued) Supplemental cash flow information related to leases was as follows: Three Months Ended March 31, 2026 March 31, 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows (fixed payments) $ 166 $ 155 Operating cash flows (liability reduction) $ 146 $ 139 ROU assets obtained in exchange for lease obligations: Operating leases $ 875 $ — Other information related to operating leases was as follows: March 31, 2026 Weighted average remaining lease term (in years) 3.41 Weighted average discount rate 5.50 % Maturity of lease liabilities as of March 31, 2026 , were as follows: March 31, 2026 Remaining nine months of 2026 $ 503 2027 439 2028 200 2029 202 2030 206 2031 33 Total payments 1,583 Less: imputed interest ( 140 ) Total present value of lease liabilities $ 1,443 9. Subsequent Events The Company has evaluated subsequent events through May 14, 2026, the date the condensed consolidated financial statements were available to be issued. Based on this evaluation, the Company determined that no material subsequent events occurred that require recognition or disclosure in these condensed consolidated financial statements. . 16 Table of Contents Item 2 . MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS We believe that it is important to communicate our future expectations to our security holders and to the public. This report, including any information incorporated by reference in this report, therefore, contains statements about future events and expectations which are "forward-looking statements" within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") including the statements about our plans, objectives, expectations and prospects under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations." You can expect to identify these statements by forward-looking words such as "may," "might," "could," "would," "should," "will," "anticipate," "believe," "plan," "estimate," "project," "expect," "intend," "seek," "are encouraged" and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. We also may make forward-looking statements in other documents that are filed or furnished with the SEC. In addition, we may make forward-looking statements orally or in writing to investors, analysts, members of the media, or others. Forward-looking statements include, but are not limited to, the following: changes or advances in technology; the success of our Solutions and Radio product groups and the products offered thereunder; successful introduction of new products and technologies, including our ability to successfully develop and sell our current and anticipated Solutions products, and our new multiband radio product and other related products in the BKR Series product line; competition in the LMR industry; general economic and business conditions, including the impact of high inflation, fluctuating interest rates, tariffs and other trade barriers and restrictions, potential tariff refunds, labor and supply shortages and disruptions, federal, state and local government budget deficits and spending limitations, any impact from a prolonged shutdown of the U.S. Government, the effects of natural disasters, changes in climate, severe weather events, geopolitical conflicts and other events, acts of war or terrorism, global health crises and other catastrophic events, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, including a potential U.S. or global downturn or recession; the availability, terms and deployment of capital; reliance on contract manufacturers and suppliers; risks associated with fixed‐price contracts; heavy reliance on sales to agencies of the U.S. Government and our ability to comply with the requirements of contracts, laws and regulations related to such sales; allocations by government agencies among multiple approved suppliers under existing agreements; our ability to comply with U.S. tax laws and utilize deferred tax assets; our ability to attract and retain executive officers, skilled workers and key personnel; our ability to manage our growth; our ability to identify potential candidates for, and to consummate, acquisition, disposition or investment transactions; impact of our capital allocation strategy; risks related to maintaining our brand and reputation; impact of government regulation; impact of rising health care costs; our business with manufacturers located in other countries, including the effects of changes in the U.S. Government and foreign governments' trade and tariff policies, such as recent increases in tariffs by the U.S. and the imposition of increased tariffs and other trade barriers and retaliatory measures by foreign governments; our inventory and debt levels; our ability to comply with the terms, including financial covenants, of our outstanding debt, including fluctuating interest rates; protection of our intellectual property rights; fluctuation in our operating results and stock price; any infringement claims; data security breaches, cyber-attacks and other factors impacting our technology systems or third-party information technology systems upon which we rely; widespread outages, interruptions or other failures of operational, communication, or other systems; availability of adequate insurance coverage; environmental, social and governance matters; maintenance of our NYSE American listing; risks related to being a holding company; our ability to maintain effective internal control over financial reporting; and the effect on our stock price and ability to raise capital through future sales of shares of our common stock or otherwise. 17 Table of Contents Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors, many of which are outside of our control, that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Report on Form 8-K. Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in "Part I-Item lA. Risk Factors" and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in our subsequent filings with the SEC. We assume no obligation to publicly update or revise any forward-looking statements made in this report, whether as a result of new information, future events, changes in assumptions or otherwise, after the date of this report. Readers are cautioned not to place undue reliance on these forward-looking statements. Reported dollar amounts in the management’s discussion and analysis (“MD&A”) section of this report are disclosed in millions or as whole dollar amounts. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this report and the MD&A, consolidated financial statements, and notes thereto appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 12, 2026. Executive Summary BK Technologies Corporation (NYSE American: BKTI) (together with its wholly owned subsidiaries, "BK," the "Company," ''we" or ''us") is a holding company that, through BK Technologies, Inc., its operating subsidiary, provides public safety grade communications products and services designed to make first responders safer and more efficient. All operating activities described herein are undertaken by our operating subsidiary. In business for over 70 years, BK operates one business segment through its operating subsidiary, BK Technologies, Inc. BK has two product groups within the segment: LMR Radio and Solutions. The Radio product group designs, manufactures and markets wireless communications products and related accessories consisting of two-way land mobile radios ("LMRs"). Two-way LMRs can be radios that are hand-held (portable) or installed in vehicles (mobile). Generally, BK Technologies-branded products serve government markets, including, but not limited to, emergency response, public safety, homeland security and military customers of federal, state and municipal government agencies, as well as various industrial and commercial enterprises. We believe that our products and solutions provide superior value by offering high specification, ruggedized, durable, reliable, feature rich, Project 25 ("P25") compliant radio products at a lower cost relative to comparable offerings. 18 Table of Contents The Solutions product group focuses on delivering innovative products and smartphone applications which operate ubiquitously over public cellular networks. Our BK ONE branded solutions are designed to provide advanced field applications that enhance situational awareness, decision-making and interagency coordination that enable the first responder to be safer and more efficient. Our BK ONE portfolio provides law enforcement improved safety and productivity, fire incident first responders more situational awareness and EMS first responders with enhanced patient safety and advanced care measures. When tethered to our radios, the combined solution offers an enhanced user experience with more unique capability which increases the sales reach of our radios. The Company continues to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, the introduction of or changes in tariffs or trade barriers, supply chain and labor disruptions, materials shortages, political and social unrest, geopolitical conflicts, and global or local recession. Such changes in domestic and global macroeconomic conditions may lead to increased costs for the business. Additionally, these macroeconomic trends could adversely affect the Company's customers, which could impact their willingness to spend on the Company's products and services, or their ability to make payments, which could harm the collection of accounts receivable and financial results. The world's financial markets remain susceptible to significant stresses, resulting in reductions in available credit and government spending, economic downturn or recession, foreign currency fluctuations and volatility in the valuations of securities generally. As a result, the Company's ability to access capital markets and other funding sources in the future may not be available on commercially reasonable terms, if at all. The rapid development and fluidity of these situations precludes any prediction as to the ultimate impact they will have on the Company's business, financial condition, results of operation and cash flows, which will depend largely on future development. Customer demand and orders for our products were strong during fiscal year 2025 and continued during the first three months of 2026. Our backlog of unshipped customer orders was approximately $8.7 million and $14.2 million as of March 31, 2026, and December 31, 2025, respectively. Changes in the backlog were attributed primarily to the timing of orders and their fulfillment. For the three months ended March 31, 2026, sales increased approximately 11.8% to approximately $21.3 million, compared with $19.1 million for the same period of fiscal year 2025. The increase was attributed primarily to the shipments of BKR series radio product and accessories sales. Gross profit margins as a percentage of sales for the three months ended March 31, 2026, were 51.8%, compared with 47.0% for the comparative fiscal year 2025 quarter, generally reflecting radio product and accessories sales mix. Selling, general, and administrative (“SG&A”) expenses for the three months ended March 31, 2026, totaled approximately $7.7 million (36.4% of sales), compared with $6.0 million (31.7% of sales) in the same period of fiscal year 2025. We recognized operating income for the three months ended March 31, 2026, of approximately $3.3 million, compared with operating income of approximately $2.9 million for the same period of fiscal year 2025. For the three months ended March 31, 2026, we recognized other income, net totaling approximately $155,000. This compares with other expenses, net totaling $114,000 for the same period of fiscal year 2025. For the three months ended March 31, 2026, the pretax income totaled approximately $3.4 million, compared with pretax income of approximately $2.8 million for same period of fiscal year 2025. We recognized tax expense of $0.7 million for the three-month period ended March 31, 2026, and approximately $0.7 million for the same period of fiscal year 2025. Net income for the three months ended March 31, 2026, totaled approximately $2.8 million ($0.74 per basic and $0.69 per diluted share), compared with a net income of approximately $2.1 million ($0.60 per basic and $0.55 per diluted share) for the same period last year. The primary factors for the improvement for the three months ended March 31, 2026, compared to the same period of fiscal year 2025, were radio product unit sales growth and increases in BKR9000 multi-band product sales mix. As of March 31, 2026, working capital totaled approximately $41.4 million, of which $36.1 million was comprised of cash, cash equivalents, and trade receivables. This compares with working capital totaling approximately $37.3 million at 2025 year-end, which included $30.0 million of cash, cash equivalents, and trade receivables. We may experience fluctuations in our quarterly results, in part, due to governmental customer spending patterns that are influenced by government fiscal year-end budgets and appropriations. We may also experience fluctuations in our quarterly results, in part, due to our sales to federal and state agencies that participate in wildland fire-suppression efforts, which may be greater during the summer season when forest fire activity is heightened. In some years, these factors may cause an increase in sales for the second and third quarters, compared with the first and fourth quarters of the same fiscal year. Such increases in sales may cause quarterly variances in our cash flow from operations and overall financial condition. 19 Table of Contents Available Information Our Internet website address is www.bktechnologies.com. The information contained on or accessible from our website is not incorporated by reference in this report. Any reference to our website is intended to be an inactive textual reference only. We make available on our Internet website, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments to these reports as soon as practicable after we file such material with, or furnish it to, the SEC. In addition, our Code of Business Conduct and Ethics, Code of Ethics for the CEO and Senior Financial Officers, Audit Committee Charter, Compensation Committee Charter, Nominating and Governance Committee Charter, and other corporate governance policies are available on our website under “Investor Relations.” A copy of any of these materials may be obtained, free of charge, upon request from our investor relations department. The SEC maintains an internet site that contains reports, proxy and information statements, and other information filed by the Company at http://www.sec.gov. All reports that the Company files with or furnishes to the SEC also are available free of charge via the SEC’s website. First Quarter and Three Months Summary Customer demand and new orders for our products was $17.3 million during the three months ended March 31, 2026, compared to $16.8 million for the same period of fiscal year 2025. The increase in new orders for the three months ended March 31, 2026, compared to the same period last year was primarily due to higher state agency orders in the first three months of 2026. For the first quarter of 2026, sales increased 11.8% to approximately $21.3 million, compared with approximately $19.1 million of sales for the first quarter of fiscal year 2025. Gross profit margin as a percentage of sales for the first quarter of 2026 was approximately 51.8%, compared with 47.0% for the same period of fiscal year 2025, generally reflecting BKR radio product and accessories sales mix compared to the first quarter of fiscal year 2025. Selling, general, and administrative (“SG&A”) expenses for the first quarter of 2026 totaled approximately $7.7 million, which was 28.3% higher than the SG&A expenses of approximately $6.0 million for the first quarter of fiscal year 2025. The increase in SG&A expenses was attributed primarily due to software and new product development costs. These factors yielded operating income of approximately $3.3 million for the three-month period ended March 31, 2026, compared with operating income of approximately $2.9 million for the same period of fiscal year 2025. For the first quarter of 2026, we recognized other net income of approximately $155,000 on interest income on our cash investments and other expenses, compared to approximately $114,000 other expense, primarily related to other expenses for the same period of fiscal year 2025. Net income for the three months ended March 31, 2026, was approximately $2.8 million ($0.74 per basic and $0.69 per diluted share), compared with net income of approximately $2.1 million ($0.60 per basic and $0.55 per diluted share) for the same quarter last year. The primary factors for the improvement for the three-month period ended March 31, 2026, compared to the same period of fiscal year 2025, were radio product unit sales growth and increases in BKR9000 multi-band product sales mix. As of March 31, 2026, working capital totaled approximately $41.4 million, of which approximately $36.1 million was comprised of cash, cash equivalents and trade receivables. As of December 31, 2025, working capital totaled approximately $37.3 million, of which approximately $30.0 million was comprised of cash, cash equivalents and trade receivables. Results of Operations As an aid to understanding our operating results for the periods covered by this report, the following table shows selected items from our condensed consolidated statements of operations expressed as a percentage of sales: Percentage of Sales Three Months Ended March 31, March 31, 2026 2025 Sales 100.0 % 100.0 % Cost of products (48.2 ) (53.0 ) Gross margin 51.8 47.0 Selling, general and administrative expenses (36.4 ) (31.7 ) Other income (expense) 0.7 (0.6 ) Income before income taxes 16.2 14.7 Income tax (expense) (3.2 ) (3.5 ) Net income 13.0 % 11.2 % (1) Amounts may not foot due to rounding. 20 Table of Contents Net Sales For the first quarter ended March 31, 2026, net sales increased 11.8% to approximately $21.3 million, compared with approximately $19.1 million for the same quarter of fiscal year 2025. Sales for the first quarter ended March 31, 2026, were attributed primarily to state and local public safety opportunities. From a product perspective, the primary contributor to orders and shipments during the first quarter ended March 31, 2026, was our BKR series radios and related accessories. The BKR Series is envisioned as a comprehensive line of new products, which includes new models such as the BKR 9000, which achieved first sales in the second quarter of 2023. We believe that the BKR Series products should increase our addressable market by expanding the number of Federal, state and local public safety customers that may purchase our products. However, the timing and size of orders from agencies at all levels can be unpredictable and subject to budgets, priorities, and other factors. Accordingly, we cannot assure that we will be able to develop additional BKR Series products on the anticipated timelines, or at all, or that sales will occur under particular contracts, or that our sales prospects will otherwise be realized. While the potential impacts of the current administration's tariff policies, material shortages, lead-times, high inflation and ongoing geopolitical conflicts in the Middle East, Ukraine and other geopolitical events remain uncertain in the coming months and quarters, such effects have the potential to adversely impact our customers and our supply chain. Such negative effects on our customers and suppliers could adversely affect our future sales, gross profit margins, operations and financial results. Cost of Products and Gross Profit Margin Gross profit margins as a percentage of sales for the first quarter ended March 31, 2026, were approximately 51.8% compared with 47.0% for the same quarter of fiscal year 2025. Our cost of products and gross profit margins are primarily derived from material, labor, and overhead costs, product mix, manufacturing volumes and pricing. The increase in gross profit margins for the three-months ended March 31, 2026, compared to the same period of fiscal year 2025, generally reflect radio product and accessories sales mix. We utilize a combination of internal manufacturing capabilities and contract manufacturing relationships for production efficiencies and to manage material and labor costs. While we anticipate continuing to do so in the future, we have increased and are continuing to increase our utilization of contract manufacturing resources, which provides increased flexibility for our production capacity to meet increased demand. We believe that our current manufacturing capabilities and contract relationships or comparable alternatives will continue to be available to us. However, we may encounter new product costs and competitive pricing pressures in the future and the extent of their impact on gross margins, if any, is uncertain. 21 Table of Contents Selling, General and Administrative Expenses SG&A expenses consist of marketing, sales, commissions, engineering, product development, management information systems, accounting, headquarters, and non-cash share-based employee compensation expenses. SG&A expenses for the quarter ended March 31, 2026, totaled approximately $7.7 million (36.4% of sales), compared with approximately $6.0 million (31.7% of sales) for the same quarter of fiscal year 2025. Engineering and product development expenses for the first quarter of 2026 totaled approximately $3.7 million (17.2% of sales), compared with approximately $2.5 million (13.3% of sales) for the same quarter of fiscal year 2025. The increase in engineering expenses was attributed primarily to development costs for the BKR multi-band mobile radio product and restricted stock unit issuance costs described in Note 6 ( Non-Cash Share-Based Employee Compensation ) to the condensed consolidated financial statements included in this report. Most of these activities were being performed by our internal engineering team and were their primary focus, combined with sustaining engineering support for our existing products. The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages, including the impact of tariffs and certain component lead times in coming months and quarters. Marketing and selling expenses for the first quarter of 2026 totaled approximately $1.8 million (8.5% of sales), compared with approximately $1.7 million (9.1% of sales) for the first quarter of fiscal year 2025. The increase in marketing and selling expenses for the three months ended March 31, 2026 was attributed primarily to additional salespeople and increased trade show participation. Other general and administrative expenses for the first quarter of 2026 totaled approximately $2.3 million (10.6% of sales), compared with approximately $1.8 million (9.3% of sales) for the same period of fiscal year 2025. The increase in other general and administrative expenses for the three months ended March 31, 2026, was attributed primarily to non-cash stock compensation and the non-recurring nature of certain corporate consulting expenses compared to the three months ended March 31, 2025. Operating Income Operating income for the quarter ended March 31, 2026, totaled approximately $3.3 million (15.4% of sales), compared with operating income of approximately $2.9 million (15.3% of sales) for the same period of fiscal year 2025. The operating income improvement for the three months ended March 31, 2026, compared to the same period last year, was attributed to sales growth and higher gross profit margins related to improved product sales mix. Other Income (Expense) We recorded net interest income of approximately $169,000 for the quarter ended March 31, 2026, compared with approximately $3,000 net interest income for the first quarter of fiscal year 2025. 22 Table of Contents Income Taxes We recorded approximately $682,000 and $670,000 tax expense for the three months ended March 31, 2026, and 2025, respectively. Our income tax provision is based on the effective tax rate for the year. The tax expense in any period may be affected by, among other things, permanent, as well as temporary, differences in the deductibility of certain items, in addition to changes in tax legislation. As a result, we may experience fluctuations in the effective book tax rate (that is, tax expense divided by pre-tax book income) from period to period. As of March 31, 2026, our net deferred tax assets totaled approximately $4.9 million and were primarily derived from capitalized software and systems integration costs and deferred revenue. In order to fully utilize the net deferred tax assets, we will need to generate sufficient taxable income in future years. We analyze all positive and negative evidence to determine if, based on the weight of available evidence, we are more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon our conclusions regarding, among other considerations, estimates of future earnings based on information currently available and current and anticipated customers, contracts, and product introductions, as well as historical operating results and certain tax planning strategies. Based on our analysis of all available evidence, both positive and negative, we have concluded that, except for the capital loss carryforward of approximately $851,000, we will have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax assets. We cannot presently estimate what, if any, changes to the valuation of our deferred tax assets may be deemed appropriate in the future. If we incur future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of March 31, 2026. Liquidity and Capital Resources For the three months ended March 31, 2026, net cash provided by operating activities totaled approximately $6.8 million, compared with cash provided by operating activities of approximately $2.5 million for the same fiscal year period of 2025. Cash provided by operating activities for the three months ended March 31, 2026, was primarily related to net income of $2.8 million, an increase of $1.8 million in accounts payable, a decrease of $0.6 million in inventories, an increase of $0.5 million in deferred revenues, partially offset by a decrease of $0.4 million in accrued compensation and related taxes and a decrease of $0.4 million in prepaid expenses and other current assets. 23 Table of Contents For the first three months of 2026, we had net income of approximately $2.8 million, compared with a net income of approximately $2.1 million for the same period of fiscal year 2025. Accounts receivable decreased approximately $0.1 million during the three months ended March 31, 2026, compared with an increase of approximately $2.8 million for the same period of fiscal year 2025, primarily due to the timing of customer collections in the first three months of fiscal year 2026 and 2025. Inventories decreased during the three months ended March 31, 2026, by approximately $0.6 million compared to a decrease of approximately $1.4 million for the same period of fiscal year 2025. The decrease in inventories during the three months ended March 31, 2026 was primarily attributed to a decrease in finished goods somewhat offset by an increase in work in process materials. Accounts payable for the three months ended March 31, 2026, increased approximately $1.8 million, compared with an increase of approximately $0.8 million for the same period of fiscal year 2025, primarily due to the increased purchases of finished goods during the quarter ended March 31, 2026. Accrued other expenses increased during the first three months of 2026 by approximately $0.3 million compared with an increase of $0.8 million for the same period of fiscal year 2025. Depreciation and amortization totaled approximately $0.7 million for the three months ended March 31, 2026, compared with approximately $0.4 million for the same period of fiscal year 2025. Depreciation and amortization are primarily related to manufacturing and engineering equipment. Cash used in investing activities for the three months ended March 31, 2026, totaled approximately $0.5 million, compared with approximately $0.7 million for the same period of fiscal year 2025. The cash used for the three-month period ended March 31, 2026, was attributed primarily to purchases of engineering equipment and tooling, compared to cash used for the three-month period ended March 31, 2025, which was also primarily attributed to capitalized software and system implementation costs and the purchase of engineering and manufacturing related equipment. For the three months ended March 31, 2026, approximately $166,000 was used in financing activities, primarily attributable to the repurchase of common stock, compared with cash provided by financing activities of approximately $13,000 for the same period of fiscal year 2025. Our cash and cash equivalents balance on March 31, 2026, was approximately $29.0 million. We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our Fifth Third credit agreement, are sufficient to meet our working capital requirements for the foreseeable future. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, including those resulting from supply chain delays or interruptions, labor shortages, wage pressures, rising inflation, geopolitical events, the impacts of tariffs, and other force majeure events, could result in volatility in the financial and capital markets and could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity, and financial condition. On October 30, 2024, the Company's subsidiary, BK Technologies, Inc. entered into a Revolving Loan Commitment with Fifth Third Bank, National Association (“Fifth Third”) which was amended on October 30, 2025 (as amended, the “RLC”). The Fifth Third RLC provides for a revolving line of credit with a maximum commitment of $6.0 million, with an accordion feature, if certain conditions are met, for up to an additional $8.0 million of borrowing capacity, totaling a maximum commitment of $14.0 million. The RLC will mature on October 30, 2028. Each advance shall accrue interest on the outstanding principal amount thereof at a range of SOFR plus 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. The Company has not utilized funding and there were no borrowings under the RLC agreement as of March 31, 2026, and as of the date of filing this report. BK Technologies, Inc.'s repayment obligations under the RLC are guaranteed by the Company and secured by a pledge of essentially all of the assets of the Company and BK Technologies, Inc. The Company is subject to customary negative covenants, including with respect to our ability to incur additional indebtedness, encumber and dispose of their assets and enter into affiliate transactions. BK Technologies, Inc. must also comply with: (i) a maximum total funded debt ratio of 2.00 to 1.00; (ii) a fixed charge coverage ratio of 1.2 to 1.0 as measured on a rolling twelve-month basis, each measured at the end of each fiscal quarter and (iii) a requirement that the outstanding principal balance under the RLC will be $0 for at least 30 consecutive days during each annual period ending on October 30. 24 Table of Contents The Fifth Third RLC agreement provided for customary events of default, including: (1) failure to pay principal, interest or fees under the RLC when due and payable; (2) failure to comply with other covenants and agreements contained in the Revolving Loan Commitment agreement and the other documents executed in connection therewith; (3) the making of false or inaccurate representations and warranties; (4) defaults under other debt or other obligations of BK Technologies, Inc.; (5) money judgments and material adverse changes; (6) a change in control or ceasing to operate business in the ordinary course; and (7) certain events of bankruptcy or insolvency. Upon the occurrence of an event of default, Fifth Third may declare the entire unpaid balance immediately due and payable and/or exercise any and all remedial and other rights under the RLC agreement. Critical Accounting Policies Our critical accounting policies include our revenue recognition process and our accounting processes involving significant judgments, estimates and assumptions. These processes affect our reported revenues and current assets and are, therefore, critical in assessing our financial and operating status. We regularly evaluate these processes in preparing our financial statements. The processes for revenue recognition, allowance for collection of trade receivables, allowance for excess or obsolete inventory and income taxes involve certain assumptions and estimates that we believe to be reasonable under present facts and circumstances. These estimates and assumptions, if incorrect, could adversely impact our operations and financial position. 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 began amortization of the multi-band mobile radio development costs for a period of 32 months, beginning on January 1, 2026. There were no other changes to our critical accounting policies during the three months ended March 31, 2026. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a “smaller reporting company,” the Company is not required to include the disclosure under this Item. 25 Table of Contents