What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-10 · 140 added, 124 removed, 246 unchanged (52% of the section changed)

3 unchanged sentences

( In thousands, except share data)

September 30,

Current assets:

31 unchanged sentences

10,000,000 authorized shares;

3,694,298 and 3,686,939 issued and 3,404,218 and 3,396,859 outstanding shares at June 30, 2023 and December 31, 2022, respectively

3,722,970 and 3,686,939 issued and 3,432,890 and 3,396,859 outstanding shares as of September 30, 2023, and December 31, 2022, respectively

Additional paid-in capital

Accumulated deficit

Treasury stock, at cost, 290,080 shares at June 30, 2023, and December 31, 2022, respectively

Treasury stock, at cost, 290,080 shares as of September 30, 2023, and December 31, 2022, respectively

Total stockholders’ equity

Total liabilities and stockholders’ equity

See notes to condensed consolidated financial statements.

See Accompanying Notes to Condensed Consolidated Financial Statements.

BK TECHNOLOGIES CORPORATION

2 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

September 30,

Nine Months Ended

September 30,

Cost of products

Selling, general and administrative

Selling, general and administrative expenses

Total operating expenses

Operating loss

Operating income (loss)

Other (expense) income:

Net interest expense

Loss on investments

Gain (Loss) on investments

Other expense

Total other (expense) income

Loss before income taxes

Total other expense, net

Income (loss) before income taxes

Provision for income tax

Net loss per share-basic and diluted:

Weighted average shares outstanding-basic and diluted

See notes to condensed consolidated financial statements.

Net income (loss)

Net income (loss) per share-basic

Net income (loss) per share-diluted

Weighted average shares outstanding-basic

Weighted average shares outstanding-diluted

See Accompanying Notes to Condensed Consolidated Financial Statements.

BK TECHNOLOGIES CORPORATION

1 unchanged sentence

( In thousands ) ( Unaudited )

Six Months Ended

Nine Months Ended

September 30,

Operating activities

32 unchanged sentences

Common stock issued under restricted stock units

See notes to condensed consolidated financial statements.

See Accompanying Notes to Condensed Consolidated Financial Statements.

BK TECHNOLOGIES CORPORATION

Notes to Condensed Consolidated Financial Statements

Three and Six Months Ended June 30, 2023 and 2022

Three and Nine Months Ended September 30, 2023, and 2022

(In thousands, except share and per share data and percentages or as otherwise noted)

1 unchanged sentence

Basis of Presentation

The condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations for the three and six months ended June 30, 2023 and 2022, and the condensed consolidated statements of cash flows for the three and six months ended June 30, 2023 and 2022, have been prepared by BK Technologies Corporation (the “Company,” “we,” “us,” “our”), and are unaudited.

The condensed consolidated balance sheet at December 31, 2022, has been derived from the Company’s audited consolidated financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) have been condensed or omitted.

The condensed consolidated balance sheet as of September 30, 2023, the condensed consolidated statements of operations for the three and nine months ended September 30, 2023, and 2022, and the condensed consolidated statements of cash flows for the three and nine months ended September 30, 2023, and 2022, have been prepared by BK Technologies Corporation (the “Company,” “we,” “us,” “our”), and are unaudited.

The condensed consolidated balance sheet as of December 31, 2022, has been derived from the Company’s audited consolidated financial statements at that date.

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, 2022, as filed with the Securities and Exchange Commission (“SEC”) on March 16, 2023.

The results of operations for the three and six months ended June 30, 2023, and 2022, are not necessarily indicative of the operating results for a full year.

The results of operations for the three and nine months ended September 30, 2023, and 2022, are not necessarily indicative of the operating results for a full year.

Principles of Consolidation

14 unchanged sentences

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

As of June 30, 2023, and December 31, 2022, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, notes payable, credit facilities, and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.

As of September 30, 2023, and December 31, 2022, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, notes payable, credit facilities, 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.

(“FGF”), which investment was held by the Company in 1347 LP.

FGF) (“FGF”), which investment was held by the Company in 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 has an investment in Series B common membership interests of FG Financial Holdings, LLC (“FG Holdings”).

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

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

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

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

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

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

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

4 unchanged sentences

(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 million (the “Line of Credit”).

The Company used funds obtained from the Line of Credit to replace the JPMC Credit Agreement (see Note 11).

The Company used funds obtained from the Line of Credit to replace the JPMC Credit Agreement (defined below) (see Note 11).

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

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

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

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

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

Reverse Stock Split

On March 23, 2023, the board of directors (the “Board”) of the Company approved a one (1)-for-five (5) reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”), and on April 4, 2023, the Company filed with the Secretary of State of the State of Nevada a Certificate of Change to its Articles of Incorporation to effect the Reverse Stock Split.

The Reverse Stock Split became effective at 5:00 p.m.

On March 23, 2023, the board of directors (the “Board”) of the Company approved a one (1)-for-five (5) reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of common stock, par value $ 0.60 per share (the “Common Stock”), and on April 4, 2023, the Company filed with the Secretary of State of the State of Nevada a Certificate of Change to its Articles of Incorporation to effect the Reverse Stock Split.

The Company executed the Reverse Stock Split, which became effective at 5:00 p.m.

Eastern Time on April 21, 2023.

The Company executed the one (1) for five (5) reverse stock split of its issued and outstanding common stock, par value $ 0.60 per share.

Shares of Common Stock underlying outstanding stock options and restricted stock units were proportionately reduced, and the respective exercise prices were proportionately increased in accordance with the terms of the agreements governing such securities.

3 unchanged sentences

Significant Events and Transactions

On January 31, 2023 the Company entered into a sales agreement (the “Sales Agreement”) with ThinkEquity LLC (“ThinkEquity” or the “Sales Agent”), relating to the sale of shares of our common stock.

On January 31, 2023, the Company entered into a sales agreement (the “Sales Agreement”) with ThinkEquity LLC (the “Sales Agent”), relating to the sale of shares of our Common Stock.

In accordance with the terms of the Sales Agreement, we may offer and sell shares of our Common Stock from time to time up to an aggregate offering price of $ 15,000,000 through or to the Sales Agent, acting as sales agent or principal.

2 unchanged sentences

Allowance for Doubtful Accounts

The allowance for doubtful accounts on trade receivables was approximately $ 50 on gross trade receivables of $ 9,239 and $ 10,666 at June 30, 2023, and December 31, 2022, respectively.

The allowance for doubtful accounts on trade receivables was approximately $ 50 on gross trade receivables of $ 9,160 and $ 10,666 as of September 30, 2023, and December 31, 2022, respectively.

This allowance is used to state trade receivables at a net realizable value or the amount that the Company estimates will be collected of the Company’s gross trade receivables.

1 unchanged sentence

Inventories, which are presented net of allowance for slow moving, excess, and obsolete inventory, consisted of the following:

June 30, 2023

December 31, 2022

September 30,

Finished goods

2 unchanged sentences

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.

The allowances were approximately $ 1,161 at June 30, 2023, compared with approximately $ 1,247 at December 31, 2022.

The Company has recorded no tax expense or benefit for the three and six months ended June 30, 2023, and 2022.

The allowances were approximately $ 1,186 as of September 30, 2023, compared with approximately $ 1,247 as of December 31, 2022.

The Company has recorded no tax expense or benefit for the three and nine months ended September 30, 2023 and 2022.

The Company’s income tax provision is based on management’s estimate of the effective tax rate for the full year.

1 unchanged sentence

As a result, the Company may experience significant fluctuations in the effective book tax rate (that is, tax expense divided by pre-tax book income) from period to period.

As of June 30, 2023, the Company’s net deferred tax assets totaled approximately $ 4,116 and were primarily derived from research and development tax credits, deferred revenue, and net operating loss carryforwards.

As of September 30, 2023, the Company’s net deferred tax assets totaled approximately $ 4,116 and were primarily derived from research and development tax credits, deferred revenue, and net operating loss carryforwards.

In order to fully utilize the net deferred tax assets, the Company will need to generate sufficient taxable income in future years.

2 unchanged sentences

Based on the analysis of all available evidence, both positive and negative, the Company has concluded that it does not have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax assets.

Accordingly, the Company established a valuation allowance of $ 4,134 and $ 3,356 as of June 30, 2023 and December 31, 2022, respectively.

Accordingly, the Company established a valuation allowance of $ 4,212 and $ 3,356 as of September 30, 2023, and December 31, 2022, respectively.

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 related to the deferred tax assets recognized as of June 30, 2023.

Through September 30, 2022, the Company was the sole limited partner of FGI 1347 Holdings’ LP (“1347 LP”).

If the Company incurs future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of September 30, 2023.

Through September 30, 2022, the Company was the sole limited partner of 1347 LP.

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

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

FGF) (“FGF”).

1347 LP was established for the purpose of investing in securities, and its sole asset was shares of common stock of FGF.

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

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

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

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

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

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

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

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

FG Holdings LLC’s structure provides for Series A preferred interests, which accrue a return of eight percent per annum and receive 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 receive 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 receive an additional return equal to 1.5 times the Series A of positive profits described above.

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

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

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

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

As of June 30, 2023, the members and affiliates of FG Holdings beneficially owned in the aggregate 5,666,111 shares of FGF’s common stock, representing approximately 55 % of FGF’s outstanding shares.

As of September 30, 2023, the members and affiliates of FG Holdings LLC beneficially owned in the aggregate 5,666,111 shares of FGF’s common stock, representing approximately 55 % of FGF’s outstanding shares.

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

Kyle Cerminara, Chairman of the Company’s Board of Directors, is Chief Executive Officer, Co-Founder and Partner of FG and serves as Chairman of the Board of Directors of FG Group Holdings Inc., a manager and majority Series B member in FG Holdings.

Kyle Cerminara, Chairman of the Board, is Chief Executive Officer, Co-Founder and Partner of FG and serves as chairman of the board of directors of FG Group Holdings Inc., the entity that is a manager and majority Series B member in FG Holdings LLC.

Cerminara also serves as chairman of the board of directors of FGF.

2 unchanged sentences

All share and per share information in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the Reverse Stock Split.

As of July 31, 2023, there were 3,694,298 shares of common stock issued and 3,404,218 outstanding, and no shares of preferred stock outstanding.

The changes in condensed consolidated stockholders’ equity for the three and six months ended June 30, 2023, and 2022, are as follows:

Common Stock Shares

Common Stock Amount

As of November 6, 2023, there were 3,745,579 shares of common stock issued and 3,455,499 outstanding, and no shares of preferred stock outstanding.

The changes in condensed consolidated stockholders’ equity for the three and nine months ended September 30, 2023, and 2022, are as follows:

Additional Paid-In Capital

Balance at December 31, 2022

Balance as of December 31, 2022

Common stock issued

2 unchanged sentences

Share-based compensation expense-restricted stock units

Balance at March 31, 2023

Common stock issue

Balance as of March 31, 2023

Common stock issued

Common stock issued under restricted stock units

1 unchanged sentence

Share-based compensation expense-restricted stock units

Balance at June 30, 2023

Common Stock Shares

Common Stock Amount

Balance as of June 30, 2023

Common stock issued

Common stock issued under restricted stock units

Share-based compensation expense-stock options

Share-based compensation expense-restricted stock units

Balance as of September 30, 2023

Additional Paid-In Capital

Balance at December 31, 2021

Balance as of December 31, 2021

Common stock issued under restricted stock units

1 unchanged sentence

Share-based compensation expense-restricted stock units

Balance at March 31, 2022

Balance as of March 31, 2022

Common stock issued under restricted stock units

2 unchanged sentences

Common stock dividends ($0.03 per share)

Balance at June 30, 2022

Loss Per Share

The following table sets forth the computation of basic and diluted loss per share:

Balance as of June 30, 2022

Common stock issued under restricted stock units

Share-based compensation expense-stock options

Share-based compensation expense-restricted stock units

Common stock dividends ($0.03 per share)

Balance as of September 30, 2022

Income (Loss) Per Share

The following table sets forth the computation of basic and diluted income (loss) per share:

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Net loss for basic and diluted earnings per share

Denominator for basic loss per share weighted average shares

September 30,

Nine Months Ended

September 30,

Net income (loss) for basic and diluted earnings per share

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

Effect of dilutive securities:

1 unchanged sentence

Denominator for diluted loss per share weighted average shares

Basic and diluted loss per share

Approximately 226,900 stock options and 41,129 restricted stock units for the three and six months ended June 30, 2023, and 181,800 stock options and 27,411 restricted stock units for the three and six months ended June 30, 2022, were excluded from the calculation because they were anti-dilutive.

Basic income (loss) per share

Diluted income (loss) per share

Approximately 168,600 and 224,600 stock options and 28,569 and 29,381 restricted stock units for the three and nine months ended September 30, 2023, respectively, and 220,300 stock options and 41,129 restricted stock units for the three and nine months ended September 30, 2022, were excluded from the calculation because they were anti-dilutive.

Non-Cash Share-Based Employee Compensation

1 unchanged sentence

The Company has an 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 $ 61 and $ 119 for the three and six months ended June 30, 2023, respectively, compared with $ 51 and $ 136 , for the same periods last year.

Related to these programs, the Company recorded non-cash share-based employee compensation expense of $ 44 and $ 163 for the three and nine months ended September 30, 2023, respectively, compared with $ 69 and $ 205 , for the same periods 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.

1 unchanged sentence

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of stock option grants under this plan.

The non-cash share-based employee compensation expense recorded in the three months ended June 30, 2023, was calculated using certain assumptions.

The non-cash share-based employee compensation expense recorded in the three and nine months ended September 30, 2023, was calculated using certain assumptions.

Such assumptions are described more comprehensively in Note 10 (Share-Based Employee Compensation) of the Notes to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

A summary of activity under the Company’s stock option plans during the three months ended June 30, 2023, is presented below:

Stock Options

Exercise Price ($) Per Share

Remaining Contractual Life (Years)

Grant Date Fair Value ($) Per Share

A summary of activity under the Company’s stock option plans during the nine months ended September 30, 2023, is presented below:

Remaining Contractual

($) Per Share

As of January 1, 2023

Period activity

As of June 30, 2023

As of September 30, 2023

Restricted Stock Units

The Company recorded non-cash restricted stock unit compensation expense of $ 63 and $ 132 for the three and six months ended June 30, 2023, compared with $ 171 and $ 241 for the same periods last year.

The Company recorded non-cash restricted stock unit compensation expense of $ 641 and $ 773 for the three and nine months ended September 30, 2023, compared with $ 126 and $ 367 for the same periods last year.

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

Number of Shares

Weighted Average

Weighted Average Grant Date

Price per Share

Unvested at January 1, 2023

Unvested as of January 1, 2023

Vested and issued

Vested-to be issued

Cancelled/forfeited

Unvested at June 30, 2023

Unvested as of September 30, 2023

Commitments and Contingencies

5 unchanged sentences

Where a loss is not probable or the amount of the loss is not estimable, the Company does not accrue legal reserves, consistent with applicable accounting guidance.

There were no pending material claims or legal matters as of June 30, 2023.

There were no pending material claims or legal matters as of September 30, 2023.

Purchase Commitments

As of June 30, 2023, the Company had purchase commitments for inventory totaling approximately $ 13,390 .

As of September 30, 2023, the Company had purchase commitments for inventory totaling approximately $ 13,134 .

Significant Customers

Sales to United States government agencies represented approximately $ 8,785 ( 46.2 %) and $ 17,429 ( 46.2 %) of the Company’s net total sales for the three and six months ended June 30, 2023, respectively, compared with approximately $ 5,316 ( 43.9 %) and $ 6,965 ( 37.3 %), for the same periods last year.

Accounts receivable from agencies of the United States government were $ 2,412 as of June 30, 2023, compared with approximately $ 2,554 at the same date last year.

Sales to United States government agencies represented approximately $ 12,142 ( 60.5 %) and $ 29,571 ( 51.2 %) of the Company’s net total sales for the three and nine months ended September 30, 2023, respectively, compared with approximately $ 4,196 ( 35.2 %) and $ 11,161 ( 36.4 %), for the same periods last year.

Accounts receivable from agencies of the United States government were $ 4,280 as of September 30, 2023, compared with approximately $ 1,545 at the same date last year.

Credit Facilities

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

and RELM Communications, Inc.

(the “Subsidiaries”), entered into an accounts receivable financing arrangement via an Invoice Purchase and Security Agreement (“IPSA”) with Alterna Capital Solutions, LLC (“Alterna”).

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

The IPSA, which provides for a one-year line of credit with a maximum capacity of up to $ 15 million (the “Line of Credit”), is scheduled to be renewed in November 2023, unless canceled by either party, as provided in the agreement.

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

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

The IPSA, which provides for a one-year Line of Credit with a maximum capacity of up to $ 15 million, is scheduled to be renewed in November 2023, unless canceled by either party, as provided in the agreement.

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

The effective borrowing rate under the IPSA was 10.1 % as of June 30, 2023.

Interest and related servicing fees for the three months and six months ended June 30, 2023, were approximately $ 173 and $ 322 , respectively.

The effective borrowing rate under the IPSA was 10.35 % as of September 30, 2023.

Interest and related servicing fees for the three months and nine months ended September 30, 2023, were approximately $ 153 and $ 476 , respectively.

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

1 unchanged sentence

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

The Company used approximately $ 4.5 million of IPSA funding to repay the outstanding balance of the credit facility with JP Morgan Chase Bank, N.A., which subsequently expired on January 31, 2023 .

During the three and six months ended June 30, 2023, the Company transferred receivables having an aggregate face value of $18.0 and $35.0 million, respectively, to the conduit in exchange for net proceeds of $19.8 and $40.6 million, respectively, of which $20.2 and $40.1 million, respectively, were funded by re-invested collections.

There were no losses incurred on these transfers during the three and six months ended June 30, 2023 .

The IPSA matures on November 22, 2023.

At June 30, 2023, the outstanding borrowings under this credit facility were approximately $ 6.6 million and the outstanding principal amount of receivables transferred under this facility amounted to $ 7.2 million.

The Company used approximately $ 4.5 million of IPSA funding to repay the outstanding balance of the credit facility with JP Morgan Chase Bank, N.A.

(“JPMC”), which subsequently expired on January 31, 2023 .

During the three and nine months ended September 30, 2023, the Company transferred receivables having an aggregate face value of $17.5 and $52.5 million, respectively, to the conduit and received proceeds of $18.2 and $58.9 million, respectively, which also include draws on available inventory funding.

There were no losses incurred on these transfers during the three and nine months ended September 30, 2023 .

As of September 30, 2023, the outstanding borrowings under the IPSA were approximately $ 6.5 million and the outstanding principal amount of receivables transferred under the IPSA amounted to $ 7.0 million.

Notes Payable

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

The following table summarizes the notes payable principal repayments subsequent to June 30, 2023:

June 30, 2023

Remaining six months of 2023

The following table summarizes the notes payable principal repayments subsequent to September 30, 2023:

September 30,

Remaining three months of 2023

Total payments

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Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

September 30,

Nine Months Ended

September 30,

Operating lease cost

4 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

September 30,

Nine Months Ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities:

4 unchanged sentences

Other information related to operating leases was as follows:

June 30, 2023

September 30,

Weighted average remaining lease term (in years)

Weighted average discount rate

Maturity of lease liabilities as of June 30, 2023, were as follows:

June 30, 2023

Remaining six months of 2023

Maturity of lease liabilities as of September 30, 2023, were as follows:

September 30,

Remaining three months of 2023

Total payments

1 unchanged sentence

Total present value of lease liability

Subsequent Events

On October 12, 2023, the Company’s President, Timothy A.

Vitou, retired.

In connection with Mr.

Vitou’s retirement, the Company and Mr.

Vitou entered into a Separation Agreement and General Release (“Separation Agreement”).

Pursuant to the Separation Agreement, the Company will pay to Mr.

Vitou $283,250, which amounts to twelve months of compensation at Mr.

Vitou’s current normal base pay rate, less taxes, social security and other required withholdings, to be paid in bi-weekly increments in accordance with the Company’s regular payroll practices .

Pursuant to the Separation Agreement, Mr.

Vitou granted a general release to the Company from any and all claims (known or unknown), rights, or demands that Mr.

Vitou has or may have against the Company and other released parties described in the Separation Agreement.

On October 13, 2023, the Company granted 1,920 restricted stock units to Joshua Horowitz, third party, for strategic advisory service compensation.

These restricted stock units were fully vested and settled on the date of grant.

On November 6, 2023, the Company entered into a Master Service Agreement (the “EW MSA”) with East West Manufacturing, LLC, a Georgia limited liability company (“EW”), for the manufacturing production of certain land mobile radio (“LMR”) products and accessories.

In connection with the EW MSA, the Company and EW also entered into a Transition Services Agreement to govern the transition of manufacturing production to EW.

Also in connection with the EW MSA, the Company and EW entered into a Stock Purchase Agreement, pursuant to which EW purchased 77,520 shares of Common Stock with a value equal to $ 1,000,000 .

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

Additionally, EW purchased a warrant (“Warrant”), with a five-year term to purchase up to 135,300 shares of Common Stock at an exercise price per share of $ 15.00 .

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

What changed 10-Q

Item 1. Financial Statements