What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-14 compared with 2023-03-16 · 223 added, 207 removed, 519 unchanged (45% of the section changed)

Financial Statements and Supplementary Data.

See the Consolidated Financial Statements included in this report.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Furthermore, we evaluated management’s business plan and analysis of current economic and industry trends, including the impact of the COVID-19 pandemic, and compared projections of future pre-tax income to other forecasted financial information prepared by management.

/s/ MSL, P.A.

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

We have served as the Company’s auditor since 2015.

/s/ MSL, P.A.

Orlando, Florida

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Property, plant and equipment, net

Right-of-use (ROU) assets

Operating lease right-of-use (ROU) assets

Deferred tax assets, net

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Accrued other expenses and other current liabilities

Dividends payable

Short-term lease liability

Short-term operating lease liabilities

Credit facility

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Notes payable, net of current portion

Long-term lease liability

Long-term operating lease liabilities

Deferred revenue

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10,000,000 authorized shares;

18,434,697 and 18,298,999 issued and 16,984,297 and 16,848,599 outstanding shares at December 31, 2022, and 2021, respectively

3,867,082 and 3,686,939 issued and 3,577,002 and 3,396,859 outstanding shares as of December 31, 2023 and 2022, respectively

Additional paid-in capital

Accumulated deficit

Treasury stock, at cost, 1,450,400 shares at December 31, 2022, and 2021, respectively

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

Total stockholders’ equity

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Selling, general and administrative

Total operating expense

Total operating expenses

Operating loss

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Other (expense)

Total other expense, net

Total other expense

Loss before income taxes

Provision for income tax (expense)

Net lossper share-basic and diluted

Net loss per share-basic and diluted

Weighted average shares outstanding-basic and diluted

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Common Stock Amount

Additional Paid-In Capital

Accumulated Deficit

Treasury Stock

Balance as December 31, 2021

Common stock issued net of issuance cost

Common stock issued-restricted stock units

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Balance at December 31, 2022

Common stock issued

Common stock issued-stock options

Common stock issued-restricted stock units

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Shared-based compensation expense-restricted stock units

Dividends declared ($0.09 per share)

Common stock warrants issued

Balance at December 31, 2023

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Operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Allowance for doubtful accounts

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

Allowance for credit losses

Inventory allowance

Amortization of deferred finance and other assets

Deferred tax expense

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Prepaid expenses and other current assets

ROU Assets and Lease Liabilities

Operating lease ROU assets and lease liabilities

Accounts payable

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Accrued other expenses and other current liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Investing activities

Proceed from the sale of property, plant, and equipment

Purchases of property, plant and equipment

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Dividends paid

Proceeds from issuance of common stock, net of costs

Proceeds from issuance of common stock

Proceeds from issuance of common stock warrants

Proceeds from credit facility and notes payable

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Common Stock issued under restricted stock units

Cashless exercise of stock options and related conversion of net shares to stockholders’ equity

See notes to consolidated financial statements.

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

Freight costs are classified as a component of cost of products in the accompanying consolidated statements of operations.

Freight costs are classified as a component of the cost of products in the accompanying consolidated statements of operations.

The allowance for slow-moving, excess and obsolete inventory is used to state the Company’s inventories at the lower of cost or net realizable value.

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Based on the review, considering business levels, future prospects, new products and technology changes, management, using its business judgment, may adjust the valuation of specific inventory items to reflect an accurate valuation estimate.

Management also performs a determination of net realizable value for all finished goods with a selling price below cost.

Management also performs a determination of the net realizable value for all finished goods with a selling price below cost.

For all such items, the inventory is valued at not more than the selling price less cost, if any, to sell.

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

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on specifically identified amounts that the Company believes to be uncollectible.

The Company also records an additional allowance based on certain percentages of the Company’s aged receivables, which are determined based on historical experience and the Company’s assessment of the general financial conditions affecting the Company’s customer base.

If the Company’s actual collections experience changes, revisions to the Company’s allowance may be required.

After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Based on the information available, management believes the allowance for doubtful accounts as of December 31, 2022 and 2021 is adequate.

Revenue Recognition

The Company recognizes revenues in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” and the additional related ASUs (“ASC 606”), which replaced previous revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under accounting principles generally accepted in the United States of America (“GAAP”).

These standards provide guidance on recognizing revenue, including a five-step method to determine when revenue recognition is appropriate:

Allowance for Credit Losses

The Company records an allowance for credit losses based on specifically identified amounts that the Company believes to be uncollectible.

The Company records an allowance for credit losses for its financial instruments, which are primarily composed of trade accounts receivable.

The measurement and recognition of credit losses involves the use of judgment and represents management’s estimate of expected lifetime credit losses based on historical experience and trends, current conditions, and forecasts.

The Company’s assessment of expected credit losses includes consideration of historical credit loss experience, the aging of account balances, customer concentrations, customer credit-worthiness, current and expected economic, market and industry factors affecting the Company’s customers, including their financial condition.

The Company evaluates its experience with historical losses and then applies this historical loss ratio to financial assets with similar characteristics.

The Company may also establish an allowance for credit losses for specific receivables when it is probable that the receivable will not be collected and the loss can be reasonably estimated.

If the Company’s actual collections experience changes, revisions to the allowance may be required.

Amounts are written off against the allowance when all attempts to collect a receivable have failed, and reversals of previously reserved amounts are recognized if a specifically reserved item is settled for an amount exceeding the previous estimate.

Based on information available, management believes the allowance for credit losses as of December 31, 2023 and 2022 is adequate.

BK TECHNOLOGIES CORPORATION

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Summary of Significant Accounting Policies (Continued)

Revenue Recognition

These standards provide guidance on recognizing revenue, including a five-step method to determine when revenue recognition is appropriate:

Identify the contract with the customer;

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Credit losses relating to customers have been consistently within management’s expectations.

The Company primarily maintains cash balances at one financial institution.

Accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250 .

From time to time, the Company has had cash in financial institutions in excess of federally insured limits.

As of December 31, 2022, the Company had cash and cash equivalents in excess of FDIC limits of $ 1,782 .

BK TECHNOLOGIES CORPORATION

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Summary of Significant Accounting Policies (Continued)

The Company primarily maintains cash balances at one financial institution.

Accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250 .

From time to time, the Company has had cash in financial institutions in excess of federally insured limits.

As of December 31, 2023, the Company had cash and cash equivalents in excess of FDIC limits of $ 3,200 .

Manufacturing and Raw Materials

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Some of these manufacturers and suppliers are in other countries.

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

For 2021, approximately 32.4 % of the Company’s material, subassembly and product procurements were sourced internationally, of which approximately 31.0 % were sourced from seven suppliers.

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

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

Purchase orders denominated in U.S.

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Fair Value of Financial Instruments

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

As of December 31, 2022 and 2021, 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.

Through September 14, 2022, the company held an investment in common stock of FG Financial Group, Inc.

(“FGF”) made via 1347 LP.

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

Effective September 14, 2022, the Company has an investment in Series B Common 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 does it exert significant influence over the activities of FG Holdings.

The investment in Series B common 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.

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

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

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

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

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

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

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

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

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

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

The Company incurred operating losses and reported negative cash flows from operations during 2022 and 2021.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

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

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

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

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

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

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

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 (See Note 15).

However, financial and economic conditions, including those resulting from the COVID-19 pandemic and the current geopolitical tension, could impact our ability to raise capital or debt financing, if needed, on acceptable terms or at all.

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 approved a one (1)-for-five (5) reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of the Company’s 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.

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.

Accordingly, all shares and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the Reverse Stock Split.

Advertising and Promotion Costs

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For the years ended December 31, 2023 and 2022, such expenses totaled $ 478 and $ 145 , respectively.

Engineering, Research and Development Costs

Included in SG&A expenses for the years ended December 31, 2023 and 2022 are engineering, research and development costs of $ 9,334 and $ 9,604 , respectively.

BK TECHNOLOGIES CORPORATION

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Summary of Significant Accounting Policies (Continued)

Engineering, Research and Development Costs

Included in SG&A expenses for the years ended December 31, 2022 and 2021 are engineering, research and development costs of $ 9,604 and $ 8,203 , respectively.

Share-Based Compensation

The Company accounts for share-based arrangements in accordance with FASB ASC Topic 718 Compensation - Stock Compensation, which requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions).

The Company accounts for share-based arrangements in accordance with GAAP, which requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions).

That cost will be recognized over the period during which the employee is required to provide service in exchange for the award requisite service period (usually the vesting period).

No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2022 AND 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Summary of Significant Accounting Policies (Continued)

Earnings (loss) per share amounts are computed and presented for all periods in accordance with GAAP.

Restricted Stock Units

The Company recorded non-cash restricted stock unit compensation expense of $ 1,143 and $ 404 for the years ended December 31, 2023 and 2022, respectively.

Earnings (Loss) Per Share

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

Comprehensive Income (loss)

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Product Warranty

The Company offers two-year standard warranties to its customers, depending on the specific product and terms of the customer purchase agreement.

The Company offers two-year and five-year standard warranties to its customers, depending on the specific product and terms of the customer purchase agreement.

The Company’s typical warranties require it to repair and replace defective products during the warranty period at no cost to the customer.

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

Change in Accounting Principle

As disclosed in Note 2, on July 1, 2021, the Company changed its accounting for inventory to burden the material at the time of purchase receipts.

Prior to July 1, 2021, the Company applied the material burden at the time the inventory was issued to work in progress.

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

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

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

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

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

BK TECHNOLOGIES CORPORATION

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Inventories, net

On July 1, 2021, the Company changed its accounting for inventory to burden the material at the time of purchase receipts.

Prior to July 1, 2021, the Company applied the material burden at the time the inventory was issued to work in progress.

The Company believes that this method improves financial reporting by better reflecting the current value of inventory on the consolidated balance sheets, by providing better matching of revenues and expenses.

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

December 31, 2022

December 31, 2021

Finished goods

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Balance, end of year

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

Direct write-off's were not significant during the year ended December 31, 2021.

Allowance for Doubtful Accounts

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

Allowance for Credit Losses

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

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Balance, beginning of year

Provision for doubtful accounts

Provision for credit losses

Uncollectible accounts written off

Balance, end of year

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2022 AND 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Property, Plant and Equipment, net

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Depreciation and amortization expense relating to property, plant and equipment for the years ended December 31, 2023 and 2022 was approximately $ 1,635 and $ 1,423 respectively.

During the year ended 31, 2022, the company removed from its records approximately $ 122 of fully depreciated machinery and equipment.

During the year ended December 31, 2022, the company removed from its records approximately $ 122 of fully depreciated machinery and equipment and none in the year ended December 31, 2023.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

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 on 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 maximum capacity of up to $ 15 million, is scheduled to renew in November 2023, unless canceled by the mutual consent of the parties.

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

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

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

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

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

Interest and related servicing fees for years ended December 31, 2023 and 2022, were approximately $ 648 and $ 100 , 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.

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

During 2022, the Company transferred receivables having an aggregate face value of $12.2 million to the conduit in exchange for proceeds of $10.4 million, of which $5.5 million was funded by re-invested collections.

The Company also received cash proceeds of $0.8 million funding on net orderly liquidation value of inventory described above.

There were no losses incurred on these transfers during the year ended December 31, 2022.

The IPSA matures on November 22, 2023, and bears an interest rate of Prime plus 1.85 %.

The IPSA had an interest of 8.35% as of December 31, 2022.

Interest and related servicing fees for the year ended December 31, 2022 were approximately $ 0.1 million.

At December 31, 2022, the outstanding borrowings under this credit facility approximated $5.9 million and the outstanding principal amount of receivables transferred under this facility amounted to $6.1 million.

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

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

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

The outstanding balance for this credit facility of $4.5 million.

was paid off in November 2022 with funds received from the IPSA funding.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2022 AND 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Debt (Continued)

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

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

There were no losses incurred on these transfers during 2023 and 2022, respectively.

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

Notes Payable

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

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

The Master Loan Agreement is payable in 48 equal monthly principal and interest payments of approximately $ 16 beginning on May 8, 2021 , matures on April 8, 2025 , and bears a fixed interest rate of 3.0 %.

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

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

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

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

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

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

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

December 31, 2022

Total payments

Through September 14, 2022, the Company held an investment in a limited partnership, FGI 1347 Holdings, LP (“1347 LP”), of which the Company was the sole limited partner.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BK TECHNOLOGIES CORPORATION

2 unchanged sentences

(in thousands, except share data and percentages)

Investments (Continued)

On September 14, 2022, FG contributed all of the shares of FGF held by 1347 LP to FG Financial Holdings, LLC (“FG Holdings”), with an approximate value of $ 945 , based on the FGF stock's published price of $ 1.98 , in exchange for Series B Common Interests of FG Holdings, with an equivalent value.

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

The investment in the Series B common 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 owns common and preferred stock of FGF (specific company/growth objective).

FG Holdings structure provides for Series A preferred interests, which accrue 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 interests.

There is no defined redemption frequency, and the Company cannot redeem or transfer its investment without a prior written consent of FG Holdings 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 investments.

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

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

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

As of December 31, 2022, FG Holdings ownes shares of FGF’s common stock and preferred stock.

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

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

Kyle Cerminara, 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 Series B member in FG Holdings.

Cerminara also serves as Chairman of the Board of Directors of FGF.

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

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

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

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

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

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

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

The Company leases manufacturing and office facilities and equipment under operating leases and determines if an arrangement is a lease at inception.

9 unchanged sentences

Annual rental, maintenance and tax expenses for the facility were approximately $ 212 and $ 203 in 2023 and 2022, respectively.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Leases (Continued)

In March 2021, the Company executed an agreement for the termination of its lease for 8,100 square feet (not in thousands) of office space in Lawrence, Kansas, effective March 31, 2021, and recognized a termination lease expense of approximately $ 53 .

The original term of the lease was through December 31, 2021 .

Lease costs consist of the following:

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Operating cash flows (liability reduction)

ROU assets obtained in exchange for lease obligations:

Operating leases

Other information related to operating leases was as follows:

December 31, 2022

Weighted average remaining lease term (in years)

Weighted average discount rate

Maturity of lease liabilities as of December 31, 2022 were as follows:

Year ending December 31,

Maturity of operating lease liabilities as of December 31, 2023 were as follows:

Total payments

1 unchanged sentence

Total liability

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2022 AND 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

The income tax expense (benefit) is summarized as follows:

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Operating loss carryforwards

R&D Tax Credit

R&D Tax Credits

Section 263A costs

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Non-qualified stock options

Deferred warranty revenue

Deferred tax assets

3 unchanged sentences

Total deferred tax liabilities

Net deferred tax assets (before unrealized gain)

Deferred tax liability:

unrealized gain

Net deferred tax assets

3 unchanged sentences

State NOLs of $ 1,870 expired in 2022.

During 2021, the Company generated $ 126 of federal NOLs and during 2022, the Company generated $ 9,261 in additional federal NOLs.

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

The deferred tax asset amounts are based upon management’s conclusions regarding, among other considerations, the Company’s current and anticipated customer base, contracts, and product introductions, certain tax planning strategies, and management’s estimates of future earnings based on information currently available, as well as recent operating results during 2023, 2023, and 2021.

23 unchanged sentences

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

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Income (Loss) Per Share

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Denominator for diluted loss per share weighted average shares

Basic (loss) income per share

Diluted (loss) per share

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2022 AND 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Income (Loss) Per Share (Continued)

Basic and diluted loss per share

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

Share-Based Employee Compensation

Share-Based Compensation

Stock Options

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

1 unchanged sentence

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

Restricted Stock Units

On September 30, 2022, the Company granted 9,600 restricted stock units to Joshua Horowitz for strategic advisory service compensation.

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

On August 12, 2022, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $ 50 per award (resulting in total 129,310 units granted with the aggregate grant-date fair value of $ 300 ), which will vest in five equal, annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board of Directors for election by stockholders, other than for good reason, as determined by the Board of Directors in its discretion, then the restricted stock units shall vest in full as of the director’s last date of service as a director of the Company.

On July 1, 2022, the Company, at the direction of the Board of Directors, granted on a pro rata basis for 2022 compensation 18,715 and 11,062 restricted stock units to former directors Michael Dill and Inez Tenenbaum, respectively.

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

On June 30, 2022, the Company granted 3,200 restricted stock units to Joshua Horowitz for strategic advisory service compensation.

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

On June 30, 2022, the Company, at the direction of the Board of Directors, accelerated the vesting of former director Michael Dill’s unvested restricted stock units granted September 6, 2018, September 6, 2019, August 24, 2020, and July 30, 2021, and issued 34,264 shares of common stock to Mr.

On June 8, 2022, the Company, at the direction of the Board of Directors, granted 10,000 restricted stock units to John Suzuki for bonus compensation.

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

On May 31, 2022, the Company granted 3,200 restricted stock units to Joshua Horowitz for strategic advisory service compensation.

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

On April 30, 2022, the Company granted 3,200 restricted stock units to Joshua Horowitz for strategic advisory service compensation.

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

On March 31, 2022, the Company granted 16,000 restricted stock units to Joshua Horowitz for strategic advisory service compensation.

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

On December 17, 2021, upon the resignation of former director John Struble, the Company, at the direction of the Board of Directors, accelerated the vesting of Mr.

Struble’s unvested restricted stock units granted September 6, 2018, September 6, 2019, August 24, 2020, and July 30, 2021, and issued 34,264 shares of common stock to Mr.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2022 AND 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Share-Based Employee Compensation (Continued)

On August 24, 2021, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $ 40 per award (resulting in total aggregate grant-date fair value of $ 240 ), which will vest in five equal, annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board of Directors for election by stockholders, other than for good reason, as determined by the Board of Directors in its discretion, then the restricted stock units shall vest in full as of the director’s last date of service as a director of the Company.

On July 30, 2021, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $ 50 per award (resulting in total aggregate grant-date fair value of $ 250 ), which will vest in five equal, annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board of Directors for election by stockholders, other than for good reason, as determined by the Board of Directors in its discretion, then the restricted stock units shall vest in full as of the director’s last date of service as a director of the Company.

On March 4, 2021, upon the resignation of former director Lewis Johnson, the Company, at the direction of the Board of Directors, accelerated the vesting of Mr.

Johnson’s unvested restricted stock units granted September 6, 2018, September 6, 2019, and August 24, 2020, and issued 24,505 shares of common stock to Mr.

There were 205,644 and 137,055 restricted stock units outstanding as of December 31, 2022, and December 31, 2021, respectively.

The Company recorded non-cash restricted stock unit compensation expense of $ 404 and $ 306 for the years ended December 31, 2022 and 2021.

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

Price per Share

Unvested at January 1, 2022

Vested and issued

Cancelled/forfeited

Unvested at December 31, 2022

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant.

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(in thousands, except share data and percentages)

Share-Based Employee Compensation (Continued)

Share-Based Compensation (Continued)

A summary of stock option activity under the Company’s equity compensation plans as of December 31, 2023, and changes during the year ended December 31, 2023, are presented below:

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The weighted-average grant-date fair value per option granted during the years ended December 31, 2023 and 2022 was $ 5.94 and $ 5.64 , respectively.

There were no stock options exercised during the years ended December 31, 2022 and 2021.

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

Restricted Stock Units

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

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

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Share-Based Compensation (Continued)

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

Year ended December 31, 2023

Number of Shares

Weighted Average Grant Date

Price per Share

Unvested as of January 1, 2023

Vested and issued

Cancelled/forfeited

Unvested as of December 31, 2023

Year ended December 31, 2022

Number of Shares

Weighted Average

Price per Share

Unvested at January 1, 2022

Vested and issued

Cancelled/forfeited

Unvested at December 31, 2022

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

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

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

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

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

As of December 31, 2023 and 2022, there was approximately $ 299 and $ 1,058 , respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including stock options and restricted stock units.

This compensation cost is expected to be recognized approximately over four years.

This compensation cost is expected to be recognized approximately over one to four years.

Other Equity Transactions

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

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

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

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

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

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

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

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

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

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

(b) there were a limited number of offerees;

(c) there will be no subsequent or contemporaneous public offerings of the Warrant or the shares underlying the Warrant by the Company;

and (d) the negotiations for the sale of the securities took place directly between East West and the Company.

BK TECHNOLOGIES CORPORATION

2 unchanged sentences

(in thousands, except share data and percentages)

Other Equity Transactions (Continued)

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

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

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

Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time, commensurate with the expected life of the stock warrant.

The dividend yield assumption is based on the Company’s expectations of no dividend payouts at the grant date.

The stock price was the closing price of the common stock on the date of the warrant agreement and the strike price and the expected term was defined in the warrant agreement.

The risk-free interest rate is derived from the 90 day U.S.

Treasury rate at the date of the stock warrant grant.

Expected Volatility

Expected Dividends

Expected Term (in years)

Risk-Free Rate

Significant Customers

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The agreement has an indefinite term, and can be terminated by either party under certain conditions.

In 2022, the Company entered into a technology license related to its development of multi-band products.

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

The Company paid $0.03 in 2023 .

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

Thereafter, either party can terminate the agreement by providing a written notice of non-renewal of at least 60 days’ prior to the end of the then current term.

Purchase Commitments

The Company has purchase commitments for inventory totaling $ 12,115 as of December 31, 2023.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Self-Insured Health Benefits

2 unchanged sentences

As of December 31, 2023, the plan had a stop-loss provision insuring losses beyond $ 90 per employee per year and an aggregate stop-loss of $ 1,677 .

As of December 31, 2022 and 2021, the Company recorded an accrual for estimated claims in the amount of approximately $ 240 and $ 97 , respectively, in accrued other expenses and other current liabilities on the Company’s consolidated balance sheets.This amount represents the Company’s estimate of incurred but not reported claims as of December 31, 2022 and 2021.

As of December 31, 2023 and 2022, the Company recorded an accrual for estimated claims in the amount of approximately $ 275 and $ 240 , respectively, in accrued other expenses and other current liabilities on the Company’s consolidated balance sheets.

This amount represents the Company’s estimate of incurred but not reported claims as of December 31, 2023 and 2022.

Liability for Product Warranties

Changes in the Company’s liability for its standard two-year product warranties during the years ended December 31, 2022 and 2021 are as follows:

Changes in the Company’s liability for its standard two-year and five-year product warranties during the years ended December 31, 2023 and 2022 are as follows:

Legal Proceedings

1 unchanged sentence

There were no pending material claims or legal matters as of December 31, 2023.

BK TECHNOLOGIES CORPORATION

YEARS ENDED DECEMBER 31, 2022 AND 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data and percentages)

Commitments and Contingencies (Continued)

Covid 19 and Geopolitical Tension

In December 2019, a novel strain of the coronavirus (COVID-19) surfaced in Wuhan, China, which spread globally and was declared a pandemic by the World Health Organization in March 2020.

From that time, additional variants have surfaced.

The COVID-19 pandemic continues to evolve, impacting the global economy, causing market instability and uncertainty in the labor market.

The full extent of the impact of the COVID-19 pandemic will depend on future developments, which are highly uncertain and cannot be predicted at this time.

We will continue to monitor the COVID-19 pandemic as well as resulting legislative and regulatory changes to manage our response and assess and mitigate potential adverse impacts to our business.

Even as the COVID-19 pandemic subsides, we may continue to experience an adverse impact to our business as a result of its national and global economic impact, including any recession that may occur in the future.

Additionally, U.S.

and global markets and supply chains are experiencing volatility and disruption following the escalation of geopolitical tensions and military conflict between Russia and Ukraine.

Capital Program

Geopolitical Tensions and COVID-19

and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflict between Russia and Ukraine and Israel and Palestinian state.

Although the length and impact of the ongoing military conflicts is highly unpredictable, the conflict in both of these regions could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

While the impacts of COVID-19 are reflected in our results of operations for 2023 and 2022 respectively, we cannot separate the direct COVID-19 impacts from other factors that cause our performance to vary from quarter to quarter.

The ultimate duration and impact of the COVID-19 pandemic on our supply chain and geopolitical factors to our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration and severity of the geopolitical factors on the global economy, which are uncertain and cannot be predicted at this time.

Capital Programs

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

5 unchanged sentences

As of December 31, 2023, the Company has completed no share repurchases under this program.

Pursuant to the capital return program, during 2021, the Company’s Board of Directors declared quarterly dividends on the Company’s common stock of $ 0.02 per share on March 16, July 8, September 23, and $ 0.03 per share on December 17.

The dividends were payable to stockholders of record as of April 12 2021, July 26, 2021, October 7, 2021and January 10, 2022, respectively.

These dividends were paid on April 26, 2021, August 9, 2021, October 18, 2021, and January 24, 2022.

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

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

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

The dividend was paid on January 24, 2022.

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

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

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

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

Subsequent events

On January 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, $ 0.60 par value per share.

In accordance with the terms of the Sales Agreement, we may offer and sell up to 4,225,352 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.

The Company intends to use the net proceeds from the offering primarily for general corporate purposes, which may include working capital, capital expenditures, operational purposes, strategic investments and potential acquisitions in complementary businesses.

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

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

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

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

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data