What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-09 · 79 added, 68 removed, 171 unchanged (46% of the section changed)

94 unchanged sentences

Radio and SaaS.

The Radio business unit designs, manufactures, and markets American-made wireless communications products consisting of two-way LMRs.

The Radio business unit designs, manufactures, and markets wireless communications products consisting of two-way LMRs.

Two-way LMRs can be radios that are hand-held (portable) or installed in vehicles (mobile).

8 unchanged sentences

Our principal executive offices are located at 7100 Technology Drive, West Melbourne, Florida 32904, and our telephone number is (321) 984-1414.

Customer demand and orders for our products were strong during 2022 and 2023 and continued during the first quarter 2024.

Our backlog of unshipped customer orders was approximately $19.0 million and $16.0 million as of March 31, 2024, and December 31, 2023, respectively.

Customer demand and orders for our products were strong during 2022 and 2023 and continued during the first six months of 2024.

Our backlog of unshipped customer orders was approximately $26.9 million and $16.0 million as of June 30, 2024, and December 31, 2023, respectively.

Changes in the backlog are attributed primarily to the timing of orders and their fulfillment.

For the three months ended March 31, 2024, sales decreased approximately 2.6% to approximately $18.2 million, compared with $18.7 million for the prior year period.

The decrease was attributed primarily to the $27.0 million backlog as of December 31, 2022, carried into 2023, due to the 2022 supply chain disruptions.

Gross profit margins as a percentage of sales for the three months ended March 31, 2024, were 34.5%, compared with 26.1% for the prior comparative quarter, generally reflecting improvement in material, component, and freight costs.

Selling, general, and administrative (“SG&A”) expenses for the three months ended March 31, 2024, totaled approximately $5.3 million (29.1% of sales), compared with $5.9 million (31.4% of sales) in the same period of last year.

We recognized operating income for the three months ended March 31, 2024, of approximately $1.0 million, compared with an operating loss of approximately $1.0 million for the same period for the prior year.

For the three months ended March 31, 2024, we recognized other expenses, net totaling approximately $0.3 million, primarily attributed to interest expense on our Line of Credit and a net realized loss from our investment in FG Holdings LLC.

This compares with other expenses, net totaling $0.3 million for the same period last year, which included interest expense and an unrealized loss on the investment in FG Holdings LLC.

For the three months ended March 31, 2024, the pretax income totaled approximately $0.7 million, compared with pretax loss of approximately $1.3 million for same period of the prior year.

We recognized a tax expense of $21,000 for the three-month period ended March 31, 2024, and no tax expense for the same periods of the prior year.

The net income for the three months ended March 31, 2024, totaled approximately $0.7 million ($0.19 per basic and diluted share), compared with a net loss of approximately $1.3 million ($0.37 per basic and diluted share) for the same period last year.

The primary factors for the improvement for the three months ended March 31, 2024, compared to the same period last year, were lower raw material and freight costs related to easing of electronic component shortages from supply chain disruptions.

As of March 31, 2024, working capital totaled approximately $18.4 million, of which $14.8 million was comprised of cash, cash equivalents, and trade receivables.

For the three months ended June 30, 2024, sales increased approximately 6.6% to approximately $20.3 million, compared with $19.0 million for the prior year period.

The increase was attributed primarily to the shipments of BKR 9000 radio products and somewhat to increased radio accessory sales.

Gross profit margins as a percentage of sales for the three months ended June 30, 2024, were 37.3%, compared with 27.4% for the prior comparative quarter, generally reflecting product sales mix and improvement in material, component, and freight costs.

Selling, general, and administrative (“SG&A”) expenses for the three months ended June 30, 2024, totaled approximately $5.5 million (27.3% of sales), compared with $6.0 million (31.5% of sales) in the same period of last year.

We recognized operating income for the three months ended June 30, 2024, of approximately $2.0 million, compared with an operating loss of approximately $0.8 million for the same period for the prior year.

For the three months ended June 30, 2024, we recognized other expenses, net totaling approximately $0.1 million, primarily attributed to interest expense on our Line of Credit.

This compares with other expenses, net totaling $0.6 million for the same period last year, which included an unrealized loss on the investment in FG Holdings LLC and interest expense on the Line of Credit.

For the three months ended June 30, 2024, the pretax income totaled approximately $1.9 million, compared with pretax loss of approximately $1.3 million for same period of the prior year.

We recognized a tax expense of $220 for the three-month period ended June 30, 2024, and no tax expense for the same period of the prior year.

The net income for the three months ended June 30, 2024, totaled approximately $1.7 million ($0.47 per basic and diluted share), compared with a net loss of approximately $1.3 million ($0.39 per basic and diluted share) for the same period last year.

The primary factors for the improvement for the three months ended June 30, 2024, compared to the same period last year, were product sales mix and lower raw material and freight costs related to cost reduction efforts and easing of electronic component shortages from supply chain disruptions.

As of June 30, 2024, working capital totaled approximately $20.3 million, of which $14.5 million was comprised of cash, cash equivalents, and trade receivables.

This compares with working capital totaling approximately $16.8 million at 2023 year-end, which included $11.4 million of cash, cash equivalents, and trade receivables.

6 unchanged sentences

All reports that the Company files with or furnishes to the SEC are also available free of charge via the SEC’s website at http://www.sec.gov.

First Quarter Summary

Customer demand and new orders for our products of $22.3 million continued to be strong during the three months ended March 31, 2024, compared to $13.8 million for the same period of the prior year.

Overall, for the first quarter 2024, sales decreased 2.6% to approximately $18.2 million, compared with approximately $18.7 million of sales for the first quarter last year.

Gross profit margin as a percentage of sales for the first quarter of 2024 was approximately 34.5%, compared with 26.1% for the same period of last year, generally reflecting improvements in supply chain material costs and freight compared to the first quarter last year.

Selling, general, and administrative (“SG&A”) expenses for the first quarter of 2024 totaled approximately $5.3 million, which was 9.8% lower than the SG&A expenses of approximately $5.9 million for the first quarter last year.

The decrease in SG&A expenses is attributed primarily to development and marketing initiatives for the BKR 9000 product in the first quarter of 2023.

These factors yielded an operating income of approximately $1.0 million for the three-month period ended March 31, 2024, compared with an operating loss of approximately $1.0 million for the same quarter last year, with improvement primarily due to material costs related to supply chain challenges for the same period last year.

For the first quarter of 2024, we recognized a net realized loss totaling approximately $0.1 million on our investment in FG Holdings, LLC.

This compares with an unrealized loss of approximately $0.1 million on the investment in FG Holdings, LLC, for the first quarter of last year.

Net income for the three months ended March 31, 2024, was approximately $0.7 million ($0.19 per basic and diluted share), compared with a net loss of approximately $1.3 million ($0.37 per basic and diluted share) for the same quarter last year.

As of March 31, 2024, working capital totaled approximately $18.4 million, of which approximately $14.8 million was comprised of cash, cash equivalents and trade receivables.

Second Quarter and Six Months Summary

Customer demand and orders for our products of $28.2 million continued to be strong during the three months ended June 30, 2024, compared to $20.8 million for the same period of the prior year.

Customer demand and orders for our products of $50.5 million continued to be strong during the six months ended June 30, 2024, compared to $34.6 million for the same period of the prior year.

For the second quarter 2024, sales increased 6.6% to approximately $20.3 million, compared with approximately $19.0 million of sales for the second quarter last year.

Sales of approximately $38.5 million for the six-months ended June 30, 2024, increased 2.0% compared with approximately $37.7 million for the same period last year.

Gross profit margin as a percentage of sales for the second quarter of 2024 was approximately 37.3%, compared with 27.4% for the same period of last year, generally reflecting product sales mix and improvements in supply chain material costs and freight compared to the second quarter last year.

Gross profit margin as a percentage of sales for the six months ended June 30, 2024, was approximately 35.9%, compared with 26.8% for the same period of last year, generally reflecting cost reduction initiatives, freight costs and product sales mix.

Selling, general, and administrative (“SG&A”) expenses for the second quarter of 2024 totaled approximately $5.5 million, which was 7.8% lower than the SG&A expenses of approximately $6.0 million for the second quarter last year, while SG&A expenses for the six-month period ended June 30, 2024, decreased 8.8% compared to the same period last year .

The decrease in SG&A expenses is attributed primarily to development and marketing initiatives for the BKR 9000 product in the second quarter of 2023.

These factors yielded an operating income of approximately $2.0 million for the three-month period ended June 30, 2024, compared with an operating loss of approximately $0.8 million for the same period last year.

Operating income of approximately $3.0 million for the six-month period ended June 30, 2024 compares to an operating loss of $1.8 million for the same period last year, related to product sales mix and improvement related to material costs from cost reduction initiatives and also to supply chain challenges for the same period last year.

For the second quarter of 2023, we recognized a net unrealized loss of approximately $0.4 million on the investment in FG Holdings, LLC, that was exited during the first quarter of this year.

For the six months ended June 30, 2023, we recognized a net unrealized loss totaling approximately $0.5 million on our investment in FG Holdings, LLC.

compared with a realized loss of approximately $0.1 million for the same six-month period this year.

For the second quarter of 2024, we recognized net interest expense of $0.1 million compared to $0.2 million for the same period of last year, while for the six-month period ended June 30, 2024, we recognized net interest expense of $0.3 million compared to $0.3 million for the same period last year.

Net income for the three months ended June 30, 2024, was approximately $1.7 million ($0.47 per basic and diluted share), compared with a net loss of approximately $1.3 million ($0.39 per basic and diluted share) for the same quarter last year.

For the six months ended June 30, 2024, our net income totaled approximately $2.3 million ($0.66 per basic and diluted share), compared with a net loss of approximately $2.6 million ($0.77 per basic and diluted share) for the same period last year.

As of June 30, 2024, working capital totaled approximately $20.3 million, of which approximately $14.5 million was comprised of cash, cash equivalents and trade receivables.

As of December 31, 2023, working capital totaled approximately $16.8 million, of which approximately $11.4 million was comprised of cash, cash equivalents and trade receivables.

3 unchanged sentences

Three Months Ended

March 31, 2024

March 31, 2023

Percentage of Sales

Six Months Ended

Cost of products

Selling, general and administrative expenses

Other expense, net

Other income (expense)

Income (loss) before income taxes

1 unchanged sentence

Net income (loss)

For the first quarter ended March 31, 2024, net sales decreased 2.6% to approximately $18.2 million, compared with approximately $18.7 million for the same quarter last year.

For the second quarter ended June 30, 2024, net sales increased 6.6% to approximately $20.3 million, compared with approximately $19.0 million for the same quarter last year.

Sales for the six months ended June 30, 2024, totaled approximately $38.5 million, compared with approximately $37.7 million for the six-month period last year.

Customer demand and orders for our products continued to be strong, reflecting the acceptance by the marketplace for our BKR 5000, as well as BKR 9000 product introduced in 2023.

The supply chain issues experienced in 2022 and to a lesser extent in 2023 have diminished significantly, but the precise impact on sales and shipments for 2024 cannot be quantified.

Sales for the first quarter ended March 31, 2024, were attributed primarily to federal wildland fire-related agencies and certain state and local public safety opportunities.

From a product perspective, the primary contributor to orders and shipments during the first quarter was our BKR 5000 portable radio and related accessories.

Sales for the second quarter ended June 30, 2024, were attributed primarily to federal wildland fire-related agencies and certain state and local public safety opportunities.

From a product perspective, the primary contributor to orders and shipments during the second quarter was our BKR 5000 portable radio and related accessories.

The BKR Series is envisioned as a comprehensive line of new products, which includes new models such as the BKR 9000, which achieved first sales in the second quarter of 2023.

6 unchanged sentences

Cost of Products and Gross Profit Margin

Gross profit margins as a percentage of sales for the first quarter ended March 31, 2024, were approximately 34.5% compared with 26.1% for the same quarter last year.

Gross profit margins as a percentage of sales for the second quarter ended June 30, 2024, were approximately 37.3% compared with 27.4% for the same quarter last year.

For the six-month period ended June 30, 2024, gross profit margins were approximately 35.9%, compared with 26.8% for the same period last year.

Our cost of products and gross profit margins are primarily derived from material, labor, and overhead costs, product mix, manufacturing volumes, and pricing.

Gross profit margins for the quarter ended March 31, 2024, increased compared with the same period last year, primarily due to improvement in material costs, including electronic components and to a lesser degree, easing of escalated freight costs.

Gross profit margins for the quarter and six-months ended June 30, 2024, increased compared with the same period last year, primarily due to product sales mix and improvement in material costs, including electronic components and to a lesser degree, easing of escalated freight costs.

During the year ended December 31, 2023, worldwide shortages of materials, including semiconductors and integrated circuits resulted in limited supplies, which in turn, extended lead times and resulted in higher costs for certain components used in our products.

5 unchanged sentences

SG&A expenses consist of marketing, sales, commissions, engineering, product development, management information systems, accounting, headquarters, and non-cash share-based employee compensation expenses.

SG&A expenses for the quarter ended March 31, 2024, totaled approximately $5.3 million (29.1% of sales), compared with approximately $5.9 million (31.4% of sales) for the same quarter last year.

Engineering and product development expenses for the first quarter of 2024 totaled approximately $2.1 million (11.4% of sales), compared with approximately $2.4 million (12.9% of sales) for the same quarter of last year.

The decrease in engineering expenses is attributed primarily to product design and development activities in the first quarter of 2023, particularly for the new BKR 9000 series radio introduced during the second quarter 2023.

Most of these activities are being performed by our internal engineering team and are their primary focus, combined with sustaining engineering support for our existing products.

SG&A expenses for the quarter ended June 30, 2024, totaled approximately $5.5 million (27.3% of sales), compared with approximately $6.0 million (31.5% of sales) for the same quarter last year.

For the six months ended June 30, 2024, SG&A expenses decreased by $1.1 million, or 8.8%, to approximately $10.8 million (28.1% of sales), compared with approximately $11.9 million (31.5% of sales), for the six-month period last year.

Engineering and product development expenses for the second quarter of 2024 totaled approximately $2.0 million (9.8% of sales), compared with approximately $2.6 million (13.7% of sales) for the same quarter of last year.

For the six months ended June 30, 2024, engineering and product development expenses totaled approximately $4.1 million (10.6% of sales), compared with approximately $5.0 million (13.3% of sales) for the six-month period last year.

The decrease in engineering expenses is attributed primarily to product design and development activities, particularly for the BKR 9000 series radio introduced during the second quarter 2023.

Most of these activities were being performed by our internal engineering team and were their primary focus, combined with sustaining engineering support for our existing products.

The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages and certain component lead times in coming months and quarters.

Marketing and selling expenses for the first quarter of 2024 totaled approximately $1.5 million (8.4% of sales), compared with approximately $1.5 million (8.2% of sales) for the first quarter last year.

Other general and administrative expenses for the first quarter of 2024 totaled approximately $1.7 million (9.3% of sales), compared with approximately $1.9 million (10.3% of sales) for the same period last year.

The decrease in general and administrative expenses for the three months ended March 31, 2024, is attributed primarily to non-recurring nature of corporate expenses related to the at-the-market capital raise (ATM) and reverse stock split strategic initiatives during the first quarter of 2023.

Marketing and selling expenses for the second quarter of 2024 totaled approximately $1.7 million (8.4% of sales), compared with approximately $1.5 million (8.0% of sales) for the second quarter last year.

For the six months ended June 30, 2024, marketing and selling expenses increased approximately $0.1 million, or 5.2%, to approximately $3.2 million (8.4% of sales), compared with approximately $3.1 million (8.1% of sales) for the same period last year.

Other general and administrative expenses for the second quarter of 2024 totaled approximately $1.8 million (9.0% of sales), compared with approximately $1.9 million (9.8% of sales) for the same period last year.

For the six months ended June 30, 2024, general and administrative expenses totaled approximately $3.5 million (9.2% of sales), compared with approximately $3.8 million (10.1% of sales) for the six-month period last year.

The decrease in general and administrative expenses for the three and six months ended June 30, 2024, is attributed primarily to the non-recurring nature of certain corporate expenses related to the At-the-Market (ATM) filing and reverse stock split during the six months ended June 30, 2023.

Operating Income (Loss)

The operating income for the quarter ended March 31, 2024, totaled approximately $1.0 million (5.4% of sales), compared with an operating loss of approximately $1.0 million (5.3% of sales) for last year’s first quarter.

The operating income for the three months ended March 31, 2023, is attributed to higher gross profit margins related to improved material costs due to cost reduction efforts and supply chain improvements.

The operating income for the quarter ended June 30, 2024, totaled approximately $2.0 million (10.0% of sales), compared with an operating loss of approximately $0.8 million (4.1% of sales) for last year’s second quarter.

For the six months ended June 30, 2024, our operating income totaled approximately $3.0 million (7.8% of sales), compared with an operating loss of approximately $1.8 million (4.7% of sales) for the six-month period last year.

The operating income improvement for the three and six months ended June 30, 2024, compared to the same periods last year, is attributed to higher gross profit margins related to improved product sales mix and lower material costs due to cost reduction efforts and supply chain improvements.

Other (Expense) Income

We recorded net interest expense of approximately $174,000 for the quarter ended March 31, 2024, compared with approximately $144,000 for the first quarter of last year.

We recorded net interest expense of approximately $0.1 million for the quarter ended June 30, 2024, compared with approximately $0.2 million for the second quarter of last year.

For the six months ended June 30, 2024, net interest expense totaled approximately $0.3 million, compared with net interest expense of approximately $0.3 million for the six-month period last year.

Net interest expense was primarily the result of our Line of Credit.

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 $650,000 on the date of the transaction and recorded a realized loss of $91,000 on the investment during the first quarter of 2024, compared to an unrealized loss of $113,000 for the first quarter of 2023.

In exchange for its Interests, the Company received 52,000 shares of our Common Stock, with an approximate fair value of $0.7 million on the date of the transaction and recorded a realized loss of $0.1 million on the investment during the first quarter of 2024, compared to an unrealized loss of $0.4 million for the second quarter of 2023.

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

We recorded a tax expense of $21,000 for the three months ended March 31, 2024, compared with no income tax provision for the same period last year.

We recorded tax expenses of $0.2 million for the three and six months ended June 30, 2024, respectively, compared with no income tax provision for the same periods last year.

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

1 unchanged sentence

As a result, we 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 March 31, 2024, our net deferred tax assets totaled approximately $4.1 million and were primarily derived from research and development tax credits, operating loss carryforwards, and deferred revenue.

As of June 30, 2024, our net deferred tax assets totaled approximately $4.1 million and were primarily derived from research and development tax credits, operating loss carryforwards, and deferred revenue.

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

2 unchanged sentences

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

Accordingly, we established a valuation allowance of $4.4 million as of March 31, 2024, and December 31, 2023, respectively.

Accordingly, we established a valuation allowance of $4.4 million as of June 30, 2024, and December 31, 2023, respectively.

We cannot presently estimate what, if any, changes to the valuation of our deferred tax assets may be deemed appropriate in the future.

If we incur future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of March 31, 2024.

Liquidity and Capital Resources

For the three months ended March 31, 2024, net cash used in operating activities totaled approximately $0.8 million, compared with cash provided by operating activities of approximately $0.6 million for the same period last year.

Cash used in operating activities for the three months ended March 31, 2024, was primarily related to an increase in accounts receivable and decrease in accounts payable offset by reductions in inventory and net income.

Cash provided by operating activities for the three months ended March 31, 2023, was primarily related to increased accounts payable and deferred revenues, partially offset by net loss.

For the first quarter of 2024, we had a net income of approximately $0.7 million, compared with a net loss of approximately $1.3 million for the same period last year.

Accounts receivable increased approximately $3.6 million during the first quarter ended March 31, 2024, compared with an increase of approximately $0.2 million for last year’s first quarter, primarily due to timing of customer collections in the first quarter of 2024.

Inventories decreased during the quarter ended March 31, 2024, by approximately $1.4 million compared with an increase of approximately $0.6 million for the same quarter last year.

Accounts payable for the quarter ended March 31, 2024, decreased approximately $0.8 million, compared with an increase of approximately $1.2 million for last year’s first quarter, primarily due to material purchases.

For the six months ended June 30, 2024, net cash provided by operating activities totaled approximately $2.9 million, compared with cash provided by operating activities of approximately $1.5 million for the same period last year.

Cash provided by operating activities for the six months ended June 30, 2024, was primarily related to net income of $2.3 million and a $2.4 million reduction in inventory, somewhat offset by a $3.7 million increase in accounts receivable and a $1.0 million decrease in accounts payable.

Cash provided by operating activities for the six months ended June 30, 2023, was primarily related to a reduction in accounts receivable and an increase in deferred revenues, which was partially offset by net loss, increase in inventories and decrease in accounts payable.

For the first six months of 2024, we had net income of approximately $2.3 million, compared with a net loss of approximately $2.6 million for the same period last year.

Accounts receivable increased approximately $3.7 million during the six months ended June 30, 2024, compared with a decrease of approximately $1.4 million for the same period last year, primarily due to increased sales in the first six months of 2024.

Inventories decreased during the six months ended June 30, 2024, by approximately $2.4 million compared with approximately $0.7 million increase for the same period last year Accounts payable for the quarter ended June 30, 2024, decreased approximately $1.0 million, compared with a decrease of approximately $0.3 million for the first six months of last year.

The decreases in inventories and accounts payable were attributed primarily to improvement of supply chain challenges from fiscal year 2022 and early fiscal 2023.

Prepaid expenses increased during the first quarter by approximately $0.1 million compared with a decrease of $0.2 million for last year’s first quarter.

Depreciation and amortization totaled approximately $0.4 million for the first quarter ended March 31, 2024, compared with approximately $0.4 million for last year’s first quarter.

Prepaid expenses decreased during the first six months of 2024 by approximately $0.4 million compared with a decrease of $0.2 million for the same period last year.

Depreciation and amortization totaled approximately $0.8 million for the six months ended June 30, 2024, compared with approximately $0.8 million for the same period last year.

Depreciation and amortization are primarily related to manufacturing and engineering equipment.

The realized loss on investments for the first quarter ended March 31, 2024, totaled approximately $0.1 million, compared with an unrealized loss of approximately $0.1 million for the first quarter last year.

The realized loss on investments for the six months ended June 30, 2024, totaled approximately $0.1 million, compared with an unrealized loss of approximately $0.5 million for the same period last year.

For additional information pertaining to our investments, refer to Note 1 (Condensed Consolidated Financial Statements) and Note 7 (Investments) to the condensed consolidated financial statements included in this report.

Cash used in investing activities for the quarter ended March 31, 2024, totaled approximately $0.2 million, compared with approximately $0.6 million for last year’s first quarter.

The cash used for both periods was attributed primarily to the purchase of engineering and manufacturing related equipment.

For the quarter ended March 31, 2024, cash of approximately $0.8 million was provided by financing activities, compared with cash provided by financing activities of approximately $0.9 million for last year’s first quarter.

During the first quarter of 2024 we received cash of approximately $15.0 million from debt, net of repayments totaling approximately $14.2 million, while for last year’s first quarter, we received cash of approximately $20.8 million from debt, net of repayments totaling approximately $19.9 million.

Our cash and cash equivalents balance on March 31, 2024, was approximately $3.3 million.

Cash used in investing activities for the six months ended June 30, 2024, totaled approximately $0.4 million, compared with approximately $0.9 million for the same period last year.

The cash used for the six-month period ended June 30, 2024, was attributed primarily to the development of the BKR mobile radio product, compared to cash used for the six-month period ended June 30, 2023, attributed primarily to the purchase of engineering and manufacturing related equipment.

For the six months ended June 30, 2024, approximately $2.9 million was used in financing activities, compared with cash provided by financing activities of approximately $0.1 million for the same period last year.

During the first six months of 2024, we received cash of approximately $29.0 million from revolving credit facility and notes payable, net of repayments totaling approximately $31.9 million, while for the same period last year, we received proceeds of approximately $40.7 million from our revolving credit facility and notes payable offset by loan and revolving credit facility repayments of approximately $40.6 million.

Our cash and cash equivalents balance on June 30, 2024, was approximately $3.0 million.

We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our ISPA Agreement, are sufficient to meet our working capital requirements for the foreseeable future.

8 unchanged sentences

During the first quarter of 2024, the Company began development of the BKR series LMR multi-band mobile radio product.

The Company accounts for the costs of LMR multi-band development in accordance with ASC Topic 350-30, “ Intangibles – Goodwill and Other”.

Upon the general release of the LMR multi-band mobile radio product currently in development to customers, development costs for that product will be amortized over periods not exceeding ten years, based on future revenue of the product.

There were no other changes to our critical accounting policies during the three months ended March 31, 2024.

The Company accounts for the costs of LMR multi-band development in accordance with ASC Topic 350-30, “ Intangibles – Goodwill and Other.” Upon the general release of the LMR multi-band mobile radio product currently in development to customers, development costs for that product will be amortized over periods not exceeding ten years, based on future revenue of the product.

There were no other changes to our critical accounting policies during the three months ended June 30, 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

1 unchanged sentence

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 2. Management’s Discussion and Analysis