BK Technologies Corp

Previous wording

Item 2*.* MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Current wording

Item 2*****.***** MANAGEMENT**’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Previous wording

The SaaS business unit focuses on delivering innovative, public safety smartphone applications that operate ubiquitously over public cellular networks. Our BKRplay-branded smartphone application will offer multiple services that make first responders safer and more efficient. When tethered to our radios, the combined solution will offer a unique capability which increases the sales reach of our radios.

Current wording

The SaaS business unit focuses on delivering innovative, public safety smartphone applications that operate ubiquitously over public cellular networks. We presently have one U.S. patent in force and two pending U.S. patent applications. Our BKRplay-branded smartphone application offers multiple services that make first responders safer and more efficient. When tethered to our radios, the combined solution will offer a unique capability which increases the sales reach of our radios.

Previous wording

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.

Current wording

Customer demand and orders for our products were strong during fiscal year 2023 and continued during the first nine months of 2024. Our backlog of unshipped customer orders was approximately $27.0 million and $16.0 million as of September 30, 2024, and December 31, 2023, respectively. Changes in the backlog are attributed primarily to the timing of orders and their fulfillment.

Previous wording

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.

Current wording

For the three months ended September 30, 2024, sales increased approximately 0.5% to approximately $20.2 million, compared with $20.1 million for the prior year period. The increase was attributed primarily to the shipments of BKR 5000 radio product sales. Gross profit margins as a percentage of sales for the three months ended September 30, 2024, were 38.8%, compared with 31.9% for the prior comparative quarter, generally reflecting radio product and accessories sales mix and material cost improvements related to cost reduction initiatives. Selling, general, and administrative (“SG&A”) expenses for the three months ended September 30, 2024, totaled approximately $5.2 million (25.9% of sales), compared with $5.8 million (29.0% of sales) in the same period last year. We recognized operating income for the three months ended September 30, 2024, of approximately $2.6 million, compared with an operating income of approximately $0.1 million for the same period for the prior year.

Previous wording

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.

Current wording

For the three months ended September 30, 2024, we recognized other expenses, net totaling less than seven thousand dollars. This compares with other expenses, net totaling $0.5 million for the same period last year, which included an unrealized loss on the investment in FG Holdings LLC and interest expense on the Alterna IPSA Line of Credit.

Previous wording

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.

Current wording

For the three months ended September 30, 2024, the pretax income totaled approximately $2.6 million, compared with pretax income of approximately $0.1 million for same period of the prior year.

Previous wording

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.

Current wording

We recognized a tax expense of $247 for the three-month period ended September 30, 2024, and no tax expense for the same period of the prior year.

Previous wording

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.

Current wording

Net income for the three months ended September 30, 2024, totaled approximately $2.4 million ($0.67 per basic and $0.63 per diluted share), compared with a net income of approximately $0.1 million ($0.03 per basic and diluted share) for the same period last year. The primary factors for the improvement for the three months ended September 30, 2024, compared to the same period last year, were radio product and accessories sales mix and lower raw material and freight costs related to cost reduction efforts and easing of electronic component shortages from supply chain disruptions.

Previous wording

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.

Current wording

As of September 30, 2024, working capital totaled approximately $22.7 million, of which $13.5 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.

Previous wording

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.

Current wording

Customer demand and new orders for our products of $21.8 million continued to be strong during the three months ended September 30, 2024, compared to $19.6 million for the same period of the prior year. Customer demand and orders for our products of $72.4 million continued to be strong during the nine months ended September 30, 2024, compared to $54.1 million for the same period of the prior year.

Previous wording

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.

Current wording

For the third quarter 2024, sales increased 0.5% to approximately $20.2 million, compared with approximately $20.1 million of sales for the third quarter last year. Sales of approximately $58.7 million for the nine-months ended September 30, 2024, increased 1.5% compared with approximately $57.8 million of sales for the same period last year. Gross profit margin as a percentage of sales for the third quarter of 2024 was approximately 38.8%, compared with 31.9% for the same period last year, generally reflecting radio product and accessories sales mix and material cost improvements related to cost reduction initiatives compared to the third quarter last year. Gross profit margin as a percentage of sales for the nine months ended September 30, 2024, was approximately 36.9%, compared with 28.6% for the same period last year, generally reflecting radio product and accessories sales mix and material cost improvements related to cost reduction initiatives. Selling, general, and administrative (“SG&A”) expenses for the third quarter of 2024 totaled approximately $5.2 million, which was 10.1% lower than the SG&A expenses of approximately $5.8 million for the third quarter last year, while SG&A expenses of $16.1 million for the nine-month period ended September 30, 2024, decreased 9.2% compared to the same period last year. The decrease in SG&A expenses is attributed primarily to capitalization of BKR Mobile radio product development costs in 2024 and marketing initiatives for the BKR 9000 product in 2023. These factors yielded operating income of approximately $2.6 million for the three-month period ended September 30, 2024, compared with operating income of approximately $0.1 million for the same period last year. Operating income of approximately $5.6 million for the nine-month period ended September 30, 2024 compares to an operating loss of $1.2 million for the same period last year, related to radio product and accessories sales mix, material cost improvements related to cost reduction initiatives and supply chain challenges for the same period last year.

Previous wording

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.

Current wording

For the third quarter of 2023, we recognized a net unrealized loss of approximately $0.3 million on the investment in FG Holdings, LLC, that was exited during the first quarter of 2024. For the nine months ended September 30, 2024, we recognized a net realized loss totaling approximately $0.1 million on our investment in FG Holdings, LLC. compared with a net unrealized loss of approximately $0.8 million for the same nine-month period last year. For the third quarter of 2024, we recognized net interest expense of one thousand dollars compared to $0.1 million for the same period last year, while for the nine-month period ended September 30, 2024, we recognized net interest expense of $0.3 million compared to $0.4 million for the same period last year.

Previous wording

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.

Current wording

Net income for the three months ended September 30, 2024, was approximately $2.4 million ($0.67 per basic and $0.63 per diluted share), compared with net income of approximately $0.1 million ($0.03 per basic and diluted share) for the same quarter last year. For the nine months ended September 30, 2024, our net income totaled approximately $4.7 million ($1.33 per basic and $1.30 per diluted share), compared with a net loss of approximately $2.5 million ($0.74 per basic and diluted share) for the same period last year.

Previous wording

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.

Current wording

As of September 30, 2024, working capital totaled approximately $22.7 million, of which approximately $13.5 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.

Previous wording

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.

Current wording

For the third quarter ended September 30, 2024, net sales increased 0.5% to approximately $20.2 million, compared with approximately $20.1 million for the same quarter last year. Sales for the nine months ended September 30, 2024, totaled approximately $58.7 million, compared with approximately $57.8 million for the nine-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.

Previous wording

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. The timing of developing additional BKR Series products and bringing them to market could be impacted by various factors, including potential impacts on our supply chain as a result of various electronic component suppliers. We believe that the BKR Series products should increase our addressable market by expanding the number of federal and other public safety customers that may purchase our products. However, the timing and size of orders from agencies at all levels can be unpredictable and subject to budgets, priorities, and other factors. Accordingly, we cannot assure that sales will occur under particular contracts, or that our sales prospects will otherwise be realized.

Current wording

Sales for the third quarter ended September 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 third 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 third quarter of 2023. The timing of developing additional BKR Series products and bringing them to market could be impacted by various factors, including potential impacts on our supply chain as a result of various electronic component suppliers. We believe that the BKR Series products should increase our addressable market by expanding the number of federal and other public safety customers that may purchase our products. However, the timing and size of orders from agencies at all levels can be unpredictable and subject to budgets, priorities, and other factors. Accordingly, we cannot assure that sales will occur under particular contracts, or that our sales prospects will otherwise be realized.

Previous wording

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 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.

Current wording

Gross profit margins as a percentage of sales for the third quarter ended September 30, 2024, were approximately 38.8% compared with 31.9% for the same quarter last year. For the nine-month period ended September 30, 2024, gross profit margins were approximately 36.9%, compared with 28.6% 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 and nine-months ended September 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.

Previous wording

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.

Current wording

Engineering and product development expenses for the third quarter of 2024 totaled approximately $1.9 million (9.2% of sales), compared with approximately $2.5 million (12.5% of sales) for the same quarter last year. For the nine months ended September 30, 2024, engineering and product development expenses totaled approximately $5.9 million (10.1% of sales), compared with approximately $7.5 million (13.0% of sales) for the nine-month period last year. The decrease in engineering expenses is attributed primarily to capitalization of BKR Mobile radio product design and development activities in 2024, and somewhat to development costs in 2023 for the BKR 9000 series radio introduced during the third 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.

Previous wording

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.

Current wording

Marketing and selling expenses for the third quarter of 2024 totaled approximately $1.4 million (7.2% of sales), compared with approximately $1.5 million (7.5% of sales) for the third quarter last year. For the nine months ended September 30, 2024, marketing and selling expenses remained flat at approximately $4.6 million (7.9% of sales), compared with the same period last year.

Previous wording

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.

Current wording

Other general and administrative expenses for the third quarter of 2024 totaled approximately $1.9 million (9.4% of sales), compared with approximately $1.8 million (9.0% of sales) for the same period last year. For the nine months ended September 30, 2024, general and administrative expenses totaled approximately $5.5 million (9.4% of sales), compared with approximately $5.6 million (9.7% of sales) for the nine-month period last year. The decrease in general and administrative expenses for the three and nine months ended September 30, 2024, is attributed primarily to the non-recurring nature of certain corporate expenses related to the At-the-Market (ATM) program and reverse stock split during the nine months ended September 30, 2023.

Previous wording

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.

Current wording

Operating income for the quarter ended September 30, 2024, totaled approximately $2.6 million (12.9% of sales), compared with operating income of approximately $0.6 million (3.0% of sales) for last year’s third quarter. For the nine months ended September 30, 2024, our operating income totaled approximately $5.6 million (9.6% of sales), compared with an operating loss of approximately $1.2 million (2.0% of sales) for the nine-month period last year. The operating income improvement for the three and nine months ended September 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.

Previous wording

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.

Current wording

We recorded net interest expense of approximately one thousand dollars for the quarter ended September 30, 2024, compared with approximately $0.1 million for the third quarter last year. For the nine months ended September 30, 2024, net interest expense totaled approximately $0.3 million, compared with net interest expense of approximately $0.4 million for the nine-month period last year. Net interest expense was primarily the result of our Alterna IPSA Line of Credit.

Previous wording

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 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.

Current wording

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 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. The Company recorded an unrealized loss of $0.3 million and $0.8 million, for the three and nine months ended September 30, 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.

Previous wording

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.

Current wording

We recorded $0.2 million and $0.5 million tax expense for the three and nine months ended September 30, 2024, respectively. The Company recorded no tax expense or benefit for the same periods last year.

Previous wording

Our income tax provision is based on management’s estimate of the effective tax rate for the full year. The tax provision (benefit) in any period will be affected by, among other things, permanent, as well as temporary, differences in the deductibility of certain items, in addition to changes in tax legislation. As a result, we may experience significant fluctuations in the effective book tax rate (that is, tax expense divided by pre-tax book income) from period to period.

Current wording

The Company's income tax provision is based on management’s estimate of the effective tax rate for the full year. The tax provision (benefit) in any period will be affected by, among other things, permanent, as well as temporary, differences in the deductibility of certain items, in addition to changes in tax legislation. As a result, we may experience significant fluctuations in the effective book tax rate (that is, tax expense divided by pre-tax book income) from period to period.

Previous wording

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 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.

Current wording

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 and $4.4 million as of September 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.

Previous wording

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.

Current wording

For the nine months ended September 30, 2024, net cash provided by operating activities totaled approximately $8.2 million, compared with cash provided by operating activities of approximately $3.9 million for the same period last year. Cash provided by operating activities for the nine months ended September 30, 2024, was primarily related to net income of $4.7 million and a $5.3 million reduction in inventory, somewhat offset by a $1.6 million increase in accounts receivable and a $3.9 million decrease in accounts payable. Cash provided by operating activities for the nine months ended September 30, 2023, was primarily related to an increase in deferred revenues and a reduction in accounts receivable, which was partially offset by net loss due to supply chain issues and decrease in accounts payable.

Previous wording

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 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 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.

Current wording

For the first nine months of 2024, we had net income of approximately $4.7 million, compared with a net loss of approximately $2.5 million for the same period last year. Accounts receivable increased approximately $1.6 million during the nine months ended September 30, 2024, compared with a decrease of approximately $1.5 million for the same period last year, primarily due to increased sales in the first nine months of 2024. Inventories decreased during the nine months ended September 30, 2024, by approximately $5.3 million compared with a decrease of approximately $0.6 million for the same period last year. Accounts payable for the nine months ended September 30, 2024, decreased approximately $3.9 million, compared with a decrease of approximately $1.1 million for the first nine months 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 and other current assets increased during the first nine months of 2024 by approximately $0.8 million compared with an increase of $0.4 million for the same period last year. Depreciation and amortization totaled approximately $1.3 million for the nine months ended September 30, 2024, compared with approximately $1.2 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 nine months ended September 30, 2024, totaled approximately $0.1 million, compared with an unrealized loss of approximately $0.8 million for the same period last year. For additional information pertaining to our investments, refer to Note 1 and Note 7 (Investments) to the condensed consolidated financial statements included in this report.

Previous wording

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.

Current wording

Cash used in investing activities for the nine months ended September 30, 2024, totaled approximately $0.9 million, compared with approximately $1.8 million for the same period last year. The cash used for the nine-month period ended September 30, 2024, was attributed primarily to the development of the BKR mobile radio product, compared to cash used for the nine-month period ended September 30, 2023, attributed primarily to the purchase of engineering and manufacturing related equipment.

Previous wording

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.

Current wording

For the nine months ended September 30, 2024, approximately $6.6 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 nine months of 2024, we received cash of approximately $46.4 million from our revolving credit facility and notes payable, net of repayments totaling approximately $53.0 million, while for the same period last year, we received proceeds of approximately $58.9 million from our revolving credit facility and notes payable offset by loan and revolving credit facility repayments of approximately $58.9 million.

Previous wording

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. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, which could be impacted by the current inflationary environment and current geopolitical tension, could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all.

Current wording

Our cash and cash equivalents balance on September 30, 2024, was approximately $4.2 million. We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our Fifth Third Line of Credit, are sufficient to meet our working capital requirements for the foreseeable future. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, which could be impacted by the current inflationary environment and current geopolitical tension, could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all.