BK Technologies Corp
For the period ended Dec 31, 2024. Filed Mar 27, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 27, 2025
BKTI$66.94+4.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-14.
0001654954-24-003098
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-27.
0001437749-25-009464
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 88 previous paragraphs and 87 current paragraphs.
33 unchanged; 43 reworded; 11 added; 11 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
As we move forward into 2025, we plan to expand the SaaS business unit to include public safety solutions that provide for improved interoperability, intended to make the first responder safer and more efficient when operating in the field. We intend the new Solutions business to build a portfolio of solutions under a new brand, BK ONE. BK ONE will include SaaS solutions such as InteropONE as well as other future software and hardware applications.
Current report
On March 28, 2019, we implemented a holding company reorganization. The reorganization created a new holding company, BK Technologies Corporation, which became the new parent company of BK Technologies, Inc. BK Technologies Corporation’s only significant assets are the outstanding equity interests in BK Technologies, Inc. and any other future subsidiaries of BK Technologies Corporation. The holding company reorganization was intended to create a more efficient corporate structure and increase operational flexibility.
Current report
We recognized a tax benefit of $1.0 million in 2024 and a tax expense $0.1 million in 2023.
Current report
Customer demand and orders for our products were $84.6 million and $65.2 million in 2024 and 2023, respectively. Supply chain constraints limited our ability to manufacture the quantities needed to convert the orders into shipments and sales revenue in 2022 and were carried in backlog of $27.0 million as of December 31, 2022, that were fulfilled during 2023. The increase in sales for the year ended December 31, 2024, was primarily attributed to sales of the BKR9000 portable LMR products to federal, state and municipal public safety agencies, some of which were new customers.
Current report
Operating income
Current report
On October 30, 2024, the Company's subsidiary, BK Technologies, Inc. entered into a Revolving Loan Commitment (“RLC”) with Fifth Third Bank, National Association, (“Fifth Third”) The Fifth Third RLC provides for a one-year revolving line of credit with a maximum commitment of $6 million, with an accordion feature, if certain conditions are met, for up to an additional $4 million of borrowing capacity, totaling a maximum commitment of $10 million. Each advance shall accrue interest on the outstanding principal amount thereof at a rate of SOFR plus 2.5% per annum. Each advance may be prepaid at any time without penalty and the entire line of credit commitment may be permanently terminated by BK Technologies, Inc. at any time upon 10 days’ prior written notice to the lender without penalty. The RLC has a borrowing base equal to the sum of (i) 80% of eligible commercial accounts receivable, plus (ii) 50% of federal government accounts receivable, plus (iii) the lesser of (a) the sum of (i) and (ii) and (b) 50% of eligible finished goods inventory. The Company has not utilized funding and there were no borrowings under the RLC agreement as of December 31, 2024, and as of the date of filing this report.
Current report
BK Technologies, Inc.'s repayment obligations under the RLC are guaranteed by the Company and Relm Communications, Inc. and secured by a pledge of essentially all of the assets of the Company, BK Technologies, Inc. and Relm Communications, Inc. The loan parties are subject to customary negative covenants, including with respect to their ability to incur additional indebtedness, encumber and dispose of their assets and enter into affiliate transactions. BK Technologies, Inc. must also comply with: (i) a maximum total funded debt ratio of 2.00 to 1.00; (ii) a fixed charge coverage ratio of 1.2 to 1.0 as measured on a rolling twelve-month basis, each measured at the end of each fiscal quarter.
Current report
In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The new standard became effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company evaluated the requirements of ASU 2023-07 and determined that there is only one reportable segment: Land Mobile Radio (LMR) Products and Solutions and included required disclosures in Note 1 to the consolidated financial statements.
Current report
Revenue Recognition
Current report
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”). ASC 606 provides that sales revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company generally satisfies performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service. For extended warranties, sales revenue associated with the warranty is deferred at the time of sale and later recognized on a straight-line basis over the extended warranty period. Some contracts include installation services, which are completed in a short period of time and the revenue is recognized when the installation is complete. Currently, the Company does not have any contracts where revenue is recognized, but the customer payment is contingent on a future event.
Current report
The Company recognizes a position in its financial statements when that tax position, based solely on its technical merit, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statutes of limitations. Derecognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.
Removed paragraphs (11)
Previous report
Customer demand and orders for our products were strong during 2022 and 2023. Supply chain constraints limited our ability to manufacture the quantities needed to ship and fulfill all the orders in 2022. Consequently, approximately $27 million customer orders were carried in backlog, and we fulfilled approximately 76% of those orders during the first half of 2023 and most of the remainder as of December 31, 2023.
Previous report
We recognized $54,000 and no tax expense in 2023 and 2022, respectively.
Previous report
Impact of COVID-19 Pandemic and Supply Chain
Previous report
In December 2019, a novel strain of the coronavirus (COVID-19) surfaced, which spread globally and was declared a pandemic by the World Health Organization in March 2020. The challenges posed by the COVID-19 pandemic on the global economy increased significantly in the first several months of 2020, and have since diminished, though there are lingering effects as noted below. Coming out of the COVID-19 pandemic, we received record customer orders of approximately $70 million in 2022. However, worldwide shortages of materials, particularly semiconductors and integrated circuits, have resulted in limited supplies, extended lead times, and increased our costs and inventory levels for certain components used in our products. While, generally, we were able to procure the material necessary to manufacture our products and fulfill customer orders in 2022, there were some delays and longer delivery times within our supply chain. During 2023, we were able to achieve incremental improvement for the COVID-19 supply chain disruption challenges to that of more normal pre-pandemic experience. While the impacts of COVID-19 are reflected in our results of operations, we cannot at this time separate the direct COVID-19 impacts from other factors that cause our performance to vary from quarter to quarter. For additional risks relating to the COVID-19 pandemic and geopolitical conflicts in Ukraine and Israel, see Item 1A. Risk Factors in Part II of this report.
Previous report
Operating Loss
Previous report
BK Technologies, Inc., our wholly owned subsidiary, entered into the $5 million Credit Agreement with JPMC. The JPMC Credit Agreement provided for a revolving line of credit of up to $5 million, with availability under the line of credit subject to a borrowing base calculated as a percentage of accounts receivable and inventory. Proceeds of borrowings under the JPMC Credit Agreement were used for general corporate purposes. The line of credit was collateralized by a blanket lien on all personal property of BK Technologies, Inc. pursuant to the terms of the Continuing Security Agreement with JPMC. BK Technologies Corporation and each subsidiary of BK Technologies, Inc., were guarantors of the obligations under the JPMC Credit Agreement, in accordance with the terms of the Continuing Guaranty. The outstanding balance of this credit facility was paid in full in November 2022, once the Company received the new IPSA funding.
Previous report
Borrowings under the JPMC Credit Agreement were to bear interest at the secured overnight financing rate plus a margin of 2.0%. The line of credit is to be repaid in monthly payments of interest only, payable in arrears, with all outstanding principal and interest to be payable in full at maturity.
Previous report
The JPMC Credit Agreement contained certain customary restrictive covenants, including restrictions on liens, indebtedness, loans and guarantees, acquisitions and mergers, sales of assets, and stock repurchases by BK Technologies, Inc. The Credit Agreement contained one financial covenant requiring BK Technologies, Inc., to maintain a tangible net worth of at least $20 million at any fiscal quarter end.
Previous report
The IPSA provides for the payment of fees by the Subsidiaries and includes customary representations and warranties, indemnification provisions, covenants and events of default. Subject in some cases to cure periods, amounts outstanding under the IPSA may be accelerated for typical defaults including, but not limited to, the failure to make payments when due, the failure to perform any covenant, the inaccuracy of representations and warranties, the occurrence of debtor-relief proceedings, and the occurrence of unpermitted liens against the purchased accounts receivable and collateral. The Subsidiaries have granted Alterna a security interest in all of their respective personal property to secure their obligations under the IPSA. The Subsidiaries entered into a cross-guarantee, guaranteeing each other’s obligations under the IPSA, and BK also provided a guaranty of the Subsidiaries’ obligations under the IPSA.
Previous report
As of December 31, 2023, and the date of filing this report, approximately $6.5 million and $6.6 million, respectively, in borrowings were outstanding under the IPSA.
Previous report
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.
Reworded paragraphs (43)
Previous wording
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Current wording
Item 7. Management**’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous wording
We believe that it is important to communicate our future expectations to our security holders and to the public. This report, including any information incorporated by reference in this report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Exchange Act, including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” “should,” “will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek,” “are encouraged” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. We also may make forward-looking statements in other documents that are filed or furnished with the SEC. In addition, we may make forward-looking statements orally or in writing to investors, analysts, members of the media, or others. Forward-looking statements include, but are not limited to, the following: changes or advances in technology; the success of our SaaS and Radio business lines and the products offered thereunder; successful introduction of new products and technologies, including our ability to successfully develop and sell our anticipated SaaS products, and our new multiband radio product and other related products in the BKR Series product line; competition in the LMR industry; general economic and business conditions, including higher inflation and its impacts, federal, state and local government budget deficits and spending limitations, any impact from a prolonged shutdown of the U.S. Government, the effects of natural disasters, changes in climate, severe weather events, geopolitical events, acts of war or terrorism, global health epidemics or pandemics (such as the COVID-19 pandemic) and catastrophic events, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments; the availability, terms and deployment of capital; reliance on contract manufacturers and suppliers; risks associated with fixed-price contracts; heavy reliance on sales to agencies of the U.S. Government and our ability to comply with the requirements of contracts, laws and regulations related to such sales; allocations by government agencies among multiple approved suppliers under existing agreements; our ability to comply with U.S. tax laws and utilize deferred tax assets; our ability to attract and retain executive officers, skilled workers and key personnel; our ability to manage our growth; our ability to identify potential candidates for, and to consummate, acquisition, disposition or investment transactions, and risks incumbent to bein…
Excerpt shortened here; the source contains the full paragraph.
Current wording
We believe that it is important to communicate our future expectations to our security holders and to the public. This report, including any information incorporated by reference in this report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” “should,” “will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek,” “are encouraged” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. We also may make forward-looking statements in other documents that are filed or furnished with the SEC. In addition, we may make forward-looking statements orally or in writing to investors, analysts, members of the media, or others. Forward-looking statements include, but are not limited to, the following: changes or advances in technology; the success of our SaaS and Radio business lines and the products offered thereunder; successful introduction of new products and technologies, including our ability to successfully develop and sell our anticipated SaaS products, and our new multiband radio product and other related products in the BKR Series product line; competition in the LMR industry; general economic and business conditions, including high inflation and its impacts, high interest rates, labor and supply shortages and disruptions, federal, state and local government budget deficits and spending limitations, any impact from a prolonged shutdown of the U.S. Government, the effects of natural disasters, changes in climate, severe weather events, geopolitical events, acts of war or terrorism, global health crises and other catastrophic events, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments; the availability, terms and deployment of capital; reliance on contract manufacturers and suppliers; risks associated with fixed-price contracts; heavy reliance on sales to agencies of the U.S. Government and our ability to comply with the requirements of contracts, laws and regulations related to such sales; allocations by government agencies among multiple approved suppliers under existing agreements; our ability to comply with U.S. tax laws and utilize deferred tax assets; our ability to attract and retain executive officers, skilled workers and key personnel; our ability to manage our growth; our ability to identify potential candidates for, and to consummate, acquisit…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Report on Form 8-K.
Current wording
Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors, many of which are outside of our control, that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Report on Form 8-K.
Previous wording
BK Technologies Corporation (NYSE American: BKTI) (together with its wholly owned subsidiaries, “BK,” the “Company,” “we” or “us”) is a holding company that, through BK Technologies, Inc., its operating subsidiary, provides public safety grade communications products and services which make first responders safer and more efficient. All operating activities described herein are undertaken by our operating subsidiary.
Current wording
BK Technologies Corporation (NYSE American: BKTI) (together with its wholly owned subsidiaries, “BK,” the “Company,” “we” or “us”) is a holding company that, through BK Technologies, Inc., its operating subsidiary, provides public safety grade communications products and services designed to make first responders safer and more efficient. All operating activities described herein are undertaken by our operating subsidiary.
Previous wording
In business for over 70 years, BK has operated two business units through its operating subsidiary, BK Technologies, Inc.: Radio and SaaS.
Current wording
In business for over 70 years, BK operates two business units through its operating subsidiary, BK Technologies, Inc.: Radio and SaaS.
Previous wording
The SaaS business unit focuses on delivering innovative, public safety smartphone applications which operate ubiquitously over public cellular networks. Our BKRPlay branded smartphone application will offer multiple services which make the first responder safer and more efficient. When tethered to our radios, the combined solution will offer more unique capability which increases the sales reach of our radios.
Current wording
The SaaS business unit focuses on delivering innovative, public safety smartphone applications which operate ubiquitously over public cellular networks. Our BKRplay branded smartphone application offers multiple services designed to make the first responder safer and more efficient. When tethered to our radios, the combined solution offers an enhanced user experience with a more unique capability which increases the sales reach of our radios.
Previous wording
Customer demand and orders for our products were strong in 2023 and 2022. Supply chain constraints limited our ability to manufacture the quantities needed to convert the orders into shipments and sales revenue in 2022. Accordingly, as of December 31, 2022, these orders were carried in backlog, and we fulfilled 76% of them during the first half of 2023. Although supply chain factors continued to impact production costs for certain components during 2023, we have been able to achieve incremental improvement and fulfill customer requirements.
Current wording
Customer demand and orders for our products were strong during 2023 and 2024. Supply chain constraints limited our ability to manufacture the quantities needed to convert the orders into shipments and sales revenue in 2022 and were carried in backlog of $27.0 million as of December 31, 2022, that were fulfilled during 2023. The increase in sales for the year ended December 31, 2024, was primarily attributed to sales of the BKR9000 portable LMR products to federal, state and municipal public safety agencies, some of which were new customers.
Previous wording
For 2023, sales grew approximately 45.4% to approximately $74.1 million, compared with $51.0 million for the prior year. The growth was attributed primarily to the backlog described above, as well as the launch of the first model in our BKR line of products. Gross profit margins as a percentage of sales in 2023 were 30.0%, compared with 19.3% for the prior year, generally reflecting decreases in material, component and freight costs related to supply chain challenges experienced in 2022. Selling, general and administrative (“SG&A”) expenses for 2023 totaled approximately $23.0 million (31.1% of sales), compared with $20.9 million (41.1% of sales) last year. We recognized an operating loss in 2023 of approximately $0.8 million, which was attributed primarily to increased operating expenses related to the introduction of the BKR9000 multi-band portable radio product. For the prior year we recognized an operating loss of approximately $11.1 million.
Current wording
For 2024, sales grew approximately 3.4% to approximately $76.6 million, compared with $74.1 million for the prior year. Gross profit margins as a percentage of sales in 2024 were 37.9%, compared with 30.0% for the prior year, generally reflecting efficiencies from the transition of production to East West Manufacturing, LLC and cost reduction efforts in 2023 and 2024. Selling, general and administrative (“SG&A”) expenses for 2024 totaled approximately $21.2 million (27.7% of sales), compared with $23.0 million (31.1% of sales) last year. We recognized an operating income of approximately $7.8 million in 2024, which was attributed primarily to increased gross margins related to the transition of production of our radio products to East West Manufacturing, LLC. For the year 2023 we recognized an operating loss of approximately $0.8 million.
Previous wording
In 2023 we recognized other expenses, net totaling approximately $1.4 million, primarily attributed to net unrealized losses from our investment in FG Financial Holdings, LLC and net interest expense. This compares with other expense of $0.6 million last year, which was also primarily related to an unrealized loss from the investment in FG Financial Group, Inc. and net interest expense.
Current wording
In 2024 we recognized other expenses, net totaling approximately $0.5 million, primarily attributed to net interest expense and net realized losses from our investment in FG Financial Holdings, LLC an entity related to the former Chairman of our Board of Directors. This compares with other expense of $1.4 million last year, which was also primarily related to an unrealized loss from the previous investment in FG Financial Group, Inc. and net interest expense.
Previous wording
For 2023 the pretax loss totaled approximately $2.2 million, compared with pretax loss of approximately $11.6 million for the prior year.
Current wording
For 2024 the pretax income totaled approximately $7.4 million, compared with a pretax loss of approximately $2.2 million for the year 2023.
Previous wording
The net loss for 2023 totaled approximately $2.2 million ($0.65 per basic share), compared with net loss of approximately $11.6 million ($3.44 per basic share) last year.
Current wording
The net income for 2024 totaled approximately $8.4 million ($2.35 per basic and $2.25 per diluted share), compared with net loss of approximately $2.2 million ($0.65 per basic and diluted share) for the year 2023.
Previous wording
As of December 31, 2023, working capital totaled approximately $16.8 million, of which $11.4 million was comprised of cash, cash equivalents and trade receivables. This compares with working capital totaling approximately $13.2 million at 2022 year-end, which included $12.5 million of cash, cash equivalents and trade receivables. During 2022, we declared three and paid four quarterly dividends, utilizing cash of approximately $2.0 million.
Current wording
As of December 31, 2024, working capital totaled approximately $23.0 million, of which $14.4 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
For 2023, net sales increased approximately $23.1 million to approximately $74.1 million, compared with approximately $51.0 million last year.
Current wording
For 2024, net sales increased approximately $2.5 million to approximately $76.6 million, compared with approximately $74.1 million for the prior year.
Previous wording
The BKR Series is envisioned as a comprehensive line of new products, which will include additional models in coming quarters and years. The timing of developing additional BKR Series products and bringing them to market could be impacted by various factors, including potential impacts related to our supply chain, labor shortages, wage pressures, rising inflation, and other force majeure events. BKR Series products, we believe, 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
The BKR Series is envisioned as a comprehensive line of new products, which will include additional models in coming quarters and years. The timing of developing additional BKR Series products and bringing them to market could be impacted by various factors, including potential impacts related to our supply chain, labor shortages, wage pressures, high inflation, and other force majeure events. BKR Series products, we believe, 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 we will be able to develop additional BKR Series products on the anticipated timelines, or at all, or that sales will occur under particular contracts, or that our sales prospects will otherwise be realized.
Previous wording
The impacts of material shortages, lead-times, labor shortages, wage pressures, rising inflation, the ongoing military conflicts in Ukraine and the Middle East and other geopolitical events in coming months and quarters is uncertain. Such effects have the potential to adversely impact our customers and our supply chain, which could adversely affect our future sales, operations, and financial results.
Current wording
The impacts of material shortages, lead-times, labor shortages, wage pressures, high inflation, the ongoing military conflicts in Ukraine and the Middle East and other geopolitical events in coming months and quarters is uncertain. Such effects have adversely impacted and have the potential to adversely affect our future sales, operations, and financial results.
Previous wording
Gross profit margins as a percentage of sales for 2023 were approximately 30.0%, compared with 19.3% for the prior year.
Current wording
Gross profit margins as a percentage of sales for 2024 were approximately 37.9%, compared with 30.0% for the year 2023.
Previous wording
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 year ended December 31, 2023, increased compared with the same period last year primarily due to decreased material, component and freight costs related primarily to improvement in supply chain factors.
Current wording
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 year ended December 31, 2024, increased compared with the same period last year primarily due to efficiencies from the transition of production of our radio products to East West Manufacturing LLC, as well as sales mix and material cost improvements related to cost reduction efforts.
Previous wording
We utilize a combination of internal manufacturing capabilities and contract manufacturing relationships for production efficiencies and to manage material and labor costs. While we anticipate continuing to do so in the future, we have increased, and are continuing to increase, our utilization of contract manufacturing resources, which provides increased flexibility for our production capacity to meet increased demand. We believe that our current manufacturing capabilities and contract relationships or comparable alternatives will continue to be available to us. Although in the future we may encounter new product costs and competitive pricing pressures, the extent of their impact on gross margins, if any, is uncertain.
Current wording
We utilize a combination of internal manufacturing capabilities and contract manufacturing relationships for production efficiencies and to manage material and labor costs. While we anticipate continuing to do so in the future, we have increased, and are continuing to increase, our utilization of contract manufacturing resources, which provides increased flexibility for our production capacity to meet increased demand. We completed the transition of our West Melbourne, Florida manufacturing activities to East West Manufacturing, LLC's facilities during the third quarter of 2024. We believe that our current manufacturing capabilities and contract relationships or comparable alternatives will continue to be available to us. Although in the future we may encounter new product costs and competitive pricing pressures, the extent of their impact on gross margins, if any, is uncertain.
Previous wording
During the last two years, worldwide shortages of materials, including semiconductors and integrated circuits, have resulted in limited supplies and extended lead times for certain components used in our products. While we have generally been able to procure the material necessary to manufacture our products and fulfill customer orders, there have been delays, extended lead times and increased costs within our supply chain. While the progression and duration of these shortages is not known with certainty, they have had a lesser impact on our operations for the last twelve months. The impact on our operations of such shortages, or additional shortages that may surface, is uncertain, but could potentially impact our future sales, manufacturing operations and financial results.
Current wording
During the last three years, worldwide shortages of materials, including semiconductors and integrated circuits, have resulted in limited supplies and extended lead times for certain components used in our products. While we have been able to procure the material necessary to manufacture our products and fulfill customer orders, there have been delays, extended lead times and increased costs within our supply chain that improved through fiscal year 2023 and had significantly less impact on our operations for 2024. The impact on our operations of such shortages, or additional shortages that may surface, is uncertain, but could potentially impact our future sales, manufacturing operations and financial results.
Previous wording
SG&A expenses for the year ended December 31, 2023, totaled approximately $23.0 million (31.1% of sales), compared with approximately $20.9 million (41.1% of sales) for the prior year.
Current wording
SG&A expenses for the year ended December 31, 2024, totaled approximately $21.2 million (27.7% of sales), compared with approximately $23.0 million (31.1% of sales) for the prior year.
Previous wording
Engineering and product development expenses for 2023 totaled approximately $9.3 million (12.6% of sales), compared with approximately $9.6 million (18.8% of sales) for the prior year. The engineering expense of $9.6 million for 2022, included a one-time write-off of $646,000 of new product development components that were not included in the final design of the BKR 9000 radio. Engineering and product development expenses are primarily related to the continued design and development of BKR Series, a new line of portable and mobile radios. These development activities are the main focus of our engineering team. The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages and the potential economic effects of the conflicts in Ukraine and Israel in coming quarters.
Current wording
Engineering and product development expenses for 2024 totaled approximately $7.8 million (10.2% of sales), compared with approximately $9.3 million (12.6% of sales) for the prior year. For 2024, the Company also capitalized approximately $1.3 million of costs related to the development of the all-band BKR9500 mobile radio. Engineering and product development expenses are primarily related to the continued design and development of BKR Series, a new line of portable and mobile radios. These development activities are the main focus of our engineering team. The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages and the potential economic effects of the conflicts in Ukraine and the Middle East in coming quarters.
Previous wording
Marketing and selling expenses for the year ended December 31, 2023, totaled approximately $6.1 million (8.2% of sales), compared with approximately $4.4 million (8.6% of sales) for the prior year. The increase in marketing and selling expenses for the year are attributed to staff-related and other sales and go-to-market expenses for the BKR9000 product.
Current wording
Marketing and selling expenses for the year ended December 31, 2024, totaled approximately $6.2 million (8.1% of sales), compared with approximately $6.1 million (8.2% of sales) for the year 2023. Marketing and selling expenses for 2024 remained consistent with 2023 levels reflecting steady staff-related and other sales and go-to-market expenses for 2024.
Previous wording
General and administrative expenses for the year ended December 31, 2023, totaled approximately $7.6 million (10.3% of sales), compared with approximately $6.9 million (13.6% of sales) for the prior year. The increase in general and administrative expenses for the year is attributed primarily to corporate management and headquarters-related expenses.
Current wording
General and administrative expenses for the year ended December 31, 2024, totaled approximately $7.2 million (9.4% of sales), compared with approximately $7.6 million (10.3% of sales) for the year 2023. General and administrative expenses for 2024 were consistent with the prior year and were primarily attributed to corporate management and headquarters-related expenses.
Previous wording
For the year ended December 31, 2023, our operating loss totaled approximately $0.8 million (1.0% of sales), compared with operating loss of approximately $11.1 million (21.7% of sales), for the prior year. The operating loss for the year is attributed primarily to increased engineering and administrative expenses, related to the introduction of the BKR9000 product.
Current wording
For the year ended December 31, 2024, our operating income totaled approximately $7.8 million (10.2% of sales), compared with operating loss of approximately $0.8 million (1.0% of sales), for the year 2023. The improvement in operating income for the year is primarily attributed to increased gross margins, related to the transition of manufacturing production to East West Manufacturing LLC throughout the year 2024, as well as sales mix and material cost improvements related to cost reduction efforts.
Previous wording
We recorded net interest expense of approximately $575,000 for the year ended December 31, 2023, compared with approximately $144,000 for the prior year. Net interest expenses were attributed primarily to our credit facility and equipment financing.
Current wording
We recorded net interest expense of approximately $266,000 for the year ended December 31, 2024, compared with approximately $575,000 for the year 2023. Net interest expenses were attributed primarily to outstanding debt on our credit facility, with the decrease in 2024 due to lower average debt balances and the full repayment of the credit facility in September 2024.
Previous wording
For the year ended December 31, 2023, we recognized an unrealized loss of approximately $740,000 on our investment in FG Financial Holdings, LLC compared with an unrealized loss on investments of approximately $313,000 for the prior year.
Current wording
For the year ended December 31, 2024, we recognized a realized loss of approximately $91,000 on our investment in FG Financial Holdings, LLC compared with an unrealized loss on investments of approximately $740,000 for the year 2023.
Previous wording
We recorded $54,000 and no income tax expense for the years ended December 31, 2023 and 2022, respectively.
Current wording
We recorded $984,000 income tax benefitand $54,000 income tax expense for the years ended December 31, 2024 and 2023, respectively.
Previous wording
As of December 31, 2023, 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.
Current wording
As of December 31, 2024, our net deferred tax assets totaled approximately$6.8 million and were primarily derived from capitalized research and development expenses and deferred revenue.
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 $4,398,000. 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 December 31, 2023.
Current wording
Based on our analysis of all available evidence, both positive and negative, we have concluded that, except for the capital loss carryforward of approximately $802,000, we will have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax assets. Accordingly, we recorded a decrease in the valuation allowance of approximately $3,596,000 as of December 31, 2024. 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 December 31, 2024.
Previous wording
For the year ended December 31, 2023, net cash provided by operating activities totaled approximately $1.7 million, compared with cash used by operating activities of approximately $9.0 million for the prior year. Cash provided by operating activities for the year was primarily related to an increase in deferred revenues, a decrease in accounts receivable and depreciation and amortization, which were partially offset by decreases in accounts payable, increases in inventories, and the net loss.
Current wording
For the year ended December 31, 2024, net cash provided by operating activities totaled approximately $11.4 million, compared with cash provided by operating activities of approximately $1.7 million for the prior year. Cash provided by operating activities for 2024 was primarily related to net income, a decrease in inventories, an increase in deferred revenues, an increase in accrued other expenses and other current liabilities and depreciation and amortization, which were partially offset by a decrease in accounts payable, increases in prepaid expenses and other current assets and capitalized product development costs.
Previous wording
For 2023, we had a net loss of $2.2 million, compared with net loss of approximately $11.6 million for the prior year. Net inventories increased during the year ended December 31, 2023, by approximately $2.4 million, compared with an increase of approximately $5.1 million for the prior year. The increase was primarily attributable to material for new product introductions as well as extended supply-chain lead times on certain components encountered in 2022. Accounts receivable decreased approximately $2.7 million during the year ended December 31, 2023, primarily due to the timing of sales that were consummated later in the year in 2022 that had not yet completed their collection cycle. For the same period last year, accounts receivable increased approximately $2.4 million. Accounts payable for the year ended December 31, 2023, decreased approximately $3.1 million, compared with an increase of approximately $7.0 million for the prior year, primarily due to the timing of purchases and longer lead times for materials from suppliers in 2022. Depreciation and amortization totaled approximately $1.6 million for the year ended December 31, 2023, compared with approximately $1.4 million for the prior year. Depreciation and amortization are primarily related to manufacturing and engineering equipment.
Current wording
For 2024, we had a net income of $8.4 million, compared with net loss of approximately $2.2 million for the prior year. Net inventories decreased during the year ended December 31, 2024, by approximately $5.9 million, compared with an increase of approximately $2.4 million for the year 2023. The decrease was primarily attributable to reductions in work in progress and raw materials related to the transition of production to East West Manufacturing, LLC. Accounts payable for the year ended December 31, 2024, decreased approximately $3.5 million, compared with a decrease of approximately $3.1 million for the year 2023, primarily due to the reduction in purchases of materials for production in 2024. Prepaid expenses and other current assets increased $3.0 million compared to an increase of $0.3 million for the year 2023. The increase is primarily due to a contractual deposit payment to East West Manufacturing LLC as a result of the transition of the production of our products. Capitalization of product development costs for 2024 were $1.3 million, related to the development of the BKR multi-band mobile product. Accounts receivable decreased approximately $0.4 million during the year ended December 31, 2024, primarily attributed to increased collections compared to the prior year. For the same period last year, accounts receivable decreased approximately $2.7 million. Depreciation and amortization totaled approximately $1.7 million for the year ended December 31, 2024, compared with approximately $1.6 million for the year 2023. Depreciation and amortization are primarily related to manufacturing and engineering equipment.
Previous wording
Cash used in investing activities for the year ended December 31, 2023, totaled approximately $2.1 million, primarily for manufacturing and engineering related equipment. For the prior year, cash used in investing activities totaled approximately $1.8 million, primarily for purchases of engineering and manufacturing related equipment.
Current wording
Cash used in investing activities for the year ended December 31, 2024, totaled approximately $1.2 million, primarily for manufacturing and engineering related equipment. For the year 2023, cash used in investing activities totaled approximately $2.1 million, primarily for purchases of engineering and manufacturing related equipment.
Previous wording
For the year ended December 31, 2023, cash of approximately $2.0 million was provided by financing activities. During the year, we received proceeds of approximately $74.9 million from the IPSA with Alterna Capital Solutions LLC described below. This was partially offset by credit facility repayments of $74.4 million and loan repayments of approximately $535. For the prior year, we received proceeds of approximately $9.7 million from our IPSA revolving credit facility with Alterna Capital Solutions, LLC and the Credit Agreement with JPMC described below, that was partially offset by credit facility repayments of $5.3 and loan repayments of approximately $277,000. We discontinued the quarterly dividend program in 2023 and used cash of approximately $2.0 million to pay quarterly dividends for the year ended December 31, 2022.
Current wording
For the year ended December 31, 2024, cash of approximately $6.6 million was used in financing activities. During the year, we received proceeds of approximately $46.4 million from the IPSA with Alterna Capital Solutions, LLC described below. This was offset by credit facility repayments of $52.9 million and equipment loan repayments of approximately $71,000. For the year 2023, we received proceeds of approximately $74.9 million from our IPSA revolving credit facility with Alterna Capital Solutions, LLC described below, that was partially offset by credit facility repayments of $74.4 million and note payable repayments of approximately $535,000.
Previous wording
On November 6, 2023, we entered into a Master Service Agreement with East West Manufacturing, LLC (EWMSA), that included a private offering of 77,520 shares of our common stock, generating net proceeds of $1.0 million. As a part of the EWMSA, the Company also issued warrants for the purchase of an additional 135,300 shares of our common stock for $15.00 per share. The warrants have a five (5) year exercise term. Net proceeds for the issuance of the 135,300 warrants generated $1.0 million, which was paid by a $950,000 reduction in accounts payable and $50,000 in cash.
Current wording
On November 6, 2023, we entered into a Master Supply Agreement with East West Manufacturing, LLC (EWMSA), that included a private offering of 77,520 shares of our common stock, generating net proceeds of $1.0 million. As a part of the EWMSA, the Company also issued a warrant for the purchase of an additional 135,300 shares of our common stock for $15.00 per share. The warrant has a five (5) year exercise term. Net proceeds for the issuance of the warrant generated $1.0 million, which was paid by a $950,000 reduction in accounts payable and $50,000 in cash.
Previous wording
The JPMC Credit Agreement provided for customary events of default, including: (1) failure to pay principal, interest or fees under the JPMC Credit Agreement when due and payable; (2) failure to comply with other covenants and agreements contained in the Credit Agreement and the other documents executed in connection therewith; (3) the making of false or inaccurate representations and warranties; (4) defaults under other agreements with JPMC or under other debt or other obligations of BK Technologies, Inc.; (5) money judgments and material adverse changes; (6) a change in control or ceasing to operate business in the ordinary course; and (7) certain events of bankruptcy or insolvency. Upon the occurrence of an event of default, JPMC may have declared the entire unpaid balance immediately due and payable and/or exercise any and all remedial and other rights under the Credit Agreement.
Current wording
The Fifth Third RLC agreement provided for customary events of default, including: (1) failure to pay principal, interest or fees under the RLC when due and payable; (2) failure to comply with other covenants and agreements contained in the Revolving Loan Commitment agreement and the other documents executed in connection therewith; (3) the making of false or inaccurate representations and warranties; (4) defaults under other debt or other obligations of BK Technologies, Inc.; (5) money judgments and material adverse changes; (6) a change in control or ceasing to operate business in the ordinary course; and (7) certain events of bankruptcy or insolvency. Upon the occurrence of an event of default, Fifth Third Bank may declare the entire unpaid balance immediately due and payable and/or exercise any and all remedial and other rights under the RLC agreement.
Previous wording
On November 22, 2022, the Company’s Subsidiaries (BK Technologies, Inc. and RELM Communications, Inc.) entered into an Invoice Purchase and Security Agreement (the “IPSA”) with Alterna Capital Solutions, LLC (“Alterna”) for a one-year line of credit with total maximum funding up to $15 million, with an interest rate of Prime plus 1.85% and other monthly administrative fees. In November 2023, the IPSA was extended for one year. The IPSA line of credit is an accounts receivable and inventory financing facility, with the borrowing base of up to 85% of eligible accounts receivable and up to 75% of net orderly liquidation value of inventory, not to exceed 100% of eligible accounts receivable. The Company used the funds obtained from the IPSA to replace the existing JPMC Credit Agreement described below and for working capital for the business.
Current wording
On November 22, 2022, the Company’s subsidiaries (BK Technologies, Inc. and RELM Communications, Inc.) entered into an Invoice Purchase and Security Agreement (the “IPSA”) with Alterna Capital Solutions, LLC (“Alterna”) for a one-year line of credit with total maximum funding up to $15 million, with an interest rate of Prime plus 1.85% and other monthly administrative fees. In November 2023, the IPSA was extended for one year. The IPSA line of credit was an accounts receivable and inventory financing facility, with the borrowing base of up to 85% of eligible accounts receivable and up to 75% of net orderly liquidation value of inventory, not to exceed 100% of eligible accounts receivable. The IPSA was paid in full in September 2024 and terminated in October 2024.
Previous wording
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 “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.
Current wording
On April 6, 2021, BK Technologies, Inc., a wholly owned subsidiary of BK Technologies Corporation, and JP Morgan Chase Bank, N.A. (JPMC), as a lender, entered into a Master Loan Agreement in the amount of $743,000 to finance various items of manufacturing equipment (the “JPMC Credit Agreement”). This note payable was paid in full on June 27, 2023.
Previous wording
On September 25, 2019, BK Technologies, Inc., a wholly owned subsidiary of BK Technologies Corporation, and U.S. Bank Equipment Finance, a division of U.S. Bank National Association, as a lender, entered into a Master Loan Agreement in the amount of $425 to finance various items of equipment. The loan is collateralized by the equipment purchased using the proceeds. 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%
Current wording
On September 25, 2019, BK Technologies, Inc., a wholly owned subsidiary of BK Technologies Corporation, and U.S. Bank Equipment Finance, a division of U.S. Bank National Association, as a lender, entered into a Master Loan Agreement in the amount of $425,000 to finance various items of equipment. The loan was collateralized by the equipment purchased using the proceeds. The Master Loan Agreement was payable in 60 monthly principal and interest payments of approximately $8,000 beginning on October 25, 2019 and maturing on September 25, 2024, and bore a fixed interest rate of 5.11%. This note payable was paid in full on June 24, 2024.
Previous wording
Our cash and cash equivalents balance at December 31, 2023, was approximately $3.5 million. We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our IPSA, are sufficient to meet our working capital requirements for the foreseeable future. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, including those resulting from supply chain delays or interruptions, labor shortages, wage pressures, rising inflation, geopolitical events, and other force majeure events, could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity, and financial condition. For a description of these risks, see “Item 1A. Risk Factors” set forth in this report.
Current wording
Our cash and cash equivalents balance at December 31, 2024, was approximately $7.1 million. We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our Fifth Third RLC, are sufficient to meet our working capital requirements for the foreseeable future. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, including those resulting from supply chain delays or interruptions, labor shortages, wage pressures, rising inflation, geopolitical events, and other force majeure events, could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity, and financial condition. For a description of these risks, see “Item 1A. Risk Factors” set forth in this report.
Previous wording
In response to the Securities and Exchange Commission’s financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, we have selected for disclosure our revenue recognition process and our accounting processes involving significant judgments, estimates and assumptions. These processes affect our reported revenues and current assets and are, therefore, critical in assessing our financial and operating status. We regularly evaluate these processes in preparing our financial statements. The processes for determining the allowance for credit losses on trade receivables, allowance for excess or obsolete inventory, and income taxes involve certain assumptions and estimates that we believe to be reasonable under present facts and circumstances. These estimates and assumptions, if incorrect, could adversely impact our operations and financial position.
Current wording
Our critical accounting policies include our revenue recognition process and our accounting processes involving significant judgments, estimates and assumptions. These processes affect our reported revenues and current assets and are, therefore, critical in assessing our financial and operating status. We regularly evaluate these processes in preparing our financial statements. The processes for determining the allowance for credit losses on trade receivables, allowance for excess or obsolete inventory, and income taxes involve certain assumptions and estimates that we believe to be reasonable under present facts and circumstances. These estimates and assumptions, if incorrect, could adversely impact our operations and financial position.
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Previous report — wording carried elsewhere
The increase in sales for the year ended December 31, 2023, was attributed primarily to the BKR5000 portable LMR product to federal, state and municipal public safety agencies, some of which were new customers.