BK Technologies Corp

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders and Board of Directors

West Melbourne, Florida

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of BK Technologies Corporation and subsidiaries (the “Company”) as of December 31, 2024, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the adjustments to the 2023 consolidated financial statements of the Company to retrospectively apply the change in accounting related to the Company’s adoption of ASU 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures as described in Note 1. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review or apply any procedures to the 2023 consolidated financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2023 consolidated financial statements taken as a whole.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As a part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Stockholders and Board of Directors

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Slow-Moving, Excess, and Obsolete Inventory

As more fully disclosed in Notes 1 and 2 of the notes to the Company’s consolidated financial statements, the Company records an estimated allowance for slow-moving, excess, and obsolete inventory to state the Company’s inventories at the lower of cost or net realizable value. The Company relies on, among other things, past sales and usage experience, significant assumptions such as future sales and usage forecasts, and its strategic business plan to develop the estimate. As a result of management’s assessment, the Company recorded an allowance for slow-moving, excess, and obsolete inventory of approximately $1,694,000 as of December 31, 2024.

We identified the allowance for slow-moving, excess, and obsolete inventory as a critical audit matter. Our principal consideration for this determination is the high degree of auditor judgement and subjectivity involved in evaluating management’s significant assumptions related to estimating the allowance, particularly as it relates to evaluating assumptions related to future inventory turnover and sales.

The following are the primary procedures we performed to address this critical audit matter:

● We obtained an understanding and evaluated the design and implementation of internal controls relating to recording inventory at the lower of cost or net realizable value.

● We evaluated the completeness and accuracy of the underlying data used in development of the allowance for slow-moving, excess, and obsolete inventory, including the mathematical accuracy of the calculation.

● For a sample of raw materials, work-in-progress (WIP) and finished goods inventory at year-end, we compared recorded amounts to supporting documentation for original cost.

● We evaluated the reasonableness of the Company’s estimate by comparing historical allowance amounts to the history of actual inventory write-offs.

● We evaluated the reasonableness of management’s business plan and forecasts of future sales assumptions, including expected changes in technology and product lines, and whether the assumptions used were reasonable considering historical sales and expectations regarding future sales.

We have served as the Company’s auditor since 2024.

/s/Forvis Mazars, LLP

Orlando, Florida

March 27, 2025

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

West Melbourne, Florida

Opinion on the Consolidated Financial Statements

We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 1, the accompanying consolidated balance sheet of BK Technologies Corporation (the “Company”) as of December 31, 2023, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements referred to above, before the effects of the adjustments to retrospectively apply the change in accounting (as described in Note 1), present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting (as described in Note 1), and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustment are appropriate and have been properly applied. Those adjustments were audited by Forvis Mazars, LLP.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company’s auditor from 2015 to 2024.

/s/ MSL, P.A.

Orlando, Florida

March 14, 2024

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’** EQUITY**

(in thousands, except share data)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

YEARS ENDED DECEMBER 31, 2024 AND 2023

1. Summary of Significant Accounting Policies

Description of Business

BK Technologies Corporation (collectively with its subsidiaries, the “Company”) is a holding company. The primary business of its wholly owned operating subsidiary, BK Technologies, Inc., is the designing, manufacturing and marketing of wireless communications equipment primarily consisting oftwo-way land mobile radios and related products, which are sold intwo primary markets: (1) the government and public safety market, and (2) the business and industrial market. The Company has onlyone reportable business segment.

On* March 28, 2019,BK Technologies, Inc., the predecessor of BK Technologies Corporation, implemented a holding company reorganization, which resulted in BK Technologies Corporation becoming the direct parent company of, and the successor issuer to, BK Technologies, Inc. For the purpose of this report, references to the “Company” or its management or business at any period prior to the holding company reorganization ( March 28, 2019)*refer to those of BK Technologies, Inc. as the predecessor company and its subsidiaries and thereafter to those of BK Technologies Corporation and its subsidiaries, except as otherwise specified or to the extent the context otherwise indicates.

Principles of Consolidation

The accounts of the Company have been included in the accompanying consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company consolidates entities in which it has a controlling financial interest. When the Company doesnot have a controlling financial interest in an entity but exerts significant influence over the entity’s operating and financial policies (generally defined as owning a voting or economic interest of between20% to50%), the Company’s investment is accounted for under the equity method of accounting. If the Company doesnot have a controlling financial interest in, or exert significant influence over, an entity, the Company accounts for its investment at fair value, if the fair value option was elected, or at cost.

Inventories

Inventories are stated at the lower of cost (determined by the average cost method) or net realizable value. Freight costs are classified as a component of the cost of products in the accompanying consolidated statements of operations.

The allowance for slow-moving, excess and obsolete inventory is used to state the Company’s inventories at the lower of cost or net realizable value. Because the amount of inventory that will actually be recouped through sales cannot be known with certainty at any particular time, the Company relies on past sales experience, future sales forecasts, and its strategic business plans. Generally, in analyzing inventory levels, inventory is classified as having been used or unused during the past year. The Company then establishes an allowance based upon several factors, including, butnot limited to, business forecasts, inventory quantities, and historic usage profile.

Supplemental to the aforementioned analysis, specific inventory items are reviewed individually by management. Based on the review, considering business levels, future prospects, new products and technology changes, management, using its business judgment,* mayadjust the valuation of specific inventory items to reflect an accurate valuation estimate. Management also performs a determination of the net realizable value for all finished goods with a selling price below cost. For all such items, the inventory is valued atnot* more than the selling price less cost, if any, to sell.

Property, Plant and Equipment

Property, plant and equipment is carried at cost less accumulated depreciation. Expenditures for maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the resulting gain or loss is reflected in operations for the period.

Depreciation and amortization are generally computed on the straight-line method using lives of 3 to 10 years for machinery and equipment and 5 to 8 years for leasehold improvements.

Impairment of Long-Lived Assets

Management regularly reviews long-lived assets and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset* may**not* be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value, which considers the discounted future net cash flows.No long-lived assets were considered impaired at* December 31, 2024and2023*.

Cash Equivalents

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

F-8

Allowance for Credit Losses

The Company records an allowance for credit losses based on specifically identified amounts that the Company believes to be uncollectible. The Company records an allowance for credit losses for its financial instruments, which are primarily composed of trade accounts receivable. The measurement and recognition of credit losses involves the use of judgment and represents management’s estimate of expected lifetime credit losses based on historical experience and trends, current conditions, and forecasts. The Company’s assessment of expected credit losses includes consideration of historical credit loss experience, the aging of account balances, customer concentrations, customer credit-worthiness, current and expected economic, market and industry factors affecting the Company’s customers, including their financial condition. The Company evaluates its experience with historical losses and then applies this historical loss ratio to financial assets with similar characteristics. The Company* mayalso establish an allowance for credit losses for specific receivables when it is probable that the receivable willnot* be collected and the loss can be reasonably estimated. If the Company’s actual collections experience changes, revisions to the allowance* maybe required. Amounts are written off against the allowance when all attempts to collect a receivable have failed, and reversals of previously reserved amounts are recognized if a specifically reserved item is settled for an amount exceeding the previous estimate. Based on information available, management believes the allowance for credit losses as of December 31, 2024and2023* is adequate.

Revenue Recognition

The Company recognizes revenues in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)2014-09, “Revenue from Contracts with Customers” and the additional related ASUs (“ASC606”), which replaced previous revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under accounting principles generally accepted in the United States of America (“GAAP”). These standards provide guidance on recognizing revenue, including afive-step method to determine when revenue recognition is appropriate:

Step1: Identify the contract with the customer;

Step2: Identify the performance obligations in the contract;

Step3: Determine the transaction price;

Step4: Allocate the transaction price to the performance obligations; and

Step5: Recognize revenue as the Company satisfies a performance obligation.

ASC606 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. Customary payment terms are granted to customers, based on credit evaluations. Currently, the Company doesnot have any contracts where revenue is recognized, but the customer payment is contingent on a future event.

The Company periodically reviews its revenue recognition procedures to assure that such procedures are in accordance with GAAP. Surcharges collected on certain sales to government customers and remitted to governmental agencies arenot included in revenues or in costs and expenses.

Income Taxes

The Company accounts for income taxes using the asset and liability method specified by GAAP. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply in the period in which the deferred tax asset or liability is expected to be realized. The effect of changes in net deferred tax assets and liabilities is recognized on the Company’s consolidated balance sheets and consolidated statements of operations in the period in which the change is recognized. Valuation allowances are provided to the extent that impairment of tax assets is more likely thannot. In determining whether a tax asset is realizable, the Company considers, among other things, estimates of future earnings based on information currently available, current and anticipated customers, contracts and new product introductions, as well as recent operating results and certain tax planning strategies. If the Company fails to achieve the future results anticipated in the calculation and valuation of net deferred tax assets, the Company* may*be required to increase the valuation allowance related to its deferred tax assets in the future.

The Company recognizes a tax position in its financial statements when the tax position, based solely upon its technical merits, is more likely thannot to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are recognized in thefirst interim period in which they meet the more likely thannot standard or are resolved through negotiation or litigation with taxing authority, or upon expiration of statutes of limitations. Derecognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax positionno longer meets the more thannot threshold of being sustained.

Concentration of Credit Risk

The Company performs periodic credit evaluations of its customers’ financial condition and generally doesnot require collateral. At* December 31, 2024and2023*, accounts receivable from governmental customers were approximately $600 and $1,445, respectively. Generally, receivables are due within30 days. Credit losses relating to customers have been consistently within management’s expectations.

F-9

The Company primarily maintains cash balances atone financial institution. Accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to*$250.* From time to time, the Company has had cash in financial institutions in excess of federally insured limits. As of* December 31, 2024*, the Company had cash and cash equivalents in excess of FDIC limits of $6,825.

Manufacturing and Raw Materials

The Company relies upon a limited number of manufacturers to produce its products and on a limited number of component suppliers. Some of these manufacturers and suppliers are in other countries. Approximately 17.0% of the Company’s material, subassembly and product procurements in2024 were sourced internationally, of which approximately 79.9% were sourced from seven suppliers. For2023, approximately 16.0% of the Company’s material, subassembly and product procurements were sourced internationally, of which approximately 94.8% were sourced from twelve suppliers. Purchase orders denominated in U.S. dollars are placed with these suppliers from time to time and there areno guaranteed supply arrangements or commitments.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Significant estimates include accounts receivable allowances, inventory obsolescence allowance, warranty allowance, and income tax accruals. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, investments, accounts payable, accrued expenses, notes payable, and other liabilities. As of* December 31, 2024and2023*, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.

Prior to* September 14, 2022,the Company held an investment in the common stock of FG Financial Group, Inc. (Nasdaq: FGF) (“FGF”), which investment was held by the Company through1347* LP. The Company used observable market data assumptions (Level1 inputs, as defined in accounting guidance) that it believes market participants would use in pricing its investment in FGF.

Effective* September 14, 2022,the Company made an investment in Series B common membership interests of FG Financial Holdings, LLC (“FG Holdings LLC”), an entity related to the former chairman of the Company's Board of Directors. As further discussed in Note7,* the Company recorded the investment according to guidance provided by ASC820 “Fair Value Measurement”, as the Company didnot have a controlling financial interest in, nor exerted significant influence over the activities of FG Holdings LLC. The investment in Series B common membership interests of FG Holdings LLC was reported using net asset value (“NAV”) of interests held by the Company at period-end. The NAV was calculated using the observable fair value of the underlying stock of FGF held by FG Holdings LLC, plus uninvested cash, less liabilities, further adjusted through allocations based on distribution preferences, as defined in operating agreement of FG Holdings LLC. The NAV was used as a practical expedient and hasnot been classified within the fair value hierarchy.

On* January 25, 2024,the Company redeemed its Series B common membership interests (the “Interests”) in FG Holdings LLC and withdrew from FG Holdings LLC. In exchange for the Interests, the Company received 52,000 shares of the Company’s Common Stock, with an approximate fair value of $650 on the date of the transaction and recorded a realized loss of $91 on the investment during thefirst* quarter of2024. 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.

Liquidity

The Company recognized operating income of $7.8 million during2024 and an operating loss of $0.8 million during2023. The Company’s2023 operating results were negatively impacted by the worldwide shortages of materials, in particular semiconductors and integrated circuits, extended lead times, and increased costs and inventory levels for certain components due to supply chain disruptions in2022 and early in2023.

On* October 30, 2024,*the Company's wholly owned subsidiary, BK Technologies, Inc. entered into a new Revolving Loan Commitment agreement with Fifth Third Bank, N.A., providing for aone-year revolving line of credit with a maximum commitment of $6,000, with an accordion feature, if certain conditions are met, for up to an additional $4,000 of borrowing capacity, totaling a maximum commitment of $10,000.

On* November 22, 2022,the Company’s wholly owned subsidiaries, BK Technologies, Inc. and RELM Communications, Inc. (the “Subsidiaries”), entered into an Invoice Purchase and Security Agreement (“IPSA”) with Alterna Capital Solutions, LLC (“Alterna”), providing for aone-year line of credit with total maximum funding up to $15,000 (the “Line of Credit”). On November 22, 2023,the IPSA was renewed forone more year. The IPSA was paid off in September 2024.*

Management believes that cash and cash equivalents currently available, combined with anticipated cash to be generated from operations, and borrowing ability are sufficient to meet the Company’s working capital requirements in the foreseeable future. The Company generally relies on cash from operations, commercial debt, and equity offerings to the extent available, to satisfy its liquidity needs and to meet its payment obligations. The Company* may*engage in public or private offerings of equity or debt securities to maintain or increase its liquidity and capital resources. However, financial and economic conditions, including those resulting from the current inflationary environment and current geopolitical tension, could impact our ability to raise capital or debt financing, if needed, on acceptable terms or at all.

F-10

Reverse Stock Split

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

The Company executed the Reverse Stock Split, which became effective at5:00 p.m. Eastern Time on* April 21, 2023.*Shares of Common Stock underlying outstanding stock options and restricted stock units were proportionately reduced, and the respective exercise prices were proportionately increased in accordance with the terms of the agreements governing such securities. Accordingly, all shares and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the Reverse Stock Split.

Advertising and Promotion Costs

The cost for advertising and promotion is expensed as incurred. Advertising and promotion expenses are classified as part of selling, general and administrative (“SG&A”) expenses in the accompanying consolidated statements of operations. For the years ended* December 31, 2024and2023*, such expenses totaled $496 and $478, respectively.

Engineering, Research and Development Costs

Included in SG&A expenses for the years ended* December 31, 2024and2023* are engineering, research and development costs of $7,841 and $9,334, respectively.

Share-Based Compensation

The Company accounts for share-based arrangements in accordance with GAAP, which requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which the employee is required to provide service in exchange for the award requisite service period (usually the vesting period).No compensation cost is recognized for equity instruments for which employees donot render the requisite service.

Restricted Stock Units

The Company recorded non-cash restricted stock unit compensation expense of $494 and $1,143 for the years ended* December 31, 2024and2023*, respectively.

Earnings (Loss) Per Share

Earnings (loss) per share amounts are computed and presented for all periods in accordance with ASC260 “Earnings per Share”.

F-11

Comprehensive Income (loss)

Comprehensive income (loss) was equal to net income (loss) for the years ended* December 31, 2024and2023*.

Product Warranty

The Company offerstwo-year andfive-year standard warranties to its customers, depending on the specific product and terms of the customer purchase agreement. The Company’s typical warranties require it to repair and replace defective products during the warranty period atno cost to the customer. At the time the product revenue is recognized, the Company records a liability for estimated costs under its warranties. The costs are estimated based on historical experience. The Company periodically assesses the adequacy of its recorded liability for product warranties and adjusts the amount as necessary.

Recent Accounting Pronouncements

The Company doesnot discuss recent pronouncements that arenot anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

In* November 2023,the FASB issued Accounting Standards Update (ASU)2023-07 Segment Reporting (Topic280*): 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 for ASU2023*-07 and reportedone reportable segment and included required disclosures.

Segment Reporting Disclosures

The Company hasone reportable segment -Land Mobile Radio (LMR) Products and Solutions.

The LMR segment provides radio devises that are hand-held (portable) or installed in vehicles (mobile) and operate on private radio systems that areP25 compliant. The Company derives revenue primarily in North America and manages the business activities on a consolidated basis.

The LMR radio products are used by public safety agencies of the federal government, state and local municipalityP25 compliant radio systems. The radio systems operate on frequencies managed by the Federal Communications Commission (FCC). The Company’s chief operating decision maker is the senior executive committee that includes the chief technology officer, chief financial officer, and the chief executive officer.

The accounting policies of the LMR segment are the same as those described in the summary of significant accounting policies. The chief operating decision maker assesses performance for the LMR segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets.

The chief operating decision maker uses operating income (loss) and net income (loss) to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the LMR segment or into other parts of the entity, the development of public safety applications utilizing cellular technology or for acquisitions. Net income (loss) is used to monitor budget versus actual results. The chief operating decision maker also uses net income (loss) in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.

The table below summarizes the significant categories regularly reviewed by the CODM for the years ended* December 31, 2024,and2023:*

(a) Other segment items included interest expense and foreign currency exchange gains/(losses)

YEARS ENDED DECEMBER 31, 2024 AND 2023

2. Inventories, net

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

Changes in the allowance for slow-moving, excess, and obsolete inventory are as follows:

During the year ended* December 31, 2024,the Company wrote off $511 of inventory that had been fully allowed for previously, which hadno* impact to the Company's consolidated balance sheets or consolidated statements of operations.

3. Allowance for Credit Losses

Changes in the allowance for credit losses are composed of the following:

4. Property, Plant and Equipment, net

Property, plant and equipment, net include the following:

Depreciation and amortization expense relating to property, plant and equipment for the years ended* December 31, 2024and2023* was approximately $1,692 and $1,635 respectively. During the year ended* December 31, 2024*, the company removed from its records approximately $8 of fully depreciated machinery and equipment andnone in the year ended* December 31, 2023*.

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5. Capitalized Product Development Costs

The Company accounts for the costs of Land Mobile Radio (LMR) multi-band development within its products in accordance with ASC Topic350-30, “ Intangibles – Goodwill and Other,” under which certain LMR multi-band radio development costs incurred subsequent to the establishment of technological feasibility are capitalized and amortized over the estimated lives of the related products. The Company determined technological feasibility was established for multi-band LMR radio products by the introduction of the BKR9000 multi-band portable product to the market in* June 2023,as specified by Topic350*-30. Upon the general release of the LMR multi-band mobile radio product currently in development to customers, development costs for that product will be amortized over periodsnot exceedingten years, based on future revenue of the product. Capitalized product development costs were $1,321 as of* December 31, 2024.*

6. Debt

Credit Facilities

On* October 30, 2024,BK Technologies, Inc., a wholly owned subsidiary of the Company, as the borrower, entered into a new credit facility with Fifth Third Bank, National Association, as the lender (the “Fifth Third Revolving Loan Commitment”). The Fifth Third Revolving Loan Commitment provides for aone-year revolving line of credit with a maximum commitment of $6,000, with an accordion feature, if certain conditions are met, for up to an additional $4,000 of borrowing capacity, totaling a maximum commitment of $10,000. Each advance shall accrue interest on the outstanding principal amount thereof at a rate of SOFR plus 2.5% per annum. Each advance maybe prepaid at any time without penalty and the entire line of credit commitment maybe permanently terminated by BK Technologies, Inc. at any time upon10* days’ prior written notice to the lender without penalty.

BK Technologies, Inc.’s repayment obligations under the credit facility are guaranteed by the Company and RELM Communications, Inc. and secured by a pledge of essentially all of the assets of BK Technologies, Inc., the Company and RELM Communications, Inc. (collectively, the “Loan Parties”).

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 a maximum total funded debt ratio of 2.00 to1.00 and a minimum fixed charge coverage ratio of 1.20 to1.00, each measured at the end of every fiscal quarter. As of* December 31, 2024,*the Company was in compliance with the debt covenants and there wasno outstanding borrowing balance.

On* November 22, 2022,the Subsidiaries entered into the IPSA with Alterna. On November 28, 2022,the Subsidiaries and Alterna entered into a rider to the IPSA, to modify the IPSA to, among other things, provided a credit facility for up to 75% of net orderly liquidation value of inventory,not to exceed 100% of the eligible accounts receivable balance. The IPSA, which provided for aone-year Line of Credit with a maximum capacity of up to $15,000 was renewed in November 2023and paid in full on September 30, 2024.The Line of Credit bore an interest rate of Prime plus 1.85%. Interest and related servicing fees for years ended December 31, 2024and2023*, were approximately $356 and $648, respectively. Under the arrangement, the Company could transfer eligible short-term trade receivables to the conduit, with full recourse, on a daily basis in exchange for cash. Generally, at the transfer date, the Company could receive cash equal to approximately 85% of the value of the transferred receivables. The Company accounted for the transfers of receivables as a secured borrowing due to the Company’s continuing involvement with the accounts receivable. During2024 and2023, the Company transferred receivables having an aggregate face value of $49,700 and $67,400, respectively, to the conduit and received proceeds of $46,400 and $74,600, respectively, which also includes draws on available inventory funding. There wereno losses incurred on these transfers during2024 and2023, respectively. The Company terminated the IPSA in* October 2024*upon entering into the credit facility with Fifth Third Bank.

Notes Payable

On* April 6, 2021,BK Technologies, Inc., a wholly owned subsidiary of the Company, and JP Morgan Chase Bank, N.A., as a lender, entered into a Master Loan Agreement in the amount of $743 to finance various items of manufacturing equipment (the “JPMC Credit Agreement”). The Company used funds obtained from the Line of Credit to replace the JPMC Credit Agreement. This note payable was paid in full on June 27, 2023.*

On* September 25, 2019,BK Technologies, Inc., a wholly owned subsidiary of the Company, 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 manufacturing equipment. The loan was collateralized by the equipment purchased using the proceeds. The Master Loan Agreement was payable in 60 equal monthly principal and interest payments of approximately $8 beginning on October 25, 2019,was scheduled to mature on September 25, 2024,and bore a fixed interest rate of 5.11%. This note payable was paid in full on June 24, 2024*

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7. Investments

On* January 25, 2024,the Company redeemed its Series B common membership interests (the “Interests”) in FG Holdings LLC and withdrew from FG Holdings LLC. In exchange for its Interests, the Company received 52,000 shares of the Company’s Common Stock, with an approximate fair value of $650 on the date of the transaction and recorded a realized loss of $91 on the investment during thefirst* quarter of2024. 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.

The investment in the Series B common membership interests of FG Holdings LLC was measured using the NAV practical expedient in accordance with ASC820 Fair Value Measurement and hasnot been classified within the fair value hierarchy. FG Holdings LLC invested in the common and preferred stock of FG Financial Group, Inc. (Nasdaq: FGF) (“FGF”). FG Holdings LLC’s structure provided for Series A preferred interests, which accrued a return ofeight percent per annum and received 20% of positive profits with respect to the total return in the capital provided by the holders of Series A preferred membership interests. The Series B common membership interests received cumulative distributions equal to the aggregate capital contributions by the Series B common membership interest equal to the total return on capital provided by the Series B common membership interests. Series B common membership interests also received an additional return equal to 1.5 times the Series A of positive profits described above. There wasno defined redemption frequency, and the Company couldnot redeem or transfer its investment without the prior written consent of FG Holdings LLC' managers, who were related parties. Distributions could have been made to members at such times and amounts as determined by the managers, and were based on the most recent NAV. The Company didnot have any unfunded commitments related to this investment.

As of* December 31, 2023,the members and affiliates of FG Holdings LLC beneficially owned in the aggregate 5,666,111 shares of FGF's common stock, representing approximately 55% of FGF's outstanding shares. Additionally, FG and its affiliates constituted the largest stockholder of the Company, as of December 31, 2023.FG and its affiliates exited its investment in the Company in June 2024.Mr. Kyle Cerminara, who served as a director of the Company and chairman of the Board of Directors until December 14, 2023,*was Chief Executive Officer, Co-Founder, and Partner of FG and served as chairman of the board of directors of FG Group Holdings Inc., the entity that was a majority Series B member in FG Holdings ILC. Mr. Cerminara also serveds as a manager of FG Holdings, LLC and chairman of the board of directors of FGF.

During the year ended* December 31, 2024and2023*, the Company recognized a realized loss of approximately $91 and an unrealized loss of approximately $740 due to changes on investments, respectively.

8. Leases

The Company accounts for its leasing arrangements in accordance with Topic842, “Leases”. The Company leases manufacturing and office facilities and equipment under operating leases and determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

As most of its leases donot provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms* may*include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has lease agreements with lease and non-lease components, which are accounted for separately.

The Company leases approximately 54,000 square feet (not in thousands) of industrial space in West Melbourne, Florida, under a non-cancellable operating lease. The lease has the expiration date of* June 30, 2027.The lease includes an option forone* additional extension period offive (5) years commencing* July 1, 2027and terminating at midnight June 30, 2032.Rental, maintenance and tax expenses for this facility were approximately $625 and $596 in2024* and2023, respectively.

In* February 2020,the Company entered into a lease for 6,857 square feet (not in thousands) of office space at Sawgrass Technology Park,1619 NW136th* Avenue in Sunrise, Florida, for a period of 64 months commencing* July 1, 2020.Annual rental, maintenance and tax expenses for the facility were approximately $224 and $212 in2024* and2023, respectively.

Lease costs consist of the following:

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8. Leases (Continued)

Supplemental cash flow information related to leases was as follows:

Other information related to operating leases was as follows:

Maturity of operating lease liabilities as of* December 31, 2024* were as follows:

9. Income Taxes

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

A reconciliation of the statutory U.S. income tax rate to the effective income tax rate follows:

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9. Income Taxes (Continued)

The components of the deferred income tax assets (liabilities) are as follows:

As of* December 31, 2024,*the Company had deferred tax assets of approximately $7,586 offset by deferred tax liabilities of $798. This asset is primarily composed of capitalization of research and development expenses and deferred revenue. The liability is composed of the effect of differences in amortization and depreciation utilized for tax purposes.

.

During2024, the Company utilized $7,915 of federal NOLs and during2023 the Company utilized $4,911 of federal NOLs. The deferred tax asset amounts are based upon management’s conclusions regarding, among other considerations, the Company’s current and anticipated customer base, contracts, and product introductions, certain tax planning strategies, and management’s estimates of future earnings based on information currently available, as well as recent operating results during2024, 2023, and2022. GAAP requires that all positive and negative evidence be analyzed to determine if, based on the weight of available evidence, the Company is more likely thannot to realize the benefit of the deferred tax asset.

Based on the analysis of all available evidence, both positive and negative, the Company has concluded that, except for the capital loss carryforward of approximately $802, it currently does have the ability to generate sufficient taxable income in the necessary period to utilize the benefits for the deferred tax assets. Accordingly, the Company recorded a decrease in the valuation allowance of $3,596 as of* December 31, 2024.The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets maybe deemed appropriate in the future. If the Company incurs future losses, it maybe necessary to record additional valuation allowance amounts related to the deferred tax assets recognized as of December 31, 2024.*

Should the factors underlying management’s analysis change, future valuation adjustments to the Company’s net deferred tax asset* maybe necessary. If future losses are incurred, it maybe necessary to record an additional valuation allowance related to the Company’s net deferred tax asset recorded as of December 31, 2024*. The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax asset* may*be deemed appropriate in the future.

The Company performed a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by GAAP. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return or planned to be taken in a future tax return that hasnot been reflected in measuring income tax expense for financial reporting purposes.

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9. Income Taxes (Continued)

A reconciliation of the beginning and ending amount of our unrecognized tax benefits is as follows:

As of* December 31, 2024,the Company recorded approximately $1,419 of unrecognized tax benefits, a net increase of $1,419 from $-0- as of December 31, 2023.*If the Company recognized its tax positions, approximately $1,419 would favorably impact the tax rate.

Penalties and tax-related interest expense, of which there wereno material amounts for the years ended* December 31, 2024*, and2023, are reported as a component of income tax expense (benefit).

The Company files federal income tax returns, as well as multiple state and local jurisdiction tax returns. A number of years* mayelapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution on any particular uncertain tax position, the Company believes that its allowances for income taxes reflect the most probable outcome. The Company adjusts these allowances, as well as the related interest, in light of changing facts and circumstances. The resolution of a matter would be recognized as an adjustment to the provision for income taxes and the effective tax rate in the period of resolution. The calendar years2019* through 2023 are still open to IRS examination under the statute of limitations. The last IRS examination on the Company’s2007 calendar year was closed withno change.

10. Income (Loss) Per Share

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

Approximately 202,600 stock options and 19,587 restricted stock units for the year ended* December 31, 2023were excluded from the calculation because they were anti-dilutive (none for the year ended December 31, 2024).*

11. Share-Based Compensation

Stock Options

The Company has an employee and non-employee director incentive compensation equity plan. Related to these programs, the Company recorded $286 and $200 of share-based employee compensation expense related to stock options during the years ended* December 31, 2024and2023*, respectively, which is included as a component of cost of products and SG&A expenses in the accompanying consolidated statements of operations. No amount of share-based employee compensation expense was capitalized as part of capital expenditures or inventory for the years presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The share-based employee compensation expense recorded in the years ended* December 31, 2024and2023* was calculated using the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time, commensurate with the expected life of the stock options. The dividend yield assumption is based on the Company’s expectations of dividend payouts at the grant date. The Company has estimated its future stock option exercises. The expected term of option grants is based upon the observed and expected time to the date of post vesting exercises and forfeitures of options by the Company’s employees. The risk-free interest rate is derived from the average U.S. Treasury rate for the period, which approximates the rate at the time of the stock option grant.

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11. Share-Based Compensation (Continued)

A summary of stock option activity under the Company’s equity compensation plans as of* December 31, 2024*, and changes during the year ended* December 31, 2024*, are presented below:

Outstanding:

Exercisable:

The weighted-average grant-date fair value per option granted during the years ended* December 31, 2024and2023* was $6.39 and $5.94, respectively. There were 6,200 and 4,000 stock options exercised during the years ended* December 31, 2024and2023*, respectively.

Restricted Stock Units

In connection with the restricted stock units (sometimes referred to as "RSUs") granted to non-employee directors, the Company accrues compensation expense based on the estimated number of shares expected to be issued, utilizing the most current information available to the Company at the date of the consolidated financial statements. The Company estimates the fair value of the restricted stock unit awards based upon the market price of the underlying common stock on the date of grant.

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11. Share-Based Compensation (Continued)

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

During the year ended* December 31, 2024and2023*, the Company also issued 8,960 RSUs under a consulting agreement for advisory services to the Board of Directors. The principal of the consulting firm was elected as the Chairman of the Board of Directors in* December 2023.*

During2024 and2023, the Company’s Board of Directors approved the Executive Salary Swap Plan to prospectively swap a portion of certain executive’s salaries for a12 month period (10% minimum, up to 50%) otherwise payable in cash for a grant of RSUs (with each RSU representing a contingent right to receiveone share of the Company’s Common Stock) at a fixed rate of $10 per share, rounded down to the nearest whole RSU. The Restricted Stock Units vested at the date of the grant. The Company issued 13,979 and 6,739 RSUs under this arrangement during* December 31, 2024and2023,* respectively.

As of* December 31, 2024and2023*, there was approximately $1,419 and $682, respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including stock options and restricted stock units. This compensation cost is expected to be recognized approximately overone tofour years.

12. Other Equity Transactions

On* January 25, 2024,the Company redeemed its "Interests" of FG Holdings LLC and withdrew from FG Holdings LLC. In exchange for its Interests, the Company received 52,000 shares of the Company’s Common Stock, with an approximate fair value of $650 on the date of the transaction and recorded a realized loss of $91 on the investment during thefirst* quarter of2024. 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.

On* November 6, 2023,the Company entered into a Master Supply Agreement (the “MSA”) and Transition Services Agreement (the “TSA,” and together with the MSA, the “Agreements”) with East West Manufacturing, LLC, a Georgia limited liability company (“East West”). Pursuant to the Agreements, the Company transitioned its West Melbourne, Florida manufacturing activities to East West’s facilities, and East West became the exclusivethird*-party manufacturer of the Company’s radio product line under athree-year arrangement. In connection with the Agreements, the Company and East West entered into a Stock Purchase Agreement (the “SPA”), pursuant to which East West purchased 77,520 shares of the Company’s common stock with a value equal to $1,000. The number of shares of common stock was determined based upon a price per share of $12.90, which is equal to the average of the closing price of the Company's common stock on the NYSE American exchange for the30 most recent trading days prior to* November 6, 2023,*rounded up to the nearest whole number of shares.

Additionally, East West purchased a warrant (“Warrant”), with afive-year term to purchase up to 135,300 shares of the Company’s common stock at an exercise price per share of $15.00. The consideration for the Warrant was payment equal to (a) $1,000 minus (b) (i) the amount of any outstanding accounts payable by the Company to East West and (ii) the amount of any excess or obsolete inventory of the Company held by East West (solely to the extentnot otherwise taken into account pursuant to the MSA or any other agreement between the Company and East West). The payment consisted of a $950 reduction in accounts payable and $50 in cash. The common stock, the Warrant and the shares issuable upon exercise of the Warrant were deemed to be issued to an accredited investor in a private placement exempt from the registration pursuant to Section4(a)(2) of the Securities Act of1933, as amended (“Securities Act”). The Company’s reliance upon Section4(a)(2) of the Securities Act was based in part upon the following factors: (a) the issuance of the securities was in connection with isolated private transactions which didnot involve any public offering; (b) there were a limited number of offerees; (c) there will beno subsequent or contemporaneous public offerings of the Warrant or the shares underlying the Warrant by the Company; and (d) the negotiations for the sale of the securities took place directly between East West and the Company.

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12. Other Equity Transactions (Continued)

The Warrant issued to East West was classified as a component of permanent equity in the Company's Consolidated Balance Sheets as it is a freestanding financial instrument that is immediately exercisable, doesnot embody an obligation for the Company to repurchase its own shares and permits the holders to receive a fixed number of shares of common stock upon exercise. For year ended2023, all of the shares underlying the Warrant hadnot been included in the weighted-average number of shares of common stock used to calculate net loss per share, basic and diluted, attributable to common stockholders because the shares would have been anti-dilutive.

The Company used the Black-Scholes-Merton option valuation model to calculate the fair value of a stock warrant grant, using the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time, commensurate with the expected life of the stock warrant. The dividend yield assumption is based on the Company’s expectations ofno dividend payouts at the grant date. The stock price was the closing price of the common stock on the date of the warrant agreement and the strike price and the expected term was defined in the warrant agreement. The risk-free interest rate is derived from the90 day U.S. Treasury rate at the date of the stock warrant grant.

13. Significant Customers

Sales to the U.S. Government represented approximately 38% and 49% of the Company’s total sales for the years ended* December 31, 2024and2023* respectively. These sales were primarily to the various government agencies, including those within the United States Department of Defense, the United States Forest Service, the United States Department of Interior, and the United States Department of Homeland Security. In addition, one commercial customer accounted for approximately 13% of net sales for the year ended* December 31, 2024and approximately 24% of accounts receivable at December 31, 2024.Another commercial customer accounted for approximately 15% of accounts receivable at December 31, 2024.There wereno commercial customers accounting for more than10%* of net sales for the year ended* December 31, 2023.One commercial customer accounted for approximately 16% of accounts receivable at December 31, 2023.*

14. Retirement Plan

The Company sponsors a participant contributory retirement401(k) plan, which is available to all employees. The Company’s contribution to the plan is either a percentage of the participant’s contribution (50% of the participant’s contribution up to a maximum of 6%) or a discretionary amount. For the years ended* December 31, 2024and2023*, total contributions made by the Company were $199 and $220, respectively.

15. Commitments and Contingencies

Royalty Commitment

In2003, the Company entered into a technology license related to its development of digital products. Under this agreement, the Company is obligated to pay a royalty for each product sold that utilizes the technology covered by this agreement. The Company paid $181 and$234 for the years ended* December 31, 2024and2023*, respectively. The agreement has an indefinite term and can be terminated by either party under certain conditions.

In2022, the Company entered into a technology license related to its development of multi-band products. Under this agreement, the Company is obligated to pay a royalty for each product sold that utilizes the technology covered by this agreement, which started in* June 2023.The Company paid $4 and $0.03 in2024* and2023, respectively. The agreement is forthree years and can be automatically renewed forone year at the end of its initial term unless either party provides at least120 days’ prior written notice of its electionnot to extend the initial term. Thereafter, either party can terminate the agreement by providing a written notice of non-renewal of at least60 days’ prior to the end of the then current term.

Purchase Commitments

The Company has purchase commitments for inventory totaling $9,324 as of* December 31, 2024*.

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Self-Insured Health Benefits

The Company maintains a self-insured health benefit plan for its employees. This plan is administered by athird party. As of* December 31, 2024*, the plan had a stop-loss provision insuring losses beyond $90 per employee per year and an aggregate stop-loss of $2,185. As of* December 31, 2024and2023*, the Company recorded an accrual for estimated claims in the amount of approximately $336 and $275, respectively, in accrued other expenses and other current liabilities on the Company’s consolidated balance sheets.** ** This amount represents the Company’s estimate of incurred butnot reported claims as of* December 31, 2024and2023*.

Liability for Product Warranties

Changes in the Company’s liability for its standardtwo-year andfive-year product warranties during the years ended* December 31, 2024and2023* are as follows:

Legal Proceedings

From time to time the Company* may*be involved in various claims and legal actions arising in the ordinary course of its business.

There wereno pending material claims or legal matters as of* December 31, 2024*.

Geopolitical Tensions

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflict between Russia and Ukraine and in the Middle East. Although the length and impact of the ongoing military conflicts is highly unpredictable, the conflict in both of these regions could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

16. Capital Programs

On* December 17, 2021a share repurchase program was authorized under which the Company mayrepurchase up to an aggregate of $5,000 of its common shares. Share repurchases under this program were authorized to begin immediately. The program doesnot* have an expiration date. Any repurchases would be funded using cash on hand and cash from operations. The actual timing, manner and number of shares repurchased under the program will be determined by management and the Board of Directors at their discretion, and will depend on several factors, including the market price of the Company’s common shares, general market and economic conditions, alternative investment opportunities, and other business considerations in accordance with applicable securities laws and exchange rules. The authorization of the share repurchase program doesnot require the Company to acquire any particular number of shares and repurchases* maybe suspended or terminated at any time at the Company’s discretion. As of December 31, 2024*, the Company has completedno share repurchases under this program.

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