BK Technologies Corp

Condensed Consolidated Balance Sheets

(In thousands, except share data)

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data) (Unaudited)

BK Technologies Corporation

Condensed Consolidated Statements of Changes in Equity

(In thousands, except share and per share data) (Unaudited)

Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

Notes to Condensed Consolidated Financial Statements

Three and Six Months Ended June 30, 2025 and 2024

Unaudited

(In thousands, except share and per share data and percentages or as otherwise noted)

Note1. Condensed Consolidated Financial Statements

Basis of Presentation

The condensed consolidated balance sheet as of* June 30, 2025*, the condensed consolidated statements of operations for thethree andsix months ended* June 30, 2025*, and2024, the condensed consolidated statement of changes in equity for thethree andsix months ended* June 30, 2025*, and2024, and the condensed consolidated statements of cash flows for thesix months ended* June 30, 2025*, and2024, have been prepared by BK Technologies Corporation (the “Company,” “we,” “us,” “our”), and are unaudited but include all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations, and cash flows for the interim periods presented. The condensed consolidated balance sheet as of* December 31, 2024*, has been derived from the Company’s audited consolidated financial statements at that date.

These condensed consolidated financial statements have been prepared in accordance with the requirements of Article8 of Regulation S-X and the instructions to Form10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form10-K for the fiscal year ended* December 31, 2024*, as filed with the Securities and Exchange Commission (“SEC”) on* March 27, 2025.The results of operations for thethree* andsix months ended* June 30, 2025*, and2024, arenot necessarily indicative of the operating results for a full year.

Principles of Consolidation

The accounts of the Company have been included in the accompanying condensed 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.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, notes payable, credit facilities, and other liabilities. As of* June 30, 2025*, and* December 31, 2024*, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, notes payable, credit facilities, and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.

Effective* September 14, 2022,the Company had an investment in Series B common membership interests of FG Financial Holdings, LLC (“FG Holdings LLC”). 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 the 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 Fundamental Global Inc. (Nasdaq: FGF) held by FG Holdings LLC, plus uninvested cash, less liabilities, further adjusted through allocations based on distribution preferences, as defined in the 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 to342,080.

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Recent Accounting Pronouncements

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

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after* December 15, 2024,with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company will adopt the ASU and will make the applicable disclosure, as required, on its Annual Report Form10*-K for the year ended* December 31, 2025.The Company doesnot* expect the adoption of ASU2023-09 to have a material effect on its consolidated financial statements.

In* November 2024,the FASB issued ASU2024*-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses, an accounting standard update to improve income statement expenses disclosures. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for fiscal years beginning after* December 15,*2026, with early adoption permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

Segment Reporting Disclosures

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

The LMR segment provides radio devices that are hand-held (portable) or installed in vehicles (mobile) and operate on private radio systems that are Project25 ("P25") 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 and net income 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 is used to monitor budget versus actual results. The chief operating decision maker also uses net income 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.

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The table below summarizes the significant categories regularly reviewed by the chief operating decision maker for thethree andsix months ended* June**30,* 2025, and2024, respectively:

Note2. Significant Events and Transactions

As we continue to move forward into2025 the Solutions business unit will continue to expand to include public safety solutions that provide for improved interoperability which will make thefirst responder safer and more efficient when operating in the field. The new Solutions business will also continue to build a portfolio of solutions under a new brand, BK ONE. BK ONE includes SaaS solutions such as InteropONE as well as future software and hardware applications.

On* October 30, 2024,a wholly owned subsidiary of the Company entered into a new credit facility with Fifth Third Bank, National Association, which provides for aone*-year revolving line of credit with a maximum commitment of $6 million, with an accordion feature, if certain conditions are met, for up to a maximum commitment of $10 million. For additional information, see Note10 of the consolidated financial statements.

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Note3. Allowance for Credit Losses

The allowance for credit losses on trade receivables was approximately $50 on gross trade receivables of $11,592 and $7,399 as of* June 30, 2025*, and* December 31, 2024*, respectively. 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 creditworthiness, and 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 June 30, 2025* and* December 31, 2024* is adequate.

Note4. Inventories, Net

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

Allowances for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or net realizable value. The allowances were approximately $1,694 as of* June 30, 2025* and* December 31, 2024*.

Note5. Income Taxes

For thethree andsix months ended* June 30, 2025,the Company recorded an income tax expense of $275 and $945, respectively, resulting in an effective tax rate of 13.86%. The Company's taxable income is generated in the United Sates and taxed at a federal and state statutory rate of 26.72%. Relative to the federal and state statutory rate, the effective tax rate for thesix* months ended* June 30, 2025,*was reduced by the tax impact of research and development tax credits.

For thethree andsix months ended* June 30, 2024,the Company recorded an income tax expense of $220 and $241, respectively. The effective tax rate for thesix* months ended* June 30, 2024,was 9.32%. Relative to the federal and state statutory rate, the effective tax rate for thesix* months ended* June 30, 2024,was primarily impacted by the tax benefit for research and development tax credits for2024* as compared to projected income before tax.

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Note5. Income Taxes (continued)

Based on our analysis of all available evidence, both positive and negative, we have concluded that, except for the capital loss carryforward of approximately $0.8 million, 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 $1.4 million as of* June 30, 2025.We cannot presently estimate what, if any, changes to the valuation of our deferred tax assets maybe deemed appropriate in the future. If we incur future losses, it maybe necessary to record additional valuation allowance related to the deferred tax assets recognized as of June 30, 2025.*

Should the factors underlying management’s analysis change, future valuation adjustments to the Company’s net deferred tax assets* maybe necessary. If future losses are incurred, it maybe necessary to record an additional valuation allowance related to the Company’s net deferred tax assets recorded as of June 30, 2025.The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets 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.

On* July 4, 2025,the U.S. government enacted The One Beautiful Bill Act of2025,* (known as the "One Big Beautiful Bill Act or "OBBBA") which makes permanent many of the tax provisions enacted in2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generallynot effective until2026. The Company is currently evaluating the impact of the new legislation but doesnot expect it to have a material impact on the results of operations.

Note6. 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 $506 and $946 for thethree andsix months ended* June 30, 2025* and $283 and $430 for thethree andsix months ended* June 30, 2024,*respectively.

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Note7. Income Per Share

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

Approximately 168,579 stock option and 5,739 restricted stock units for thethree andsix months ended* June 30, 2025,and approximately 137,600 stock options and 35,682 restricted stock units for thethree* months andsix months ended* June 30, 2024,*were excluded from the calculation because they were anti-dilutive.

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Note8. Non-Cash Share-Based Employee Compensation

The Company’s stockholders approved the BK Technologies Corporation2025 Incentive Compensation Plan (the*“2025* Plan”) at the2025 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) held on* June 18, 2025.The2025* Plan was previously approved by the Company’s Board of Directors (the “Board”). The2025 Plan replaces the2017 Incentive Compensation Plan (the “Prior Plan”).No new awards will be granted under the Prior Plan after the date of the Annual Meeting. However, all awards granted under the Prior Plan that were outstanding on the date of the Annual Meeting will remain outstanding in accordance with their terms. The2025 Plan authorizes the grant of equity-based and cash-based compensation awards to officers, directors, and employees of, and consultants to, the Company and its subsidiaries. Awards under the2025 Plan* maybe granted in the form of stock options, stock appreciation rights, restricted shares, restricted share units, other share-based awards, and cash-based awards. There are 500,000 shares of the Company’s common stock reserved for issuance under the2025* Plan.No awards* maybe granted under the2025* Plan after* March 11, 2035.*

The stockholders of the Company also approved the BK Technologies Corporation Employee Stock Purchase Plan (the “ESPP”) at the Annual Meeting held on* June 18, 2025.*The ESPP was previously approved by the Board. The objective of the ESPP is to offer eligible employees of the Company and its designated subsidiaries the ability to purchase shares of the Company’s common stock at a discount, subject to various limitations under the ESPP. There are 150,000 shares of the Company’s common stock authorized for issuance under the ESPP.

Stock Options

The Company has employee and non-employee director share-based incentive compensation plans. Related to these programs, the Company recorded non-cash share-based employee compensation expense of $126 and $244 for thethree andsix months ended* June 30, 2025*, compared with $77 and $132 for the same periods last year, respectively. The Company considers its non-cash share-based employee compensation expenses as a component of cost of products and selling, general and administrative expenses. There wasno non-cash share-based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of stock option grants under this plan. The non-cash share-based employee compensation expense recorded in thethree andsix months ended* June 30, 2025*, was calculated using certain assumptions. Such assumptions are described more comprehensively in Note11 (Share-Based Employee Compensation) of the Notes to the Company’s consolidated financial statements included in its Annual Report on Form10-K for the fiscal year ended* December 31, 2024*.

A summary of activity under the Company’s stock option plans during thesix months ended* June 30, 2025*, is presented below:

Restricted Stock Units

The Company recorded non-cash restricted stock unit compensation expense of $299 and $574 for thethree andsix months ended* June 30, 2025*, compared with $148 and $269 for the same periods last year, respectively.

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

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Note9. Commitments and Contingencies

Legal Matters

From time to time, the Company* maybe involved in various claims and legal actions arising in the ordinary course of its business. We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal accruals maybe increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss isnot* probable or the amount of the loss isnot estimable, we donot record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, our ultimate liability in connection with these matters isnot expected to have a material adverse effect on our results of operations, financial position or cash flows, and the amounts accrued for any individual matter arenot material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters* may*be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.

Purchase Commitments

As of* June 30, 2025*, the Company had purchase commitments for inventory totaling approximately $12,115, which are to be satisfied in thethird quarter of2025.

Significant Customers

Sales to United States government agencies represented approximately 12.0% and 11.5% of the Company’s net total sales for thethree andsix months ended* June 30, 2025*, respectively, compared with approximately 30.4% and 41.5% for the same periods last year, respectively. Accounts receivable from agencies of the United States government were 2% of accounts receivable at of* June 30, 2025*, compared with approximately 17.4% at the same date last year. In addition, two commercial customers accounted for approximately 24.8% and 26.6% of net sales for thethree andsix months ended* June 30, 2025,respectively. There wereno commercial customers accounting for more than10%* of net sales for the same periods last year. Three commercial customers accounted for approximately 45.1% of accounts receivable at* June 30, 2025,compared to approximately 39.1% of accounts receivable at June 30, 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.

Note10. Debt

Credit Facilities

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 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. 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 hasnot utilized funding and there wereno borrowings under the RLC agreement as of* June**30,* 2025, and as of the date of filing this report.

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Note10. Debt (continued)

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 to1.00; and (ii) a fixed charge coverage ratio of 1.2 to1.0 as measured on a rollingtwelve-month basis, each measured at the end of each fiscal quarter.

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* may*declare the entire unpaid balance immediately due and payable and/or exercise any and all remedial and other rights under the RLC agreement.

As of* June 30, 2025*, there wereno outstanding borrowings under the Fifth Third RLC.

Note11. 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 an expiration date of* June**30,* 2027. The lease terms include an option to extend the lease agreement for an additionalfive (5) year term commencing* July 1, 2027and terminating at midnight June 30, 2032.*Annual rental, maintenance, and tax expenses for the facility are approximately $610.

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 will be approximately $196 for thefirst* year, increasing by approximately 3% for each subsequent12-month period.

Lease costs consisted of the following:

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Note11. Leases (continued)

Supplemental cash flow information related to leases was as follows:

Other information related to operating leases was as follows:

Maturity of lease liabilities as of* June 30, 2025*, were as follows:

12. Subsequent Events

On* July 4, 2025,the President signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of2017,* including100% bonus depreciation on qualified property acquired and placed in service after* January 19, 2025.ASC740,* "Income Taxes," requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The Company is assessing these impacts on its consolidated financial statements.

On* July 10, 2025,the Company approved the grant of performance-based stock options for certain executives. The options provide the executives with the option to purchase up to an aggregate of 162,566 shares of Common Stock of the Company's common stock on the grant date of $42.81 per share and will vest based on whether certain common share prices are achieved over afive-year period ending on July 10, 2030.*

On* August 6, 2025,the Company issued 39,250 shares of common stock related to Restricted Stock Unit (RSU) grants issued in2023.* The RSU grants included performance vesting criteria for certain Engineering employees, upon achieving $20 million revenues related to sales of theBKR9000 multi-band portable radio product. The shares were issued at the* August 6, 2025,*closing price of $38.27, for a total non-cash stock compensation expense of approximately $1.5 million.

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