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 Months Ended March 31, 2026 and 2025

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* March 31, 2026*, the condensed consolidated statements of operations for thethree months ended* March 31, 2026*, and2025, the condensed consolidated statement of changes in stockholders' equity for thethree months ended* March 31, 2026*, and2025, and the condensed consolidated statements of cash flows for thethree months ended* March 31, 2026*, and2025, 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, 2025*, 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, 2025*, as filed with the Securities and Exchange Commission (“SEC”) on* March 12, 2026.The results of operations for thethree* months ended* March 31, 2026*, and2025, arenot necessarily indicative of the operating results for a full year.

Significant Accounting Policies

There have beenno material changes to the Company’s significant accounting policies during thethree-months ended* March 31, 2026,as compared to those disclosed in the consolidated financial statements included in the Company’s Annual Report on the Form10*-K for the year ended* December 31, 2025.*

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, and other liabilities. As of* March 31, 2026*, and* December 31, 2025*, 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.

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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* 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 doesnot expect the adoption of ASU2024-03 to have a material effect on its consolidated financial statements.

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 municipality agencies on theirP25 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 executive officer, chief financial officer, and the chief technology 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 months ended* March**31,* 2026, and2025, respectively:

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

Note2. Significant Events and Transactions

On* October 30, 2024,a wholly owned subsidiary of the Company entered into a new credit facility with Fifth Third Bank, National Association, which provided 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. On* October 30, 2025,the subsidiary entered into an amendment to the credit facility, which provided for athree-year extension of the agreement and revised the availability under the $6 million revolving credit facility, if certain conditions are met, to increase the accordion feature for a maximum commitment of $14 million, among other things. Each advance shall accrue interest on the outstanding principal amount thereof at a rate of SOFR plus a range of 1.75% to 2.25% per annum, based on certain total debt coverage ratios. 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 Company hasnot utilized funding and there wereno borrowings under the RLC agreement as of* March 31, 2026,*and as of the date of filing this report

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Note3. 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.

Note4. Income Taxes

The Company's tax provision and the resulting effective tax rate for interim periods is determined based on its estimate annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The provision for income taxes consists of federal and state taxes in the US, California, Florida, and various other states.

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Note4. Income Taxes (continued)

For thethree months ended* March 31, 2026,the Company recorded an income tax expense of $682, resulting in an effective tax rate of 19.8%. The Company's taxable income is generated in the United States and taxed at a federal and state statutory rate of 27.5%. Relative to federal and state statutory rate, the effective tax rate for thethree* months ended* March 31, 2026,*was reduced by the tax impact of research and development tax credits and stock compensation exercises and vestings.

For thethree months ended* March 31, 2025,the Company recorded an income tax expense of $670. The effective tax rate for thethree* months ended* March 31, 2025,was 24.8%. Relative to the federal and state statutory rate, the effective tax rate for thethree* months ended* March 31, 2025,was primarily impacted by the tax benefit for research and development tax credits for2025* as compared to projected income before tax.

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 $851, it currently does have the ability to generate sufficient taxable income in the necessary period for the deferred tax assets. Accordingly, the Company recorded an increase in the valuation allowance of $24 as of* December 31, 2025.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 March 31, 2026.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's policy is to recognize interest and penalties associated with uncertain tax benefits as part of income tax provision and included accrued interest and penalties with the related income tax liability on the Company's Condensed Consolidated Balance Sheets. To date, the Company hasnot recognized any interest and penalties in its Condensed Consolidated Statement of Operations, nor has it accrued for or made payments for interest and penalties. The Company recorded $0 and $1,419 unrecognized tax benefits as of* March 31, 2026and2025,* respectively.

The Company imports certain materials and products that are subject to U.S. government tariffs and import duties. On* February 20, 2026,a US federal court ordered the U.S. government to begin refunding certain tariffs. The Company believes that some of the tariffs it has paid maybe eligible for refund; however, the amount and timing of any potential refunds are uncertain. Accordingly, the Company hasnot* recorded, nor plans to record, any benefit related to possible tariff refunds at this time.

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Note5. Earnings Per Share

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

Approximately 1,016 stock options and 1,081 restricted stock units for thethree months ended* March 31, 2026,and approximately 0 stock options and 0 restricted stock units for thethree* months ended* March 31, 2025,*were excluded from the calculation because they were anti-dilutive.

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Note6. Non-Cash Share-Based Employee Compensation

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 $362 for thethree months ended* March 31, 2026*, compared with $118 for the same period last year. 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.

A summary of activity under the Company’s stock option plans during thethree months ended* March 31, 2026*, is presented below:

Restricted Stock Units

The Company recorded non-cash restricted stock unit compensation expense of $57 and $275 for thethree months ended* March 31, 2026*, and2025, 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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Note7. 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.

On* February 3, 2026,the Company filed a complaint with the United States District Court for the Eastern District of Texas, alleging patent infringement against AT&T Mobility LLC and AT&T Services, Inc. (collectively, “AT&T”) and requesting monetary and injunctive relief. As of the date of filing of this report on Form10*-Q, AT&T has responded to the Company’s complaint and is reviewing resolution alternatives.

Purchase Commitments

As of* March 31, 2026*, the Company had purchase commitments for inventory totaling approximately $17,636, which are expected to be satisfied in thesecond quarter2026.

Significant Customers

The following table summarizes customer concentration of net revenues

The following table summarizes customer concentration of receivables

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 are 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.

Macroeconomic Trends

The Company continues to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, the introduction of or changes in tariffs or trade barriers and global or local recession. Such changes in domestic and global macroeconomic conditions* maylead to increased costs for the business. Additionally, these macroeconomic trends could adversely affect the Company’s customers, which could impact their willingness to spend on the Company’s products and services, or their ability to make payments, which could harm the collection of accounts receivable and financial results. The world’s financial markets remain susceptible to significant stresses, resulting in reductions in available credit and government spending, economic downturn or stagnation, foreign currency fluctuations and volatility in the valuations of securities generally. As a result, the Company’s ability to access capital markets and other funding sources in the future may**not* be available on commercially reasonable terms, if at all. The rapid development and fluidity of these situations precludes any prediction as to the ultimate impact they will have on the Company’s business, financial condition, results of operation and cash flows, which will depend largely on future developments.

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Note8. Leases

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 2026,we entered into a new lease relating to this property, pursuant to which we will lease approximately 31,500 square feet (not in thousands) of industrial space at7100* Technology Drive in West Melbourne, Florida. The lease will commence in* February 2027,*has a term of 125 months, and includestwo five-year renewal options.

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 (the “Sawgrass Lease”). In September 2025,the Company entered into an amendment to the Sawgrass Lease to lease an additional 1,514 square feet (not in thousands) of office space and to extend the lease term an additional62* months, commencing on the date construction on the additional leased area is completed (the “Sawgrass Amendment”). Pursuant to the Sawgrass Amendment, the annual rental, maintenance, and tax expenses for the facility will be approximately $180 for thefirst year of the extended term and will increase approximately 3.0% for each subsequent12-month period.

Lease costs consisted of the following:

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Note8. 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* March 31, 2026*, were as follows:

9. Subsequent Events

The Company has evaluated subsequent events through* May 14, 2026,the date the condensed consolidated financial statements were available to be issued. Based on this evaluation, the Company determined thatno* material subsequent events occurred that require recognition or disclosure in these condensed consolidated financial statements.

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