BK Technologies Corp

Previous wording

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in "Part I-Item lA. Risk Factors" and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in our subsequent filings with the SEC. We assume no obligation to publicly update or revise any forward-looking statements made in this report, whether as a result of new information, future events, changes in assumptions or otherwise, after the date of this report. Readers are cautioned not to place undue reliance on these forward-looking statements.

Current wording

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in "Part I-Item 1A. Risk Factors" and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in our subsequent filings with the SEC. We assume no obligation to publicly update or revise any forward-looking statements made in this report, whether as a result of new information, future events, changes in assumptions or otherwise, after the date of this report. Readers are cautioned not to place undue reliance on these forward-looking statements.

Previous wording

Customer demand and orders for our products were strong during fiscal year 2025 and continued during the first three months of 2026. Our backlog of unshipped customer orders was approximately $8.7 million and $14.2 million as of March 31, 2026, and December 31, 2025, respectively. Changes in the backlog were attributed primarily to the timing of orders and their fulfillment.

Current wording

Customer demand and orders for our products were strong during fiscal year 2025 and continued during the first six months of 2026. Customer demand and new orders for our products was $18.4 million during the three months ended June 30, 2026, compared to $18.3 million for the same period of fiscal year 2025. Our backlog of unshipped customer orders was approximately $3.2 million and $14.2 million as of June 30, 2026, and December 31, 2025, respectively. Changes in the backlog were attributed primarily to the timing of orders and their fulfillment. The timing of orders from certain federal and state agency customers, can have a significant impact on the backlog reported during any specific quarterly period.

Previous wording

For the three months ended March 31, 2026, sales increased approximately 11.8% to approximately $21.3 million, compared with $19.1 million for the same period of fiscal year 2025. The increase was attributed primarily to the shipments of BKR series radio product and accessories sales. Gross profit margins as a percentage of sales for the three months ended March 31, 2026, were 51.8%, compared with 47.0% for the comparative fiscal year 2025 quarter, generally reflecting radio product and accessories sales mix. Selling, general, and administrative (“SG&A”) expenses for the three months ended March 31, 2026, totaled approximately $7.7 million (36.4% of sales), compared with $6.0 million (31.7% of sales) in the same period of fiscal year 2025. We recognized operating income for the three months ended March 31, 2026, of approximately $3.3 million, compared with operating income of approximately $2.9 million for the same period of fiscal year 2025.

Current wording

For the three months ended June 30, 2026, sales increased approximately 10.6% to approximately $23.4 million, compared with $21.2 million for the same period of fiscal year 2025. The increase was attributed primarily to the shipments of BKR series radio product and accessories sales. Gross profit margins as a percentage of sales for the three months ended June 30, 2026, were 51.9%, compared with 47.4% for the comparative fiscal year 2025 quarter, generally reflecting radio product and accessories sales mix. Selling, general, and administrative (“SG&A”) expenses for the three months ended June 30, 2026, totaled approximately $8.3 million (35.5% of sales), compared with $6.0 million (28.5% of sales) in the same period of fiscal year 2025. We recognized operating income for the three months ended June 30, 2026, of approximately $3.8 million, compared with operating income of approximately $4.0 million for the same period of fiscal year 2025.

Previous wording

For the three months ended March 31, 2026, we recognized other income, net totaling approximately $155,000. This compares with other expenses, net totaling $114,000 for the same period of fiscal year 2025.

Current wording

For the three months ended June 30, 2026, and 2025, we recognized other income, net totaling approximately $174,000 and $19,000, respectively.

Previous wording

For the three months ended March 31, 2026, the pretax income totaled approximately $3.4 million, compared with pretax income of approximately $2.8 million for same period of fiscal year 2025.

Current wording

For the three months ended June 30, 2026, the pretax income totaled approximately $4.0 million, compared with pretax income of approximately $4.0 million for same period of fiscal year 2025.

Previous wording

We recognized tax expense of $0.7 million for the three-month period ended March 31, 2026, and approximately $0.7 million for the same period of fiscal year 2025.

Current wording

We recognized tax expense of $0.8 million for the three-month period ended June 30, 2026, and approximately $0.3 million for the same period of fiscal year 2025.

Previous wording

Net income for the three months ended March 31, 2026, totaled approximately $2.8 million ($0.74 per basic and $0.69 per diluted share), compared with a net income of approximately $2.1 million ($0.60 per basic and $0.55 per diluted share) for the same period last year. The primary factors for the improvement for the three months ended March 31, 2026, compared to the same period of fiscal year 2025, were radio product unit sales growth and increases in BKR9000 multi-band product sales mix.

Current wording

Net income for the three months ended June 30, 2026, totaled approximately $3.2 million ($0.84 per basic and $0.79 per diluted share), compared with a net income of approximately $3.7 million ($1.03 per basic and $0.96 per diluted share) for the same period last year. The primary factor for the decrease for the three months ended June 30, 2026, compared to the same period of fiscal year 2025, is primarily related to federal and state estimated tax expense.

Previous wording

As of March 31, 2026, working capital totaled approximately $41.4 million, of which $36.1 million was comprised of cash, cash equivalents, and trade receivables. This compares with working capital totaling approximately $37.3 million at 2025 year-end, which included $30.0 million of cash, cash equivalents, and trade receivables.

Current wording

As of June 30, 2026, working capital totaled approximately $46.1 million, of which $42.1 million was comprised of cash, cash equivalents, and trade receivables. This compares with working capital totaling approximately $37.3 million at 2025 year-end, which included $30.0 million of cash, cash equivalents, and trade receivables.

Previous wording

Customer demand and new orders for our products was $17.3 million during the three months ended March 31, 2026, compared to $16.8 million for the same period of fiscal year 2025. The increase in new orders for the three months ended March 31, 2026, compared to the same period last year was primarily due to higher state agency orders in the first three months of 2026.

Current wording

Customer demand and new orders for our products was $18.4 million during the three months ended June 30, 2026, compared to $18.3 million for the same period of fiscal year 2025.

Previous wording

For the first quarter of 2026, sales increased 11.8% to approximately $21.3 million, compared with approximately $19.1 million of sales for the first quarter of fiscal year 2025. Gross profit margin as a percentage of sales for the first quarter of 2026 was approximately 51.8%, compared with 47.0% for the same period of fiscal year 2025, generally reflecting BKR radio product and accessories sales mix compared to the first quarter of fiscal year 2025. Selling, general, and administrative (“SG&A”) expenses for the first quarter of 2026 totaled approximately $7.7 million, which was 28.3% higher than the SG&A expenses of approximately $6.0 million for the first quarter of fiscal year 2025. The increase in SG&A expenses was attributed primarily due to software and new product development costs. These factors yielded operating income of approximately $3.3 million for the three-month period ended March 31, 2026, compared with operating income of approximately $2.9 million for the same period of fiscal year 2025.

Current wording

For the second quarter of 2026, sales increased 10.6% to approximately $23.4 million, compared with approximately $21.2 million of sales for the second quarter of fiscal year 2025. Sales for the six months ended June 30, 2026, totaled approximately $44.7 million, an increase of 11.2% compared with approximately $40.2 million for the same period last year. Gross profit margin as a percentage of sales for the second quarter of 2026 was approximately 51.9%, compared with 47.4% for the same period of fiscal year 2025, generally reflecting BKR radio product and accessories sales mix compared to the second quarter of fiscal year 2025. Gross profit margin as a percentage of sales for the six months ended June 30, 2026 was approximately 51.8%, compared with approximately 47.2% for the same period last year. Selling, general, and administrative (“SG&A”) expenses for the second quarter of 2026 totaled approximately $8.3 million, which was 37.7% higher than the SG&A expenses of approximately $6.0 million for the second quarter of fiscal year 2025. The increase in SG&A expenses was attributed primarily due to software, new product development costs and legal expenses. Selling, general, and administrative expenses for the first six months of 2026 totaled approximately $16.1 million, which was 33.0% higher than the SG&A expenses of approximately $12.1 million for the same period of fiscal year 2025. These factors yielded operating income of approximately $3.8 million for the three-month period ended June 30, 2026, compared with operating income of approximately $4.0 million for the same period of fiscal year 2025. Operating income for the first six months of 2026 was approximately $7.1 million, compared with operating income of approximately $6.9 million for the same period of fiscal year 2025.

Previous wording

For the first quarter of 2026, we recognized other net income of approximately $155,000 on interest income on our cash investments and other expenses, compared to approximately $114,000 other expense, primarily related to other expenses for the same period of fiscal year 2025.

Current wording

For the second quarter of 2026, we recognized other net income of approximately $174,000 on interest income on our cash investments and other expenses, compared to approximately $19,000 other income, primarily related to interest income partially offset by other expenses for the same period of fiscal year 2025. For the first six months of 2026, we recognized other net income of approximately $329,000 on interest income, primarily on our cash investments and other expenses, compared to approximately $95,000 other expense, primarily related to other expenses exceeding interest income for the same period of fiscal year 2025.

Previous wording

As of March 31, 2026, working capital totaled approximately $41.4 million, of which approximately $36.1 million was comprised of cash, cash equivalents and trade receivables. As of December 31, 2025, working capital totaled approximately $37.3 million, of which approximately $30.0 million was comprised of cash, cash equivalents and trade receivables.

Current wording

As of June 30, 2026, working capital totaled approximately $46.1 million, of which approximately $42.1 million was comprised of cash, cash equivalents and trade receivables. As of December 31, 2025, working capital totaled approximately $37.3 million, of which approximately $30.0 million was comprised of cash, cash equivalents and trade receivables.

Previous wording

(1) Amounts may not foot due to rounding.

Current wording

Note - Amounts may not foot due to rounding.

Previous wording

Sales for the first quarter ended March 31, 2026, were attributed primarily to state and local public safety opportunities. From a product perspective, the primary contributor to orders and shipments during the first quarter ended March 31, 2026, was our BKR series radios and related accessories. The BKR Series is envisioned as a comprehensive line of new products, which includes new models such as the BKR 9000, which achieved first sales in the second quarter of 2023.

Current wording

Sales for the three and six months ended June 30, 2026, were attributed primarily to state and local public safety opportunities. From a product perspective, the primary contributor to orders and shipments during the second quarter ended June 30, 2026, was our BKR series radios and related accessories. The BKR Series is envisioned as a comprehensive line of new products, which includes new models such as the BKR 9000, which achieved first sales in the second quarter of 2023.

Previous wording

Gross profit margins as a percentage of sales for the first quarter ended March 31, 2026, were approximately 51.8% compared with 47.0% for the same quarter of fiscal year 2025. Our cost of products and gross profit margins are primarily derived from material, labor, and overhead costs, product mix, manufacturing volumes and pricing. The increase in gross profit margins for the three-months ended March 31, 2026, compared to the same period of fiscal year 2025, generally reflect radio product and accessories sales mix.

Current wording

Gross profit margins as a percentage of sales for the second quarter ended June 30, 2026, were approximately 51.9% compared with 47.4% for the same quarter of fiscal year 2025. Gross profit margins as a percentage of sales for the six months ended June 30, 2026, were approximately 51.8% compared with 47.2% for the same period of fiscal year 2025. Our cost of products and gross profit margins are primarily derived from material, labor, and overhead costs, product mix, manufacturing volumes and pricing. The increase in gross profit margins for the three and six months ended June 30, 2026, compared to the same period of fiscal year 2025, generally reflect radio product and accessories sales mix.

Previous wording

Engineering and product development expenses for the first quarter of 2026 totaled approximately $3.7 million (17.2% of sales), compared with approximately $2.5 million (13.3% of sales) for the same quarter of fiscal year 2025. The increase in engineering expenses was attributed primarily to development costs for the BKR multi-band mobile radio product and restricted stock unit issuance costs described in Note 6 (Non-Cash Share-Based Employee Compensation**)** to the condensed consolidated financial statements included in this report. Most of these activities were being performed by our internal engineering team and were their primary focus, combined with sustaining engineering support for our existing products. The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages, including the impact of tariffs and certain component lead times in coming months and quarters.

Current wording

Engineering and product development expenses for the second quarter of 2026 totaled approximately $4.0 million (16.9% of sales), compared with approximately $2.3 million (10.9% of sales) for the same quarter of fiscal year 2025. For the six months ended June 30, 2026, engineering and product development expenses totaled approximately $7.6 million (17.0% of sales), compared with approximately $5.0 million (12.5% of sales) for the six month period last year. The increase in engineering expenses was attributed primarily to development costs for the BKR multi-band mobile radio product and software development costs. Most of these activities were being performed by our internal engineering team and were their primary focus, combined with sustaining engineering support for our existing products. The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages, including the impact of tariffs and certain component lead times in coming months and quarters.

Previous wording

Other general and administrative expenses for the first quarter of 2026 totaled approximately $2.3 million (10.6% of sales), compared with approximately $1.8 million (9.3% of sales) for the same period of fiscal year 2025. The increase in other general and administrative expenses for the three months ended March 31, 2026, was attributed primarily to non-cash stock compensation and the non-recurring nature of certain corporate consulting expenses compared to the three months ended March 31, 2025.

Current wording

Other general and administrative expenses for the second quarter of 2026 totaled approximately $2.5 million (10.7% of sales), compared with approximately $1.8 million (8.5% of sales) for the same period of fiscal year 2025. For the six months ended June 30, 2026, other general and administrative expenses totaled approximately $4.8 million (10.6% of sales), compared with approximately $3.3 million (8.1% of sales) for the six-month period last year. The increase in other general and administrative expenses for the three and six months ended June 30, 2026, was attributed primarily to non-cash stock compensation and the non-recurring nature of certain legal and corporate consulting expenses compared to the three and six months ended June 30, 2025.

Previous wording

As of March 31, 2026, our net deferred tax assets totaled approximately $4.9 million and were primarily derived from capitalized software and systems integration costs and deferred revenue.

Current wording

As of June 30, 2026, our net deferred tax assets totaled approximately $4.5 million and were primarily derived from capitalized software and systems integration costs and deferred revenue.

Previous wording

For the three months ended March 31, 2026, net cash provided by operating activities totaled approximately $6.8 million, compared with cash provided by operating activities of approximately $2.5 million for the same fiscal year period of 2025. Cash provided by operating activities for the three months ended March 31, 2026, was primarily related to net income of $2.8 million, an increase of $1.8 million in accounts payable, a decrease of $0.6 million in inventories, an increase of $0.5 million in deferred revenues, partially offset by a decrease of $0.4 million in accrued compensation and related taxes and a decrease of $0.4 million in prepaid expenses and other current assets.

Current wording

For the six months ended June 30, 2026, net cash provided by operating activities totaled approximately $7.5 million, compared with cash provided by operating activities of approximately $6.0 million for the same fiscal year period of 2025. Cash provided by operating activities for the six months ended June 30, 2026, was primarily related to net income of $5.9 million, an increase of $3.2 million in accounts payable, a decrease of $0.8 million in inventories, an increase of $0.2 million in deferred revenues, partially offset by an increase of $5.0 million in accounts receivable and a $0.5 million decrease in accrued compensation and related taxes.

Previous wording

For the first three months of 2026, we had net income of approximately $2.8 million, compared with a net income of approximately $2.1 million for the same period of fiscal year 2025. Accounts receivable decreased approximately $0.1 million during the three months ended March 31, 2026, compared with an increase of approximately $2.8 million for the same period of fiscal year 2025, primarily due to the timing of customer collections in the first three months of fiscal year 2026 and 2025. Inventories decreased during the three months ended March 31, 2026, by approximately $0.6 million compared to a decrease of approximately $1.4 million for the same period of fiscal year 2025. The decrease in inventories during the three months ended March 31, 2026 was primarily attributed to a decrease in finished goods somewhat offset by an increase in work in process materials. Accounts payable for the three months ended March 31, 2026, increased approximately $1.8 million, compared with an increase of approximately $0.8 million for the same period of fiscal year 2025, primarily due to the increased purchases of finished goods during the quarter ended March 31, 2026. Accrued other expenses increased during the first three months of 2026 by approximately $0.3 million compared with an increase of $0.8 million for the same period of fiscal year 2025. Depreciation and amortization totaled approximately $0.7 million for the three months ended March 31, 2026, compared with approximately $0.4 million for the same period of fiscal year 2025. Depreciation and amortization are primarily related to manufacturing and engineering equipment.

Current wording

For the first six months of 2026, we had net income of approximately $5.9 million, compared with a net income of approximately $5.9 million for the same period of fiscal year 2025. Accounts receivable increased approximately $5.0 million during the six months ended June 30, 2026, compared with an increase of approximately $4.2 million for the same period of fiscal year 2025, primarily due to the timing of customer collections in the first six months of fiscal year 2026 and 2025. Accounts payable for the six months ended June 30, 2026, increased approximately $3.2 million, compared with an increase of approximately $3.5 million for the same period of fiscal year 2025, primarily due to the increased purchases of finished goods during the quarter ended June 30, 2026 and 2025. Accrued other expenses increased during the first six months of 2026 by approximately $0.1 million compared with a decrease of $1.3 million for the same period of fiscal year 2025. The increase in accrued other expenses in the first six months of 2026, was related to the reversal of the increase that occurred during the first six months of 2025, related to contractual terms with our contract manufacturers. Inventories decreased during the six months ended June 30, 2026, by approximately $0.8 million compared to a decrease of approximately $0.5 million for the same period of fiscal year 2025. The decrease in inventories during the six months ended June 30, 2026, was primarily attributed to a decrease in raw materials and an increase in inventory allowance somewhat offset by an increase in finished goods. The decrease in inventories during the six months ended June 30, 2025, was primarily attributed to a decrease in raw materials and work in process, somewhat offset by an increase in finished goods. Depreciation and amortization totaled approximately $1.5 million for the six months ended June 30, 2026, compared with approximately $0.9 million for the same period of fiscal year 2025. The increase in depreciation and amortization for the six months ended June 30, 2026 compared to the same period in 2025, was primarily due to amortization of capitalized software and system integration costs. Depreciation and amortization costs are primarily related to manufacturing and engineering equipment and somewhat to software and integration cost amortization.

Previous wording

Cash used in investing activities for the three months ended March 31, 2026, totaled approximately $0.5 million, compared with approximately $0.7 million for the same period of fiscal year 2025. The cash used for the three-month period ended March 31, 2026, was attributed primarily to purchases of engineering equipment and tooling, compared to cash used for the three-month period ended March 31, 2025, which was also primarily attributed to capitalized software and system implementation costs and the purchase of engineering and manufacturing related equipment.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026, totaled approximately $0.7 million, compared with approximately $1.5 million for the same period of fiscal year 2025. The net cash used in the six-month period ended June 30, 2026, was attributed primarily to purchases of engineering equipment and tooling, compared to cash used for the six-month period ended June 30, 2025, which was primarily attributed to capitalized software and system implementation costs and the purchase of engineering and manufacturing related equipment.

Previous wording

For the three months ended March 31, 2026, approximately $166,000 was used in financing activities, primarily attributable to the repurchase of common stock, compared with cash provided by financing activities of approximately $13,000 for the same period of fiscal year 2025.

Current wording

For the six months ended June 30, 2026, approximately $0.4 million was provided by financing activities, compared with cash provided by financing activities of approximately $0.2 million for the same period of fiscal year 2025. Net cash provided by financing activities was primarily attributable to proceeds from the exercise of common stock options, somewhat offset by the repurchase of common stock in the first six months of 2026.

Previous wording

Our cash and cash equivalents balance on March 31, 2026, was approximately $29.0 million. We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our Fifth Third credit agreement, are sufficient to meet our working capital requirements for the foreseeable future. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, including those resulting from supply chain delays or interruptions, labor shortages, wage pressures, rising inflation, geopolitical events, the impacts of tariffs, and other force majeure events, could result in volatility in the financial and capital markets and could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity, and financial condition.

Current wording

Our cash and cash equivalents balance on June 30, 2026, was approximately $29.9 million. We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our Fifth Third credit agreement, are sufficient to meet our working capital requirements for the foreseeable future. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, including those resulting from supply chain delays or interruptions, labor shortages, wage pressures, rising inflation, geopolitical events, the impacts of tariffs, and other force majeure events, could result in volatility in the financial and capital markets and could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity, and financial condition.

Previous wording

BK Technologies, Inc.'s repayment obligations under the RLC are guaranteed by the Company and secured by a pledge of essentially all of the assets of the Company and BK Technologies, Inc. The Company is subject to customary negative covenants, including with respect to our ability to incur additional indebtedness, encumber and dispose of their assets and enter into affiliate transactions. BK Technologies, Inc. must also comply with: (i) a maximum total funded debt ratio of 2.00 to 1.00; (ii) a fixed charge coverage ratio of 1.2 to 1.0 as measured on a rolling twelve-month basis, each measured at the end of each fiscal quarter and (iii) a requirement that the outstanding principal balance under the RLC will be $0 for at least 30 consecutive days during each annual period ending on October 30.

Current wording

BK Technologies, Inc.'s repayment obligations under the RLC are guaranteed by the Company and secured by a pledge of essentially all of the assets of the Company and BK Technologies, Inc. The Company is subject to customary negative covenants, including with respect to our ability to incur additional indebtedness, encumber and dispose of their assets and enter into affiliate transactions. BK Technologies, Inc. must also comply with: (i) a maximum total funded debt ratio of 2.00 to 1.00; (ii) a fixed charge coverage ratio of 1.20 to 1.00 as measured on a rolling twelve-month basis, each measured at the end of each fiscal quarter and (iii) a requirement that the outstanding principal balance under the RLC will be $0 for at least 30 consecutive days during each annual period ending on October 30.

Previous wording

The Fifth Third RLC agreement provided for customary events of default, including: (1) failure to pay principal, interest or fees under the RLC when due and payable; (2) failure to comply with other covenants and agreements contained in the Revolving Loan Commitment agreement and the other documents executed in connection therewith; (3) the making of false or inaccurate representations and warranties; (4) defaults under other debt or other obligations of BK Technologies, Inc.; (5) money judgments and material adverse changes; (6) a change in control or ceasing to operate business in the ordinary course; and (7) certain events of bankruptcy or insolvency. Upon the occurrence of an event of default, Fifth Third may declare the entire unpaid balance immediately due and payable and/or exercise any and all remedial and other rights under the RLC agreement.

Current wording

The Fifth Third RLC agreement provides 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.