BKTI 10-K & 10-Q changes, risk factors and insider trading

Various portions of this report contain forward-looking statements that involve risks and uncertainties. Actual results, performance or achievements could differ materially from those anticipated in these forward-looking statements as a result of certain risk factors, including those set forth below and elsewhere in this report. We undertake no obligation to revise or update any forward-looking statements contained herein to reflect subsequent events or circumstances or the occurrence of unanticipated events. We face many risks and uncertainties, any one or more of which could have a material adverse effect on our business, results of operations, financial condition (including capital and liquidity), or prospects or the value of or return on an investment in BK. We describe certain of these risks and uncertainties in this section, although we may be adversely affected by other risks or uncertainties that are not presently known to us, that we have failed to appreciate, or that we currently consider immaterial. Although risks are organized by headings and each risk is discussed separately, many are interrelated. Disclosures of risks should not be interpreted to imply that the risks have not already materialized. These risk factors should be read in conjunction with the MD&A in Part II, Item 7 of this Annual Report on Form 10-K, and the Consolidated Financial Statements and notes thereto. This Annual Report on Form 10-K is qualified in its entirety by these risk factors.

We currently depend on our LMR products as our primary source of sales. A decline in the price of and/or demand for LMR products, as a result of competition, technological change, the introduction of new products by us or others or a failure to manage product transitions successfully, could have a material adverse effect on our business, financial condition and results of operations. In addition, our future success will largely depend on the successful introduction and sale of additional products to our BKR Series product line, including additional multiband products, which we may be unable to successfully complete in a timely manner. Even if we successfully develop and launch additional products to the BKR Series product line, such as our Solutions product group or any other new products, the development of which is a complex and requires innovation and investment, such products may not achieve market acceptance, which could have a material adverse effect on us.

Additionally, our ability to attract customers and increase revenue from our products and services depends in part on our ability to enhance and improve such products and services and to introduce new features and technologies, including our planned expansion of the SaaSSolutions business unitofferings and new BKR series products. The success of new products, technologies, enhancements and developments depends on several factors, including, but not limited to our anticipation of market changes and demands for product features, adequate quality testing, sufficient customer demand, cost effectiveness in our product development efforts and the proliferation of new technologies that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently or more securely. Any delays in the planned release dates of our products and services could result in adverse publicity, loss of sales or delay in market acceptance of our products and services, any of which could cause us to lose existing customers or impair our ability to attract new customers. In addition, the introduction of new products and services by competitors or the development of entirely new offerings could make our products and technologies obsolete or adversely affect our ability to compete. Any delay or failure in the introduction of enhancements, functionality or infrastructure developments could harm our business, results of operations and financial condition.

We also face risks related to our BKRplayInteropONE branded smartphone application. We rely on third parties maintaining open marketplaces, including the Apple App Store and Google Play, to make BKRplayour InteropONE branded smartphone application available for download. We cannot assure you that the marketplaces through which we distribute our mobile application will maintain their current structures or that such marketplaces will not charge us fees to list our application for download. In addition, any defects in our mobile application and the technology powering it may adversely affect our business. Tools, code, subroutines and processes contained within our mobile application may contain defects not yet discovered or contained in updates and new versions. Our introduction of updates and new versions with defects or quality problems may result in adverse publicity, reduced downloads and use, product development costs, loss of or delay in market acceptance of our products and technologies or claims by customers or others against us. Such problems or claims may have a material and adverse effect on our business, prospects, financial condition and results from operations.

The U.S. and global economy, as well as our business and results from operations, may be negatively impacted by a variety of factors, including inflation, interest rate uncertainty, supply chain and labor disruptions, unemployment rates, labor and materials shortages, banking instability, political and social unrest, geopolitical events and uncertainty, such as the Ukraine-Russia conflict and the conflict in the Middle East, any U.S. government shutdown, any downgrades in the U.S. government's sovereign credit rating, public health crises and an economic downturn or recession. These challenging economic conditions could materially and adversely impact our business, liquidity and financial condition in a number of ways, including, but not limited to, the following:

The terms of the amended credit agreement with Fifth Third Bank, National Association contain restrictive covenants that may limit our operating flexibility or that of our subsidiaries.

On October 30, 2024, our subsidiary, BK Technologies, Inc. (the “Subsidiary”), entered into a Revolving Loan Commitment (“RLC”) with Fifth Third Bank, National Association, (“Fifth Third”), which was amended on October 30, 2025, for a one-year$6 million line of credit with total maximum funding up to $6 million,credit, with an interest rate of the Secured Overnight Financing Rate ("SOFR") plus 2.5%a range of 1.75% to 2.25% per annum.annum, which will mature on October 30, 2028. The Company will use funds obtained from the RLC for general business purposes and working capital needs. The RLC has covenants concerning additional financing and indebtedness restrictions and certain financial covenants providing for a maximum funded debt ratio of 2.00 to 1.00.covenants. The RLC provides for the payment of fees by the Subsidiary and includes customary representations and warranties, indemnification provisions, covenants and events of default. Subject in some cases to cure periods, amounts outstanding under the RLC may be accelerated for typical defaults including, but not limited to, the failure to make payments when due, the failure to perform any covenant, the inaccuracy of representations and warranties, the occurrence of debtor-relief proceedings, and the occurrence of unpermitted liens. The Subsidiary'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 Subsidiary,Subsidiary and the Company and Relm Communications, Inc.Company. In general, the RLC could have an adverse effect on our financial condition or results of operations.

We are required to maintain internal control over financial reporting and disclosure controls and procedures in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. We, along with our independent registered public accounting firm, havepreviously identified a material weakness in our internal control over financial reporting that pertained to our income tax provision.provision, which was remediated as of December 31, 2025. See further discussion regarding controls implemented to remediate the material weakness in “Item 9A. Controls and Procedures” included in this report. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses could adversely impact our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC. While we arehave takingtaken steps to remediate the material weakness and enhance our disclosure controls and procedures and our internal control over financial reporting, we cannot provide any assurance that we will continue to be able to maintain adequate controls over our financial processes and reporting in the future or that we will not identify additional significant deficiencies and material weaknesses in our internal control over financial reporting in the future. Any failure of our internal controls could result in material misstatements in our consolidated financial statements, significant deficiencies, material weaknesses, costs, failure to timely meet our periodic reporting obligations and erosion of investor confidence. Such failure could also negatively affect the market price and trading liquidity of our common stock, subject us to civil and criminal investigations and penalties and could have a material adverse effect on our business, financial condition, results of operations or cash flow.

The occurrence of one or more natural disasters or other extreme weather events, such as fires, hurricanes, tornados, tsunamis, floods and earthquakes; geo-political events and political instability, such as civil unrest in a country in which our suppliers or manufacturers are located, including in the U.S., or acts of war or terrorism (wherever located around the world) or military activities disrupting transportation, communication or utility systems or otherwise causing damage to our business, employees, suppliers, manufacturers and customers; or other highly disruptive events, such as nuclear accidents, pandemics and other health crises, tariffs and other trade barriers or restrictions, or cyber-attacks, could have a material adverse effect on our business, financial condition and results of operations. Such events could have, and in the future result, among other things, in operational disruptions, physical damage to or destruction or disruption of one or more of our properties or properties used by third parties in connection with the supply of products or services to us, the lack of an adequate workforce in parts or all of our operations and communications and transportation disruptions. These factors could also cause consumer confidence and spending to decrease or result in increased volatility in the U.S. and global financial markets and economy. In addition, although preventative measures may help to mitigate damage from these types of catastrophic events, we cannot provide any assurance that any measures that we may take will be successful, and delays in recovery may be significant. Furthermore, the insurance we maintain may not be adequate to cover or losses resulting from any business interruption, including those resulting from a natural disaster or other severe weather event, and recurring extreme weather events or other adverse events could reduce the availability or increase the cost of insurance. Such occurrences could have a material adverse effect on us and could also have indirect consequences, such as increases in the costs of insurance, if they result in significant loss of property or other insurable damage.

If we incur future operating losses, we may be required to provide some or all of our deferred tax assets with a valuation allowance, resulting in additional non-cash income tax expense. The change in the valuation allowance may have a materialan impact on future net income or loss.

As a supplier of LMR products to federal, state and municipality agencies, we face a multitude of security threats, including cybersecurity threats ranging from attacks common to most industries, such as ransomware and denial-of-service, to attacks from more advanced and persistent, highly organized adversaries, including nation state actors, which target the defense contractors and other critical infrastructure sectors. The sophistication of these threats continuecontinues to evolve and grow, including the risk associated with the use of emerging technologies, such as artificial intelligence and quantum computing, for nefarious purposes. In addition to cybersecurity threats, we face threats to the security of our facilities and employees from sabotage or other disruptions, any of which could adversely affect our business. The improper conduct of our employees or others working on behalf of us who have access to sensitive information could also adversely affect our business and reputation. Our customers, suppliers, subcontractors and manufacturing partners experience similar security threats.

From time to time, we have experienced, and expect to continue to experience, cyber-attacks on our information technology systems and the information systems of our distributors, manufacturers, suppliers and other partners, whose systems we do not control. These systems are vulnerable to damage, unauthorized access or interruption from a variety of sources, including, but not limited to, continually evolving cyber-attacks (including social engineering and phishing attempts), attempts to gain unauthorized access to data, cyber intrusion, computer viruses, and/or malicious or destructive code, ransomware or other malware, or denial-of-service attacks, security breach, misconduct by employees or other insiders with access to our data, energy blackouts, natural disasters, terrorism, sabotage, war and telecommunication failures. We previously experienced an incident that impacted certain portions of our information technology systems, in which a limited number of non-critical systems experienced minor disruption. We completed an investigation into the incident and remediated and mitigated cybersecurity concerns, and the incident did not materially impact the Company’s financial condition or results of operations. Cyber-attacks are rapidly evolving and becoming increasingly sophisticated. Computer hackers and others might compromise our security measures, or security measures of those parties that we do business with now or in the future, and obtain the personal information of our customers, employees and partners or our business information. A cyber-attack or other significant disruption involving our information technology systems or those of our distributors, manufacturers, suppliers or other partners, could result in disruptions in critical systems, corruption or loss of data, theft of data, funds or intellectual property, and unauthorized release of our or our customers’ proprietary, confidential or sensitive information. Such incidents could also lead to widespread technology outages, interruptions or other failures of operational, communication or other systems globally and across companies and industries. Such unauthorized access to, or release of, this information could expose us to data loss, disrupt our operations, allow others to unfairly compete with us, subject us to litigation, government enforcement actions, regulatory penalties and costly response measures, and could seriously disrupt our operations. Any resulting negative publicity could also significantly harm our reputation. We may not have adequate insurance coverage to compensate us for any losses associated with such events. Any or all of the foregoing could have a negative impact on our business, financial condition, results of operations and cash flows.

Because the techniques used to obtain unauthorized access to, or disable, degrade or sabotage, information technology systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques, implement adequate preventative measures or remediate any intrusion on a timely or effective basis, as cyber-attacks could go undetected and persist for an extended period of time. Furthermore, to the extent artificial intelligence capabilities continue to improve and are increasingly adopted, they may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks, including the use of generative artificial intelligence to conduct more sophisticated social engineering attacks on the Company or third parties. In addition, vulnerabilities may be introduced from the use of artificial intelligence by us and third parties on which we rely.rely, which could increase the risk of unauthorized access to our data. Moreover, the development and maintenance of preventative and detective measures is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. We, therefore, remain potentially vulnerable to additional known or yet unknown threats, as in some instances, we, our distributors, manufacturers, suppliers and other partners, may be unaware of an incident or its magnitude and effects. We also face the risk of exposing our customers or partners to cybersecurity attacks. In addition, from time to time, we implement updates to our information technology systems and software, which can disrupt or shut down our information technology systems. We may not be able to successfully integrate and launch these new systems as planned without disruption to our operations.

We contract with manufacturers to produce portions of our products. For example, during 2023, we entered into the EWMaster MSA,Supply Agreement with East West Manufacturing, LLC,, pursuant to which we transitioned the manufacturing production of certain LMR products and accessories to EW, which was completed in the third quarter of 2024. Our use of contract manufacturers exposes us to certain risks, including shortages of manufacturing capacity, reduced control over delivery schedules, quality assurance, production yield and costs. If any of our manufacturers terminate production or cannot meet our production requirements, we may have to rely on other contract manufacturing sources or identify and qualify new contract manufacturers. The lead-time required to qualify a new manufacturer could range from approximately two to six months. Despite efforts to do so, we may not be able to identify or qualify new contract manufacturers in a timely and cost-effective manner, and these new manufacturers may not allocate sufficient capacity to us in order to meet our requirements. Any significant delay in our ability to obtain adequate quantities of our products from our current or alternative contract manufacturers could have a material adverse effect on our business, financial condition and results of operations.

In addition, our dependence on limited and sole source suppliers of components involves several risks, including a potential inability to obtain an adequate supply of components, price increases, late deliveries and poor component quality, as well as the impact of increased tariffs and the imposition of other trade barriers and restrictions. 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%15.2% of the Company’s material, subassembly and product procurements in 20242025 were sourced internationally, of which approximately 79.9%64.4% were sourced from seventhree suppliers. We place purchase orders from time to time with a limited number of these suppliers and have no guaranteed supply arrangements. Disruption or termination of the supply of thesecertain components could delay shipments of our products. The lead-time required for some of our proprietary components is up to as long as twelve to eighteen months. If we are unable to accurately predict our component needs, or if our component supply is disrupted, we may miss market opportunities by not being able to meet the demand for our products. This may damage our relationships with current and prospective customers and have a material adverse effect on our business, financial condition and results of operations.

ChangesContinuing changes in U.S. trade policy, including the imposition of new or additional tariffs on imported goods, may have a material adverse effect on us.

The U.S.'s trade policy, including the imposition of new or additional tariffs, is currentlyremains in flux, following the recent change in U.S. Presidential administration.flux. Changes in U.S. trade policy mayhave leadresulted toin significant increases in tariffs for certain imported goods, as well as retaliatory tariffs and other trade barriers and restrictions by trading partners.partners, and there could be further increases in tariffs and/or new or more stringent retaliatory measures imposed in the future. The current presidential administration has imposed additionalnew tariffsor on certain products from China, as well as significantincreased tariffs on products from MexicoChina and Canada,a whichnumber areof currentlyother oncountries, hold.including steel and aluminum. The imposition of suchthese tariffs has strained international relations and increasedresulted in the riskimplementation that foreign governments implementof retaliatory tariffs and other measures on goods imported from the U.S.U.S, which could become more severe. We derive a majority of our revenues from products comprised of electronic components from foreign sources, which makes us especially vulnerable to increased tariffs. Ongoing or new trade wars orand other governmental action related to tariffs imposed by the U.S. orand other countries orand changes to international trade agreements and policies could result in increased costs, and any action we take or policiesmay take as a result including increased prices to our customers, may not be sufficient to fully offset the impact of tariffs and could result in reduced profitability; could adversely impact our supply chain; and could reduce demand for our products and services, increaseall our costs, reduce our profitability, adversely impact our supply chain,of which could have a material adverse effect on our business and results of operations. Further, the volatility and unpredictability of international trade policies and conditions add further complexity to our operations, making it challenging to forecast and plan effectively. We are not able to predict future trade policy of the U.S. or of any foreign countries, or the terms of any trade agreements or their impact on our business. The adoption and expansion of trade restrictions and tariffs, quotas, embargoes and other related actions, the occurrence or threat of a trade war or other governmental action related to tariffs or trade agreements or policies, could also adversely impact our customers, our suppliers and the world and U.S. economies, including instability in the financial and capital markets, including bond markets, and the potential for a recession in the U.S. or globally, which in turn could have a material adverse effect on our business, operating results and financial condition.

Currently, we have five approved and four pending applications for U.S. patents and two international pending patent applications. We have several trademarks related to the names “BK Technologies,” “BK RadioRadio,” "BK ONE," "BKRplay," and “Radios for Heroes.” We seek to trademark registrations to protect our proprietary positions whenever possible and wherever practical. As part of our confidentiality procedures, we generally enter into nondisclosure agreements with our employees, distributors and customers and limit access to and distribution of our proprietary information. We also rely on trade secret laws to protect our intellectual property rights. From time to time, we may pursue litigation to protect and assert our intellectual property rights. There is a risk that we may be unable to prevent another party from manufacturing and selling competing products or otherwise violating our intellectual property rights. Our intellectual property rights, and any additional rights we may obtain in the future, may be invalidated, circumvented or challenged in the future. It may also be particularly difficult to protect our products and intellectual property under the laws of certain countries in which our products are or may be manufactured or sold. Our failure to perfect or successfully assert intellectual property rights could harm our competitive position and could negatively impact us.

We believe that it is important to communicate our future expectations to our security holders and to the public. This report, including any information incorporated by reference in this report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” “should,” “will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek,” “are encouraged” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. We also may make forward-looking statements in other documents that are filed or furnished with the SEC. In addition, we may make forward-looking statements orally or in writing to investors, analysts, members of the media, or others. Forward-looking statements include, but are not limited to, the following: changes or advances in technology; the success of our SaaSSolutions and Radio businessproduct linesgroups and the products offered thereunder; successful introduction of new products and technologies, including our ability to successfully develop and sell our current and anticipated SaaSSolutions products, and our new multiband radio product and other related products in the BKR Series product line; competition in the LMR industry; general economic and business conditions, including the impact of high inflationinflation, and its impacts,fluctuating high interest rates, tariffs and other trade barriers and restrictions, labor and supply shortages and disruptions, federal, state and local government budget deficits and spending limitations, any impact from a prolonged shutdown of the U.S. Government, the effects of natural disasters, changes in climate, severe weather events, geopolitical events, acts of war or terrorism, global health crises and other catastrophic events, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environmentsenvironments, including a potential U.S. or global downturn or recession; the availability, terms and deployment of capital; reliance on contract manufacturers and suppliers; risks associated with fixed-price contracts; heavy reliance on sales to agencies of the U.S. Government and our ability to comply with the requirements of contracts, laws and regulations related to such sales; allocations by government agencies among multiple approved suppliers under existing agreements; our ability to comply with U.S. tax laws and utilize deferred tax assets; our ability to attract and retain executive officers, skilled workers and key personnel; our ability to manage our growth; our ability to identify potential candidates for, and to consummate, acquisition, disposition or investment transactions, impact of our capital allocation strategy; risks related to maintaining our brand and reputation; impact of government regulation; impact of rising health care costs; our business with manufacturers located in other countries, including the effects of changes in the U.S. Government and foreign governments’ trade and tariff policiespolicies, such as recent increases in tariffs by the U.S. and the imposition of increased tariffs and other trade barriers and retaliatory measures by foreign governments; our inventory and debt levels; our ability to comply with the terms, including financial covenants, of our outstanding debt, including increasing fluctuating interest rates; protection of our intellectual property rights; fluctuation in our operating results and stock price; any infringement claims; data security breaches, cyber-attacks and other factors impacting our technology systems or third-party information technology systems upon which we rely; widespread outages, interruptions or other failures of operational, communication, or other systems; availability of adequate insurance coverage; environmental, social and governance matters; maintenance of our NYSE American listing; risks related to being a holding company; our ability to remediatemaintain the material weakness in oureffective internal control over financial reporting; and the effect on our stock price and ability to raise equity capital ofthrough future sales of shares of our common stock.stock or otherwise.

In business for over 70 years, BK operates two businesskey unitsproduct throughgroup its operating subsidiary, BK Technologies, Inc.offerings: Radio and SaaS.Solutions.

The Radio businessproduct unitgroup designs, manufactures and markets wireless communications products and related accessories consisting of two-way land mobile radios (“LMRs”). Two-way LMRs can be radios that are hand-held (portable) or installed in vehicles (mobile).

Generally, BK Technologies-branded products serve government marketsmarkets, includingincluding, but not limited toto, emergency response, public safety, homeland security and military customers of federal, state and municipal government agencies, as well as various industrial and commercial enterprises. We believe that our products and solutions provide superior value by offering a high specification, ruggedized, durable, reliable, feature rich, Project 25 (“P25”) compliant radio products at a lower cost relative to comparable offerings.

The SaaSSolutions businessproduct unitgroup focuses on delivering innovative,innovative publicproducts safetyand smartphone applications which operate ubiquitously over public cellular networks. Our BKRplayBK ONE branded smartphonesolutions application offers multiple servicesare designed to makeprovide advanced field applications that enhance situational awareness, decision-making and interagency coordination that enable the first responder to be safer and more efficient. Our BK ONE portfolio provides law enforcement improved safety and productivity, fire incident first responders more situational awareness and EMS first responders with enhanced patient safety and advanced care measures. When tethered to our radios, the combined solution offers an enhanced user experience with a more unique capability which increases the sales reach of our radios.

For 2024,2025, sales grew approximately 3.4%12.5% to approximately $76.6$86.1 million, compared with $74.1$76.6 million for the prior year. Gross profit margins as a percentage of sales in 20242025 were 37.9%,48.8%, compared with 30.0%37.9% for the prior year, generally reflecting product sales mix for the BKR9000 Series radios and the full year impact of efficiencies from the transition of production to East West Manufacturing, LLC and cost reduction efforts in 2023 and 2024. Selling, general and administrative (“SG&A”) expenses for 20242025 totaled approximately $21.2$26.0 million (27.7%30.2% of sales), compared with $23.0$21.2 million (31.1%27.7% of sales) last year. We recognized an operating income of approximately $7.8$16.0 million in 2024,2025, which was attributed primarily to increased gross margins related to the product mix and transition of production of our radio products to East West Manufacturing, LLC.LLC described above. For the year 2023ended December 31, 2024 we recognized an operating lossprofit of approximately $0.8$7.8 million.

For 20242025 the pretax income totaled approximately $7.4$16.1 million, compared with a pretax lossincome of approximately $2.2$7.4 million for the year 2023.2024.

We recognized a tax expense of $2.6 million in 2025 and a tax benefit of $1.0 million in 2024 and a tax expense $0.1 million in 2023.2024.

The net income for 20242025 totaled approximately $13.5 million ($3.69 per basic and $3.44 per diluted share), compared with net income of approximately $8.4 million ($2.35 per basic and $2.25 per diluted share), compared with net loss of approximately $2.2 million ($0.65 per basic and diluted share) for the year 2023.2024.

We may experience fluctuations in our quarterly results, in part, due to governmental customer spending patterns that are influenced by government fiscal year-end budgets and appropriations. We may also experience fluctuations in our quarterly results, in part, due to our sales to federal and state agencies that participate in wildland fire-suppression efforts, which may be greater during the summer season when forest fire activity is heightened. In some years, these factors may cause an increase in sales for the second and third quarters, compared with the first and fourth quarters of the same fiscal year. Such increases in sales may cause quarterly variances in our cash flow from operations and overall financial condition. The Company’s guidance reflects our current understanding of the potential impact of tariffs and the current administration’s efforts to reduce federal expenditures, and to the extent it can be calculated, the estimated amount of the impacts are included in current guidance.

Customer demand and orders for our products were $84.6$80.1 million and $65.2$84.6 million in 20242025 and 2023,2024, respectively. SupplyThe chain constraints limited our ability to manufacture the quantities needed to convert the orders into shipments and sales revenuedecrease in 2022 and were carried in backlog of $27.0 million as of December 31, 2022, that were fulfilled during 2023. The increase in salesorders for the year ended December 31, 2024,2025, was primarily attributed to salesa ofdecrease in orders to wildland fire customers somewhat offset by an increase in orders for the BKR9000 portable LMR products to federal, state and municipal public safety agencies, some of which were new customers.

The BKR Series is envisioned as a comprehensive line of new products, which will include additional models in coming quarters andfuture years. The timing of developing additional BKR Series products and bringing them to market could be impacted by various factors, including potential impacts related to our supply chain, labor shortages, wage pressures, high inflation, and other force majeure events. We believe BKR Series products, we believe,products should increase our addressable market by expanding the number of federal and other public safety customers that may purchase our products. However, the timing and size of orders from agencies at all levels can be unpredictable and subject to budgets, priorities, and other factors. Accordingly, we cannot assure that we will be able to develop additional BKR Series products on the anticipated timelines, or at all, or that sales will occur under particular contracts, or that our sales prospects will otherwise be realized.

Gross profit margins as a percentage of sales for 20242025 were approximately 37.9%,48.8%, compared with 30.0%37.9% for the year 2023.2024.

Our cost of products and gross profit margins are primarily derived from material, labor and overhead costs, product mix, manufacturing volumes and pricing. Gross profit margins for the year ended December 31, 2024,2025, increased compared with the same period last year primarily due to product sales mix and the full year impact of efficiencies from the transition of production of our radio products to East West Manufacturing LLC, as well as sales mix and material cost improvements related to cost reduction efforts.

We utilize a combination of internal manufacturing capabilities and contract manufacturing relationships for production efficiencies and to manage material and labor costs. While we anticipate continuing to do so in the future, we have increased,increased and are continuing to increase,increase our utilization of contract manufacturing resources, which provides increased flexibility for our production capacity to meet increased demand. We completed the transition of our West Melbourne, Floridamain manufacturing activities to East West Manufacturing, LLC's facilities during the third quarter of 2024. We believe that our current manufacturing capabilities and contract relationships or comparable alternatives will continue to be available to us. Although in the future we may encounter new product costs and competitive pricing pressures, the extent of their impact on gross margins, if any, is uncertain.

During the last three years, worldwideWorldwide shortages of materials, including semiconductors and integrated circuits, have resulted in limited supplies and extended lead times for certain components used in our products.products While we have been ablerelated to procure the material necessary to manufacture our products and fulfill customer orders, there have been delays, extended lead times and increased costs within ourongoing supply chain thatissues improvedsince through fiscal year 2023 and had significantly less impact on our operations for 2024.2021. The impact on our operations of such shortages, or additional shortages that may surface, is uncertain, but could potentially impact our future sales, manufacturing operations and financial results.

Engineering and product development expenses for 20242025 totaled approximately $7.8$10.6 million (10.2%12.3% of sales), compared with approximately $9.3$7.8 million (12.6%10.2% of sales) for the prior year. For 2024,2025, the Company also capitalized approximately $1.3$2.1 million of costs related to the development of the all-band BKR9500 mobile radio.radio, compared to $1.3 million in 2024. Engineering and product development expenses are primarily related to the continued design and development of BKR Series, a new line of portable and mobile radios. These development activities are the main focus of our engineering team. The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages and the potential economic effects of the conflictschanges in UkraineU.S. trade legislation and regulations, including increased tariffs, and the Middleimposition Eastof governmental economic sanctions on countries in comingwhich quarters.we do business.

Marketing and selling expenses for the year ended December 31, 2024,2025, totaled approximately $7.6 million (8.8% of sales), compared with approximately $6.2 million (8.1% of sales), compared with approximately $6.1 million (8.2% of sales) for the year 2023.2024. Marketing and selling expenses for 2025 increased $1.4 million compared to 2024 remained consistent with 2023 levels reflecting steadyincreases in staff-related and othermarketing salesprojects to promote and go-to-marketaccelerate expensesthe foradoption 2024.rate of the BKR9000.

General and administrative expenses for the year ended December 31, 2024,2025, totaled approximately $7.9 million (9.2% of sales), compared with approximately $7.2 million (9.4% of sales), compared with approximately $7.6 million (10.3% of sales) for the year 2023.2024. General and administrative expenses for 20242025 were consistent with the prior year and were primarily attributed to corporate management and headquarters-related expenses. A LMR general manager position was added mid-year 2025, to enhance the leadership of the daily operations.

For the year ended December 31, 2024,2025, our operating income totaled approximately $16.0 million (18.6% of sales), compared with operating income of approximately $7.8 million (10.2% of sales), compared with operating loss of approximately $0.8 million (1.0% of sales), for the year 2023.2024. The improvement in operating income for the year iswas primarily attributed to increased gross margins, related to product sales mix, as well as the full year impact of the transition of manufacturing production to East West Manufacturing LLC throughout the year 2024, as well as sales mix2024 and material cost improvements related to cost reduction efforts.

Other Income (Expense) Income

Interest Income (Expense) Income

Gain/Loss on Investments

For the year ended December 31, 2024, we recognized a realized loss of approximately $91,000 on our investment in FG FinancialHoldings Holdings,LLC. On January 25, 2024, the Company redeemed its interests in FG Holdings LLC comparedand withwithdrew anfrom unrealizedFG Holdings LLC and recorded a realized loss on investments of approximately $740,000 for the year 2023.investment.

We recorded $984,000approximately $2.6 million income tax expense and $1.0 million income tax benefit and $54,000 income tax expense for the years ended December 31, 20242025 and 2023,2024, respectively.

As of December 31, 2024,2025, our net deferred tax assets totaled approximately $5.2 million compared to $6.8 million in 2024 and were primarily derived from capitalized research and development expenses and deferred revenue.

For the year ended December 31, 2024,2025, net cash provided by operating activities totaled approximately $11.4$19.4 million, compared with cash provided by operating activities of approximately $1.7$12.8 million for the prior year. Cash provided by operating activities for 20242025 was primarily related to net income, a decrease in inventories, an increase in deferred revenues, an increase in accrued other expenses and other current liabilities and depreciation and amortization,amortization and non-cash share-based compensation expense, which were partially offset by a decreasedecreases in accounts payable,payable increasesand inother prepaidaccrued expenses and other current assets and capitalized product development costs.liabilities.

On October 30, 2024, the Company's subsidiary, BK Technologies, Inc. entered into a Revolving Loan Commitment (as amended, the “RLC”) with Fifth Third Bank, National Association,Association (“Fifth Third”) The Fifth Third RLC providespreviously provided for a one-year revolving line of credit with a maximum commitment of $6 million, with an accordion feature, if certain conditions are met, for up to an additional $4 million of borrowing capacity, totaling a maximum commitment of $10 million. On October 30, 2025, the subsidiary entered into an amendment to the RLC, which provided for a three-year extension of the agreement and revised the availability under the $6 million RLC, 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 raterange of SOFR plus 2.5%1.75% to 2.25% per annum.annum, based on certain total debt coverage ratios. Each advance may be prepaid at any time without penalty and the entire line of credit commitment may be permanently terminated by BK Technologies, Inc. at any time upon 10 days’ prior written notice to the lender without penalty. The RLC has a borrowing base equal to the sum of (i) 80% of eligible commercial accounts receivable, plus (ii) 50% of federal government accounts receivable, plus (iii) the lesser of (a) the sum of (i) and (ii) and (b) 50% of eligible finished goods inventory. The Company has not utilized funding and thereThere were no borrowings under the RLC agreement as of December 31, 2024,2025, and as of the date of filing this report.

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

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

Our cash and cash equivalents balance at December 31, 2024,2025, was approximately $7.1$22.8 million. We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our Fifth Third RLC, are sufficient to meet our working capital requirements for the foreseeable future. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, including those resulting from supply chain delays or interruptions, labor shortages, wage pressures, risinginflation, inflation,tariffs and other trade barriers and restrictions, geopolitical events, and other force majeure events, could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity, and financial condition. For a description of these risks, see “Item 1A. Risk Factors” set forth in this report.

The Company recognizes revenues in accordance with theFASB Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” and the additional related ASUs (“ASC 606”). ASC 606 provides that sales revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company generally satisfies performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service. For extended warranties, sales revenue associated with the warranty is deferred at the time of sale and later recognized on a straight-line basis over the extended warranty period. Some contracts include installation services, which are completed in a short period of time and the revenue is recognized when the installation is complete. Currently, the Company does not have any contracts where revenue is recognized, but the customer payment is contingent on a future event.

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.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.

For the three months ended MarchJune 31,30, 2026, sales increased approximately 11.8%10.6% to approximately $21.3$23.4 million, compared with $19.1$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 MarchJune 31,30, 2026, were 51.8%,51.9%, compared with 47.0%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 MarchJune 31,30, 2026, totaled approximately $7.7$8.3 million (36.4%35.5% of sales), compared with $6.0 million (31.7%28.5% of sales) in the same period of fiscal year 2025. We recognized operating income for the three months ended MarchJune 31,30, 2026, of approximately $3.3$3.8 million, compared with operating income of approximately $2.9$4.0 million for the same period of fiscal year 2025.

For the three months ended MarchJune 31,30, 2026, and 2025, we recognized other income, net totaling approximately $155,000.$174,000 Thisand compares$19,000, with other expenses, net totaling $114,000 for the same period of fiscal year 2025.respectively.

For the three months ended MarchJune 31,30, 2026, the pretax income totaled approximately $3.4$4.0 million, compared with pretax income of approximately $2.8$4.0 million for same period of fiscal year 2025.

We recognized tax expense of $0.7$0.8 million for the three-month period ended MarchJune 31,30, 2026, and approximately $0.7$0.3 million for the same period of fiscal year 2025.

Net income for the three months ended MarchJune 31,30, 2026, totaled approximately $2.8$3.2 million ($0.74$0.84 per basic and $0.69$0.79 per diluted share), compared with a net income of approximately $2.1$3.7 million ($0.60$1.03 per basic and $0.55$0.96 per diluted share) for the same period last year. The primary factorsfactor for the improvementdecrease for the three months ended MarchJune 31,30, 2026, compared to the same period of fiscal year 2025, wereis radioprimarily productrelated unitto sales growthfederal and increasesstate inestimated BKR9000tax multi-band product sales mix.expense.

As of MarchJune 31,30, 2026, working capital totaled approximately $41.4$46.1 million, of which $36.1$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.

FirstSecond Quarter and ThreeSix Months Summary

Customer demand and new orders for our products was $17.3$18.4 million during the three months ended MarchJune 31,30, 2026, compared to $16.8$18.3 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.

For the firstsecond quarter of 2026, sales increased 11.8%10.6% to approximately $21.3$23.4 million, compared with approximately $19.1$21.2 million of sales for the firstsecond 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 firstsecond quarter of 2026 was approximately 51.8%,51.9%, compared with 47.0%47.4% for the same period of fiscal year 2025, generally reflecting BKR radio product and accessories sales mix compared to the firstsecond 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 firstsecond quarter of 2026 totaled approximately $7.7$8.3 million, which was 28.3%37.7% higher than the SG&A expenses of approximately $6.0 million for the firstsecond quarter of fiscal year 2025. The increase in SG&A expenses was attributed primarily due to software andsoftware, new product development costs.costs Theseand factorslegal yieldedexpenses. operatingSelling, incomegeneral, 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 $3.3 million for the three-month period ended March 31, 2026, compared with operating income of approximately $2.9$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.

For the firstsecond quarter of 2026, we recognized other net income of approximately $155,000$174,000 on interest income on our cash investments and other expenses, compared to approximately $114,000$19,000 other expense,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.

NetProvision for income taxes for the three months ended MarchJune 31,30, 2026, was approximately $2.8$0.8 million ($0.74 per basic and $0.69 per diluted share),million, compared with netprovision for income taxes of approximately $2.1$0.3 million ($0.60 per basic and $0.55 per diluted share) for the same quarter last year. The primary factorsfactor for the improvementincrease for the three-month period ended MarchJune 31,30, 2026, compared to the same period of fiscal year 2025, wereis radiorelated productto unitutilization salesof growthresearch and increasesdevelopment intax BKR9000credits multi-bandfor product2025. salesProvision mix.for income taxes for the six months ended June 30, 2026, was approximately $1.5 million, compared with provision for income taxes of approximately $0.9 million for the same period last year.

As of MarchJune 31,30, 2026, working capital totaled approximately $41.4$46.1 million, of which approximately $36.1$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.

(1)Note - Amounts may not foot due to rounding.

For the firstsecond quarter ended MarchJune 31,30, 2026, net sales increased 11.8%10.6% to approximately $21.3$23.4 million, compared with approximately $19.1$21.2 million for the same quarter of fiscal year 2025. Sales for the six months ended June 30, 2026, totaled approximately $44.7 million, compared with approximately $40.2 million for the six-month period last year.

Sales for the firstthree quarterand six months ended MarchJune 31,30, 2026, were attributed primarily to state and local public safety opportunities. From a product perspective, the primary contributor to orders and shipments during the firstsecond quarter ended MarchJune 31,30, 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.

Gross profit margins as a percentage of sales for the firstsecond quarter ended MarchJune 31,30, 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 47.0%47.2% for the same quarterperiod 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-monthsthree and six months ended MarchJune 31,30, 2026, compared to the same period of fiscal year 2025, generally reflect radio product and accessories sales mix.

SG&A expenses for the quarter ended MarchJune 31,30, 2026, totaled approximately $7.7$8.3 million (36.4%35.5% of sales), compared with approximately $6.0 million (31.7%28.5% of sales) for the same quarter of fiscal year 2025. SG&A expenses increased by $4.0 million, or 33.0%, to approximately $16.1 million (35.9% of sales), compared with approximately $12.1 million (30.0% of sales), for the six month period last year.

Engineering and product development expenses for the firstsecond quarter of 2026 totaled approximately $3.7$4.0 million (17.2%16.9% of sales), compared with approximately $2.5$2.3 million (13.3%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 restrictedsoftware stockdevelopment unit issuance costs described in Note 6 (Non-Cash Share-Based Employee Compensation) to the condensed consolidated financial statements included in this report.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.

Marketing and selling expenses for the firstsecond quarter of 2026 totaled approximately $1.8$1.9 million (8.5%7.9% of sales), compared with approximately $1.7$1.9 million (9.1%9.2% of sales) for the firstsecond quarter of fiscal year 2025. TheFor increasethe insix months ended June 30, 2026, marketing and selling expenses decreased approximately $0.1 million, or 3.0%, to approximately $3.7 million (8.2% of sales), compared with approximately $3.8 million (9.4% of sales) for the same period last year. Marketing and selling expenses for the three monthsand six-months ended MarchJune 31,30, 2026 was attributedwere primarily unchanged compared to additionalthe salespeoplesame andperiod increasedof trade show participation.2025.

Other general and administrative expenses for the firstsecond quarter of 2026 totaled approximately $2.3$2.5 million (10.6%10.7% of sales), compared with approximately $1.8 million (9.3%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 MarchJune 31,30, 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 MarchJune 31,30, 2025.

Operating income for the quarter ended MarchJune 31,30, 2026, totaled approximately $3.3$3.8 million (15.4%16.4% of sales), compared with operating income of approximately $2.9$4.0 million (15.3%18.9% of sales) for the same period of fiscal year 2025. TheFor the six months ended June 30, 2026, our operating income improvementtotaled approximately $7.1 million (15.9% of sales), compared with operating income of approximately $6.9 million (17.2% of sales) for the six-month period last year. The decrease in operating income for the three months ended MarchJune 31,30, 2026, compared to the same period last year, was attributed to salesgrowth growthin product development costs and higher gross profit marginspartially related to improvedincreased productnon-cash salesstock mix.compensation and the non-recurring nature of certain legal and corporate consulting expenses.

Other Income (Expense)

We recorded approximately $682,000$0.8 million and $670,000$1.5 million tax expense for the three and six months ended MarchJune 31,30, 2026, respectively, compared to approximately $0.3 million and 2025,$0.9 respectively.million, respectively, for the same periods last year.

As of MarchJune 31,30, 2026, our net deferred tax assets totaled approximately $4.9$4.5 million and were primarily derived from capitalized software and systems integration costs and deferred revenue.

Based on our analysis of all available evidence, both positive and negative, we have concluded that, except for the capital loss carryforward of approximately $851,000, we will have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax assets. We cannot presently estimate what, if any, changes to the valuation of our deferred tax assets may be deemed appropriate in the future. If we incur future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of MarchJune 31,30, 2026.

For the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities totaled approximately $6.8$7.5 million, compared with cash provided by operating activities of approximately $2.5$6.0 million for the same fiscal year period of 2025. Cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026, was primarily related to net income of $2.8$5.9 million, an increase of $1.8$3.2 million in accounts payable, a decrease of $0.6$0.8 million in inventories, an increase of $0.5$0.2 million in deferred revenues, partially offset by aan decreaseincrease of $0.4$5.0 million in accounts receivable and a $0.5 million decrease in accrued compensation and related taxes and a decrease of $0.4 million in prepaid expenses and other current assets.taxes.

For the first threesix months of 2026, we had net income of approximately $2.8$5.9 million, compared with a net income of approximately $2.1$5.9 million for the same period of fiscal year 2025. Accounts receivable decreasedincreased approximately $0.1$5.0 million during the threesix months ended MarchJune 31,30, 2026, compared with an increase of approximately $2.8$4.2 million for the same period of fiscal year 2025, primarily due to the timing of customer collections in the first threesix 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 threesix months ended MarchJune 31,30, 2026, increased approximately $1.8$3.2 million, compared with an increase of approximately $0.8$3.5 million for the same period of fiscal year 2025, primarily due to the increased purchases of finished goods during the quarter ended MarchJune 31,30, 2026.2026 and 2025. Accrued other expenses increased during the first threesix months of 2026 by approximately $0.3$0.1 million compared with ana increasedecrease of $0.8$1.3 million for the same period of fiscal year 2025. DepreciationThe andincrease amortizationin totaledaccrued approximatelyother $0.7expenses million forin the threefirst 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 MarchJune 31,30, 2026, compared withby approximately $0.4$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.equipment and somewhat to software and integration cost amortization.

CashNet cash used in investing activities for the threesix months ended MarchJune 31,30, 2026, totaled approximately $0.5$0.7 million, compared with approximately $0.7$1.5 million for the same period of fiscal year 2025. The net cash used forin the three-monthsix-month period ended MarchJune 31,30, 2026, was attributed primarily to purchases of engineering equipment and tooling, compared to cash used for the three-monthsix-month period ended MarchJune 31,30, 2025, which was also primarily attributed to capitalized software and system implementation costs and the purchase of engineering and manufacturing related equipment.

For the threesix months ended MarchJune 31,30, 2026, approximately $166,000$0.4 million was usedprovided inby financing activities, primarily attributable to the repurchase of common stock, compared with cash provided by financing activities of approximately $13,000$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.

Our cash and cash equivalents balance on MarchJune 31,30, 2026, was approximately $29.0$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.

On October 30, 2024, the Company's subsidiary, BK Technologies, Inc. entered into a Revolving Loan Commitment with Fifth Third Bank, National Association (“Fifth Third”) which was amended on October 30, 2025 (as amended, the “RLC”). The Fifth Third RLC provides for a revolving line of credit with a maximum commitment of $6.0 million, with an accordion feature, if certain conditions are met, for up to an additional $8.0 million of borrowing capacity, totaling a maximum commitment of $14.0 million. The RLC will mature on October 30, 2028. Each advance shall accrue interest on the outstanding principal amount thereof at a range of SOFR plus 1.75% to 2.25% per annum, based on certain total debt coverage ratios. Each advance may be prepaid at any time without penalty and the entire line of credit commitment may be permanently terminated by BK Technologies, Inc. at any time upon 10 days’ prior written notice to the lender without penalty. The Company has not utilized funding and there were no borrowings under the RLC agreement as of MarchJune 31,30, 2026, and as of the date of filing this report.

The Fifth Third RLC agreement providedprovides 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.

The Company accounts for the costs of Land Mobile Radio (LMR) multi-band development within its products in accordance with ASC Topic 350-30, “ Intangibles – Goodwill and Other,” under which certain LMR multi-band radio software and systems integration costs incurred subsequent to the establishment of technological feasibility are capitalized and amortized over the estimated lives of the related products. The Company began amortization of the multi-band mobile radio development costs for a period of 32 months, beginning on January 1, 2026.

There were no other changes to our critical accounting policies during the three months ended MarchJune 31,30, 2026.