Financial Performance - For the three months ended September 30, 2025, sales increased approximately 21.0% to approximately $24.4 million, compared to $20.2 million for the same period in fiscal year 2024[87] - Net income for the three months ended September 30, 2025, totaled approximately $3.4 million, compared to $2.4 million for the same period last year[90] - For Q3 2025, net income was approximately $3.4 million ($0.93 per basic share), a 41.7% increase from $2.4 million ($0.67 per basic share) in Q3 2024[98] - Net sales for Q3 2025 increased by 21.0% to approximately $24.4 million, compared to approximately $20.2 million in Q3 2024[102] - Operating income for Q3 2025 was approximately $4.8 million (19.8% of sales), an increase from $2.6 million (12.9% of sales) in Q3 2024[114] - For the first nine months of 2025, net income was approximately $9.3 million, a 97.87% increase compared to $4.7 million for the same period in fiscal year 2024[123] Profitability Metrics - Gross profit margins for the three months ended September 30, 2025, were 49.9%, up from 38.8% for the same period in fiscal year 2024, reflecting price increases and cost reduction initiatives[87] - Gross profit margin for Q3 2025 was approximately 49.9%, up from 38.8% in Q3 2024, reflecting improved product sales mix and material cost reductions[106] Customer Demand and Orders - Customer demand and new orders for products were $34.3 million during the three months ended September 30, 2025, compared to $21.8 million for the same period in fiscal year 2024[95] - Customer demand and new orders for the nine months ended September 30, 2025, totaled $69.3 million, compared to $72.4 million for the same period in fiscal year 2024[95] Expenses - Selling, general, and administrative expenses for the three months ended September 30, 2025, totaled approximately $7.3 million, or 30.1% of sales, compared to $5.2 million, or 25.9% of sales in the same period of fiscal year 2024[87] - Selling, general and administrative (SG&A) expenses for Q3 2025 totaled approximately $7.3 million (30.1% of sales), compared to $5.2 million (25.9% of sales) in Q3 2024[110] - Engineering and product development expenses for Q3 2025 were approximately $2.8 million (11.4% of sales), compared to $1.9 million (9.2% of sales) in Q3 2024[111] Working Capital and Cash Flow - Working capital as of September 30, 2025, was approximately $33.8 million, compared to $23.0 million at the end of fiscal year 2024[91] - Cash provided by operating activities for the nine months ended September 30, 2025, was approximately $16.4 million, compared to $9.0 million for the same period in 2024[122] - As of September 30, 2025, working capital totaled approximately $33.8 million, up from $23.0 million as of December 31, 2024[99] - The cash and cash equivalents balance on September 30, 2025, was approximately $21.5 million, sufficient to meet working capital requirements for the foreseeable future[126] Inventory and Receivables - Accounts receivable increased by approximately $0.2 million, compared to an increase of approximately $1.6 million for the same period in fiscal year 2024[123] - Inventories increased by approximately $1.8 million during the nine months ended September 30, 2025, contrasting with a decrease of approximately $5.3 million for the same period in fiscal year 2024[123] - Accounts payable increased by approximately $4.5 million, compared to a decrease of approximately $3.9 million for the same period in fiscal year 2024[123] Investment and Financing Activities - Cash used in investing activities totaled approximately $2.4 million for the nine months ended September 30, 2025, compared to approximately $1.6 million for the same period in fiscal year 2024[124] - Cash provided by financing activities was approximately $0.4 million, compared to cash used of approximately $6.6 million for the same period in fiscal year 2024[125] Debt and Credit Facilities - The Fifth Third Revolving Loan Commitment provides a maximum credit line of $6 million, with potential additional borrowing capacity of up to $8 million, maturing on October 30, 2028[127] - BK Technologies, Inc. must comply with a maximum total funded debt ratio of 2.00 to 1.00 and a fixed charge coverage ratio of 1.2 to 1.0[128] Product Development and Market Expansion - The Solutions product group plans to expand its offerings under the new brand BK ONE, which includes SaaS solutions and other applications[84] - The BKR series radios and related accessories were the primary contributors to sales growth in Q3 2025[103] - The company anticipates that the BKR Series products will expand its addressable market among public safety customers, although order timing may be unpredictable[104] Investment Performance - There were no realized or unrealized losses on investments for the nine months ended September 30, 2025, compared to approximately $0.1 million for the same period in fiscal year 2024[123]

Revenue and Sales Performance - Third quarter 2025 revenue increased by 21% to $24.4 million compared to $20.2 million in the third quarter of 2024[6] - Net sales for the three months ended September 30, 2025, increased to $24,411 million, up 21.5% from $20,179 million in the same period last year[26] Profitability and Earnings - Net income for Q3 2025 rose 46% to $3.4 million, or $0.87 per diluted share, compared to $2.4 million, or $0.63 per diluted share, in Q3 2024[8] - Non-GAAP adjusted earnings for Q3 2025 were $5.0 million, or $1.27 per diluted share, compared to $2.7 million, or $0.71 per diluted share, in Q3 2024[9] - Operating income for Q3 2025 was $4.8 million, compared to $2.6 million in Q3 2024[8] - Basic earnings per share for the three months ended September 30, 2025, were $0.93, compared to $0.67 for the same period in 2024, an increase of 38.8%[26] Margins and EBITDA - Gross margin for Q3 2025 was 49.9%, up from 38.8% in Q3 2024, primarily due to the product mix with the BKR 9000 gaining traction[6] - Non-GAAP adjusted EBITDA for Q3 2025 was $5.3 million, compared to $3.1 million in Q3 2024[10] - Adjusted EBITDA for the three months ended September 30, 2025, was $5,252 million, up from $3,109 million in the same period last year, reflecting a 68.9% increase[30] Cash and Working Capital - The company ended Q3 2025 with a record cash balance of $21.5 million and no debt[5] - Working capital at September 30, 2025, was approximately $33.8 million, compared to $23.0 million at December 31, 2024[10] - Cash and cash equivalents as of September 30, 2025, were $21,471 million, significantly higher than $7,075 million at the end of 2024, indicating a 202.5% increase[28] Assets and Liabilities - Total current assets as of September 30, 2025, increased to $51,748 million, compared to $36,941 million as of December 31, 2024, marking a growth of 39.9%[28] - Total liabilities as of September 30, 2025, were $25,914 million, up from $21,668 million as of December 31, 2024, representing a 19.5% increase[28] Guidance and Future Outlook - For the full year 2025, the company is reiterating guidance of high single-digit revenue growth, gross margin of 47%+, GAAP EPS of $3.15, and non-GAAP adjusted EPS of $3.80[3] Development Costs and Shares - The company reported a significant increase in capitalized product development costs, rising to $2,837 million as of September 30, 2025, from $1,321 million at the end of 2024[28] - The weighted average common shares outstanding, basic, increased to 3,708,717 for the three months ended September 30, 2025, compared to 3,539,841 in the same period last year[30] Expenses - Selling, General & Administrative expenses for Q3 2025 totaled $7.3 million, up from $5.2 million in Q3 2024[7]

Core Insights - The article emphasizes the focus on growth and momentum stocks that are reasonably priced and expected to outperform the market in the long term [1] - It highlights a significant investment opportunity, noting that the S&P 500 increased by 367% and the Nasdaq by 685% from March 2009 to 2019, indicating a strong recovery and growth potential in quality stocks [1] Investment Strategy - The investment strategy involves long-term investment in high-quality growth stocks, with the use of options to enhance returns [1] - The recommendation to buy during the financial crisis in March 2009 is presented as a pivotal moment for investors, showcasing the potential for substantial gains in the market [1] Market Performance - The article provides a historical perspective on market performance, illustrating the dramatic increases in major indices over a decade, which serves as a benchmark for future investment considerations [1]

Core Points - BK Technologies Corporation will host an investor conference call to discuss its operating results for Q3 and the nine months ended September 30, 2025 [1] - The conference call is scheduled for November 6, 2025, at 9:00 a.m. ET [1] - The company plans to release its financial and operating results prior to the call on the same day [1]

Core Insights - Liberty Park Fund, LP's value increased by 1.13% in Q3 2025, underperforming the Russell 2000's 12.40% increase, with long positions contributing positively and shorts detracting significantly [2][4][21] - Liberty Park Select Opportunities, LP's value increased by 14.27% in the same period, indicating a strong performance in its investment strategy [3][21] - The Federal Reserve's interest rate cuts are expected to stimulate the economy, but have also inflated a bubble in speculative stocks, reminiscent of the dot-com bubble [4][10] Performance Analysis - Long positions saw a 14.42% increase, contributing 12.38% on a weight-adjusted basis, while shorts increased by 18.60%, detracting 10.85% [2][4] - The gross exposure for Liberty Park Fund averaged 142.48%, while net exposure averaged 33.61% [2][21] - Gross Pure Alpha for the quarter was -3.11%, indicating challenges in stock selection [2] Long Performance - Best-performing long positions included Xometry Inc (61.20% return), BK Technologies Corp (79.25% return), and Napco Security Technologies (45.13% return) [5] - Worst-performing long positions included Limbach Holdings Inc (-30.68% return), DMC Global Inc (-20.84% return), and Whirlpool Corp (-24.49% return) [6] Short Performance - The short portfolio faced significant pressure, with seven companies accounting for over half of the negative contribution, surging an average of 170% without fundamental changes [7] - These companies collectively have a market cap of $100 billion, reflecting unrealistic valuations based on 2026 revenue estimates [7] Portfolio Outlook - The investment environment is complex, with interest rate cuts expected to boost consumption while speculation in certain sectors has risen dramatically [10] - The fund's strategy is to remain invested in real economy, non-bubble names while being short on profitless hype [11] Adaptation and Strategy - The fund is considering single-name equity shorts as a core competency, but currently finds few attractive traditional economy shorts [12] - Options have been introduced for risk management, including long call and put positions to hedge against potential market corrections [13][14] Communication Changes - The fund will no longer disclose top positions or highlight individual investments in quarterly communications to protect proprietary research and focus on new initiatives [15][17]

Company Overview - BK Technologies Corp. (BKTI) designs and manufactures mission-critical communications equipment primarily for government and public safety applications [1] - The company has a Software-as-a-Service (SaaS) division that develops public safety smartphone applications, including BKRplay and InteropONE [2] Product and Market Performance - The BKR 9000 multiband radio is driving growth through adoption by federal, state, and local agencies, leveraging competitive pricing as a unified platform replacement for legacy systems [4] - Gross Margin in Q2 expanded sharply to 47.4% from 37.3% in the prior year, driven by a favorable product mix and efficiencies from outsourced manufacturing [5] - The company achieved a 77.5% year-over-year improvement in adjusted EBITDA, indicating strong financial performance [5] Valuation Metrics - The stock is currently trading at 3.1X trailing 12-month EV/Sales, compared to 3.9X for the Zacks sub-industry and 7.5X for the Zacks sector [6] - The stock is trading at 18.2X trailing 12-month EV/EBITDA, which is lower than the Zacks sub-industry average of 29.6X [6] Historical Stock Performance - Over the past five years, the stock has traded as high as 3.3X and as low as 0.4X, with a five-year median of 0.8X [6] - In the past year, the stock has traded as high as 19.1X and as low as 7.6X, with a one-year median of 12.4X [7]

Core Insights - BK Technologies Corporation (BKTI) shares have increased by 50.3% since the earnings report for the quarter ended June 30, 2025, significantly outperforming the S&P 500 Index, which saw a 0.2% loss during the same period [1] - Over the past month, BKTI's stock rose by 61.8%, compared to a 2.5% increase in the S&P 500 [1] Revenue and Earnings Performance - BKTI reported second-quarter 2025 revenues of $21.2 million, a 4.5% increase from $20.3 million in the same quarter last year [2] - Gross margin improved to 47.4% from 37.3% year-over-year, attributed to a favorable product mix and efficiencies from outsourced manufacturing [2] - Net income surged by 124.8% to $3.7 million, or $0.96 per diluted share, compared to $1.7 million, or $0.47 per diluted share, in Q2 2024 [2] - Adjusted EPS rose to $1.30 from $0.55, reflecting a 136.4% year-over-year increase [2] - Operating income increased by 97.4% to $3.9 million, raising the operating margin to 18.9% from 10% last year [2] Segment Performance - The Land Mobile Radio (LMR) unit continued to show steady revenue growth, driven by strong demand for BKR Series radios [3] Key Business Metrics - Adjusted EBITDA for the quarter was $4.4 million, a 77.5% increase from $2.5 million a year earlier, achieving an EBITDA margin above 20% for the first time [4] - For the first half of 2025, revenues rose 4.5% to $40.2 million from $38.5 million, with gross margin improving to 47.2% from 35.9% [4] - Net income for the half-year surged 150.4% to $5.9 million from $2.3 million, and diluted EPS rose to $1.51 from $0.66 [4] Balance Sheet and Cash Position - Working capital increased to $28.9 million as of June 30, 2025, from $23 million at year-end 2024 [5] - Cash and equivalents grew to $11.9 million from $7.1 million over the same period [5] - The company reported no debt, indicating improved balance sheet flexibility [5] Management Commentary - CEO John Suzuki attributed margin expansion to strong operational execution and noted growing momentum from federal customers [6] - Multiple purchase orders from the USDA Forest Service totaling $12.9 million were received just after the quarter-end, setting a positive outlook for the second half [6] - The launch of RelayONE, a portable repeater kit, was highlighted, with the first order placed by the Larimer County Sheriff's Office in Colorado [6] - Continued adoption of the BKR 9000 multiband radio, which has higher margins than single-band offerings, was also emphasized [6] Factors Influencing Performance - Gross margin gains were driven by a favorable shift towards higher-margin radios, operational efficiencies, and the transition of manufacturing to East West Manufacturing [7] - Clarity on tariffs under the USMCA trade agreement alleviated earlier cost uncertainties, allowing for raised margin expectations [7] - Demand for BKR radios from state and local markets continued to expand, with delayed federal orders resuming robustly in July [7] Guidance - BK Technologies raised its full-year 2025 GAAP EPS target to $3.15 from $2.40 and its non-GAAP adjusted EPS target to $3.80 from $2.80 [8] - The company expects revenue growth at the high end of its single-digit range and gross margins above 47%, an improvement from earlier guidance of above 42% [8] - Management reiterated investment priorities in sales, marketing, and R&D to drive adoption of the BKR 9000 and advance development of the next-generation BKR 9500 mobile radio, expected to generate revenues in 2027 [8] Other Developments - BK Technologies expanded its product portfolio with the introduction of RelayONE, enhancing its suite of interoperable solutions under the BK ONE brand [9] - The company secured substantial follow-on orders from the USDA Forest Service after the quarter-end, marking the largest single purchase of its BKR 5000 radios since launch [9] - These developments reinforce the strategy to diversify revenue streams and capture additional market share across traditional LMR and emerging solutions markets [9]

Financial Data and Key Metrics Changes - Second quarter revenue increased by 4.5% to $21.2 million compared to $20.3 million in 2024, with sequential growth of 11.1% from $19.1 million in the previous quarter [7][15] - Gross margin improved significantly to 47.4% from 37.3% in 2024, reflecting better sales mix and cost reduction initiatives [8][15] - Fully diluted GAAP EPS was $0.96 compared to $0.47 in 2024, while non-GAAP adjusted EPS was $1.3 compared to $0.55 in the prior year [8][17] - Non-GAAP adjusted EBITDA was $4.4 million, a significant increase from $2.5 million in 2024, with an adjusted EBITDA margin of 20.7% [18] Business Line Data and Key Metrics Changes - The BKR product line is performing well, with strong market reception and revenue growth driven by federal orders [7][12] - The launch of Relay One, a portable repeater kit, is expected to enhance interoperability among public safety radios, with initial orders received from Larimer County Sheriff's Office [8][9] Market Data and Key Metrics Changes - Federal order activity increased significantly in July, with total orders from various government agencies amounting to $17.8 million for the month [10][12] - The company anticipates continued strong demand for its VKR series radios, particularly as wildland fire activity intensifies [12] Company Strategy and Development Direction - The company is committed to investing in sales and marketing to expand the adoption of the BKR 9,000 multiband radio, which has a higher price point and better margins [24] - Development of the next-generation BKR 9,500 mobile radio is progressing well, with expected revenue recognition in 2027 [25] - The company aims to build R&D and engineering capabilities to strengthen its software offerings and position itself as a leader in public safety communications [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit revenue growth for 2025, raising the full-year GAAP EPS target to $3.15 from $2.4 [22][23] - The tariff environment is stabilizing, contributing to improved gross margin expectations [22][44] - Management remains optimistic about the company's growth potential and the opportunities ahead [48] Other Important Information - The company reported cash and cash equivalents of $11.9 million and no debt as of June 30, 2025, with working capital improving to $28.9 million [20] - Shareholders' equity increased to $36.8 million compared to $29.8 million at the end of 2024 [20] Q&A Session Summary Question: What is driving the lift in gross margin outlook? - Management indicated that the primary driver is improved tariff expectations and a shift to higher-margin products, along with cost savings from outsourcing production [27][28] Question: How is the BKR 9,000 tracking? - The company expects to ship two to three times more radios than last year, indicating strong growth [29] Question: What was the backlog number exiting Q2? - The backlog was approximately $16 million, slightly lower than anticipated due to federal orders received in July [30] Question: What is the progress on the Interop One and the 9,500 development? - The Interop One tethering is still in development, while the 9,500 is on track for revenue recognition in 2027 [34][39] Question: How does the revenue guidance relate to federal orders? - Management noted that federal orders are flowing as expected, contributing to the high-end revenue guidance [41] Question: What is the size of the addressable market for the 9,500? - The US device market for handhelds and mobiles is approximately $2.3 billion, with a significant portion available for the 9,500 mobile radio [71] Question: Will customers likely buy both the 9,000 and 9,500 together? - Customers may buy both, as the devices operate similarly, creating a seamless user experience [75]

Financial Performance - Revenue increased by 4.5% to $21.2 million in the second quarter of 2025, aligning with the company's single-digit revenue growth target for FY2025[10] - Gross margin improved significantly to 47.4% in 2Q25, compared to 37.3% in 2Q24[10] - Fully diluted GAAP EPS reached $0.96 in 2Q25, a notable increase from $0.47 in 2Q24[10] - Fully diluted non-GAAP adjusted EPS was $1.30 in 2Q25, compared to $0.55 in 2Q24[10] - The company is increasing its full-year margin target to 47+% from a previous target of 42+%[13] - Adjusted EBITDA for 2Q25 was $4.417 million, compared to $2.489 million in 2Q24[17] Product and Orders - The company launched and received a purchase order for RelayONE, a rapid deployment portable repeater kit[10] - Following the close of 2Q25, the company received several purchase orders from the USDA Forest Service totaling $12.9 million[10] Financial Position and Outlook - The company has updated its FY2025 financial targets, expecting single-digit revenue growth at the high end of the range and GAAP diluted EPS of $3.15[29] - The company anticipates non-GAAP diluted adjusted EPS of $3.80 for FY2025[29] - Cash and cash equivalents increased from $7.1 million to $11.9 million[24] - Shareholders' equity increased from $29.8 million to $36.8 million[25]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) The company presents its unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025, showing significant improvement in net income and gross margin driven by higher sales and better cost management [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$60.4 million** from **$51.5 million** at year-end 2024, with total stockholders' equity growing significantly to **$36.8 million** from **$29.8 million** | Balance Sheet Items (In thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $11,853 | $7,075 | | Trade accounts receivable, net | $11,542 | $7,349 | | Inventories, net | $17,167 | $17,636 | | Total current assets | $44,833 | $36,941 | | **Total Assets** | **$60,426** | **$51,499** | | **Current Liabilities** | | | | Accounts payable | $9,835 | $6,327 | | Total current liabilities | $15,920 | $13,974 | | **Total Liabilities** | **$23,663** | **$21,668** | | **Total Stockholders' Equity** | **$36,763** | **$29,831** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, sales increased to **$21.2 million** from **$20.3 million** year-over-year, with gross margin improving to **47.4%** from **37.3%**, leading to net income more than doubling to **$3.7 million** or **$0.96 per diluted share** | Income Statement (In thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales, net | $21,165 | $20,254 | $40,219 | $38,485 | | Gross margin | $10,035 | $7,547 | $18,985 | $13,835 | | Operating income | $3,997 | $2,025 | $6,913 | $3,008 | | Net income | $3,741 | $1,664 | $5,873 | $2,345 | | Net income per share-diluted | $0.96 | $0.47 | $1.51 | $0.66 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to **$6.0 million** for the first six months of 2025, contributing to a rise in cash and cash equivalents to **$11.9 million** | Cash Flow (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,002 | $3,311 | | Net cash used in investing activities | ($1,465) | ($848) | | Net cash provided by (used in) financing activities | $241 | ($2,938) | | **Net change in cash and cash equivalents** | **$4,778** | **($475)** | | **Cash and cash equivalents, end of period** | **$11,853** | **$2,981** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the expansion of the BK ONE Solutions business, a new **$6 million** credit facility, customer concentration, and subsequent events including stock option grants - The company is expanding its Solutions business unit under the new brand, BK ONE, which includes SaaS solutions like InteropONE and other future software and hardware applications[37](index=37&type=chunk) - Sales to U.S. government agencies were **11.5%** of total net sales for the first six months of 2025, down from **41.5%** in the same period last year, while two commercial customers accounted for **26.6%** of net sales in the first half of 2025[62](index=62&type=chunk) - The company entered into a new one-year revolving line of credit for up to **$6 million** with Fifth Third Bank in October 2024, with no borrowings under this facility as of June 30, 2025[38](index=38&type=chunk)[64](index=64&type=chunk) - Subsequent to the quarter end, the company granted performance-based stock options for executives and issued shares related to RSU grants upon achieving revenue milestones for the BKR9000 radio[75](index=75&type=chunk)[76](index=76&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q2 2025 financial results, highlighting a **4.5%** YoY sales increase to **$21.2 million**, significant gross margin improvement to **47.4%**, and nearly doubled operating income, alongside improved liquidity and an undrawn **$6.0 million** credit facility [Executive Summary](index=21&type=section&id=Executive%20Summary) Q2 2025 sales rose **4.5%** YoY to **$21.2 million**, driven by BKR series radio shipments, with gross margin expanding significantly to **47.4%** and net income increasing substantially to **$3.7 million** or **$0.96 per diluted share** - The backlog of unshipped customer orders was approximately **$16.0 million** as of June 30, 2025, compared to **$21.8 million** as of December 31, 2024[89](index=89&type=chunk) | Key Metrics (Q2 2025 vs Q2 2024) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Sales | ~$21.2M | ~$20.3M | +4.5% | | Gross Profit Margin | 47.4% | 37.3% | +10.1 ppt | | Operating Income | ~$4.0M | ~$2.0M | +100% | | Net Income | ~$3.7M | ~$1.7M | +118% | | Diluted EPS | $0.96 | $0.47 | +104% | [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Net sales for Q2 2025 increased by **4.5%** to **$21.2 million** due to strong BKR series radio sales, while gross profit margin rose to **47.4%** reflecting favorable product mix and manufacturing cost improvements, leading to doubled operating income - The increase in gross profit margins for Q2 and H1 2025 was attributed to a better radio product and accessories sales mix and material cost improvements from transitioning manufacturing to East West Manufacturing, LLC[108](index=108&type=chunk) - SG&A expenses increased by **11.5%** for the six-month period, primarily due to higher engineering and product development costs for the BKR multi-band mobile radio and increased marketing and selling expenses[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity strengthened with cash and cash equivalents reaching **$11.9 million** at June 30, 2025, driven by **$6.0 million** in net cash from operations for the first six months, and an undrawn **$6 million** revolving credit facility - Net cash provided by operating activities totaled approximately **$6.0 million** for the first six months of 2025, compared to **$3.3 million** for the same period in 2024[123](index=123&type=chunk) - The company's cash and cash equivalents balance was approximately **$11.9 million** on June 30, 2025[127](index=127&type=chunk) - A Revolving Loan Commitment with Fifth Third Bank provides for a one-year, **$6 million** line of credit (expandable to **$10 million**), which was unused as of the report date[128](index=128&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a "smaller reporting company," the company is not required to provide disclosure under this item - As a "smaller reporting company," the Company is not required to include disclosures about market risk[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to an un-remediated material weakness in internal control over the income tax provision - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were not effective as of the end of the reporting period[135](index=135&type=chunk) - The ineffectiveness is due to a material weakness in internal control related to the proper design and implementation of controls over the income tax provision[136](index=136&type=chunk) - Management has engaged in implementing a remediation plan, including using third-party assistance and enhancing review processes for complex accounting transactions[138](index=138&type=chunk)[139](index=139&type=chunk) PART II - OTHER INFORMATION [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20RISK%20FACTORS) The company highlights a new risk concerning potential adverse effects of changes in U.S. trade policy, including tariffs, which could increase costs, impact the supply chain, and reduce demand due to reliance on foreign electronic components - A specific risk factor has been added regarding changes in U.S. trade policy and tariffs, which could materially affect the business due to its reliance on electronic components from foreign sources[146](index=146&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the issuance of **89,248** common shares via cashless warrant exercise on May 2, 2025, and confirms no shares were repurchased under the **$5 million** share repurchase program during Q2 2025 - On May 2, 2025, the Company issued **89,248** shares of common stock upon the cashless exercise of a warrant[148](index=148&type=chunk) - No shares were repurchased during the second quarter of 2025 under the company's **$5 million** share repurchase program authorized in December 2021[148](index=148&type=chunk)[150](index=150&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20EXHIBITS) This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, incentive compensation plans, employment agreement amendments, and CEO/CFO certifications - The report includes exhibits such as the 2025 Incentive Compensation Plan, Employee Stock Purchase Plan, amendments to executive employment agreements, and CEO/CFO certifications[155](index=155&type=chunk)