BK Technologies Corporation (NYSE:BKTI) Q1 2022 Earnings Conference Call May 12, 2022 9:00 AM ET Company Participants John Suzuki - CEO Bill Kelly - EVP and CFO Conference Call Participants Aaron Martin - AIGH Investment Partners Orin Hirschman - AIGH Investment Partners Operator Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference Call for the First Quarter 2022. This call is being recorded. All participants have been placed on a listen-only mode. Following the mana ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Nevada 83-4064262 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Stock, par value $.60 per share BKTI NYSE American Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated Filer ☒ Smaller reporting company ☒ Emerging growth company ☐ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) ...

Financial Data and Key Metrics Changes - Sales for Q4 2021 totaled approximately $12.8 million, compared to $10.6 million for the same quarter last year, reflecting a year-over-year increase [14] - Gross profit margins as a percentage of sales in Q4 2021 were 36.2%, down from 44.2% in the same quarter last year, primarily due to increased material and freight costs [14] - The net loss for Q4 2021 was approximately $303,000, or $0.02 per share, compared to a net income of approximately $1.1 million, or $0.08 per share, for the same quarter last year [15] Business Line Data and Key Metrics Changes - The company achieved record bookings of $55.5 million and a backlog of $13 million by the end of 2021, indicating strong demand for its products [6] - The BKR 5000 product has gained significant traction in the marketplace, contributing to the strong order activity [6][10] Market Data and Key Metrics Changes - The company is experiencing strong demand in the wildland fire management sector, which is a core market, and is looking to expand into military, law enforcement, and emergency medical response sectors [10] - The increased use of public networks by first responders presents a significant opportunity for the company, leading to the launch of a dedicated business unit for software-as-a-service solutions [11] Company Strategy and Development Direction - The company is focusing on optimizing its supply chain to mitigate the impact of supply chain challenges on gross margins and product availability [8] - A new business unit has been launched to deliver software-as-a-service solutions, which is expected to be a higher margin and recurring revenue stream [11][25] - The company is positioning itself to tether first responders' radios to smartphones, expanding its addressable market [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong customer demand and bookings at the start of 2022, despite ongoing supply chain constraints [9][27] - The company anticipates increasing production in March and April 2022, while addressing supply chain issues [9] - Management is excited about the progress made on the BKR 9000 and expects to start field engineering tests in Q2 2022 [12][33] Other Important Information - The company reported a working capital of approximately $25.2 million as of December 31, 2021, an increase from $16.2 million at the end of 2020 [16] - The company has a history of paying dividends, with the most recent increase to $0.03 per share reflecting confidence in its financial strength [16] Q&A Session Summary Question: Can the extra costs from supply chain issues be shifted onto customers? - Management confirmed that they have been increasing pricing on products where possible, despite some long-term fixed-price contracts [20] Question: What needs to happen for the $55 million in bookings to become a firm backlog number? - Management explained that the business operates on a book-and-ship model, and supply chain availability is crucial for converting bookings into backlog [21] Question: How big can the SaaS solutions business grow? - Management indicated that the SaaS business is expected to be a higher margin and recurring revenue stream, with significant growth opportunities as public safety embraces cellular technology [23][25] Question: How has backlog been trending in the first quarter? - Management reported that backlog has grown due to strong customer demand in early 2022, despite ongoing supply chain challenges [27] Question: What percentage of the business in 2021 was from new customers versus existing contracts? - Management noted that securing new customers in 2021 was better than historical performance, largely attributed to the introduction of the BKR 5000 [29] Question: Is the company in a position to implement the new buyback program? - Management clarified that the buyback program would be implemented after the filing of the first quarter 10-Q, expected in May [30]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 0 ...

BK Technologies Corporation (NYSE:BKTI) Q3 2021 Earnings Conference Call November 11, 2021 9:00 AM ET Company Participants Timothy Vitou - President John Suzuki - CEO William Kelly - CFO Conference Call Participants Orin Hirschman - AIGH Investment Partners LP Operator Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference Call for the Third Quarter 2021. This call is being recorded. All participants have been placed in a listen-only mode. Following, management’s remar ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 001-32644 BK TECHNOLOGIES CORPORATION (Exact name of registrant as specified in its charter) | --- | --- | --- | --- | ...

| --- | --- | --- | --- | |-------|-------|-------|-------| | | | | | | | | | | DISCLOSURES Forward-Looking Statements This presentation contains certain forward-looking statements that are made pursuant to the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the Company's operations, economic performance and financial condition and are based largely on the Company's beliefs and expectations. These statements can be identified by forw ...

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements, management's analysis of financial condition and operations, market risk disclosures, and controls and procedures for the company [Item 1. FINANCIAL STATEMENTS](index=2&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section presents BK Technologies Corporation's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with detailed notes on presentation, significant events, and accounting policies for the specified periods [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2021, and December 31, 2020 **Condensed Consolidated Balance Sheets (In thousands):** | Item | June 30, 2021 (Unaudited) | December 31, 2020 | | :---------------------------------- | :------------------------ | :------------------ | | Total current assets | $36,773 | $24,611 | | Property, plant and equipment, net | $4,426 | $3,566 | | Investment in securities | $4,481 | $2,014 | | Total assets | $52,491 | $37,490 | | Total liabilities | $17,464 | $11,899 | | Total stockholders' equity | $35,027 | $22,524 | - Total assets increased by approximately **$15 million** from December 31, 2020, to June 30, 2021, primarily driven by an increase in cash and cash equivalents and investment in securities[8](index=8&type=chunk) - Total stockholders' equity increased significantly from **$22,524 thousand** at December 31, 2020, to **$35,027 thousand** at June 30, 2021[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net income or loss for the three and six months ended June 30, 2021 and 2020 **Condensed Consolidated Statements of Operations (In thousands, except per share data):** | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales, net | $11,335 | $9,937 | $19,899 | $20,826 | | Operating loss | $(342) | $(36) | $(1,219) | $(884) | | Gain (loss) on investment in securities | $2,262 | $(200) | $2,467 | $(506) | | Net income (loss) | $1,696 | $(302) | $1,002 | $(1,494) | | Net income (loss) per share-basic | $0.13 | $(0.02) | $0.08 | $(0.12) | | Net income (loss) per share-diluted | $0.12 | $(0.02) | $0.08 | $(0.12) | - Net sales for the three months ended June 30, 2021, increased by **14.1%** year-over-year, reaching **$11,335 thousand**, while six-month sales decreased by **4.5%** to **$19,899 thousand**[11](index=11&type=chunk) - The company reported a net income of **$1,696 thousand** for Q2 2021, a significant improvement from a net loss of **$302 thousand** in Q2 2020, largely due to a substantial gain on investment in securities[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the inflows and outflows of cash from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 **Condensed Consolidated Statements of Cash Flows (In thousands):** | Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(2,825) | $3,597 | | Net cash used in investing activities | $(1,541) | $(525) | | Net cash provided by (used in) financing activities | $13,201 | $(809) | | Net change in cash and cash equivalents | $8,835 | $2,263 | | Cash and cash equivalents, end of period | $15,661 | $6,939 | - Operating activities used **$2,825 thousand** in cash for the six months ended June 30, 2021, a reversal from **$3,597 thousand** provided in the prior year, primarily due to increased inventory and accounts receivable[16](index=16&type=chunk) - Financing activities provided **$13,201 thousand** in cash, largely driven by **$11,599 thousand** from common stock issuance, significantly boosting the cash balance[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, significant events, and specific financial line items [1. Condensed Consolidated Financial Statements](index=5&type=section&id=1.%20Condensed%20Consolidated%20Financial%20Statements) This note details the basis of presentation for the unaudited condensed consolidated financial statements, including the company's reorganization and accounting policies - The unaudited condensed consolidated financial statements were prepared by BK Technologies Corporation, following a holding company reorganization on March 28, 2019, which established BK Technologies Corporation as the direct parent company[19](index=19&type=chunk) - The company consolidates entities where it has a controlling financial interest, determined by evaluating if the entity is a variable interest entity (VIE) or a voting interest entity[21](index=21&type=chunk) - The company adopted ASU 2018-13 on January 1, 2020, which modified fair value measurement disclosure requirements, but it had no material impact on its consolidated financial statements[29](index=29&type=chunk) [2. Significant Events and Transactions](index=6&type=section&id=2.%20Significant%20Events%20and%20Transactions) This note highlights key corporate actions and financial transactions, including dividend declarations and a public offering of common stock - The Board of Directors declared a quarterly dividend of **$0.02 per share** on July 9, 2021, paid on August 9, 2021[31](index=31&type=chunk) - On June 9, 2021, the company completed a public offering of **4,249,250 shares** of common stock at **$3.00 per share**, generating net proceeds of **$11,559,000** for general corporate purposes, including working capital, capital expenditures, and potential acquisitions[32](index=32&type=chunk) [3. Allowance for Doubtful Accounts](index=6&type=section&id=3.%20Allowance%20for%20Doubtful%20Accounts) This note details the company's provision for uncollectible trade receivables, showing gross receivables and the allowance amount **Allowance for Doubtful Accounts (In thousands):** | Item | June 30, 2021 | December 31, 2020 | | :-------------------------- | :------------ | :---------------- | | Gross trade receivables | $7,260 | $6,516 | | Allowance for doubtful accounts | $50 | $50 | - The allowance for doubtful accounts remained stable at **$50 thousand**, despite an increase in gross trade receivables from **$6,516 thousand** to **$7,260 thousand**[33](index=33&type=chunk) [4. Inventories, Net](index=6&type=section&id=4.%20Inventories,%20Net) This note provides a breakdown of the company's inventory, including finished goods, work in process, raw materials, and the allowance for obsolete inventory **Inventories, Net (In thousands):** | Item | June 30, 2021 | December 31, 2020 | | :------------------ | :------------ | :---------------- | | Finished goods | $2,459 | $1,975 | | Work in process | $3,539 | $3,288 | | Raw materials | $6,038 | $4,178 | | Total inventories | $12,036 | $9,441 | | Allowance for slow-moving, excess, or obsolete inventory | $888 | $520 | - Total inventories increased by **$2,595 thousand** from December 31, 2020, to June 30, 2021, primarily driven by a significant increase in raw materials[34](index=34&type=chunk) - The allowance for slow-moving, excess, or obsolete inventory increased by **$368 thousand**, from **$520 thousand** to **$888 thousand**[35](index=35&type=chunk) [5. Income Taxes](index=6&type=section&id=5.%20Income%20Taxes) This note details the company's income tax expense, deferred tax assets, and the valuation allowance established against them **Income Tax Expense (In thousands):** | Period | 2021 | 2020 | | :-------------------------------- | :--- | :--- | | Three months ended June 30 | $184 | $28 | | Six months ended June 30 | $184 | $28 | - Income tax expense for both the three and six months ended June 30, 2021, was **$184 thousand**, a substantial increase from **$28 thousand** in the prior year periods[36](index=36&type=chunk) - As of June 30, 2021, net deferred tax assets totaled approximately **$4,116 thousand**, primarily from R&D tax credits, deferred revenue, and net operating loss carryforwards[39](index=39&type=chunk) - The company established a valuation allowance of **$98 thousand** against deferred tax assets, concluding it may not generate sufficient taxable income to fully utilize the benefits[41](index=41&type=chunk) [6. Investment in Securities](index=7&type=section&id=6.%20Investment%20in%20Securities) This note describes the company's investment in FGI 1347 Holdings, LP, and the recognized unrealized gains or losses on these securities - The company holds an investment in FGI 1347 Holdings, LP (1347 LP), of which it is the sole limited partner, established for investing in securities[42](index=42&type=chunk) - As of June 30, 2021, the company indirectly held **477,282 shares** of FG Financial Group, Inc. (FGF) with a fair value of **$4,481 thousand** through 1347 LP[44](index=44&type=chunk) **Unrealized Gain (Loss) on Investment in Securities (In thousands):** | Period | 2021 | 2020 | | :----------------------------------- | :----- | :----- | | Three months ended June 30 | $2,262 | $(200) | | Six months ended June 30 | $2,467 | $(506) | - The company recognized significant unrealized gains on the FGF investment: **$2,262 thousand** for Q2 2021 and **$2,467 thousand** for the six months ended June 30, 2021, a reversal from losses in the prior year[44](index=44&type=chunk) [7. Stockholders' Equity](index=7&type=section&id=7.%20Stockholders'%20Equity) This note details the changes in stockholders' equity, including common stock issuance, net income, and their impact on the overall equity balance **Changes in Condensed Consolidated Stockholders' Equity (In thousands, except share data):** | Item | Common Stock Shares | Common Stock Amount | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total | | :---------------------------------------------------- | :------------------ | :------------------ | :------------------------- | :------------------ | :------------- | :------ | | Balance at December 31, 2020 | 13,962,366 | $8,377 | $26,346 | $(6,797) | $(5,402) | $22,524 | | Common stock issued, net of issuance costs (Q2 2021) | 4,249,250 | $2,549 | $9,010 | - | - | $11,559 | | Net income (Q2 2021) | — | — | - | $1,696 | - | $1,696 | | Balance at June 30, 2021 | 18,236,121 | $10,941 | $35,534 | $(6,046) | $(5,402) | $35,027 | | Balance at December 31, 2019 | 13,929,381 | $8,357 | $26,095 | $(6,043) | $(5,133) | $23,276 | | Net loss (Q2 2020) | — | — | - | $(302) | - | $(302) | | Balance at June 30, 2020 | 13,943,820 | $8,366 | $26,235 | $(8,039) | $(5,402) | $21,160 | - Total stockholders' equity increased significantly from **$22,524 thousand** at December 31, 2020, to **$35,027 thousand** at June 30, 2021, primarily due to the **$11,559 thousand** from common stock issuance and net income[48](index=48&type=chunk) - The number of common stock shares outstanding increased from **13,962,366** at December 31, 2020, to **18,236,121** at June 30, 2021, largely due to the public offering[48](index=48&type=chunk) [8. Income (Loss) Per Share](index=8&type=section&id=8.%20Income%20(Loss)%20Per%20Share) This note presents the basic and diluted earnings per share calculations, reflecting the company's profitability on a per-share basis **Income (Loss) Per Share (In thousands, except per share data):** | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) for basic and diluted earnings per share | $1,696 | $(302) | $1,002 | $(1,494) | | Weighted average shares outstanding-basic | 13,563,763 | 12,495,707 | 13,043,477 | 12,525,407 | | Basic income (loss) per share | $0.13 | $(0.02) | $0.08 | $(0.12) | | Diluted income (loss) per share | $0.12 | $(0.02) | $0.08 | $(0.12) | - Basic and diluted EPS significantly improved to **$0.13** and **$0.12**, respectively, for Q2 2021, compared to a loss of **$0.02** in Q2 2020[51](index=51&type=chunk) - For the six months ended June 30, 2021, basic and diluted EPS turned positive at **$0.08**, compared to a loss of **$0.12** in the prior year period[51](index=51&type=chunk) [9. Non-Cash Share-Based Employee Compensation](index=9&type=section&id=9.%20Non-Cash%20Share-Based%20Employee%20Compensation) This note details the non-cash expenses related to stock options and restricted stock units granted to employees **Non-Cash Share-Based Employee Compensation Expense (In thousands):** | Period | 2021 | 2020 | | :-------------------------------- | :--- | :--- | | Stock option expense (3 months) | $33 | $30 | | Stock option expense (6 months) | $65 | $60 | | Restricted stock unit expense (3 months) | $25 | $68 | | Restricted stock unit expense (6 months) | $128 | $89 | - Total non-cash share-based compensation expense for stock options increased slightly, while restricted stock unit compensation expense decreased for the three months ended June 30, 2021, compared to the prior year[52](index=52&type=chunk)[63](index=63&type=chunk) - The company uses the Black-Scholes-Merton option valuation model for stock option grants[53](index=53&type=chunk) - Restricted stock units outstanding decreased from **147,038** at December 31, 2020, to **122,533** at June 30, 2021[63](index=63&type=chunk) [10. Commitments and Contingencies](index=10&type=section&id=10.%20Commitments%20and%20Contingencies) This note outlines potential future obligations and uncertain events, including legal actions, the impact of COVID-19, purchase commitments, and sales to government agencies - The company assesses liabilities and contingencies for legal actions quarterly, recording a liability when a loss is probable and estimable[64](index=64&type=chunk) - The COVID-19 pandemic has the potential to adversely impact the business and financial performance, with uncertainties regarding its duration and severity, and its impact on the global economy and supply chain[65](index=65&type=chunk) - As of June 30, 2021, the company had purchase commitments for inventory totaling approximately **$8,591 thousand**[66](index=66&type=chunk) **Sales to United States Government Agencies (In thousands):** | Period | 2021 Sales | 2021 % of Total Sales | 2020 Sales | 2020 % of Total Sales | | :-------------------------------- | :--------- | :-------------------- | :--------- | :-------------------- | | Three months ended June 30 | $4,749 | 41.9% | $4,268 | 43.0% | | Six months ended June 30 | $6,865 | 34.5% | $10,845 | 52.1% | | Accounts receivable (June 30) | $3,279 | N/A | $589 | N/A | - Sales to U.S. government agencies remained a significant portion of total sales, representing **41.9%** for Q2 2021 and **34.5%** for the six months ended June 30, 2021[67](index=67&type=chunk) [11. Debt](index=10&type=section&id=11.%20Debt) This note details the company's debt obligations, including its revolving credit agreement and equipment financing arrangements - BK Technologies, Inc. extended its **$5,000 thousand** revolving Credit Agreement with JPMorgan Chase Bank, N.A. through January 31, 2022[68](index=68&type=chunk)[69](index=69&type=chunk) - As of June 30, 2021, the company had an outstanding balance of approximately **$1,500 thousand** and a net balance availability of **$3,165 thousand** under the Credit Agreement[73](index=73&type=chunk) - On April 6, 2021, the company entered into a Master Loan Agreement for **$743 thousand** with JPMC to finance manufacturing equipment, payable over 48 months at a fixed interest rate of **3.0%**[74](index=74&type=chunk) [12. Leases](index=11&type=section&id=12.%20Leases) This note describes the company's operating lease arrangements for facilities and equipment, including lease costs and maturity schedules - The company leases manufacturing and office facilities and equipment under operating leases, recognizing ROU assets and lease liabilities based on the present value of lease payments[76](index=76&type=chunk) **Total Lease Cost (In thousands):** | Period | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $136 | $143 | $302 | $287 | | Variable lease cost | $33 | $32 | $65 | $63 | | Total lease cost | $169 | $175 | $367 | $352 | - The company terminated a lease for office space in Lawrence, Kansas, effective March 31, 2021, recognizing a termination expense of approximately **$53 thousand**[81](index=81&type=chunk) **Maturity of Lease Liabilities as of June 30, 2021 (In thousands):** | Period | Amount | | :------------------------- | :----- | | Remaining six months of 2021 | $287 | | 2022 | $582 | | 2023 | $595 | | 2024 | $608 | | 2025 | $618 | | Thereafter | $722 | | Total payments | $3,412 | | Less: imputed interest | $(486) | | Total liability | $2,926 | [13. Subsequent Event](index=12&type=section&id=13.%20Subsequent%20Event) This note discloses a significant accounting method change implemented after the reporting period, impacting inventory and retained earnings - Effective July 1, 2021, the company changed its accounting method to burden material at the time of purchase receipts, resulting in a net increase of approximately **$1.3 million** in inventory and retained earnings[84](index=84&type=chunk) [Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=13&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of the company's financial condition and operational results, discussing sales trends, profitability, expenses, and liquidity for the periods ended June 30, 2021, and 2020 [SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS](index=13&type=section&id=SPECIAL%20NOTE%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) This section cautions readers about forward-looking statements, outlining inherent risks and uncertainties that could cause actual results to differ materially from projections - The report contains forward-looking statements regarding future events and expectations, which involve risks and uncertainties that could cause actual results to differ materially[88](index=88&type=chunk) - Key risk factors include changes in technology, success of product lines (e.g., land mobile radio, BKR Series), competition, economic conditions, capital availability, reliance on contract manufacturers, government sales, tax compliance, ability to attract talent, growth management, and impacts of the COVID-19 pandemic[89](index=89&type=chunk)[92](index=92&type=chunk) - The company assumes no obligation to publicly update or revise any forward-looking statements[93](index=93&type=chunk) [Executive Overview](index=14&type=section&id=Executive%20Overview) This overview introduces BK Technologies Corporation as a holding company specializing in two-way land mobile radios for government and public safety, highlighting operational impacts from COVID-19 and material shortages - BK Technologies Corporation is a holding company that designs, manufactures, and markets two-way land mobile radios, repeaters, base stations, and related components, primarily under the 'BK' brand for government and public safety markets[97](index=97&type=chunk)[98](index=98&type=chunk) - A holding company reorganization was implemented on March 28, 2019, to create a more efficient corporate structure and increase operational flexibility, with no material operational or financial impacts[99](index=99&type=chunk) - The company is considered an 'essential business' and has maintained manufacturing operations during the COVID-19 pandemic, implementing safety measures and workforce adjustments[103](index=103&type=chunk) - Worldwide shortages of materials, especially semiconductors, have led to limited supplies, extended lead times, and increased costs, potentially impacting future sales and manufacturing operations[105](index=105&type=chunk) [Second Quarter and Six Months Summary](index=15&type=section&id=Second%20Quarter%20and%20Six%20Months%20Summary) This summary highlights the company's financial and operating performance for the second quarter and six months ended June 30, 2021, noting sales trends, gross profit margins, and the impact of a public offering - Financial and operating results for Q2 and the six months ended June 30, 2021, improved year-over-year, with Q2 sales increasing **14.1%** and six-month sales being within **4.5%** of the prior year[108](index=108&type=chunk) - Gross profit margins decreased due to cost increases in materials and freight, and a less favorable sales mix[108](index=108&type=chunk) - The company closed a public offering in Q2 2021, raising approximately **$11.6 million** in net proceeds[108](index=108&type=chunk) **Key Financial Highlights (In thousands, except per share data):** | Metric | Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Net Sales | $11,335 | $9,937 | $19,899 | $20,826 | | Gross Profit Margin (%) | 37.2% | 43.6% | 36.7% | 39.5% | | SG&A Expenses | $4,553 | $4,364 | $8,526 | $9,107 | | Operating Loss | $(342) | $(36) | $(1,219) | $(884) | | Unrealized Gain (Loss) on Investment | $2,262 | $(200) | $2,467 | $(506) | | Net Income (Loss) | $1,696 | $(302) | $1,002 | $(1,494) | | Basic EPS | $0.13 | $(0.02) | $0.08 | $(0.12) | | Diluted EPS | $0.12 | $(0.02) | $0.08 | $(0.12) | - Working capital increased to approximately **$25.0 million** as of June 30, 2021, from **$15.1 million** at December 31, 2020, largely due to cash from the public offering[115](index=115&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's operational performance, examining net sales, cost of products, gross profit, operating expenses, and income taxes [Net Sales](index=17&type=section&id=Net%20Sales) This section analyzes the company's net sales performance, highlighting growth drivers and the impact of supply chain constraints **Net Sales (In thousands):** | Period | 2021 | 2020 | Change (YoY) | | :-------------------------- | :----- | :----- | :----------- | | Three months ended June 30 | $11,335 | $9,937 | +14.1% | | Six months ended June 30 | $19,899 | $20,826 | -4.5% | - The increase in Q2 2021 sales was primarily driven by demand from federal legacy customers and western region state public safety agencies, despite supply chain constraints delaying shipments[120](index=120&type=chunk) - The new BKR Series of APCO Project 25 land mobile radio products, including the BKR 5000, is expected to expand the addressable market, with additional models planned for later in the year[121](index=121&type=chunk) - Reorganization of sales resources aims to capture new sales opportunities in federal, state, and local public safety agencies[122](index=122&type=chunk) [Cost of Products and Gross Profit Margin](index=17&type=section&id=Cost%20of%20Products%20and%20Gross%20Profit%20Margin) This section examines the cost of products sold and the resulting gross profit margins, noting the impact of product mix and rising material and freight costs **Gross Profit Margins (% of Sales):** | Period | 2021 | 2020 | Change (YoY) | | :-------------------------- | :----- | :----- | :----------- | | Three months ended June 30 | 37.2% | 43.6% | -6.4 pp | | Six months ended June 30 | 36.7% | 39.5% | -2.8 pp | - Gross profit margins decreased in Q2 2021 and for the six-month period primarily due to a less favorable product sales mix and increased material and freight costs[125](index=125&type=chunk) - The six-month gross profit margins were also adversely impacted by one-time inventory reserves related to the legacy KNG series product line in Q1[125](index=125&type=chunk) - Ongoing worldwide shortages of materials, particularly semiconductors, are causing supply limitations, extended lead times, and increased costs, which could impact future sales and manufacturing[127](index=127&type=chunk) [Selling, General and Administrative Expenses](index=18&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) This section analyzes the trends and components of selling, general, and administrative expenses, including engineering, marketing, and other overhead costs **SG&A Expenses (In thousands, % of sales):** | Period | 2021 Amount | 2021 % of Sales | 2020 Amount | 2020 % of Sales | Change (YoY) | | :-------------------------------- | :---------- | :-------------- | :---------- | :-------------- | :----------- | | Three months ended June 30 | $4,553 | 40.2% | $4,364 | 43.9% | +4.3% | | Six months ended June 30 | $8,526 | 42.8% | $9,107 | 43.7% | -6.4% | | Engineering and product development (6 months) | $4,100 | 20.7% | $4,100 | 19.5% | 0% | | Marketing and selling (6 months) | $2,000 | 10.1% | $2,500 | 11.9% | -18.5% | | Other general and administrative (6 months) | $2,400 | 12.1% | $2,600 | 12.5% | -7.7% | - SG&A expenses for the six months ended June 30, 2021, decreased by **$581 thousand (6.4%)** year-over-year, primarily due to reductions in sales and go-to-market employment and related expenses[131](index=131&type=chunk)[133](index=133&type=chunk) - Engineering and product development expenses remained comparable year-over-year for the six-month period, with a primary focus on the BKR series, including planned multiband products[132](index=132&type=chunk) [Operating Loss](index=18&type=section&id=Operating%20Loss) This section details the company's operating loss, explaining the factors contributing to its increase for the reported periods **Operating Loss (In thousands, % of sales):** | Period | 2021 Amount | 2021 % of Sales | 2020 Amount | 2020 % of Sales | | :-------------------------- | :---------- | :-------------- | :---------- | :-------------- | | Three months ended June 30 | $(342) | 3.0% | $(36) | 0.4% | | Six months ended June 30 | $(1,219) | 6.1% | $(884) | 4.2% | - The operating loss for Q2 2021 increased to **$342 thousand** from **$36 thousand** in Q2 2020, and for the six-month period, it increased to **$1,219 thousand** from **$884 thousand**[135](index=135&type=chunk) - The increased operating loss for the six months is attributed to sales mix and increased material costs, which negatively impacted gross profit margins, partially offset by SG&A expense reductions[135](index=135&type=chunk) [Other (Expense) Income](index=18&type=section&id=Other%20(Expense)%20Income) This section covers non-operating financial items, including net interest expense and unrealized gains or losses from investment in securities **Net Interest (Expense) Income (In thousands):** | Period | 2021 | 2020 | | :-------------------------- | :----- | :----- | | Three months ended June 30 | $(14) | $(6) | | Six months ended June 30 | $(18) | $3 | **Unrealized Gain (Loss) on Investment in FGF (In thousands):** | Period | 2021 | 2020 | | :-------------------------- | :----- | :----- | | Three months ended June 30 | $2,262 | $(200) | | Six months ended June 30 | $2,467 | $(506) | - Net interest expense increased for both the three and six months ended June 30, 2021, primarily due to lower average cash balances and equipment financing[136](index=136&type=chunk) - The company recognized significant unrealized gains on its investment in FGF, totaling **$2.3 million** for Q2 2021 and **$2.5 million** for the six-month period, a substantial improvement from losses in the prior year[137](index=137&type=chunk) [Income Taxes](index=18&type=section&id=Income%20Taxes) This section details the company's income tax expense, deferred tax assets, and the valuation allowance, reflecting the estimated full-year effective tax rate **Income Tax Expense (In thousands):** | Period | 2021 | 2020 | | :-------------------------- | :--- | :--- | | Six months ended June 30 | $184 | $28 | - Income tax expense for the six months ended June 30, 2021, was **$184 thousand**, up from **$28 thousand** in the prior year, based on management's estimate of the full-year effective tax rate[138](index=138&type=chunk) - Net deferred tax assets totaled approximately **$4.1 million** as of June 30, 2021, primarily from R&D tax credits, operating loss carryforwards, and deferred revenue[139](index=139&type=chunk) - A valuation allowance of **$98 thousand** was established against deferred tax assets, as the company concluded it may not generate sufficient taxable income to fully utilize the benefits[141](index=141&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's cash flows from operating, investing, and financing activities, assessing its ability to meet short-term and long-term financial obligations **Cash Flow Summary (In thousands):** | Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(2,900) | $3,600 | | Net cash used in investing activities | $(1,500) | $(525) | | Net cash provided by financing activities | $13,200 | $(809) | | Cash and cash equivalents, end of period | $15,700 | $6,939 | - Net cash used in operating activities was approximately **$2.9 million** for the six months ended June 30, 2021, primarily due to increased inventory and accounts receivable, partially offset by net income[142](index=142&type=chunk)[143](index=143&type=chunk) - Financing activities provided approximately **$13.2 million** in cash, largely from **$11.6 million** net proceeds from a public common stock offering[146](index=146&type=chunk) - The company's revolving credit facility with JPMC was extended through January 31, 2022, with an outstanding balance of approximately **$1.5 million** as of June 30, 2021[147](index=147&type=chunk)[153](index=153&type=chunk) - Management believes current cash, anticipated cash from operations, and borrowing availability are sufficient to meet working capital requirements for the foreseeable future[155](index=155&type=chunk) [Critical Accounting Policies](index=20&type=section&id=Critical%20Accounting%20Policies) This section identifies the company's critical accounting policies that require significant judgment and estimates, such as revenue recognition and inventory valuation - The company's critical accounting policies involve significant judgments, estimates, and assumptions related to revenue recognition, allowance for collection of trade receivables, allowance for excess or obsolete inventory, and income taxes[156](index=156&type=chunk) - There were no changes to the critical accounting policies during the quarter ended June 30, 2021, as described in the Annual Report on Form 10-K for fiscal year 2020[157](index=157&type=chunk) [Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.](index=20&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) As a smaller reporting company, BK Technologies Corporation is not required to provide quantitative and qualitative disclosures about market risk in this report - The company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[158](index=158&type=chunk) [Item 4. CONTROLS AND PROCEDURES](index=20&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) This section details the company's evaluation of its disclosure controls and procedures and confirms that no material changes occurred in internal control over financial reporting during the quarter ended June 30, 2021 [Evaluation of Disclosure Controls and Procedures](index=21&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section outlines management's assessment of the effectiveness of the company's disclosure controls and procedures as of the reporting date - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2021[161](index=161&type=chunk) - Based on the evaluation, the CEO and CFO concluded that the disclosure controls and procedures were effective in ensuring timely and accurate reporting of information required under the Exchange Act[161](index=161&type=chunk) [Changes in Internal Control over Financial Reporting](index=21&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms that no material changes in internal control over financial reporting occurred during the quarter ended June 30, 2021 - No changes in internal control over financial reporting were identified during the three months ended June 30, 2021, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[162](index=162&type=chunk) [PART II - OTHER INFORMATION](index=21&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including risk factors, equity security sales, and a list of exhibits [Item 1A. RISK FACTORS](index=21&type=section&id=Item%201A.%20RISK%20FACTORS) This section reiterates and emphasizes risk factors from the Annual Report on Form 10-K, highlighting how the COVID-19 pandemic and material shortages could exacerbate impacts on business, financial condition, and operations - Many risk factors from the Annual Report on Form 10-K may be further heightened or exacerbated by the impact of the COVID-19 pandemic[164](index=164&type=chunk) - The COVID-19 pandemic has negatively impacted, and could continue to materially adversely affect, the company's business, financial condition, results of operations, and cash flow[165](index=165&type=chunk) - Worldwide shortages of materials, especially semiconductors, have resulted in limited supplies, extended lead times, and increased costs, posing potential impacts on future sales, manufacturing, and financial results[167](index=167&type=chunk) - Fluctuations in quarterly results may occur due to governmental customer spending patterns influenced by fiscal year-end budgets and appropriations, as well as seasonal sales related to wildland fire-suppression efforts[169](index=169&type=chunk) [Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=22&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section discloses that the company's Credit Agreement with JPMorgan Chase Bank, N.A. contains limitations and covenants that may restrict its wholly-owned operating subsidiary, BK Technologies, Inc., from paying dividends to the parent company - The Credit Agreement with JPMC contains limitations and covenants that may restrict BK Technologies, Inc.'s ability to pay dividends to BK Technologies Corporation[170](index=170&type=chunk) [Item 6. EXHIBITS](index=22&type=section&id=Item%206.%20EXHIBITS) This section provides a list of exhibits filed with the quarterly report, including certifications from the principal executive and financial officers, and XBRL-related documents - The exhibit index lists various certifications (e.g., 31.1, 31.2, 32.1, 32.2) required by the Sarbanes-Oxley Act, along with XBRL Instance Document and Taxonomy Extension documents[172](index=172&type=chunk) [SIGNATURES](index=23&type=section&id=SIGNATURES) This section provides the official signatures of the principal executive and financial officers, certifying the accuracy of the report - The report was signed on August 12, 2021, by John M. Suzuki, Chief Executive Officer, and William P. Kelly, Executive Vice President and Chief Financial Officer, on behalf of BK Technologies Corporation[177](index=177&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 001-32644 BK TECHNOLOGIES CORPORATION (Exact name of registrant as specified in its charter) Nevada 83-4064262 (State or ot ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) The company designs and manufactures two-way land mobile radio (LMR) equipment for the public safety and government sectors - The company provides two-way land mobile radios (LMRs), repeaters, and base stations for the government, public safety, and commercial markets[7](index=7&type=chunk) - In August 2020, the company introduced the **BKR 5000 portable radio**, the first model in its new BKR Series of APCO Project 25 products[10](index=10&type=chunk)[21](index=21&type=chunk) Sales by Market Segment (FY 2020 vs. FY 2019) | Market Segment | 2020 Sales (%) | 2019 Sales (%) | | :--- | :--- | :--- | | Government and Public Safety | 92% | 93% | | Business and Industrial | 8% | 7% | - Sales to the U.S. Government constituted approximately **51% of total sales in 2020**, up from 49% in 2019[26](index=26&type=chunk) - The backlog of unshipped customer orders was approximately **$5.9 million** as of December 31, 2020, a decrease from $7.2 million at the end of 2019[27](index=27&type=chunk) Engineering & Development Expenses | Year | Expense (in millions) | | :--- | :--- | | 2020 | $7.9 | | 2019 | $9.8 | [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from product line dependency, intense competition, government contracts, and supply chain vulnerabilities - The company's success is highly dependent on its LMR products and the market acceptance of its **new BKR Series product line**[38](index=38&type=chunk) - The company faces intense competition from larger suppliers like **Motorola Solutions, Inc.**, which has a dominant market share[39](index=39&type=chunk) - Approximately **51% of 2020 sales were to the U.S. Government**, creating risk associated with government spending and budget processes[42](index=42&type=chunk) - The **COVID-19 pandemic** could materially adversely affect business through supply chain disruptions and reduced customer spending[45](index=45&type=chunk) - The company relies on a limited number of suppliers, with **65% of material procurements in 2020 sourced from six suppliers**[57](index=57&type=chunk) - The largest stockholder, FG and its affiliates, holds approximately **34.3% of the company's common stock**, giving it significant influence[51](index=51&type=chunk) [Unresolved Staff Comments](index=21&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[73](index=73&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties) The company leases all its facilities and does not own any real estate - The company leases all its facilities, including its primary **54,000 sq. ft.** industrial space in West Melbourne, Florida[74](index=74&type=chunk) [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) The company had no pending material claims or legal actions as of year-end 2020 - There were no pending material claims or legal matters as of December 31, 2020[75](index=75&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[75](index=75&type=chunk) Part II [Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20For%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE American, pays a quarterly dividend, and completed its repurchase program in April 2020 - The company's common stock is traded on the NYSE American under the symbol **"BKTI"**[79](index=79&type=chunk) - The company pays quarterly cash dividends, with four dividends of **$0.02 per share** paid in 2020[10](index=10&type=chunk)[82](index=82&type=chunk) Issuer Purchases of Equity Securities (Jan-Apr 2020) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | Jan 2020 | 36,155 | 2.94 | | Feb 2020 | 20,963 | 2.72 | | Mar 2020 | 44,695 | 1.72 | | Apr 2020 | 16,129 | 1.63 | | **Total** | **117,942** | **2.25** | - The stock repurchase program was **completed in April 2020**[84](index=84&type=chunk) [Selected Financial Data](index=22&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not required as the company is a smaller reporting company - Not required for smaller reporting companies[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company achieved a significant turnaround in 2020 with 10.1% sales growth and a return to profitability Financial Performance Summary (FY 2020 vs. FY 2019) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Sales | $44.1M | $40.1M | +10.1% | | Gross Profit Margin | 41.0% | 39.0% | +2.0 p.p. | | SG&A Expenses | $17.0M | $20.0M | -15.0% | | Operating Income (Loss) | $1.0M | ($4.4M) | +$5.4M | | Net Income (Loss) | $0.25M | ($2.6M) | +$2.85M | | EPS (diluted) | $0.02 | ($0.21) | +$0.23 | - Sales growth in 2020 was primarily attributed to orders from **federal and state public safety agencies** and initial sales from the new BKR 5000 radio[87](index=87&type=chunk)[92](index=92&type=chunk) - The company implemented cost-reduction measures, including an **18% workforce reduction** in Q2 2020, which incurred approximately $221,000 in severance costs[89](index=89&type=chunk)[102](index=102&type=chunk) - In April 2020, the company received a **$2.2 million PPP loan** but repaid it in full the same month out of caution[12](index=12&type=chunk)[102](index=102&type=chunk) - Cash provided by operating activities was **$4.4 million** in 2020, a significant improvement from $2.5 million used in 2019, largely due to a **$4.1 million decrease in inventory**[100](index=100&type=chunk) - The company renewed its **$5.0 million revolving line of credit**, with no borrowings outstanding as of year-end 2020[102](index=102&type=chunk)[104](index=104&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not required as the company is a smaller reporting company - Not required for smaller reporting companies[116](index=116&type=chunk) [Financial Statements and Supplementary Data](index=32&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item refers to the Consolidated Financial Statements and auditor's report included in the filing - Refers to the Consolidated Financial Statements included in the report[116](index=116&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=56&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[204](index=204&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of year-end 2020 - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2020[205](index=205&type=chunk) - Management assessed internal control over financial reporting using the COSO framework (2013) and concluded it was **effective** as of December 31, 2020[206](index=206&type=chunk) [Other Information](index=56&type=section&id=Item%209B.%20Other%20Information) A board member resigned in March 2021 with no reported disagreements - Lewis M. Johnson, a board member, resigned effective March 2, 2021, with **no reported disagreement** with the company[208](index=208&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=56&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2021 annual stockholders' meeting[210](index=210&type=chunk) [Executive Compensation](index=57&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2021 annual stockholders' meeting[212](index=212&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=57&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2021 annual stockholders' meeting[213](index=213&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=57&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related party transaction information is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2021 annual stockholders' meeting[214](index=214&type=chunk) [Principal Accounting Fees and Services](index=57&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on accounting fees is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2021 annual stockholders' meeting[215](index=215&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=58&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed with the report, omitting inapplicable financial schedules - Lists all exhibits filed with the Form 10-K, including corporate governance documents, incentive plans, and material agreements[218](index=218&type=chunk)[219](index=219&type=chunk) - All financial statement schedules have been omitted because they are inapplicable or the information is included elsewhere[226](index=226&type=chunk) [Form 10-K Summary](index=60&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a Form 10-K summary - None[227](index=227&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=33&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued an unqualified opinion with two critical audit matters identified - The auditor issued an **unqualified (clean) opinion** on the consolidated financial statements[119](index=119&type=chunk) - Critical Audit Matters identified were: 1) **Allowance for slow-moving and obsolete inventory**, and 2) **Assessment of realizability of deferred tax assets**[123](index=123&type=chunk)[124](index=124&type=chunk)[127](index=127&type=chunk) [Consolidated Balance Sheets](index=35&type=section&id=Consolidated%20Balance%20Sheets) Total assets were $37.5 million, with a significant inventory reduction offset by increased cash and receivables Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $6,826 | $4,676 | | Inventories, net | $9,441 | $13,513 | | Total current assets | $24,611 | $23,886 | | **Total assets** | **$37,490** | **$37,940** | | **Liabilities & Equity** | | | | Accounts payable | $5,119 | $5,310 | | Total current liabilities | $9,466 | $9,376 | | **Total liabilities** | **$14,966** | **$14,664** | | **Total stockholders' equity** | **$22,524** | **$23,276** | [Consolidated Statements of Operations](index=36&type=section&id=Consolidated%20Statements%20of%20Operations) The company achieved net income of $248,000 in 2020, a turnaround from a $2.6 million loss in 2019 Consolidated Statement of Operations (in thousands, except per share data) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Sales, net | $44,139 | $40,100 | | Cost of products | $26,055 | $24,449 | | Selling, general and administrative | $17,036 | $20,036 | | **Operating income (loss)** | **$1,048** | **($4,385)** | | (Loss) gain on investment in securities | ($620) | $716 | | Income (loss) before income taxes | $251 | ($3,623) | | **Net income (loss)** | **$248** | **($2,636)** | | Net income (loss) per share-diluted | $0.02 | ($0.21) | [Consolidated Statements of Changes in Stockholders' Equity](index=37&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity decreased to $22.5 million due to dividends and stock repurchases offsetting net income Changes in Stockholders' Equity for FY 2020 (in thousands) | Description | Amount | | :--- | :--- | | Balance at Dec 31, 2019 | $23,276 | | Net income | $248 | | Dividends declared | ($1,002) | | Repurchase of common stock | ($269) | | Share-based compensation & other | $271 | | **Balance at Dec 31, 2020** | **$22,524** | [Consolidated Statements of Cash Flows](index=38&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $4.4 million, driving a $2.15 million increase in total cash and cash equivalents Consolidated Statement of Cash Flows (in thousands) | Cash Flow Category | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $4,444 | ($2,486) | | Net cash used in investing activities | ($946) | ($2,455) | | Net cash used in financing activities | ($1,348) | ($1,651) | | **Net change in cash and cash equivalents** | **$2,150** | **($6,592)** | | Cash and cash equivalents, end of year | $6,826 | $4,676 |