Sales Performance - Sales for Q3 2020 increased by 8.1% to approximately $12.8 million compared to $11.8 million in Q3 2019[105] - For the nine months ended September 30, 2020, sales increased by 2.6% to approximately $33.6 million compared to $32.7 million in the same period last year[105] - For the third quarter ended September 30, 2020, net sales increased 8.1% to approximately $12.8 million, compared to approximately $11.8 million for the same quarter last year[114] Income and Profitability - Operating income for Q3 2020 increased by 253.2% to approximately $1.0 million compared to approximately $0.3 million in Q3 2019[108] - Net income for Q3 2020 increased by 184.5% to approximately $678,000 ($0.05 per share) compared to approximately $238,000 ($0.02 per share) in Q3 2019[110] - Operating income for the third quarter increased approximately $747,000 (253.2%) to approximately $1.0 million (8.2% of sales), compared to $295,000 (2.5% of sales) for the same quarter last year[129] Expenses Management - Selling, general and administrative expenses decreased by 13.6% to approximately $4.2 million in Q3 2020 compared to approximately $4.8 million in Q3 2019[107] - SG&A expenses for the third quarter decreased by $653,000, or 13.6%, to approximately $4.2 million (32.6% of sales), compared to approximately $4.8 million (40.8% of sales) for the same quarter last year[125] - Engineering and product development expenses for the third quarter decreased $359,000, or 15.1%, to approximately $2.0 million (15.8% of sales), compared to approximately $2.4 million (20.1% of sales) for the same quarter last year[126] Cash Flow and Working Capital - Inventory was reduced by over $5.0 million, or 37.6%, from the start of the year, contributing to positive cash flow from operations[103] - Net cash provided by operating activities for the nine months ended September 30, 2020, totaled approximately $3.5 million, compared to cash used in operating activities of approximately $1.0 million for the same period last year[139] - As of September 30, 2020, working capital totaled approximately $14.4 million, with approximately $12.2 million in cash, cash equivalents, and trade receivables[111] Workforce and Costs - The company implemented workforce reductions of approximately 18% in May 2020, incurring severance costs of approximately $221,000[101] - The company incurred approximately $221,000 in severance costs related to workforce reductions recognized in Q2 2020[146] Investments and Financing - An unrealized loss of approximately $291,000 was recognized on the investment in 1347 Property Insurance Holdings, Inc. for Q3 2020[109] - Cash used in investing activities for the nine months ended September 30, 2020, totaled approximately $742,000, compared to approximately $2.3 million for the same period last year[141] - The company received $2.2 million under the PPP, which was fully repaid within the same period[144] - The company has a $5.0 million Credit Agreement with JPMC, with no borrowings outstanding as of September 30, 2020, and approximately $2.8 million available for borrowing[151] - The Master Loan Agreement for $425,000 to finance manufacturing equipment has a term of five years and bears a fixed interest rate of 5.11%[152] Product Development and Market Focus - The company launched the BKR 5000, the first model in the new BKR Series of APCO Project 25 land mobile radio products during the third quarter[116] - The company reorganized its sales resources to better focus on target markets, enhancing its sales funnel for potential new customers in federal, state, and local public safety agencies[117] Stock and Capital Management - The company used approximately $1.1 million in financing activities, including $752,000 in dividends and $269,000 in stock repurchases[143] - The company’s stock repurchase program was terminated in April 2020 and was not renewed[143] - The Credit Agreement requires the company to maintain a tangible net worth of at least $20.0 million at any fiscal quarter end[149] - The company may engage in public or private offerings of equity or debt securities to increase capital resources, depending on market conditions[154]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) Unaudited condensed consolidated financial statements for H1 2020 reflect decreased assets and equity, a $1.5 million net loss, and positive operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $34.6 million by June 30, 2020, driven by a $4.0 million inventory reduction, with liabilities and stockholders' equity also declining Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $21,457 | $23,886 | | Inventories, net | $9,527 | $13,513 | | **Total Assets** | **$34,610** | **$37,940** | | **Total Current Liabilities** | $8,011 | $9,376 | | **Total Liabilities** | **$13,450** | **$14,664** | | **Total Stockholders' Equity** | **$21,160** | **$23,276** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales for Q2 2020 decreased to $9.9 million, resulting in a $302,000 net loss; H1 2020 net sales were flat at $20.8 million with a $1.5 million net loss Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2020 (in thousands) | Q2 2019 (in thousands) | Six Months 2020 (in thousands) | Six Months 2019 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Sales, net | $9,937 | $13,294 | $20,826 | $20,938 | | Operating (loss) income | ($36) | $20 | ($884) | ($2,298) | | Net loss | ($302) | ($247) | ($1,494) | ($1,565) | | Net loss per share | ($0.02) | ($0.02) | ($0.12) | ($0.12) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2020 operating cash flow was $3.6 million, a significant improvement driven by a $3.9 million inventory decrease, with cash and equivalents increasing to $6.9 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $3,597 | ($1,333) | | Net cash used in investing activities | ($525) | ($1,462) | | Net cash used in financing activities | ($809) | ($1,058) | | **Net change in cash and cash equivalents** | **$2,263** | **($3,853)** | | **Cash and cash equivalents, end of period** | **$6,939** | **$7,415** | [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail COVID-19 impacts, including an 18% workforce reduction and PPP loan repayment, significant sales to U.S. government agencies, and an unrealized investment loss - In response to the COVID-19 pandemic, the company implemented an approximately **18% workforce reduction** in May 2020, incurring about **$221,000 in severance costs**[31](index=31&type=chunk) - The company received a **$2.2 million loan** under the Paycheck Protection Program (PPP) in April 2020 but repaid it in full the same month due to uncertainty regarding qualification requirements[32](index=32&type=chunk) - Sales to U.S. government agencies accounted for **43.0% of net sales in Q2 2020** and **52.1% for the first six months of 2020**[62](index=62&type=chunk) - The company recognized a six-month unrealized loss of approximately **$506,000** on its investment in 1347 Property Insurance Holdings, Inc. (PIH), compared to a **$444,000 gain** in the prior year period[45](index=45&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses H1 2020 financial results, highlighting COVID-19 impacts, cost-saving measures, improved gross margins, reduced SG&A, and positive operating cash flow [Impact of COVID-19 Pandemic](index=20&type=section&id=Impact%20of%20COVID-19%20Pandemic) As an essential business, the company maintained operations while implementing cost reductions, including an 18% workforce reduction and repaying a $2.2 million PPP loan - The company is considered an "essential business" and has kept manufacturing operations open during the pandemic[89](index=89&type=chunk) - In May 2020, the company reduced its workforce by approximately **18%** to lower costs, resulting in severance charges of about **$221,000**[91](index=91&type=chunk) - The company's stock repurchase program terminated in April 2020 and was not renewed[92](index=92&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) H1 2020 sales were flat at $20.8 million, with gross margin improving to 39.5% and SG&A decreasing to $9.1 million, resulting in a reduced operating loss Key Operational Metrics Comparison (in millions, except for percentages) | Metric | H1 2020 (in millions) | H1 2019 (in millions) | | :--- | :--- | :--- | | Net Sales | $20.8 | $20.9 | | Gross Profit Margin | 39.5% | 38.9% | | SG&A Expenses | $9.1 | $10.4 | | Operating Loss | ($0.884) | ($2.3) | - Engineering and product development expenses for H1 2020 decreased to **$4.1 million** from **$5.2 million** in H1 2019 as development activities for the new BKR Series shifted to the internal engineering team[116](index=116&type=chunk) - The company anticipates its new BKR Series product line will be available for sale in the second half of 2020, which is expected to increase its addressable market[108](index=108&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved with H1 2020 operating cash flow of $3.6 million, driven by inventory reduction, and a $5.0 million revolving credit line secured - Net cash provided by operating activities was **$3.6 million** for H1 2020, mainly due to a decrease in inventory of **$3.9 million**[130](index=130&type=chunk)[131](index=131&type=chunk) - In H1 2020, the company paid **$502,000 in dividends** and repurchased **$269,000 of its common stock**; the repurchase program ended in April 2020[134](index=134&type=chunk) - In January 2020, the company entered into a **$5.0 million credit agreement** with JPMC, with approximately **$3.9 million available** as of June 30, 2020, and no outstanding borrowings[138](index=138&type=chunk)[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were effective as of June 30, 2020, with no material changes in internal control over financial reporting during Q2 2020 - The President and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2020[148](index=148&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[149](index=149&type=chunk) PART II - OTHER INFORMATION [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20RISK%20FACTORS) Updated risk factors highlight the COVID-19 pandemic's material adverse impact on business, including workforce disruptions, supply chain delays, and reduced customer spending - The COVID-19 pandemic is expected to have a material adverse impact on business and financial performance, with the full extent dependent on future developments like the pandemic's duration and severity[154](index=154&type=chunk) - Risks include potential disruptions to the supply chain, manufacturing, and product shipments, as well as the possibility of customers reducing or delaying orders due to budget constraints or economic uncertainty[156](index=156&type=chunk)[158](index=158&type=chunk) - The company has taken steps to reduce expenses, including a workforce reduction of approximately **18%**, but there is no certainty these measures will be sufficient to mitigate all risks posed by the pandemic[156](index=156&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased 16,129 shares in April 2020 before terminating its stock repurchase program, with credit agreement covenants potentially limiting subsidiary dividends Issuer Purchases of Equity Securities (Q2 2020) | Period | Total Shares Purchased (shares) | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | April 2020 | 16,129 | $1.63 | | May 2020 | 0 | $0 | | June 2020 | 0 | $0 | - The company's stock repurchase program terminated in April 2020 and was not renewed[162](index=162&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20OTHER%20INFORMATION) The company entered a consulting agreement with Itasca Financial LLC for strategic advice, involving a retainer and monthly fees, with related party disclosures - The company entered into a consulting agreement with Itasca Financial LLC on June 24, 2020, for strategic advice, involving a **$50,000 retainer** and a **$20,000 monthly fee**; the agreement has since been suspended indefinitely[164](index=164&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20EXHIBITS) This section indexes exhibits filed with the Form 10-Q, including corporate governance documents, the new consulting agreement, and officer certifications - The Exhibit Index lists all documents filed with the report, including certifications required by the Sarbanes-Oxley Act and XBRL data files[168](index=168&type=chunk)[170](index=170&type=chunk)

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=2&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) The company reported a Q1 net loss of $1.2 million on decreased assets, but generated positive operating cash flow of $0.9 million due to inventory reduction and took post-quarter actions in response to COVID-19 [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $35.7 million as of March 31, 2020, driven by lower inventory, while stockholders' equity declined due to the net loss and stock repurchases Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $22,275 | $23,886 | | Inventories, net | $10,937 | $13,513 | | **Total Assets** | **$35,712** | **$37,940** | | **Total Current Liabilities** | $8,565 | $9,376 | | **Total Liabilities** | **$14,070** | **$14,664** | | **Total Stockholders' Equity** | **$21,642** | **$23,276** | [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales grew 42.5% to $10.9 million in Q1 2020, significantly narrowing the operating loss to $0.85 million despite an investment loss Q1 2020 vs Q1 2019 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Sales, net | $10,889 | $7,644 | | Operating loss | $(848) | $(2,318) | | Net loss | $(1,192) | $(1,318) | | Net loss per share-basic and diluted | $(0.09) | $(0.10) | [Condensed Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company generated $0.9 million in cash from operations in Q1 2020, a significant turnaround from the prior year, driven by a $2.5 million decrease in inventories Q1 2020 vs Q1 2019 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $915 | $(2,308) | | Net cash used in investing activities | $(131) | $(829) | | Net cash used in financing activities | $(514) | $(591) | | **Net change in cash and cash equivalents** | **$270** | **$(3,728)** | [Notes to Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail significant events including the COVID-19 impact, large USFS orders, a new credit facility, an investment loss, and post-quarter PPP loan and workforce reduction actions - The company's operating subsidiary received orders totaling approximately **$4.9 million** from the U.S. Forest Service (USFS) in February and March 2020[37](index=37&type=chunk)[38](index=38&type=chunk) - The company has an investment in 1347 Property Insurance Holdings, Inc. (PIH) which had a fair value of **$2.3 million** as of March 31, 2020, and an unrealized loss of **$306,000** was recognized in Q1 2020[51](index=51&type=chunk) - On January 30, 2020, the company entered into a new **$5.0 million** revolving line of credit with JPMorgan Chase Bank, which was undrawn as of March 31, 2020[70](index=70&type=chunk)[75](index=75&type=chunk) - Subsequent to quarter end, the company received a **$2.2 million PPP loan** on April 13, 2020, but decided to repay the full amount on April 24, 2020, following new SBA guidance[86](index=86&type=chunk)[87](index=87&type=chunk) - On May 4, 2020, the company implemented an **18% workforce reduction** to cut costs due to the uncertain business environment from COVID-19, incurring approximately **$221,000** in severance costs[88](index=88&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=16&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the 42.5% sales growth driven by federal demand, improved gross margins, a reduced operating loss, and the significant uncertainty and responsive actions related to COVID-19 [Executive Overview & COVID-19 Impact](index=17&type=section&id=Executive%20Overview%20%26%20COVID-19%20Impact) The company outlines its two-way radio business and details the significant operational and financial uncertainties posed by the COVID-19 pandemic, including responsive cost-cutting measures - The company designs, manufactures, and markets two-way land mobile radios under the BK Radio (government/public safety) and RELM (business/industrial) brands[97](index=97&type=chunk)[99](index=99&type=chunk) - The COVID-19 pandemic poses significant challenges, and while manufacturing remains open as an "essential business," the company has implemented cost-reduction measures, including an **18% workforce reduction**[103](index=103&type=chunk)[107](index=107&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Q1 2020 net sales rose 42.5% to $10.9 million with improved gross margins and lower relative SG&A expenses, leading to a substantially reduced operating loss of $848,000 Q1 2020 vs Q1 2019 Key Metrics | Metric | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Net Sales | $10.9M (+42.5%) | $7.6M | | Gross Margin % | 35.8% | 31.9% | | SG&A Expenses | $4.7M | $4.8M | | Operating Loss | $(0.85)M | $(2.3)M | - The increase in net sales was primarily due to **strong demand from federal customers** like the U.S. Forest Service, contrasting with an unusually low Q1 2019 affected by a federal government shutdown[118](index=118&type=chunk) - Engineering and product development expenses decreased by 4.8% to **$2.0 million** as development activities for the new BKR Series migrated to the internal engineering team[128](index=128&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved with positive operating cash flow of $0.9 million from inventory reduction, a new $5.0 million credit facility, and post-quarter actions to preserve capital - Net cash provided by operating activities was **$0.9 million**, a significant improvement from the $2.3 million used in the prior year, mainly due to a **$2.5 million decrease in net inventories**[141](index=141&type=chunk)[142](index=142&type=chunk) - Financing activities in Q1 2020 used **$514,000**, consisting of **$252,000 for dividends** and **$243,000 for stock repurchases**[145](index=145&type=chunk) - The company secured a **$5.0 million credit agreement** with JPMC, with approximately **$3.2 million available** as of March 31, 2020[149](index=149&type=chunk)[153](index=153&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal controls during the quarter - The President and Chief Financial Officer evaluated disclosure controls and procedures and concluded they were **effective as of March 31, 2020**[159](index=159&type=chunk) - **No material changes** in internal control over financial reporting occurred during the first quarter of 2020[160](index=160&type=chunk) [PART II - OTHER INFORMATION](index=25&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Risk Factors](index=25&type=section&id=Item%201A.%20RISK%20FACTORS) The primary risk factor update centers on the COVID-19 pandemic's potential material adverse impact on operations, supply chain, and financial condition - The COVID-19 pandemic is expected to have a **material adverse impact** on business and financial performance, with uncertainty regarding its duration and severity[164](index=164&type=chunk)[165](index=165&type=chunk) - Risks include operational disruptions, supply chain delays, increased freight costs, and potential for **reduced customer orders and delayed payments**[167](index=167&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - In response to the economic downturn from the pandemic, the company has restructured operations, including **reducing its workforce by approximately 18%**[167](index=167&type=chunk) [Issuer Purchases of Equity Securities](index=26&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased 101,813 shares for approximately $240,000 in Q1 2020 under a program that terminated in April 2020 and was not renewed Q1 2020 Share Repurchases | 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 | | **Total** | **101,813** | **$2.36** | - The company's stock repurchase program **terminated in April 2020** and has not been renewed[173](index=173&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20EXHIBITS) This section indexes all exhibits filed with the Form 10-Q, including governance documents, agreements, and certifications

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) The company designs, manufactures, and markets two-way land mobile radio communications equipment for government and industrial markets - BK Technologies Corporation is a holding company, with its operating subsidiary BK Technologies, Inc. providing two-way radio communications equipment[9](index=9&type=chunk) - The company designs, manufactures, and markets wireless communications products including two-way LMRs, repeaters, base stations, and related components, utilizing both analog and P-25 compliant digital technologies[10](index=10&type=chunk)[11](index=11&type=chunk) - BK Radio-branded products target the government and public safety market, while RELM-branded products serve the business and industrial market[12](index=12&type=chunk)[13](index=13&type=chunk) - On March 28, 2019, the company implemented a holding company reorganization to create a more efficient corporate structure and increase operational flexibility, with BK Technologies Corporation becoming the new parent company[16](index=16&type=chunk)[19](index=19&type=chunk) - Significant orders received in 2019 and early 2020 include approximately **$3.1 million** from the U.S. Forest Service, **$1.6 million** from a California State customer, and a **$1.8 million** firm delivery order from the TSA, with an additional **$2.1 million** order from a California State customer and **$2.8 million** from the USFS announced in January/February 2020[21](index=21&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - The company declared and paid four quarterly dividends of **$0.02 per share** in 2019 and declared another for April 2020, marking fifteen consecutive quarterly dividends[26](index=26&type=chunk) - The LMR industry is mature, with slowed growth due to factors like limited spectrum availability and constrained government budgets, leading to a migration towards more spectrum-efficient digital technologies like P-25[32](index=32&type=chunk)[33](index=33&type=chunk) - The P-25 Compliance Assessment Program (CAP) validates the company's KNG and KNG2 Series digital radios for P-25 compliance and interoperability with competitors' infrastructure, which is crucial for federal, state, and local emergency response agencies[11](index=11&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) Sales by Market Segment (2018-2019) | Market Segment | 2019 Sales (% of Total) | 2018 Sales (% of Total) | | :--- | :--- | :--- | | Government and Public Safety | 93% | 95% | | Business and Industrial | 7% | 5% | Engineering and Development Expenses (2018-2019) | Year | Expenses (in millions) | | :--- | :--- | | 2019 | $9.8 | | 2018 | $7.8 | - The increase in R&D expenses was primarily due to the development of the new BKR Series, including multiband radios, expected to supplant the KNG and KNG2 series[44](index=44&type=chunk)[46](index=46&type=chunk) - The company has no U.S. patents but relies on registered federal trademarks ('BK Technologies', 'BK Radio', 'Radios for Heroes') and trade secret laws[48](index=48&type=chunk)[103](index=103&type=chunk) - Manufacturing strategy involves a hybrid of internal capabilities and outside contract arrangements, with approximately **64.0% of material and subassembly procurements** in 2019 sourced from three suppliers, some of which are international[49](index=49&type=chunk)[52](index=52&type=chunk) - Sales may fluctuate quarterly due to governmental customer spending patterns (fiscal year budgets) and increased demand from wildland fire-suppression efforts during the summer season[53](index=53&type=chunk) U.S. Government Sales (2018-2019) | Year | % of Total Sales | | :--- | :--- | | 2019 | 49% | | 2018 | 40% | Backlog of Unshipped Customer Orders (2018-2019) | As of December 31 | Backlog (in millions) | | :--- | :--- | | 2019 | $7.2 | | 2018 | $7.6 | - The company competes in a highly competitive industry dominated by Motorola Solutions, Inc., leveraging price, product quality, and customer responsiveness as competitive advantages[57](index=57&type=chunk)[69](index=69&type=chunk) - The company is subject to various U.S. federal, state, local, and international laws and regulations, including FCC regulations for wireless communications products and U.S. Federal Government procurement regulations[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) Sales by Customer Location (2018-2019) | Customer Location | 2019 Sales (in millions) | 2018 Sales (in millions) | | :--- | :--- | :--- | | United States | $39.7 | $44.8 | | International | $0.4 | $4.6 | | Total | $40.1 | $49.4 | [Item 1A. Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from product line dependency, intense competition, technological change, government sales reliance, and supply chain disruptions - The company is **highly dependent on its LMR product line** as its sole source of sales, and the success of new products like the BKR Series is critical[68](index=68&type=chunk) - The LMR industry is highly competitive, dominated by Motorola Solutions, Inc., which has significantly greater resources and a broader product range, including complete communication systems and infrastructure that BK Technologies does not provide[69](index=69&type=chunk) - Failure to keep pace with rapid technological changes, such as the transition from analog to digital LMR products and the adoption of the P-25 standard, could materially adversely affect the business[73](index=73&type=chunk) Reliance on U.S. Government Sales | Year | % of Total Sales to U.S. Government | | :--- | :--- | | 2019 | 49.1% | | 2018 | 40.0% | - The company's U.S. Government contracts are subject to strict procurement regulations, oversight audits, and potential termination, which could result in penalties or negative financial impacts[78](index=78&type=chunk)[79](index=79&type=chunk) - Approximately **67.0% of material, subassembly, and product procurements** in 2019 were sourced internationally, exposing the company to economic, political, and health risks in foreign countries, including potential disruptions from the coronavirus outbreak[81](index=81&type=chunk)[84](index=84&type=chunk) - Carrying substantial inventory and inaccurate demand estimates could lead to markdowns and negatively impact financial results[86](index=86&type=chunk) - Fixed-price contracts carry risks of losses if cost estimates are incorrect or if there are unforeseen events like raw material price fluctuations or subcontractor issues[87](index=87&type=chunk) - The investment strategy, including holdings in public companies like PIH, is riskier than conservative investments and could adversely impact financial condition if not successful[88](index=88&type=chunk) - Fundamental Global Investors, LLC, as the largest stockholder (approx. 39%), can exert significant influence over company policies and affairs, potentially leading to interests that differ from other stockholders[89](index=89&type=chunk) - The company's brand and reputation are critical, and negative incidents, product issues, or legal violations could lead to lost sales and recruiting difficulties[91](index=91&type=chunk) - Challenging economic conditions could lead to deferred purchases by customers, increased financial pressures on third-party partners, and limited access to credit and capital for the company[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - The credit agreement with JPMorgan Chase Bank, N.A. contains restrictive covenants, including a tangible net worth requirement, which could limit operating flexibility and lead to default if not met[96](index=96&type=chunk) - Dependence on a limited number of contract manufacturers and component suppliers (**64.0% from three suppliers in 2019**) creates risks of shortages, delays, and price increases[97](index=97&type=chunk)[98](index=98&type=chunk) - Failure to effectively manage growth, including integrating new employees and improving operating systems, could materially and adversely affect the business[100](index=100&type=chunk) - The loss of executive officers or key personnel, or the inability to attract and retain qualified staff, is critical to the company's success[101](index=101&type=chunk)[102](index=102&type=chunk) - The company's reliance on trademarks and trade secret laws, without U.S. patents, may make it difficult to protect intellectual property rights against infringement[103](index=103&type=chunk) - Rising healthcare costs could have a material adverse effect on the company's financial condition[104](index=104&type=chunk) - Insurance coverage may not fully cover all potential exposures, and disruptions in financial markets could impact insurer stability or increase premiums[106](index=106&type=chunk) - The company's stock price is vulnerable to significant fluctuations due to quarterly operating results, technological innovations, competition, and personnel changes[107](index=107&type=chunk) - Natural disasters, acts of war or terrorism, and other catastrophic events could cause operational disruptions, physical damage, and negatively impact financial condition[108](index=108&type=chunk) - Cybersecurity breaches or disruptions to information technology systems, including those of partners, could lead to data loss, operational disruptions, litigation, and reputational harm[110](index=110&type=chunk) - Noncompliance with U.S. and foreign laws and regulations, including those from the FCC and SEC, could result in penalties and reputational damage[113](index=113&type=chunk) - Failure to maintain NYSE American listing standards could lead to delisting, making it harder to trade common stock and access capital markets[115](index=115&type=chunk) - Infringement claims against the company could result in costly litigation, product redesigns, or licensing requirements, negatively impacting business and financial results[116](index=116&type=chunk) - The company has deferred tax assets that may not be fully utilized if future operating losses occur, potentially requiring a valuation allowance and additional non-cash income tax expense[117](index=117&type=chunk) - Compliance with Dodd-Frank conflict minerals disclosure requirements could affect sourcing, availability, and cost of minerals, potentially leading to reputational damage if conflict-free products are not obtainable[118](index=118&type=chunk) - As a holding company, BK Technologies Corporation relies on its subsidiaries' operations and funds, and restrictions on dividend payments from subsidiaries could impact its ability to meet obligations[120](index=120&type=chunk) - Future sales of substantial amounts of common stock, particularly by affiliates, could negatively affect the stock price and impair the ability to raise equity capital[121](index=121&type=chunk)[122](index=122&type=chunk) [Item 1B. Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments[123](index=123&type=chunk) [Item 2. Properties](index=22&type=section&id=Item%202.%20Properties) The company leases industrial and office space in Florida and Kansas and entered a new office lease in Sunrise, Florida, in February 2020 - The company leases approximately **54,000 square feet** of industrial space in West Melbourne, Florida, with a lease term until June 30, 2027[124](index=124&type=chunk) - The company also leases **8,100 square feet** of office space in Lawrence, Kansas, with the lease term extended until December 31, 2021[124](index=124&type=chunk) - In February 2020, a new lease for **6,857 square feet** of office space in Sunrise, Florida, was entered into for 64 months, with annual rental expenses starting at approximately **$196,000**[125](index=125&type=chunk) [Item 3. Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) As of December 31, 2019, there were no pending material claims or legal matters - No pending material claims or legal matters as of December 31, 2019[126](index=126&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[127](index=127&type=chunk) PART II [Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20For%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE American, with details on stockholders, dividends, and a stock repurchase program provided - Common stock trades on the NYSE American under the symbol 'BKTI'[132](index=132&type=chunk) - As of February 19, 2020, there were **645 holders of record** of common stock[133](index=133&type=chunk) - The company currently pays quarterly cash dividends, funded by its wholly-owned subsidiary, BK Technologies, Inc., subject to credit agreement covenants[134](index=134&type=chunk)[135](index=135&type=chunk) Issuer Purchases of Equity Securities (Q4 2019) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | Shares Purchased Under Publicly Announced Plans | Shares Remaining Under Publicly Announced Plans | | :--- | :--- | :--- | :--- | :--- | | 10/01/19-10/31/19 | 15,384 | 3.44 | 15,384 | 177,891 | | 11/01/19-11/30/19 | 15,569 | 3.18 | 15,569 | 162,322 | | 12/01/19-12/31/19 | 44,180 | 3.09 | 44,180 | 118,142 | | Total | 75,133 | 3.24 | 75,133 | | - The company has a stock repurchase program authorizing up to **1 million shares**, with no termination date[137](index=137&type=chunk) [Item 6. Selected Financial Data](index=23&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data is not required for smaller reporting companies - Not required for smaller reporting companies[138](index=138&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Sales and operating results declined in 2019 due to lower volumes and increased R&D, with a focus on new product development for future growth [Executive Summary](index=24&type=section&id=Executive%20Summary) Financial results declined in 2019, marked by an **18.8% decrease in sales** and an operating loss, driven by lower public safety agency purchases - Financial and operating results for 2019 declined from 2018, with **sales down 18.8%** and an operating loss recognized[141](index=141&type=chunk) Key Financial Highlights (2018-2019) | Metric | 2019 (in millions) | 2018 (in millions) | | :--- | :--- | :--- | | Total Sales | $40.1 | $49.4 | | Gross Profit Margin | 39.0% | 40.5% | | SG&A Expenses | $20.0 | $17.6 | | Operating (Loss) Income | ($4.4) | $2.4 | | Pretax (Loss) Income | ($3.6) | ($0.5) | | Net Loss | ($2.6) | ($0.2) | | Cash Used in Operations | ($2.5) | $5.3 (provided) | - The decrease in sales was primarily due to reduced purchases from state and international public safety agencies in California and Canada, partially offset by new state and local agency sales[142](index=142&type=chunk)[154](index=154&type=chunk) - Increased operating expenses were largely attributed to product development and engineering for the new BKR Series, including a multiband radio, which has experienced delays[141](index=141&type=chunk)[149](index=149&type=chunk) - Working capital decreased to **$14.5 million** at year-end 2019 from **$21.0 million** in 2018, with cash, cash equivalents, and trade receivables declining[147](index=147&type=chunk) - The coronavirus outbreak in China has not impacted operations to date, but its potential future impact on the supply chain and ability to fulfill customer demand is uncertain[148](index=148&type=chunk)[155](index=155&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Sales fell **18.8%** to **$40.1 million** and gross margin decreased to **39.0%**, while SG&A expenses rose due to increased R&D for the BKR Series Consolidated Statements of Operations as a Percentage of Sales | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Sales | 100.0% | 100.0% | | Cost of products | (61.0)% | (59.5)% | | Gross margin | 39.0% | 40.5% | | Selling, general and administrative expenses | (50.0)% | (35.5)% | | Other income (expense), net | 1.9% | (6.0)% | | Loss before income taxes | (9.1)% | (1.0)% | | Income tax benefit | 2.5% | 0.6% | | Net loss | (6.6)% | (0.4)% | Sales, Net (2018-2019) | Year | Sales (in millions) | | :--- | :--- | | 2019 | $40.1 | | 2018 | $49.4 | - Sales decreased by **$9.3 million (18.8%)** in 2019, primarily due to non-recurring substantial purchases from state and international public safety agencies in California and Canada in prior years, and the federal government shutdown in Q1 2019[154](index=154&type=chunk) - Gross profit margin decreased to **39.0%** in 2019 from **40.5%** in 2018, mainly due to lower sales and manufacturing volumes, leading to suboptimal utilization of expenses, and a product mix weighted towards lower-margin products[158](index=158&type=chunk)[159](index=159&type=chunk) Selling, General and Administrative (SG&A) Expenses (2018-2019) | Year | SG&A Expenses (in millions) | % of Sales | | :--- | :--- | :--- | | 2019 | $20.0 | 50.0% | | 2018 | $17.6 | 35.5% | - Engineering and product development expenses increased to **$9.8 million (24.5% of sales)** in 2019 from **$7.8 million (15.7% of sales)** in 2018, driven by the development of the new BKR Series, including multiband radios[162](index=162&type=chunk) - Marketing and selling expenses decreased slightly to **$5.2 million** in 2019, while general and administrative expenses increased to **$5.0 million**, primarily due to corporate headquarters costs and IT security upgrades[163](index=163&type=chunk)[164](index=164&type=chunk) Operating (Loss) Income (2018-2019) | Year | Operating (Loss) Income (in millions) | % of Sales | | :--- | :--- | :--- | | 2019 | ($4.4) | (10.9)% | | 2018 | $2.4 | 4.9% | - The operating loss in 2019 was primarily due to lower sales combined with increased product development expenses[165](index=165&type=chunk) [Other Income (Expense)](index=27&type=section&id=Other%20Income%20(Expense)) Other income improved significantly due to an unrealized gain on an investment in securities, compared to a substantial loss in the prior year Other Income (Expense) (2018-2019) | Metric | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | | Interest Income | $150 | $102 | | Gain (Loss) on Investment in Securities | $716 | ($2,671) | | Other Expense | ($104) | ($328) | | Total Other Income (Expense) | $762 | ($2,897) | - The company recognized an **unrealized gain of $716,000** on its investment in PIH in 2019, a significant improvement from a **$2.7 million loss** in 2018[168](index=168&type=chunk) - Other expenses in 2018 were primarily attributed to exchange losses from a Canadian dollar-denominated contract[170](index=170&type=chunk) [Income Tax Benefit](index=27&type=section&id=Income%20Tax%20Benefit) The company recorded a non-cash income tax benefit resulting from deferred items, with net deferred tax assets totaling **$4.4 million** Income Tax Benefit (2018-2019) | Year | Income Tax Benefit (in thousands) | | :--- | :--- | | 2019 | $987 | | 2018 | $277 | - The income tax benefit for both years is largely non-cash, resulting from deferred items[145](index=145&type=chunk) - Net deferred tax assets totaled approximately **$4.4 million** as of December 31, 2019, primarily from R&D tax credits, operating loss carryforwards, and accrued expenses[173](index=173&type=chunk) - Management believes the company can generate sufficient taxable income to utilize the entire deferred tax asset, but future losses could necessitate additional valuation allowances[174](index=174&type=chunk)[175](index=175&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased by **$6.6 million** due to a net loss, inventory increases, dividends, and stock repurchases Net Cash Flow Summary (2018-2019) | Activity | 2019 (in millions) | 2018 (in millions) | | :--- | :--- | :--- | | Operating | ($2.5) | $5.3 | | Investing | ($2.5) | $3.2 | | Financing | ($1.7) | ($4.4) | | Net Change in Cash | ($6.6) | $4.1 | - Cash used in operating activities in 2019 was primarily due to a net loss, increased inventory, decreased accrued compensation, and an unrealized gain on investment, partially offset by decreased accounts receivable and increased deferred revenue[177](index=177&type=chunk)[178](index=178&type=chunk) - Cash used in investing activities in 2019 was for property, plant, and equipment purchases, while 2018 included proceeds from securities sales[179](index=179&type=chunk) - Financing activities in 2019 included **$1.0 million** in quarterly dividends and **$1.0 million** in stock repurchases, partially offset by **$0.4 million** from a new equipment loan[180](index=180&type=chunk) - On January 30, 2020, the company entered into a new **$5.0 million** revolving line of credit with JPMorgan Chase Bank, N.A., collateralized by personal property and subject to restrictive covenants, including a **$20.0 million** tangible net worth requirement[184](index=184&type=chunk)[186](index=186&type=chunk) Cash and Cash Equivalents (2018-2019) | As of December 31 | Amount (in millions) | | :--- | :--- | | 2019 | $4.7 | | 2018 | $11.3 | - The company believes current funds, anticipated cash from operations, and the new credit agreement are sufficient for foreseeable working capital needs[189](index=189&type=chunk) [Off Balance Sheet Arrangements](index=29&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company does not have any off-balance sheet arrangements - The company does not have any off-balance sheet arrangements[190](index=190&type=chunk) [Recently Adopted Accounting Pronouncements](index=29&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) The company adopted new accounting standards for revenue, financial instruments, and leases, with the lease standard having the most significant balance sheet impact - Adopted ASU 2014-09 (Revenue from Contracts with Customers) in Q1 2018 using the modified retrospective approach, with no material impact on financial statements[191](index=191&type=chunk) - Adopted ASU 2016-01 (Financial Instruments) in Q1 2018, resulting in a **$4.3 million** reclassification of unrealized gain on investment in securities to accumulated deficit[193](index=193&type=chunk) - Adopted ASU 2018-15 (Cloud Computing Arrangement Implementation Costs) in Q4 2018, with no material impact[194](index=194&type=chunk) - Adopted ASU 2016-02 (Leases) on January 1, 2019, recognizing approximately **$2.9 million** in Right-of-Use (ROU) assets and **$3.0 million** in lease liabilities for operating leases[195](index=195&type=chunk) [Recent Accounting Pronouncements](index=30&type=section&id=Recent%20Accounting%20Pronouncements) No recent accounting pronouncements are expected to materially impact the company's financial condition or results of operations - No recent pronouncements are anticipated to have a material impact on the company's financial condition, results of operations, cash flows, or disclosures[196](index=196&type=chunk) [Critical Accounting Policies and Estimates](index=30&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies involve significant estimates for revenue recognition, inventory and accounts receivable allowances, warranty costs, and income taxes - Critical accounting policies and estimates include revenue recognition, allowance for doubtful accounts, allowance for excess or obsolete inventory, allowance for product warranty, software development, and income taxes[197](index=197&type=chunk) - Revenue is recognized when control of promised goods or services is transferred to customers, typically upon shipment. Extended warranty revenue is deferred and recognized straight-line over the warranty period[199](index=199&type=chunk)[200](index=200&type=chunk) Allowance for Doubtful Accounts (2018-2019) | As of December 31 | Allowance (in thousands) | Gross Trade Receivables (in millions) | | :--- | :--- | :--- | | 2019 | $50 | $4.0 | | 2018 | $50 | $5.8 | - The allowance for doubtful accounts is based on historical collection experience and a general allowance of approximately **1.3% of gross receivables**, with no specific allowance as of December 31, 2019 and 2018[201](index=201&type=chunk) Allowance for Obsolete and Slow-Moving Inventory (2018-2019) | As of December 31 | Allowance (in thousands) | | :--- | :--- | | 2019 | $823 | | 2018 | $629 | - Inventory allowance is determined by classifying inventory usage, business forecasts, and individual management review to ensure valuation at the lower of cost or net realizable value[204](index=204&type=chunk) - A liability for estimated product warranty costs (two-year warranties) is recorded at the time of revenue recognition, based on historical experience and periodically assessed for adequacy[205](index=205&type=chunk) - Income taxes are accounted for using the asset and liability method, with deferred tax assets and liabilities recognized for temporary differences. Valuation allowances are provided if realization of deferred tax assets is not more likely than not, based on estimates of future earnings and tax planning strategies[206](index=206&type=chunk) [Forward-Looking Statements](index=33&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements that involve risks and uncertainties, and readers are cautioned against placing undue reliance on them - The report contains forward-looking statements regarding future events and expectations, which involve risks and uncertainties that could cause actual results to differ materially[208](index=208&type=chunk) - Readers are cautioned not to place undue reliance on these statements, and the company assumes no obligation to publicly update or revise them[209](index=209&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Disclosures about market risk are not required for smaller reporting companies - Not required for smaller reporting companies[210](index=210&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=33&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the audited consolidated financial statements for 2019 and 2018, the independent auditor's report, and detailed notes - The consolidated financial statements for the years ended December 31, 2019 and 2018, have been audited by MSL, P.A., who issued an **unqualified opinion**[214](index=214&type=chunk)[218](index=218&type=chunk) - The financial statements include Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Stockholders' Equity, and Consolidated Statements of Cash Flows[220](index=220&type=chunk)[223](index=223&type=chunk)[226](index=226&type=chunk)[230](index=230&type=chunk) - Notes to the consolidated financial statements provide detailed information on significant accounting policies, inventories, allowance for doubtful accounts, property, plant and equipment, debt, investment in securities, leases, income taxes, loss per share, share-based employee compensation, significant customers, retirement plan, commitments and contingencies, and the capital program[233](index=233&type=chunk)[286](index=286&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk)[291](index=291&type=chunk)[303](index=303&type=chunk)[307](index=307&type=chunk)[317](index=317&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk)[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk)[354](index=354&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=57&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[359](index=359&type=chunk) [Item 9A. Controls and Procedures](index=57&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2019 - The President and Chief Financial Officer concluded that disclosure controls and procedures were **effective** as of December 31, 2019[360](index=360&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of December 31, 2019, based on the COSO framework[363](index=363&type=chunk) - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect internal control over financial reporting during the fourth fiscal quarter[364](index=364&type=chunk) [Item 9B. Other Information](index=57&type=section&id=Item%209B.%20Other%20Information) There is no other information to report under this item - No other information[365](index=365&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=58&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, officers, and corporate governance is incorporated by reference from the 2020 proxy statement - Information on Directors, Executive Officers, and Corporate Governance is incorporated by reference from the 2020 definitive proxy statement[368](index=368&type=chunk)[370](index=370&type=chunk) - The company has a Code of Business Conduct and Ethics and a Code of Ethics for the CEO and Senior Financial Officers, available on its website[371](index=371&type=chunk) [Item 11. Executive Compensation](index=58&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the 2020 proxy statement - Executive compensation information is incorporated by reference from the 2020 definitive proxy statement[372](index=372&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=58&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the 2020 proxy statement - Security ownership information is incorporated by reference from the 2020 definitive proxy statement[373](index=373&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=58&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2020 proxy statement - Information on related party transactions and director independence is incorporated by reference from the 2020 definitive proxy statement[374](index=374&type=chunk) [Item 14. Principal Accounting Fees and Services](index=58&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the 2020 proxy statement - Information on principal accounting fees and services is incorporated by reference from the 2020 definitive proxy statement[375](index=375&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=59&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and all exhibits filed with the report - The report includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Stockholders' Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements[378](index=378&type=chunk) - A comprehensive list of exhibits is provided, covering organizational documents, incentive compensation plans, employment agreements, credit agreements, and various certifications (e.g., XBRL, Section 302, Section 906)[380](index=380&type=chunk)[381](index=381&type=chunk)[383](index=383&type=chunk) - All financial statement schedules have been omitted as they are inapplicable, not material, or the information is included in the Consolidated Financial Statements and notes[386](index=386&type=chunk) [Item 16. Form 10-K Summary](index=61&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable as no Form 10-K Summary is provided - No Form 10-K Summary is provided[387](index=387&type=chunk)

Sales Performance - For Q3 2019, sales decreased by 11.3% to approximately $11.8 million compared to $13.3 million in Q3 2018[89] - For the nine months ended September 30, 2019, sales totaled approximately $32.7 million, down 15.4% from $38.7 million in the same period last year[89] - The company anticipates sales growth and the expected production and sale of new products to favorably impact overall gross profit margins in the future[102] - The sales funnel includes potential new customers in federal, state, and local public safety agencies, with strengthened sales and marketing resources[99] Profitability - Gross profit margin for Q3 2019 improved to approximately 43.3%, compared to 41.1% in Q3 2018[90] - For the nine-month period ended September 30, 2019, gross profit margin was approximately 40.4%, down from 41.8% in the same period last year[90] - The company recognized operating income of approximately $295,000 in Q3 2019, compared to $878,000 in Q3 2018[91] - Operating income for Q3 2019 was approximately $295,000, or 2.5% of sales, down from $878,000, or 6.6% of sales in Q3 2018[111] - Net income for Q3 2019 was approximately $238,000 ($0.02 per share), down from $650,000 ($0.05 per share) in Q3 2018[94] - The company recorded a net loss of approximately $1.3 million for the nine months ended September 30, 2019, compared to net income of approximately $1.2 million for the same period last year[122] Expenses - SG&A expenses for Q3 2019 totaled approximately $4.8 million, representing 40.8% of sales, a decline of 15.3% from the previous quarter[91] - SG&A expenses for Q3 2019 totaled approximately $4.8 million, or 40.8% of sales, compared to $4.6 million, or 34.5% of sales in Q3 2018[105] - Engineering and product development expenses for Q3 2019 were approximately $2.4 million, representing 20.1% of total sales, up from $2.1 million, or 15.9% of total sales in Q3 2018[106] - Marketing and selling expenses for Q3 2019 were approximately $1.4 million, or 11.5% of sales, unchanged from the same quarter last year[109] - General and administrative expenses for Q3 2019 totaled approximately $1.1 million, or 9.1% of total sales, compared to $1.1 million, or 8.3% of total sales in Q3 2018[110] Cash Flow and Working Capital - As of September 30, 2019, working capital totaled approximately $17.1 million, down from $21.0 million as of December 31, 2018[95] - Cash provided by operating activities for the nine months ended September 30, 2019, totaled approximately $1.0 million, down from $2.6 million for the same period last year[121] - As of September 30, 2019, the company's cash and cash equivalents balance was approximately $8.8 million, which is expected to meet working capital requirements for the foreseeable future[131] Investments and Future Products - The company recognized an unrealized loss of approximately $258,000 on its investment in 1347 Property Insurance Holdings, Inc. for Q3 2019, compared to a loss of $191,000 in Q3 2018[113] - The company anticipates introducing a new multi-band product in the market in the second half of 2020, following design changes aimed at improving functionality and performance[107] Accounting Policies - No changes were made to critical accounting policies during the quarter ended September 30, 2019[133]

Financial Performance - For Q2 2019, net sales totaled approximately $13.3 million, a decrease of 2.7% compared to $13.7 million in Q2 2018[47] - Sales for the six months ended June 30, 2019, were approximately $20.9 million, down 17.6% from $25.4 million in the same period last year[44] - Net loss for Q2 2019 was approximately $247,000 ($0.02 per share), compared to net income of approximately $947,000 ($0.07 per share) in Q2 2018[46] - The company recorded a net loss of approximately $1.6 million for the six months ended June 30, 2019, compared to net income of approximately $503,000 for the same period last year[57] Profitability Metrics - Gross profit margin for Q2 2019 was approximately 42.9%, slightly down from 43.1% in Q2 2018, but improved from 31.9% in Q1 2019[49] - For the six-month period ended June 30, 2019, gross profit margin decreased to 38.9% from 42.2% in the same period last year[44] - Operating income for Q2 2019 was approximately $20,000, or 0.2% of sales, down from $1.3 million, or 9.7% of sales in Q2 2018[52] Expenses - Selling, general and administrative expenses for Q2 2019 were approximately $5.7 million, representing 42.7% of sales, compared to $4.6 million (33.3% of sales) in Q2 2018[44] - Engineering and product development expenses for Q2 2019 exceeded those of the comparable period last year, indicating increased investment in new product development[44] - Engineering and product development expenses for Q2 2019 totaled approximately $3.1 million, or 23.3% of total sales, compared to $1.9 million, or 13.8% of total sales in Q2 2018[50] - General and administrative expenses for Q2 2019 were approximately $1.3 million, or 9.8% of total sales, up from $1.0 million, or 7.5% of total sales in Q2 2018[50] Cash Flow and Working Capital - For the six months ended June 30, 2019, net cash used in operating activities was approximately $1.3 million, compared to cash provided of approximately $0.7 million in the same period last year[57] - As of June 30, 2019, working capital totaled approximately $17.1 million, down from approximately $21.0 million as of December 31, 2018[46] - As of June 30, 2019, the company had a cash and cash equivalents balance of approximately $7.4 million[59] Other Financial Information - The company recognized an unrealized loss of approximately $148,000 on its investment in 1347 Property Insurance Holdings, Inc. for Q2 2019[53] - The Credit Facility provides a maximum borrowing availability of $1.0 million, with no outstanding borrowings as of June 30, 2019[59] - The company expects its effective tax rate for 2019 to be comparable to last year, with net deferred tax assets totaling approximately $3.7 million as of June 30, 2019[54] - The company experienced a 73.9% increase in sales from Q1 2019 to Q2 2019, attributed to improved orders from federal government customers[47]

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, 2019 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ——————— 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, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ ——————— BK TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) ——————— Nevada 001-32644 59-3486297 (State or ot ...