BK Technologies (NYSE: BKTI) lifts revenue and margins but sees backlog drop
BK Technologies Corporation reported higher revenue and margins for the quarter and six months ended June 30, 2026. Second-quarter sales rose to $23.4 million, up 10.6% from 2025, with six‑month sales of $44.7 million, up 11.2%, driven mainly by BKR series radios and accessories.
Gross margin expanded to 51.9% in the quarter and 51.8% year‑to‑date, compared with 47.4% and 47.2% a year earlier, reflecting favorable product mix. SG&A expenses increased sharply, up 37.7% in Q2 and 33.0% year‑to‑date, primarily from product development, software, legal and higher non‑cash share‑based compensation.
Quarterly net income was $3.2 million (basic EPS $0.84, diluted $0.79) versus $3.7 million last year, mainly due to higher income tax expense. Six‑month net income was $5.9 million (basic EPS $1.57, diluted $1.47), essentially flat year‑over‑year. Cash and cash equivalents increased to $29.9 million, working capital reached $46.1 million, and there were no borrowings under a revolving credit facility with up to $14.0 million of potential capacity. Backlog declined to $3.2 million from $14.2 million at year‑end, which management attributes to order‑timing.
Positive
- Revenue and margin expansion: Q2 2026 sales rose 10.6% to $23.4 million and six‑month sales rose 11.2% to $44.7 million, while gross margin improved to 51.9% from 47.4% in Q2 and to 51.8% from 47.2% year‑to‑date, indicating stronger profitability per dollar of sales.
- Stronger liquidity and no debt usage: Cash and cash equivalents increased to $29.9 million with working capital of $46.1 million, and the company has an undrawn revolving credit facility with up to $14.0 million of total commitment, providing substantial financial flexibility.
Negative
- Backlog sharply lower: Backlog of unshipped customer orders fell to $3.2 million at June 30, 2026, from $14.2 million at December 31, 2025, a significant decline that could pressure future revenue if not offset by new orders.
- Higher costs and lower quarterly earnings: Q2 2026 net income declined to $3.2 million from $3.7 million, as SG&A expenses rose 37.7% and income tax expense increased, compressing operating and net margins despite higher sales.
Key Figures
Key Terms
Secured Overnight Financing Rate financial
accordion feature financial
Project 25 technical
bonus depreciation financial
gain contingencies financial
Earnings Snapshot
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
OR
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number:
| BK Technologies Corporation |
| (Exact name of registrant as specified in its charter) |
| | | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code: (
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
| | | |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
There were
TABLE OF CONTENTS
| PART I - FINANCIAL INFORMATION |
3 |
||
| Item 1. |
FINANCIAL STATEMENTS (UNAUDITED) |
3 |
|
| Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
14 |
|
| Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
21 |
|
| Item 4. |
CONTROLS AND PROCEDURES |
22 |
|
| PART II - OTHER INFORMATION |
24 |
||
| Item 1. | LEGAL PROCEEDINGS | 24 | |
| Item 1A. |
RISK FACTORS |
24 |
|
| Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
25 |
|
| Item 5. | OTHER INFORMATION | 25 | |
| Item 6. |
EXHIBITS |
26 |
|
| SIGNATURES |
27 |
||
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
BK TECHNOLOGIES CORPORATION
Condensed Consolidated Balance Sheets
(In thousands, except share data)
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Trade accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use (ROU) assets | ||||||||
| Deferred tax assets, net | ||||||||
| Capitalized software and systems integration costs, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued compensation and related taxes | ||||||||
| Accrued warranty expense | ||||||||
| Accrued other expenses and other current liabilities | ||||||||
| Short-term operating lease liabilities | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Long-term operating lease liabilities | ||||||||
| Deferred revenue, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 7) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock; $1.00 par value; 1,000,000 authorized shares; none issued or outstanding | ||||||||
| Common stock; $0.60 par value; 10,000,000 authorized shares; 4,125,236 and 4,092,056 issued, and 3,768,151 and 3,733,733 outstanding shares as of June 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings (accumulated deficit) | ( | ) | ||||||
| Treasury stock, at cost, 357,085 shares as of June 30, 2026, and 358,323 shares as of December 31, 2025 | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
BK TECHNOLOGIES CORPORATION
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data) (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Sales, net | $ | $ | $ | $ | ||||||||||||
| Cost of products | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||
| Engineering and product development | ||||||||||||||||
| Marketing and selling | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total selling, general and administrative expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Gain on disposal of property, plant and equipment | ||||||||||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense), net | ( | ) | ||||||||||||||
| Income before income taxes | ||||||||||||||||
| Provision for income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income | $ | $ | ||||||||||||||
| Earnings per share-basic: | $ | $ | $ | $ | ||||||||||||
| Earnings per share-diluted: | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding-basic | ||||||||||||||||
| Weighted average shares outstanding-diluted | ||||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
BK Technologies Corporation
Condensed Consolidated Statements of Changes in Equity
(In thousands, except share and per share data) (Unaudited)
| Common | Common | Additional | Retained Earnings | |||||||||||||||||||||
| Stock | Stock | Paid-In | (Accumulated | Treasury | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit) | Stock | Total | |||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Common stock issued under restricted stock units | ( | ) | ||||||||||||||||||||||
| Stock option exercises | ||||||||||||||||||||||||
| Share-based compensation expense-stock options | — | |||||||||||||||||||||||
| Share-based compensation expense-restricted stock units | — | |||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Balance at March 31, 2026 | ( | ) | ||||||||||||||||||||||
| Common stock issued under restricted stock units and warrants | ( | ) | ||||||||||||||||||||||
| Stock option exercises | ||||||||||||||||||||||||
| Share-based compensation expense-stock options | — | |||||||||||||||||||||||
| Share-based compensation expense-restricted stock units | — | |||||||||||||||||||||||
| Issuance of common stock under employee purchase plan | — | |||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Balance at June 30, 2026 | ( | ) | ||||||||||||||||||||||
| Common | Common | Additional | ||||||||||||||||||||||
| Stock | Stock | Paid-In | Accumulated | Treasury | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Stock | Total | |||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Common stock issued under restricted stock units | ( | ) | ||||||||||||||||||||||
| Stock option exercises | ||||||||||||||||||||||||
| Share-based compensation expense-stock options | — | |||||||||||||||||||||||
| Share-based compensation expense-restricted stock units | — | |||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||
| Common stock issued under restricted stock units | ( | ) | ||||||||||||||||||||||
| Common stock issued-stock options | ||||||||||||||||||||||||
| Common stock issued - exercised warrants | ( | ) | ||||||||||||||||||||||
| Share-based compensation expense-stock options | — | |||||||||||||||||||||||
| Share-based compensation expense-restricted stock units | — | |||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Balance at June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
BK TECHNOLOGIES CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Operating activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Allowance for credit losses | ||||||||
| Inventories allowances | ||||||||
| Deferred taxes expense (benefit) | ( | ) | ||||||
| Gain on disposal of property, plant and equipment | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| Share-based compensation expense-stock options | ||||||||
| Share-based compensation expense-restricted stock units | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade accounts receivable, net | ( | ) | ( | ) | ||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other assets | ( | ) | ( | ) | ||||
| Operating lease ROU assets and lease liabilities | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Long-term uncertain tax position liability | ||||||||
| Accrued compensation and related taxes | ( | ) | ( | ) | ||||
| Accrued warranty expense | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ||||||
| Accrued other expenses and other current liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Investing activities | ||||||||
| Purchases of property, plant, and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of property, equipment and plant | ||||||||
| Capitalized software and systems integration costs | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities | ||||||||
| Proceeds from exercise of common stock options | ||||||||
| Repurchase of common stock | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosure | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Non-cash financing activity | ||||||||
| Common stock issued under restricted stock units | $ | $ | ||||||
| Cashless exercise of stock options, warrants and related conversion of net shares to stockholders' equity | $ | $ | ||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
BK TECHNOLOGIES CORPORATION
Notes to Condensed Consolidated Financial Statements
Three and Six Months Ended June 30, 2026 and 2025
Unaudited
(In thousands, except share and per share data and percentages or as otherwise noted)
Note 1. Condensed Consolidated Financial Statements
Basis of Presentation
The condensed consolidated balance sheet as of June 30, 2026, the condensed consolidated statements of operations for the three and six months ended June 30, 2026, and 2025, the condensed consolidated statement of changes in stockholders' equity for the three and six months ended June 30, 2026, and 2025, and the condensed consolidated statements of cash flows for the six months ended June 30, 2026, and 2025, have been prepared by BK Technologies Corporation (the “Company,” “we,” “us,” “our”), and are unaudited but include all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations, and cash flows for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2025, has been derived from the Company’s audited consolidated financial statements at that date.
These condensed consolidated financial statements have been prepared in accordance with the requirements of Article 8 of Regulation S-X and the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026. The results of operations for the three and six months ended June 30, 2026, and 2025, are not necessarily indicative of the operating results for a full year.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2026, as compared to those disclosed in the consolidated financial statements included in the Company’s Annual Report on the Form 10-K for the year ended December 31, 2025.
Principles of Consolidation
The accounts of the Company have been included in the accompanying condensed consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company consolidates entities in which it has a controlling financial interest. When the Company does not have a controlling financial interest in an entity but exerts significant influence over the entity’s operating and financial policies (generally defined as owning a voting or economic interest of between 20% to 50%), the Company’s investment is accounted for under the equity method of accounting. If the Company does not have a controlling financial interest in, or exert significant influence over, an entity, the Company accounts for its investment at fair value, if the fair value option was elected or at cost.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, and other liabilities. As of June 30, 2026, and December 31, 2025, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.
The Company does not discuss recent pronouncements that are not anticipated to have a material impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, an accounting standard update to improve income statement expenses disclosures. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company does not expect the adoption of ASU 2024-03 to have a material effect on its condensed consolidated financial statements.
Segment Reporting Disclosures
The Company has one reportable segment - Land Mobile Radio (LMR) Products and Solutions.
The LMR segment provides radio devices that are hand-held (portable) or installed in vehicles (mobile) and operate on private radio systems that are Project 25 ("P25") compliant. The Company derives revenue primarily in North America and manages its business activities on a consolidated basis.
The LMR radio products are used by public safety agencies of the federal government, state and local municipality agencies on their P25 compliant radio systems. The radio systems operate on frequencies managed by the Federal Communications Commission ("FCC"). The Company’s chief operating decision maker ("CODM") is the senior executive committee that includes the chief executive officer, chief financial officer, and the chief technology officer.
The accounting policies of the LMR segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the LMR segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets.
The CODM uses operating income and net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the LMR segment or into other parts of the entity, the development of public safety applications utilizing cellular technology or for acquisitions. Net income is used to monitor budget versus actual results. The CODM also uses net income in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.
The table below summarizes the significant categories regularly reviewed by the CODM for the three and six months ended June 30, 2026, and 2025, respectively:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||
| Sales, net | $ | $ | $ | $ | ||||||||||||
| Cost of products | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Engineering and product development | ||||||||||||||||
| Marketing and selling | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Other income (expense) (a) | ( | ) | ||||||||||||||
| Income tax (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Segment net income | $ | $ | $ | $ | ||||||||||||
(a) Other segment items include interest income (expense) and foreign currency exchange gains/losses.
Note 2. Significant Events and Transactions
On October 30, 2024, a wholly owned subsidiary of the Company entered into a new credit facility with Fifth Third Bank, National Association, which provided for a one-year revolving line of credit with a maximum commitment of $
Note 3. Inventories, Net
Inventories, which are presented net of allowance for slow moving, excess, and obsolete inventory, consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Inventory reserve | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Allowances for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or net realizable value.
Note 4. Income Taxes
The Company's tax provision and the resulting effective tax rate for interim periods is determined based on its estimated annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The provision for income taxes consists of federal and state taxes in the US, California, Florida, and various other states.
For the three and six months ended June 30, 2026, the Company recorded an income tax expense of $
For the three and six months ended June 30, 2025, the Company recorded an income tax expense of $
Based on the analysis of all available evidence, both positive and negative, the Company has concluded that, except for the capital loss carryforward of approximately $
The Company's policy is to recognize interest and penalties associated with uncertain tax benefits as part of income tax provision and included accrued interest and penalties with the related income tax liability on the Company's Condensed Consolidated Balance Sheets. To date, the Company has not recognized any interest and penalties in its Condensed Consolidated Statement of Operations, nor has it accrued for or made payments for interest and penalties. The Company recorded $
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Under OBBBA, the Company is permitted to claim 100% bonus depreciation and fully deduct domestic research expenditures under Section 174A. These provisions accelerate tax deductions but do not create permanent tax differences; therefore, the impact is timing related only and does not materially affect the Company's financial statements.
The Company imports certain materials and products that are subject to U.S. government tariffs and import duties. On February 20, 2026, a US federal court ordered the U.S. government to begin refunding certain tariffs. The Company believes that some of the tariffs it has paid may be eligible for refund; however, the amount and timing of any potential refunds are uncertain. Accordingly, the Company has not recorded, nor plans to record, any benefit related to possible tariff refunds at this time.
Note 5. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income for basic and diluted earnings per share | $ | $ | $ | $ | ||||||||||||
| Denominator for basic earnings per share weighted average shares | ||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||
| Options, restricted stock units, and warrants | ||||||||||||||||
| Denominator for diluted earnings per share weighted average shares | ||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | ||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | ||||||||||||
Approximately
Note 6. Non-Cash Share-Based Employee Compensation
Stock Options
The Company has employee and non-employee director share-based incentive compensation plans. Related to these programs, the Company recorded non-cash share-based employee compensation expense of $
A summary of activity under the Company’s stock option plans during the six months ended June 30, 2026, is presented below:
| Shares/Options | Weighted Average Exercise Price ($) Per Share | Weighted Average FMV @ Grant ($) Per Share | Weighted Average Fair Value ($) Per Share | Weighted Average Remaining Contractual Term (Years) | Weighted Average Remaining Vesting Term (Years) | Aggregate Intrinsic Value ($) | ||||||||||||||||||||||
| Beginning Outstanding | ||||||||||||||||||||||||||||
| Awarded | ||||||||||||||||||||||||||||
| Forfeited | ( | ) | 31.57 | - | - | ( | ) | |||||||||||||||||||||
| Expired | ( | ) | - | - | - | (71 | ) | |||||||||||||||||||||
| Exercised / Released | ( | ) | - | - | ||||||||||||||||||||||||
| Ending Outstanding | ||||||||||||||||||||||||||||
| Ending Vested | - | |||||||||||||||||||||||||||
| Ending Unvested | - | |||||||||||||||||||||||||||
| Vested and Expected to Vest | - | |||||||||||||||||||||||||||
| Exercisable | - | |||||||||||||||||||||||||||
Restricted Stock Units
The Company recorded non-cash restricted stock unit compensation expense of $
A summary of non-vested restricted stock under the Company’s non-employee director share-based incentive compensation plan is as follows:
| Weighted Average | ||||||||
| Number of | Grant Date | |||||||
| Shares | Price per Share | |||||||
| Unvested as of January 1, 2026 | $ | |||||||
| Granted | ||||||||
| Vested and issued | ( | ) | ||||||
| Cancelled/forfeited | ( | ) | ||||||
| Unvested as of June 30, 2026 | $ | |||||||
Note 7. Commitments and Contingencies
Legal Matters
From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of its business. We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we do not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, our ultimate liability in connection with these matters is not expected to have a material adverse effect on our results of operations, financial position or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.
On February 3, 2026, the Company filed a complaint with the United States District Court for the Eastern District of Texas, alleging patent infringement against AT&T Mobility LLC and AT&T Services, Inc. (collectively, “AT&T”) and requesting monetary and injunctive relief. As of the date of filing of this report on Form 10-Q, AT&T has responded to the Company’s complaint and is reviewing resolution alternatives.
Purchase Commitments
As of June 30, 2026, the Company had purchase commitments for inventory totaling approximately $
Significant Customers
The following table summarizes customer concentration of net revenues
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||
| Revenue as a percent of total revenue | ||||||||||||||||
| United States government agencies | % | % | % | % | ||||||||||||
| Customer A | % | % | % | |||||||||||||
| Customer B | % | % | ||||||||||||||
The following table summarizes customer concentration of receivables:
| June 30, 2026 | June 30, 2025 | |||||||
| Receivables as a percent of total receivables | ||||||||
| United States government agencies | % | % | ||||||
| Customer A | % | % | ||||||
| Customer B | % | % | ||||||
Geopolitical Tensions
U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflict between Russia and Ukraine and in the Middle East. Although the length and impact of the ongoing military conflicts are highly unpredictable, the conflict in both of these regions could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.
Macroeconomic Trends
The Company continues to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, the introduction of or changes in tariffs or trade barriers and global or local recession. Such changes in domestic and global macroeconomic conditions may lead to increased costs for the business. Additionally, these macroeconomic trends could adversely affect the Company’s customers, which could impact their willingness to spend on the Company’s products and services, or their ability to make payments, which could harm the collection of accounts receivable and financial results. The world’s financial markets remain susceptible to significant stresses, resulting in reductions in available credit and government spending, economic downturn or stagnation, foreign currency fluctuations and volatility in the valuations of securities generally. As a result, the Company’s ability to access capital markets and other funding sources in the future may not be available on commercially reasonable terms, if at all. The rapid development and fluidity of these situations precludes any prediction as to the ultimate impact they will have on the Company’s business, financial condition, results of operation and cash flows, which will depend largely on future developments.
Note 8. Leases
The Company leases approximately
In February 2020, the Company entered into a lease for
Lease costs consisted of the following:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Variable lease cost | ||||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||
Supplemental cash flow information related to leases was as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||
| Operating cash flows (fixed payments) | $ | $ | $ | $ | ||||||||||||
| Operating cash flows (liability reduction) | $ | $ | $ | $ | ||||||||||||
| ROU assets obtained in exchange for lease obligations: | ||||||||||||||||
| Operating leases | $ | $ | $ | $ | ||||||||||||
Other information related to operating leases was as follows:
| June 30, 2026 | ||||
| Weighted average remaining lease term (in years) | ||||
| Weighted average discount rate | % | |||
Maturity of lease liabilities as of June 30, 2026, were as follows:
| June 30, 2026 | ||||
| Remaining six months of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Total payments | ||||
| Less: imputed interest | ( | ) | ||
| Total present value of lease liabilities | $ | |||
Note 9. Subsequent Events
The Company has evaluated subsequent events through August 13, 2026, the date the condensed consolidated financial statements were available to be issued. Based on this evaluation, the Company determined that no material subsequent events occurred that require recognition or disclosure in these condensed consolidated financial statements.
.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY NOTE CONCERNING
FORWARD-LOOKING STATEMENTS
We believe that it is important to communicate our future expectations to our security holders and to the public. This report, including any information incorporated by reference in this report, therefore, contains statements about future events and expectations which are "forward-looking statements" within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") including the statements about our plans, objectives, expectations and prospects under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations." You can expect to identify these statements by forward-looking words such as "may," "might," "could," "would," "should," "will," "anticipate," "believe," "plan," "estimate," "project," "expect," "intend," "seek," "are encouraged" and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. We also may make forward-looking statements in other documents that are filed or furnished with the SEC. In addition, we may make forward-looking statements orally or in writing to investors, analysts, members of the media, or others. Forward-looking statements include, but are not limited to, the following: changes or advances in technology; the success of our Solutions and Radio product groups and the products offered thereunder; successful introduction of new products and technologies, including our ability to successfully develop and sell our current and anticipated Solutions products, and our new multiband radio product and other related products in the BKR Series product line; competition in the LMR industry; general economic and business conditions, including the impact of high inflation, fluctuating interest rates, tariffs and other trade barriers and restrictions, potential tariff refunds, labor and supply shortages and disruptions, federal, state and local government budget deficits and spending limitations, any impact from a prolonged shutdown of the U.S. Government, the effects of natural disasters, changes in climate, severe weather events, geopolitical conflicts and other events, acts of war or terrorism, global health crises and other catastrophic events, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments, including a potential U.S. or global downturn or recession; the availability, terms and deployment of capital; reliance on contract manufacturers and suppliers; risks associated with fixed‐price contracts; heavy reliance on sales to agencies of the U.S. Government and our ability to comply with the requirements of contracts, laws and regulations related to such sales; allocations by government agencies among multiple approved suppliers under existing agreements; our ability to comply with U.S. tax laws and utilize deferred tax assets; our ability to attract and retain executive officers, skilled workers and key personnel; our ability to manage our growth; our ability to identify potential candidates for, and to consummate, acquisition, disposition or investment transactions; impact of our capital allocation strategy; risks related to maintaining our brand and reputation; impact of government regulation; impact of rising health care costs; our business with manufacturers located in other countries, including the effects of changes in the U.S. Government and foreign governments' trade and tariff policies, such as recent increases in tariffs by the U.S. and the imposition of increased tariffs and other trade barriers and retaliatory measures by foreign governments; our inventory and debt levels; our ability to comply with the terms, including financial covenants, of our outstanding debt, including fluctuating interest rates; protection of our intellectual property rights; fluctuation in our operating results and stock price; any infringement claims; data security breaches, cyber-attacks and other factors impacting our technology systems or third-party information technology systems upon which we rely; widespread outages, interruptions or other failures of operational, communication, or other systems; availability of adequate insurance coverage; environmental, social and governance matters; maintenance of our NYSE American listing; risks related to being a holding company; our ability to maintain effective internal control over financial reporting; and the effect on our stock price and ability to raise capital through future sales of shares of our common stock or otherwise.
Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors, many of which are outside of our control, that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Report on Form 8-K.
Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in "Part I-Item 1A. Risk Factors" and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in our subsequent filings with the SEC. We assume no obligation to publicly update or revise any forward-looking statements made in this report, whether as a result of new information, future events, changes in assumptions or otherwise, after the date of this report. Readers are cautioned not to place undue reliance on these forward-looking statements.
Reported dollar amounts in the management’s discussion and analysis (“MD&A”) section of this report are disclosed in millions or as whole dollar amounts.
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this report and the MD&A, consolidated financial statements, and notes thereto appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 12, 2026.
Executive Summary
BK Technologies Corporation (NYSE American: BKTI) (together with its wholly owned subsidiaries, "BK," the "Company," ''we" or ''us") is a holding company that, through BK Technologies, Inc., its operating subsidiary, provides public safety grade communications products and services designed to make first responders safer and more efficient. All operating activities described herein are undertaken by our operating subsidiary.
In business for over 70 years, BK operates one business segment through its operating subsidiary, BK Technologies, Inc. BK has two product groups within the segment: LMR Radio and Solutions.
The Radio product group designs, manufactures and markets wireless communications products and related accessories consisting of two-way land mobile radios ("LMRs"). Two-way LMRs can be radios that are hand-held (portable) or installed in vehicles (mobile).
Generally, BK Technologies-branded products serve government markets, including, but not limited to, emergency response, public safety, homeland security and military customers of federal, state and municipal government agencies, as well as various industrial and commercial enterprises. We believe that our products and solutions provide superior value by offering high specification, ruggedized, durable, reliable, feature rich, Project 25 ("P25") compliant radio products at a lower cost relative to comparable offerings.
The Solutions product group focuses on delivering innovative products and smartphone applications which operate ubiquitously over public cellular networks. Our BK ONE branded solutions are designed to provide advanced field applications that enhance situational awareness, decision-making and interagency coordination that enable the first responder to be safer and more efficient. Our BK ONE portfolio provides law enforcement improved safety and productivity, fire incident first responders more situational awareness and EMS first responders with enhanced patient safety and advanced care measures. When tethered to our radios, the combined solution offers an enhanced user experience with more unique capability which increases the sales reach of our radios.
The Company continues to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, the introduction of or changes in tariffs or trade barriers, supply chain and labor disruptions, materials shortages, political and social unrest, geopolitical conflicts, and global or local recession. Such changes in domestic and global macroeconomic conditions may lead to increased costs for the business. Additionally, these macroeconomic trends could adversely affect the Company's customers, which could impact their willingness to spend on the Company's products and services, or their ability to make payments, which could harm the collection of accounts receivable and financial results. The world's financial markets remain susceptible to significant stresses, resulting in reductions in available credit and government spending, economic downturn or recession, foreign currency fluctuations and volatility in the valuations of securities generally. As a result, the Company's ability to access capital markets and other funding sources in the future may not be available on commercially reasonable terms, if at all. The rapid development and fluidity of these situations precludes any prediction as to the ultimate impact they will have on the Company's business, financial condition, results of operation and cash flows, which will depend largely on future development.
In February 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). On March 4, 2026, the U.S. Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection to refund certain tariffs collected under IEEPA. The Company identified certain potential refunds of previously paid tariffs in accordance with the ruling by the CIT and has estimated the total potential recovery to be approximately $0.6 million, which recovery remained subject to administrative review and final liquidation of the underlying customs entries by U.S. Customs and Border Protection. These potential refunds represent gain contingencies under ASC 450-30 and have not been recognized in the financial statements for the three months ended June 30, 2026, as uncertainties remain regarding government approval and appeals and final liquidation amounts. The Company will continue to monitor developments and recognize refunds when realized or realizable, however, no assurance can be given that the Company will recoup any IEEPA tariff refunds
Customer demand and orders for our products were strong during fiscal year 2025 and continued during the first six months of 2026. Customer demand and new orders for our products was $18.4 million during the three months ended June 30, 2026, compared to $18.3 million for the same period of fiscal year 2025. Our backlog of unshipped customer orders was approximately $3.2 million and $14.2 million as of June 30, 2026, and December 31, 2025, respectively. Changes in the backlog were attributed primarily to the timing of orders and their fulfillment. The timing of orders from certain federal and state agency customers, can have a significant impact on the backlog reported during any specific quarterly period.
For the three months ended June 30, 2026, sales increased approximately 10.6% to approximately $23.4 million, compared with $21.2 million for the same period of fiscal year 2025. The increase was attributed primarily to the shipments of BKR series radio product and accessories sales. Gross profit margins as a percentage of sales for the three months ended June 30, 2026, were 51.9%, compared with 47.4% for the comparative fiscal year 2025 quarter, generally reflecting radio product and accessories sales mix. Selling, general, and administrative (“SG&A”) expenses for the three months ended June 30, 2026, totaled approximately $8.3 million (35.5% of sales), compared with $6.0 million (28.5% of sales) in the same period of fiscal year 2025. We recognized operating income for the three months ended June 30, 2026, of approximately $3.8 million, compared with operating income of approximately $4.0 million for the same period of fiscal year 2025.
For the three months ended June 30, 2026, and 2025, we recognized other income, net totaling approximately $174,000 and $19,000, respectively.
For the three months ended June 30, 2026, the pretax income totaled approximately $4.0 million, compared with pretax income of approximately $4.0 million for same period of fiscal year 2025.
We recognized tax expense of $0.8 million for the three-month period ended June 30, 2026, and approximately $0.3 million for the same period of fiscal year 2025.
Net income for the three months ended June 30, 2026, totaled approximately $3.2 million ($0.84 per basic and $0.79 per diluted share), compared with a net income of approximately $3.7 million ($1.03 per basic and $0.96 per diluted share) for the same period last year. The primary factor for the decrease for the three months ended June 30, 2026, compared to the same period of fiscal year 2025, is primarily related to federal and state estimated tax expense.
As of June 30, 2026, working capital totaled approximately $46.1 million, of which $42.1 million was comprised of cash, cash equivalents, and trade receivables. This compares with working capital totaling approximately $37.3 million at 2025 year-end, which included $30.0 million of cash, cash equivalents, and trade receivables.
We may experience fluctuations in our quarterly results, in part, due to governmental customer spending patterns that are influenced by government fiscal year-end budgets and appropriations. We may also experience fluctuations in our quarterly results, in part, due to our sales to federal and state agencies that participate in wildland fire-suppression efforts, which may be greater during the summer season when forest fire activity is heightened. In some years, these factors may cause an increase in sales for the second and third quarters, compared with the first and fourth quarters of the same fiscal year. Such increases in sales may cause quarterly variances in our cash flow from operations and overall financial condition.
Available Information
Our Internet website address is www.bktechnologies.com. The information contained on or accessible from our website is not incorporated by reference in this report. Any reference to our website is intended to be an inactive textual reference only. We make available on our Internet website, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments to these reports as soon as practicable after we file such material with, or furnish it to, the SEC. In addition, our Code of Business Conduct and Ethics, Code of Ethics for the CEO and Senior Financial Officers, Audit Committee Charter, Compensation Committee Charter, Nominating and Governance Committee Charter, and other corporate governance policies are available on our website under “Investor Relations.” A copy of any of these materials may be obtained, free of charge, upon request from our investor relations department. The SEC maintains an internet site that contains reports, proxy and information statements, and other information filed by the Company at http://www.sec.gov. All reports that the Company files with or furnishes to the SEC also are available free of charge via the SEC’s website.
Second Quarter and Six Months Summary
Customer demand and new orders for our products was $18.4 million during the three months ended June 30, 2026, compared to $18.3 million for the same period of fiscal year 2025.
For the second quarter of 2026, sales increased 10.6% to approximately $23.4 million, compared with approximately $21.2 million of sales for the second quarter of fiscal year 2025. Sales for the six months ended June 30, 2026, totaled approximately $44.7 million, an increase of 11.2% compared with approximately $40.2 million for the same period last year. Gross profit margin as a percentage of sales for the second quarter of 2026 was approximately 51.9%, compared with 47.4% for the same period of fiscal year 2025, generally reflecting BKR radio product and accessories sales mix compared to the second quarter of fiscal year 2025. Gross profit margin as a percentage of sales for the six months ended June 30, 2026 was approximately 51.8%, compared with approximately 47.2% for the same period last year. Selling, general, and administrative (“SG&A”) expenses for the second quarter of 2026 totaled approximately $8.3 million, which was 37.7% higher than the SG&A expenses of approximately $6.0 million for the second quarter of fiscal year 2025. The increase in SG&A expenses was attributed primarily due to software, new product development costs and legal expenses. Selling, general, and administrative expenses for the first six months of 2026 totaled approximately $16.1 million, which was 33.0% higher than the SG&A expenses of approximately $12.1 million for the same period of fiscal year 2025. These factors yielded operating income of approximately $3.8 million for the three-month period ended June 30, 2026, compared with operating income of approximately $4.0 million for the same period of fiscal year 2025. Operating income for the first six months of 2026 was approximately $7.1 million, compared with operating income of approximately $6.9 million for the same period of fiscal year 2025.
For the second quarter of 2026, we recognized other net income of approximately $174,000 on interest income on our cash investments and other expenses, compared to approximately $19,000 other income, primarily related to interest income partially offset by other expenses for the same period of fiscal year 2025. For the first six months of 2026, we recognized other net income of approximately $329,000 on interest income, primarily on our cash investments and other expenses, compared to approximately $95,000 other expense, primarily related to other expenses exceeding interest income for the same period of fiscal year 2025.
Provision for income taxes for the three months ended June 30, 2026, was approximately $0.8 million, compared with provision for income taxes of approximately $0.3 million for the same quarter last year. The primary factor for the increase for the three-month period ended June 30, 2026, compared to the same period of fiscal year 2025, is related to utilization of research and development tax credits for 2025. Provision for income taxes for the six months ended June 30, 2026, was approximately $1.5 million, compared with provision for income taxes of approximately $0.9 million for the same period last year.
Net income for the three months ended June 30, 2026, was approximately $3.2 million ($0.84 per basic and $0.79 per diluted share), compared with net income of approximately $3.7 million ($1.03 per basic and $0.96 per diluted share) for the same quarter last year. The primary factor for the decrease for the three-month period ended June 30, 2026, compared to the same period of fiscal year 2025, is related to federal and state estimated income tax expense. Net income for the six months ended June 30, 2026, was approximately $5.9 million ($1.57 per basic and $1.47 per diluted share), compared with net income of approximately $5.9 million ($1.63 per basic and $1.51 per diluted share) for the same period last year.
As of June 30, 2026, working capital totaled approximately $46.1 million, of which approximately $42.1 million was comprised of cash, cash equivalents and trade receivables. As of December 31, 2025, working capital totaled approximately $37.3 million, of which approximately $30.0 million was comprised of cash, cash equivalents and trade receivables.
Results of Operations
As an aid to understanding our operating results for the periods covered by this report, the following table shows selected items from our condensed consolidated statements of operations expressed as a percentage of sales:
| Percentage of Sales |
Percentage of Sales |
|||||||||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, |
June 30, |
June 30, |
June 30, |
|||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| Sales |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Cost of products |
(48.1 | ) | (52.6 | ) | (48.2 | ) | (52.8 | ) | ||||||||
| Gross margin |
51.9 | 47.4 | 51.8 | 47.2 | ||||||||||||
| Selling, general and administrative expenses |
(35.5 | ) | (28.5 | ) | (35.9 | ) | (30.0 | ) | ||||||||
| Other income (expense) |
0.7 | 0.1 | 0.7 | (0.2 | ) | |||||||||||
| Income before income taxes |
17.1 | 19.0 | 16.7 | 17.0 | ||||||||||||
| Income tax (expense) |
(3.6 | ) | (1.3 | ) | (3.4 | ) | (2.3 | ) | ||||||||
| Net income |
13.5 | % | 17.7 | % | 13.3 | % | 14.6 | % | ||||||||
Note - Amounts may not foot due to rounding.
Net Sales
For the second quarter ended June 30, 2026, net sales increased 10.6% to approximately $23.4 million, compared with approximately $21.2 million for the same quarter of fiscal year 2025. Sales for the six months ended June 30, 2026, totaled approximately $44.7 million, compared with approximately $40.2 million for the six-month period last year.
Sales for the three and six months ended June 30, 2026, were attributed primarily to state and local public safety opportunities. From a product perspective, the primary contributor to orders and shipments during the second quarter ended June 30, 2026, was our BKR series radios and related accessories. The BKR Series is envisioned as a comprehensive line of new products, which includes new models such as the BKR 9000, which achieved first sales in the second quarter of 2023.
We believe that the BKR Series products should increase our addressable market by expanding the number of Federal, state and local public safety customers that may purchase our products. However, the timing and size of orders from agencies at all levels can be unpredictable and subject to budgets, priorities, and other factors. Accordingly, we cannot assure that we will be able to develop additional BKR Series products on the anticipated timelines, or at all, or that sales will occur under particular contracts, or that our sales prospects will otherwise be realized.
While the potential impacts of the current administration's tariff policies, material shortages, lead-times, high inflation and ongoing geopolitical conflicts in the Middle East, Ukraine and other geopolitical events remain uncertain in the coming months and quarters, such effects have the potential to adversely impact our customers and our supply chain. Such negative effects on our customers and suppliers could adversely affect our future sales, gross profit margins, operations and financial results.
Cost of Products and Gross Profit Margin
Gross profit margins as a percentage of sales for the second quarter ended June 30, 2026, were approximately 51.9% compared with 47.4% for the same quarter of fiscal year 2025. Gross profit margins as a percentage of sales for the six months ended June 30, 2026, were approximately 51.8% compared with 47.2% for the same period of fiscal year 2025. Our cost of products and gross profit margins are primarily derived from material, labor, and overhead costs, product mix, manufacturing volumes and pricing. The increase in gross profit margins for the three and six months ended June 30, 2026, compared to the same period of fiscal year 2025, generally reflect radio product and accessories sales mix.
We utilize a combination of internal manufacturing capabilities and contract manufacturing relationships for production efficiencies and to manage material and labor costs. While we anticipate continuing to do so in the future, we have increased and are continuing to increase our utilization of contract manufacturing resources, which provides increased flexibility for our production capacity to meet increased demand. We believe that our current manufacturing capabilities and contract relationships or comparable alternatives will continue to be available to us. However, we may encounter new product costs and competitive pricing pressures in the future and the extent of their impact on gross margins, if any, is uncertain.
Selling, General and Administrative Expenses
SG&A expenses consist of marketing, sales, commissions, engineering, product development, management information systems, accounting, headquarters, and non-cash share-based employee compensation expenses.
SG&A expenses for the quarter ended June 30, 2026, totaled approximately $8.3 million (35.5% of sales), compared with approximately $6.0 million (28.5% of sales) for the same quarter of fiscal year 2025. SG&A expenses increased by $4.0 million, or 33.0%, to approximately $16.1 million (35.9% of sales), compared with approximately $12.1 million (30.0% of sales), for the six month period last year.
Engineering and product development expenses for the second quarter of 2026 totaled approximately $4.0 million (16.9% of sales), compared with approximately $2.3 million (10.9% of sales) for the same quarter of fiscal year 2025. For the six months ended June 30, 2026, engineering and product development expenses totaled approximately $7.6 million (17.0% of sales), compared with approximately $5.0 million (12.5% of sales) for the six month period last year. The increase in engineering expenses was attributed primarily to development costs for the BKR multi-band mobile radio product and software development costs. Most of these activities were being performed by our internal engineering team and were their primary focus, combined with sustaining engineering support for our existing products. The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages, including the impact of tariffs and certain component lead times in coming months and quarters.
Marketing and selling expenses for the second quarter of 2026 totaled approximately $1.9 million (7.9% of sales), compared with approximately $1.9 million (9.2% of sales) for the second quarter of fiscal year 2025. For the six months ended June 30, 2026, marketing and selling expenses decreased approximately $0.1 million, or 3.0%, to approximately $3.7 million (8.2% of sales), compared with approximately $3.8 million (9.4% of sales) for the same period last year. Marketing and selling expenses for the three and six-months ended June 30, 2026 were primarily unchanged compared to the same period of 2025.
Other general and administrative expenses for the second quarter of 2026 totaled approximately $2.5 million (10.7% of sales), compared with approximately $1.8 million (8.5% of sales) for the same period of fiscal year 2025. For the six months ended June 30, 2026, other general and administrative expenses totaled approximately $4.8 million (10.6% of sales), compared with approximately $3.3 million (8.1% of sales) for the six-month period last year. The increase in other general and administrative expenses for the three and six months ended June 30, 2026, was attributed primarily to non-cash stock compensation and the non-recurring nature of certain legal and corporate consulting expenses compared to the three and six months ended June 30, 2025.
Operating Income
Operating income for the quarter ended June 30, 2026, totaled approximately $3.8 million (16.4% of sales), compared with operating income of approximately $4.0 million (18.9% of sales) for the same period of fiscal year 2025. For the six months ended June 30, 2026, our operating income totaled approximately $7.1 million (15.9% of sales), compared with operating income of approximately $6.9 million (17.2% of sales) for the six-month period last year. The decrease in operating income for the three months ended June 30, 2026, compared to the same period last year, was attributed to growth in product development costs and partially related to increased non-cash stock compensation and the non-recurring nature of certain legal and corporate consulting expenses.
Other Income
We recorded net other income of approximately $174,000 for the quarter ended June 30, 2026, compared with approximately $19,000 net other income for the second quarter of fiscal year 2025. For the six months ended June 30, 2026, net other income totaled approximately $329,000, compared with net other expense of approximately $95,000 for the six month period last year. The increase in net other income for the three and six months ended June 30, 2026 compared to the same period of 2025, is primarily related to interest income related to the increase of our cash balance compared to 2025.
Income Taxes
We recorded approximately $0.8 million and $1.5 million tax expense for the three and six months ended June 30, 2026, respectively, compared to approximately $0.3 million and $0.9 million, respectively, for the same periods last year.
Our income tax provision is based on the effective tax rate for the year. The tax expense in any period may be affected by, among other things, permanent, as well as temporary, differences in the deductibility of certain items, in addition to changes in tax legislation. As a result, we may experience fluctuations in the effective book tax rate (that is, tax expense divided by pre-tax book income) from period to period.
As of June 30, 2026, our net deferred tax assets totaled approximately $4.5 million and were primarily derived from capitalized software and systems integration costs and deferred revenue.
In order to fully utilize the net deferred tax assets, we will need to generate sufficient taxable income in future years. We analyze all positive and negative evidence to determine if, based on the weight of available evidence, we are more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon our conclusions regarding, among other considerations, estimates of future earnings based on information currently available and current and anticipated customers, contracts, and product introductions, as well as historical operating results and certain tax planning strategies.
Based on our analysis of all available evidence, both positive and negative, we have concluded that, except for the capital loss carryforward of approximately $851,000, we will have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax assets. We cannot presently estimate what, if any, changes to the valuation of our deferred tax assets may be deemed appropriate in the future. If we incur future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of June 30, 2026.
Liquidity and Capital Resources
For the six months ended June 30, 2026, net cash provided by operating activities totaled approximately $7.5 million, compared with cash provided by operating activities of approximately $6.0 million for the same fiscal year period of 2025. Cash provided by operating activities for the six months ended June 30, 2026, was primarily related to net income of $5.9 million, an increase of $3.2 million in accounts payable, a decrease of $0.8 million in inventories, an increase of $0.2 million in deferred revenues, partially offset by an increase of $5.0 million in accounts receivable and a $0.5 million decrease in accrued compensation and related taxes.
For the first six months of 2026, we had net income of approximately $5.9 million, compared with a net income of approximately $5.9 million for the same period of fiscal year 2025. Accounts receivable increased approximately $5.0 million during the six months ended June 30, 2026, compared with an increase of approximately $4.2 million for the same period of fiscal year 2025, primarily due to the timing of customer collections in the first six months of fiscal year 2026 and 2025. Accounts payable for the six months ended June 30, 2026, increased approximately $3.2 million, compared with an increase of approximately $3.5 million for the same period of fiscal year 2025, primarily due to the increased purchases of finished goods during the quarter ended June 30, 2026 and 2025. Accrued other expenses increased during the first six months of 2026 by approximately $0.1 million compared with a decrease of $1.3 million for the same period of fiscal year 2025. The increase in accrued other expenses in the first six months of 2026, was related to the reversal of the increase that occurred during the first six months of 2025, related to contractual terms with our contract manufacturers. Inventories decreased during the six months ended June 30, 2026, by approximately $0.8 million compared to a decrease of approximately $0.5 million for the same period of fiscal year 2025. The decrease in inventories during the six months ended June 30, 2026, was primarily attributed to a decrease in raw materials and an increase in inventory allowance somewhat offset by an increase in finished goods. The decrease in inventories during the six months ended June 30, 2025, was primarily attributed to a decrease in raw materials and work in process, somewhat offset by an increase in finished goods. Depreciation and amortization totaled approximately $1.5 million for the six months ended June 30, 2026, compared with approximately $0.9 million for the same period of fiscal year 2025. The increase in depreciation and amortization for the six months ended June 30, 2026 compared to the same period in 2025, was primarily due to amortization of capitalized software and system integration costs. Depreciation and amortization costs are primarily related to manufacturing and engineering equipment and somewhat to software and integration cost amortization.
Net cash used in investing activities for the six months ended June 30, 2026, totaled approximately $0.7 million, compared with approximately $1.5 million for the same period of fiscal year 2025. The net cash used in the six-month period ended June 30, 2026, was attributed primarily to purchases of engineering equipment and tooling, compared to cash used for the six-month period ended June 30, 2025, which was primarily attributed to capitalized software and system implementation costs and the purchase of engineering and manufacturing related equipment.
For the six months ended June 30, 2026, approximately $0.4 million was provided by financing activities, compared with cash provided by financing activities of approximately $0.2 million for the same period of fiscal year 2025. Net cash provided by financing activities was primarily attributable to proceeds from the exercise of common stock options, somewhat offset by the repurchase of common stock in the first six months of 2026.
Our cash and cash equivalents balance on June 30, 2026, was approximately $29.9 million. We believe these funds, combined with anticipated cash generated from operations and borrowing availability under our Fifth Third credit agreement, are sufficient to meet our working capital requirements for the foreseeable future. We may, depending on a variety of factors, including market conditions for capital raises, the trading price of our common stock and opportunities for uses of any proceeds, engage in public or private offerings of equity or debt securities to increase our capital resources. However, financial and economic conditions, including those resulting from supply chain delays or interruptions, labor shortages, wage pressures, rising inflation, geopolitical events, the impacts of tariffs, and other force majeure events, could result in volatility in the financial and capital markets and could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity, and financial condition.
On October 30, 2024, the Company's subsidiary, BK Technologies, Inc. entered into a Revolving Loan Commitment with Fifth Third Bank, National Association (“Fifth Third”) which was amended on October 30, 2025 (as amended, the “RLC”). The Fifth Third RLC provides for a revolving line of credit with a maximum commitment of $6.0 million, with an accordion feature, if certain conditions are met, for up to an additional $8.0 million of borrowing capacity, totaling a maximum commitment of $14.0 million. The RLC will mature on October 30, 2028. Each advance shall accrue interest on the outstanding principal amount thereof at a range of SOFR plus 1.75% to 2.25% per annum, based on certain total debt coverage ratios. Each advance may be prepaid at any time without penalty and the entire line of credit commitment may be permanently terminated by BK Technologies, Inc. at any time upon 10 days’ prior written notice to the lender without penalty. The Company has not utilized funding and there were no borrowings under the RLC agreement as of June 30, 2026, and as of the date of filing this report.
BK Technologies, Inc.'s repayment obligations under the RLC are guaranteed by the Company and secured by a pledge of essentially all of the assets of the Company and BK Technologies, Inc. The Company is subject to customary negative covenants, including with respect to our ability to incur additional indebtedness, encumber and dispose of their assets and enter into affiliate transactions. BK Technologies, Inc. must also comply with: (i) a maximum total funded debt ratio of 2.00 to 1.00; (ii) a fixed charge coverage ratio of 1.20 to 1.00 as measured on a rolling twelve-month basis, each measured at the end of each fiscal quarter and (iii) a requirement that the outstanding principal balance under the RLC will be $0 for at least 30 consecutive days during each annual period ending on October 30.
The Fifth Third RLC agreement provides for customary events of default, including: (1) failure to pay principal, interest or fees under the RLC when due and payable; (2) failure to comply with other covenants and agreements contained in the Revolving Loan Commitment agreement and the other documents executed in connection therewith; (3) the making of false or inaccurate representations and warranties; (4) defaults under other debt or other obligations of BK Technologies, Inc.; (5) money judgments and material adverse changes; (6) a change in control or ceasing to operate business in the ordinary course; and (7) certain events of bankruptcy or insolvency. Upon the occurrence of an event of default, Fifth Third may declare the entire unpaid balance immediately due and payable and/or exercise any and all remedial and other rights under the RLC agreement.
Critical Accounting Policies
Our critical accounting policies include our revenue recognition process and our accounting processes involving significant judgments, estimates and assumptions. These processes affect our reported revenues and current assets and are, therefore, critical in assessing our financial and operating status. We regularly evaluate these processes in preparing our financial statements. The processes for revenue recognition, allowance for collection of trade receivables, allowance for excess or obsolete inventory and income taxes involve certain assumptions and estimates that we believe to be reasonable under present facts and circumstances. These estimates and assumptions, if incorrect, could adversely impact our operations and financial position.
The Company accounts for the costs of Land Mobile Radio (LMR) multi-band development within its products in accordance with ASC Topic 350-30, Intangibles – Goodwill and Other, under which certain LMR multi-band radio software and systems integration costs incurred subsequent to the establishment of technological feasibility are capitalized and amortized over the estimated lives of the related products. The Company began amortization of the multi-band mobile radio development costs for a period of 32 months, beginning on January 1, 2026.
There were no other changes to our critical accounting policies during the three months ended June 30, 2026.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company,” the Company is not required to include the disclosure under this Item.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (who serves as our principal executive officer) and Chief Financial Officer (who serves as our principal financial and accounting officer), as appropriate, to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
During the three and six months ended June 30, 2026, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitation on the Effectiveness of Internal Control
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
From time to time, we may be involved in various claims and legal actions arising in the ordinary course of our business. We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we do not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, our ultimate liability in connection with these matters is not expected to have a material effect on our results of operations, financial position or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending on the size of loss or our income for that particular period.
On February 3, 2026, the Company filed a complaint with the United States District Court for the Eastern District of Texas, alleging patent infringement against AT&T Mobility LLC and AT&T Services, Inc. ( collectively, "AT&T") and requesting monetary and injunctive relief. As of the date of filing of this report on Form 10-Q, AT&T has responded to the Company's complaint and is reviewing resolution alternatives.
Item 1A. RISK FACTORS
As of the date of this filing, there have been no material changes to the Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 12, 2026. The Risk Factors set forth in the 2025 Form 10-K should be read carefully in connection with evaluating our business and in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q. Any of the risks described in the 2025 Form 10-K could materially adversely affect our business, financial condition, or future results and the actual outcome of matters as to which forward-looking statements are made. These are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Share Repurchase Program
On December 21, 2021, the Company announced that the Board authorized a share repurchase program which permits the Company to purchase up to an aggregate of $5.0 million of its common shares. Repurchases may be made through a variety of methods, which could include open market purchases, accelerated share repurchase transactions, negotiated block transactions, Rule 10b5-1 plans, other transactions that may be structured through investment banking institutions or privately negotiated, or a combination of the foregoing. The program does not have an expiration date. Any repurchases would be funded using cash on hand and cash from operations. The actual timing, manner, and number of shares repurchased under the program will be determined by management and the Board at their discretion and will depend on several factors, including the market price of the Company’s common shares, general market and economic conditions, alternative investment opportunities, and other business considerations in accordance with applicable securities laws and exchange rules. The authorization of the share repurchase program does not require BK Technologies to acquire any particular number of shares and repurchases may be suspended or terminated at any time at the Company’s discretion. The following table provides information about purchases made by us of our common stock for each month included in the second quarter of 2026:
| ISSUER PURCHASES OF EQUITY SECURITIES |
||||||||||||||||
| Total Number of Shares |
Approximate Dollar Value |
|||||||||||||||
| Purchased as Part of |
of Shares that May Still be |
|||||||||||||||
| Total Number of |
Average Price |
Publicly Announced |
Purchased Under the |
|||||||||||||
| Period |
Shares Purchased |
Paid Per Share |
Plans or Programs |
Plans or Programs |
||||||||||||
| April 1–30, 2026 |
— | — | — | $ | 3,528,714 | |||||||||||
| May 1–31, 2026 |
— | — | — | $ | 3,528,714 | |||||||||||
| June 1–30, 2026 |
— | — | — | $ | 3,528,714 | |||||||||||
| Quarter Ended June 30, 2026 |
— | $ | — | — | $ | 3,528,714 | ||||||||||
Item 5. OTHER INFORMATION
During the quarter ended June 30, 2026, none of the Company’s directors or executive officers adopted, modified or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (each as defined in Item 408 of Regulation S-K).
Item 6. EXHIBITS
Exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index below.
Exhibit Index
| Exhibit Number |
Description |
|
| Exhibit 3.1 |
Articles of Incorporation (incorporated by reference from Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed March 17, 2022)
|
|
| Exhibit 3.1.1 |
Certificate of Amendment to Articles of Incorporation (incorporated by reference from Exhibit 3.1.1 to the Company’s Annual Report on Form 10-K filed March 17, 2022) |
|
| Exhibit 3.1.2 |
Certificate of Change to Articles of Incorporation (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 28, 2023) |
|
| Exhibit 3.2 |
Bylaws (incorporated by reference from Exhibit 3.3 to the Company’s Current Report on Form 8-K12B filed March 28, 2019) |
|
| Exhibit 10.1+ | Form of Indemnification Agreement | |
| Exhibit 31.1 |
Certification of Principal Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
| Exhibit 31.2 |
Certification of Principal Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
| Exhibit 32.1 |
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32) of Regulation S‑K) |
|
| Exhibit 32.2 |
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32) of Regulation S‑K) |
|
| Exhibit 101.INS |
Inline XBRL Instance Document |
|
| Exhibit 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
| Exhibit 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
| Exhibit 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
| Exhibit 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
| Exhibit 101.DEF |
Inline XBRL Taxonomy Definition Linkbase Document |
|
| Exhibit 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
| + Management contract or compensatory plan or arrangement. | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BK TECHNOLOGIES CORPORATION |
|||
| (The “Registrant”) |
|||
| Date: August 13, 2026 |
By: |
/s/ John M. Suzuki |
|
| John M. Suzuki Chief Executive Officer (Principal executive officer and duly authorized officer) |
|||
| Date: August 13, 2026 |
By: |
/s/ Scott A. Malmanger |
|
| Scott A. Malmanger Chief Financial Officer (Principal financial and accounting officer and duly authorized officer) |
|||